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What changed in PUMA BIOTECHNOLOGY, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PUMA BIOTECHNOLOGY, INC.'s 2023 and 2024 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 2024 report.

+428 added−392 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in PUMA BIOTECHNOLOGY, INC.'s 2024 10-K

428 paragraphs added · 392 removed · 333 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

137 edited+36 added−16 removed454 unchanged
Biggest changeAlisertib Patent Portfolio We hold a worldwide exclusive license under our license agreement with Takeda (the “Takeda Agreement”), to 20 granted U.S. patents and 5 pending U.S. patent applications, as well as foreign counterparts thereof, and other patent applications and patents claiming priority therefrom for a total of approximately 363 foreign patents and patent applications to develop and commercialize alisertib. 14 Table of Contents We have a license to issued U.S. patents that include species claims and genus claims to the composition of matter of alisertib which are set to expire in 2029 and 2027, respectively, not including any extension for Hatch-Waxman exclusivity.
Biggest changeThe granted claims are directed to use of a combination of neratinib and capecitabine in the manufacture of a medicament for treating a neoplasm. 14 Table of Contents Alisertib Patent Portfolio We hold a worldwide exclusive license under our license agreement with Takeda (the “Takeda Agreement”), to 22 granted U.S. patents and five pending U.S. patent applications, as well as foreign counterparts thereof, and other patent applications and patents claiming priority thereof for a total of approximately 368 foreign patents and patent applications to develop and commercialize alisertib.
We believe that by more potently inhibiting HER2 at a different site and acting via a mechanism different from other agents, neratinib may have therapeutic benefits in breast cancer patients who have been previously treated with these existing treatments, most notably due to its irreversible inhibition of the HER2 target enzyme. 3 Table of Contents NERLYNX, the commercial name for neratinib, 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.
We believe that by more potently inhibiting HER2 at a different site and acting via a mechanism different from other agents, neratinib may have therapeutic benefits in breast cancer patients who have been previously treated with these existing treatments, most notably due to its irreversible inhibition of the HER2 target enzyme. 3 Table of Contents NERLYNX, the commercial name for neratinib, 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.
An SPA is a written agreement between the trial’s sponsor and the FDA regarding the design, endpoints, and planned statistical analysis of the Phase III trial with respect to the effectiveness of neratinib for the indication to be studied to support a NDA.
An SPA is a written agreement between the trial’s sponsor and the FDA regarding the design, endpoints, and planned statistical analysis of the Phase III trial with respect to the effectiveness of neratinib for the indication to be studied to support an NDA.
Inhibition of Aurora Kinase A leads to disruption of mitotic spindle apparatus assembly, disruption of chromosome segregation, and inhibition of cell proliferation.
Inhibition of Aurora Kinase A leads to disruption of mitotic spindle apparatus assembly, disruption of chromosome segregation, and inhibition of cell proliferation.
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.
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, Panama, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, Venezuela, French Guiana, the Falkland Islands and Mexico (the “Pint Territory”).
As a condition of approval, the FDA generally requires that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled confirmatory clinical trials to verify or characterize the anticipated effect on irreversible morbidity or mortality or other clinical benefit and may require that such confirmatory trials be underway prior to granting any accelerated approval.
As a condition of approval, the FDA generally requires that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled confirmatory clinical trials to verify or characterize the anticipated effect on irreversible morbidity or mortality or other clinical benefit and may require that such confirmatory trials be well underway prior to granting any accelerated approval.
After these five years, the authorization may be renewed for an unlimited period on the basis of a reevaluation of the risk-benefit balance. Under the centralized procedure, the maximum timeframe for the evaluation of a MAA by the EMA is 210 days.
After these five years, the authorization may be renewed for an unlimited period on the basis of a reevaluation of the risk-benefit balance. Under the centralized procedure, the maximum timeframe for the evaluation of an MAA by the EMA is 210 days.
The holder of a MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance (“QPPV”) who is responsible for the establishment and maintenance of that system, and oversees the safety profiles of medicinal products and any emerging safety concerns.
The holder of an MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance (“QPPV”) who is responsible for the establishment and maintenance of that system, and oversees the safety profiles of medicinal products and any emerging safety concerns.
For our office-based employees, during the latter part of 2022, adopted a virtual work environment, allowing functional management and employees to determine when working virtually is more efficient and productive, and when in-office collaboration is beneficial. We are an equal opportunity employer and believe strongly in hiring and maintaining a diverse, equitable, and inclusive workforce.
For our office-based employees, during the latter part of 2022, we adopted a virtual work environment, allowing functional management and employees to determine when working virtually is more efficient and productive, and when in-office collaboration is beneficial. We are an equal opportunity employer and believe strongly in hiring and maintaining a diverse, equitable, and inclusive workforce.
It is also supported from a clinical expertise and cancer landscape perspective by our medical affairs group. We launched NERLYNX in the United States in July 2017 with the goal of establishing NERLYNX as the standard of care for the extended adjuvant treatment of adult patients with early stage HER2-positive breast cancer to follow adjuvant trastuzumab-based therapy.
It is also supported from a clinical and cancer landscape perspective by our medical affairs group. We launched NERLYNX in the United States in July 2017 with the goal of establishing NERLYNX as the standard of care for the extended adjuvant treatment of adult patients with early stage HER2-positive breast cancer to follow adjuvant trastuzumab-based therapy.
If we obtain market approval for neratinib or other drug candidates or in certain jurisdictions outside the United States, we may be eligible for regulatory protection, such as eight to eleven years of data and marketing exclusivity are potentially available for new drugs in the EU; up to five years of patent extension are potentially available in Europe (Supplemental Protection Certificate), and eight years of data exclusivity are potentially available in Japan.
If we obtain market approval for neratinib or other drug candidates or in certain jurisdictions outside the United States, we may be eligible for regulatory protection, such as eight to eleven years of data and marketing exclusivity potentially available for new drugs in the EU; up to five years of patent extension potentially available in Europe (Supplemental Protection Certificate), and eight years of data exclusivity potentially available in Japan.
Therapeutic strategies have been developed to block HER2 in order to improve the treatment of this type of breast cancer. Trastuzumab, pertuzumab, lapatinib, T-DM1, fam‐trastuzumab deruxtecan and tucatinib are all drugs are used as single agents, in combination with other drugs and in combination with chemotherapy to treat patients with HER2-positive breast cancer at various stages.
Therapeutic strategies have been developed to block HER2 in order to improve the treatment of this type of breast cancer. Trastuzumab, pertuzumab, lapatinib, T-DM1, fam‐trastuzumab deruxtecan and tucatinib are all drugs that are used as single agents, in combination with other drugs and in combination with chemotherapy to treat patients with HER2-positive breast cancer at various stages.
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 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.
Treatment with paclitaxel plus alisertib resulted in a numerically higher but not statistically significant improvement in overall survival with the median OS for the paclitaxel plus alisertib arm was 26.3 months versus 25.1 months for the single agent paclitaxel arm of the trial which resulted in a hazard ratio of 0.89 and a p value of 0.61.
Treatment with paclitaxel plus alisertib resulted in a numerically higher but not statistically significant improvement in overall survival where the median OS for the paclitaxel plus alisertib arm was 26.3 months versus 25.1 months for the single agent paclitaxel arm of the trial which resulted in a hazard ratio of 0.89 and a p value of 0.61.
The ALISCA-Breast1 trial is designed to dose patients with alisertib given at either 30 mg, 40 mg or 50 mg twice daily (BID) on days 1-3, 8-10 and 15-17 on a 28-day cycle in combination with the endocrine therapy of the investigator’s choice.
The ALISCA TM -Breast1 trial is designed to dose patients with alisertib given at either 30 mg, 40 mg or 50 mg twice daily (BID) on days 1-3, 8-10 and 15-17 on a 28-day cycle in combination with the endocrine therapy of the investigator’s choice.
The efficacy results from the trial showed that CNS Objective Response Rate by RANO-BM was 33.3% of patients in cohort 4A, 29.4% in cohort 4B, and 28.6% in cohort 4C. Rates of response + stable disease greater than or equal to 6 months were 50% in cohort 4A, 35.3% in cohort 4B, and 33.3% in cohort 4C.
The efficacy results from the trial showed that CNS Objective Response Rate by RANO-BM was 33.3% of patients in cohort 4A, 29.4% in cohort 4B, and 28.6% in cohort 4C. Rates of response + stable disease greater than or equal to six months were 50% in cohort 4A, 35.3% in cohort 4B, and 33.3% in cohort 4C.
We believe that the key commercial priorities to achieve for NERLYNX include: • Educating healthcare providers about the evolving clinical data for NERLYNX and its ability to reduce the risk of recurrence in the extended adjuvant setting for woman battling HER2-positive breast cancer; • Educating HER2-positive breast cancer patients about the risks of recurrence and empowering them to ask their MDs if NERLYNX is an appropriate option for them; • Removing access barriers by ensuring broad insurance coverage; and • Providing patients with appropriate co-pay support as well as tools and resources to better maintain persistency and compliance. 12 Table of Contents In the United States, we sell our products through a specialty pharmacy network and special distributor network.
We believe that the key commercial priorities for NERLYNX include: • Educating healthcare providers about the evolving clinical data for NERLYNX and its ability to reduce the risk of recurrence in the extended adjuvant setting for patients battling HER2-positive breast cancer; • Educating HER2-positive breast cancer patients about the risks of recurrence and empowering them to ask their MDs if NERLYNX is an appropriate option for them; • Removing access barriers by ensuring broad insurance coverage; and • Providing patients with appropriate co-pay support as well as tools and resources to better maintain persistency and compliance. 12 Table of Contents In the United States, we sell our products through a specialty pharmacy network and special distributor network.
Our benefit programs are constantly evolving to meet our employees’ needs and renew our commitment to them as a vital resource to our continued success. Culture and Communication How we conduct our business is just as important as what we do. Our core values are the principles that guide our company strategy and our individual actions.
Our benefit programs are constantly evolving to meet our employees’ needs and renew our commitment to them as a vital resource to our continued success. Culture and Communication How we conduct our business is just as important as what we do and achieve. Our core values are the principles that guide our company strategy and our individual actions.
The median cumulative duration of grade 3 diarrhea ranged from 2 – 2.5 days across the CONTROL DE study cohorts for the entire 12-month treatment period (compared with 5.0 days for ExteNET). The proportion of patients discontinuing neratinib because of diarrhea was decreased both DE cohorts (DE1 3%; DE2 6%) compared with ExteNET (17%).
