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Puma Biotechnology Reports Second Quarter 2018 Financial Results

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Puma Biotechnology, Inc. (NASDAQ:PBYI), a biopharmaceutical company,
announced financial results for the second quarter ended June 30, 2018.
Unless otherwise stated, all comparisons are for the second quarter 2018
compared to the second quarter 2017.

On July 17, 2017, Puma Biotechnology received approval from the U.S.
Food and Drug Administration (FDA) for NERLYNX® (neratinib) for the
treatment of early stage HER2-positive breast cancer following adjuvant
trastuzumab-based therapy, and the Company began shipment to wholesalers
at the end of July 2017. Prior to the launch of NERLYNX the Company had
no product revenue. Net product revenue from sales of NERLYNX in the
second quarter of 2018 amounted to $50.8 million, compared to net
product revenue of $36.0 million and $20.1 million in the first quarter
of 2018 and fourth quarter of 2017, respectively.

Based on accounting principles generally accepted in the United States
(GAAP), Puma reported a net loss applicable to common stock of $44.3
million, or $1.17 per share, for the second quarter of 2018, compared to
a net loss applicable to common stock of $77.8 million, or $2.10 per
share, for the second quarter of 2017. Net loss applicable to common
stock for the first six months of 2018 was $68.7 million, or $1.82 per
share, compared to $150.7 million, or $4.08 per share, for the first six
months of 2017.

Non-GAAP adjusted net loss was $22.2 million, or $0.59 per share, for
the second quarter of 2018, compared to non-GAAP adjusted net loss of
$50.9 million, or $1.38 per share, for the second quarter of 2017.
Non-GAAP adjusted net loss for the first six months of 2018 was $21.2
million, or $0.56 per share, compared to non-GAAP adjusted net loss of
$94.0 million, or $2.54 per share, for the first six months of 2017.
Non-GAAP adjusted net loss excludes stock-based compensation expense,
which represents a significant portion of overall expense and has no
impact on the cash position of the Company. For a reconciliation of GAAP
net loss to non-GAAP adjusted net loss and GAAP net loss per share to
non-GAAP adjusted net loss per share, please see the financial tables at
the end of this news release.

Net cash used in operating activities for the second quarter of 2018 was
$17.6 million. Net cash used in operating activities for the first six
months of 2018 was $23.9 million. At June 30, 2018, Puma had cash and
cash equivalents of $95.9 million and marketable securities of $38.6
million, compared to cash and cash equivalents of $81.7 million at
December 31, 2017.

"In the second quarter of 2018, we saw strong commercial progress for
Puma," said Alan H. Auerbach, Chairman, Chief Executive Officer and
President of Puma. "We continued to grow NERLYNX sales in the United
States, with net sales of NERLYNX rising approximately 41% from the 2018
first quarter. We were also pleased that the Committee for Medicinal
Products for Human Use (CHMP) adopted a positive opinion recommending
marketing authorization for NERLYNX for the extended adjuvant treatment
of adult patients with early stage hormone receptor positive
HER2-overexpressed/amplified breast cancer and who are less than one
year from the completion of prior adjuvant trastuzumab based therapy.
The CHMP recommendation will now be reviewed by the European Commission
(EC), which has the authority to approve medicines for the European
Union (EU)."

Mr. Auerbach added, "We anticipate the following key milestones over the
next 12 months: (i) in the third quarter of 2018, a decision by the
European Commission (EC) regarding the Marketing Authorisation
Application for neratinib; (ii) in the second half of 2018 or first half
of 2019, reporting data from the Phase III NALA trial in third-line
metastatic breast cancer patients; (iii) in the second half of 2018 and
first half of 2019, submitting for regulatory approval of NERLYNX for
the extended adjuvant HER2-positive early stage breast cancer indication
in additional countries; (iv) in the fourth quarter of 2018, reporting
additional data from the Phase II CONTROL trial; and (v) in the fourth
quarter of 2018 and first half of 2019, reporting additional data from
the Phase II SUMMIT trial."

