Puma Biotechnology Analysts Are Getting Nervous, But Still Going Long

Puma Biotechnology Inc PBYI shares are down more than 26 percent on Tuesday and 29 since Monday's open.

The stock's plunge comes on the back of news that the biotechnology company has plans to delay its NDA (New Drug Application) filing after meeting with the FDA (U.S. Food and Drug Administration). The meeting between Puma and the FDA involved talks regarding Neratinib, a drug slated for treatment of extended adjuvant breast cancer.

However, according to the Business Wire press release, "[T]he FDA requested that Puma amend the current statistical analysis plan for the ExteNET trial (the extended adjuvant treatment for HER2-positive early stage breast cancer) to incorporate the FDA's recommendations with regard to rules for censoring the data for recurrent disease events or death."

"The FDA's requested approach was a sensitivity analysis used in the ExteNET trial's original statistical analysis plan but will now be the primary analysis approach used in the trial's updated statistical analysis plan," the press release read. "In order to accommodate this change, Puma expects to delay filing its NDA for neratinib for the treatment […] until mid-2016."

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Analysts React

JPMorgan and Credit Suisse both released notes this week, updating their analysis on Puma.

Credit Suisse: Credit Suisse maintains its Outperform rating on Puma, but has cut the target price from a previous $69 to the current $50.

"Yesterday, PBYI announced neratinib's ExteNET NDA filing is delayed to mid-2016 (from Q1:16) to accommodate a data censoring rule requested by the FDA," Credit Suisse's research analyst Kennan MacKay stated. "We are disappointed by the timeline delay, and our conversations with mgmt. suggest this was following a ‘Type B' FDA meeting last week, which we see as adding regulatory risk."

The analyst continued, "Despite this, we continue to see neratinib as approvable in the extended-adjuvant setting, and see a role in patients with higher risk disease and superior responses […]This results in our new DCF valuation of $50."

JPMorgan: JPMorgan likewise maintains its Overweight rating on Puma, but decreased the associated price target from a previous $105 to the current $89.

JPMorgan analysts, led by Cory Kasimov, stated that the delay "importantly, doesn't materially alter the drug's treatment effect."

While Credit Suisse mentioned increased risks, Kasimov pointed out that "a number of the hazard ratios and p-values are numerically improved" by the revised statistical analysis approach.

"While another delay is certainly not the headline we're looking for from PBYI in this current tape, taking care of the request now should theoretically derisk the NDA acceptance in our eyes," Kasimov explained.

"We expect the market to overreact to this headline (down 10%+ after hours) as we see investor patience wearing thin; however, whether or not this is a true overreaction will depend on whether or not neratinib is ultimately approved," Kasimov concluded.

At time of writing, Puma was down roughly 26 percent at $26.18.