The median cumulative duration of grade 3 diarrhea ranged from 2 – 2.5 days across the CONTROL DE study cohorts for the entire 12-month treatment period (compared with 5.0 days for ExteNET). The proportion of patients discontinuing neratinib because of diarrhea was decreased in both DE cohorts (DE1 3%; DE2 6%) compared with ExteNET (17%).
Treatment with paclitaxel plus alisertib resulted in a higher but not statistically significant improvement in overall survival with the median OS for the paclitaxel plus alisertib arm was 16 months versus 12.7 months for the paclitaxel alone arm of the trial which resulted in a hazard ratio of 0.51 and a p value of 0.09.
Treatment with paclitaxel plus alisertib resulted in a higher but not statistically significant improvement in overall survival where the median OS for the paclitaxel plus alisertib arm was 16 months versus 12.7 months for the paclitaxel alone arm of the trial which resulted in a hazard ratio of 0.51 and a p value of 0.09.
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 was issued on November 19, 2021. U.S. Patent No. 7,399,865 will expire December 29, 2030.
In August 2023, we announced that we had been notified by the FDA that we can proceed under our Investigational New Drug application (“IND”) with the clinical development of alisertib monotherapy for the treatment of patients with extensive stage small cell lung cancer (“SCLC”).
In August 2023, we announced that we had been notified by the FDA that we can proceed under our Investigational New Drug application (“IND”) with the clinical development of alisertib monotherapy for the treatment of patients with extensive stage small cell lung cancer.
Once the optimal alisertib dose is identified, we plan to engage with global regulatory agencies regarding the design of a pivotal Phase III trial, which we anticipate will be a randomized trial of alisertib plus investigator’s choice endocrine therapy versus placebo plus investigator’s choice endocrine therapy in patients with chemotherapy naïve HER2-negative, hormone receptor-positive metastatic breast cancer. 11 Table of Contents Clinical Testing of Our Drug Candidates Any drug candidates we seek to develop will require extensive pre-clinical and clinical testing to determine its safety and efficacy in the potential applications prior to seeking and obtaining regulatory approval.
Once the optimal alisertib dose is identified, we plan to engage with global regulatory agencies regarding the design of a pivotal Phase III trial, which we anticipate will be a randomized trial of alisertib plus investigator’s choice endocrine therapy versus placebo plus investigator’s choice endocrine therapy in patients with chemotherapy naïve HER2-negative, hormone receptor-positive metastatic breast cancer. 11 Table of Contents Clinical Testing of Our Drug Candidates Any drug candidates we seek to develop will require extensive pre-clinical and clinical testing to determine its safety and efficacy in the potential applications before seeking and obtaining regulatory approval.
We participate in the 340B program, which is administered by the Health Resources and Services Administration (“HRSA”), and requires us to charge statutorily defined covered entities no more than the 340B “ceiling price” for our covered outpatient drugs used in an outpatient setting.
We participate in the 340B program, which is administered by the Health Resources and Services Administration (“HRSA”) that requires us to charge statutorily defined covered entities no more than the 340B “ceiling price” for our covered outpatient drugs used in an outpatient setting.
The specialty pharmacy network sells directly to patients and consists of Acaria Health, Accredo, CVS, ONCO 360, Optum/Diplomat and Biologics. Our specialty distributor network sells to hospitals, physician practices and other sites of care and consists of McKesson, ASD/Oncology Supply, Cardinal Health and DMS Pharmaceutical Group.
The specialty pharmacy network sells directly to patients and consists of Acaria Health, Accredo, CVS, ONCO 360, Optum and Biologics. Our specialty distributor network sells to hospitals, physician practices and other sites of care and consists of McKesson, ASD/Oncology Supply, Cardinal Health and DMS Pharmaceutical Group.
In April 2018, we announced that NERLYNX has been included as a recommended treatment option in the latest NCCN, Clinical Practice Guidelines in Oncology Central Nervous System Cancers for Breast Cancer patients with brain metastases.
In April 2018, we announced that NERLYNX has been included as a recommended treatment option in the latest NCCN Clinical Practice Guidelines in Oncology Central Nervous System Cancers for patients with breast cancer and brain metastases.
Pending the outcome of this planned study, we may then look to focus the future clinical development of alisertib in combination with endocrine therapy for patients with HER2-negative hormone receptor-positive breast cancer in patients with any potential biomarkers.
Pending the outcome of this study, we may then look to focus the future clinical development of alisertib in combination with endocrine therapy for patients with HER2-negative hormone receptor-positive breast cancer in patients with any potential biomarkers.
The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. 20 Table of Contents Data and market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications.
The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. 20 Table of Contents Marketing exclusivity Data and market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications.
The benefits of a PRIME designation include the appointment of a CHMP rapporteur before submission of a MAA, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review earlier in the application process.
The benefits of a PRIME designation include the appointment of a CHMP rapporteur before submission of an MAA, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review earlier in the application process.
The EU laws that have been transposed into United Kingdom law through secondary legislation remain applicable in Great Britain, however, new legislation such as the EU CTR is not applicable in Great Britain.
The EU laws that have been transposed into United Kingdom law through secondary legislation remain applicable in the UK; however, new legislation such as the (EU) CTR is not applicable in Great Britain.
In 12 patients with exceptional response to alisertib plus paclitaxel (defined as PFS greater than or equal to 12 months), increased expression of genes involved in MYC activation and in epithelial to mesenchymal transition (a hallmark of cancer progression and metastasis) was observed in comparison to cancers from patients whose disease progressed within 6 months of initiating alisertib + paclitaxel (n=11) or those with exceptional response to paclitaxel alone (n=4).
In 12 patients with exceptional response to alisertib plus paclitaxel (defined as PFS greater than or equal to 12 months), increased expression of genes involved in MYC activation and in epithelial to mesenchymal transition (a hallmark of cancer progression and metastasis) was observed in comparison to cancers from patients whose disease progressed within six months of initiating alisertib + paclitaxel (n=11) or those with exceptional response to paclitaxel alone (n=4).
The overall 10-year market exclusivity period can be extended to a maximum of 11 years if, during the first 8 years of those 10 years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
The overall 10-year market exclusivity period can be extended to a maximum of 11 years if, during the first eight years of those 10 years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
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.
This sales force is supported by an experienced leadership team consisting of six 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. Our commercial infrastructure includes capabilities in manufacturing, regulatory, quality control, and compliance.
Intellectual Property and License Agreements Neratinib Patent Portfolio We hold a worldwide exclusive license under our license agreement with Pfizer, as amended (the “Pfizer Agreement”) to 21 granted U.S. patents and four pending U.S. patent applications, as well as foreign counterparts thereof, and other patent applications and patents claiming priority therefrom to develop and commercialize certain compounds, including neratinib.
Intellectual Property and License Agreements Neratinib Patent Portfolio We hold a worldwide exclusive license under our license agreement with Pfizer, as amended (the “Pfizer Agreement”) to 21 granted U.S. patents and three pending U.S. patent applications, as well as foreign counterparts thereof, and other patent applications and patents claiming priority therefrom to develop and commercialize certain compounds, including neratinib.
Other national and EU-wide regulatory requirements may also apply. 21 Table of Contents Marketing Authorization In order to market our drug candidates in the EU and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EU, medicinal drug candidates can only be placed on the market after obtaining a marketing authorization (“MA”).
Other national and EU-wide regulatory requirements may also apply. 21 Table of Contents Marketing Authorization In order to market our drug candidates in the EU and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EU, medicinal drug candidates can only be placed on the market after obtaining a MA.
ITEM 1. BUSINESS Company Overview Unless otherwise provided in this Annual Report, references to the “ Company, ” “ we, ” “ us, ” and “ our ” refer to Puma Biotechnology, Inc. and our wholly owned subsidiaries. We are a biopharmaceutical company that develops and commercializes innovative products to enhance cancer care and improve treatment outcomes for patients.
ITEM 1. BUSINESS Company Overview Unless otherwise provided in this Annual Report, references to the “ Company, ” “ we, ” “ us, ” and “ our ” refer to Puma Biotechnology, Inc. and our wholly owned subsidiary. We are a biopharmaceutical company that develops and commercializes innovative products to enhance cancer care and improve treatment outcomes for patients.
The FDA will attempt to direct additional resources to the evaluation of an application for a new drug designated for priority review in an effort to facilitate the review.
The FDA will attempt to direct additional resources to the evaluation of an application for a drug designated for priority review in an effort to facilitate the review.
In exceptional cases, the CHMP might perform an accelerated review of a MAA in no more than 150 days (not including clock stops).
In exceptional cases, the CHMP might perform an accelerated review of an MAA in no more than 150 days (not including clock stops).
We also have a license to an issued U.S. patent for the use of neratinib in the treatment of breast cancer, which is currently set to expire in 2025, an issued patent for the use of neratinib in the extended adjuvant treatment of early stage HER2-positive breast cancer that has previously been treated with a trastuzumab containing regimen that expires in 2030, two issued patents for the use of neratinib in combination with capecitabine, the latter of which is set to expire in 2031, and two issued patents for the formulation of NERLYNX® that are set to expire in 2030, two issued patents for the polymorphic forms of neratinib which are set to expire in 2028, one issued patent for the preparation of the polymorphic forms of neratinib which is set to expire in 2028, and three issued patents for the use of the polymorphic forms of neratinib in the treatment of breast cancer which are set to expire in 2028.
We also have a license to an issued U.S. patent for the use of neratinib in the treatment of breast cancer, which is currently set to expire on October 8, 2025, an issued patent for the use of neratinib in the extended adjuvant treatment of early stage HER2-positive breast cancer that has previously been treated with a trastuzumab containing regimen that expires in 2030, two issued patents for the use of neratinib in combination with capecitabine, the latter of which is set to expire in 2031, and two issued patents for the formulation of NERLYNX® that are set to expire in 2030, two issued patents for the polymorphic forms of neratinib which are set to expire in 2028, one issued patent for the preparation of the polymorphic forms of neratinib which is set to expire in 2028, and three issued patents for the use of the polymorphic forms of neratinib in the treatment of breast cancer which are set to expire in 2028.