Revenue

Total revenue consists of net product revenue from sales of NERLYNX,
Puma's first and only commercial product to date, and license revenue.
The FDA approved NERLYNX for commercial sale in the United States in
July 2017 and Puma commenced shipment to wholesalers in late July. For
the second quarter of 2018, total revenue was $50.8 million, all of
which was net product revenue. For the first six months of 2018, total
revenue was $117.3 million, of which $86.8 million was net product
revenue and $30.5 million was license revenue received from Puma's
sub-licensees.

Operating Costs and Expenses

Operating costs and expenses were $92.2 million for the second quarter
of 2018, compared to $78.2 million for the second quarter of 2017.
Operating costs and expenses for the first six months of 2018 were
$182.1 million, compared to $151.4 million for the first six months of
2017.

Cost of Sales:

Cost of sales was $8.8 million for the second quarter of 2018 and $15.2
million for the first six months of 2018. The Company had no product
sales prior to the third quarter of 2017.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses were $40.1 million for the
second quarter of 2018, compared to $24.9 million for the second quarter
of 2017. SG&A expenses for the first six months of 2018 were $76.7
million, compared to $43.3 million for the first six months of 2017.
This approximately $33.4 million increase was attributable to an
increase of approximately $8.5 million in external expenses, such as
marketing, commercialization support and commercial strategy.
Additionally, internal expenses increased approximately $22.0 million,
primarily due to the hiring of a salesforce for the commercialization of
NERLYNX in the United States. Finally, employee stock-based compensation
increased approximately $2.9 million due to the hiring of the salesforce
in conjunction with the NERLYNX commercial launch. Puma expects SG&A
expenses in 2018 and into 2019 to remain higher than in 2017 as it
launches NERLYNX commercially in the United States and other territories.

Research and Development Expenses:

Research and development (R&D) expenses were $43.3 million for the
second quarter of 2018, compared to $53.3 million for the second quarter
of 2017. R&D expenses for the first six months of 2018 were $90.2
million, compared to $108.1 million for the first six months of 2017.
The $17.9 million year-to-date decrease resulted primarily from a
decrease of approximately $12.1 million for stock-based compensation and
a decrease of approximately $9.0 million for clinical trial expenses.
This was partially offset by an increase of approximately $3.2 million
in other expenses, such as additional personnel needed to support
medical affairs and quality assurance. We expect R&D expenses in 2018 to
continue to decline slightly when compared with R&D expenses in 2017
based on a decline in clinical trial activities as existing trials
continue to wind down.

About Puma Biotechnology

Puma Biotechnology, Inc. is a biopharmaceutical company with a focus on
the development and commercialization of innovative products to enhance
cancer care. The Company in-licenses the global development and
commercialization rights to three drug candidates — PB272 (neratinib,
oral), PB272 (neratinib, intravenous) and PB357. Neratinib, oral was
approved by the U.S. Food and Drug Administration in July 2017 for the
extended adjuvant treatment of adult patients with early stage
HER2-overexpressed/amplified breast cancer, following adjuvant
trastuzumab-based therapy, and is marketed in the United States as
NERLYNX® (neratinib) tablets. NERLYNX is a registered trademark of Puma
Biotechnology, Inc.

IMPORTANT SAFETY INFORMATION

NERLYNX ® (neratinib) tablets, for oral use

INDICATIONS AND USAGE: NERLYNX is a kinase inhibitor indicated
for the extended adjuvant treatment of adult patients with early-stage
HER2 overexpressed/amplified breast cancer, to follow adjuvant
trastuzumab-based therapy.

CONTRAINDICATIONS: None

WARNINGS AND PRECAUTIONS:

  • Diarrhea: Aggressively manage diarrhea occurring despite
    recommended prophylaxis with additional antidiarrheals, fluids, and
    electrolytes as clinically indicated. Withhold NERLYNX in patients
    experiencing severe and/or persistent diarrhea. Permanently
    discontinue NERLYNX in patients experiencing Grade 4 diarrhea or Grade
    ≥ 2 diarrhea that occurs after maximal dose reduction.
  • Hepatotoxicity: Monitor liver function tests monthly for the
    first 3 months of treatment, then every 3 months while on treatment
    and as clinically indicated. Withhold NERLYNX in patients experiencing
    Grade 3 liver abnormalities and permanently discontinue NERLYNX in
    patients experiencing Grade 4 liver abnormalities.
  • Embryo-Fetal Toxicity: NERLYNX can cause fetal harm. Advise
    patients of potential risk to a fetus and to use effective
    contraception.

