Though the company is named for a jungle cat, investors were not impressed by Puma Biotechnology Inc.’s growl last week.
The stock’s turmoil began after Puma shared additional data from its pivotal breast cancer drug trial at the American Society of Clinical Oncology’s annual meeting in Chicago on June 1.
The three-year trial involved more than 2,800 patients in 41 countries with early stage HER2-positive breast cancer who had undergone surgery and treatment with a drug called herceptin. About half the patients were treated with Puma’s drug neratinib, while the others received a placebo.
Puma told the assembled physicians that the disease-free survival rate for patients treated with neratinib was 93.9 percent, compared with 91.6 percent for the placebo group. However, certain subgroups of patients treated with neratinib saw slightly better results.
Casting that small beneficial increase in a more negative light was the news that neratinib caused severe diarrhea in 40 percent of patients who took it. According to reports, some oncologists questioned whether the side effects were worth living with, given the small boost to the chance of success.
In a statement accompanying the results, Puma called these results “statistically significant.”
“We are very pleased with the results,” said Puma founder and Chief Executive Alan Auerbach in the release. “This represents … a meaningful point of differentiation for neratinib in the treatment of HER2 positive breast cancer.”
Auerbach did not respond to a request for comment.
Given that he’s the company’s largest shareholder, Puma’s stock dip hit Auerbach’s wallet the hardest.
In late May, Auerbach had a net worth of about $1.2 billion, enough to debut on the Business Journal’s list of Wealthiest Angelenos at No. 47.
But that fortune, built primarily on his ownership of 4 million Puma shares, has since shrunk by more than $300 million after the company’s share price took a 25 percent dive one day last week. Puma shares closed at $147.02 on June 3, down nearly 27 percent for the week. (See page 52.)
If the Wealthiest Angelenos list had come out today, Auerbach would not be on it.
Big bet
Despite investor backlash, Wall Street analysts remain optimistic about Puma’s chances, though more trial data is yet to come.
In a research note released after Puma’s presentation at the conference, RBC Capital Markets analyst Simos Simeonidis called the results positive, citing the increase in treatment benefit for key subpopulations. Simeonidis gave the stock an “outperform” rating with a price target of $285.
According to a Bloomberg report, analyst Matthew Roden of UBS in New York gave the stock a “buy” rating after the news, adding that he believes the stock is undervalued and neratinib will gain Food and Drug Administration approval.
Given that neratinib is Puma’s only drug, its future as a company rests squarely on whether the FDA allows it to come to market. Should neratinib receive approval, analysts have predicted it could have a market value of $5 billion.
In July, the company’s shares spiked after positive trial results, rocketing from about $59 to $233 – a 295 percent leap.
Then, in December, the company received a setback when the FDA said it would not allow Puma to submit its study data after the company filed its new-drug application. Subsequently, Puma opted to postpone its filing by roughly a year until the first quarter of 2016, which sent shares tumbling 12 percent to $197.
Puma’s business model, known as “no research, development only,” involves licensing a drug from another pharmaceutical firm that’s already in preclinical or clinical testing but for one reason or another has hit a snag.
Puma acquired neratinib from New York’s Pfizer Inc. in 2011. It has agreed to pay Pfizer up to $188 million in licensing fees plus royalties should the drug come to market.
Despite doubts among some in the medical community about neratinib’s effectiveness, RBC’s Simeonidis said the stock’s current low price presents an opportunity.
“We would be buyers at any weakness,” he wrote in the memo.
