Three months ago, Puma Biotechnology Inc. ran into Wall Street headwinds on findings from its adaptive I-SPY 2 (Investigation of Serial Studies to Predict Your Therapeutic Response with Imaging And moLecular Analysis 2) trial of PB272 (neratinib), a pan-HER tyrosine kinase inhibitor, as neoadjuvant therapy in metastatic breast cancer.

On Wednesday, there was no such blowback after the company reported top-line findings from the phase III ExteNET trial of neratinib for the extended adjuvant treatment of breast cancer. Puma, instead, did the roaring, while analysts tried to wrap their heads around the magnitude of benefit. Citi Research's Yaron Werber wondered aloud on the company's conference call whether neratinib could replace Herceptin (trastuzumab, Roche AG) as the new standard-of-care adjuvant treatment for women with early stage HER2-positive breast cancer.

The findings, reported after Tuesday's market close, drove Puma's shares (NYSE:PBYI) through the roof overnight to open Wednesday at $217.10 for a gain of 268 percent. The stock trended modestly higher from there, ending the day at $233.43 for a gain of $174.40, with more than 8 million shares exchanged – 19 times the stock's average volume.

ExteNET enrolled 2,821 patients in 41 countries, evaluating neratinib compared to placebo in women with early stage HER2-positive breast cancer who had undergone surgery. After completing adjuvant treatment with Herceptin, patients were randomized to extended adjuvant treatment with neratinib or placebo for one year, then followed for recurrent disease, ductal carcinoma in situ (DCIS) or death for two years after randomization in the trial.

Treatment with neratinib resulted in a 33 percent improvement in disease-free survival (DFS) – the primary endpoint – compared to placebo. The hazard ratio was statistically significant, at 0.67, with a "p" value of 0.0046.

Findings from the secondary endpoint – DFS including DCIS (DFS-DCIS) – were equally compelling, with neratinib treatment resulting in a 37 percent improvement vs. placebo. The hazard ratio was 0.63, which was statistically significant with a "p" value of 0.0009.

"This represents the first trial with a HER2-targeted agent that has shown a statistically significant benefit in the extended adjuvant setting, which we believe provides a meaningful point of differentiation for neratinib in the treatment of HER2-positive breast cancer," Alan Auerbach, Puma's CEO and president, said on the call. "While the use of trastuzumab in the adjuvant setting has led to a reduction in disease recurrence in patients with early stage HER2-positive breast cancer, there remains an unmet clinical need for further improvement in outcome in order to attempt to further reduce this risk of recurrence. The ExteNET results demonstrate that we may be able to provide this type of improvement with neratinib."

Significantly, Auerbach said the separation of DFS curves persisted and appeared to widen over time, in contrast to the HERA comparison studies of Herceptin, where curves merged after a small initial separation.

Auerbach hastened to add that Los Angeles-based Puma has not seen the safety findings from ExteNET, and he cautioned that the adverse event (AE) profile likely will mirror that of earlier studies, which have shown that approximately 30 percent of patients on neratinib developed grade III or higher diarrhea as a first-cycle effect.

After Puma licensed neratinib from Pfizer Inc. in 2011, the company began to incorporate a high dose of over-the-counter Imodium (loperamide) prophylactically, which dramatically reduced the incidence of diarrhea associated with the study drug, Auerbach said. The first trial data using the Imodium prophylaxis are expected to report in the second half of the year, "and we believe that this will give investors much greater transparency" about that strategy, he added.

In any event, Auerbach was seemingly unconcerned about the prospect of a diarrhea AE associated with ExteNET. He said the company plans to file in the first half of 2015 with regulators in the U.S. and Europe for approval of neratinib in the extended adjuvant setting. Pressed by analysts about the filing timetable, Auerbach said the 85-person company is limited mainly by the need to retain contract research organizations to assist with paperwork.

Auerbach said complete findings from ExteNET will be presented at a future scientific meeting, which he declined to name.

'AMONG BEST-CARE SCENARIOS THAT COULD BE ENVISIONED'

Puma is a single asset play, with neratinib – alone and in combination – being evaluated in a dozen trials across multiple breast cancer indications, including metastatic disease, metastatic disease with brain metastases and HER2-mutated breast cancer. The compound also is being studied as a single agent in a phase II study in HER2-mutated solid tumors and alone and in combination with Torisel (temsirolimus, Pfizer Inc.) in a phase II study in HER2-mutated non-small-cell lung cancer.

The ExteNET findings seem to validate Puma's confidence in neratinib and in the data from I-SPY 2, an experiment designed to test whether, based on Bayesian predictive probability, a neratinib pill-containing regimen likely would prove statistically superior to standard therapy in an equally randomized, 300-patient confirmatory trial. The company reported initial findings from I-SPY 2 in December 2013, and more data trickled out in April during an oral presentation at the American Association for Cancer Research (AACR) meeting in San Diego. (See BioWorld Today, Dec. 6, 2013, and April 9, 2014.)