ADVERSE REACTIONS: The most common adverse reactions (≥ 5%) were
diarrhea, nausea, abdominal pain, fatigue, vomiting, rash, stomatitis,
decreased appetite, muscle spasms, dyspepsia, AST or ALT increase, nail
disorder, dry skin, abdominal distention, epistaxis, weight decreased
and urinary tract infection.

To report SUSPECTED ADVERSE REACTIONS, contact Puma Biotechnology,
Inc. at 1-844-NERLYNX (1-844-637-5969) and
www.NERLYNX.com
or FDA at 1-800-FDA-1088 or
www.fda.gov/medwatch
.

DRUG INTERACTIONS:

  • Gastric acid reducing agents: Avoid concomitant use with proton pump
    inhibitors (PPI) and H2-receptor antagonists. Separate NERLYNX by 3
    hours after antacid dosing.
  • Strong or moderate CYP3A4 inhibitors: Avoid concomitant use.
  • Strong or moderate CYP3A4 inducers: Avoid concomitant use.
  • P-glycoprotein (P-gp) substrates: Monitor for adverse reactions of
    narrow therapeutic agents that are P-gp substrates when used
    concomitantly with NERLYNX.

USE IN SPECIFIC POPULATIONS:

  • Lactation: Advise women not to breastfeed.

Please see Full
Prescribing Information
for additional safety information.

The recommended dose of NERLYNX is 240 mg (six 40 mg tablets) given
orally once daily with food, continuously for one year. Antidiarrheal
prophylaxis should be initiated with the first dose of NERLYNX and
continued during the first 2 months (56 days) of treatment and as needed
thereafter.

To help ensure patients have access to NERLYNX, Puma has implemented the
Puma Patient Lynx support program to assist patients and healthcare
providers with reimbursement support and referrals to resources that can
help with financial assistance. More information on the Puma Patient
Lynx program can be found at www.NERLYNX.com
or 1-855-816-5421.

Further information about Puma Biotechnology can be found at www.pumabiotechnology.com.

Forward-Looking Statements

This press release contains forward-looking statements, including
statements regarding the benefits of NERLYNX and neratinib, the progress
and expected timing of the Company's clinical trials, the announcement
of data relative to those trials and the timing for anticipated
regulatory approvals. All forward-looking statements involve risks and
uncertainties that could cause the Company's actual results to differ
materially from the anticipated results and expectations expressed in
these forward-looking statements. These statements are based on current
expectations, forecasts and assumptions, and actual outcomes and results
could differ materially from these statements due to a number of
factors, which include, but are not limited to, the risk factors
disclosed in the periodic and current reports filed by the Company with
the Securities and Exchange Commission from time to time, including the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2018. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company assumes no obligation to update these forward-looking
statements, except as required by law.

PUMA BIOTECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions except share and per share data)
         
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
  2018     2017     2018     2017  
 
Product revenue, net $ 50.8 $ $ 86.8 $
License revenue           30.5      
Total revenue 50.8 117.3
Operating costs and expenses:
Cost of sales 8.8 15.2
Selling, general and administrative 40.1 24.9 76.7 43.3
Research and development   43.3     53.3     90.2     108.1  
Totals   92.2     78.2     182.1     151.4  
Loss from operations   (41.4 )   (78.2 )   (64.8 )   (151.4 )
Other income (expenses):
Interest income 0.3 0.4 0.5 0.7
Interest expense (2.6 ) (3.7 )
Other expense   (0.6 )       (0.7 )    
Totals   (2.9 )   0.4     (3.9 )   0.7  
Net loss $ (44.3 ) $ (77.8 ) $ (68.7 ) $ (150.7 )
Net loss per common share—basic and diluted $ (1.17 ) $ (2.10 ) $ (1.82 ) $ (4.08 )
Weighted-average common shares outstanding—basic and diluted   37,819,767     36,992,017     37,759,729     36,961,760  
 
