Puma Biotechnology, Inc. (NASDAQ:PBYI) Q3 2021 Earnings Conference Call November 4, 2021 4:30 PM ET Company Participants Mariann Ohanesian - Senior Director, Investor Relations Alan Auerbach - Chairman, President and Chief Executive Officer Jeffrey Ludwig - Chief Commercial Officer Maximo Nougues - Chief Financial Officer Conference Call Participants Carly Kenselaar - Citi Marc Frahm - Cowen Alex Hammond - Bank of America Sheldon Fan - Barclays Operator Good afternoon. My name is Melinda, and I will be your ...

Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35703 PUMA BIOTECHNOLOGY, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR (Exact name of registrant as specified in its charter) Delaware 77-0683487 (State or ...

Puma Biotechnology Earnings Call Commercial Update August 5, 2021 Forward-Looking Safe-Harbor Statement This presentation contains forward-looking statements, including statements regarding commercialization of NERLYNX® and the potential indications and development of our drug candidates. All forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from the anticipated results and expectations expressed in these forward-looking statements. These sta ...

Puma Biotechnology, Inc. (NASDAQ:PBYI) Q2 2021 Earnings Conference Call August 5, 2021 4:30 PM ET Company Participants Mariann Ohanesian - Senior Director, IR Alan Auerbach - Founder, Chairman, President, CEO & Secretary Jeffrey Ludwig - Chief Commercial Officer Maximo Nougues - CFO & Principal Accounting Officer Conference Call Participants Carly Kenselaar - Citigroup Marc Frahm - Cowen and Company Alex Hammond - Bank of America Merrill Lynch Sheldon Fan - Barclays Bank Paul Choi - Goldman Sachs Group Oper ...

OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35703 PUMA BIOTECHNOLOGY, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or orga ...

Puma Biotechnology, Inc. (NASDAQ:PBYI) Q1 2021 Earnings Conference Call May 6, 2021 4:30 PM ET Company Participants Mariann Ohanesian - Senior Director, IR Alan Auerbach - Founder, Chairman, President, CEO & Secretary Jeff Ludwig - Chief Commercial Officer Maximo Nougues - CFO & Principal Accounting Officer Conference Call Participants Carly Kenselaar - Citigroup Marc Frahm - Cowen and Company Kennen MacKay - RBC Capital Markets Alec Stranahan - Bank of America Merrill Lynch Sheldon Fan - Barclays Bank Oper ...

PART I – FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements of Puma Biotechnology, Inc. and its subsidiaries for the periods ended March 31, 2021, and December 31, 2020, including balance sheets, statements of operations, comprehensive income (loss), stockholders' equity (deficit), and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's financial position, including assets, liabilities, and equity, at specific reporting dates | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Total Assets | $258,659 | $244,220 | | Total Liabilities | $242,222 | $250,171 | | Total Stockholders' Equity (Deficit) | $16,437 | $(5,951) | | Cash and cash equivalents | $95,653 | $85,293 | | Current Liabilities | $140,408 | $114,255 | | Long-term debt | $76,346 | $84,025 | - The company's total assets increased by **$14.4 million**, and total liabilities decreased by **$7.9 million**, leading to a significant improvement in stockholders' equity from a deficit of **$(5.951) million** to a positive **$16.437 million**[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Reports the company's revenues, expenses, and net income or loss over specific periods | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Total Revenue | $98,169 | $51,217 | | Product revenue, net | $45,816 | $48,609 | | License revenue | $50,000 | $2,000 | | Royalty revenue | $2,353 | $608 | | Total operating costs and expenses | $78,023 | $65,468 | | Income (loss) from operations | $20,146 | $(14,251) | | Net income (loss) | $16,528 | $(16,933) | | Net income (loss) per share—basic | $0.41 | $(0.43) | | Net income (loss) per share—diluted | $0.40 | $(0.43) | - Total revenue significantly increased by **91.7%** year-over-year, primarily driven by a substantial increase in license revenue from **$2.0 million** to **$50.0 million**. This led to a shift from an operating loss of **$(14.251) million** to an operating income of **$20.146 million**, and a net income of **$16.528 million** compared to a net loss of **$(16.933) million** in the prior year[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Presents the net income or loss alongside other comprehensive income or loss components | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Net income (loss) | $16,528 | $(16,933) | | Other comprehensive income (loss) | $0 | $(60) | | **Comprehensive income (loss)** | **$16,528** | **$(16,993)** | - The company reported comprehensive income of **$16.528 million** for the three months ended March 31, 2021, a significant improvement from a comprehensive loss of **$(16.993) million** in the same period of 2020. Other comprehensive income (loss) was negligible in the current period[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) Outlines changes in the company's equity, including net income, stock-based compensation, and other adjustments | Metric | Balance at December 31, 2020 (in thousands) | Net Income (in thousands) | Stock-based Compensation (in thousands) | Balance at March 31, 2021 (in thousands) | | :-------------------------- | :---------------------------------- | :------------------------ | :------------------------------------ | :--------------------------------- | | Total Stockholders' Equity (Deficit) | $(5,951) | $16,528 | $5,860 | $16,437 | - Stockholders' equity transitioned from a deficit of **$(5.951) million** at December 31, 2020, to a positive **$16.437 million** at March 31, 2021, primarily driven by the net income of **$16.528 million** and stock-based compensation of **$5.860 million** during the quarter[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Operating activities | $15,661 | $(11,540) | | Investing activities | $(5,301) | $34,377 | | Net increase in cash, cash equivalents and restricted cash | $10,360 | $22,837 | | Cash, cash equivalents and restricted cash, end of period | $107,814 | $96,047 | - Cash flow from operating activities significantly improved, generating **$15.661 million** in Q1 2021 compared to using **$(11.540) million** in Q1 2020. Investing activities shifted from providing **$34.377 million** in Q1 2020 to using **$(5.301) million** in Q1 2021, primarily due to purchases of available-for-sale securities[21](index=21&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1—Business and Basis of Presentation](index=9&type=section&id=Note%201%E2%80%94Business%20and%20Basis%20of%20Presentation) Describes the company's biopharmaceutical business and the basis for preparing its financial statements - Puma Biotechnology, Inc. is a biopharmaceutical company focused on developing and commercializing innovative products for cancer care, primarily NERLYNX (neratinib) for HER2-positive breast cancer and HER2 mutated cancers[23](index=23&type=chunk) - NERLYNX received FDA approval in July 2017 for extended adjuvant treatment of early-stage HER2-overexpressed/amplified breast cancer and in February 2020 for advanced or metastatic HER2-positive breast cancer in combination with capecitabine. The European Commission granted marketing authorization in 2018[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The