Puma Biotechnology ( PBYI ) crashed to a two-month low Friday after sales of its breast cancer drug crushed the third-quarter consensus but failed to live up to more bullish buy-side expectations, analysts said.
[ibd-display-video id=2567460 width=50 float=left autostart=true]By the closing bell on the stock market today , Puma plummeted by 19% to close at 103.
Puma’s Nerlynx was approved in July as a maintenance treatment to reduce the risk of breast cancer returning in a specific population of patients. The drug was “soft” launched in July with a full commercial rollout in September.
For the quarter, Nerlynx pulled in $6.1 million in sales, above consensus views between $3 million and $4 million, according to various analyst reports. But that could have lagged more bullish buy-side expectations, analysts said Friday.
“Headed into (earnings), we sense that buy-side expectations around the launch were likely higher,” RBC analyst Matthew Eckler wrote in a note to clients. He views the launch as still in its infancy.
Through October, Nerlynx has achieved an estimated $11.6 million in sales, Eckler said. He projects Nerlynx pulling in $20 million in the fourth quarter and $26 million in 2017, up from his prior model for $13 million and $17 million, respectively.
In total, 779 patients have been enrolled in Puma’s specialty pharma network through October, accounting for 567 patients on the commercial drug and 443 total prescriptions in October.
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Nearly nine in 10, or 86%, of patients receive the drug in 20 days or less and the discontinuation rate is running at 11% thus far, Eckler wrote. He boosted his price target on Puma to 108 from 92, though kept his sector perform rating.
Leerink analyst Michael Schmidt says all the launch metrics “point in the right direction.” October sales of $5.5 million suggest Puma is capable of meeting fourth-quarter and 2018 sell-side views for $16.3 million and $191 million, respectively.
“Despite that, shares are down after the market close (Thursday) offering a buying opportunity in our opinion,” he wrote in a note to clients. Puma is still trading two times below its peers as investors discount estimates for Nerlynx.
Schmidt reiterated his outperform rating and 140 price target on Puma. He noted the majority of patients receive insurance approval within 10 days or less with no denials thus far. And only $1 million of the quarterly sales figure was inventory, he added.
Credit Suisse analyst Alethia Young increased her price target to 142 from 136, and maintained her outperform rating.
“Expectations were high, and we think that launch is living up to high expectations,” she wrote in a note to clients. “The stock was weak due to high expectations into the quarter.”
Investors are pegging between $25 million and $30 million in the fourth quarter. The October $5.5 million sales figure represents an almost 100% growth rate from September to October and indicates the range is “very achievable,” she said.
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