- Puma Biotechnology Inc. has initiated an early launch of its breast cancer drug, a move that has some investors questioning the company's potential to be taken over.
- The drug, Nerlynx, first gained the Food and Drug Administration's approval on July 17. At the time, Puma expected commercialization would begin in September. The decision to push up the launch date was due to "physician interest," according to a July 31 note from investment firm RBC Capital Markets, which said it spoke to Puma CEO Alan Auerbach.
- Puma still intends to conduct a more robust rollout in September, RBC said, but the bigger implication is whether the early launch diminishes the likelihood of a takeover. Investors sure seemed to think so, as Puma shares dropped more than 11% to $84.31 apiece in Tuesday morning trading.
If there's one thing that gets investors excited, it's the possibility of a takeover. That's because company acquisitions often come at a premium price tag, leading to a payout of some sort for shareholders.
Puma's no stranger to takeover speculation; positive clinical readouts for Nerlynx (neratinib) have put the company on many industry followers' takeover radars over the past few years. The drug's status as the first FDA-approved extended adjuvant therapy for early-stage, HER2-positive breast cancer further elevates Puma's attractiveness to potential buyers.
But commercializing a drug is expensive. Puma previously said it has readied a salesforce of 85 to launch the drug. If the company were mulling a sale, some argue that bringing Nerlynx to market would be an unnecessary expense.
"The bear case for an early launch is that an acquisition of Puma must not be imminent, otherwise why go ahead and launch early? And on your own?" RBC analyst Matthew Eckler wrote in the July 31 note. "We’d tend to agree that if a deal was only days or weeks away, it’s hard to understand why the company would push ahead with commercialization."
"That said, if the current commercial efforts are limited to unsolicited prescription requests, without the support of detailing by sales reps, the read-through of today’s announcement to any potential deal could ultimately be negligible," he added.
Puma didn't disclose Nerlynx's wholesale acquisition cost (WAC) in a July 31 announcement of the early launch, and declined BioPharma Dive's request for further details.
Eckler noted, however, that Price Rx lists the drug's WAC as $10,500 per month, which would be well above the roughly $6,800 per month cost of Novartis' Tykerb (lapatinib).
"Premium pricing has the potential to drive upside to current Street estimates," Eckler said. "However, we think this strategy could also signal plans to target a more restricted population of motivated high-risk patients (at least initially) where they such a pricing premium may be more readily accepted."