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What changed in PUMA BIOTECHNOLOGY, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PUMA BIOTECHNOLOGY, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+595 added−582 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-02)

Top changes in PUMA BIOTECHNOLOGY, INC.'s 2023 10-K

595 paragraphs added · 582 removed · 453 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

188 edited+54 added−27 removed365 unchanged
Biggest changeThe following table shows the HER2+ breast cancer approvals for NERLYNX by disease and country: Extended adjuvant Metastatic United States Jul-17 United States Feb-20 European Union Aug-18 Argentina Jan-21 Australia Mar-19 Peru Mar-21 Canada Jul-19 Chile May-21 Argentina Aug-19 Canada Jun-21 Hong Kong Oct-19 Taiwan Oct-21 Singapore Nov-19 Israel Jul-22 Switzerland Mar-20 Equador Aug-22 Brunei Apr-20 Singapore Sep-22 China Apr-20 Chile Apr-20 New Zealand Jun-20 Taiwan Jun-20 Ecuador Jul-20 Malaysia Jul-20 Peru Mar-21 Macau Aug-21 South Korea Oct-21 Brazil Dec-21 Mexico Jan-22 Philippines Jun-22 Israel Jul-22 We currently have sub-licenses in each of these regions with third parties that are commercializing NERLYNX in their respective geography.
Biggest changeThe following table shows the HER2-positive breast cancer approvals for NERLYNX by disease and country: Extended adjuvant Metastatic United States July 2017 United States February 2020 European Union August 2018 Argentina January 2021 Australia March 2019 Peru March 2021 Canada July 2019 Chile May 2021 Argentina August 2019 Canada June 2021 Hong Kong October 2019 Taiwan October 2021 Singapore November 2019 Israel July 2022 Switzerland March 2020 Ecuador August 2022 Brunei April 2020 Singapore September 2022 China April 2020 Colombia March 2023 Chile April 2020 Malaysia September 2023 New Zealand June 2020 Taiwan June 2020 Ecuador July 2020 Malaysia July 2020 Peru March 2021 Macau August 2021 South Korea October 2021 Brazil December 2021 Mexico January 2022 Philippines June 2022 Israel July 2022 South Africa January 2023 Morocco February 2023 We currently have sub-licenses in each of these regions with third parties that are commercializing NERLYNX in their respective geography.
We also plan to evaluate alisertib in biomarker focused populations where it has shown a higher degree of activity, such as patients with c-myc amplification and RB1 loss/RB1 mutations, as we believe that this may provide a point of differentiation from the other drugs being developed in the treatment of these diseases.
We also plan to evaluate alisertib in biomarker focused populations where it has shown a higher degree of activity, such as patients with c-myc amplification and RB1 loss/RB1 mutations, as we believe that this may provide a point of differentiation from the other drugs being developed in the treatment of these diseases.
CONTROL . In February 2015, we initiated the CONTROL trial which is an international, open-label, Phase II study investigating the use of antidiarrheal prophylaxis or dose escalation in the prevention and reduction of neratinib-associated diarrhea and, more specifically, grade 3 diarrhea.
In February 2015, we initiated the CONTROL trial, which is an international, open-label, Phase II study investigating the use of antidiarrheal prophylaxis or dose escalation in the prevention and reduction of neratinib-associated diarrhea and, more specifically, grade 3 diarrhea.
In clinical trials to date, alisertib had shown single agent activity and activity in combination with other cancer drugs in the treatment of many different types of cancers, including hormone receptor positive breast cancer, triple negative breast cancer, small cell lung cancer and head and neck cancer.
In clinical trials to date, alisertib had shown single agent activity and activity in combination with other cancer drugs in the treatment of many different types of cancers, including hormone receptor positive breast cancer, triple negative breast cancer, small cell lung cancer and head and neck cancer.
Orphan exclusivity also could block the approval of a competing product for seven years if a competitor obtains approval of the “same drug,” as defined by the FDA, or if a product candidate is determined to be contained within the competitor’s product for the same disease or condition.
Orphan exclusivity also could block the approval of a competing product for seven years if a competitor obtains approval of the “same drug,” as defined by the FDA, or if a drug candidate is determined to be contained within the competitor’s product for the same disease or condition.
In December 2021, NERLYNX (neratinib) was included in the updated National Reimbursement Drug List ("NRDL") by the China National Healthcare Security Administration for patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer after adjuvant trastuzumab based therapy. The addition of NERLYNX to the China NRDL now enables broad access to neratinib to more women throughout China.
In December 2021, NERLYNX (neratinib) was included in the updated National Reimbursement Drug List (“NRDL”) by the China National Healthcare Security Administration for patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer after adjuvant trastuzumab based therapy. The addition of NERLYNX to the China NRDL now enables broad access to neratinib to more women throughout China.
We may terminate the Pierre Fabre Agreement, as amended, on a China Region-by-China Region basis or, under certain circumstances, in the entire Third Pierre Fabre Territory if Pierre Fabre is in material violation of certain anti-corruption laws. Bixink Agreement During the second quarter of 2020, we entered into a sub-license agreement (the “Bixink Agreement”), with Bixink Therapeutics Co., Ltd. ("Bixink").
We may terminate the Pierre Fabre Agreement, as amended, on a China Region-by-China Region basis or, under certain circumstances, in the entire Third Pierre Fabre Territory if Pierre Fabre is in material violation of certain anti-corruption laws. Bixink Agreement During the second quarter of 2020, we entered into a sub-license agreement (the “Bixink Agreement”), with Bixink Therapeutics Co., Ltd. (“Bixink”).
For the patients in the trial whose tumors were HER2-positive by central confirmation, the results of the trial demonstrated that treatment with neratinib resulted in a 51% reduction of risk of disease recurrence including DCIS or death versus placebo (hazard ratio = 0.49, p 5 For the pre-defined subgroup of patients with hormone receptor positive disease, the results of the trial demonstrated that treatment with neratinib resulted in a 49% reduction of risk of invasive disease recurrence or death versus placebo (hazard ratio = 0.51, p = 0.001).
For the patients in the trial whose tumors were HER2-positive by central confirmation, the results of the trial demonstrated that treatment with neratinib resulted in a 51% reduction of risk of disease recurrence including DCIS or death versus placebo (hazard ratio = 0.49, p For the pre-defined subgroup of patients with hormone receptor positive disease, the results of the trial demonstrated that treatment with neratinib resulted in a 49% reduction of risk of invasive disease recurrence or death versus placebo (hazard ratio = 0.51, p = 0.001).
There can be no assurance that we will qualify for any such regulatory exclusivity, or that any such exclusivity will prevent competitors from seeking approval solely on the basis of their own studies. See “Government Regulation” below. 11 On November 28, 2011, a Boehringer Ingelheim entity filed an opposition to European Patent No.
There can be no assurance that we will qualify for any such regulatory exclusivity, or that any such exclusivity will prevent competitors from seeking approval solely on the basis of their own studies. See “Government Regulation” below. On November 28, 2011, a Boehringer Ingelheim entity filed an opposition to European Patent No.
Additionally, we have dynamic information technology systems, which allow for a more synergistic atmosphere. 25 Corporate Information and History Our principal executive offices are located at 10880 Wilshire Boulevard, Suite 2150, Los Angeles, California 90024 and our telephone number is (424) 248-6500. Our internet address is www.pumabiotechnology.com.
Additionally, we have dynamic information technology systems, which allow for a more synergistic atmosphere. Corporate Information and History Our principal executive offices are located at 10880 Wilshire Boulevard, Suite 2150, Los Angeles, California 90024 and our telephone number is (424) 248-6500. Our internet address is www.pumabiotechnology.com.
We also have issued U.S. patents for the use of alisertib in combination with other agents in the treatment of proliferative disorders, including small-cell lung cancer and breast cancer, which are currently set to expire in 2032, 2033 and 2034, respectively, not including any extension for Hatch-Waxman exclusivity.
We also have issued U.S. patents for the use of alisertib in combination with certain other agents in the treatment of certain proliferative disorders, small-cell lung cancer and breast cancer, which are currently set to expire in 2032, 2033 and 2034, respectively, not including any extension for Hatch-Waxman exclusivity.
This approval was based on the results from our NALA trial. Trials of Neratinib as a Single Agent . In 2009, Pfizer Inc. ("Pfizer") presented data at the CTRC-AACR San Antonio Breast Cancer Symposium from a Phase II trial of neratinib administered as a single agent to patients with HER2-positive metastatic breast cancer.
This approval was based on the results from our NALA trial. Trials of Neratinib as a Single Agent . In 2009, Pfizer Inc. (“Pfizer”) presented data at the CTRC-AACR San Antonio Breast Cancer Symposium from a Phase II trial of neratinib administered as a single agent to patients with HER2-positive metastatic breast cancer.
Of these Supplemental Protection Certificate applications, five have been granted, one is pending grant, four have been abandoned and the remaining are in active prosecution. An Opposition was filed by Hexal AG ("Hexal") on August 3, 2016 against European Patent No.
Of these Supplemental Protection Certificate applications, five have been granted, one is pending grant, four have been abandoned and the remaining are in active prosecution. An Opposition was filed by Hexal AG (“Hexal”) on August 3, 2016 against European Patent No.
While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim. Once the Regulation becomes applicable, it will have a phased implementation depending on the concerned products.
While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim. Once applicable, it will have a phased implementation depending on the concerned products.
The federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") created federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Drug products intended for serious or life threatening conditions may be eligible for accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint, which is a laboratory measurement or physical sign used as an indirect or substitute measurement representing a clinically meaningful outcome, or an effect on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality and that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.
Drug products intended for serious or life threatening conditions may also be eligible for accelerated approval upon a determination that the drug candidate has an effect on a surrogate endpoint, which is a laboratory measurement or physical sign used as an indirect or substitute measurement representing a clinically meaningful outcome, or an effect on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality and that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.
Further information is provided in Table 1 below: Table 1: Incidence of Treatment-Emergent Diarrhea Colestipol + Dose Neratinib Dose Loperamide Escalation Escalation Loperamide Budesonide Colestipol Loperamide PRN Scheme 1 Scheme 2 (N=137) (N=64) (N=136) (N=104) (N=60) (N=62) Patient incidence of diarrhea by worst grade - n (%) Any grade 109 (80) 55 (86) 113 (83) 99 (95) 59 (98) 61 (98) Grade 1 33 (24) 15 (23) 38 (28) 34 (33) 24 (40) 23 (37) Grade 2 34 (25) 22 (34) 47 (35) 31 (30) 27 (45) 21 (34) Grade 3 42 (31) 18 (28) 28 (21) 34 (33) 8 (13) 17 (27) Grade 4 0 0 0 0 0 0 Diarrhea leading to discontinuation 28 (20) 7 (11) 5 (4) 8 (8) 2 (3) 4 (6) Hospitalization (due to diarrhea) 2 (1) 0 0 0 0 0 6 Table of Contents Adoption of neratinib dose escalation at the initiation of treatment, particularly the 2-week DE schedule ("DE1"), most markedly reduced the incidence, severity, and duration of neratinib-associated grade 3 diarrhea in CONTROL compared to other treatment cohorts.
Further information is provided in Table 1 below: Table 1: Incidence of Treatment-Emergent Diarrhea Colestipol + Neratinib Dose Neratinib Dose Loperamide Escalation Escalation Loperamide Budesonide Colestipol Loperamide PRN Scheme 1 Scheme 2 (N=137) (N=64) (N=136) (N=104) (N=60) (N=62) Patient incidence of diarrhea by worst grade - n (%) Any grade 109 (80) 55 (86) 113 (83) 99 (95) 59 (98) 61 (98) Grade 1 33 (24) 15 (23) 38 (28) 34 (33) 24 (40) 23 (37) Grade 2 34 (25) 22 (34) 47 (35) 31 (30) 27 (45) 21 (34) Grade 3 42 (31) 18 (28) 28 (21) 34 (33) 8 (13) 17 (27) Grade 4 0 0 0 0 0 0 Diarrhea leading to discontinuation 28 (20) 7 (11) 5 (4) 8 (8) 2 (3) 4 (6) Hospitalization (due to diarrhea) 2 (1) 0 0 0 0 0 Adoption of neratinib dose escalation at the initiation of treatment, particularly the 2-week DE schedule (“DE1”), most markedly reduced the incidence, severity, and duration of neratinib-associated grade 3 diarrhea in CONTROL compared to other treatment cohorts.
Any product candidate submitted to the FDA for approval, including a product with a fast track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.
Any drug candidate submitted to the FDA for approval, including a product with a fast track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the Clinical Trials Directive remain governed by said Directive until January 31, 2025.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.
Daiichi Sankyo and Jazz are developing their drugs for the treatment of small cell lung cancer. All of the other competitors are developing their drugs for the treatment of early stage and/or metastatic HER2-positive breast cancer and/or for cancers that have a HER2 mutation.
Amgen, Daiichi Sankyo and Jazz are developing their drugs for the treatment of small cell lung cancer. All of the other competitors are developing their drugs for the treatment of early stage and/or metastatic HER2-positive breast cancer and/or for cancers that have a HER2 mutation.
Our decision may be different for each product that reaches commercialization and will be based on a number of factors including capital necessary to execute on each option, size of the market to be addressed and terms of potential offers from other pharmaceutical and biotechnology companies. • In-license or acquire additional drug candidates and technologies in order to build a sustainable product pipeline by employing multiple therapeutic approaches and disciplined decision criteria based on clearly defined proof of principal goals.
Our decision may be different for each product that reaches commercialization and will be based on a number of factors including capital necessary to execute on each option, size of the market to be addressed and terms of potential offers from other pharmaceutical and biotechnology companies. • In-license or acquire additional commercial drugs and/or drug candidates and technologies in order to build a sustainable product pipeline by employing multiple therapeutic approaches and disciplined decision criteria based on clearly defined proof of principal goals.
Medicaid drug rebates are based on pricing data that we must report on a monthly and quarterly basis to the U.S. Centers for Medicare & Medicaid Services (“CMS”), the federal agency that administers the MDRP and Medicare programs.
Medicaid rebates are based on pricing data that we must report on a monthly and quarterly basis to the U.S. Centers for Medicare & Medicaid Services (“CMS”), the federal agency that administers the MDRP and Medicare programs.
Pursuant to the Knight Agreement, we granted to Knight, under certain of the our intellectual property rights relating to neratinib, an exclusive, sublicensable (under certain circumstances) license (i) to commercialize any product containing neratinib and certain related compounds in Canada (the "Knight Territory"), (ii) to seek and maintain regulatory approvals for the licensed products in the Knight Territory and (iii) to manufacture the licensed products anywhere in the world solely for the development and commercialization of the licensed products in the Knight Territory for human use, subject to the terms of the Knight Agreement and a supply agreement to be negotiated and executed by the parties.
Pursuant to the Knight Agreement, we granted to Knight, under certain of the our intellectual property rights relating to neratinib, an exclusive, sublicensable (under certain circumstances) license (i) to commercialize any product containing neratinib and certain related compounds in Canada (the “Knight Territory”), (ii) to seek and maintain regulatory approvals for the licensed products in the Knight Territory and (iii) to manufacture the licensed products anywhere in the world solely for the development and commercialization of the licensed products in the Knight Territory for human use, subject to the terms of the Knight Agreement and a supply agreement to be negotiated and executed by the parties.
The federal Anti-Kickback Statute ("AKS") prohibits, among other things, any person or entity from knowingly and willfully soliciting, receiving, offering or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of an item or service reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs.
The federal Anti-Kickback Statute (“AKS”) prohibits, among other things, any person or entity from knowingly and willfully soliciting, receiving, offering or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of an item or service reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs.
Federal civil and criminal false claims laws, such as the federal False Claims Act ("FCA") prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented false, fictitious or fraudulent claims for payment or approval by the federal government, including federal health care programs, such as Medicare and Medicaid, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim, or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government.
Federal civil and criminal false claims laws, such as the federal False Claims Act (“FCA”) prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented false, fictitious or fraudulent claims for payment or approval by the federal government, including federal health care programs, such as Medicare and Medicaid, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim, or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government.
The centralized procedure is mandatory for certain types of products, such as (i) medicinal products, derived from biotechnology processes, such as genetic engineering, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products ("ATMPs") such as gene therapy, somatic cell therapy or tissue-engineered medicines, and (iv) medicinal products containing a new active substance indicated for the treatment of HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases.
The centralized procedure is mandatory for certain types of products, such as (i) medicinal products, derived from biotechnology processes, such as genetic engineering, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products (“ATMPs”) such as gene therapy, somatic cell therapy or tissue-engineered medicines, and (iv) medicinal products containing a new active substance indicated for the treatment of HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases.
Significant financial resources are invested in research, development and commercialization of new cancer products. We have faced and will likely continue to face considerable competition from major pharmaceutical, biotechnology and specialty cancer companies. Our competitors include, but are not limited to, Genentech, Novartis, Roche, Boehringer Ingelheim, Lilly, Takeda, Daiichi Sankyo, Jazz and Seagen.
Significant financial resources are invested in research, development and commercialization of new cancer products. We have faced and will likely continue to face considerable competition from major pharmaceutical, biotechnology and specialty cancer companies. Our competitors include, but are not limited to, Genentech, Novartis, Roche, Boehringer Ingelheim, Lilly, Amgen, Daiichi Sankyo, Jazz and Seagen.
Patients who received neratinib in this trial did not receive any prophylaxis with antidiarrheal agents to prevent the neratinib-related diarrhea. In October 2020, we announced that efficacy results of neratinib in HER2-positive, hormone receptor-positive, or HR+, early stage breast cancer, ("eBC") from the Phase III ExteNET trial were published in Clinical Breast Cancer .
Patients who received neratinib in this trial did not receive any prophylaxis with antidiarrheal agents to prevent the neratinib-related diarrhea. In October 2020, we announced that efficacy results of neratinib in HER2-positive, hormone receptor-positive, or HR+, early stage breast cancer, (“eBC”) from the Phase III ExteNET trial were published in Clinical Breast Cancer .
During the exclusivity period, the FDA may not accept for review an abbreviated new drug application ("ANDA"), or an NDA submitted under section 505(b)(2) of the FDCA by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval.
During the exclusivity period, the FDA may not accept for review an abbreviated new drug application (“ANDA”), or an NDA submitted under section 505(b)(2) of the FDCA by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval.
Alisertib has also shown activity in previous clinical trials in peripheral T cell lymphoma and non Hodgkins lymphoma. Prior to our licensing alisertib from Takeda the drug was tested in over 1,300 patients who were treated across 22 company-sponsored trials resulting in a large well-characterized clinical safety database.
