Another FDA delay at Puma triggers fresh doubts, sharp drop in share price

Puma CEO Alan Auerbach

Puma Biotechnology ($PBYI) has developed quite a track record of disappointing investors and analysts with its work on the cancer drug neratinib. On Monday, it added to that track record with the news that a change in its Phase III statistical analysis plan would slow its NDA timeline, again, raising fresh doubts about the drug and triggering a sharp 20% drop in the biotech's share price.

By itself, the news that pre-NDA talks with the FDA led to a modest delay in filing the drug--pushing back its filing date from Q1 to the middle of the year--wouldn't normally have triggered much fretting. But Puma has already been forced to defend questionable efficacy data against some serious tox concerns. And a delay at this point simply raises more uncertainty regarding the FDA's position on the drug, as well as any long-term commercial prospects the drug may have.

"We note that this is the second time that Puma has unexpectedly announced pushing out filing of the neratinib NDA following meetings with FDA," notes RBC analyst Simos Simeonidis. "(I)n December 2014, the company pushed out the timeline for the NDA from 1H15 to 1Q16. One of the concerns around neratinib's approvability had been on whether the FDA would be OK with the multiple protocol changes that took place in the trial over the years through the multiple changes in sponsorship (Wyeth, Pfizer, Puma)."

Last December, Puma disheartened backers with new mid-stage data on neratinib, tying a 32% response rate among breast cancer patients with a 35% rate of grade 3 diarrhea, despite treatment to prevent it. The drug's toxicity also clouded questionable efficacy results for the drug reported at ASCO last summer.

"We still believe that neratinib has a better than 50/50 chance of getting through the FDA, given the positive Phase III data in ExteNET," adds Simeonidis. "However, we also believe that this second negative regulatory surprise for investors increases the approvability risk for neratinib (in the form of "what else could come up that we assumed we were OK with?"), which together with 1) the fact that we are now more than a year away from an approval decision, 2) the Perjeta/APHINITY overhang, 3) questions about how neratinib will be commercialized, and 4) the omnipresent questions about the drug's ultimate utility, given its marginal efficacy and toxicity profile, shift the risk/reward balance more towards the risk side of the equation.

- here's the release