company has entered into exclusive sub-license agreements for NERLYNX commercialization in various international regions, including Europe, Australia, Canada, China, Southeast Asia, Israel, Mexico, South Korea, and Central/South America[28](index=28&type=chunk) - For the three months ended March 31, 2021, the company reported net income of approximately **$16.5 million** and cash flows from operations of approximately **$15.7 million**. Management believes existing cash and marketable securities, along with future product sales and sub-license payments, are sufficient to satisfy operating needs for at least one year[29](index=29&type=chunk) [Note 2—Significant Accounting Policies](index=10&type=section&id=Note%202%E2%80%94Significant%20Accounting%20Policies) Outlines the key accounting principles and estimates used in preparing the financial statements - Revenue from product sales is recognized net of variable consideration, including trade discounts, product returns, chargebacks, government rebates, payor rebates, and patient assistance programs, which are estimated and established as reserves[39](index=39&type=chunk)[42](index=42&type=chunk) - License revenue from non-refundable upfront fees is recognized when the license term commences and the licensed data, technology, or product is delivered, or deferred if performance obligations are not satisfied. Royalty revenue is recognized when related sales occur[50](index=50&type=chunk)[57](index=57&type=chunk) - Stock-based compensation for options is valued using the Black-Scholes Option Pricing Method, and Restricted Stock Units (RSUs) are valued at the market price on the grant date, with expense recognized over the service period[63](index=63&type=chunk)[64](index=64&type=chunk) - The company adopted ASU 2019-12 (Income Taxes) and ASU 2020-10 (Codification Improvements) as of January 1, 2021, with no material effect on its financial position, results of operations, or disclosures[94](index=94&type=chunk)[95](index=95&type=chunk) [Note 3—Accounts Receivable, Net](index=19&type=section&id=Note%203%E2%80%94Accounts%20Receivable%2C%20Net) Details the composition and changes in the company's net accounts receivable | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :------------------------------ | | Trade accounts receivable | $22,800 | $21,515 | | License revenue receivable | $2,000 | $2,500 | | Royalty revenue receivable | $2,358 | $2,528 | | Total accounts receivable | $27,158 | $26,543 | | Allowance for credit losses | $(1,000) | $(1,000) | | Total accounts receivable, net | $26,158 | $25,543 | - Total accounts receivable, net increased slightly to **$26.158 million** at March 31, 2021, from **$25.543 million** at December 31, 2020. The company recognized **$0** in credit loss expense for the three months ended March 31, 2021, compared to **$1.0 million** for the period ended December 31, 2020[96](index=96&type=chunk)[97](index=97&type=chunk) [Note 4—Prepaid Expenses and Other](index=20&type=section&id=Note%204%E2%80%94Prepaid%20Expenses%20and%20Other) Provides a breakdown of current and long-term prepaid expenses and other assets | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | **Current:** | | | | CRO services | $1,308 | $1,550 | | Other clinical development | $3,322 | $2,718 | | Insurance | $2,733 | $3,708 | | Professional fees | $1,083 | $651 | | Other | $3,143 | $2,635 | | **Total Current** | **$11,589** | **$11,262** | | **Long-term:** | | | | CRO services | $198 | $518 | | Other clinical development | $475 | $437 | | Other | $657 | $790 | | **Total Long-term** | **$1,330** | **$1,745** | | **Totals** | **$12,919** | **$13,007** | - Total prepaid expenses and other remained relatively stable at **$12.919 million** as of March 31, 2021. Current prepaid expenses increased slightly, with notable changes in other clinical development (increase) and insurance (decrease). Long-term prepaid expenses decreased[98](index=98&type=chunk) [Note 5—Other Current Assets](index=20&type=section&id=Note%205%E2%80%94Other%20Current%20Assets) Details the components and changes in other current assets | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | Deposit for manufacturing costs | $0 | $3,376 | | Deferred rent | $198 | $198 | | Other | $175 | $67 | | **Totals** | **$373** | **$3,641** | - Other current assets significantly decreased from **$3.641 million** at December 31, 2020, to **$0.373 million** at March 31, 2021, primarily due to the absence of a deposit for manufacturing costs in the current period[99](index=99&type=chunk) [Note 6—Leases](index=20&type=section&id=Note%206%E2%80%94Leases) Describes the company's operating lease arrangements and related financial impacts - The company holds operating leases for office space in Los Angeles (until March 2026) and South San Francisco (until March 2026, with a five-year extension option), and copier equipment. These leases include annual rent increases of approximately **3%**[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) | Lease Metric | Value | | :-------------------------- | :------ | | Operating cash flows used for operating leases (Q1 2021) | $1,380 thousand | | Weighted average remaining lease term | 5.0 years | | Weighted average discount rate (IBR) | 10.9% | | Total lease liabilities (March 31, 2021) | $21,930 thousand | | Total minimum lease payments to be received (sublease) | $2,496 thousand | - Operating sublease income of **$0.1 million** was recorded for the three months ended March 31, 2021[103](index=103&type=chunk) [Note 7—Property and Equipment, Net](index=22&type=section&id=Note%207%E2%80%94Property%20and%20Equipment%2C%20Net) Presents the company's property and equipment, net of accumulated depreciation | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :------------------------------ | | Leasehold improvements | $3,779 | $3,779 | | Computer equipment | $2,192 | $2,192 | | Telephone equipment | $302 | $302 | | Furniture and fixtures | $2,359 | $2,359 | | Less: accumulated depreciation | $(6,349) | $(6,151) | | **Totals** | **$2,283** | **$2,481** | - Property and equipment, net decreased slightly to **$2.283 million** at March 31, 2021, from **$2.481 million** at December 31, 2020, reflecting **$0.2 million** in depreciation expense incurred during the quarter[105](index=105&type=chunk) [Note 8—Intangible Assets, Net](index=22&type=section&id=Note%208%E2%80%94Intangible%20Assets%2C%20Net) Details the company's intangible assets, net of accumulated amortization | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | Acquired and in-licensed rights | $90,000 | $90,000 | | Less: accumulated amortization | $(17,864) | $(15,860) | | **Total intangible asset, net** | **$72,136** | **$74,140** | - Intangible assets, net decreased to **$72.136 million** at March 31, 2021, from **$74.140 million** at December 31, 2020, due to **$2.0 million** in amortization expense incurred during the quarter. The estimated remaining useful life of these assets is **9.0 years**[106](index=106&type=chunk) [Note 9—Accrued Expenses](index=23&type=section&id=Note%209%E2%80%94Accrued%20Expenses) Provides a breakdown of current and long-term accrued expenses | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | **Current:** | | | | Accrued legal verdict expense | $47,731 | $22,724 | | Accrued royalties | $7,934 | $8,604 | | Accrued CRO services | $1,795 | $3,474 | | Accrued variable consideration | $9,050 | $9,014 | | Accrued bonus | $2,039 | $7,788 | | Accrued compensation | $5,135 | $4,820 | | Accrued other clinical development | $1,512 | $1,904 | | Accrued professional fees | $1,424 | $1,420 | | Accrued legal fees | $1,599 | $383 | | Accrued manufacturing costs | $476 | $752 | | Other | $589 | $442 | | **Total Current** | **$79,284** | **$61,325** | | **Long-term:** | | | | Accrued legal verdict expense | $0 | $24,822 | | Accrued CRO services | $934 | $908 | | Accrued other | $206 | $233 | | **Total Long-term** | **$1,140** | **$25,963** | | **Totals** | **$80,424** | **$87,288** | - Total accrued expenses decreased to **$80.424 million** at March 31, 2021, from **$87.288 million** at December 31, 2020. Current accrued legal verdict expense significantly increased to **$47.731 million**, including **$22.9 million** for *Eshelman v. Puma Biotechnology, Inc., et al.