Alisertib has also shown activity in previous clinical trials in peripheral T cell lymphoma and non-Hodgkin's lymphoma. Prior to our licensing alisertib from Takeda, the drug was tested in over 1,300 patients who were treated across 22 company-sponsored trials resulting in a large well-characterized clinical safety database.
In February 2013, we reached agreement with the FDA under a Special Protocol Assessment ("SPA") for our Phase III clinical trial (PUMA-NER-1301 or the NALA trial) of neratinib in patients with HER2-positive metastatic breast cancer who have failed two or more prior treatments (third-line disease).
In February 2013, we reached agreement with the FDA under a Special Protocol Assessment (“SPA”) for our Phase III clinical trial (PUMA-NER-1301 or the NALA trial) of neratinib in patients with HER2-positive metastatic breast cancer who have failed two or more prior treatments (third-line disease).
The drug has also shown activity in previous clinical trials in peripheral T cell lymphoma and non Hodgkins lymphoma. Prior to our licensing alisertib from Takeda the drug was tested in over 1,300 patients who were treated across 22 company sponsored trials resulting in a large well characterized clinical safety database.
The drug has also shown activity in previous clinical trials in peripheral T cell lymphoma and non-Hodgkin's lymphoma. Prior to our licensing alisertib from Takeda the drug was tested in over 1,300 patients who were treated across 22 company sponsored trials resulting in a large well characterized clinical safety database.
In addition, the Financial Accounting Standards Board ("FASB"), the SEC, and other bodies that have jurisdiction over the form and content of our accounts, our financial statements and other public disclosure are constantly discussing and interpreting proposals and existing pronouncements designed to ensure that companies best display relevant and transparent information relating to their respective businesses.
In addition, the Financial Accounting Standards Board (“FASB”), the SEC, and other bodies that have jurisdiction over the form and content of our accounts, our financial statements and other public disclosure are constantly discussing and interpreting proposals and existing pronouncements designed to ensure that companies best display relevant and transparent information relating to their respective businesses.
Treatment-emergent adverse events ("TEAEs") were similar between arms: TEAEs leading to neratinib/lapatinib discontinuation were lower with neratinib (10.9%) than with lapatinib (14.5%).
Treatment-emergent adverse events (“TEAEs”) were similar between arms: TEAEs leading to neratinib/lapatinib discontinuation were lower with neratinib (10.9%) than with lapatinib (14.5%).
The primary endpoint of the trial was CNS Objective Response Rate according to a composite criteria that included volumetric brain MRI measurements, steroid use, neurological signs and symptoms, and Response Evaluation Criteria in Solid Tumors ("RECIST") evaluation for non-CNS sites. The secondary endpoint of the trial was CNS response by Response Assessment in Neuro-Oncology-Brain Metastases (“RANO-BM”), criteria.
The primary endpoint of the trial was CNS Objective Response Rate according to a composite criteria that included volumetric brain MRI measurements, steroid use, neurological signs and symptoms, and Response Evaluation Criteria in Solid Tumors (“RECIST”) evaluation for non-CNS sites. The secondary endpoint of the trial was CNS response by Response Assessment in Neuro-Oncology-Brain Metastases (“RANO-BM”), criteria.
A product candidate can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
A drug candidate can receive breakthrough therapy designation if preliminary clinical evidence indicates that the drug candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
("Generics") on September 3, 2015 against European Patent No. EP2656844, which was licensed from Pfizer in 2011, and which claims, inter alia, a pharmaceutical pack containing 50 to 300 mg of neratinib and pharmaceutically acceptable salts thereof and vinorelbine for use in a method of treating a neoplasm.
(“Generics”) on September 3, 2015 against European Patent No. EP2656844, which was licensed from Pfizer in 2011, and which claims, inter alia, a pharmaceutical pack containing 50 to 300 mg of neratinib and pharmaceutically acceptable salts thereof and vinorelbine for use in a method of treating a neoplasm.
Other Laws and Regulatory Processes We are subject to a variety of financial disclosure and securities trading regulations as a public company in the United States with securities traded on the NASDAQ Global Select Market, including laws relating to the oversight activities of the Securities and Exchange Commission (the "SEC"), and the rules and regulations of The NASDAQ Stock Market LLC.
Other Laws and Regulatory Processes We are subject to a variety of financial disclosure and securities trading regulations as a public company in the United States with securities traded on the NASDAQ Global Select Market, including laws relating to the oversight activities of the Securities and Exchange Commission (the “SEC”), and the rules and regulations of The NASDAQ Stock Market LLC.
Before a company can market products for additional indications, it must obtain additional approvals from the FDA. Obtaining approval for a new indication generally requires that additional clinical studies be conducted. A company cannot be sure that any additional approval for new indications for any product candidate will be approved on a timely basis, or at all.
Before a company can market products for additional indications, it must obtain additional approvals from the FDA. Obtaining approval for a new indication generally requires that additional clinical studies be conducted. A company cannot be sure that any additional approval for new indications for any drug candidate will be approved on a timely basis, or at all.
Neratinib — Metastatic Breast Cancer In February 2020, the FDA approved our supplemental New Drug Application ("NDA") for the use of neratinib in combination with capecitabine for the treatment of adult patients with advanced or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in the metastatic setting.
Neratinib — Metastatic Breast Cancer In February 2020, the FDA approved our supplemental New Drug Application (“NDA”) for the use of neratinib in combination with capecitabine for the treatment of adult patients with advanced or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in the metastatic setting.
We elected to apply patent term extension to U.S. Patent No. 7,399,865. The U.S. Patent and Trademark Office ("USPTO") has determined that U.S. Patent No. 7,399,865 is eligible for five years of patent term extension. U.S. Patent No. 7,399,865 Patent Term Extension (PTE) Certificate issued on November 19, 2021. U.S. Patent No. 7,399,865 will expire December 29, 2030.
We elected to apply patent term extension to U.S. Patent No. 7,399,865. The U.S. Patent and Trademark Office (“USPTO”) has determined that U.S. Patent No. 7,399,865 is eligible for five years of patent term extension. U.S. Patent No. 7,399,865 Patent Term Extension (PTE) Certificate issued on November 19, 2021. U.S. Patent No. 7,399,865 will expire December 29, 2030.
The FDA periodically inspects the sponsor’s records related to safety reporting and/or manufacturing facilities; this latter effort includes assessment of ongoing compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.
The FDA periodically inspects the sponsor’s records related to safety reporting and/or manufacturing facilities; this latter effort includes assessment of ongoing compliance with cGMPs. Accordingly, manufacturers and their subcontractors must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.
Pursuant to the Pint Agreement, we granted to Pint, under certain of our intellectual property rights relating to neratinib, an exclusive, sublicensable (under certain circumstances) license to develop and commercialize any product containing neratinib and certain related compounds in Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela, French Guiana, the Falkland Islands, and Mexico (the "Pint Territory").
Pursuant to the Pint Agreement, we granted to Pint, under certain of our intellectual property rights relating to neratinib, an exclusive, sublicensable (under certain circumstances) license to develop and commercialize any product containing neratinib and certain related compounds in Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela, French Guiana, the Falkland Islands, and Mexico (the “Pint Territory”).
After completion of adjuvant treatment with trastuzumab, patients were randomized to receive extended adjuvant treatment with either neratinib or placebo for a period of one year. Patients were then followed for recurrent disease, ductal carcinoma in situ ("DCIS"), or death for a period of two years after randomization in the trial.
After completion of adjuvant treatment with trastuzumab, patients were randomized to receive extended adjuvant treatment with either neratinib or placebo for a period of one year. Patients were then followed for recurrent disease, ductal carcinoma in situ (“DCIS”), or death for a period of two years after randomization in the trial.
Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our current product candidates and any future product candidates, proprietary information and proprietary technology through a combination of contractual arrangements and patents, both in the United States and abroad.
Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our current drug candidates and any future drug candidates, proprietary information and proprietary technology through a combination of contractual arrangements and patents, both in the United States and abroad.
Efficacy results from the trial showed that the objective response rate was 24% for patients who had received prior trastuzumab treatment and 56% for patients with no prior trastuzumab treatment. Furthermore, the median progression free survival ("PFS") was 22.3 weeks for the patients who had received prior trastuzumab and 39.6 weeks for the patients who had not received prior trastuzumab.
Efficacy results from the trial showed that the objective response rate was 24% for patients who had received prior trastuzumab treatment and 56% for patients with no prior trastuzumab treatment. Furthermore, the median progression free survival (“PFS”) was 22.3 weeks for the patients who had received prior trastuzumab and 39.6 weeks for the patients who had not received prior trastuzumab.
The primary endpoint of the ExteNET trial was invasive disease-free survival ("DFS"). The results of the trial demonstrated that treatment with neratinib resulted in a 33% reduction of risk of invasive disease recurrence or death versus placebo (hazard ratio = 0.67, p = 0.009).
The primary endpoint of the ExteNET trial was invasive disease-free survival (“DFS”). The results of the trial demonstrated that treatment with neratinib resulted in a 33% reduction of risk of invasive disease recurrence or death versus placebo (hazard ratio = 0.67, p = 0.009).
Under the Prescription Drug User Fee Act ("PDUFA") guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.
Under the Prescription Drug User Fee Act (“PDUFA”) guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.
The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase I and an organizational commitment to expedite the development and review of the product candidate, including involvement of senior managers.
The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase I and an organizational commitment to expedite the development and review of the drug candidate, including involvement of senior managers.
Fast track designation applies to the combination of the product candidate and the specific indication for which it is being studied. The sponsor of a fast track product candidate has opportunities for more frequent interactions with the FDA review team during development.
Fast track designation applies to the combination of the drug candidate and the specific indication for which it is being studied. The sponsor of a fast track drug candidate has opportunities for more frequent interactions with the FDA review team during development.
The competent authority of the reference member state prepares a draft assessment report, a draft summary of the product characteristics ("SmPC"), and a draft of the labeling and package leaflet, which are sent to the other member states (referred to as the member states concerned) for their approval.
The competent authority of the reference member state prepares a draft assessment report, a draft summary of the product characteristics (“SmPC”), and a draft of the labeling and package leaflet, which are sent to the other member states (referred to as the member states concerned) for their approval.
In addition to the FDA, a company can be subject to legal claims from other governmental agencies and private parties relating to marketing practices such as the Federal Trade Commission ("FTC"), competitors, patients, and other third parties.
In addition to the FDA, a company can be subject to legal claims from other governmental agencies and private parties relating to marketing practices such as the Federal Trade Commission (“FTC”), competitors, patients, and other third parties.
An NDA is eligible for priority review if the product candidate is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or effectiveness compared to available products.
An NDA is eligible for priority review if the drug candidate is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or effectiveness compared to available products.
Non-clinical studies and clinical trials Similarly to the United States, the various phases of non-clinical and clinical research in the EU, are subject to significant regulatory controls. Non-clinical studies are performed to demonstrate the health or environmental safety of new biological substances.
Non-clinical studies and clinical trials As in the United States, the various phases of non-clinical and clinical research in the EU are subject to significant regulatory controls. Non-clinical studies are performed to demonstrate the health or environmental safety of new biological substances.
The regulatory landscape related to clinical trials in the EU has been subject to recent changes. The EU Clinical Trials Regulation ("CTR") which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022.
The regulatory landscape related to clinical trials in the EU has been subject to recent changes. The EU Clinical Trials Regulation (“CTR”) which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022.
We intend to pursue the development of alisertib in hormone receptor positive breast cancer as well as small cell lung cancer based on the prior clinical data that has been generated.
We intend to pursue the development of alisertib in hormone receptor positive. HER2-negative, breast cancer as well as small cell lung cancer based on the prior clinical data that has been generated.
The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, for new indications, dosages or strengths of an existing drug.
The FDCA also provides three years of non-patent exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, for new indications, dosages or strengths of an existing drug.
Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies. The advertising and promotion of medicinal products is also subject to laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.
Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies. 23 Table of Contents The advertising and promotion of medicinal products is also subject to laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.
In the CONTROL trial, patients with HER2-positive early stage breast cancer who had completed trastuzumab-based adjuvant therapy received neratinib daily for a period of one year. In December 2021, final results from the CONTROL trial were presented at the CTRC-AACR San Antonio Breast Cancer Symposium.
In the CONTROL trial, patients with HER2-positive early stage breast cancer who had completed trastuzumab-based adjuvant therapy received neratinib daily for a period of one year. 6 Table of Contents In December 2021, final results from the CONTROL trial were presented at the CTRC-AACR San Antonio Breast Cancer Symposium.
The data from this trial were presented in an oral presentation at the American Society of Clinical Oncology ("ASCO") Annual Meeting in June 2015 and were published online in The Lancet Oncology in February 2016.
The data from this trial were presented in an oral presentation at the American Society of Clinical Oncology (“ASCO”) Annual Meeting in June 2015 and were published online in The Lancet Oncology in February 2016.
Within the Knight Territory, we will be solely responsible for obtaining the regulatory approval for the indication of extended adjuvant treatment of HER2-positive early stage breast cancer (the "Initial Indication"), and Knight will use commercially reasonable efforts to prepare, file and manage regulatory filings for any other indications in the field of human use.
Within the Knight Territory, we will be solely responsible for obtaining the regulatory approval for the indication of extended adjuvant treatment of HER2-positive early stage breast cancer (the “Initial Indication”), and Knight will use commercially reasonable efforts to prepare, file and manage regulatory filings for any other indications in the field of human use.
In addition, we are aware of numerous additional ongoing clinical trials involving other product candidates used alone or in combination with existing drugs to treat patients with breast cancer.
In addition, we are aware of numerous additional ongoing clinical trials involving other drug candidates used alone or in combination with existing drugs to treat patients with breast cancer.
In September 2017, we presented updated data from the ExteNET trial at the European Society of Medical Oncology ("ESMO") 2017 Congress in Madrid, Spain. The data represented a predefined five-year invasive disease-free survival ("iDFS"), analysis as a follow-up to the primary two-year iDFS analysis of the Phase III ExteNet trial.
In September 2017, we presented updated data from the ExteNET trial at the European Society of Medical Oncology (“ESMO”) 2017 Congress in Madrid, Spain. The data represented a predefined five-year invasive disease-free survival (“iDFS”), analysis as a follow-up to the primary two-year iDFS analysis of the Phase III ExteNet trial.
The Bixink Agreement granted intellectual property rights and set forth the respective obligations with respect to development, commercialization and supply of NERLYNX in South Korea (the "Bixink Territory"). The Bixink Agreement includes potential milestone payments due to us upon successful completion of certain performance obligations, such as achieving regulatory approvals.
The Bixink Agreement granted intellectual property rights and set forth the respective obligations with respect to development, commercialization and supply of NERLYNX in South Korea (the “Bixink Territory”). The Bixink Agreement includes potential milestone payments due to us upon successful completion of certain performance obligations, such as achieving regulatory approvals.
We have some flexibility in securing other manufacturers to produce our drug candidates; however, our alternatives may be limited due to proprietary technologies or methods used in the manufacture of some of our drug candidates. 15 Government Regulation United States—FDA Process The research, development, testing, manufacture, labeling, promotion, advertising, distribution and marketing, among other things, of drug products are extensively regulated by governmental authorities in the United States and other countries.
We have some flexibility in securing other manufacturers to produce our drug candidates; however, our alternatives may be limited due to proprietary technologies or methods used in the manufacture of some of our drug candidates. 17 Table of Contents Government Regulation United States—FDA Process The research, development, testing, manufacture, labeling, promotion, advertising, distribution and marketing, among other things, of drug products are extensively regulated by governmental authorities in the United States and other countries.
The regulation will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
In addition, we will pursue patent protection for any new discoveries or inventions made in the course of our development of neratinib. In the United States, marketing approval for neratinib was obtained on July 17, 2017, which provided five years of regulatory exclusivity.
In addition, we will pursue patent protection for any new discoveries or inventions made in the course of our development of neratinib. 13 Table of Contents In the United States, marketing approval for neratinib was obtained on July 17, 2017, which provided five years of regulatory exclusivity.
Patients were administered alisertib monotherapy at a dose of 50 mg twice a day (“BID”) for seven days followed by a 14-day break. 8 Table of Contents In patients with chemotherapy sensitive disease, alisertib resulted in a response rate of 19% and a duration of response of 3.1 months.
Patients were administered alisertib monotherapy at a dose of 50 mg twice a day (“BID”) for seven days followed by a 14-day break. In patients with chemotherapy sensitive disease, alisertib resulted in a response rate of 19% and a duration of response of 3.1 months.
As a result of this transaction, Former Puma became our wholly-owned subsidiary and subsequently merged with and into us, at which time we adopted Former Puma’s business plan and changed our name to “Puma Biotechnology, Inc.”
As a result of this transaction, Former Puma became our wholly owned subsidiary and subsequently merged with and into us, at which time we adopted Former Puma’s business plan and changed our name to “Puma Biotechnology, Inc.” 29 Table of Contents
In June 2020, we entered into a letter agreement (the "Letter Agreement") with Pfizer relating to the method of payment associated with a one-time milestone payment under the Pfizer Agreement.
In June 2020, we entered into a letter agreement (the “Letter Agreement”) with Pfizer relating to the method of payment associated with a one-time milestone payment under the Pfizer Agreement.
Under the terms of the Knight Agreement, we will be solely responsible for the manufacturing and supply of the licensed products to Knight, but under limited circumstances Knight may obtain the right to manufacture the licensed products under the supply agreement. The Knight Agreement sets forth the parties’ respective obligations with respect to the commercialization of the licensed products.
Under the terms of the Knight Agreement, we will be solely responsible for the manufacturing and supply of the licensed products to Knight, but under limited circumstances Knight may obtain the right to manufacture the licensed products under the supply agreement. 16 Table of Contents The Knight Agreement sets forth the parties’ respective obligations with respect to the commercialization of the licensed products.
The aforementioned EU rules are generally applicable in the European Economic Area ("EEA") which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.
The aforementioned EU rules are generally applicable in the European Economic Area (“EEA”) which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.
This sales force is supported by an experienced leadership team consisting of regional business leaders and a VP of sales. In addition, the broader commercial team is comprised of experienced professionals in marketing, training, sales operations, global product strategy as well as access and reimbursement. In addition, our commercial infrastructure includes capabilities in manufacturing, medical affairs, quality control, and compliance.
This sales force is supported by an experienced leadership team consisting of 6 regional business leaders and a VP of sales. In addition, the broader commercial team is comprised of experienced professionals in marketing, training, sales operations, global product strategy as well as access and reimbursement. In addition, our commercial infrastructure includes capabilities in manufacturing, regulatory, quality control, and compliance.
The main AEs seen in the trial were similar to the prior monotherapy trial with incindences of neutropenia, anemia, and decreases in white blood cells and lymphocytes seen.