Although Puma described the updated findings as positive, since a group of patients in I-SPY 2 had graduated – thus stopping enrollment – investors ran for the hills, with shares dropping 18 percent on April 7 following disclosure of the data at AACR and another 7 percent, to $80.86, the following day. The stock had fallen into the doldrums since that time, trading below $60 in seven of the last 20 sessions, including Tuesday, when shares closed at $59.03.

But that was before ExteNET and – provided the full data play out as the company predicts – this is a whole new day for Puma.

Analyst Howard Liang of Leerink Partners LLC called the ExteNET findings "among [the] better breast cancer adjuvant outcomes." Liang observed that "the magnitude of benefit (HR = 0.63-0.67 depending on how disease-free survival is measured, likely 4 percent absolute improvement in DFS on top of one-year Herceptin) is among best-case scenarios that could be envisioned." He said the ExteNET data "position neratinib as the only HER2 inhibitor that showed benefit in extended adjuvant breast cancer, and no competition is anticipated in near term."

Of course, the FDA and EMA need to have the same comfort level with Puma's data package as investors apparently now do. But Cowen and Co. analyst Eric Schmidt doesn't anticipate pushback, writing in a company update that, "given the large magnitude of benefit and high degree of statistical significance observed in ExteNET, we see few risks to approval."

Provided "the great majority of eligible adjuvant patients" could be treated with neratinib following Herceptin, and assuming modestly lower penetration than that currently achieved by Herceptin and a pricing premium of approximately $1,000 per month, Schmidt forecast peak neratinib sales of $6 billion in 2028.

Even ISI Group analyst Mark Schoenebaum, who has engaged in a simulated sparring match with Federal Reserve chairwoman Janet Yellen, noted in an email update on Wednesday's upbeat biotech news, "Also, I would love your opinion on PBYI here."

'TODAY IS NOT THE DAY I'M MAKING THAT DECISION'

Puma now has one eye on commercial plans for neratinib, and Wednesday the company treated investors to another upside surprise on that strategy, revealing that it amended its licensing deal with New York-based Pfizer prior to receiving the ExteNET results.

In October 2011, when Puma completed its reverse merger with the public shell company Innovative Acquisitions Inc., it disclosed the deal for neratinib, then in phase II in HER2-positive metastatic breast cancer. Puma assumed global product development and commercialization of neratinib, with Pfizer entitled to up-front and development milestones totaling approximately $187 million, plus incremental annual royalties on a sliding scale of 10 percent to 20 percent of net sales. Pfizer had turned up encouraging data with neratinib but dumped the drug as part of a pipeline reprioritization. (See BioWorld Today, Dec. 15, 2009, Oct. 7, 2011, and Oct. 22, 2012.)

At the time, legacy trials of neratinib previously initiated by Pfizer were transferred to Puma. The original license agreement placed a limit on the amount of external expenses Puma would incur to complete them, and Pfizer accepted responsibility for additional expenses associated with the legacy trials until their completion. Puma said it reached the pre-determined limit in the fourth quarter of 2012, with Pfizer then picking up the tab.

Auerbach said Pfizer subsequently approached the company, seeking to reduce the neratinib-related expenses in its oncology R&D budget.

"We viewed that as an opportunity to reduce and potentially fix the royalty amount that we are obligated to pay Pfizer on commercial sales and, correspondingly, increase the potential value of the drug, so we proceeded with these discussions," he explained.

The amended agreement calls for Puma to assume sole responsibility for expenses associated with the ongoing legacy trials, which the company predicted will result in an increase of approximately $30 million in its R&D expenses. Puma said "a significant percentage" of that amount will occur this year, decreasing over time until the trials are completed in 2017 or thereabout.

At the end of the first quarter, Puma reported cash and equivalents of approximately $196.1 million and a quarterly burn rate of approximately $14.6 million, so Auerbach said no additional financing is anticipated to cover the higher R&D expense.

In addition, Puma renegotiated its royalty deal with Pfizer, setting an undisclosed fixed rate "in the low to midteens" on annual net sales. Asked on the call if a 13 percent to 15 percent range was a fair estimate for calculating expected royalties, Auerbach responded, "My definition of the low end is less than 13 percent."

The obvious next question for Puma is whether, and how, the company may change its long-term game plan on the back of the ExteNET data. Auerbach, who previously formed Cougar Biotechnology Inc., worked on prostate cancer drug abiraterone until its 2009 acquisition by Johnson & Johnson for nearly $1 billion. (See BioWorld Today, May 26, 2009.)

J&J went on to win approval of abiraterone, branded Zytiga, for use in combination with prednisone in men with metastatic castration-resistant prostate cancer. (See BioWorld Today, April 29, 2011.)

Sale of the company is now one of many options on the table, admitted Auerbach, who emphasized his position as Puma's largest shareholder as evidence that his interests are aligned with those of investors.

"We could build our own sales and marketing force and become a fully integrated company," he said. "We could do some type of a partnership – a joint venture on a country-wide basis or worldwide basis. Or we could sell the entire company, which I did with my previous company. Today is not the day I'm making that decision."