* and **$24.9 million** for *Hsu v. Puma Biotechnology, Inc., et al.*, while long-term accrued legal verdict expense became **$0**[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Note 10—Debt](index=24&type=section&id=Note%2010%E2%80%94Debt) Details the company's outstanding debt, including terms, covenants, and related costs | Debt Component | March 31, 2021 (in thousands) | | :-------------------------- | :----------------------------- | | Total debt | $100,000 | | Accretion of final interest payment | $3,675 | | Less: current portion of long-term debt | $(22,857) | | Less: deferred financing costs | $(4,472) | | **Total long-term debt, net** | **$76,346** | - As of March 31, 2021, the company had **$100.0 million** in term loans outstanding under its New Credit Facility, maturing on June 1, 2024. The effective interest rate was **12.75%**[112](index=112&type=chunk)[114](index=114&type=chunk)[119](index=119&type=chunk) - The New Credit Facility includes affirmative and negative covenants, including product revenue targets, and the company was in compliance with all covenants as of March 31, 2021[116](index=116&type=chunk)[119](index=119&type=chunk) - Deferred financing costs, net of accumulated amortization, totaled **$4.472 million**, with **$0.5 million** of related interest expense recognized in Q1 2021[121](index=121&type=chunk) [Note 11—Stockholders' Equity](index=25&type=section&id=Note%2011%E2%80%94Stockholders%27%20Equity) Describes the components of stockholders' equity and stock-based compensation - As of March 31, 2021, **40,324,263** shares of common stock were issued and outstanding. A warrant for **2,116,250** shares at **$16** per share, issued to the CEO, is exercisable until October 4, 2021[13](index=13&type=chunk)[125](index=125&type=chunk) | Stock-based Compensation Expense (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Options - Selling, general, and administrative | $1,007 | $920 | | Options - Research and development | $228 | $841 | | Restricted stock units - Selling, general, and administrative | $2,594 | $3,772 | | Restricted stock units - Research and development | $2,031 | $3,374 | | **Total stock-based compensation expense** | **$5,860** | **$8,907** | - Total estimated unrecognized employee compensation cost was approximately **$8.4 million** for non-vested stock options (over **2.1 years**) and **$22.3 million** for non-vested RSUs (over **2.0 years**) as of March 31, 2021[129](index=129&type=chunk) [Note 12—401(k) Savings Plan](index=27&type=section&id=Note%2012%E2%80%94401%28k%29%20Savings%20Plan) Reports the company's contributions to its employee 401(k) savings plan - The company incurred **$0.6 million** in employer matching contributions to its 401(k) plan for the three months ended March 31, 2021, an increase from **$0.4 million** in the same period of 2020[132](index=132&type=chunk) [Note 13—Commitments and Contingencies](index=27&type=section&id=Note%2013%E2%80%94Commitments%20and%20Contingencies) Outlines the company's contractual obligations and potential legal liabilities - Under its license agreement with Pfizer, the company is obligated to make substantial milestone payments (up to **$187.5 million** if all achieved) and annual royalties (low-to-mid teens of net sales). A remaining milestone payment of approximately **$21.9 million** (including interest) is due to Pfizer by September 2021[136](index=136&type=chunk)[137](index=137&type=chunk) - In *Hsu v. Puma Biotechnology, Inc., et al.* (class action), the company faces claimed damages of **$50.5 million**, but estimates actual claims could range from **$24.9 million** to **$51.4 million** after challenges[211](index=211&type=chunk) - In *Eshelman v. Puma Biotechnology, Inc., et al.* (defamation), a jury awarded **$15.9 million** in compensatory and **$6.5 million** in punitive damages, totaling **$26.3 million** with pre-judgment interest. The company has appealed, with an estimated high end of potential damages at **$27.9 million**[212](index=212&type=chunk) - The company resolved an arbitration with CANbridge BIOMED Limited, agreeing to dismiss claims and pay a one-time termination fee of **$20.0 million** to regain NERLYNX rights in greater China[93](index=93&type=chunk)[213](index=213&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2021, compared to the same period in 2020. It covers the business overview, the impact of the COVID-19 pandemic, critical accounting policies, a detailed analysis of revenue and expenses, liquidity and capital resources, and a reconciliation of GAAP to non-GAAP financial measures [Overview](index=29&type=section&id=Overview) Provides a general description of the company's business, products, and recent strategic developments - Puma Biotechnology is a biopharmaceutical company focused on developing and commercializing innovative products for cancer care, primarily the oral version of neratinib (NERLYNX) for HER2-positive breast cancer and HER2 mutated cancers[141](index=141&type=chunk) - NERLYNX received FDA approval in 2017 for early-stage HER2-positive breast cancer and in 2020 for advanced/metastatic HER2-positive breast cancer. It also received EC marketing authorization in the EU in 2018[142](index=142&type=chunk) - The company settled an arbitration with CANbridge BIOMED Limited, regaining NERLYNX rights in greater China, and subsequently amended its sub-license agreement with Pierre Fabre Medicament SAS for greater China rights, receiving a **$50 million** upfront payment and potential additional milestone payments up to **$240 million**, plus double-digit tiered royalties[144](index=144&type=chunk) [Impact of COVID-19](index=30&type=section&id=Impact%20of%20COVID-19) Discusses the effects of the COVID-19 pandemic on the company's operations, sales, and clinical trials - The COVID-19 pandemic has led to limited travel and virtual promotional activities for the U.S. sales force, potentially deterring cancer patients from doctor visits and adversely impacting NERLYNX sales. Similar actions have been taken by international sub-licensees[146](index=146&type=chunk) - Disruptions in patient enrollments have been observed in clinical trials (e.g., SUMMIT basket trial), which could materially impact clinical trial plans and timelines[146](index=146&type=chunk) - The company's ability to operate without significant negative impacts depends on the pandemic's length and severity, and its ability to protect employees and the supply chain. While operations were broadly maintained in Q1 2021, the pandemic could adversely affect revenue and compliance with loan