The main AEs seen in the trial were similar to the prior monotherapy trial with incidences of neutropenia, anemia, and decreases in white blood cells and lymphocytes seen.
For a complete description, you should refer to each of these agreements, copies of which have been filed as exhibits to this Annual Report on Form 10-K. Specialised Therapeutics Agreement On November 20, 2017, we entered into a sub-license agreement (the "Specialised Therapeutics Agreement"), with Specialised Therapeutics Asia Pte Ltd. ("STA").
For a complete description, you should refer to each of these agreements, copies of which have been filed as exhibits to this Annual Report on Form 10-K. Specialised Therapeutics Agreement On November 20, 2017, we entered into a sub-license agreement (the “Specialised Therapeutics Agreement”), with Specialised Therapeutics Asia Pte Ltd. (“STA”).
Pursuant to the Medison Agreement, we granted to Medison, under certain of our intellectual property rights relating to neratinib, an exclusive license to commercialize neratinib and certain related compounds and participate in the named patient supply in Israel (the "Medison Territory"), subject to the terms of the Medison Agreement and the related supply agreement.
Pursuant to the Medison Agreement, we granted to Medison, under certain of our intellectual property rights relating to neratinib, an exclusive license to commercialize neratinib and certain related compounds and participate in the named patient supply in Israel (the “Medison Territory”), subject to the terms of the Medison Agreement and the related supply agreement.
The Takeda Agreement contains other customary clauses and terms as are common in similar agreements in the industry. 13 Sub-License Agreements The following summary describes our material sub-license agreements. Because the following is only a summary, it does not contain all of the information that may be important to you.
The Takeda Agreement contains other customary clauses and terms as are common in similar agreements in the industry. 15 Table of Contents Sub-License Agreements The following summary describes our material sub-license agreements. Because the following is only a summary, it does not contain all of the information that may be important to you.
This regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and providing the basis for cooperation at the EU level for joint clinical assessments in these areas.
The Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and provide the basis for cooperation at the EU level for joint clinical assessments in these areas.
The two-year DFS rate for the neratinib arm was 93.9% and the two-year DFS rate for the placebo arm was 91.6%. The secondary endpoint of the trial was disease-free survival including ductal carcinoma in situ ("DFS-DCIS").
The two-year DFS rate for the neratinib arm was 93.9% and the two-year DFS rate for the placebo arm was 91.6%. The secondary endpoint of the trial was disease-free survival including ductal carcinoma in situ (“DFS-DCIS”).
Even with such studies, our products may be considered less safe, less effective or less cost-effective than existing or future products, and third-party payors may not provide limits or deny coverage and reimbursement for our product candidates, in whole or in part. In many countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.
Even with such studies, our products may be considered less safe, less effective or less cost-effective than existing or future products, and third-party payors may not provide limits or deny coverage and reimbursement for our drug candidates, in whole or in part. 24 Table of Contents In many countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeObtaining approval of an NDA or foreign marketing application is an extensive, lengthy, expensive and inherently uncertain process, and the FDA or a foreign regulator may delay, limit or deny approval of a drug candidate for many reasons, including: • we may not be able to demonstrate that NERLYNX, alisertib or any other drug candidate is safe and effective as a treatment for our targeted indications to the satisfaction of the FDA or other foreign regulator; • the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or other foreign regulator for marketing approval; • the FDA or other foreign regulators may disagree with the number, design, size, conduct or implementation of our clinical trials; • the CRO, that we retain to conduct clinical trials or any other third parties involved in the conduct of trials may take actions outside of our control that materially adversely impact our clinical trials; • the FDA or other foreign regulators may not find the data from pre-clinical studies and clinical trials sufficient to demonstrate that the clinical and other benefits of NERLYNX, alisertib or any other drug candidate outweigh the safety risks; • the FDA or other foreign regulators may disagree with our interpretation of data from our pre-clinical studies and clinical trials or may require that we conduct additional studies or trials; • the FDA or other foreign regulators may not accept data generated at our clinical trial sites; • if our NDA is reviewed by an advisory committee, the FDA may have difficulties scheduling an advisory committee meeting in a timely manner or the advisory committee may recommend against approval of our application or may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions; • the advisory committee may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions; • the FDA or other foreign regulators may require development of a Risk Evaluation and Mitigation Strategy or similar risk management measures as a condition of approval; • the FDA or other foreign regulators may identify deficiencies in the manufacturing processes or facilities of our third-party manufacturers; or • the FDA or other foreign regulators may change their approval policies or adopt new regulations.
Biggest changeObtaining approval of an NDA or foreign marketing application is an extensive, lengthy, expensive and inherently uncertain process, and the FDA or a foreign regulator may delay, limit or deny approval of a drug candidate for many reasons, including: • we may not be able to demonstrate that NERLYNX, alisertib or any other drug candidate is safe and effective as a treatment for our targeted indications to the satisfaction of the FDA or other foreign regulator; • the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or other foreign regulator for marketing approval; • the FDA or other foreign regulators may disagree with the number, design, size, conduct or implementation of our clinical trials; • the CRO that we retain to conduct clinical trials or any other third parties involved in the conduct of trials may take actions outside of our control that materially adversely impact our clinical trials; • the FDA or other foreign regulators may not find the data from pre-clinical studies and clinical trials sufficient to demonstrate that the clinical and other benefits of NERLYNX, alisertib or any other drug candidate outweigh the safety risks; • the FDA or other foreign regulators may disagree with our interpretation of data from our pre-clinical studies and clinical trials or may require that we conduct additional studies or trials; • the FDA or other foreign regulators may not accept data generated at our clinical trial sites; • the FDA or other foreign regulators may require development of a Risk Evaluation and Mitigation Strategy or similar risk management measures as a condition of approval; • the FDA or other foreign regulators may identify deficiencies in the manufacturing processes or facilities of our third-party manufacturers; or • the FDA or other foreign regulators may change their approval policies or adopt new regulations.
The patents we have licensed may be challenged and could be invalidated or rendered unenforceable by third parties. There is no guarantee that a court would agree that any of the patents we have licensed, and which are currently in force, are valid or enforceable.
The patents we have licensed may be challenged by third parties and could be invalidated or rendered unenforceable. There is no guarantee that a court would agree that any of the patents we have licensed, and which are currently in force, are valid or enforceable.
The FDA’s approval of the NDA for NERLYNX and any regulatory approvals that we receive for alisertib or our other drug candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase IV clinical trials, and surveillance to monitor the safety and efficacy of the drug candidate.
The FDA’s approval for NERLYNX and any regulatory approvals that we receive for alisertib or our other drug candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase IV clinical trials, and surveillance to monitor the safety and efficacy of the drug candidate.
NERLYNX, alisertib or our other drug candidates may cause undesirable side effects or have other properties when used alone or in combination with other approved products or investigational new drugs that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any, as applicable.
NERLYNX, alisertib or other drug candidates may cause undesirable side effects or have other properties when used alone or in combination with other approved products or investigational new drugs that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any, as applicable.
Each third-party payor separately decides which products it will cover and establishes the reimbursement level, and there is no guarantee that any of our approved products or product candidates that may be approved for marketing by regulatory authorities will receive adequate coverage or reimbursement levels. Obtaining and maintaining coverage approval for a product is time-consuming, costly and may be difficult.
Each third-party payor separately decides which products it will cover and establishes the reimbursement level, and there is no guarantee that any of our approved products or drug candidates that may be approved for marketing by regulatory authorities will receive adequate coverage or reimbursement levels. Obtaining and maintaining coverage approval for a product is time-consuming, costly and may be difficult.
In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our products after receipt of FDA or comparable foreign regulatory authority approval. • Our third-party manufacturers might be unable to formulate and manufacture our drugs in the volume and of the quality required to meet our clinical and/or commercial needs. • Our future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our products for commercialization, as applicable. • The facilities used by our contract manufacturers to manufacture NERLYNX, alisertib and our other drug candidates must be approved by the FDA or foreign regulatory authorities pursuant to inspections that are conducted following submission of an NDA to the FDA or pursuant to similar foreign applications to foreign regulatory authorities.
In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our products after receipt of FDA or comparable foreign regulatory authority approval. • Our third-party manufacturers might be unable to formulate and manufacture our products and drug candidates in the volume and of the quality required to meet our clinical and/or commercial needs. • Our future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our products for commercialization, as applicable. • The facilities used by our contract manufacturers to manufacture NERLYNX, alisertib and our other drug candidates must be approved for the manufacture of such products or candidates by the FDA or foreign regulatory authorities pursuant to inspections that are conducted following submission of an NDA to the FDA or pursuant to similar foreign applications to foreign regulatory authorities.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product and product candidates, if approved.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product and drug candidates, if approved.
We cannot assure you that we will successfully address each of these uncertainties or any others we may face in the commercialization of NERLYNX. In addition, we are dependent on international third-party sub-licensees for the development and commercialization of NERLYNX in several countries outside the United States.
We cannot assure you that we will successfully address each of these uncertainties or any others we may face in the ongoing commercialization of NERLYNX. In addition, we are dependent on international third-party sub-licensees for the development and commercialization of NERLYNX in several countries outside the United States.
In addition, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general.
In addition, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular drug candidate or product and our company in general.
The United States and some foreign jurisdictions have enacted or are considering enacting a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to profitably sell our product and product candidates, if and when they are approved.
The United States and some foreign jurisdictions have enacted or are considering enacting a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to profitably sell our product and drug candidates, if and when they are approved.
Any potential future acquisitions or in-licensing transactions entail numerous risks, including but not limited to: • risks associated with satisfying the closing conditions relating to such transactions and realizing their anticipated benefits; • increased operating expenses and cash requirements; • difficulty integrating acquired technologies, products, operations, and personnel with our existing business; • the potential disruption of our historical core business; • diversion of management’s attention in connection with both negotiating the acquisition or license and integrating the business, technology or product; • retention of key employees; • difficulties in assimilating employees and corporate cultures of any acquired companies; 46 Table of Contents • uncertainties in our ability to maintain key business relationships of any acquired companies; • strain on managerial and operational resources; • difficulty implementing and maintaining effective internal control over financial reporting at businesses that we acquire, particularly if they are not located near our existing operations; • exposure to unanticipated liabilities of acquired companies or companies in which we invest; • the potential need to write down assets or recognize impairment charges; and • potential costly and time-consuming litigation, including stockholder lawsuits.
Any potential future acquisitions or in-licensing transactions entail numerous risks, including but not limited to: • risks associated with satisfying the closing conditions relating to such transactions and realizing their anticipated benefits; • increased operating expenses and cash requirements; • difficulty integrating acquired technologies, products, operations, and personnel with our existing business; • the potential disruption of our historical core business; • diversion of management’s attention in connection with both negotiating the acquisition or license and integrating the business, technology or product; • retention of key employees; • difficulties in assimilating employees and corporate cultures of any acquired companies; • uncertainties in our ability to maintain key business relationships of any acquired companies; • strain on managerial and operational resources; • difficulty implementing and maintaining effective internal control over financial reporting at businesses that we acquire, particularly if they are not located near our existing operations; • exposure to unanticipated liabilities of acquired companies or companies in which we invest; • the potential need to write down assets or recognize impairment charges; and • potential costly and time-consuming litigation, including stockholder lawsuits.
We may be required to conduct expensive pharmacoeconomic studies to justify coverage and reimbursement or the level of coverage and reimbursement relative to other therapies. If coverage and adequate reimbursement are not available or limited, we may not be able to successfully commercialize any product or product candidate for which we obtain marketing approval.
We may be required to conduct expensive pharmacoeconomic studies to justify coverage and reimbursement or the level of coverage and reimbursement relative to other therapies. If coverage and adequate reimbursement are not available or limited, we may not be able to successfully commercialize any product or drug candidate for which we obtain marketing approval.
Undesirable side effects caused by NERLYNX, alisertib or our other drug candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities.
Undesirable side effects caused by NERLYNX, alisertib or other drug candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities.
While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim. Once the Regulation becomes applicable, it will have a phased implementation depending on the concerned products.
While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim. Once applicable, it will have a phased implementation depending on the concerned products.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; 38 Table of Contents • the federal Civil Monetary Penalties law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • federal criminal laws that prohibit executing a scheme to defraud any federal healthcare benefit program or making false statements relating to healthcare matters; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to Centers for Medicare & Medicaid Services (“CMS”), information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (nurse practitioners, certified nurse anesthetists, physician assistants, clinical nurse specialists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners (manufacturers are required to submit reports to CMS by the 90th day of each calendar year); • analogous state equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and • European and other foreign law equivalents of each of these laws, including reporting requirements detailing interactions with and payments to healthcare providers.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • the federal Civil Monetary Penalties law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • federal criminal laws that prohibit executing a scheme to defraud any federal healthcare benefit program or making false statements relating to healthcare matters; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to Centers for Medicare & Medicaid Services (“CMS”), information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (nurse practitioners, certified nurse anesthetists, physician assistants, clinical nurse specialists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners (manufacturers are required to submit reports to CMS by the 90 th day of each calendar year); • analogous state equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and • European and other foreign law equivalents of each of these laws, including reporting requirements detailing interactions with and payments to healthcare providers.
Orphan drug designation neither shortens the development or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. Health care reform measures may hinder or prevent our products ’ and product candidates ’ commercial success.
Orphan drug designation neither shortens the development or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. Health care reform measures may hinder or prevent our products ’ and drug candidates ’ commercial success.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the Clinical Trials Directive remain governed by said Directive until January 31, 2025.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.
In addition, if a product candidate that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity. 36 Table of Contents We may decide to seek Orphan Drug Designations for alisertib.
In addition, if a drug candidate that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity. 41 Table of Contents We may decide to seek Orphan Drug Designations for alisertib.
These factors include: • the level of sales of NERLYNX; • the overall demand for NERLYNX, including the customer ordering and discontinuation patterns • actual or anticipated quarterly variation in our results of operations or the results of our competitors; • announcements regarding results of any clinical trials relating to our drug candidates; • announcements of medical innovations or new products by our competitors; 49 Table of Contents • developments involving our sublicensees; • issuance of new or changed securities analyst reports or recommendations for our stock; • developments or disputes concerning our intellectual property or other proprietary rights; • commencement of, or developments in, litigation involving us; • market conditions in the biopharmaceutical industry; • timing and announcement of regulatory approvals; • changes in government regulation that affect us or the biopharmaceutical industry more generally; • any future sales of our common stock or other securities in connection with raising additional capital or otherwise; • any major change to the composition of our board of directors or management; and • general economic conditions and slow or negative growth of our markets.
These factors include: • the level of sales of NERLYNX; • the overall demand for NERLYNX, including the customer ordering and discontinuation patterns; • actual or anticipated quarterly variation in our results of operations or the results of our competitors; • announcements regarding results of any clinical trials relating to our drug candidates; • announcements of medical innovations or new products by our competitors; • developments involving our sublicensees; • issuance of new or changed securities analyst reports or recommendations for our stock; • developments or disputes concerning our intellectual property or other proprietary rights; • commencement of, or developments in, litigation involving us; • market conditions in the biopharmaceutical industry; • timing and announcement of regulatory approvals; • changes in government regulation that affect us or the biopharmaceutical industry more generally; • any future sales of our common stock or other securities in connection with raising additional capital or otherwise; • any major change to the composition of our board of directors or management; and • general economic conditions and slow or negative growth of our markets.
There can be no assurances that we will be able to obtain such designations. Even if we, or any future collaborators, obtain orphan drug designation for a product candidate, we, or they, may not be able to obtain or maintain orphan drug exclusivity for that product candidate.
There can be no assurances that we will be able to obtain such designations. Even if we, or any future collaborators, obtain orphan drug designation for a drug candidate, we, or they, may not be able to obtain or maintain orphan drug exclusivity for that drug candidate.
Alternatively, we may attempt to identify and transact with a new sub-licensee, but there can be no assurance that we would be able to identify a suitable sub-licensee or transact on terms that are favorable to us. 40 Table of Contents We have no experience in drug formulation or manufacturing and rely exclusively on third parties to formulate and manufacture NERLYNX, alisertib and our other drug candidates, and any disruption or loss of these relationships could delay our development and commercialization efforts.
Alternatively, we may attempt to identify and transact with a new sub-licensee, but there can be no assurance that we would be able to identify a suitable sub-licensee or transact on terms that are favorable to us. 45 Table of Contents We have no experience in drug formulation or manufacturing and rely exclusively on third parties to formulate and manufacture NERLYNX, alisertib and our other drug candidates, and any disruption or loss of these relationships could delay our development and commercialization efforts.
We may fail to obtain orphan drug designations from the FDA for our product candidates, and even if we obtain such designations, we may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.
We may fail to obtain orphan drug designations from the FDA for our drug candidates, and even if we obtain such designations, we may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.
If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business. 31 Table of Contents Clinical trials are very expensive, time-consuming and difficult to design and implement.
If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business. 35 Table of Contents Clinical trials are very expensive, time-consuming and difficult to design and implement.
In addition, our failure to follow FDA or foreign regulatory authorities rules and guidelines relating to promotion and advertising may cause the FDA or foreign regulatory authorities to issue warning letters or untitled letters, bring an enforcement action against us, suspend or withdraw an approved product from the market, require a recall or institute fines or civil fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our reputation and our business.
In addition, our failure to follow FDA or other regulatory authorities rules and guidelines relating to promotion and advertising may cause the FDA or other regulatory authorities to issue warning letters or untitled letters, bring an enforcement action against us, suspend or withdraw an approved product from the market, require a recall or institute fines or civil fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our reputation and our business.
Failure to make necessary disclosures and/or to identify overpayments could result in allegations against us under the Federal False Claims Act and other laws and regulations. 39 Table of Contents Federal law requires that a manufacturer that participates in the MDRP also participate in the Public Health Service’s 340B drug pricing program (the “340B program”) in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B.
Failure to make necessary disclosures and/or to identify overpayments could result in allegations against us under the Federal False Claims Act and other laws and regulations. 44 Table of Contents Federal law requires that a manufacturer that participates in the MDRP also participate in the Public Health Service’s 340B drug pricing program (the “340B program”) in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B.
Even if we obtain coverage for a given product, the resulting reimbursement rates may be inadequate and may affect the demand for, or the price of, any product candidate for which we obtain marketing approval.
Even if we obtain coverage for a given product, the resulting reimbursement rates may be inadequate and may affect the demand for, or the price of, any drug candidate for which we obtain marketing approval.
Similarly, if we do not obtain regulatory approval of alisertib or our other drug candidates in a particular jurisdiction, we will not be able to market such drug candidate in that jurisdiction.