We seek to build a sustainable portfolio including commercial drugs where we can successfully leverage our existing commercial infrastructure and a product pipeline by employing multiple therapeutic approaches and by acquiring drug candidates belonging to known drug classes. In addition, we employ disciplined decision criteria to assess drug candidates.
We seek to build a sustainable portfolio including commercial drugs where we can successfully leverage our existing c ommercial infrastructure and a product pipeline by employing multiple therapeutic approaches and by acquiring drug candidates belonging to known drug classes. In addition, we employ disciplined decision criteria to assess drug candidates.
The NCCN designated NERLYNX in combination with capecitabine as a category 2B treatment option and NERLYNX in combination with paclitaxel as a category 2B treatment option. Use, as designated for breast cancer patients with brain metastases, is outside the FDA-approved indication for NERLYNX and considered investigational, and we do not market or promote NERLYNX for these uses.
The NCCN designated NERLYNX in combination with capecitabine as a category 2A treatment option and NERLYNX in combination with paclitaxel as a category 2B treatment option. Use of NERLYNX for breast cancer patients with brain metastases is outside the FDA-approved indication for NERLYNX and considered investigational, and we do not market or promote NERLYNX for these uses.
The European Medicines Agency (“EMA”) also provided follow-on Scientific Advice (“SA”) consistent with that of the FDA regarding our Phase III trial design and endpoints used for such design to support the submission of an marketing authorization application (“MAA”) in the EU.
The European Medicines Agency (“EMA”) also provided follow-on Scientific Advice (“SA”) consistent with that of the FDA regarding our Phase III trial design and endpoints used for such design to support the submission of a marketing authorization application (“MAA”) in the EU.
If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of 8 years from the date on which the reference product was first authorized in the EU.
If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.
Where available and eligible, regulatory or data exclusivity has been obtained, or is currently being pursued in these jurisdictions outside the United States and Europe. Patent term extension or supplemental protection certificate are being, or will be, pursued in jurisdictions where available and eligible, including Chile, Europe and Taiwan.
Where available a nd eligible, regulatory or data exclusivity has been obtained, or is currently being pursued in these jurisdictions outside the United States and Europe. Patent term extension or supplemental protection certificate are being, or will be, pursued in jurisdictions where available and eligible, including Chile, Europe and Taiwan.
Upon grant of a MA, orphan medicinal products are entitled to ten years of market exclusivity for the approved indication, which means that the competent authorities cannot accept another MAA, or grant a MA, or accept an application to extend a MA for a similar medicinal product for the same indication for a period of ten years.
Upon grant of an MA, orphan medicinal products are entitled to 10 years of market exclusivity for the approved indication, which means that the competent authorities cannot accept another MAA, or grant an MA, or accept an application to extend an MA for a similar medicinal product for the same indication for a period of 10 years.
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 10 months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.
Increased MYC RNA expression was observed in tumors from patients who did not derive clinical benefit from paclitaxel alone (defined as PFS less than 6 months) compared to those with benefit from paclitaxel alone (defined as PFS greater than or equal to 6 months).
Increased MYC RNA expression was observed in tumors from patients who did not derive clinical benefit from paclitaxel alone (defined as PFS less than six months) compared to those with benefit from paclitaxel alone (defined as PFS greater than or equal to six months).
An NDA must be accompanied by a significant user fee, which may be waived in circumstances, such as where the drug is approved for an orphan-designated indications, or for the first NDA submitted by a qualifying small business.
An NDA must be accompanied by a significant user fee, which may be waived in circumstances, such as where the drug is approved for an orphan-designated indication, or for the first NDA submitted by a qualifying small business.
There can be no assurance that we will qualify for such regulatory exclusivity, or that such exclusivity will prevent competitors from seeking approval solely on the basis of their own studies. 22 Table of Contents Orphan Medicinal Products The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States.
There can be no assurance that we will qualify for such regulatory exclusivity, or that such exclusivity will prevent competitors from seeking approval solely on the basis of their own studies. Orphan Medicinal Products The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States.
The FDA endeavors to review applications with priority review designations within six months of the filing date as compared to ten months for review of new molecular entity NDAs under its current PDUFA review goals.
The FDA endeavors to review applications with priority review designations within six months of the filing date as compared to 10 months for review of new molecular entity NDAs under its current PDUFA review goals.
Government Price Reporting Medicaid is a joint federal and state program for low-income and disabled beneficiaries. Medicare is a federal program covering individuals age 65 and over as well as those with certain disabilities.
Government Price Reporting Medicaid is a joint federal and state program for low-income and disabled beneficiaries. Medicare is a federal program covering individuals aged 65 and over as well as those with certain disabilities.
The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until ten years have elapsed from the initial MA of the reference product in the EU.
The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years have elapsed from the initial MA of the reference product in the EU.
According to biomarker analyses from clinical trials, approximately 50% of hormone receptor positive breast cancer tumors may have c-myc amplifications and approximately 2-9% of hormone receptor positive HER2-negative breast cancer samples have RB1 mutations detected at the time of resistance to cdk4/6 inhibitors.
According to biomarker analyses from clinical trials, approximately 50% of hormone receptor positive breast cancer tumors may have c-Myc amplifications and approximately 2-9% of hormone receptor positive HER2-negative breast cancer samples have RB1 mutations detected at the time of resistance to CDK 4/6 inhibitors.
In Europe, marketing approval for neratinib was obtained on August 31, 2018, which provided 10 years of regulatory exclusivity. Between 2019 and 2022, marketing approval for neratinib was obtained in Argentina, Brazil, Brunei, Canada, Chile, China, Ecuador, Hong Kong, Israel, Malaysia, Mexico, Singapore and Taiwan.
In Europe, marketing approval for neratinib was obtained on August 31, 2018, which provided 10 years of regulatory exclusivity. Between 2019 and 2024, marketing approval for neratinib was obtained in Argentina, Brazil, Brunei, Canada, Chile, China, Ecuador, Hong Kong, Israel, Malaysia, Mexico, Singapore, Taiwan, Brazil and Thailand.
If certain of our out-of-pocket costs in completing such studies exceed a mutually agreed amount, Pfizer was obligated to pay for certain additional out-of-pocket costs to complete such studies.
If certain of our out-of-pocket costs in completing such studies exceeded a mutually agreed amount, Pfizer was obligated to pay for certain additional out-of-pocket costs to complete such studies.
In June 2017, we presented interim data from the TBCRC 022 at the ASCO 2017 Annual Meeting. The multicenter Phase II clinical trial enrolled patients with HER2-positive metastatic breast cancer who have brain metastases. The trial enrolled three cohorts of patients.
In June 2017, we presented interim data from TBCRC 022 at the ASCO 2017 Annual Meeting. The multicenter Phase II clinical trial enrolled patients with HER2-positive metastatic breast cancer who had brain metastases. The trial initially enrolled three cohorts of patients.
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.
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. In many countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.
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.
Depending on the design of the applicable clinical studies, drug candidates 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.
An important near-term objective is to continue to execute our NERLYNX commercial plan by driving market penetration and duration of therapy consistent with the current NERLYNX label. We continue to focus our efforts on commercializing NERLYNX in the United States.
An important near-te rm objective is to continue to execute our NERLYNX commercial plan by driving market penetration and duration of therapy consistent with the current NERLYNX label. We continue to focus our efforts on commercializing NERLYNX in the United States.
Of note RB1 mutations were the most frequently mutation with approximately 60% of the patients having RB1 mutations while CDK6, RBL1 and RBL2 mutations were found with very low frequency.
Of note RB1 mutations were the most frequent mutation with approximately 60% of the patients having RB1 mutations while CDK6, RBL1 and RBL2 mutations were found with very low frequency.
The 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.
The 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 Mexico October 2023 Taiwan June 2020 Brazil May 2024 Ecuador July 2020 Thailand December 2024 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 UAE September 2023 Syria January 2024 Saudi Arabia July 2024 Algeria July 2024 Turkey November 2024 Thailand December 2024 We currently have sub-licenses in each of these regions with third parties that are commercializing NERLYNX in their respective geography.
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 more than 20 countries outside the United States, including the European Union (“EU”), China, Latin America, Australia, Canada, and Hong Kong.
As of December 31, 2024, NERLYNX has received approval for the treatment of certain patients with extended adjuvant and/or metastatic HER2-positive breast cancer in more than 40 countries outside the United States, including the European Union (“EU”), China, Latin America, Australia, Canada, and Hong Kong.
Neratinib is a potent irreversible TKI that blocks signal transduction through the epidermal growth factor receptors, HER1, HER2 and HER4. Based on pre-clinical studies and clinical trials to date, we believe that neratinib may offer an advantage over existing treatments that are used in the treatment of patients with HER2-positive breast cancer.
Neratinib is a potent irreversible tyrosine kinase inhibitor (“TKI”) that blocks signal transduction through the epidermal growth factor receptors, HER1, HER2 and HER4. Based on pre-clinical studies and clinical trials to date, we believe that neratinib may offer an advantage over existing treatments that are used in the treatment of patients with HER2-positive breast cancer.
More recently, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. The rebate was previously capped at 100% of a drug’s average manufacturer price. Most significantly, in August 2022, the Inflation Reduction Act of 2022, or the IRA, was signed into law.
More recently, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. The rebate was previously capped at 100% of a drug’s average manufacturer price. Most significantly, in August 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.
A medicinal product can be designated as an orphan if its sponsor can establish that: (1) the product is intended for the diagnosis, prevention or treatment of a life threatening or chronically debilitating condition (2) either (a) such condition affects not more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from the orphan status, would not generate sufficient return in the EU to justify the necessary investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized for marketing in the EU or, if such method exists, the product will be of significant benefit to those affected by that condition.
A medicinal product can be designated as an orphan if its sponsor can establish that: (1) the product is intended for the diagnosis, prevention or treatment of a life threatening or chronically debilitating condition (2) either (a) such condition affects not more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from the orphan status, would not generate sufficient return in the EU to justify the necessary investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized for marketing in the EU or, if such method exists, the product will be of significant benefit to those affected by that condition. 22 Table of Contents Orphan designation must be requested before submitting an MAA.
Based on the our interactions with the FDA in 2023, we plan to initiate a Phase II trial of alisertib in combination with endocrine treatment (consisting of either anastrozole, exemestane, letrozole, fulvestrant or tamoxifen) in patients with chemotherapy-naïve HER2-negative, hormone receptor-positive metastatic breast cancer (ALISCA-Breast1).
