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Puma Biotech (PBYI) Up More Than 95% in 3 Months: Here's Why

Zacks Equity Research

Shares of Puma Biotechnology, Inc. PBYI have witnessed a sharp rise in the past three months. In fact, the biotech stock has soared 96.1%, outperforming the industry’s increase of 7.8%.

The company’s sole marketed drug, Nerlynx (neratinib), was launched in the United States during July 2017 for treating early-stage hormone receptor-positive (HER2-positive) breast cancer in patients, previously treated with Roche’s RHHBY Herceptin-based adjuvant therapy.

Sales of the drug have improved steadily since its launch a couple of years back and were above management’s expectations last year. For 2018, Nerlynx generated sales of $200.5 million, slightly higher than management’s guided range of $175-$200 million.

Nerlynx sales rose 16% on a sequential basis in fourth-quarter 2018. On the last conference call, the company stated that the drug is noticing a spurt in demand across both the specialty pharmacy and distribution channels.

Additionally, a supportive care voucher program, which provides up to three months' of anti-diarrheal products for free to eligible patients, was introduced during the third quarter of 2018. Following this, the use of vouchers increased immensely and became an additional driver for sales growth in the fourth quarter, thus curtailing discontinuations, which hurt sales earlier. We remain upbeat that this positive trend will continue in 2019.

Nerlynx was approved in the EU last September, which can fuel sales growth further in 2019.

Several additional studies on Nerlynx targeting different types of breast cancer patient populations and in earlier-line settings are currently underway. Notably, last December, Puma Biotech announced favorable top-line data from the phase III NALA study, evaluating Nerlynx for the treatment of third-line HER2-positive metastatic breast cancer. If the company gets an approval to include the NALA analysis outcome on Nerlynx’s label, it will be eligible to treat a broader breast cancer population, which can drive sales higher.

Apart from the HER2-positive breast cancer indication, the company believes that Nerlynx holds potential for addressing several other cancers as well. The label expansion of the drug will thus allow treatment and access to an expanded subject count, thereby boosting sales in the future.

However, Puma Biotech has no approved product in its portfolio other than Nerlynx at the moment. Hence, due to the lack of a strong pipeline, the company is totally dependent on Nerlynx for growth. As a result, any kind of hostile development or a regulatory setback could mar the company’s growth prospects and the stock price performance massively.

Puma Biotechnology, Inc. Price

Puma Biotechnology, Inc. Price | Puma Biotechnology, Inc. Quote

Zacks Rank & Other Stocks to Consider

Puma Biotech currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the biotech sector include Celgene Corporation CELG and Trevena, Inc. TRVN, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene’s earnings estimates have moved 3.8% north for 2019 and 3.9% for 2020 over the past 60 days. The stock has surged 36.2% so far this year.

Trevena’s loss per share estimates have been narrowed 12.9% for 2019 and 11% for 2020 in the last 60 days. The stock has skyrocketed 232.6% year to date.

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