If we do not obtain regulatory approval of alisertib or our other drug candidates in a particular jurisdiction, we will not be able to market such drug candidate in that jurisdiction.
We are currently party to several sub-licenses in various regions outside the United States, including Europe (excluding Russia and Ukraine), Australia, Canada, China, Southeast Asia, Israel, South Korea, and various countries and territories in Central America, South America and Africa. We depend on these third parties for a significant portion of our total revenue.
We are currently party to several sub-licenses in various regions outside the United States, including Europe (excluding Russia and Ukraine), Australia, Canada, China, Southeast Asia, Israel, South Korea, and various countries and territories in Central America, South America, the Middle East and Africa. We depend on these third parties for a significant portion of our total revenue.
If these licensees are unsuccessful in receiving regulatory approvals or in commercializing NERLYNX, our business, results of operations and financial condition will be materially adversely affected. Moreover, we intend to seek additional third parties to sub-license NERLYNX in additional geographies, and may pursue a similar strategy for any future product candidates that we develop.
If these licensees are unsuccessful in receiving regulatory approvals or in commercializing NERLYNX, our business, results of operations and financial condition will be materially adversely affected. Moreover, we intend to seek additional third parties to sub-license NERLYNX in additional geographies, and may pursue a similar strategy for any future drug candidates that we develop.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.; • federal false claims laws, including, without limitation, the False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal third-party payors that are false or fraudulent, such as engaging in improper promotion of products or submitting inaccurate price reports to the Medicaid Drug Rebate program.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.; 43 Table of Contents • federal false claims laws, including, without limitation, the False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal third-party payors that are false or fraudulent, such as engaging in improper promotion of products or submitting inaccurate price reports to the Medicaid Drug Rebate program.
In the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize NERLYNX and our other product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the EU or member state level may result in significant additional requirements or obstacles that may increase our operating costs.
In the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize NERLYNX and our other drug candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the EU or member state level may result in significant additional requirements or obstacles that may increase our operating costs.
We cannot predict with certainty what impact any federal or state health reforms will have on us, but such changes could impose new or more stringent regulatory requirements on our activities or result in reduced reimbursement for our products, any of which could adversely affect our business, results of operations and financial condition. 37 Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
We cannot predict with certainty what impact any federal or state health reforms will have on us, but such changes could impose new or more stringent regulatory requirements on our activities or result in reduced reimbursement for our products, any of which could adversely affect our business, results of operations and financial condition. 42 Table of Contents Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. For example, the California Consumer Privacy Act of 2018 ("CCPA") went into effect on January 1, 2020.
Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. For example, the California Consumer Privacy Act of 2018 (“CCPA”) went into effect on January 1, 2020.
If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our drug candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance. The results of our clinical trials may not support our product candidate claims.
In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance. The results of our clinical trials may not support our drug candidate claims.
Further, the California Privacy Rights Act ("CPRA") generally went into effect on January 1, 2023 and significantly amends the CCPA. It imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
Further, the California Privacy Rights Act (“CPRA”) generally went into effect on January 1, 2023 and significantly amends the CCPA. It imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
Disruptions at the FDA and other agencies, such as the European Medicines Agency ("EMA") following its relocation to Amsterdam and resulting staff changes, may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Disruptions at the FDA and other agencies, such as the European Medicines Agency (“EMA”) following its relocation to Amsterdam and resulting staff changes, may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
There are numerous risks associated with our planned development alisertib, including, among others: • We have no prior experience developing alisertib; • The results of pre-clinical studies and early clinical studies of alisertib may not be predictive of later clinical studies, and success in previous stages cannot ensure positive outcome of future stages of clinical studies; • Alisertib may fail to show the desired pharmacological properties or safety and efficacy traits despite having progressed through pre-clinical studies and early clinical studies; • Even if we complete clinical development of alisertib, the results may not be sufficient to obtain regulatory approval in the United States or other countries; • Our license agreement with Takeda may be terminated by Takeda if we materially breach the agreement, in which case we would lose all rights to develop and commercialize alisertib; • We plan to rely on third party contractors to formulate and manufacture alisertib for clinical trials and these third-party contractors may be unable to formulate and manufacture alisertib in the volume and quality we require; • We plan to rely on third-party contractors to conduct our clinical trials of alisertib and if those parties fail to perform their services within expected timelines or fail to comply with regulatory requirements, our development efforts could be delayed; • Clinical trials are expensive, time-consuming and difficult to design and implement; and • Development of alisertib could distract management’s attention from other important aspects of our business.
There are numerous risks associated with our planned development alisertib, including, among others: • We have limited experience developing alisertib; 32 Table of Contents • The results of pre-clinical studies and early clinical studies of alisertib may not be predictive of later clinical studies, and success in previous stages cannot ensure positive outcome of future stages of clinical studies; • Alisertib may fail to show the desired pharmacological properties or safety and efficacy traits despite having progressed through pre-clinical studies and early clinical studies; • Even if we complete clinical development of alisertib, the results may not be sufficient to obtain regulatory approval in the United States or other countries; • Our license agreement with Takeda may be terminated by Takeda if we materially breach the agreement, in which case we would lose all rights to develop and commercialize alisertib; • We plan to rely on third party contractors to formulate and manufacture alisertib for clinical trials and these third-party contractors may be unable to formulate and manufacture alisertib in the volume and quality we require; • We plan to rely on third-party contractors to conduct our clinical trials of alisertib and if those parties fail to perform their services within expected timelines or fail to comply with regulatory requirements, our development efforts could be delayed; • Clinical trials are expensive, time-consuming and difficult to design and implement; and • Development of alisertib could distract management’s attention from other important aspects of our business.
The successful development and commercialization of any product candidate will require us to perform a variety of functions, including: • undertaking pre-clinical development and clinical trials; • participating in regulatory approval processes; • formulating and manufacturing products; • successfully conducting sales and marketing activities; and • implementing additional internal systems and infrastructure.
The successful development and commercialization of any drug candidate will require us to perform a variety of functions, including: • undertaking pre-clinical development and clinical trials; • participating in regulatory approval processes; • formulating and manufacturing products; • successfully conducting sales and marketing activities; and • implementing additional internal systems and infrastructure.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, we may terminate or delay the development of one or more of our product candidates, delay clinical trials necessary to market our products, or delay establishment of sales and marketing capabilities or other activities necessary to commercialize our products.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, we may terminate or delay the development of one or more of our drug candidates, delay clinical trials necessary to market our products, or delay establishment of sales and marketing capabilities or other activities necessary to commercialize our products.
If we market our products for uses beyond such approved indications, we could be subject to enforcement action, which could have a material adverse effect on our business. The FDA and foreign regulatory authorities strictly regulates marketing, labeling, advertising and promotion of prescription drugs.
If we market our products for uses beyond such approved indications, we could be subject to enforcement action, which could have a material adverse effect on our business. The FDA and foreign regulatory authorities strictly regulate marketing, labeling, advertising and promotion of prescription drugs.
To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.
To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our drug candidates.
As a result of these or other problems and risks, businesses, technologies or products we acquire or invest in or obtain licenses to may not produce the revenues, earnings or business synergies that we anticipated, acquired or licensed product candidates or technologies may not result in regulatory approvals, and acquired or licensed products may not perform as expected.
As a result of these or other problems and risks, businesses, technologies or products we acquire or invest in or obtain licenses to may not produce the revenues, earnings or business synergies that we anticipated, acquired or licensed drug candidates or technologies may not result in regulatory approvals, and acquired or licensed products may not perform as expected.
Our future capital requirements will depend on many factors, including: • the costs and expenses of our United States sales and marketing infrastructure, and of manufacturing; • the degree of success we experience in commercializing NERLYNX; • the revenue generated by the sale of NERLYNX and any other products that may be approved; • the costs, timing and outcomes of clinical trials and regulatory reviews associated with developing NERLYNX for additional indications, alisertib and our other product candidates; • the emergence of competing products; • the extent to which NERLYNX or any other product candidates we develop are adopted by the physician community and patients; • the number and types of future product candidates we develop and commercialize; • the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims; • the costs of operating as a public company and compliance with existing and future regulations; and • the extent and scope of our general and administrative expenses.
Our future capital requirements will depend on many factors, including: • the costs and expenses of our United States sales and marketing infrastructure, and of manufacturing; • the degree of success we experience in commercializing NERLYNX; • the revenue generated by the sale of NERLYNX and any other products that may be approved; • the costs, timing and outcomes of clinical trials and regulatory reviews associated with developing NERLYNX for additional indications, alisertib and our other drug candidates; 31 Table of Contents • the emergence of competing products; • the extent to which NERLYNX or any other drug candidates we develop are adopted by the physician community and patients; • the number and types of future drug candidates we develop and commercialize; • the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims; • the costs of operating as a public company and compliance with existing and future regulations; and • the extent and scope of our general and administrative expenses.
We cannot assure you that we will be able to enter these agreements on commercial terms, or at all, and our failure to do so would have an adverse effect on our continued commercialization efforts for NERLYNX or any future product candidates.
We cannot assure you that we will be able to enter these agreements on commercial terms, or at all, and our failure to do so would have an adverse effect on our continued commercialization efforts for NERLYNX or any future drug candidates.
In November 2021, we also entered into an Open Market Sales AgreementSM with Jefferies LLC pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $50.0 million from time to time, in any method that is deemed to be an “at the market” offering as defined in Rule 415(a)(4) of the Securities Act.
In November 2021, we also entered into an Open Market Sales Agreement SM with Jefferies LLC pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $50.0 million from time to time, in any method that is deemed to be an “at the market” offering as defined in Rule 415(a)(4) of the Securities Act.
Moreover, pre-clinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or comparable foreign regulatory authority approval.
Moreover, pre-clinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their drug candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or comparable foreign regulatory authority approval.
In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications.
In such an event, our trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our drug candidates for any or all targeted indications.
We estimate that clinical trials of our other drug candidates will take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials.
We estimate that clinical trials for any of our drug candidates will take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials.
We cannot guarantee that the FDA or foreign regulatory authorities will interpret trial results as we do, and more trials could be required before we are able to submit applications seeking approval of our product candidates.
We cannot guarantee that the FDA or foreign regulatory authorities will interpret trial results as we do, and more trials could be required before we are able to submit applications seeking approval of our drug candidates.
Coupled with ever-increasing EU and national regulatory burdens on those wishing to develop and market products, this could restrict or regulate post-approval activities and affect our ability to commercialize NERLYNX and our other product candidates, if approved.
Coupled with ever-increasing EU and national regulatory burdens on those wishing to develop and market products, this could restrict or regulate post-approval activities and affect our ability to commercialize NERLYNX and our other drug candidates, if approved.
It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may also be required.
It also created a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may also be required.
Challenges to the breadth or strength of protection provided by any patents we have licensed, or patent applications we may pursue in the future, with respect to any of our current or future product candidates or products, could threaten our ability to commercialize any of our current or future product candidates or products.
Challenges to the breadth or strength of protection provided by any patents we have licensed, or patent applications we may pursue in the future, with respect to any of our current or future drug candidates or products, could threaten our ability to commercialize any of our current or future drug candidates or products.
If a significant product patent is successfully challenged in a post grant proceeding or patent opposition, it may be revoked, which would have a serious negative impact on our ability to maintain exclusivity in the market-place for our commercial products affected by such revocation and could adversely affect our future revenues and profitability.
If a significant product patent is successfully challenged in a post grant proceeding or patent opposition, it may be revoked, which would have a serious negative impact on our ability to maintain exclusivity in the marketplace for our commercial products affected by such revocation and could adversely affect our future revenues and profitability.
To the extent economic challenges result in fewer individuals pursuing or being able to afford our products once commercialized, our business, results of operations, financial condition and cash flows could be adversely affected. We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits and product recalls.
To the extent economic challenges result in fewer individuals pursuing or being able to afford our products once commercialized, our business, results of operations, financial condition and cash flows could be adversely affected. 51 Table of Contents We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits and product recalls.
This Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and providing the basis for cooperation at the EU level for joint clinical assessments in these areas.
This Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and provide the basis for cooperation at the EU level for joint clinical assessments in these areas.
The failure of these sub-licensees to meet their contractual, regulatory or other obligations could adversely affect our business. ” Our NERLYNX commercialization efforts may fail to achieve the degree of market acceptance by patients and physicians necessary for commercial success. NERLYNX was approved by the FDA in 2017.
The failure of these sub-licensees to meet their contractual, regulatory or other obligations could adversely affect our business. ” 39 Table of Contents Our NERLYNX commercialization efforts may fail to achieve the degree of market acceptance by patients and physicians necessary for commercial success. NERLYNX was approved by the FDA in 2017.
We have entered into exclusive sub-license agreements with several third parties that provide these sub-licensees exclusive rights to the development and commercialization of NERLYNX in Europe (excluding Russia and Ukraine), Australia, Canada, China, Southeast Asia, Israel, South Korea, and various countries and territories in Central and South America.
We have entered into exclusive sub-license agreements with several third parties that provide these sub-licensees exclusive rights to the development and commercialization of NERLYNX in Europe (excluding Russia and Ukraine), Australia, Canada, China, Southeast Asia, Israel, South Korea, and various countries and territories in Central America, South America, the Middle East and Africa.
Our development of alisertib will be expensive, lengthy and unpredictable, and any failure to successfully develop alisertib will have a material adverse effect on our business and financial position. In September 2022, we in-licensed alisertib, a new product candidate, from Takeda. Pursuant to our exclusive license agreement with Takeda, we are responsible for global development and commercialization of alisertib.
Our development of alisertib will be expensive, lengthy and unpredictable, and any failure to successfully develop alisertib will have a material adverse effect on our business and financial position. In September 2022, we in-licensed alisertib from Takeda. Pursuant to our exclusive license agreement with Takeda, we are responsible for global development and commercialization of alisertib.
Any of these events could prevent us from achieving or maintaining market acceptance of NERLYNX or the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.
Any of these events could prevent us from achieving or maintaining market acceptance of NERLYNX or the particular drug candidate, if approved, and could significantly harm our business, results of operations and prospects.
Depending on the facts and circumstances, we could be subject to criminal penalties if we knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA. 44 Certain states have also enacted data privacy and security laws and regulations, which govern the privacy, processing and protection of health-related and other personal information.
Depending on the facts and circumstances, we could be subject to criminal penalties if we knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA. 49 Table of Contents Certain states have also enacted data privacy and security laws and regulations, which govern the privacy, processing and protection of health-related and other personal information.
The regulation will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
In such an event, we may be required to devote additional efforts and to incur additional costs associated with pursuing regulatory approval and commercialization of the applicable products and product candidates.
In such an event, we may be required to devote additional efforts and to incur additional costs associated with pursuing regulatory approval and commercialization of the applicable products and drug candidates.
We currently rely on various third parties for certain services outside the United States, including continued development of our product candidates and, if approved, its subsequent commercialization.
We currently rely on various third parties for certain services outside the United States, including continued development of our drug candidates and, if approved, its subsequent commercialization.
If NERLYNX fails to achieve market acceptance, it could have a material and adverse effect on our business, financial condition, results of operation and prospects. 35 Table of Contents We depend on a limited number of customers for a significant amount of our total revenue, and if we lose any of our significant customers, our business could be harmed.
If NERLYNX fails to achieve market acceptance, it could have a material and adverse effect on our business, financial condition, results of operation and prospects. We depend on a limited number of customers for a significant amount of our total revenue, and if we lose any of our significant customers, our business could be harmed.
If we or our third-party vendors were to experience a significant cybersecurity breach of our or their information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to counter-parties and data subjects could be material. In addition, our remediation efforts may not be successful.
If we or our third-party vendors were to experience a significant cybersecurity breach of our or their information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to counterparties and data subjects could be material. In addition, our remediation efforts may not be successful.
Even if regulatory approval is secured for any of our product candidates, the terms of such approval may limit the scope and use of our product candidate, which may also limit its commercial potential.
Even if regulatory approval is secured for any of our drug candidates, the terms of such approval may limit the scope and use of our drug candidate, which may also limit its commercial potential.
As of December 31, 2022, the aggregate principal amount outstanding under the notes sold pursuant to the Note Purchase Agreement (collectively, the “Athyrium Notes”) was $100.0 million.
As of December 31, 2023, the aggregate principal amount outstanding under the notes sold pursuant to the Note Purchase Agreement (collectively, the “Athyrium Notes”) was $100.0 million.
Failure to obtain or maintain adequate coverage and reimbursement for our products or product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue.
Failure to obtain or maintain adequate coverage and reimbursement for our products or drug candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue.
Outside the United States we rely entirely on third-party sublicenses for the development and commercialization of NERLYNX. For a description of the risks associated with those arrangements see, “— Risks Related to Third Parties — We are dependent on international third-party sub-licensees for the development and commercialization of NERLYNX in several countries outside the United States.
For a description of the risks associated with those arrangements see, “— Risks Related to Third Parties — We are dependent on international third-party sub-licensees for the development and commercialization of NERLYNX in several countries outside the United States.
Changes in either the patent laws or in the interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. 47 Table of Contents The patents we have licensed may be affected by certain provisions of the America Invents Act (“AIA”), enacted in 2011.
Changes in either the patent laws or in the interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. The patents we have licensed may be affected by certain provisions of the America Invents Act (“AIA”), enacted in 2011.
If our products fail to capture and maintain market share, we may not achieve sufficient product revenue and our business will suffer. We compete against fully integrated pharmaceutical companies and smaller companies that are collaborating with larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations.
If our products fail to capture and maintain market share, we may not achieve sufficient product revenue and our business will suffer. 50 Table of Contents We compete against fully integrated pharmaceutical companies and smaller companies that are collaborating with larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations.
We will also continue to expend substantial amounts on research and development of our other product candidates, including conducting clinical trials.
We will also continue to expend substantial amounts on research and development of our other drug candidates, including conducting clinical trials.
We participate in the Medicaid Drug Rebate Program ("MDRP") and other federal and state government pricing programs in the United States, and we may participate in additional government pricing programs in the future.
We participate in the Medicaid Drug Rebate Program (“MDRP”) and other federal and state government pricing programs in the United States, and we may participate in additional government pricing programs in the future.
To date, subjects treated with NERLYNX have experienced drug-related side effects including diarrhea. Results of our trials could reveal a high and unacceptable severity and prevalence of these or other side effects.
To date, subjects treated with NERLYNX have experienced drug-related side effects such as diarrhea. Results of our trials could reveal a high and unacceptable severity and prevalence of these or other side effects.
Although we have begun to commercialize NERLYNX in the United States and Europe in these indications, we continue to experience net losses. Moreover, we are continuing to develop NERLYNX for additional indications and are in the early stages of development for alisertib.