Based on our interactions with the FDA, we initiated a Phase II trial of alisertib in combination with endocrine treatment (consisting of either anastrozole, exemestane, letrozole, fulvestrant or tamoxifen) in patients with chemotherapy-naïve HER2-negative, hormone receptor-positive metastatic breast cancer (ALISCA™-Breast1).
As a secondary objective, the we plan to evaluate each of these efficacy endpoints within biomarker subgroups in order to determine whether any biomarker subgroup correlates with more favorable efficacy results, such as though observed in preclinical and clinical studies in other cancers including breast cancer and small cell lung cancer.
As a secondary objective, we will evaluate each of these efficacy endpoints within biomarker subgroups in order to determine whether any biomarker subgroup correlates with more favorable efficacy results, such as through observed in preclinical and clinical studies in other cancers including breast cancer and small cell lung cancer.
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.
Any drug candidate submitted to the FDA for approval, including a product with a fast track designation or breakthrough therapy designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review.
HRSA has also finalized an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs.
HRSA has also finalized a revised regulation implementing an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); redesigns the Medicare Part D benefit (beginning in 2024); and replaces the Part D coverage gap discount program with a new manufacturer discount program (beginning in 2025).
This allows new rules to be introduced in the future by way of secondary legislation, which aims to allow flexibility in addressing regulatory gaps and future changes in the fields of human medicines, clinical trials and medical devices. Since January 1, 2021, the Medicines and Healthcare products Regulatory Agency (“MHRA”), has been the UK’s standalone medicines and medical devices regulator.
This allows new rules to be introduced in the future by way of secondary legislation, which aims to allow flexibility in addressing regulatory gaps and future changes in the fields of human medicines, clinical trials and medical devices. 23 Table of Contents Since January 1, 2021, the Medicines and Healthcare products Regulatory Agency (“MHRA”) is the UK’s standalone medicines and medical devices regulator.
Human Capital Employees As of December 31, 2023, our workforce consisted of 185 full-time employees. Throughout 2023, the size of our employee population was fairly consistent, but ending with lower headcount at the end of the year due to reorganization efforts and employee attrition.
Human Capital Employees As of December 31, 2024, our workforce consisted of 172 full-time employees. Throughout 2024, the size of our employee population was fairly consistent, but ending with lower headcount at the end of the year due to reorganization/efficiency efforts and employee attrition.
Sales and Marketing United States We currently have an oncology sales force in the United States comprised of approximately 38 sales specialists, 8 clinical nurse educators and four strategic account managers and one national account director who are focused on promoting NERLYNX to oncologists and the oncology care team.
Sales and Marketing United States We currently have an oncology sales force in the United States comprised of approximately 35 sales specialists, three clinical nurse educators, two strategic account managers and one national account director who are focused on promoting NERLYNX to oncologists and the oncology care team.
Neratinib — Other Potential Applications While we believe neratinib has potential applications in other diseases, such as HER2 Mutation-Positive Solid Tumors, HER2-Mutated, Non-Amplified Breast Cancer and EGFR Exon 18 Mutated Non Small Cell Lung Cancer, we are not currently pursuing additional development in these indications at this time.
Neratinib — Other Potential Applications While we believe neratinib has potential applications in other diseases, such as HER2 -mutated solid tumors, as well as EGFR exon 18-mutated non-small cell lung cancer, we are not currently pursuing additional development in these indications at this time.
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. 16 Table of Contents 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.
This application was licensed from Pfizer in 2011. An oral hearing was held in Jerusalem before the Israeli Patent Office on January 22, 2018. The patent was granted by the Israeli Patent Office upon filing of amendments to the claims. No opposition to the patent has been filed within the allowed opposition period.
An oral hearing was held in Jerusalem before the Israeli Patent Office on January 22, 2018. The patent was granted by the Israeli Patent Office upon filing of amendments to the claims. No opposition to the patent has been filed within the allowed opposition period.
The current antibody-based treatments, including trastuzumab and pertuzumab, do not enter the brain and therefore are not believed to be effective in treating these patients. Neratinib is currently being tested in a clinical trial in collaboration with Translational Breast Cancer Research Consortium referred to as TBCRC 022.
The current antibody-based treatments, including trastuzumab and pertuzumab, do not enter the brain and therefore are not believed to be effective in treating these patients. Neratinib was evaluated in a clinical trial with the Translational Breast Cancer Research Consortium, referred to as TBCRC 022.
Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each member state and can differ from one country to another.
Direct-to-consumer advertising of prescription medicines is also prohibited in the EU. Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each member state and can differ from one country to another.
To obtain regulatory approval of a drug candidate under EU regulatory systems, we must submit a MA application (“MAA”). The process for doing this depends, among other things, on the nature of the medicinal product.
To obtain regulatory approval of a product candidate under EU regulatory systems, we must submit an MAA. The process for doing this depends, among other things, on the nature of the medicinal product.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe 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.
Biggest changeWe 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. 40 Table of Contents Even though the FDA and EC have granted approval of NERLYNX for the extended adjuvant treatment of certain patients with early stage, HER2-positive breast cancer and the FDA has granted approval for NERLYNX for the treatment of certain patients with metastatic HER2-positive breast cancer, the terms of the approvals may limit its commercial potential.
For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU CTR which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022.
For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The CTR which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022.
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.
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 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.
Clinical trials can be delayed for a variety of reasons, including delays related to: • the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies; • obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design; • any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval or a positive opinion from one or more institutional review boards (“IRBs”) or ethics committees; • IRBs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocol; • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of drug candidate or obtaining sufficient quantities of combination therapies for use in clinical trials; • subjects failing to enroll or remain in our trial at the rate we expect, or failing to return for post- treatment follow-up; • subjects choosing an alternative treatment for the indication for which we are developing our drug candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our drug candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing practice (“cGMP”), regulations or other applicable requirements, or infections or cross-contaminations of drug candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices (“GCP”), or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other foreign government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications. 36 Table of Contents Further, we, the FDA, foreign regulatory authorities, or an IRB may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, that we are exposing participants to unacceptable health risks, or if the FDA or such other foreign regulator finds deficiencies in our IND or comparable submissions supporting the conduct of these trials.
Clinical trials can be delayed for a variety of reasons, including delays related to: • the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies; • obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design; • any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval or a positive opinion from one or more institutional review boards (“IRBs”) or ethics committees; • IRBs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocol; • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of drug candidate or obtaining sufficient quantities of combination therapies for use in clinical trials; • subjects failing to enroll or remain in our trial at the rate we expect, or failing to return for post- treatment follow-up; • subjects choosing an alternative treatment for the indication for which we are developing our drug candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our drug candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing practice (“cGMP”), regulations or other applicable requirements, or infections or cross-contaminations of drug candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other foreign government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications. 36 Table of Contents Further, we, the FDA, foreign regulatory authorities, or an IRB may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, that we are exposing participants to unacceptable health risks, or if the FDA or such other foreign regulator finds deficiencies in our IND or comparable submissions supporting the conduct of these trials.
We believe our ability to effectively increase product revenue from NERLYNX depends on our ability to, among other things: • achieve and maintain compliance with regulatory requirements; • create and sustain market demand for NERLYNX through our marketing and sales activities and other arrangements established for the promotion of NERLYNX; • compete with other breast cancer drugs, including clinical trials (either in the present or in the future); • educate physicians and patients about the benefits, administration and use of NERLYNX; • train, deploy and support a qualified sales force; • ensure and maintain appropriate placement on formularies and pathways; • ensure that our third-party manufacturers manufacture NERLYNX in sufficient quantities, in compliance with requirements of the FDA and similar foreign regulatory agencies where NERLYNX is approved, and at acceptable quality and pricing levels in order to meet commercial demand; • ensure that our third-party manufacturers develop, validate and maintain commercially viable manufacturing processes that are compliant with current Good Manufacturing Practice (“cGMP”) or similar foreign regulations; • maintain agreements with wholesalers, distributors and group purchasing organizations on commercially reasonable terms; • ensure that our entire supply chain efficiently and consistently delivers NERLYNX to our customers; • maintain broad levels of coverage and reimbursement for NERLYNX from commercial health plans and governmental health programs; • continue to provide co-pay assistance to help qualified patients with out-of-pocket costs associated with their NERLYNX prescription and/or other programs to ensure patient access to our products; • maintain acceptance of NERLYNX as safe and effective by patients and the medical community; • influence the nature and volume of publicity relative to our competitors’ products; • obtain regulatory approvals for additional indications for the use of NERLYNX; and • maintain and defend our patent protection and regulatory exclusivity for NERLYNX and to comply with our obligations under, and otherwise maintain, our intellectual property license with Pfizer and our license agreements with third parties.
We believe our ability to effectively increase product revenue from NERLYNX depends on our ability to, among other things: • achieve and maintain compliance with regulatory requirements; 30 Table of Contents • create and sustain market demand for NERLYNX through our marketing and sales activities and other arrangements established for the promotion of NERLYNX; • compete with other breast cancer drugs, including clinical trials (either in the present or in the future); • educate physicians and patients about the benefits, administration and use of NERLYNX; • train, deploy and support a qualified sales force; • ensure and maintain appropriate placement on formularies and pathways; • ensure that our third-party manufacturers manufacture NERLYNX in sufficient quantities, in compliance with requirements of the FDA and similar foreign regulatory agencies where NERLYNX is approved, and at acceptable quality and pricing levels in order to meet commercial demand; • ensure that our third-party manufacturers develop, validate and maintain commercially viable manufacturing processes that are compliant with current Good Manufacturing Practice (“cGMP”) or similar foreign regulations; • maintain agreements with wholesalers, distributors and group purchasing organizations on commercially reasonable terms; • ensure that our entire supply chain efficiently and consistently delivers NERLYNX to our customers; • maintain broad levels of coverage and reimbursement for NERLYNX from commercial health plans and governmental health programs; • continue to provide co-pay assistance to help qualified patients with out-of-pocket costs associated with their NERLYNX prescription and/or other programs to ensure patient access to our products; • maintain acceptance of NERLYNX as safe and effective by patients and the medical community; • influence the nature and volume of publicity relative to our competitors’ products; • obtain regulatory approvals for additional indications for the use of neratinib; and • maintain and defend our patent protection and regulatory exclusivity for NERLYNX and to comply with our obligations under, and otherwise maintain, our intellectual property license with Pfizer and our license agreements with third parties.
