Puma Biotechnology(PBYI) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and controls and procedures Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements show a shift to net income and positive operating cash flow for the six months ended June 30, 2025 Condensed Consolidated Balance Sheets The balance sheets show a decrease in total assets and liabilities, with an increase in stockholders' equity as of June 30, 2025 | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----- | :--------------------------- | :------------------------------- | | Total Assets | $194.9 | $213.3 | | Total Liabilities | $90.2 | $121.2 | | Total Stockholders' Equity | $104.7 | $92.1 | - Cash and cash equivalents decreased from $69.2 million to $54.7 million, while marketable securities increased from $31.7 million to $41.4 million[13] Condensed Consolidated Statements of Operations The statements of operations show increased revenue and a shift from operating loss to income for the three and six months ended June 30, 2025 | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total Revenue | $52.4 | $47.1 | $98.4 | $90.8 | | Income (loss) from operations | $6.6 | $(2.2) | $10.6 | $(4.5) | | Net Income (loss) | $5.9 | $(4.5) | $8.8 | $(9.3) | | Basic EPS | $0.12 | $(0.09) | $0.18 | $(0.19) | | Diluted EPS | $0.12 | $(0.09) | $0.18 | $(0.19) | - Total revenue increased by 11.4% for the three months and 8.4% for the six months ended June 30, 2025, compared to the same periods in 2024[15] - Operating costs and expenses decreased by 7.0% for the three months and 7.9% for the six months ended June 30, 2025, compared to the same periods in 2024[15] Condensed Consolidated Statements of Comprehensive Income The statements show a positive shift in comprehensive income for the three and six months ended June 30, 2025, compared to prior year losses | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net income (loss) | $5.9 | $(4.5) | $8.8 | $(9.3) | | Unrealized loss on available-for-sale securities, net of tax | $(0.003) | $(0.006) | $(0.02) | $(0.028) | | Comprehensive income (loss) | $5.9 | $(4.5) | $8.8 | $(9.4) | Condensed Consolidated Statements of Stockholders' Equity The statements detail changes in stockholders' equity, reflecting positive contributions from net income in 2025 compared to prior year losses | Metric | June 30, 2025 (in millions) | June 30, 2024 (in millions) | | :----- | :--------------------------- | :--------------------------- | | Total Stockholders' Equity (3 Months) | $104.7 | $48.5 | | Total Stockholders' Equity (6 Months) | $104.7 | $48.5 | | Additional Paid-in Capital (6 Months) | $1,410.8 | $1,403.0 | | Accumulated Deficit (6 Months) | $(1,306.1) | $(1,354.5) | - Net income of $5.9 million for the three months and $8.8 million for the six months ended June 30, 2025, contributed positively to equity, contrasting with net losses in the prior year[19][21] Condensed Consolidated Statements of Cash Flows The cash flow statements show increased cash from operating activities and a significant rise in cash used for financing activities in 2025 | Activity | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :------- | :------------------------------------------ | :------------------------------------------ | | Operating activities | $17.7 | $12.3 | | Investing activities | $(9.7) | $(18.4) | | Financing activities | $(22.5) | $(11.3) | | Net decrease in cash, cash equivalents and restricted cash | $(14.6) | $(17.4) | | Cash, cash equivalents and restricted cash, end of period | $56.8 | $69.2 | - Net cash provided by operating activities increased by $5.4 million, or 44.2%, for the six months ended June 30, 2025, compared to the same period in 2024[24] - Cash used in financing activities increased significantly due to higher debt payments in 2025[24] Note 1—Business and Basis of Presentation This note outlines the company's core business, financial performance highlights, and management's assessment of liquidity for the upcoming year - The Company commercializes NERLYNX® (neratinib) for HER2-positive breast cancer and is developing alisertib for various cancer types[25][31] - The Company reported net income of approximately $8.8 million and cash provided by operations of approximately $17.7 million for the six months ended June 30, 2025[32] - Management believes existing cash, cash equivalents, marketable securities ($96.0 million total at June 30, 2025), product sales, and sub-license payments are sufficient to meet operating cash needs for at least one year[32][33] Note 2—Significant Accounting Policies This note details the company's key accounting policies, including segment reporting, revenue recognition, and the evaluation of new accounting standards - The Company operates as a single reporting segment, focusing on the development and commercialization of cancer care products, with NERLYNX® generating global product, license, and royalty revenue[38] - Revenue recognition for product sales is recorded net of variable consideration, including trade discounts, product returns, chargebacks, government and payor rebates, and patient assistance programs[53] - The Company is evaluating the impact of new FASB ASUs on income tax disclosures (ASU 2023-09, effective after Dec 15, 2024) and expense disaggregation (ASU 2024-03, effective after Dec 15, 2026)[110][111] Note 3—Accounts