Although we have begun to commercialize NERLYNX in the United States and Europe in these indications, we continue to experience net losses. Moreover, we are in the early stages of development for alisertib.
As a result, we are entirely dependent on these parties to achieve regulatory approval of NERLYNX for marketing in these countries and for the commercialization of NERLYNX, if approved. For the years ended December 31, 2022 and 2021, royalty revenue from these sub-licensees was $28.0 million and $12.3 million, respectively, and represented 12% and 5% of total revenue, respectively.
As a result, we are entirely dependent on these parties to achieve regulatory approval of NERLYNX for marketing in these countries and for the commercialization of NERLYNX, if approved. For the years ended December 31, 2023 and 2022, royalty revenue from these sub-licensees was $32.5 million and $28.0 million, respectively, and represented 14% and 12% of total revenue, respectively.
We have no prior experience developing alisertib and may face significant difficulties during our development of alisertib or NERLYNX for additional indications. Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial process is also time consuming.
We have no prior experience developing alisertib and may face significant difficulties during our development of alisertib. Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial process is also time consuming.
If a third-party claims that we infringe its intellectual property rights, it could cause our business to suffer in a number of ways, including: • we may become involved in time-consuming and expensive litigation, even if the claim is without merit, the third party’s patent is ultimately invalid or unenforceable, or we are ultimately found to have not infringed; • we may become liable for substantial damages for past infringement if a court decides that our technologies infringe upon a third party’s patent; • we may be ordered by a court to stop making, using, selling, offering for sale, importing or licensing our products or technologies without a license from a patent holder, and such license may not be available on commercially acceptable terms, if at all, or may require us to pay substantial royalties or grant cross-licenses to our patents; and • we may have to redesign our products so that they do not infringe upon others’ patent rights, which may not be possible or could require substantial investment and/or time.
If a third-party claims that we infringe its intellectual property rights, it could cause our business to suffer in a number of ways, including: • we may become involved in time-consuming and expensive litigation, even if the claim is without merit, the third party’s patent is ultimately invalid or unenforceable, or we are ultimately found to have not infringed; • we may become liable for substantial damages for past infringement if a court decides that our technologies infringe upon a third party’s patent; • we may be ordered by a court to stop making, using, selling, offering for sale, importing or licensing our products or technologies without a license from a patent holder, and such license may not be available on commercially acceptable terms, if at all, or may require us to pay substantial royalties or grant cross-licenses to our patents; and • we may have to redesign our products so that they do not infringe upon others’ patent rights, which may not be possible or could require substantial investment and/or time. 54 Table of Contents If any of these events occur, our business could suffer, and the market price of our common stock may decline.
Although recent court decisions in the United States suggest that certain off-label promotional activities may be protected under the First Amendment, the scope of any such protection is unclear. If our promotional activities fail to comply with the FDA’s or foreign regulatory authorities' regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities.
Although court decisions in the United States have suggested that certain off-label promotional activities may be protected under the First Amendment, the scope of any such protection is unclear. If our promotional activities fail to comply with the FDA’s or other regulatory authorities’ regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease approximately 29,470 square feet of office space in the building located at 701 Gateway Blvd, South San Francisco, California. The lease for the South San Francisco facility commenced in October 2012. The lease will terminate around March 2026, with an option to extend for an additional five-year term.
Biggest changeThe rental amounts payable to us pursuant to both subleases increase approximately 3% and terminate in March 2026. We also lease approximately 29,470 square feet of office space in the building located at 701 Gateway Blvd, South San Francisco, California. The lease for the South San Francisco facility commenced in October 2012.
In February 2019, we entered into a long-term sublease agreement whereby we sublease 12,429 square feet of this office space to a third party subtenant. The rental amounts payable to us pursuant to the sublease increase approximately 3% each year. The lease and the related sublease both terminate in March 2026.
In February 2019, we entered into a long-term sublease agreement whereby we sublease 12,429 square feet of this office space to a third party subtenant. Also, in August 2023, we entered into a long-term sublease agreement whereby we sublease 13,916 square feet of this office space to a third party subtenant.
Added
The lease will terminate around March 2026, with an option to extend for an additional five-year term.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeConvalife ANDA China Litigation Convalife Pharmaceuticals (Shanghai) Co., Ltd (“Convalife”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA application No. is CYHS2202095. On December 23, 2022, Convalife made non-infringement declarations (Type 4.2) against the four Orange Book patents ZL201410082103.7, ZL201080060546.6, ZL200880118789.3 and ZL201710057547.9.
Biggest changeThe Company also has the right to enforce the four Orange Book patents in civil litigation before the Chinese court. Convalife China Litigation Convalife Pharmaceuticals (Shanghai) Co., Ltd (“Convalife”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA application No. is CYHS2202095.
On February 3, 2023, the CNIPA accepted the Company’s request for administrative determination in relation to patent nos. ZL201410082103.7 and ZL201080060546.6. Also on February 3, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to patent nos.
ZL201410082103.7 and ZL201080060546.6. Also on February 3, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.
On January 6, 2023, the CNIPA accepted the Company’s request for administrative determination in relation to patent nos. ZL201410082103.7 and ZL201080060546.6. Also on January 6, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to patent nos.
ZL201410082103.7 and ZL201080060546.6. Also on January 6, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.
ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms”, which are not eligible for listing in the Chinese Orange Book.
ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.
ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms”, which are not eligible for listing in the Chinese Orange Book.
ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.
ZL200880118789.3 are not eligible for registration in the Chinese Orange Book on the ground that these two pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms”, which are not eligible for listing in the Chinese Orange Book.
ZL200880118789.3 are not eligible for registration in the Chinese Orange Book on the ground that these two pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.
ZL201410082103.7, ZL201080060546.6, and ZL200880118789.3 (“NERLYNX® Patents”), alleging in a Type 4.2 patent declaration that its generic version of NERLYNX does not fall within the scope of the claims of NERLYNX® Patents listed in the Chinese Orange Book. The patent declaration of Acebright were published in the Chinese Orange Book on January 19, 2022.
ZL201410082103.7, ZL201080060546.6, and ZL200880118789.3 (the “'789 patent”, and collectively, the “NERLYNX® Patents”), alleging in a Type 4.2 patent declaration that its generic version of NERLYNX does not fall within the scope of the claims of NERLYNX® Patents listed in the Chinese Orange Book. The patent declaration of Acebright was published in the Chinese Orange Book on January 19, 2022.
The court has accepted these three complaints. 52 Aosaikang ANDA China Litigation On November 17, 2022, Jiangsu Aosaikang Pharmaceutical Co. Ltd. (“Aosaikang”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA application No. is CYHS2202006.
Aosaikang China Litigation On November 17, 2022, Jiangsu Aosaikang Pharmaceutical Co. Ltd. (“Aosaikang”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA application No. is CYHS2202006.
Convalife also alleged that patents ZL200880118789.3 and ZL201710057547.9 are not eligible for Chinese Orange Book listing. On February 1, 2023, the Company submitted four Article 76 petitions against the Convalife ANDA with the CNIPA and requested administrative determination that Convalife’s generic neratinib tablet falls within the scope of the claims of NERLYNX® Patents listed in the Chinese Orange Book.
Kelun also alleged that Patents ZL200880118789.3 and ZL201710057547.9 are not eligible for Chinese Orange Book listing. 59 Table of Contents On March 13, 2023, the Company submitted four Article 76 petitions against the Kelun ANDA with the CNIPA and requested administrative determination that Kelun’s generic neratinib tablet falls within the scope of the claims of the four Orange Book patents.
Patent-Related Proceedings AstraZeneca Litigation On September 22, 2021, the Company filed suit against AstraZeneca Pharmaceuticals, LP, AstraZeneca AB, and AstraZeneca PLC for infringement of United States Patent Nos. 10,603,314 (“the ’314 patent”) and 10,596,162 (“the ’162 patent”). ( Puma Biotechnology, Inc. et al. v. AstraZeneca Pharmaceuticals LP et al , 1:21CV01338 (D. Del. Sep. 22, 2021)).
On September 21, 2023, the plaintiff and the Company agreed to dismiss the action with prejudice. Patent-Related Proceedings AstraZeneca Litigation On September 22, 2021, the Company filed suit against AstraZeneca Pharmaceuticals, LP, AstraZeneca AB, and AstraZeneca PLC for infringement of United States Patent Nos. 10,603,314 (“the ’314 patent”) and 10,596,162 (“the ’162 patent”) ( Puma Biotechnology, Inc. et al. v.
On December 28, 2022, the Company submitted four Article 76 petitions against the Aosaikang ANDA with the CNIPA and requested administrative determination that Aosaikang’s generic neratinib tablet falls within the scope of the claims of NERLYNX® Patents listed in the Chinese Orange Book.
On December 28, 2022, the Company submitted four Article 76 petitions against the Aosaikang ANDA with the CNIPA and requested administrative determination that Aosaikang’s generic neratinib tablet falls within the scope of the claims of the four Orange Book patents. On January 6, 2023, the CNIPA accepted the Company’s request for administrative determination in relation to Patent Nos.
Aosaikang made non-infringement declarations (Type 4.2) against the four Orange Book patents ZL201410082103.7, ZL201080060546.6, ZL200880118789.3 and ZL201710057547.9. Aosaikang also alleged that patents ZL200880118789.3 and ZL201710057547.9 are not eligible for Chinese Orange Book listing.
Aosaikang made Type 4.2 declarations against the four Orange Book Patents ZL201410082103.7, ZL201080060546.6, ZL200880118789.3 and ZL201710057547.9, alleging that its generic version of NERLYNX does not fall within the scope of the claims of the Orange Book patents. Aosaikang also alleged that Patents ZL200880118789.3 and ZL201710057547.9 are not eligible for Chinese Orange Book listing.
Plaintiffs seek a judgment that AstraZeneca’s product infringes the asserted patents and an award of monetary damages in an amount to be proven at trial. AstraZeneca AB and AstraZeneca Pharmaceuticals LP filed an answer and counterclaims on November 5, 2021, including claims challenging the asserted patents as not infringed and/or invalid, and accusing plaintiffs of patent misuse.
AstraZeneca AB and AstraZeneca Pharmaceuticals LP filed an answer and counterclaims on November 5, 2021, including claims challenging the asserted patents as not infringed and/or invalid, and accusing plaintiffs of unclean hands and patent misuse.
The Company has appealed each CNIPA administrative decision in January 2023. The Company also filed three civil complaints based on the three NERLYNX® Patents against Acebright with the Beijing Intellectual Property court in July 2022 and requested court determination that Acebright’s generic neratinib tablet falls within the scope of the claims of NERLYNX® Patents.
The Company also filed three civil complaints based on the three NERLYNX® Patents against Acebright with the BJIPC in July 2022 and requested court determination that Acebright’s generic neratinib tablet falls within the scope of the claims of NERLYNX® Patents. On May 6, 2023, the Company withdrew two civil lawsuits and two appeals in relation to Chinese Patent Nos.
The Company’s complaint alleges that AstraZeneca’s commercial manufacture, use, offer for sale, sale, distribution, and/or importation of Tagrisso® (osimertinib) products for the treatment of gefitinib and/or erlotinib-resistant non-small cell lung cancer infringes the ’314 and ’162 patents. The Company is an exclusive licensee of the ’314 and ’162 patents under the Pfizer Agreement. Wyeth is a co-plaintiff.
AstraZeneca Pharmaceuticals LP et al. , 1:21CV01338 (D. Del. Sep. 22, 2021)). The Company’s complaint alleges that AstraZeneca’s commercial manufacture, use, offer for sale, sale, distribution, and/or importation of Tagrisso® (osimertinib) products for the treatment of gefitinib and/or erlotinib-resistant non-small cell lung cancer infringes the ’314 and ’162 patents.
(“Acebright”) filed an ANDA with the National Medical Products Administration in China (“NMPA”) seeking approval to market a generic version of the Company’s NERLYNX® (neratinib) tablet, 40mg in China. Acebright seeks approval prior to the expiration of three patents listed on the China Patent Information Registration Platform for Marketed Drugs (“Chinese Orange Book”), namely, Chinese Patent Nos.
Acebright seeks approval prior to the expiration of three patents listed on the China Patent Information Registration Platform for Marketed Drugs (“Chinese Orange Book”), namely, Chinese Patent Nos.
Levy, the attorneys who previously represented the Company in Eshelman v. Puma Biotechnology, Inc., et al. in the Superior Court of Mecklenburg County, North Carolina. The Company is alleging legal malpractice based on the defendants’ negligent handling of the defense of the Company in Eshelman v. Puma Biotechnology, Inc., et al. as detailed above.
The Company is alleging legal malpractice based on the defendants’ negligent handling of the defense of the Company in Eshelman v. Puma Biotechnology, Inc., et al . The Company is seeking recovery of the entire amount awarded in Eshelman v.
On November 23, 2020, the defendant filed an answer to the complaint denying the allegations of negligence. On August 19, 2022, the Company filed a voluntary dismissal of the legal malpractice action, without prejudice, to allow the Eshelman v. Puma Biotechnology, Inc. to conclude before proceedings. The Company intends to re-file the action now that the Eshelman case has concluded.
On August 19, 2022, the Company filed a voluntary dismissal of the legal malpractice action, without prejudice, to allow the Eshelman v. Puma Biotechnology, Inc., et al . to conclude before proceedings. On June 2, 2023, the Company re-filed the lawsuit against Hedrick Gardner Kincheloe & Garofalo, L.L.P. and David L.
The Company has the right to appeal each CNIPA administrative decision within six months of receiving the decision. The Company also has the right to enforce NERLYNX® Patents in civil litigation before the Chinese court.
ZL201410082103.7 and claims 1-4, 7 and 9-13 of Patent No. ZL201080060546.6. The two CNIPA administrative decisions on NERLYNX® Patents have lifted the stay of Aosaikang’s ANDA by NMPA. The Company has the right to appeal each CNIPA administrative decision within six months of receiving the decision.
The Company is seeking recovery of all legal fees and expenses incurred in appealing from the judgment and retrying the damages phase of the Eshelman v. Puma Biotechnology, Inc. et al. , as well as the amount of the settlement. However, at this time, the amount of potential damages that may be recovered in the legal malpractice case is uncertain.
Puma Biotechnology, Inc., et al . and all legal fees and expenses incurred in appealing from the judgment and retrying the damages phase of the trial. On November 23, 2020, the defendant filed an answer to the complaint denying the allegations of negligence.
Removed
ITEM 3. LEGAL PROCEEDINGS Hsu v. Puma Biotechnology, Inc., et. al. On October 29, 2021, the parties informed the court that they had reached a settlement in principle. On November 9, 2021, the Court ordered the parties to file settlement documents by December 3, 2021.
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ITEM 3. LEGAL PROCEEDINGS Legal Malpractice Suit On September 17, 2020, the Company filed a lawsuit against Hedrick Gardner Kincheloe & Garofalo, L.L.P. and David L. Levy, the attorneys who previously represented the Company in Eshelman v. Puma Biotechnology, Inc., et al . in the Superior Court of Mecklenburg County, North Carolina.
Removed
That same day, the court also clarified an earlier order by making clear that no judgment was entered against any party and that the court would retain jurisdiction over the settlement process. The parties' settlement provides that there will be no judgment for liability entered against the Company or its Chief Executive Officer, Alan H.
Added
Levy, the attorneys who previously represented the Company in Eshelman v. Puma Biotechnology, Inc., et al. in the Superior Court of Mecklenburg County, North Carolina. On August 22, 2023, the defendants filed motions to dismiss the cas e. These motions were presented at a hearing on February 20, 2024, but there has yet to be a ruling.
Removed
Auerbach, and provides for two installment payments by the Company of approximately $27.1 million each, which were paid in January 2022 and June 2022. On December 29, 2021, the Court issued an order preliminarily approving the parties’ settlement. On August 3, 2022, the Court ordered final approval of the parties' settlement and dismissed the case.
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Mfolozi Dlamini, individually and on behalf of all others similarly situated v. Puma Biotechnology, Inc.
Removed
This matter is now concluded. 51 Eshelman v. Puma Biotechnology, Inc., et. al. In February 2016, Fredric N. Eshelman filed a lawsuit against the Company’s Chief Executive Officer and President, Alan H. Auerbach, and the Company in the United States District Court for the Eastern District of North Carolina (Case No. 7:16 -cv- 00018 -D).
Added
On May 26, 2023, Mfolozi Dlamini filed a Class Action Complaint against the Company in the United States District Court for the Central District of California, alleging injuries as a result of unauthorized disclosure of certain individuals’ personally identifiable information in connection with a data security incident discovered by the Company in June 2022.
Removed
The complaint generally alleged that Mr. Auerbach and the Company made defamatory statements regarding Dr. Eshelman in connection with a proxy contest. In May 2016 , Dr. Eshelman filed a notice of voluntary dismissal of the claims against Mr. Auerbach. A trial on the remaining defamation claims against the Company took place from March 11 to March 15, 2019.
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The Company is an exclusive licensee of the ’314 and ’162 patents under the Pfizer Agreement. Wyeth is a co-plaintiff. Plaintiffs seek a judgment that AstraZeneca’s product infringes the asserted patents and an award of monetary damages in an amount to be proven at trial.
Removed
At trial, the jury found the Company liable and awarded Dr. Eshelman $15.9 million in compensatory damages and $6.5 million in punitive damages. The Company strongly disagreed with the verdict and, on April 22, 2019, filed a motion for a new trial or, in the alternative, a reduced damages award. The Court denied that motion on March 2, 2020.
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A Markman Hearing was conducted on March 17, 2023, and the Court issued its claim construction decision on March 29, 2023. Fact discovery closed on May 19, 2023, and expert discovery closed on November 17, 2023. The parties recently exchanged motions for summary judgment on certain issues and also Daubert challenges to certain expert opinions.
Removed
The Company has appealed that ruling, and the verdict. Additionally, after trial, the plaintiff filed a motion seeking approximately $3.0 million in attorneys’ fees, as well as prejudgment interest. In the Court’s March 2020 ruling, it denied the motion for attorneys’ fees but granted the request for prejudgment interest, bringing the total judgment to $26.3 million.
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A jury trial is scheduled to begin on May 13, 2024. 58 Table of Contents Acebright China Litigation On January 18, 2022, Shanghai Acebright Pharmaceuticals Group Co., Ltd. (“Acebright”) filed an ANDA with the National Medical Products Administration in China (“NMPA”) seeking approval to market a generic version of the Company’s NERLYNX® (neratinib) tablet, 40mg in China.