Included in the omnibus bill is the Food and Drug Omnibus Reform Act of 2022, which among other things, provided FDA new statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval.
Included in the omnibus bill is the Food and Drug Omnibus Reform Act of 2022, which among other things, provided FDA statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval.
While we have reported net income in the years ended December 31, 2023 and 2022, we cannot assure that we will continue to do so and will need to continue to generate significant revenue to sustain operations and successfully commercialize neratinib and develop alisertib.
While we have reported net income in the years ended December 31, 2024, 2023 and 2022, we cannot assure that we will continue to do so and will need to continue to generate significant revenue to sustain operations and successfully commercialize neratinib and develop alisertib.
There can be no assurance that after our evaluation of the feedback and other factors we will decide to pursue or submit an NDA for accelerated approval or any other form of expedited development, review or approval.
There can be no assurance that after our evaluation of the feedback and other factors we will decide to pursue or submit an NDA, or NDA supplement, for accelerated approval or any other form of expedited development, review or approval.
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.
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 clinical trials, and surveillance to monitor the safety and efficacy of the drug candidate.
If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional confirmatory studies to verity and describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit or are not completed in a timely manner, the FDA may withdraw its approval of the drug on an expedited basis.
If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional confirmatory studies to verify and describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit or are not completed in a timely manner, the FDA may withdraw its approval of the drug on an expedited basis.
Risks Related to our Financial Condition and Capital Requirements While we have reported net income in the years ended December 31, 2023 and 2022, we cannot assure that we will continue to do so and may not be able to maintain profitability. We have incurred significant operating losses since our inception.
Risks Related to our Financial Condition and Capital Requirements While we have reported net income in the years ended December 31, 2024, 2023 and 2022, we cannot assure that we will continue to do so and may not be able to maintain profitability. We have incurred significant cumulative operating losses since our inception.
In addition, in December 2022, President Biden signed an omnibus appropriations bill to fund the U.S. government through fiscal year 2023.
In addition, in December 2022, former President Biden signed an omnibus appropriations bill to fund the U.S. government through fiscal year 2023.
Further, since January 1, 2021, companies have to comply with the GDPR and also the UK data protection regime, which imposes separate but similar obligations to those under the GDPR. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
Further, since January 1, 2021, companies must comply with the GDPR and also the UK data protection regime, which imposes separate but similar obligations to those under the GDPR. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
If we fail to comply with all of our post-marketing commitments, or if the results of the post-marketing studies, or any other ongoing clinical studies of NERLYNX, are negative, the FDA or the EC could decide to withdraw its respective approval, add warnings or narrow the approved indication in the product label.
If we fail to comply with all of our post-marketing commitments, or if the results of the post-marketing studies, or any other ongoing clinical studies of neratinib, are negative, the FDA or the EC could decide to withdraw its respective approval, add warnings or narrow the approved indication in the product label.
In addition, we may spend significant amounts, issue dilutive securities, assume or incur significant debt obligations, incur large one-time expenses and acquire intangible assets or goodwill in connection with acquisitions and in-licensing transactions that could result in significant future amortization expense and write-offs.
In addition, we may spend significant amounts of funds, issue dilutive securities, assume or incur significant debt obligations, incur large one-time expenses and acquire intangible assets or goodwill in connection with acquisitions and in-licensing transactions that could result in significant future amortization expense and write-offs.
While we experienced profitability in 2023 and 2022, we may incur operating losses in the future as we continue our efforts to commercialize NERLYNX in existing indications and to develop NERLYNX for additional indications, and as we commence development efforts for alisertib and any other drug candidates we may acquire.
While we experienced profitability in 2024, 2023 and 2022, we may incur operating losses in the future as we continue our efforts to commercialize NERLYNX in existing indications and to develop neratinib for additional indications, and as we commence development efforts for alisertib and any other drug candidates we may acquire.
In order to eliminate the burden, expense, distraction and uncertainties of litigation, we entered a settlement and license agreement in 2022 that would permit Sandoz to begin selling a generic version of neratinib in the United States on or around December 8, 2030. 53 Table of Contents We may not be able to protect our intellectual property rights throughout the world.
In order to eliminate the burden, expense, distraction and uncertaintie s of litigation, we entered a settlement and license agreement in 2022 that would permit Sandoz to begin selling a generic version of neratinib in the United States on or around December 8, 2030. 53 Table of Contents We may not be able to protect our intellectual property rights throughout the world.
For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
For example, in recent years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
Approval of NERLYNX by the FDA or the EC for any particular indication does not ensure that another foreign jurisdiction will also approve NERLYNX for such indication, nor does it ensure that NERLYNX will be approved by the FDA or the EC for any other indications.
Approval of neratinib by the FDA or the EC for any particular indication does not ensure that another foreign jurisdiction will also approve neratinib for such indication, nor does it ensure that neratinib will be approved by the FDA or the EC for any other indications.
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.
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.
We are not permitted to market NERLYNX for other indications or alisertib or any of our other drug candidates in the United States until we receive approval of an NDA from the FDA or until we receive a MA from the EC in the EU, as applicable, for such indications, or, in any foreign countries, until requisite approval from such countries.
We are not permitted to market neratinib for other indications or alisertib or any of our other drug candidates in the United States until we receive approval of an NDA from the FDA or until we receive an MA from the EC in the EU, as applicable, for such indications, or, in any foreign countries, until requisite approval from such countries.
Royalty revenue obtained pursuant to these sub-license agreements was 14% and 12% of total revenue for the years ended December 31, 2023 and 2022, respectively.
Royalty revenue obtained pursuant to these sub-license agreements was 15% , 14% and 12% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Additionally, we may decide to settle such lawsuits on similarly unfavorable terms, which could adversely affect our business, financial condition, results of operations or stock price. Issuance of stock to fund our operations may dilute your investment and reduce your equity interest.
Additionally, we may decide to settle such lawsuits on similarly unfavorable terms, which could adversely affect our business, financial condition, results of operations or stock price. 55 Table of Contents Issuance of stock to fund our operations may dilute your investment and reduce your equity interest.
We have very little control over these third-parties and any of our existing or future licensees may fail to devote the necessary resources and attention to obtain regulatory approval, where needed, and to market and distribute NERLYNX effectively.
We h ave very little control over these third-parties and any of our existing or future licensees may fail to devote the necessary resources and attention to obtain regulatory approval, where needed, and to market and distribute NERLYNX effectively.
The Athyrium Notes are secured by collateral which consists of our equity interests in our domestic and foreign subsidiaries (including up to 100% of the issued and outstanding equity interests in each of our domestic subsidiaries directly owned by us or the guarantors of the Athyrium Notes) and substantially all of our property.
The Athyrium Notes are secured by collateral which consists of our equity interests in our domestic and foreign subsidiary (including up to 100% of the issued and outstanding equity interests in our subsidiary directly owned by us or the guarantors of the Athyrium Notes) and substantially all of our property.
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 more th an 20 count ries outside the United States, including the EU, Australia, Canada, and Hong Kong.
As of December 31, 2024, NERLYNX has received approval for the treatment of certain patients with extended adjuvant and/or metastatic HER2-positive breast cancer in more th an 40 count ries outside the United States, including the EU, Australia, Canada, and Hong Kong.
We depend upon independent investigators and collaborators, such as CROs, universities and medical institutions, to conduct our pre-clinical studies and clinical trials, including those involving NERLYNX (for additional indications) and alisertib, under agreements with us. These collaborators are not our employees, and we cannot control the amount or timing of resources that they devote to our programs.
We depend upon independent investigators and collaborators, such as CROs, universities and medical institutions, to conduct our pre-clinical studies and clinical trials, including those involving neratinib and alisertib, under agreements with us. These collaborators are not our employees, and we cannot control the amount or timing of resources that they devote to our programs.
Although NERLYNX has been approved by the FDA for two limited indications, alisertib and our other drug candidates are in development, as well, all of which will require extensive clinical testing before we can submit any NDA or similar foreign entities for regulatory approval.
Although NERLYNX has been approved by the FDA for two limited indications, alisertib and our other drug candidates are in development as well, all of which will require extensive clinical testing before we can submit any NDA or similar foreign entities for regulatory approval. We may face significant difficulties during our development of alisertib.
HRSA has also finalized an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs.
HRSA has also finalized a revised regulation implementing an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); redesigns the Medicare Part D benefit (beginning in 2024); and replaces the Part D coverage gap discount program with a new manufacturer discount program (beginning in 2025).
The Note Purchase Agreement includes affirmative and negative covenants applicable to us and our subsidiaries.
The Note Purchase Agreement includes affirmative and negative covenants applicable to us and our subsidiary.
We do not know whether our future clinical trials will begin on time or enroll patients on time, or whether our ongoing and/or future clinical trials will be completed on schedule or at all.
Our future clinical trial results may not be successful. We do not know whether our future clinical trials will begin on time or enroll patients on time, or whether our ongoing and/or future clinical trials will be completed on schedule or at all.
In 2018, the EC granted a marketing authorization for NERLYNX in the EU for the extended adjuvant treatment of adult patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer and who completed adjuvant trastuzumab-based therapy less than one year ago.
In 2018, the EC granted a marketing authorization for NERLYNX in the EU for the extended adjuvant treatment of adult patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer and who completed adjuvant trastuzumab-based therapy less than one year ago. W e are also in the early stages of development for alisertib.
Our ability to attract and retain collaborators or customers, invest in and grow our business and meet our financial obligations depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial, business and other factors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States and inflationary pressures.
Our ability to attract and retain collaborators or customers, invest in and grow our business and meet our financial obligations depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial, business and other factors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States and inflationary pressures, or the threat or imposition of substantial tariffs on imports from various countries, including China, Canada and Mexico.
If any analyst who may cover us in the future were to cease coverage of our company or fail to regularly publish reports on us, or if analysts fail to cover us or publish reports about us at all, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. 56 Table of Contents We do not foresee paying cash dividends in the foreseeable future.
If any analyst who may cover us in the future were to cease coverage of our company or fail to regularly publish reports on us, or if analysts fail to cover us or publish reports about us at all, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
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.
As of December 31, 2024, the aggregate principal amount outstanding under the notes sold pursuant to the Note Purchase Agreement (collectively, the “Athyrium Notes”) was $66.7 million.