covenants[147](index=147&type=chunk)[148](index=148&type=chunk) [Critical Accounting Policies](index=30&type=section&id=Critical%20Accounting%20Policies) Reaffirms and explains the key accounting policies and estimates used in financial reporting - No material changes to critical accounting policies and estimates occurred during the three months ended March 31, 2021, from those reported at December 31, 2020[149](index=149&type=chunk) - License revenue is recognized under ASC 606, evaluating agreements for distinct performance obligations. Non-refundable upfront fees are recognized when the license term commences and the licensed data/product is delivered, or deferred if obligations are not satisfied. Estimates of transaction price, including variable consideration, are made to ensure no significant revenue reversal is probable[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - Legal contingencies are accrued when a loss is probable and estimable. Legal fees are expensed as incurred, and estimates are periodically adjusted based on available information[153](index=153&type=chunk) [Summary of Income and Expenses](index=31&type=section&id=Summary%20of%20Income%20and%20Expenses) Explains the primary drivers and components of the company's revenues and operating expenses - Product revenue, net, is derived from NERLYNX sales to specialty pharmacies and distributors, recorded net of variable consideration (discounts, returns, rebates)[154](index=154&type=chunk) - License revenue comes from satisfied performance obligations under sub-license agreements, while royalty revenue is earned from sub-licensees' product sales in their territories[155](index=155&type=chunk)[156](index=156&type=chunk) - Cost of sales includes third-party manufacturing, freight, overhead, Pfizer royalties, amortization of milestone payments, and inventory adjustments. Selling, general and administrative (SG&A) expenses cover payroll, professional fees, insurance, rent, and general legal activities. Research and development (R&D) expenses include clinical trial costs, consultant fees, and personnel costs[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Analyzes the period-over-period changes in the company's revenues and expenses | Revenue Category | Q1 2021 (in thousands) | Q1 2020 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Total revenue | $98,169 | $51,217 | $46,952 | 91.7% | | Product revenue, net | $45,816 | $48,609 | $(2,793) | -5.7% | | License revenue | $50,000 | $2,000 | $48,000 | 2400.0% | | Royalty revenue | $2,353 | $608 | $1,745 | 287.0% | - Product revenue, net, decreased by **5.7%** due to a **20%** volume decrease in NERLYNX bottles sold and an increase in variable consideration reserves (from **16%** to **19%** of product revenue), partially offset by higher gross selling prices[161](index=161&type=chunk) - Cost of sales increased significantly to **$29.6 million** in Q1 2021 from **$9.1 million** in Q1 2020, primarily due to a one-time license termination fee, increased amortization of intangible assets, and higher Pfizer royalty expense related to increased royalty revenue[164](index=164&type=chunk) | Expense Category | Q1 2021 (in thousands) | Q1 2020 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Selling, general and administrative | $28,238 | $30,937 | $(2,699) | -8.7% | | Research and development | $20,228 | $25,455 | $(5,227) | -20.5% | - SG&A expenses decreased by **$2.7 million**, mainly due to lower stock-based compensation (**$1.1 million** decrease), reduced travel and meetings (**$1.4 million** decrease due to COVID-19), and lower other expenses (**$0.4 million** decrease), partially offset by increased professional fees (**$0.3 million** increase, primarily legal expenses)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - R&D expenses decreased by **$5.2 million**, primarily due to a **$2.7 million** decrease in clinical trial expense (NALA close-out, studies nearing completion), a **$2.0 million** decrease in stock-based compensation, and a **$0.6 million** decrease in consultant and contractor expense[168](index=168&type=chunk)[172](index=172&type=chunk) - Total other expenses increased to **$(3.580) million** in Q1 2021 from **$(2.682) million** in Q1 2020, driven by a **$0.4 million** decrease in interest income and a **$0.4 million** increase in interest expense (due to milestone payment interest to Pfizer)[169](index=169&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash position, working capital, debt, and ability to meet future obligations | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | Cash and cash equivalents | $95,653 | $85,293 | | Marketable securities | $13,397 | $8,096 | | Working capital | $23,357 | $31,884 | | Stockholders' equity (deficit) | $16,437 | $(5,951) | | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Operating activities | $15,661 | $(11,540) | | Investing activities | $(5,301) | $34,377 | | Net increase in cash, cash equivalents and restricted cash | $10,360 | $22,837 | - The company generated **$15.7 million** in cash from operating activities in Q1 2021, a significant improvement from using **$11.5 million** in Q1 2020. Investing activities used **$5.3 million** in Q1 2021, primarily for purchasing available-for-sale securities, compared to providing **$34.4 million** in Q1 2020[176](index=176&type=chunk)[179](index=179&type=chunk) - As of March 31, 2021, **$100.0 million** in term loans were outstanding under the New Credit Facility, with an effective interest rate of **12.75%**. The company was in compliance with all applicable covenants[185](index=185&type=chunk)[190](index=190&type=chunk) - While current cash and marketable securities are expected to satisfy operating needs for at least one year, the company anticipates continued significant losses and may require additional funding, which could be impacted by market conditions, the COVID-19 pandemic, and clinical trial results[192](index=192&type=chunk)[193](index=193&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) Reconciles GAAP financial results to non-GAAP measures, primarily adjusting for stock-based compensation | Metric | Q1 2021 (in thousands) | Q1 2020 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | | GAAP net income (loss) | $16,528 | $(16,933) | | Stock-based compensation (SG&A) | $3,601 | $4,692 | | Stock-based compensation (R&D) | $2,259 | $4,215 | | **Non-GAAP adjusted net income (loss)** | **$22,388** | **$(8,026)** | | Non-GAAP adjusted basic net income (loss) per share | $0.56 | $(0.20) | | Non-GAAP adjusted diluted net income (loss) per share | $0.55 | $(0.20) | - Excluding stock-based compensation, non-GAAP adjusted net income was **$22.388 million** in Q1 2021, a significant improvement from a non-GAAP adjusted net loss of **$(8.026) million** in Q1 2020. Stock-based compensation represented **12.1%** of operating expenses (excluding cost of sales) in Q1 2021, down from **15.8%** in Q1 2020[194](index=194&type=chunk)[196](index=196&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, primarily focusing on interest rate fluctuations affecting its cash equivalents and outstanding borrowings - The company's investments in cash equivalents (e.g., money market investments) are subject to interest rate risk, but due to their short-term maturities, a **10%** increase in interest rates is not expected to materially affect their realized value[203](index=203&type=chunk)[204](index=204&type=chunk) - The **$100.0 million** outstanding under the loan and security agreement bears a variable interest rate (greater of **9.0%** or prime rate + **3.5%**), making the company's interest expense sensitive to changes in the prime rate[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2021, concluding they were effective. It also states that no material changes in internal control over financial reporting occurred during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[207](index=207&type=chunk) - There were no material changes in the company's internal control over financial reporting during the three months ended March 31, 2021[208](index=208&type=chunk) PART II – OTHER INFORMATION Contains additional disclosures not included in the financial statements, such as legal proceedings and risk factors [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section provides updates on significant legal proceedings involving the company, including class action lawsuits, a defamation suit, a licensing dispute, and a legal malpractice claim - In *Hsu v. Puma Biotechnology, Inc., et al.