Removed
On March 30, 2020, the plaintiff filed a notice of cross-appeal and conditional cross-appeal, appealing the Court’s order denying the plaintiff’s request for attorneys’ fees and conditionally cross-appealing a Court ruling that certain communications between Mr. Auerbach and his attorneys were protected by attorney-client privilege and a related evidentiary ruling.
Added
The Company has appealed each CNIPA administrative decision in January 2023 at the Beijing Intellectual Property Court (“BJIPC”). The three appeals were accepted by BJIPC on February 20, 2023.
Removed
On June 23, 2021, the United States Court of Appeals for the Fourth Circuit affirmed the liability verdict in the Eshelman v. Puma Biotechnology, et al matter but found the $22.4 million damages award, payable by the Company, to be excessive in light of the evidence at trial.
Added
ZL201410082103.7 and ZL201080060546.6 at the BJIPC. On May 24, 2023, the BJIPC accepted the Company’s withdrawal request. On July 24, 2023, the Company withdrew the remaining one civil lawsuit and one appeal in relation to Chinese Patent No. ZL200880118789.3 at the BJIPC. On August 15, 2023, the BJIPC accepted the Company’s withdrawal request.
Removed
The court vacated this award and remanded for a new trial on damages. The Court’s judgment eliminated the damages award, pending further proceedings on remand. On remand, the District Court set a trial date for the new trial on damages for November 7, 2022. As the Company announced on November 10, 2022, the parties entered into a settlement agreement.
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On September 12, 2023, the NMPA approved Acebright’s ANDA to market a generic version of the Company’s NERLYNX® in China with the approval number of GuoYaoZhunZi H20234141. On December 28, 2023, the Company filed a civil lawsuit against Acebright for infringement of the '789 patent under Article 11 of the Chinese Patent Law before Jiangsu Nanjing Intermediate People’s Court.
Removed
Pursuant to the settlement agreement, Dr. Eshelman filed a Stipulation of Voluntary Dismissal with Prejudice on November 7, 2022, and the Company agreed to pay Dr. Eshelman $16.0 million.
Added
The Company’s complaint alleges that Acebright’s offer for sale of a generic version of the Company’s NERLYNX® product infringes the '789 patent. The Company seeks a judgment that Acebright’s product infringes the '789 patent and Acebright’s act of offer for sale shall be enjoined. On January 2, 2024, Jiangsu Nanjing Intermediate People’s Court accepted the civil complaint.
Removed
The settlement amount will be paid in two separate payments, the first payment of $8.0 million was paid in January 2023, and the second payment of $8.0 million will be paid on or before November 1, 2024. Legal Malpractice Suit On September 17, 2020, the Company filed a lawsuit against Hedrick Gardner Kincheloe & Garofalo, L.L.P. and David L.
Added
On January 28, 2023, the Company requested the NMPA to institute a nine-month stay against Aosaikang ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination. On June 2, 2023, CNIPA decided that the generic drug in Aosaikang’s ANDA does not fall within the protection scope of claims 1, 3, 5 and 6 of Patent No.
Removed
The parties attended a status conference with the Court on February 6, 2023. The parties are conducting fact discovery and have completed briefing relating to claim construction. A Markman hearing is scheduled for March 17, 2023. Trial is currently scheduled to begin on or after May 13, 2024.
Added
On December 23, 2022, Convalife made Type 4.2 declarations against the four Orange Book Patents ZL201410082103.7, ZL201080060546.6, ZL200880118789.3 and ZL201710057547.9, alleging that its generic version of NERLYNX does not fall within the scope of the claims of the Orange Book patents. Convalife also alleged that Patents ZL200880118789.3 and ZL201710057547.9 are not eligible for Chinese Orange Book listing.
Removed
Sandoz Litigation On November 10, 2021, the Company filed suit against Sandoz, Inc. ("Sandoz") for infringement of U.S. Patent No. 7,399,865 B2 (“the '865 patent”) ( Puma Biotechnology, Inc. et al. v. Sandoz Inc., 1:21CV19918 (D.N.J. Nov. 10, 2021) in the U.S. District Court for the District of New Jersey.
Added
On February 1, 2023, the Company submitted four Article 76 petitions against the Convalife ANDA with the CNIPA and requested administrative determination that Convalife’s generic neratinib tablet falls within the scope of the claims of the four Orange Book patents. On February 3, 2023, the CNIPA accepted the Company’s request for administrative determination in relation to Patent Nos.
Removed
The Complaint was filed within 45 days of Sandoz providing notice of its abbreviated new drug application (“ANDA”) seeking approval to market a generic version of the Company’s NERLYNX (neratinib) Tablets, 40 mg prior to the expiration of the '865 patent.
Added
On February 24, 2023, the Company requested the NMPA to institute a nine-month stay against Convalife ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination. On June 2, 2023, CNIPA decided that the generic drug in Convalife’s ANDA does not fall within the protection scope of claims 1, 3, 5 and 6 of Patent No.
Removed
The Company and Wyeth seek judgment that Sandoz’s purported ANDA product would, if allowed on the market, infringe the ‘865 patent, and ask that the Court order that, pursuant to 35 U.S.C. 271(e)(4)(A), the FDA’s approval of the Sandoz ANDA can be no earlier than the date the ‘865 patent expires.
Added
ZL201410082103.7 and claims 1-4, 7 and 9-13 of Patent No. ZL201080060546.6. The two CNIPA administrative decisions on NERLYNX® Patents have lifted the stay of Convalife’s ANDA by NMPA. The Company has the right to appeal each CNIPA administrative decision within six months of receiving the decision.
Removed
Sandoz has stated that, due to Paragraph III certifications filed for other patents listed in the Orange Book in conjunction with NERLYNX, Sandoz cannot launch its ANDA product until November 21, 2030, at the earliest.
Added
The Company also has the right to enforce the four Orange Book patents in civil litigation before the Chinese court. Kelun China Litigation Hunan Kelun Pharmaceutical Co., Ltd. (“Kelun”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA application No. is CYHS2300221.
Removed
The Company’s complaint alleges that Sandoz has infringed the '865 patent by seeking approval to commercially manufacture, use, offer for sale, sell, and/or import a generic version of NERLYNX in the United States prior to the expiration of the '865 patent. The Company is the exclusive licensee of the '865 patent under the Pfizer Agreement. Wyeth is a co-plaintiff.
Added
On January 28, 2023, Kelun made Type 4.2 declarations against the four Orange Book Patents ZL201410082103.7, ZL201080060546.6, ZL200880118789.3 and ZL201710057547.9, alleging that its generic version of NERLYNX does not fall within the scope of the claims of the Orange Book patents.
Removed
Sandoz submitted its answer to the complaint on January 14, 2022 and asserted counterclaims challenging the ‘865 patent as invalid. The Company and Wyeth filed an answer to those counterclaims on February 4, 2022. The filing of the Company’s Complaint against Sandoz triggered a 30-month stay of marketing approval for Sandoz’s ANDA.
Added
On March 21, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.
Removed
Effective December 13, 2022, the Company and Wyeth entered into a settlement and license agreement (the “Settlement and License Agreement”) with Sandoz to fully settle and release all claims and terminate without prejudice the patent infringement litigation. Pursuant to the Settlement and License Agreement, the Company granted Sandoz a non-exclusive, royalty-free sublicense to certain licensed patents, including U.S.
Added
ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.
Removed
Patent No. 7,399,865 B2, which would permit Sandoz to begin selling a generic version of neratinib on or around December 8, 2030, unless such date is otherwise adjusted in accordance with the Settlement and License Agreement. In addition, the Company and Wyeth granted Sandoz a waiver of any and all regulatory exclusivities.
Added
On March 24, 2023, the CNIPA accepted the Company’s request for administrative determination in relation to Patent Nos. ZL201410082103.7 and ZL201080060546.6. On April 17, 2023, the Company requested the NMPA to institute a nine-month stay against Kelun’s ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination.
Removed
The Company entered into the Settlement and License Agreement solely to eliminate the burden, expense, distraction and uncertainties of further litigation. Acebright China Litigation On January 18, 2022, Shanghai Acebright Pharmaceuticals Group Co., Ltd.
Added
On September 14, 2023, the Company withdrew the two requests for administrative determination in relation to Chinese Patent Nos. ZL201410082103.7 and ZL201080060546.6 at the CNIPA. On September 25, 2023, the CNIPA accepted the Company’s withdrawal request. ITEM 4. MINE SAFETY DISCLOSURE Not applicable. PART II
Removed
The Company has the right to appeal each CNIPA administrative decision within six months of receiving the decision. The Company also has the right to enforce NERLYNX® Patents in civil litigation before the Chinese court. ITEM 4. MINE SAFETY DISCLOSURE Not applicable. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFinancial Statements and Supplementary Data 64 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 64 Item 9A. Controls and Procedures 64 Item 9B. Other Information 65
Biggest changeFinancial Statements and Supplementary Data 72 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 72 Item 9A. Controls and Procedures 72
Item 4. Mine Safety Disclosure 53 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 53 Item 6. [Reserved] 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 55 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 63 Item 8.
Item 4. Mine Safety Disclosure 60 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 60 Item 6. [Reserved] 61 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 62 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 72 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−3 removed5 unchanged
Biggest change(PBYI)* Stock Price Performance Graph The graph and table below compare the cumulative total return of Puma Biotechnology common stock from December 31, 2017, through December 31, 2022, with the cumulative total returns on (i) the Nasdaq Biotechnology Index and (ii) the Nasdaq Composite Index.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers None. 60 Table of Contents Performance Graph The graph and table below compare the cumulative total return of Puma Biotechnology common stock from December 31, 2018, through December 31, 2023, with the cumulative total returns on (i) the Nasdaq Biotechnology Index and (ii) the Nasdaq Composite Index.
The comparison assumes investment of $100 on December 31, 2017, in our common stock and in each index and, for each index, assumes reinvestment of all dividends. The historical price performance included below is not necessarily indicative of future stock price performance. Cumulative Total Return Puma Biotechnology, Inc.
The comparison assumes investment of $100 on December 31, 2018, in our common stock and in each index and, for each index, assumes reinvestment of all dividends. The historical price performance included below is not necessarily indicative of future stock price performance. Cumulative Total Return Puma Biotechnology, Inc.
We believe approximately 11,700 additional owners held our common stock in “Street Name” as of February 22, 2023. Dividends We have never declared or paid any cash dividends on our capital stock.
We believe approximately 13,100 additional owners held our common stock in “Street Name” as of February 20, 2024. Dividends We have never declared or paid any cash dividends on our capital stock.
Prior to January 3, 2017, shares of our common stock had been listed on the New York Stock Exchange since October 19, 2012. Record Holders On February 22, 2023, we ha d ten holde rs of record of our common stock.
Prior to January 3, 2017, shares of our common stock had been listed on the New York Stock Exchange since October 19, 2012. Record Holders On Februa ry 20, 2024, we ha d nine holders of recor d of our common stock.
Removed
Recent Sales of Unregistered Securities Other than as has been previously reported on a Current Report on Form 8-K filed with the SEC on March 8, 2022 and December 13, 2022, we did not sell any unregistered securities during fiscal year 2022. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 53 Table of Contents Puma Biotechnology, Inc.
Added
Compared to the Nasdaq Biotechnology Index and Nasdaq Composite Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Puma Biotechnology, Inc. 100.00 43.00 50.42 14.94 20.79 21.28 NASDAQ Biotechnology Index 100.00 125.11 158.17 158.20 142.19 148.72 NASDAQ Composite Index 100.00 136.69 198.10 242.03 163.28 236.17 The material in this performance graph is not soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made on, before or after the date of this filing and irrespective of any general incorporation language in such filing.
Removed
Compared to the Nasdaq Biotechnology Index and Nasdaq Composite Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Puma Biotechnology, In c. 100.00 20.59 8.85 10.38 3.08 4.28 Nasdaq Biotechnology Index 100.00 91.14 114.02 144.15 144.19 129.62 Nasdaq Composite Index 100.00 97.18 132.88 192.74 235.56 158.97 *On October 19, 2012, shares of Puma common stock were listed and began trading on the New York Stock Exchange.
Removed
On January 3, 2017, the listing of shares of Puma common stock was moved to the Nasdaq Stock Market.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+19 added−43 removed72 unchanged
Biggest changeLiquidity and Capital Resources The following table summarizes our liquidity and capital resources as of and for the years ended December 31, 2022 and December 31, 2021 and is intended to supplement the more detailed discussion that follows: As of As of Liquidity and capital resources (in thousands) December 31, 2022 December 31, 2021 Cash and cash equivalents $ 76,201 $ 63,131 Marketable securities $ 4,873 $ 18,975 Working capital $ 56,797 $ 30,436 Stockholders' Equity (deficit) $ 21,608 $ (2,446 ) We also have long-term debt, net of $98.3 million and $97.1 million for the years ended December 31, 2022 and 2021, respectively, related to our Athyrium debt Year Ended Year Ended December 31, 2022 December 31, 2021 Cash provided by (used in): Operating activities $ (15,827 ) $ 20,650 Investing activities 7,104 (10,881 ) Financing activities 12,223 (31,931 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ 3,500 $ (22,162 ) Operating Activities We recorded net income of approximately two thousand dollars and net loss of approximately $29.1 million for the years ended December 31, 2022 and 2021, respectively.
Biggest changeLiquidity and Capital Resources The following table summarizes our liquidity and capital resources as of and for the years ended December 31, 2023 and 2022 and is intended to supplement the more detailed discussion that follows: As of As of Liquidity and capital resources (in thousands) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 84,585 $ 76,201 Marketable securities $ 11,354 $ 4,873 Working capital $ 56,803 $ 56,797 Long term debt $ 65,659 $ 98,307 Stockholders' equity $ 53,442 $ 21,608 We also have long-term debt, net of $65.7 million and $98.3 million for the years ended December 31, 2023 and 2022, respectively, related to our Athyrium debt.
NERLYNX is currently approved in the United States for two indications: the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplified breast cancer following adjuvant trastuzumab-based therapy and for use in combination with capecitabine for the treatment of adult patients with advanced or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in metastatic setting.
NERLYNX is currently approved in the United States for two indications: the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplified breast cancer following adjuvant trastuzumab-based therapy and for use in combination with capecitabine for the treatment of adult patients with advanced or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in the metastatic setting.
Investing Activities During the year ended December 31, 2022, cash provided by investing activities was approximately $7.1 million. This included the maturity of available-for-sale securities of approximately $18.9 million, partially offset by the purchase of available-for-sale securities of approximately $4.8 million, and the purchase of in-process R&D of $7.0 million as part of the Takeda Agreement.
During the year ended December 31, 2022, cash provided by investing activities was approximately $7.1 million. This included the maturity of available-for-sale securities of approximately $18.9 million, partially offset by the purchase of available-for-sale securities of approximately $4.8 million, and the purchase of in-process R&D of $7.0 million as part of the Takeda Agreement.
We paid Takeda an upfront license fee of $7.0 million in October 2022 and is eligible to receive potential future milestone payments of up to $287.3 million upon our achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib.
We paid Takeda an upfront license fee of $7.0 million in October 2022 , and it is eligible to receive potential future milestone payments of up to $287.3 million upon our achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib.
We recorded in-process research and development expense of $7.0 million during the year ended December 31, 2022, in connection with the up-front payment related to the asset acquisition. As of December 31, 2022, no milestones had been accrued as the underlying contingencies were not probable or estimable.
We recorded in-process research and development expense of $7.0 million during the year ended December 31, 2022, in connection with the up-front payment related to the asset acquisition. As of December 31, 2023, no milestones had been accrued as the underlying contingencies were not probable or estimable.
Accordingly, our success depends not only on the safety and efficacy of our product candidates, but also on our ability to finance product development. To date, our major sources of working capital have been proceeds from product and license revenue, public offerings of our common stock, proceeds from our credit facility and sales of our common stock in private placements.
Accordingly, our success depends not only on the safety and efficacy of our drug candidates, but also on our ability to finance product development. To date, our major sources of working capital have been proceeds from product and license revenue, public offerings of our common stock, proceeds from our credit facility and sales of our common stock in private placements.
Our expenses to date have been related to hiring staff, commencing company-sponsored clinical trials and the build out of our corporate infrastructure and, since 2017, the commercial launch of NERLYNX. Going forward we anticipate significant expenses as we continue to develop NERLYNX in additional indications and as we pursue the development of alisertib.
Our expenses to date have been related to hiring staff, commencing company-sponsored clinical trials and the build out of our corporate infrastructure and, since 2017, the commercial launch of NERLYNX. Going forward we anticipate significant expenses as we continue to develop NERLYNX in additional indications and as we pursue the development of alisertib in 2024.
We intend to satisfy our near-term liquidity requirements through a combination of our existing cash and cash equivalents and marketable securities as of December 31, 2022, and proceeds that will become available to us through product sales, royalties and sub-license milestone payments. However, this intention is based on assumptions that may prove to be wrong.
We intend to satisfy our near-term liquidity requirements through a combination of our existing cash and cash equivalents and marketable securities as of December 31, 2023, and proceeds that will become available to us through product sales, royalties and sub-license milestone payments. However, this intention is based on assumptions that may prove to be wrong.
We believe that our existing cash and cash equivalents and marketable securities as of December 31, 2022, and proceeds that will become available to us through product sales and sub-license payments are sufficient to satisfy our operating cash and capital needs for at least one year after the filing of this Annual Report.
We believe that our existing cash and cash equivalents and marketable securities as of December 31, 2023, and proceeds that will become available to us through product sales and sub-license payments are sufficient to satisfy our operating cash and capital needs for at least one year after the filing of this Annual Report.
During the years ended December 31, 2022, 2021 and 2020, our R&D expenses consisted primarily of CRO fees, fees paid to consultants, salaries and related personnel costs and stock-based compensation. We expense our R&D costs as they are incurred. Internal R&D expenses primarily consist of payroll-related costs and also include equipment costs, travel expenses and supplies.
During the years ended December 31, 2023, 2022 and 2021, our R&D expenses consisted primarily of CRO fees, fees paid to consultants, salaries and related personnel costs and stock-based compensation. We expense our R&D costs as they are incurred. Internal R&D expenses primarily consist of payroll-related costs and also include equipment costs, travel expenses and supplies.
The modification of the Note Purchase Agreement pursuant to the Third Amendment did not meet the requirements of a debt extinguishment under ASC 470-50 - Debt Modifications and Exchanges and no gain or loss was recognized. The Company performed a quantitative analysis and determined that the terms of the new debt and original debt instrument are not substantially different.
The modification of the Note Purchase Agreement pursuant to the Third Amendment did not meet the requirements of a debt extinguishment under ASC 470-50 - Debt Modifications and Exchanges and no gain or loss was recognized. We performed a quantitative analysis and determined that the terms of the new debt and original debt instrument are not substantially different.