Receivable, Net This note details the composition of net accounts receivable and the recorded recovery to the provision for credit losses | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----- | :--------------------------- | :------------------------------- | | Trade accounts receivable | $22.5 | $26.4 | | Royalty revenue receivable | $3.6 | $6.0 | | Total accounts receivable, net | $25.9 | $32.0 | - A recovery to the provision for credit loss of $0.3 million and $0.2 million was recorded for the three months ended June 30, 2025 and 2024, respectively, and $0.1 million for each of the six months ended June 30, 2025 and 2024[113] Note 4—Prepaid Expenses and Other This note outlines the changes in current and long-term prepaid expenses, highlighting increases in prepaid taxes and other long-term amounts | Category | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------- | :--------------------------- | :------------------------------- | | Current Prepaid Expenses | $3.9 | $5.9 | | Long-term Prepaid Expenses | $1.8 | $0.3 | | Totals | $5.7 | $6.2 | - Prepaid Taxes increased significantly from $21 thousand to $722 thousand in current prepaid expenses[114] - Other long-term prepaid amounts increased from $119 thousand to $1.7 million, primarily for commercial copay support programs[114] Note 5—Leases This note details lease commitments, including a significant office lease amendment and future minimum lease payment obligations - The Los Angeles office lease was amended in July 2025, extending the term to August 31, 2031, with total future lease payments of approximately $6.6 million and the return of a $1.0 million letter of credit[116] | Metric | 6 Months Ended June 30, 2025 (in millions) | | :----- | :------------------------------------------ | | Operating cash flows used for operating leases | $3.1 | | Weighted-average remaining lease term | 0.8 years | | Weighted average discount rate | 10.9% | | Future Minimum Lease Payments (in millions) | Amount | | :----------------------------------------- | :----- | | 2025 | $3.0 | | 2026 | $1.5 | | Total minimum lease payments | $4.5 | Note 6—Property and Equipment, Net This note presents the net property and equipment balances and associated depreciation expenses for the reported periods | Asset Category | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------------- | :--------------------------- | :------------------------------- | | Total property and equipment | $8.5 | $8.4 | | Less: accumulated depreciation | $(8.1) | $(7.9) | | Property and equipment, net | $0.4 | $0.5 | - Depreciation expense was $0.1 million for the three months and $0.2 million for the six months ended June 30, 2025 and 2024, respectively[124] Note 7—Intangible Assets, Net This note details the net intangible assets, including acquired rights, accumulated amortization, and projected future amortization expenses | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----- | :--------------------------- | :------------------------------- | | Acquired and in-licensed rights | $102.5 | $102.5 | | Less: accumulated amortization | $(56.2) | $(51.4) | | Total intangible assets, net | $46.3 | $51.1 | - Amortization expense was $2.4 million for the three months and $4.9 million for the six months ended June 30, 2025 and 2024, respectively[125][126] - Estimated future amortization expense is approximately $4.9 million for the remainder of 2025, $9.7 million for each year from 2026-2029, and $2.4 million for 2030[126] Note 8—Accrued Expenses This note provides a breakdown of accrued expenses, highlighting changes in royalties, CRO services, variable consideration, bonus, and compensation | Category | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------- | :--------------------------- | :------------------------------- | | Accrued royalties | $8.8 | $10.2 | | Accrued CRO services | $1.7 | $1.0 | | Accrued variable consideration | $8.4 | $10.8 | | Accrued bonus | $3.4 | $8.0 | | Accrued compensation | $5.8 | $4.4 | | Total current accrued expenses | $31.8 | $36.9 | - Accrued variable consideration and accrued bonus decreased significantly, while accrued compensation and CRO services increased[127] Note 9—Debt This note details the company's debt structure, including the Athyrium Notes' terms, interest rates, and compliance with covenants | Metric | June 30, 2025 (in millions) | | :----- | :--------------------------- | | Total debt, inclusive of exit payment | $102.0 | | Current portion of long-term debt | $34.0 | | Long-term debt, net | $10.9 | | Principal balance outstanding (Athyrium Notes) | $44.5 | | Exit fees (Athyrium Notes) | $0.9 | - The Athyrium Notes bear interest at an annual rate of 8.00% plus a SOFR-based component, with an effective interest rate of 12.99% as of June 30, 2025[131] - The Company began quarterly principal payments of approximately $11.1 million (plus 2.0% exit payment) in Q2 2024 and was in compliance with all covenants as of June 30, 2025[131][133] Note 10—Stockholders' Equity This note outlines the authorized common stock, stock-based compensation expenses, and a significant CEO stock warrant - The Company has 100,000,000 shares of common stock authorized for issuance[136] - Stock-based compensation expense totaled $1.6 million for the three months and $3.7 million for the six months ended June 30, 2025[141] - A warrant allows the CEO to