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.
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 neratinib for additional indications, alisertib and our other drug candidates; • 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. 31 Table of Contents While our consolidated financial statements have been prepared on a going concern basis, we expect to incur significant losses for the foreseeable future and will continue to remain dependent on our ability to obtain sufficient funding to sustain operations and successfully commercialize NERLYNX and develop alisertib.
In March 2010, the ACA became law in the United States. The ACA substantially changed the way healthcare is financed by both governmental and private insurers and significantly affects the pharmaceutical industry.
In March 2010, the Affordable Care Act ( “ ACA ” ) became law in the U nited States. The ACA substantially changed the way healthcare is financed by both governmental and private insurers and significantly affects the pharmaceutical industry.
Auerbach resigns or becomes unable to continue in his present role and is not adequately replaced, our business operations could be materially adversely affected. We do not maintain “key man” life insurance for Mr. Auerbach. If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.
Auerbach resigns or becomes unable to continue in his present role and is not adequately replaced, our business operations could be materially adversely affected. We do not maintain “key man” life insurance for Mr. Auerbach.
As of December 31, 2023, we had an accumulated deficit of approximately $1,345.2 million, outstanding indebtedness of approximately $99.7 million and cash and cash equivalents and marketable securities of approximately $95.9 million. We expect to continue to incur significant expenses and may incur net losses in the future.
As of December 31, 2024, we had an accumulated deficit of approximately $1,314.9 million, outstanding indebtedness of approximately $67.0 million and cash and cash equivalents and marketable securities of approximately $101.0 million. We expect to continue to incur significant expenses and may incur net losses in the future.
The stock market in general, and market prices for the securities of biotechnology companies like ours in particular, have from time to time experienced volatility that often has been unrelated to the operating performance of the underlying companies.
The stock market in general, and market prices for the securities of biotechnology companies like ours in particular, have from time to time experienced volatility that often has been unrelated to the operating performance of the underlying companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operating performance.
We had total revenue for NERL YNX of $ 253.2 million, $ 228.0 million and $ 235.6 million for the years ended December 31, 2021, 2022 and 2023, respectively. We cannot assure you that the sales of NERLYNX will continue at these levels or grow.
We had total revenue for N ERLYNX of $ 230.5 million, $ 235.6 million and $ 228.0 million for the years ended December 31, 2024, 2023 and 2022, respective ly. We cannot assure you that the sales of NERLYNX will continue at these levels or grow.
The loss by us of any of these customers, or a material reduction in their purchases or their market pricing, could harm our business, results of operations, financial condition and prospects.
The loss by us of any of these customers, or a material reduction in their purchases or their market pricing, could harm our business, results of operations, financial condition and prospects. In addition, if any of these customers were to fail to pay us in a timely manner, it could harm our cash flow.
Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses – a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis.
Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses – a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis The European Commission adopted its Adequacy Decision in relation to the DPF on July 10, 2023, rendering the DPF effective as a GDPR transfer mechanism to U.S. entities self-certified under the DPF.
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 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.
As of December 31, 2023, we had 185 employees. Our future success depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled scientific, technical, marketing, managerial and financial personnel.
If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed As of December 31, 2024, we had 172 employees. Our future success depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled scientific, technical, marketing, managerial and financial personnel.
The majority of our revenue comes from a limited number of customers. In 2023, four customers individually comprised approximately 31.4%, 17.2%, 15.2% and 11.9% respectively, of our total product revenue. We expect that revenue from a limited number of customers will continue to account for a large portion of our revenue in the future.
The majority of our revenue comes from a limited number of customers. In 2024, four customers individually comprised approximately 28.4%, 18.8%, 14.1% and 12.3% respectively, of our total product revenue. We expect that revenue from a limited number of customers will continue to account for a large portion of our revenue in the future.
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 rely primarily on third-parties to pursue regulatory approval, if necessary, and to commercialize NERLYNX and they may not commit sufficient time or resources to marketing NERLYNX. 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.
The future commercial success of NERLYNX depends on the extent to which patients and physicians accept and adopt NERLYNX.
We may not be able to successfully commercialize NERLYNX in the future. The future commercial success of NERLYNX depends on the extent to which patients and physicians accept and adopt NERLYNX.
We currently intend to retain any future earnings for funding growth. We do not anticipate paying any dividends in the foreseeable future, and the payment of dividends is also restricted under our Note Purchase Agreement with Athyrium. As a result, you should not rely on an investment in our securities if you require dividend income.
We do not foresee paying cash dividends in the foreseeable future. We currently intend to retain any future earnings for funding growth. We do not anticipate paying any dividends in the foreseeable future, and the payment of dividends is also restricted under our Note Purchase Agreement with Athyrium.
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.
More recently, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024.
More recently, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. The rebate was previously capped at 100% of a drug’s average manufacturer price, Most significantly, in August 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.
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.
Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials. The results of pre-clinical studies and early clinical trials of our drug candidates may not be predictive of the results of later-stage clinical trials.
There are numerous examples of unsuccessful product launches and failures to meet high expectations of market potential, including by pharmaceutical companies with more experience and resources than we have. 30 Table of Contents We may not be able to successfully commercialize NERLYNX in the future.
NERLYNX is the first product that we, as an organization, have launched and commercialized, and there is no guarantee that we will be able to do so successfully. There are numerous examples of unsuccessful product launches and failures to meet high expectations of market potential, including by pharmaceutical companies with more experience and resources than we have.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. For example, the Budget Control Act of 2011, among other things, led to reductions to Medicare payments of providers which, will remain in effect through 2032.
For example, the Budget Control Act of 2011, among other things, led to reductions to Medicare payments to providers that will remain in effect through 2032.
In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
Some states have enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Thus, the ACA will remain in effect in its current form. In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted.
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 drug rebates are based on pricing data that we must report on a monthly and quarterly basis to the CMS, the federal agency that administers the MDRP and Medicare programs. For the MDRP, these data include the average manufacturer price (“AMP”) for each drug and, in the case of our innovator products, the best price.
We may encounter delays or hurdles related to our sales efforts that affect amount of revenue generated and the timing of such revenue. There is no guarantee that the infrastructure, systems, processes, policies, personnel, relationships and materials we have built to commercialize NERLYNX in the United States will be sufficient for us to achieve success at the levels we expect.
There is no guarantee that the infrastructure, systems, processes, policies, personnel, relationships and materials we have built to commercialize NERLYNX in the United States will be sufficient for us to achieve success at the levels we expect. 39 Table of Contents Our NERLYNX commercialization efforts may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community.
A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Our future clinical trial results may not be successful.
Drug candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials.
The NCCN designated NERLYNX in combination with capecitabine as a category 2A treatment option and NERLYNX in combination with paclitaxel as a category 2B treatment option. Use, as designated for breast cancer patients with brain metastases, is outside the FDA approved indication for NERLYNX and considered investigational, and we do not market or promote NERLYNX for these uses.
Use, as designated for breast cancer patients with brain metastases and in Cervical Cancer, is outside the FDA approved indication for NERLYNX and considered investigational, and we do not market or promote NERLYNX for these uses. Regulatory authorities in the United States and outside the United States generally do not regulate the behavior of physicians in their choice of treatments.
These types of lawsuits are subject to inherent uncertainties, and are expensive and time-consuming to investigate, defend and resolve. For instance, in Hsu v.
This risk is especially relevant for us because pharmaceutical companies have experienced significant stock price volatility in recent years. These types of lawsuits are subject to inherent uncertainties, and are expensive and time-consuming to investigate, defend and resolve. For instance, in Hsu v.
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.
Regulatory authorities do, however, restrict communications by pharmaceutical companies on the subject of off-label use. 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.
For instance, the EU pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative, launched by the European Commission in November 2020. The European Commission’s proposal for revision of several legislative instruments related to medicinal products (revising the eligibility for expedited pathways, etc.) was published on April 26, 2023.
For instance, the EU pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative, launched by the European Commission in November 2020.
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.
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 estimate that clinical trials for any of our drug candidates will take at least several years to complete.
In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant stock price volatility in recent years.
We have been subject to securities litigation in the past, and volatility in the price of our common stock may subject us to securities litigation in the future. In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities.
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.
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.
After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR. Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans.
Once the CTA is approved, clinical study development may proceed. The CTR transition period ended on January 31, 2025, and all clinical trials (and related applications) are now fully subject to the provisions of the CTR. Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans.
Our NERLYNX commercialization efforts may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If NERLYNX does not achieve an adequate level of acceptance, we may not generate significant product revenue and we may not maintain profitability.
If NERLYNX does not achieve an adequate level of acceptance, we may not generate significant product revenue and we may not maintain profitability.
Our ability to use our net operating losses and research and development credit carryforwards to offset future taxable income may be subject to certain limitations.
Moreover, you may not be able to re-sell your shares in us at or above the price you paid for them. 56 Table of Contents Our ability to use our net operating losses and research and development credit carryforwards to offset future taxable income may be subject to certain limitations.
The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations.
The IRA permits the Secretary of the Department of Health and Human Services (“HHS”) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented, although the Medicare drug price negotiation program is currently subject to legal challenges.
The rebate was previously capped at 100% of a drug’s average manufacturer price, Most significantly, in August 2022, President Biden signed the Inflation Reduction Act of 2022, or the IRA, into law. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.
This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.
Capital appreciation, if any, of our shares may be your sole source of gain for the foreseeable future. Moreover, you may not be able to re-sell your shares in us at or above the price you paid for them.
As a result, you should not rely on an investment in our securities if you require dividend income. Capital appreciation, if any, of our shares may be your sole source of gain for the foreseeable future.
HHS has issued and will continue to issue guidance implementing the IRA, although the Medicare drug price negotiation program is currently subject to legal challenges. While the impact of the IRA on our business and the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.
The impact of the IRA on us and the pharmaceutical industry cannot yet be fully determined but is likely to be significant.
Removed
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.
Added
The European Commission’s proposal for revision of several legislative instruments related to medicinal products (potentially reducing the duration of regulatory data protection, revising the eligibility for expedited pathways, etc.) was published on April 26, 2023.
Removed
NERLYNX is the first product that we, as an organization, have launched and commercialized, and there is no guarantee that we will be able to do so successfully.
Added
We may encounter delays or hurdles related to our sales efforts that affect amount of revenue generated and the timing of such revenue.