* (class action), the claims administrator reported **$50.5 million** in claimed damages, but the company disputes this amount and estimates actual claims could range from **$24.9 million** to **$51.4 million** after challenges[211](index=211&type=chunk) - In *Eshelman v. Puma Biotechnology, Inc., et al.* (defamation), a jury awarded **$15.9 million** in compensatory and **$6.5 million** in punitive damages, totaling **$26.3 million** with pre-judgment interest. The company has appealed the verdict, with an estimated high end of potential damages at **$27.9 million**[212](index=212&type=chunk) - The company resolved an arbitration with CANbridge BIOMED Limited, dismissing all claims and paying a one-time termination fee of **$20.0 million** to regain NERLYNX rights in greater China[213](index=213&type=chunk) - A legal malpractice suit was filed against former attorneys for alleged negligent handling of the *Eshelman* case, seeking recovery of the awarded amount[214](index=214&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the company's Annual Report on Form 10-K for a comprehensive discussion of risk factors, stating that there have been no material changes to these risks since the prior filing - There have been no material changes in the company's risk factors subsequent to the filing of its Annual Report on Form 10-K for the year ended December 31, 2020[215](index=215&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms that the company did not engage in any unregistered sales of equity securities or purchases of its own equity securities during the three months ended March 31, 2021 - The company did not sell any of its equity securities without registration under the Securities Act of 1933 during the three months ended March 31, 2021[216](index=216&type=chunk) - Neither the company nor any affiliated purchasers made any purchases of its equity securities during the quarter ended March 31, 2021[217](index=217&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[218](index=218&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that the disclosure requirements for mine safety are not applicable to the company - Mine Safety Disclosures are not applicable to the company[219](index=219&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported in this section[220](index=220&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, amendments to key agreements, and certifications required by SEC regulations - Key exhibits include the Fourth Amendment to Amended and Restated Loan and Security Agreement, Termination Agreement with CANbridge BIOMED Limited, Amendment No. 3 to the License Agreement with Pierre Fabre Medicament SAS, and certifications from the Principal Executive Officer and Principal Financial Officer (Sections 302 and 906 of Sarbanes-Oxley Act)[223](index=223&type=chunk) [Signatures](index=42&type=section&id=Signatures) This section contains the official signatures of the company's President and Chief Executive Officer, and Chief Financial Officer, certifying the accuracy and completeness of the Form 10-Q - The report was signed by Alan H. Auerbach, President and Chief Executive Officer, and Maximo F. Nougues, Chief Financial Officer, on May 6, 2021[227](index=227&type=chunk)

Puma Biotechnology Barclays Global Healthcare Conference March 2021 Forward-Looking Safe-Harbor Statement This presentation contains forward-looking statements, including statements regarding commercialization of NERLYNX® and the potential indications and development of our drug candidates. All forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from the anticipated results and expectations expressed in these forward-looking statements. These s ...

Part I [Business Overview](index=3&type=section&id=Item%201.%20Business) Puma Biotechnology is a biopharmaceutical company focused on developing and commercializing its primary cancer care product, NERLYNX - Puma Biotechnology, Inc is a biopharmaceutical company focused on developing and commercializing innovative products to enhance cancer care, with **NERLYNX (neratinib) as its lead product**[15](index=15&type=chunk)[356](index=356&type=chunk)[518](index=518&type=chunk) - NERLYNX is an oral, potent irreversible tyrosine kinase inhibitor (TKI) that blocks signal transduction through HER1, HER2, and HER4 receptors[15](index=15&type=chunk)[32](index=32&type=chunk)[356](index=356&type=chunk) - NERLYNX received **FDA approval in July 2017** for extended adjuvant treatment of early-stage HER2-overexpressed/amplified breast cancer and in February 2020 for metastatic HER2-positive breast cancer in combination with capecitabine[15](index=15&type=chunk)[35](index=35&type=chunk)[51](index=51&type=chunk) - The European Commission (EC) granted marketing authorization for NERLYNX in August 2018 for extended adjuvant treatment of early-stage hormone receptor positive HER2-overexpressed/amplified breast cancer[18](index=18&type=chunk)[35](index=35&type=chunk) - The company commercializes NERLYNX in the US with a direct specialty sales force of approximately **68 sales specialists** and through exclusive sub-license agreements in various regions outside the US[18](index=18&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) - Puma Biotechnology is actively conducting Phase II clinical trials to evaluate neratinib's safety and efficacy for other indications, including HER2-mutated HER2-negative cancers and EGFR exon 18 mutated non-small cell lung cancer[21](index=21&type=chunk)[66](index=66&type=chunk)[69](index=69&type=chunk)[79](index=79&type=chunk) - The company's strategy includes executing the NERLYNX commercial plan, advancing neratinib development for other cancer indications, expanding the product pipeline, and evaluating commercialization strategies[25](index=25&type=chunk) - Puma Biotechnology **relies exclusively on third-party contractors** for drug formulation and manufacturing of NERLYNX and its drug candidates[132](index=132&type=chunk)[133](index=133&type=chunk) - The company holds a worldwide exclusive license from Pfizer for neratinib, with key US patents expiring between 2025 and 2031[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[104](index=104&type=chunk) - Research and development expenses totaled **$97.7 million in 2020**, a decrease from $132.9 million in 2019 and $164.9 million in 2018[191](index=191&type=chunk) NERLYNX Approvals by