Puma Biotechnology (PBYI) jumped as much as 11% Friday after its "surprisingly strong" second quarter but reversed course amid analyst doubt for future sales of breast cancer drug Nerlynx.
XRBC Capital Markets analyst Kennen MacKay says Nerlynx sales are "clearly on track to beat unchanged fiscal year 2018 guide." But he cut his price target on Puma stock to 69 from 77 as it appears fewer patients will begin starting therapy with Nerlynx.
On the call, Puma management indicated some patients may continue treatment with Nerlynx after the one-year mark recommended by the Food and Drug Administration. If so, this would be critical to maintaining sales momentum, MacKay said in a note to clients.
"Future quarters may begin to see loss of patients following one year of therapy," he said. "Given Nerlynx's limited prescribing experience we await more robust support for durations of therapy beyond one year in a substantial portion of treated patients."
On the stock market today, Puma stock jumped as much as 11.4% in high volume. But shares reversed those gains and ended the regular session down 8.1%, to 44.70. Broadly, biotech stocks lost a fraction.
Will Nerlynx Sales Taper?
During the second quarter, Nerlynx brought in $50.8 million in sales, rising 41% over the first quarter and 153% over the fourth quarter of 2017. Nerlynx was first approved in July 2017, so Puma's first sales of the drug weren't reported until late 2017.
Nerlynx sales beat expectations for $46 million, MacKay said. But he expects Nerlynx's launch to become more muted as Puma struggles to retain patients after one year. He calls for challenges in sustaining growth beyond the fourth quarter if patients come off therapy at the one-year mark.
"Notably, management no longer presented the breakdown of new patient starts, which follows the first quarter's controversial datapoint suggesting a decline in new patient starts in April to 280 patients vs. January-March starts in the 320-350 patient rate," he said.
For the year, Puma kept guidance for $175 million to $200 million in sales. This is attainable, MacKay said. Before the report, the Street had modeled $217 million for the year.
"Though we note this trajectory would imply moderate growth slowing into the second half of 2018," he said. "We look for signs that current total prescription trends do not taper and lead to fiscal year 2018 results well ahead of guidance."
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The post Biotech Stock Reverses Gains Despite 'Surprisingly Strong' Report appeared first on Investor's Business Daily.
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