Removed
While our consolidated financial statements have been prepared on a going concern basis, we expect to incur significant losses for the foreseeable future and will continue to remain dependent on our ability to obtain sufficient funding to sustain operations and successfully commercialize NERLYNX and develop alisertib.
Added
The NCCN designated NERLYNX in combination with capecitabine as a category 2A treatment option and NERLYNX in combination with paclitaxel as a category 2B treatment option. In addition, in December 2024, we announced that NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelines®) for Cervical Cancer were updated to include an addition involving neratinib.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+2 added−0 removed4 unchanged
Biggest changeThe team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal technology and quality assurance compliance personnel and our retained external cybersecurity consultants. Our management team has experience in risk management as well as in the technology and finance industries, equipping them to oversee cybersecurity risks effectively.
Biggest changeThe Senior Director of Information Technology and Senior Vice President, Quality Assurance have primary responsibility for our overall cybersecurity risk management program and supervises both our internal technology and quality assurance compliance personnel and our retained external cybersecurity consultants.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment. 57 Table of Contents
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our information technology environment. 57 Table of Contents Table of Contents
Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the “Committee”) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of our cybersecurity risk management program. The Committee receives periodic reports from management on our cybersecurity risks.
Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the “Committee”) oversight of cybersecurity risks, including oversight of management’s implementation of our cybersecurity risk management program. The Committee receives periodic reports from management on our cybersecurity risks.
In addition, management updates the Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from management on our cyber risk management program.
In addition, management updates the Committee, where it deems appropriate, regarding any cybersecurity incidents it considers to be potentially significant. The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from management on our cyber risk management program.
Board members receive presentations on cybersecurity topics from internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies. Our management team, including our Chief Financial Officer, Senior Director of Information Technology and Senior Vice President, Quality Assurance, is responsible for assessing and managing our material risks from cybersecurity threats.
Board members receive presentations on cybersecurity topics from internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies.
Added
Our Senior Director of Information Technology and Senior Vice President, Quality Assurance, who report to the Chief Financial Officer and Chief Executive Officer, respectively, are primarily responsible for assessing and managing our material risks from cybersecurity threats.
Added
Our Senior Director of Information Technology has more than 20 years of experience in IT Management, including cybersecurity, and our Senior Vice President, Quality Assurance has more than 20 years of experience in computerized system and IT infrastructure controls, compliance, and risk management.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed3 unchanged
Biggest changeIn 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.
Biggest changeIn 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. This sublease was terminated in December 2024. 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.
We believe that our existing office space, along with the additional office space in South San Francisco, is adequate to meet current and anticipated future requirements and that additional or substitute space will be available as needed to accommodate any expansions that our operations require.
We believe that our existing office space in Los Angeles, along with the additional office space in South San Francisco, is adequate to meet current and anticipated future requirements and that additional or substitute space will be available as needed to accommodate any expansions that our operations require.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

23 edited+18 added−4 removed19 unchanged
Biggest changeAstraZeneca 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.
Biggest changeThe 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.
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.
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 one remaining 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.
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 within 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 within 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 within 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 within the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.
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 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.
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.
The ANDA application No. is CYHS2202006. 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.
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.
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. Kelun also alleged that Patents ZL200880118789.3 and ZL201710057547.9 are not eligible for Chinese Orange Book listing.
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.
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 case. These motions were presented at a hearing on February 20, 2024.
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.
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 the four Orange Book patents.
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
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.
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.
The ANDA application No. is CYHS2202095. 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.
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.
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 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.
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. On March 21, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.
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.
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 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.
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.
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.
Demai Litigation Zhengzhou Demai Pharmaceutical Co., Ltd (“Demai”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA application No. is CYHS2402776.
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.
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 unclean hands and patent misuse.
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.
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.
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.
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. On June 28, 2024, the NMPA approved Convalife’s ANDA to market a generic version of the Company’s NERLYNX® in China with the approval number of GuoYaoZhunZi H20244222.
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.
(“Acebright”) filed an abbreviated new drug application (“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.
The 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 October 22, 2024, the NMPA approved Aosaikang’s ANDA to market a generic version of the Company’s NERLYNX® in China with the approval number of GuoYaoZhunZi H20249180. 59 Table of Contents 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®.
Removed
Mfolozi Dlamini, individually and on behalf of all others similarly situated v. Puma Biotechnology, Inc.
Added
The Superior Court Judge granted the motions to dismiss on March 20, 2024. The Company appealed this ruling to the North Carolina Court of Appeals.
Removed
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.
Added
The Court denied the parties’ respective motions for summary judgment and Daubert motions, other than to clarify that Plaintiffs’ damages cannot extend to any time period before the asserted patents were issued.
Removed
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.
Added
The Court granted AstraZeneca’s motion to dismiss the Company as a Plaintiff on constitutional standing grounds but denied the motion to dismiss Wyeth as a Plaintiff on constitutional standing grounds. On April 29, 2024, the Court granted AstraZeneca’s motion to dismiss AstraZeneca’s counterclaims against the Company, which removed the Company from the case.
Removed
On March 21, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.
Added
Wyeth remained in the case as a Plaintiff and counterclaim-defendant. Under the Company’s worldwide exclusive license agreement with Pfizer, Inc. (the parent of Wyeth) as amended, the Company also maintains contractual rights to recover monetary damages in the AstraZeneca litigation, and those contractual rights are unaffected by the court’s March 18, 2024 and April 29, 2024 orders.
Added
A jury trial was held May 13-17, 2024. The jury found in favor of Wyeth and against AstraZeneca. In particular, the jury found that use of Tagrisso® according to each of the three FDA-approved indications infringes the asserted claims of the ‘314 and ‘162 patents, and that AstraZeneca induces that infringement.
Added
The jury further rejected AstraZeneca’s challenges to the validity of the patents, finding that they are not invalid. The jury awarded damages to Wyeth for past acts of infringement through December 31, 2023, in the amount of $107,500,000.
Added
A separate bench trial related to certain equitable claims and defenses raised by AstraZeneca was held before Judge Kennelly on June 20 and 25, 2024. On August 6, 2024, Judge Kennelly issued his ruling on the issues that were tried in the bench trial, finding for Wyeth and against AstraZeneca on all claims and defenses.
Added
The Court found that AstraZeneca had not proved its claim that Wyeth’s asserted patents were invalid as indefinite, or that Wyeth had committed acts that would give rise to findings of unclean hands, implied waiver, or patent misuse. AstraZeneca has filed a motion challenging the jury’s verdict and requesting a new trial.
Added
Wyeth has filed a motion requesting supplemental damages for past infringement from January 1, 2024, through the date of judgment; pre-and-post judgment interest, and ongoing royalties through the remaining term of the patents. Briefing on these motions from both sides was completed on July 16, 2024.
Added
On August 14, 2024, Judge Kennelly ruled on AstraZeneca’s motion challenging the jury’s verdict, granting it in part and denying it in part.
Added
The Court granted AstraZeneca’s motion for judgment as a matter of law that the '314 and '162 patents are invalid under 35 U.S.C. § 112 for lacking enablement and adequate written description as to a particular claim limitation. In all other respects, the Court denied AstraZeneca’s motion. The Court entered its final and appealable judgment accordingly.
Added
The Company respectfully disagrees with the Court’s ruling regarding invalidity with respect to the particular claim limitation. Wyeth filed a notice of appeal on September 12, 2024, appealing the District Court’s judgment as a matter of law, as well as other rulings and opinions of the Court adverse to Wyeth.
Added
Wyeth filed its opening brief on appeal to the Federal Circuit on December 18, 2024. 58 Table of Contents Acebright China Litigation On January 18, 2022, Shanghai Acebright Pharmaceuticals Group Co., Ltd.
Added
An oral hearing was held on June 19, 2024, during which the Company amended its complaint to allege that Acebright making, selling and offering to sell the generic version of NERLYNX® infringes the ’789 patent. On July 24, 2024, the Company submitted a request to withdraw the lawsuit.
Added
On August 8, 2024, Jiangsu Nanjing Intermediate People’s Court accepted the withdrawal request. On September 27, 2024, the Company filed an additional patent infringement claim against Acebright at Jiangsu Nanjing Intermediate People’s Court. On October 14, 2024, the Court accepted the complaint and designated case number (2024) Su 01 Min Chu 2192 to this case.
Added
On December 16, 2024, the Court conducted an evidence exchange hearing. On January 10, 2025, the Court conducted a hearing of party experts on the evaluation of evidence. 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®.
Added
On August 26, 2024, Demai made a Type 4.2 declaration against Orange Book Patent ZL201410082103.7, alleging that its generic version of NERLYNX does not fall within the scope of the claims of this Orange Book patent. On September 30, 2024, the Company filed a lawsuit against Demai at the BJIPC based on Nerlynx Patent No.
Added
ZL201080060546.6 and on October 8, 2024, the Company filed a lawsuit against Demai at the BJIPC based on Nerlynx Patent No. ZL201410082103.7. 60 Table of Contents ITEM 4. MINE SAFETY DISCLOSURE Not applicable. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 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.
Biggest changeItem 4. Mine Safety Disclosure 61 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 61 Item 6. [Reserved] 62 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 63 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 73 Item 8.
Financial 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
Financial Statements and Supplementary Data 73 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 73 Item 9A. Controls and Procedures 73

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed5 unchanged
Biggest changeCompared 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.
Biggest changeCompared to the Nasdaq Biotechnology Index and Nasdaq Composite Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Puma Biotechnology, Inc. 100.00 117.26 34.74 48.34 49.49 34.86 NASDAQ Biotechnology Index 100.00 126.42 126.45 113.65 118.87 118.20 NASDAQ Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 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.
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.
The comparison assumes investment of $100 on December 31, 2019, 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. Puma Biotechnology, Inc. (PBYI) Stock Price Performance Graph Cumulative Total Return Puma Biotechnology, Inc.
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.
We believe approximately 13,400 additional owners held our common stock in “Street Name” as of February 20, 2025. Dividends We have never declared or paid any cash dividends on our capital stock.
Purchases 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.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 61 Table of Contents Performance Graph The graph and table below compare the cumulative total return of Puma Biotechnology common stock from December 31, 2019, through December 31, 2024, with the cumulative total returns on (i) the NASDAQ Biotechnology Index and (ii) the NASDAQ Composite Index.