Country (as of December 2020) | Indication | Country | Approval Date | | :---------- | :------ | :------------ | | Extended adjuvant | United States | July 2017 | | Extended adjuvant | European Union | August 2018 | | Extended adjuvant | Australia | March 2019 | | Extended adjuvant | Canada | July 2019 | | Extended adjuvant | Argentina | August 2019 | | Extended adjuvant | Hong Kong | October 2019 | | Extended adjuvant | Singapore | November 2019 | | Extended adjuvant | Switzerland | March 2020 | | Extended adjuvant | Brunei | April 2020 | | Extended adjuvant | China | April 2020 | | Extended adjuvant | Chile | April 2020 | | Extended adjuvant | New Zealand | June 2020 | | Extended adjuvant | Taiwan | June 2020 | | Extended adjuvant | Ecuador | July 2020 | | Extended adjuvant | Malaysia | July 2020 | | Metastatic | United States | February 2020 | | Metastatic | Argentina | January 2021 | Workforce by Location (as of December 31) | Location | December 31, 2020 | December 31, 2019 | | :--------- | :------------------ | :------------------ | | Los Angeles | 86 | 83 | | South San Francisco | 67 | 70 | | Field | 114 | 116 | | **Total** | **267** | **269** | [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including operating losses, single-product dependency, and challenges in commercialization and financing - Puma Biotechnology has a history of operating losses, with an **accumulated deficit of approximately $1.3 billion** as of December 31, 2020[206](index=206&type=chunk) - The company is currently a single-product company, with **NERLYNX being the sole source of product revenue**, making its success almost entirely dependent on NERLYNX's commercial performance[209](index=209&type=chunk) - Commercial success of NERLYNX is uncertain and depends on market penetration, physician and patient acceptance, and the ability to manage side effects like diarrhea[210](index=210&type=chunk) - The company may not be able to secure additional financing on favorable terms, which could force delays or termination of product development or commercialization efforts[212](index=212&type=chunk)[214](index=214&type=chunk) - The credit facility with Oxford Finance LLC places restrictions on business operations and financial flexibility, including **minimum revenue covenants**[215](index=215&type=chunk)[216](index=216&type=chunk) - Reliance on international third-party sub-licensees for development and commercialization of NERLYNX outside the US poses risks if these partners fail to meet obligations[211](index=211&type=chunk)[269](index=269&type=chunk) - NERLYNX or other drug candidates may cause undesirable side effects, which could delay or prevent regulatory approval or limit commercial potential[248](index=248&type=chunk) - The company has no experience in drug formulation or manufacturing and **relies exclusively on third parties**, exposing it to risks of supply disruption and quality issues[272](index=272&type=chunk)[274](index=274&type=chunk) - The **COVID-19 pandemic** has harmed and could continue to harm business operations, financial condition, and ongoing clinical trials[277](index=277&type=chunk)[279](index=279&type=chunk) - The company depends significantly on intellectual property licensed from Pfizer, and termination of this license would severely harm its business[307](index=307&type=chunk) - The company is subject to securities litigation, including the **Hsu v. Puma Biotechnology, Inc., et al. class action lawsuit**, which could result in substantial damages[325](index=325&type=chunk)[337](index=337&type=chunk) [Unresolved Staff Comments](index=61&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from SEC staff [Properties](index=61&type=section&id=Item%202.%20Properties) The company leases adequate office space in Los Angeles and South San Francisco for its corporate and operational needs - The company leases **65,656 sq ft** of office space in Los Angeles, CA (corporate headquarters) and **29,470 sq ft** in South San Francisco, CA[336](index=336&type=chunk) - Both leases terminate in March 2026, with the South San Francisco lease having a five-year extension option[336](index=336&type=chunk) [Legal Proceedings](index=61&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in several material legal proceedings, including class action lawsuits and a licensing dispute - In Hsu v. Puma Biotechnology, Inc., et al., a jury found liability on one of four alleged misstatements, with claimed damages ranging from **$24.8 million to $51.4 million**[337](index=337&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - In Eshelman v. Puma Biotechnology, Inc., et al., a jury found the company liable for defamation, awarding **$26.3 million** including interest, which the company has appealed[338](index=338&type=chunk)[123](index=123&type=chunk) - The company resolved a licensing dispute with CANbridge Biomed Limited, agreeing to pay a one-time termination fee of **$20.0 million** to regain all rights to NERLYNX in Greater China[339](index=339&type=chunk)[463](index=463&type=chunk)[123](index=123&type=chunk) - Puma Biotechnology filed a legal malpractice lawsuit against its former attorneys in the Eshelman case, seeking recovery of the awarded amount[340](index=340&type=chunk)[123](index=123&type=chunk) [Mine Safety Disclosure](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) The company has no mine safety disclosures as it is not subject to the relevant Dodd-Frank Act requirements Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=63&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under 'PBYI', and it has not paid dividends and does not plan to - Puma Biotechnology's common stock has been quoted on the NASDAQ Global Select Market under the symbol **'PBYI'** since January 3, 2017[342](index=342&type=chunk) - As of February 18, 2021, there were nine holders of record and approximately **14,500 additional owners** holding common stock in 'Street Name'[343](index=343&type=chunk) - The company has **never declared or paid cash dividends** and does not anticipate doing so in the foreseeable future; dividend payments are also restricted under its credit facility[344](index=344&type=chunk)[332](index=332&type=chunk) Cumulative Total Return Comparison (December 31, 2015 = $100) | | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | | :----------------------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Puma Biotechnology, Inc | 100.00 | 39.16 | 126.08 | 25.96 | 11.16 | 13.09 | | Nasdaq Biotechnology Index | 100.00 | 78.65 | 95.67 | 87.19 | 109.08 | 137.90 | | Nasdaq Composite Index | 100.00 | 108.87 | 141.13 | 137.12 | 187.44 | 271.64 | [Selected Financial Data](index=65&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents a five-year summary of the company's key consolidated financial data Consolidated Statement of Operations Data (in millions, except share and per share data) | | 2020 | 2019 | 2018 | 2017 | 2016 | | :----------------------------------- | :----- | :----- | :----- | :----- | :----- | | Product revenue, net | $196.7 | $211.6 | $200.5 | $26.2 | $— | | License revenue | 22.7 | 60.3 | 50.5 | 1.5 | — | | Royalty revenue | 5.7 | 0.4 | — | — | — | | Cost of sales | 39.4 | 36.8 | 34.6 | 5.6 | — | | Selling, general and administrative | 118.4 | 141.6 | 146.2 | 106.7 | 53.8 | | Research and development | 97.7 | 132.9 | 164.9 | 207.8 | 222.8 | | Operating loss | (30.4) | (39.0) | (94.7) | (292.4) | (276.6) | | Net loss | (60.0) | (75.6) | (113.6) | (292.0) | (276.0) | | Net loss per common share—basic and diluted | (1.52) | (1.95) | (2.99) | (7.85) | (8.29) | | Weighted-average common shares outstanding—basic and diluted | 39,576,107 | 38,768,653 | 37,942,411 | 37,169,678 | 33,295,114 | Consolidated Balance Sheet Data (in millions) | | As of December 31, 2020 | As of December 31, 2019 | As of December 31, 2018 | As of December 31, 2017 | As of December 31, 2016 | | :-------------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Total assets | $244.2 | $234.9 | $259.1 | $165.5 | $252.8 | | Total liabilities | 250.2 | 217.4 | 224.8 | 112.2 | 43.0 | | Total stockholders' (deficit) equity | (6.0) | 17.5 | 34.3 | 53.3 | 209.8 | Other Financial Data (in millions) | | Years Ended December 31, 2020 | Years Ended December 31, 2019 | Years Ended December 31, 2018 | Years Ended December 31, 2017 | Years Ended December 31, 2016 | | :--------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net cash provided by (used in) operating activities | $0.8 | $22.4 | $(24.1) | $(172.5) | $(141.7) | | Net cash provided by (used in) investing activities | 23.4 | 5.2 | (57.6) | (15.4) | 142.2 | | Net cash provided by (used in) financing activities | 0.1 | (67.1) | 108.5 | 75.1 | 162.4 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=66&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial performance for 2020 and 2019, including revenue, expenses, and liquidity - Total revenue decreased to **$225.1 million in 2020** from $272.3 million in 2019, primarily due to a decrease in product and license revenue[370](index=370&type=chunk) - Product revenue, net, decreased by **$14.9 million (7.0%)** in 2020, driven by a 21% volume decrease in NERLYNX bottles sold[371](index=371&type=chunk) - License revenue decreased by **$37.6 million** in 2020 due to lower upfront payments and performance-based milestones from sub-license agreements[372](index=372&type=chunk) - Royalty revenue increased by **$5.3 million** in 2020, reflecting increased product sales by sub-licensees in international territories[373](index=373&type=chunk) - Total operating costs and expenses decreased by **17.9% to $255.5 million** in 2020 from $311.3 million in 2019[374](index=374&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk) - Net loss for 2020 was **$60.0 million**, compared to $75.6 million in 2019[354](index=354&type=chunk)[388](index=388&type=chunk) - The company reported positive cash flows from operating activities of **$0.8 million in 2020**, down from $22.4 million in 2019[391](index=391&type=chunk) - As of December 31, 2020, the company had **$100.0 million in principal amounts outstanding** under its New Credit Facility, with an effective interest rate of 12.75%[402](index=402&type=chunk)[407](index=407&type=chunk) Revenue Breakdown (in millions) | Revenue Type | 2020 | 2019 | Change (2020 vs 2019) | | :------------- | :----- | :----- | :-------------------- | | Product revenue, net | $196.7 | $211.6 | $(14.9) | | License revenue | $22.7 | $60.3 | $(37.6) | | Royalty revenue | $5.7 | $0.4 | $5.3 | | **Total Revenue** | **$225.1** | **$272.3** | **$(47.2)** | Selling, General and Administrative Expenses (in thousands) | Category | 2020 | 2019 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Payroll and related costs | $41,313 | $41,415 | $(102) | -0.2% | | Professional fees and expenses | $42,935 | $49,060 | $(6,125) | -12.5% | | Travel and meetings | $4,726 | $10,987 | $(6,261) | -57.0% | | Facilities and equipment costs | $5,673 | $5,803 | $(130) | -2.2% | | Loss on impairment of asset | $— | $1,183 | $(1,183) | -100.0% | | Stock-based compensation | $17,778 | $27,892 | $(10,114) | -36.3% | | Credit loss expense | $1,000 | $— | $1,000 | 100.0% | | Other | $5,063 | $5,299 | $(236) | -4.5% | | **Total SG&A expenses** | **$118,488** | **$141,639** | **$(23,151)** | **-16.3%** | Research and Development Expenses (in thousands) | Category | 2020 | 2019 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Clinical trial expense | $31,428 | $51,545 | $(20,117) | -39.0% | | Internal R&D | $38,736 | $39,603 | $(867) | -2.2% | | Consultant and contractors | $8,689 | $12,268 | $(3,579) | -29.2% | | Stock-based compensation | $18,797 | $29,435 | $(10,638) | -36.1% | | **Total R&D expenses** | **$97,650** | **$132,851** | **$(35,201)** | **-26.5%** | Liquidity and Capital Resources (in thousands) | Category | December 31, 2020 | December 31, 2019 | | :------------------------------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $85,293 | $60,037 | | Marketable securities | $8,096 | $51,607 | | Working capital | $31,884 | $75,459 | | Stockholders' (deficit) equity | $(5,951) | $17,463 | | Net cash provided by (used in) operating activities | $773 | $22,376 | | Net cash provided by (used in) investing activities | $23,403 | $5,163 | | Net cash provided by (used in) financing activities | $68 | $(67,067) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $24,244 | $(39,528) | Contractual Obligations (as of December 31, 2020, in thousands) | Contractual Obligations | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | | :---------------------- | :---- | :--------------- | :---------- | :---------- | :---------------- | | Operating lease obligations | $29,776 | $5,365 | $11,114 | $13,297 | $— | | Debt obligations (principal and interest) | $126,509 | $23,194 | $78,214 | $25,101 | $— | | **Total** | **$156,285** | **$28,559** | **$89,328** | **$38,398** | **$—** | [Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure relates to interest rate changes affecting its cash equivalents and term loans - The company's primary market risk exposure is to **changes in interest rates**, affecting cash equivalents and outstanding term loans[440](index=440&type=chunk)[442](index=442&type=chunk) - Excess cash is invested in cash equivalents with objectives of liquidity and principal preservation[440](index=440&type=chunk) - A **10% increase in interest rates** is not expected to materially affect the realized value of cash equivalents[441](index=441&type=chunk) - As of December 31, 2020, outstanding term loans totaled **$100 million**, bearing variable interest, and a 100 basis point increase in interest rates would not have materially affected interest expense for 2020[442](index=442&type=chunk) [Financial Statements and Supplementary Data](index=79&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item refers to the consolidated financial statements and supplementary data presented elsewhere in the Annual Report [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=79&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with accountants on accounting and financial disclosure matters [Controls and Procedures](index=79&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2020 - As of December 31, 2020, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective**[446](index=446&type=chunk) - There were **no material changes** in internal control over financial reporting during the year ended December 31, 2020[447](index=447&type=chunk) - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2020, based on the COSO 2013 framework, and concluded it was effective[450](index=450&type=chunk) - KPMG LLP, the independent registered public accounting firm, issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2020[451](index=451&type=chunk)[453](index=453&type=chunk) [Other Information](index=81&type=section&id=Item%209B.