Our analyses also contemplated application of the constraint in accordance with the guidance, under which it determined a significant reversal of revenue would not occur in a future period for the estimates detailed below as of December 31, 2022 and, therefore, the transaction price was not reduced further during the year ended December 31, 2022.
Our analyses also contemplated application of the constraint in accordance with the guidance, under which it determined a significant reversal of revenue would not occur in a future period for the estimates detailed below as of December 31, 2023 and, therefore, the transaction price was not reduced further during the year ended December 31, 2023.
Acquired In-Process Research and Development Expense For the year ended December 31, 2022, we entered into an exclusive license agreement with Takeda to license the worldwide research and development and commercial rights to alisertib, a new product candidate. We recorded acquired in-process research and development expense related to the up-front payment of $7.0 million.
Acquired In-Process Research and Development Expense For the year ended December 31, 2022, we entered into an exclusive license agreement with Takeda to license the worldwide research and development and commercial rights to alisertib, a new drug candidate. We recorded acquired in-process research and development expense related to the up-front payment of $7.0 million.
We also have unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 2022. We do not have tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefit will significantly increase or decrease within 12 months of the reporting date.
We also have unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 2023. We do not have tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefit will significantly increase or decrease within 12 months of the reporting date.
In regard to our contractual obligations with Takeda, as consideration for the license, we are required to make substantial payments upon the achievement of certain milestones totaling $287.3 million if all such milestones are achieved. As of December 31, 2022, no milestones had been achieved.
In regard to our contractual obligations with Takeda, as consideration for the license, we are required to make substantial payments upon the achievement of certain milestones totaling $287.3 million if all such milestones are achieved. As of December 31, 2023, no milestones had been achieved.
In determining whether a loss should be accrued, we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the lo ss (see Note 14-Commitments and Contingencies in the accompanying notes to the financial statements).
In determining whether a loss should be accrued, we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the lo ss (see Note 13-Commitments and Contingencies in the accompanying notes to the financial statements).
Based on information in this database, we believe alisertib has potential application in the treatment of a range of different cancer types, including hormone receptor-positive breast cancer, triple negative breast cancer, small cell lung cancer and head and neck cancer. We intend to pursue development of alisertib initially in small cell lung cancer and hormone receptor-positive breast cancer.
Based on information in this database, we believe alisertib has potential application in the treatment of a range of different cancer types, including hormone receptor-positive breast cancer, triple-negative breast cancer and small cell lung cancer. We intend to pursue development of alisertib initially in small cell lung cancer and hormone receptor-positive breast cancer.
Selling, general and administrative expenses Selling, general and administrative ("SG&A") expenses, consist primarily of salaries and payroll-related costs, stock-based compensation expense, professional fees, business insurance, rent, general legal activities, credit loss expense and other corporate expenses. We expense SG&A costs as they are incurred.
Selling, general and administrative expenses Selling, general and administrative (“SG&A”) expenses, consist primarily of salaries and payroll-related costs, stock-based compensation expense, professional fees, business insurance, rent, general legal activities, credit loss expense and other corporate expenses. We expense SG&A costs as they are incurred.
In June 2020, we entered into a letter agreement with Pfizer relating to the method of payment associated with a milestone payment under our license agreement with Pfizer (see Note 14-Commitments and Contingencies in the accompanying notes to the financial statements).
In June 2020, we entered into a letter agreement with Pfizer relating to the method of payment associated with a milestone payment under our license agreement with Pfizer (see Note 13-Commitments and Contingencies in the accompanying notes to the financial statements).
ASU 2021-10 requires entities to provide information about the nature of the transactions, the related accounting policies used to account for the transactions, the effect of the transactions on an entity's financial statements, and significant terms and conditions associated with the transactions. ASU 2021-10 must be adopted for fiscal years beginning after December 15, 2021. Early adoption is permitted.
ASU 2021-10 requires entities to provide information about the nature of the transactions, the related accounting policies used to account for the transactions, the effect of the transactions on an entity's finan cial statements, and significant terms and conditions associated with the transactions. ASU 2021-10 must be adopted for fiscal years beginning after December 15, 2021. Early adoption is permitted.
Revenue Recognition Under Accounting Standards Codification ("ASC") Topic 606 - Revenue from Contracts with Customers (" ASC 606") we recognize revenue when a customer obtains control of the promised goods or services, in an amount that reflects the consideration which we expect to be entitled in exchange for those goods or services.
Revenue Recognition Under Accounting Standards Codification (“ASC”) Topic 606 - Revenue from Contracts with Customers (“ ASC 606”) we recognize revenue when a customer obtains control of the promised goods or services, in an amount that reflects the consideration which we expect to be entitled in exchange for those goods or services.
In the event that we sublicense the rights granted to us under the license agreement with Pfizer to a third party, the same milestone and royalty payments are required. We can terminate the license agreement at will, or for safety concerns, in each case upon specified advance notice.
In the event that we sublicense the rights granted to us under the license agreement with Pfizer to a third party, the same milestone and royalty payments are required. We can ter minate the license agreement at will, or for safety concerns, in each case upon specified advance notice.
Critical Accounting Policies The discussion and analysis of our consolidated financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with GAAP.
Critical Accounting Estimates The discussion and analysis of our consolidated financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with GAAP.
For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2021, compared to the year ended December 31, 2020, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the Year Ended December 31, 2021, which was filed with the United States Securities and Exchange Commission on March 3, 2022.
For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2022, compared to the year ended December 31, 2021, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the Year Ended December 31, 2022, which was filed with the United States Securities and Exchange Commission on March 2, 2023.
In such an event, we will be required to undertake a thorough review of our programs, and the opportunities presented by such programs, and allocate our resources in the manner most prudent. 60 Off-Balance Sheet Arrangements We do not have any “off-balance sheet arrangements,” as defined by the SEC regulations.
In such an event, we will be required to undertake a thorough review of our programs, and the opportunities presented by such programs, and allocate our resources in the manner most prudent. 68 Table of Contents Off-Balance Sheet Arrangements We do not have any “off-balance sheet arrangements,” as defined by the SEC regulations.
The following table presents our net income (loss) and net income (loss) per share, as calculated in accordance with GAAP, as adjusted to remove the impact of stock-based compensation. For the year ended December 31, 2022, stock-based compensation represented approximately 8.3% of the total of SG&A and R&D expenses.
The following table presents our net income (loss) and net income (loss) per share, as calculated in accordance with GAAP, as adjusted to remove the impact of stock-based compensation. For the year ended December 31, 2023, stock-based compensation represented approximately 7.3% of the total of SG&A and R&D expenses.
We have determined that these sales channels with customers are similar. 61 Product Revenue, Net: We sell NERLYNX to a limited number of specialty pharmacies and specialty distributors in the United States. These customers subsequently resell our products to patients and certain medical centers or hospitals.
We have determined that these sales channels with customers are similar. 69 Table of Contents Product Revenue, Net: We sell NERLYNX to a limited number of specialty pharmacies and specialty distributors in the United States. These customers subsequently resell our products to patients and certain medical centers or hospitals.
The Company was in compliance with all applicable covenants under the Athyrium Notes. Current and Future Financing Needs We did not receive or record any product revenue until the third quarter of 2017.
We were in compliance with all applicable covenants under the Athyrium Notes. Current and Future Financing Needs We did not receive or record any product revenue until the third quarter of 2017.
We may cancel these agreements with a 30 to 45 day written notice to the outside vendor. We would be obligated to pay for services rendered up to that point, which amounts to total contractual obligations of $55.2 million within the next twelve months.
We may cancel these agreements with a 30 to 45 day written notice to the outside vendor. We would be obligated to pay for services rendered up to that point, which amounts to total contractual obligations of $66.0 million within the next twelve months.
We currently market NERLYNX in the United States using our direct specialty sales force consisting of approximately 40 sales specialists.
We currently market NERLYNX in the United States using our direct specialty sales force consisting of approximately 38 sales specialists.
The increase was due to increased product sales by our sub-licensees as they increased commercialization of NERLYNX in additional territories, including an increase in China sales. Cost of sales Cost of sales was approximately $55.1 million for the year ended December 31, 2022, compared to $63.7 million for the year ended December 31, 2021.
The increase was due to increased product sales by our sub-licensees as they increased commercialization of NERLYNX in additional territories, including an increase in China sales. Cost of sales Cost of sales was approximately $62.7 million for the year ended December 31, 2023 , compared to $55.1 million for the year ended December 31, 2022 .
Payments to acquire a new product candidate are immediately expensed as acquired in-process research and development provided that the product candidate has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use. 56 Results of Operations The following summarizes our results of operations for the years ended December 31, 2022 and 2021.
Payments to acquire a new drug candidate are immediately expensed as acquired in-process research and development provided that the drug candidate has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use. Results of Operations The following summarizes our results of operations for the years ended December 31, 2023 and 2022.
In regard to our contractual obligations in relation to the Pfizer in-license agreement, as consideration for the license, we are required to make substantial payments upon the achievement of certain milestones totaling approximately $187.5 million if all such milestones are achieved, of which $102.5 million have been achieved as of December 31, 2022 .
In regard to our contractual obligations in relation to the Pfizer in-license a greement, as consideration for the license, we are required to make substantial payments upon the achievement of certain milestones totaling approximately $187.5 million if all such milestones are achieved, of which $102.5 million have been achieved as of December 31, 2023 .
Acquired In-Process Research and Development Expense The Company has acquired, and may continue to acquire, the rights to develop new product candidates. Payments to acquire a new product candidate are immediately expensed as acquired in-process research and development provided that the product candidate has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.
Acquired In-Process Research and Development Expense We have acquired, and may continue to acquire, the rights to develop new drug candidates. Payments to acquire a new drug candidate are immediately expensed as acquired in-process research and development provided that the drug candidate has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.
See Note 13-Income Taxes and Note 14-Commitments and Contingencies in the accompanying notes to the financial statements for a summary of our uncertain tax positions and contracts held by us as of December 31, 2022.
See Note 12-Income Taxes and Note 13-Commitments and Contingencies in the accompanying notes to the financial statements for a summary of our uncertain tax positions and contracts held by us as of December 31, 2023.
As of December 31, 2022, the amount of unrecognized tax benefit was $2.5 million , and is also not included in the table above as the timing of when or if these payments will be made is uncertain.
As of December 31, 2023, the amount of unrecognized tax benefit was $2.8 million , and is also not included in the table above as the timing of when or if these payments will be made is uncertain.
As of December 31, 2022, the effective interest rate for the loan was 12.99% .
As of December 31, 2023, the effective interest rate for the loan was 12.99% .
Research and development expenses Research and development ("R&D") expenses include costs associated with services provided by consultants who conduct clinical services on our behalf, contract organizations for manufacturing of clinical materials and clinical trials.
Research and development expenses Research and development (“R&D”) expenses include costs associated with services provided by consultants who conduct clinical services on our behalf, contract organizations for manufacturing of clinical materials and clinical trials.
In addition, the Company reached a commercial milestone by achieving aggregate worldwide net sales of $250.0 million in calendar year 2022, resulting in a payable to Pfizer of $12.5 million as of December 31, 2022 . The commercial milestone payable was paid in February 2023.
In addition, we reached a commercial milestone by achieving aggregate worldwide net sales of $250.0 million in calendar year 2022, resulting in a payable to Pfizer of $12.5 million. The commercial milestone payable was paid in February 2023.
Athyrium Note Purchase Agreement We issued senior notes for an aggregate principal amount of $100.0 million pursuant to the note purchase agreement dated July 23, 2021, by us, and our subsidiaries, and Athyrium, as Administrative Agent, and certain other investor parties (the “Note Purchase Agreement”), with an initial maturity date of July 23, 2026 (the “Athyrium Notes”).
Auerbach on December 9, 2022. 67 Table of Contents Athyrium Note Purchase Agreement We issued senior notes for an aggregate principal amount of $100.0 million pursuant to the note purchase agreement dated July 23, 2021, by us, and our subsidiaries, and Athyrium, as Administrative Agent, and certain other investor parties (the “Note Purchase Agreement”), with an initial maturity date of July 23, 2026 (the “Athyrium Notes”).
(2) To reflect a non-cash charge to operating expense for research and development stock-based compensation. (3) Non-GAAP adjusted basic net income per share was calculated based on 44,674,501 and 40,638,852 weighted-average shares of common stock outstanding for the years ended December 31, 2022 and 2021, respectively.
(2) To reflect a non-cash charge to operating expense for research and development stock-based compensation. (3) Non-GAAP adjusted basic net income per share was calculated based on 47,134,331 and 44,674,501 weighted-average shares of common stock outstanding for the years ended December 31, 2023 and 2022, respectively.
For example, we recently in-licensed alisertib from Takeda and assumed sole responsibility for its global development and commercialization. These efforts will require funding in addition to the cash and cash equivalents totaling approximately $76.2 million and approximately $4.9 million in marketable securities available at December 31, 2022.
For example, we recently in-licensed alisertib from Takeda and assumed sole responsibility for its global development and commercialization. These efforts will require funding in addition to the cash and cash equivalents totaling approximately $84.6 million and approximately $11.4 million in marketable securities available at December 31, 2023.
We are also required to achieve certain minimum product revenue targets, measured as of the last day of each fiscal quarter on a trailing year-to-date basis. As of December 31, 2022, the principal balance outstanding under the Athyrium Notes was $100.0 million, re presenting all of the Company’s long-term debt.
We are also required to maintain minimum cash balances and to achieve certain minimum product revenue targets, measured as of the last day of each fiscal quarter on a trailing year-to-date basis. As of December 31, 2023, the principal balance outstanding under the Athyrium Notes was $100.0 million, re presenting all of our debt.
We can borrow up to an additional $25.0 million under the Note Purchase Agreement for general corporate purposes and to further support commercial initiatives. The Athyrium Notes are secured by substantially all of our assets. We incurred $1.9 million of deferred financing costs with the initial borrowing of the Athyrium Notes.
We can borrow up to an additional $25.0 million under the Note Purchase Agreement for certain purposes specified in the Note Purchase Agreement. The Athyrium Notes are secured by substantially all of our assets. We incurred $1.9 million of deferred financing costs with the initial borrowing of the Athyrium Notes.
Net cash used in operating activities for the year ended December 31, 2022 of $15.8 million consisted of net income of two thousand dollars, offset by non-cash items of approximately $20.7 million, including stock-based compensation and depreciation and amortization.
Net cash used in operating activities for the year ended December 31, 2022 of $15.8 million consisted of net income of two thousand dollars, adjusted for non-cash items of approximat ely $21.7 mil lion, including stock-based compensation and depreciation and amortization.
We recorded negative cash flows from operating activities of approximately $15.8 million for the year ended December 31, 2022 and recorded positive cash flows from operating activities of approximately $20.7 million for the year ended December 31, 2021.
We recorded cash flows from operating activities of approximately $27.0 million for the year ended December 31, 2023 and recorded negative cash flows from operating activities of approximately $15.8 million for the year ended December 31, 2022 .
These non-GAAP financial measures are not, and should not be viewed as, substitutes for GAAP reporting measures. 58 Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net Income (Loss) and GAAP Net Loss Per Share to Non-GAAP Adjusted Net Income (Loss) Per Share (in thousands except share and per share data) For the Year Ended December 31, 2022 2021 GAAP net income (loss) $ 2 $ (29,126 ) Adjustments: Stock-based compensation - Selling, general and administrative (1) 8,046 25,699 Research and development (2) 3,780 6,934 Non-GAAP adjusted net income $ 11,828 $ 3,507 GAAP net income (loss) per share—basic $ - $ (0.72 ) Adjustment to net income (loss) (as detailed above) 0.26 0.81 Non-GAAP adjusted basic net income per share $ 0.26 (3) $ 0.09 (3) GAAP net income (loss) per share—diluted $ - $ (0.72 ) Adjustment to net income (loss) (as detailed above) 0.26 0.80 Non-GAAP adjusted diluted net income per share $ 0.26 (4) $ 0.08 (4) (1) To reflect a non-cash charge to operating expense for selling, general, and administrative stock-based compensation.
These non-GAAP financial measures are not, and should not be viewed as, substitutes for GAAP reporting measures. 65 Table of Contents Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net Income (Loss) and GAAP Net Loss Per Share to Non-GAAP Adjusted Net Income (Loss) Per Share (in thousands except share and per share data) For the Year Ended December 31, 2023 2022 GAAP net income $ 21,591 $ 2 Adjustments: Stock-based compensation - Selling, general and administrative (1) 6,908 8,046 Research and development (2) 3,339 3,780 Non-GAAP adjusted net income $ 31,838 $ 11,828 GAAP net income per share—basic $ 0.46 $ — Adjustment to net income (as detailed above) 0.22 0.26 Non-GAAP adjusted basic net income per share $ 0.68 (3) $ 0.26 (3) GAAP net income per share—diluted $ 0.45 $ — Adjustment to net income (as detailed above) 0.22 0.26 Non-GAAP adjusted diluted net income per share $ 0.67 (4) $ 0.26 (4) (1) To reflect a non-cash charge to operating expense for selling, general, and administrative stock-based compensation.
Our liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel at the end of each reporting period. 62 Payor Rebates: We contract with certain private payor organizations, primarily insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of its products.
Our liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel at the end of each reporting period.
See Note 10-Debt in the notes to the financial statements in this Annual Report on Form 10-K. Non-GAAP Financial Measures: In addition to our operating results, as calculated in accordance with generally accepted accounting principles in the United States, ("GAAP"), we use certain non-GAAP financial measures when planning, monitoring, and evaluating our operational performance.
Non-GAAP Financial Measures: In addition to our operating results, as calculated in accordance with generally accepted accounting principles in the United States, (“GAAP”), we use certain non-GAAP financial measures when planning, monitoring, and evaluating our operational performance.
Changes may occur that would consume our available capital faster than anticipated, including the length and severity of the COVID-19 pandemic and measures taken to control the spread of COVID-19, as well as changes in and progress of our development activities, the impact of commercialization efforts, acquisitions of additional drug candidates and changes in regulation.
Changes may occur that would consume our available capital faster than anticipated, including changes in and progress of our development activities, the impact of commercialization efforts, acquisitions of additional drug candidates and changes in regulation.
During the year ended December 31, 2021, cash used in investing activities was approximately $10.9 million.
Investing Activities During the year ended December 31, 2023, cash used in investing activities was approximately $19.1 million.
The following table represents our contractual obligations as of December 31, 2022, aggregated by type (in thousands): Contractual Obligations Total Less than 1 year 1 - 3 years Operating Lease Obligations 18,927 5,631 13,296 Long Term Debt Obligations (principal and interest) 131,234 11,660 119,574 Total 150,161 17,291 132,870 We also engage with CROs and contract manufacturing organizations ("CMOs") in addition to eng aging in contracts for the management of its ongoing clinical trials and pre-commercialization efforts.