PUMA BIOTECHNOLOGY, INC. AND SUBSIDIARY
LIQUIDITY AND CAPITAL RESOURCES
(in millions, unaudited)
     
 
June 30, December 31,
  2018     2017  
 
Cash and cash equivalents $ 95.9 $ 81.7
Marketable securities 38.6
Working capital 106.5 48.1
Stockholders' equity 38.3 53.3
 
Six Months Six Months
Ended Ended
June 30, June 30,
  2018     2017  
Cash provided by (used in):
Operating activities $ (23.9 ) $ (82.0 )
Investing activities (38.8 ) (36.0 )
Financing activities   76.9     4.3  
 
Increase (decrease) in cash and cash equivalents $ 14.2   $ (113.7 )
 

Non-GAAP Financial Measures

In addition to operating results as calculated in accordance with GAAP,
the Company uses certain non-GAAP financial measures when planning,
monitoring, and evaluating operational performance. The following table
presents the Company's net loss and net loss per share calculated in
accordance with GAAP and as adjusted to remove the impact of employee
stock-based compensation. For the three and six months ended June 30,
2018, stock-based compensation represented approximately 26.5% and 28.5%
of operating expense (which does not include cost of sales),
respectively. Although net loss is important to measure financial
performance, the Company currently places an emphasis on cash burn and,
more specifically, cash used in operations. Stock-based compensation
appears in GAAP net loss but is removed from net loss to arrive at cash
used in operations on the statement of cash flows. Due to its noncash
nature, the Company believes these non-GAAP measures enhance
understanding of financial performance, are more indicative of
operational performance and facilitate a better comparison among fiscal
periods. These non-GAAP financial measures are not, and should not be
viewed as, substitutes for GAAP reporting measures.

PUMA BIOTECHNOLOGY, INC. AND SUBSIDIARY
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net Loss and
GAAP Net Loss Per Share to Non-GAAP Adjusted Net Loss Per Share    
(in millions except share and per share data)
(Unaudited)
 
Three Months Ended June 30,
2018 2017
GAAP net loss $ (44.3 ) $ (77.8 )
Adjustments:
Stock-based compensation -
Selling, general and administrative 8.5 7.3 (1)
Research and development   13.6     19.6   (2)
Non-GAAP adjusted net loss $ (22.2 ) $ (50.9 )
 
 
GAAP net loss per share - basic and diluted $ (1.17 ) $ (2.10 )
Adjustment to net loss (as detailed above)   0.58     0.72  
Non-GAAP adjusted net loss per share $ (0.59 ) $ (1.38 ) (3)
 
Six Months Ended June 30,
2018 2017
GAAP net loss $ (68.7 ) $ (150.7 )
Adjustments:
Stock-based compensation -
Selling, general and administrative 17.5 14.6 (1)
Research and development   30.0     42.1   (2)
Non-GAAP adjusted net loss $ (21.2 ) $ (94.0 )
 
GAAP net loss per share - basic and diluted $ (1.82 ) $ (4.08 )
Adjustment to net loss (as detailed above)   1.26     1.54  
Non-GAAP adjusted net loss per share $ (0.56 ) $ (2.54 ) (4)
(1)   To reflect a non-cash charge to operating expense for Selling,
General and Administrative stock-based compensation.
(2) To reflect a non-cash charge to operating expense for Research and
Development stock-based compensation.
(3) Non-GAAP adjusted net loss per share was calculated based on
37,819,767 and 36,992,017 weighted average common
shares outstanding for the three months ended June 30, 2018 and
2017, respectively.
(4) Non-GAAP adjusted net loss per share was calculated based on
37,759,729 and 36,961,760 weighted average common
shares outstanding for the six months ended June 30, 2018 and 2017,
respectively.

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