acquire 2,116,250 shares at $16 per share until October 4, 2026, to maintain at least 20% ownership[137][138] Note 11—401(k) Savings Plan This note describes the company's 401(k) matching policy and the employer contributions for the reported period - The Company matches 100% of the first 3% of wages deferred and 50% of the next 2% for participating employees in its 401(k) plan[144] - Employer matching contributions were approximately $1.0 million for the six months ended June 30, 2025, an increase from $0.9 million in the prior year[144] Note 12—Commitments and Contingencies This note details the company's contractual obligations, license agreements, and ongoing legal and patent-related proceedings - Contractual obligations include agreements with CMOs and CROs, with variable costs and milestones that are difficult to predict[146] - The Company has license agreements with Pfizer for NERLYNX and Takeda for alisertib, involving milestone payments and royalties[147][150] - The Company is involved in a legal malpractice suit and several patent-related proceedings, including the AstraZeneca litigation (US), multiple generic challenges in China (Acebright, Aosaikang, Convalife, Kelun, Demai), and a European patent opposition (Hexal)[152][154][156][159][162][165][167][168] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Puma Biotechnology's financial performance, liquidity, and critical accounting policies, highlighting increased revenue and net income Overview This overview introduces Puma Biotechnology's focus on cancer care, its key commercial product NERLYNX, and the development of alisertib - Puma Biotechnology develops and commercializes innovative products for cancer care, with NERLYNX as its primary commercial product for HER2-positive breast cancer[171][172] - The Company in-licensed alisertib from Takeda in 2022 and initiated Phase II trials for small cell lung cancer (ALISCA™ -Lung1) in February 2024 and hormone receptor-positive breast cancer (ALISCA™ -Breast1) in November 2024[174] - NERLYNX is approved in over 40 countries outside the US and commercialized through exclusive sub-license agreements[173] Critical Accounting Policies This section confirms no material changes to critical accounting policies and estimates during the six months ended June 30, 2025 - No material changes to critical accounting policies and estimates occurred during the six months ended June 30, 2025, compared to the December 31, 2024, Annual Report on Form 10-K[178] Summary of Income and Expenses This section defines revenue recognition policies, outlines components of cost of sales, SG&A, and R&D expenses, and notes potential tax law impacts - Product revenue is net of variable consideration (discounts, returns, rebates), while license revenue is from satisfied performance obligations in sub-license agreements, and royalty revenue is from sub-licensee sales[179][181][182] - Cost of sales includes manufacturing, freight, Pfizer royalties, and amortization of milestone payments. SG&A covers payroll, professional fees, and general corporate expenses. R&D includes CRO fees, consultants, and personnel costs[183][184][185] - The Company does not expect tariffs to materially impact product costs or results of operations but is evaluating the 'One Big Beautiful Bill' for potential tax law changes[186][187] Results of Operations This section analyzes the company's revenue, selling, general and administrative, and research and development expenses for the reported periods - Total revenue increased by $5.4 million (11.4%) for the three months and $7.6 million (8.4%) for the six months ended June 30, 2025, compared to 2024[189][202] - Selling, general and administrative expenses decreased by $6.9 million (27.7%) for the three months and $11.1 million (23.7%) for the six months, primarily due to lower legal fees from the AstraZeneca litigation[193][196][206][207] - Research and development expenses increased by $1.8 million (13.4%) for the three months and $2.1 million (7.7%) for the six months, mainly due to increased alisertib study activity[195][197][209][214] Liquidity and Capital Resources This section assesses the company's liquidity and capital resources, including cash balances, working capital, debt, and future funding sufficiency | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----- | :--------------------------- | :------------------------------- | | Cash and cash equivalents | $54.7 | $69.2 | | Marketable securities | $41.4 | $31.7 | | Working capital | $57.5 | $51.5 | | Current portion of long-term debt | $34.0 | $45.3 | | Long-term debt | $10.9 | $21.7 | | Stockholders' equity | $104.7 | $92.1 | | Cash Flow Activity | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :----------------- | :------------------------------------------ | :------------------------------------------ | | Operating activities | $17.7 | $12.3 | | Investing activities | $(9.7) | $(18.4) | | Financing activities | $(22.5) | $(11.3) | | Net decrease in cash, cash equivalents and restricted cash | $(14.6) | $(17.4) | - The Company believes its existing cash, cash equivalents, marketable securities ($96.0 million total at June 30, 2025), and future product sales/sub-license payments are sufficient for operating cash and capital needs for at least one year[229] Non-GAAP Financial Measures This section explains the use of