%20Other%20Information) The company amended its agreement with Pierre Fabre to extend NERLYNX rights to Greater China and terminated its agreement with CANbridge - On February 24, 2021, Puma Biotechnology entered into the Second Pierre Fabre Amendment, extending **NERLYNX commercial rights to Greater China**[461](index=461&type=chunk)[649](index=649&type=chunk) - Under the Pierre Fabre amendment, the company will receive a **$50.0 million upfront payment** and up to $240.0 million in additional milestone payments, plus royalties[461](index=461&type=chunk)[649](index=649&type=chunk) - Concurrently, the company terminated its sub-license agreement with CANbridge BIOMED Limited for Greater China, paying a one-time termination fee of **$20.0 million** to regain all rights[463](index=463&type=chunk)[649](index=649&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=81&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This item incorporates by reference information from the company's 2021 Proxy Statement [Executive Compensation](index=81&type=section&id=Item%2011.%20Executive%20Compensation) This item incorporates by reference information regarding executive compensation from the company's 2021 Proxy Statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=81&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This item incorporates by reference information regarding security ownership from the company's 2021 Proxy Statement [Certain Relationships and Related Transactions, and Director Independence](index=81&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This item incorporates by reference information regarding related transactions and director independence from the company's 2021 Proxy Statement [Principal Accounting Fees and Services](index=81&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This item incorporates by reference information regarding accounting fees and services from the company's 2021 Proxy Statement Part IV [Exhibits, Financial Statement Schedules](index=82&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the Annual Report on Form 10-K - The report includes the Report of Independent Registered Public Accounting Firm, Consolidated Financial Statements, and Notes to Consolidated Financial Statements[471](index=471&type=chunk) - Consolidated Financial Statement Schedules have been omitted as they are not required or applicable[472](index=472&type=chunk) - An Exhibit Index is provided, listing various agreements, plans, and certifications, including the License Agreement with Pfizer Inc and the Loan and Security Agreement with Oxford Finance LLC[472](index=472&type=chunk)[476](index=476&type=chunk)[477](index=477&type=chunk)[478](index=478&type=chunk)[479](index=479&type=chunk) [Form 10-K Summary](index=83&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company states that no Form 10-K Summary is included in this report

Financial Data and Key Metrics Changes - Total revenue for Q4 2020 was reported at $52.6 million, which includes net U.S. NERLYNX sales and royalty fees from sublicensees [9] - Net U.S. NERLYNX sales were $50 million in Q4 2020, a slight increase from $49.3 million in Q3 2020, but a decrease from $58.7 million in Q4 2019 [9] - Royalty revenue for Q4 2020 was $2.6 million, compared to $200,000 in Q4 2019 [9] - The company reported a GAAP net loss of $15 million or $0.38 per share for Q4 2020, an improvement from a GAAP net loss of $31.5 million in Q3 2020 [41] - Non-GAAP net loss for Q4 2020 was $5.5 million or $0.14 per share [42] Business Line Data and Key Metrics Changes - NERLYNX sales gross revenue was $60.1 million in Q4 2020, up from $58.6 million in Q3 2020 [43] - Approximately 79% of NERLYNX sales were through the specialty pharmacy channel, with 21% through the specialty distributor channel [25] - The number of NERLYNX bottles sold in Q4 2020 was 3,585, a slight decrease from 3,611 in Q3 2020 [30] Market Data and Key Metrics Changes - The company anticipates that NERLYNX net sales for fiscal year 2021 will be in the range of $205 million to $210 million [45] - The gross-to-net adjustment for Q4 2020 was approximately 16.8%, an increase from 15.8% in Q3 2020 [44] - The company expects Q1 2021 NERLYNX net sales to be in the range of $42 million to $43 million [47] Company Strategy and Development Direction - The company is focusing on the extended adjuvant setting for NERLYNX, aiming to prevent patients from becoming metastatic, as this market is significantly underpenetrated [24][59] - Puma has extended its licensing agreement with Pierre Fabre to include commercialization rights for NERLYNX in Greater China, with an upfront payment of $50 million and potential milestone payments of up to $240 million [19][21] - The company is adapting to a virtual environment due to the COVID-19 pandemic and is hopeful that changes to its commercial infrastructure will positively impact NERLYNX sales growth [52][53] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic on achieving sales growth and emphasized the need for improvement in NERLYNX sales [52] - The company remains committed to addressing the unmet needs of women battling breast cancer and is focused on finding more effective ways to assist these patients [54] - Management expressed optimism about the second half of 2021, anticipating a more favorable commercial promotional environment as vaccination efforts progress [67] Other Important Information - The company reported cash burn of $15.6 million in Q4 2020, which included a $10.1 million milestone payment to Pfizer [50] - As of the end of Q4 2020, the company had $93.4 million in cash, cash equivalents, and marketable securities [51] Q&A Session Summary Question: Next steps on ongoing litigation regarding T790M patent in the EU and feedback on competition in the metastatic setting - Management indicated that the T790M patent is a sensitive legal matter and could not provide much detail. They noted that while the metastatic setting is competitive, their focus remains on the extended adjuvant setting where they see less competition [56][58] Question: Bar for success in EGFR exon 18 lung cancer and guidance assumptions for NERLYNX sales in 2021 - Management stated that the interim data showed a 40% response rate for EGFR exon 18, which compares favorably to existing data. They also noted that guidance for NERLYNX sales in 2021 considers the impact of the pandemic, with expectations for growth in the second half of the year as conditions improve [64][67] Question: Accelerated approval for HER2-mutant hormone receptor positive breast cancer cohort of the SUMMIT trial - Management explained that they are focusing on isolating the contribution of neratinib in combination therapies and are hopeful for a favorable response from the FDA based on the data [70][76] Question: Market for neratinib in Asia and go-to-market strategy for additional geographies - Management expressed optimism about the partnership with Pierre Fabre in Asia, highlighting their existing commercial infrastructure and plans for a launch in China. They also mentioned ongoing partnerships across various regions and potential for further expansions [81][84] Question: Current revenue breakdown from extended adjuvant versus metastatic settings - Management indicated that approximately 6% of new patient starts are in the metastatic setting, with expectations for this to remain consistent as the focus is on the extended adjuvant market [98]