The following table represents our contractual obligations as of December 31, 2023, aggregated by type (in thousands): Contractual Obligations Total Less than 1 year 1 - 3 years Operating Lease Obligations 13,296 5,805 7,491 Long Term Debt Obligations (principal and interest) 119,574 44,709 74,865 Total 132,870 50,514 82,356 We also engage with CROs and contract manufacturing organizations (“CMOs”) in addition to eng aging in contracts for the management of its ongoing clinical trials and pre-commercialization efforts.
We adopted this guidance during 2022, and recognized approximately $3.8 million in payroll tax credits under the Coronavirus Aid Relief Economic Security Act (the "CARES Act").
We adopted this guidance during 2022, and recognized approximately $3.8 million in payroll tax credits under the CARES Act. 71 Table of Contents
These changes were offset by an increase in accounts receivable, net of approximately $6.0 million, an increase in inventory of approximately $3.7 million, a decrease in post-marketing commitment liability of approximately $1.1 million, and a decrease in accounts payable of approximately $0.9 million.
These changes were offset by an increase in accounts receivable, net of approximately $7.8 million, an increase in other current assets of approximately $2.0 million, a decrease in post-marketing commitment liability of approximately $0.9 million, a decrease in accounts payable of approximately $4.7 million, and a decrease in accrued expenses of approximately $33.1 million.
ASU 2020-10 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832) , which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model.
The impact of the adoption of this ASU is not expected to have a material effect on our consolidated financial statements. In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832) , which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model.
This included the maturity of available for-sale securities of approximately $27.2 million, partially offset by the purchase of available-for-sale securities of approximately $38.1 million. 59 Financing Activities Cash provided by financing activities for the year ended December 31, 2022 was approximately $12.2 million, representing cash raised, net of offering expenses, from the Purchase Agreement entered into on March 8, 2022 with Mr.
Financing Activities There were no financing activities recorded for the year ended December 31, 2023 . Cash provided by financing activities for the year ended December 31, 2022 was approximately $12.2 million, representing cash raised, net of offering expenses, from the Purchase Agreement entered into on March 8, 2022 with Mr.
The remaining milestone amounts were not included in the table above as the timing of when or if these payments will be made is uncertain. As of December 31, 2022, our obligations for potential milestone payments totaled approximately $14.4 million.
The remaining milestone amounts were not included in the table above as the timing of when or if these payments will be made is uncertain.
The increase in product revenue, net was primarily attributable to an increase in net selling price and a decrease in reserves for variable consideration from approximately 19.3% of product revenue for the year ended December 31, 2021 to approximately 17.9% of product revenue for the year ended December 31, 2022, partially offset by a volume decrease of approximately 4.6% in bottles of NERLYNX sold.
Product revenue, net Product revenue, net was approximately $203.1 million for the year ended December 31, 2023 , compared to $200.0 million for the year ended December 31, 2022 . The increase in product revenue, net was primarily attributable to an increase in net selling price, partially offset by a volume decrease of approximately 6.3% in bottles of NERLYNX sold.
While our consolidated financial statements have been prepared on a going concern basis, we expect to continue incurring significant losses for the foreseeable future and will need to generate significant revenue to sustain operations and successfully commercialize neratinib.
While our consolidated financial statements have been prepared on a going concern b asis, we may incur significant losses in the future and will need to generate sig nificant revenue to sustain operations and successfully commercialize neratinib and develop alisertib.
(4) Non-GAAP adjusted diluted net income per share was calculated based on 44,929,998 and 41,558,838 weighted-average shares of common stock outstanding and potentially dilutive common stock equivalents (stock options, restricted stock units and warrants) for the twelve months ended December 31, 2022 and 2021, respectively.
(4) Non-GAAP adjusted diluted net income per share was calculated based on 47,550,852 and 44,929,998 weighted-average shares of common stock outstanding for the years ended December 31, 2023 and 2022, respectively.
Legal verdict expense For the year ended December 31, 2022, we increased our legal expense accrual by approximately $12.5 million with respect to the Eshelman v. Puma Biotechnology, Inc., et al. judgment. See Part II, Item 1. "Legal Proceedings" in this Annual Report for further details.
Legal verdict expense For the year ended December 31, 2022, we increased our legal expense accrual by approximately $12.5 million with respect to the Eshelman v. Puma Biotechnology, Inc., et al. judgment. There were no such expenses for the year ended December 31, 2023.
This amount will be paid by us if all milestones are reached and would reduce the overall contractual obligation if one or more milestone is never reached.
As of December 31, 2023, our obligations for potential milestone payments totaled approximately $15.5 million.This amount will be paid by us if all milestones are reached and would reduce the overall contractual obligation if one or more milestone is never reached.
Some of these developments have had and may continue to have an adverse effect on our revenue and thus could have an adverse effect on our ability to satisfy the minimum revenue covenants as stated in the Athyrium Notes.
Some of these developments have had and may continue to have an adverse effect on our revenue and thus could have an adverse effect on our ability to satisfy the minimum revenue and cash balance covenants contained in the Athyrium Notes. 62 Table of Contents Summary of Income and Expenses Product revenue, net Product revenue, net consists of revenue from sales of NERLYNX.
Other Incentives: Other incentives which we offer include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payors.
We estimate these rebates and record such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. 70 Table of Contents Other Incentives: Other incentives which we offer include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payors.
Outside the United States, we seek to enter into exclusive sub-license agreements with third parties to pursue regulatory approval, if necessary, and commercialize NERLYNX, if approved.
Outside the United States, we seek to enter into exclusive sub-license agreements with third parties to pursue regulatory approval, if necessary, and commercialize NERLYNX, if approved. As of December 31 2023, NERLYNX has received approval for the treatment of certain patients with extended adjuvant or metastatic HER2-positive breast cancer in over 50 countries outside the United States.
Selling, general and administrative expenses: Selling, general, and administrative expenses For the Year Ended Change (in thousands) December 31, $ % 2022 2021 2022/2021 2022/2021 Payroll and related costs $ 29,933 $ 38,118 $ (8,185 ) -21.5 % Professional fees and expenses 38,122 38,356 (234 ) -0.6 % Travel and meetings 5,057 4,521 536 11.9 % Facilities and equipment costs 5,338 5,546 (208 ) -3.8 % Stock-based compensation 8,046 25,699 (17,653 ) -68.7 % Credit loss recovery — (1,000 ) 1,000 -100.0 % Other 3,482 5,054 (1,572 ) -31.1 % $ 89,978 $ 116,294 $ (26,316 ) -22.6 % Total SG&A expenses decreased approximately 22.6% to $90.0 million for the year ended December 31, 2022 from $116.3 million for the year ended December 31, 2021.
Selling, general and administrative expenses: Selling, general, and administrative expenses For the Year Ended Change (in thousands) December 31, $ % 2023 2022 2023/2022 2023/2022 Payroll and related costs $ 33,436 $ 29,933 $ 3,503 11.7 % Provision for credit loss 881 — 881 100.0 % Professional fees and expenses 34,011 38,122 (4,111 ) -10.8 % Travel and meetings 5,537 5,057 480 9.5 % Facilities and equipment costs 5,116 5,338 (222 ) -4.2 % Stock-based compensation 6,909 8,046 (1,137 ) -14.1 % Loss on impairment of asset 625 — 625 100.0 % Other 3,418 3,482 (64 ) -1.8 % $ 89,933 $ 89,978 $ (45 ) -0.1 % Total SG&A expenses were consistent at approximately $90.0 million for the years ended December 31, 2023 and December 31, 2022.
Other income and expenses: Other income (expenses) For the Year Ended Change (in thousands) December 31, $ % 2022 2021 2022/2021 2022/2021 Interest income $ 813 $ 160 $ 653 408.1 % Interest expense (11,592 ) (12,807 ) 1,215 -9.5 % Legal verdict expense (12,456 ) (9,591 ) (2,865 ) 29.9 % Loss on debt extinguishment — (8,146 ) 8,146 0.0 % Other income (expense) (28 ) 292 (320 ) -109.6 % $ (23,263 ) $ (30,092 ) $ 6,829 -22.7 % Interest expense For the year ended December 31, 2022, we recognized approximately $11.6 million in interest expense compared to approximately $12.8 million of interest expense for the year ended December 31, 2021.
Other income and expenses: Other income (expenses) For the Year Ended Change (in thousands) December 31, $ % 2023 2022 2023/2022 2023/2022 Interest income $ 2,605 $ 813 $ 1,792 220.4 % Interest expense (13,330 ) (11,592 ) (1,738 ) 15.0 % Legal verdict expense — (12,456 ) 12,456 -100.0 % Other income 759 (28 ) 787 -2810.7 % $ (9,966 ) $ (23,263 ) $ 13,297 -57.2 % Interest income For the year ended December 31, 2023, we recognized approximately $2.6 million in interest income compared to approximately $0.8 million of interest income for the year ended December 31, 2022.
Our ability to obtain funding may be adversely impacted by uncertain market conditions, including the global COVID-19 pandemic, our success in commercializing neratinib, our success in developing alisertib, unfavorable decisions of regulatory authorities or adverse clinical trial results. The outcome of these matters cannot be predicted at this time.
While we have been successful in raising financing in the past, there can be no assurance that we will be able to do so in the future. Our ability to obtain funding may be adversely impacted by uncertain market conditions, our success in commercializing neratinib, our success in developing alisertib, unfavorable decisions of regulatory authorities or adverse clinical trial results.
Total revenue Total revenue was approximately $228.0 million for the year ended December 31, 2022, compared to $253.2 million for the year ended December 31, 2021. Product revenue, net Product revenue, net was approximately $200.0 million for the year ended December 31, 2022, compared to $189.1 million for the year ended December 31, 2021.
Total revenue Total revenue was approximately $235.6 million for the year ended December 31, 2023, compared to $228.0 million for the year ended December 31, 2022. This increase in total revenue of $7.6 million was due to an increase in product revenue, net of approximately $3.1 million and an increase in royalty revenue of $4.5 million.
Acquired In-Process Research and Development Expense Acquired in-process research and development expense includes the rights to develop new product candidates.
We expect R&D expenses to increase significantly in 2024 as we initiate two Phase II clinical trials of alisertib. Acquired In-Process Research and Development Expense Acquired in-process research and development expense includes the rights to develop new drug candidates.
The decreases above were partially offset by: • an increase in travel and meetings expense of approximately $0.5 million, primarily due to the easing of COVID-19 travel restrictions; and • a recovery of a prior year $1.0 million credit loss expense in the year ended December 31, 2021. 57 Research and development expenses: Research and development expenses For the Year Ended Change (in thousands) December 31, $ % 2022 2021 2022/2021 2022/2021 Clinical trial expense $ 17,367 $ 26,033 $ (8,666 ) -33.3 % Internal R&D 27,511 33,068 (5,557 ) -16.8 % Consultant and contractors 3,582 5,835 (2,253 ) -38.6 % Stock-based compensation 3,780 6,934 (3,154 ) -45.5 % $ 52,240 $ 71,870 $ (19,630 ) -27.3 % Total R&D expenses decreased approximately 27.3% to $52.2 million for the year ended December 31, 2022 from approximately $71.9 million for the year ended December 31, 2021.
Research and development expenses: Research and development expenses For the Year Ended Change (in thousands) December 31, $ % 2023 2022 2023/2022 2023/2022 Clinical trial expense $ 13,611 $ 17,367 $ (3,756 ) -21.6 % Internal R&D 30,731 27,511 3,220 11.7 % Consultant and contractors 2,701 3,582 (881 ) -24.6 % Stock-based compensation 3,339 3,780 (441 ) -11.7 % $ 50,382 $ 52,240 $ (1,858 ) -3.6 % 64 Table of Contents Total R&D expenses decreased approximately 3.6% to $50.4 million for the year ended December 31, 2023 from approximately $52.2 million for the year ended December 31, 2022.
Further changes in cash flows from operations included an increase in accrued expenses other of approximately $5.2 million, a decrease in other current assets of approximately $3.2 million, and a decrease in prepaid expenses and other of approximately $2.7 million.
Total changes in cash flows from operations were due to changes in working capital and primarily related to an increase in inventory of approximately $2.6 million (increase in inventory purchases) and an increase in accounts receivable, net of approximately $8.4 million (increase and timing of fourth quarter total revenues) and a decrease in accrued expenses of approximately $7.6 million.
These changes were offset by an increase in accounts receivable, net of approximately $7.8 million, an increase in other current assets of approximately $2.0 million, a decrease in post-marketing commitment liability of approximately $0.9 million, a decrease in accounts payable of approximately $4.7 million, and a decrease in accrued expenses of approximately $33.1 million Net cash provided by operating activities for the year ended December 31, 2021 of $20.7 million consisted of a net loss of a $29.1 million, offset by a decrease of non-cash items of approximately $46.6 million, including stock-based compensation, depreciation and amortization, credit loss recovery and loss on extinguishment of debt of approximately $3.8 million related to the write off of debt issuance costs.
Net cash provided by operating activities for the year ended December 31, 2023 was $27.0 million which consisted of net income of $21.6 million, adjusted for non-cash items of approximately $23.3 million, including stock-based compensation of $10.2 million, and depreciation and amortization of $11.5 million, provision of credit loss of $0.9 million and loss on impairment of ROU asset of $0.6 million.
Auerbach and Athyrium, and the Purchase Agreement entered into with Mr. Auerbach on December 9, 2022. During the year ended December 31, 2021, cash used in financing activities was approximately $31.9 million.
Auerbach and Athyrium, and the Purchase Agreement entered into with Mr.
The decrease is primarily attributable to the following: • a decrease in clinical trial expense of approximately $8.7 million, primarily due to the reduction in the number of patients in certain clinical trials; • a decrease in internal R&D of approximately $5.6 million, consisting of approximately $5.1 million due to a decrease in headcount and clinical trial activity, and a decrease of approximately $1.8 million for a payroll tax credit under the CARES Act, partially offset by an increase in bonuses of approximately $1.0 million and increased travel of approximately $0.4 million; • a decrease in consultant and contractors of approximately $2.3 million, primarily due to the close of the CONTROL study and a reduction in the number of patients undergoing treatment in the SUMMIT study; and • a decrease in stock-based compensation of approximately $3.2 million, primarily due to the impact of a lower headcount combined with a lower stock price at which new grants were valued.
The decrease is primarily attributable to the following: • a decrease in clinical trial expense of approximately $3.8 million, primarily due to the reduction and closure of clinical trial sites with respect to NERLYNX; • a decrease in consultant and contractors of approximately $0.9 million, primarily due to the reduction and closure of clinical trial sites with respect to NERLYNX; and • a decrease in stock-based compensation of approximately $0.4 million, primarily due to lower fair value on equity grants as a result of a lower market price for our common stock.
The decrease in license revenue was primarily due to a large upfront payment in connection with an amendment to the Pierre Fabre sub-license agreement during the year ended December 31, 2021. Royalty revenue Royalty revenue was approximately $28.0 million for the year ended December 31, 2022, compared to $12.3 million for the year ended December 31, 2021.
License revenue There was no license revenue for the years ended December 31, 2023 and December 31, 2022 . 63 Table of Contents Royalty revenue Royalty revenue was approximately $32.5 million for the year ended December 31, 2023 , compared to $28.0 million for the year ended December 31, 2022 .
Removed
We have continued to expand the labeled indications for NERLYNX in the United States and intend to pursue further indications as well.
Added
We initiated the ALISertib in CAncer (ALISCA-Lung1) Phase II trial (PUMA-ALI-4201) of alisertib monotherapy for the treatment of patients with extensive stage small cell lung cancer in February 2024, and we plan to commence the ALISCA-Breast 1 trial in the second half of 2024.
Removed
We also believe neratinib has clinical application in the treatment of several other cancers as well, including other tumor types that over-express or have a mutation in HER2 or epidermal growth factor receptor (“EGFR”), such as cervical cancer, lung cancer or other solid tumors.
Added
Reserves for variable consideration were approximately 17.9% of product revenue for the years ended December 31, 2023 and 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−1 removed1 unchanged
Biggest changeAs described in Note 10, we modified the interest rate, beginning October 1, 2022, to the adjusted three-month term SOFR and the lesser of (a) the sum of (i) three-month term SOFR and (ii) 0.26161% (26.161 basis points) and (b) three and one-half of one percent (3.50%) per annum.
Biggest changeThe Athyrium Notes bear interest at a rate per annum equal to the sum of 8.00% plus the adjusted three-month term SOFR and the lesser of (a) the sum of (i) three-month term SOFR and (ii) 0.26161% (26.161 basis points) and (b) three and one-half of one percent (3.50%) per annum.
We invest our excess cash primarily in cash equivalents such as money market investments as of December 31, 2022. The primary objectives of our investment activities are to ensure liquidity and to preserve principal while at the same time maximizing the income we receive from our cash and cash equivalents without significantly increasing risk.
We invest our excess cash primarily in cash equivalents such as money market investments as of December 31, 2023. The primary objectives of our investment activities are to ensure liquidity and to preserve principal while at the same time maximizing the income we receive from our cash and cash equivalents without significantly increasing risk.
Additionally, we established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. 63 Table of Contents Because of the short-term maturities of our cash equivalents, we do not believe that a 10% increase in interest rates would have a material effect on the realized value of our cash equivalents.
Additionally, we established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. Because of the short-term maturities of our cash equivalents, we do not believe that a 10% increase in interest rates would have a material effect on the realized value of our cash equivalents.
If overall interest rates had increased by one hundred basis points during the year ended December 31, 2022, our interest expense would have increased by approximately $1.0 million.
If overall interest rates had increased by one hundred basis points during the year ended December 31, 2023, our interest expense would have increased by $1.0 million.
We also have interest rate exposure as a result of borrowings outstanding under the Athyrium Notes. As of December 31, 2022 the aggregate outstanding principal amounts of the Athyrium Notes was $100.0 million.
We also h ave interest rate exposure as a result of borrowings outstanding under the Athyrium Notes. As of December 31, 2023, the aggregate outstanding principal amounts of the Athyrium Notes was $100.0 million.
Removed
The Athyrium Notes bear interest at a rate per annum equal to the sum of (a) 8.00% plus (b) the lesser of (x) adjusted three-month term LIBOR for such interest period ("LIBOR") and (y) 3.5% (or a comparable or successor rate that gives due consideration to the then prevailing rate used by commercial banks in the United States, which rate is reasonably determined by Athyrium) until September 30, 20 22.

Other PBYI 10-K year-over-year comparisons