non-GAAP financial measures, primarily by adjusting for stock-based compensation to highlight operational performance - Non-GAAP financial measures are used to enhance understanding of financial performance, focusing on operational performance by excluding stock-based compensation[232] - Stock-based compensation represented approximately 4.9% and 5.6% of operating expenses (excluding cost of sales) for the three and six months ended June 30, 2025, respectively[232] | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | GAAP net income (loss) | $5.9 | $(4.5) | $8.8 | $(9.3) | | Stock-based compensation (SG&A) | $1.0 | $1.4 | $2.2 | $2.9 | | Stock-based compensation (R&D) | $0.6 | $0.6 | $1.4 | $1.6 | | Non-GAAP adjusted net income (loss) | $7.5 | $(2.5) | $12.5 | $(4.9) | | GAAP basic EPS | $0.12 | $(0.09) | $0.18 | $(0.19) | | Non-GAAP adjusted basic EPS | $0.15 | $(0.05) | $0.25 | $(0.10) | Off-Balance Sheet Arrangements This section confirms the absence of off-balance sheet arrangements as defined by SEC regulations - The Company has no off-balance sheet arrangements as defined by SEC regulations[238] Contractual Obligations This section states that no material changes to contractual obligations have occurred since the prior annual report - No material changes to contractual obligations and commitments have occurred since the December 31, 2024, Annual Report on Form 10-K[239] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risk from interest rate fluctuations, impacting variable-rate debt and cash equivalents, with specific sensitivity to Athyrium Notes - The Company's investment activities prioritize liquidity and principal preservation, with excess cash invested primarily in money market instruments[240] - A 10% increase in interest rates is not expected to materially affect the realized value of cash equivalents due to their short-term maturities[241] - A 100 basis point increase in interest rates would increase interest expense on the $44.5 million outstanding Athyrium Notes by $0.4 million for the quarter ended June 30, 2025[242] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[244] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[245] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, exhibits, and signatures Item 1. Legal Proceedings The company is engaged in a legal malpractice suit and various patent-related proceedings, including US, Chinese, and European litigations Legal Malpractice Suit This note details the re-filed legal malpractice lawsuit against former attorneys, its dismissal, and the ongoing appeal - The Company re-filed a legal malpractice lawsuit against former attorneys in June 2023, which was dismissed by the Superior Court in March 2024 and is currently under appeal[153][248] Patent-Related Proceedings This note outlines key patent litigations, including the AstraZeneca case, multiple Chinese generic challenges, and a European patent opposition - In the AstraZeneca litigation, a jury awarded Wyeth $107.5 million for Tagrisso® infringement, but the District Court later granted AstraZeneca's motion for judgment as a matter of law, invalidating certain patent claims. Wyeth has appealed this ruling[154][249] - Multiple Chinese generic companies (Acebright, Aosaikang, Convalife, Kelun, Demai) have filed ANDAs for generic NERLYNX, leading to ongoing patent infringement lawsuits and administrative actions in China[156][159][162][165][167][251][254][257][260][262] - A European patent opposition against EP3000467 (NERLYNX) was upheld as amended after the first instance hearing, but Hexal, Generics [UK] Limited, and Wyeth have filed appeals[168][263] Item 1A. Risk Factors No material changes to risk factors have occurred since the last annual report, though new risks may emerge - No material changes to risk factors have occurred since the December 31, 2024, Annual Report on Form 10-K[265] - The Company acknowledges that additional risks and uncertainties, currently deemed immaterial or unknown, could affect future results[265] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales or purchases of equity securities by the issuer or affiliates occurred during the period - No recent sales of unregistered securities occurred[266] - No purchases of equity securities by the issuer or affiliated purchasers occurred[267] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities occurred[268] Item 4. Mine Safety Disclosures This item regarding mine safety disclosures is not applicable to the company - Mine Safety Disclosures are not applicable[269] Item 5. Other Information No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[270] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, encompassing corporate documents, lease amendments, certifications, and XBRL files - Exhibits include the Second Amended and Restated Certificate of Incorporation, Fifth Amended and Restated Bylaws, Sixth Amendment to Office Lease, and certifications from principal executive and financial officers[272] - XBRL instance document, taxonomy extension schema, calculation, definition, and label linkbase documents, and cover page interactive data file are also included[272] Signatures The report was officially signed by the President and CEO, and the CFO on August 7, 2025 - The report was signed by Alan H. Auerbach (President and CEO) and Maximo F. Nougues (CFO) on August 7, 2025[276]