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.
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 20, 2025, we had nine holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

82 edited+17 added−20 removed65 unchanged
Biggest changeThe slight increase is primarily attributable to the following: • an increase in payroll and related costs of approximately $3.5 million, primarily due to a $2.0 million tax credit under the Coronavirus Aid Relief Economic Security Act (the “CARES Act”) recorded during the year ended December 31, 2022, without a comparable tax credit in 2023, a $2.9 million increase in salary and benefits, offset by a decrease of $1.5 million in bonus expense; • an increase in provision for credit loss of approximately $0.9 million, due to royalties receivable due from a sub-license partner, compared to no provision for credit loss expense for the year ended December 31, 2022; • an increase in travel and meetings expense of approximately $0.5 million, primarily due to additional sales field personnel in 2023; and • an increase in loss on impairment of asset expense of $0.6 million in connection with our decision to sublease a portion of our leased office space, which was recorded as an operating asset in accordance with ASC 842.
Biggest changeThe decrease is primarily attributable to the following: • a decrease in payroll and related costs of approximately $1.9 million , primarily due to lower headcount, partially offset by annual salary increases; • a decrease in provision for credit loss (recovery) of approximately $1.4 million , due to an overdue receivable as of December 31, 2023 that was collected in 2024; • a decrease in professional fees and expenses of approximately $4.1 million, primarily due to a decrease in consultant and contractor expenses (primarily marketing related) of approximately $2.7 million, a decrease in legal fees of approximately $1.0 million and a decrease in insurance and other expense of approximately $0.4 million; • a decrease in stock-based compensation expense of approximately $1.3 million , primarily due to lower fair value on equity grants as a result of a lower market price for our common stock; and • a decrease in loss on impairment of asset expense of $0.6 million in connection with our decision to sublease a portion of our leased office space in 2023, which was recorded as an operating asset in accordance with ASC 842.
Royalty revenue Royalty revenue consists of consideration earned related to product sales made by our sub-licensees in their respective territories pursuant to our license agreements. Cost of sales Cost of sales consists of third-party manufacturing costs, freight, and indirect overhead costs associated with sales of NERLYNX.
Royalty revenue Royalty revenue consists of consideration earned related to product sales made by our sub-licensees in their respective territories pursuant to our sub-license agreements. Cost of sales Cost of sales consists of third-party manufacturing costs, freight, and indirect overhead costs associated with sales of NERLYNX.
Investing Activities During the year ended December 31, 2023, cash used in investing activities was approximately $19.1 million.
During the year ended December 31, 2023, cash used in investing activities was approximately $19.1 million.
Interest on the Athyrium Notes is calculated in part based on the Secured Overnight Financing Rate (“SOFR”), which replaced the “London Interbank Offering Rate” as the floating benchmark for interest rate calculations applicable to the Athyrium Notes pursuant to the terms of the Third Amendment to Note Purchase Agreement dated as of September 16, 2022 (the “Third Amendment”).
Interest on the Athyrium Notes is calculated in part based on the Secured Overnight Financing Rate (“SOFR”), which replaced the “London Interbank Offering Rate” as the floating benchmark for interest rate calculations applicable to the Athyrium Notes pursuant to the terms of the Third Amendment to the Note Purchase Agreement dated as of September 16, 2022 (the “Third Amendment”).
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.
The modification of the Note Purchase Agreement pursuant to the Third Amendment did not meet the requirements of a debt extinguishment under ASC Topic 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.
Cost of product sales also includes period costs related to royalty charges payable to Pfizer, the amortization of milestone payments under our license agreement with Pfizer, certain inventory manufacturing services, inventory adjustment charges, unabsorbed manufacturing and overhead costs, and manufacturing variances. Cost of sales includes applicable license termination fees.
Cost of product sales also includes period costs related to royalty charges payable to Pfizer, the amortization of milestone payments made under our license agreement with Pfizer, certain inventory manufacturing services, inventory adjustment charges, unabsorbed manufacturing and overhead costs, and manufacturing variances. Cost of sales includes applicable license termination fees.
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.
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. 71 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.
The ASU requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual reporting periods beginning after December 15, 2025. Adoption is either with a prospective method or a fully retrospective method of transition. Early adoption is permitted.
The ASU requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for our annual reporting periods beginning after December 15, 2025. Adoption is either with a prospective method or a fully retrospective method of transition. Early adoption is permitted.
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 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, 2024, 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.
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.
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, 2024 and 2023.
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.
We believe that our existing cash and cash equivalents and marketable securities as of December 31, 2024, 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.
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.
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, 2024 and, therefore, the transaction price was not reduced further during the year ended December 31, 2024.
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.
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, 2024, no milestones had been accrued as the underlying contingencies were not probable or estimable.
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.
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. 63 Table of Contents Summary of Income and Expenses Product revenue, net Product revenue, net consists of revenue from sales of NERLYNX.
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 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, 2024, no milestones had been achieved.
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 has 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.
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 expenses (“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 expenses as they are incurred.
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 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, Africa and the Middle East.
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.
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, 2024.
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.
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 2024, NERLYNX has received approval for the treatment of certain patients with extended adjuvant and/or metastatic HER2-positive breast cancer in over 40 countries outside the United States.
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.
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 a right-of-use ( “ROU” ) asset of $0.6 million.
We are currently commercializing NERLYNX, an oral version of neratinib, for the treatment of certain HER2-positive breast cancers. Additionally, we recently in-licensed and are responsible for global development and commercialization of alisertib.
We are currently commercializing NERLYNX, an oral version of neratinib, for the treatment of certain HER2-positive breast cancers. Additionally, in 2022, we in-licensed and became responsible for the global development and commercialization of alisertib.
In September 2022, we entered into an exclusive license agreement with Takeda Pharmaceutical Company Limited (“Takeda”) to license the worldwide research and development and commercial rights to alisertib. Alisertib is an investigational, reversible, ATP-competitive inhibitor that is designed to be highly selective for aurora kinase A.
In September 2022, we entered into an exclusive license agreement with Takeda to license the worldwide research and development and commercial rights to alisertib. Alisertib is an investigational, reversible, ATP-competitive inhibitor that is designed to be highly selective for Aurora Kinase A.
We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned product development efforts, our clinical trials, our R&D efforts and our commercialization efforts. We may choose to begin new R&D efforts, or we may choose to launch additional marketing efforts.
We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned product development efforts, our clinical trials, our R&D efforts and our commercialization efforts. We may choose to begin new R&D efforts, launch additional marketing efforts or pursue other in-licensing opportunities.
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.
During the years ended December 31, 2024, 2023 and 2022, our R&D expenses consisted primarily of CRO fees, manufacturing of clinical materials, fees paid to consultants, salaries and related personnel costs and stock-based compensation. We expense our R&D expenses as they are incurred. Internal R&D expenses primarily consist of payroll-related costs and also include equipment costs, travel expenses and supplies.
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.
For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2023, compared to the year ended December 31, 2022, 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, 2023, which was filed with the United States Securities and Exchange Commission on February 29, 2024.
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 Und er Accounting Standards Co dification (“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.
We had no contracts with customers until the FDA approved NERLYNX on July 17, 2017. Subsequent to receiving FDA approval, we entered into a limited number of arrangements with specialty pharmacies and specialty distributors in the United States to distribute NERLYNX. These arrangements are our initial contracts with customers.
We had no contracts with customers until the FDA approved NERLYNX on July 17, 2017. Subsequent to receiving FDA approval, we entered into a limited number of arrangements with specialty pharmacies and specialty distributors in the United States to distribute NERLYNX. These arrangements are our initial contracts with customers. We have determined that these sales channels with customers are similar.
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.
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 alisertib in 2025.
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.
We expect R&D expenses to increase in 2025 as we conduct 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.
Following the effectiveness of the Third Amendment, the Athyrium Notes bear interest at an annual rate equal to the sum of (a) eight percent (8.00%) plus (b) the lesser of (i) the sum of (x) three-month term SOFR for an interest period of three months plus (y) 0.26161% (26.161 basis points) and (ii) three and one-half of one percent (3.50%) per annum.
Accordingly, the Third Amendment is accounted for as a debt modification. 68 Table of Contents Following the effectiveness of the Third Amendment, the Athyrium Notes bear interest at an annual rate equal to the sum of (a) eight percent (8.00%) plus (b) the lesser of (i) the sum of (x) three-month term SOFR for an interest period of three months plus (y) 0.26161% (26.161 basis points) and (ii) three and one-half of one percent (3.50%) per annum.
(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.
(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 48,648,701 and 47,134,331 weighted-average shares of common stock outstanding for the years ended December 31, 2024 and 2023, respectively.
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.
The following table presents our net income and net income per share, as calculated in accordance with GAAP, as adjusted to remove the impact of stock-based compensation. For the year ended December 31, 2024, stock-based compensation represented approximately 6.1% of the total of SG&A and R&D expenses.
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 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 $42.3 million within the next twelve mo nths.
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, 2024, the amount of unrecognized tax benefit was $3.0 million, and is also not included in the table above as the timing of when or if these payments will be made is uncertain.
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”).
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 subsidiary, 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”).
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 expenses (“R&D expenses”) include costs associated with services provided by consultants who conduct and perform clinical services on our behalf and contract organizations for the manufacturing of clinical materials.
(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.
(4) Non-GAAP adjusted diluted net income per share was calculated based on 49,100,433 and 47,550,852 weighted-average shares of common stock outstanding for the years ended December 31, 2024 and 2023, respectively.
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.
As of December 31, 2024, our obligations for potential milestone payments totaled app roximately $16.3 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.
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 .
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 approxim ately $187.5 million if all such milestones are achieved, of whi ch $102.5 million h ave been achieved as of December 31, 2024 .
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.
Product revenue, net Product revenue, net was approximately $195.2 million for the year ended December 31, 2024 , compared to $203.1 million for the year ended December 31, 2023 . The decrease in product revenue, net was primarily attributable to a volume decrease of approximately 8.7% in bottles of NERLYNX sold, partially offset by an increase in net selling price.
Interest is payable quarterly on the last business day of March, June, September and December each year. Beginning June 30, 2024, principal payments are required to be made quarterly at 11.11% of the original face amount with the remaining balance paid at maturity. Each principal payment will also include a 2.0% exit payment.
Interest is payable quarterly on the last business day of March, June, September and December each year. In the second quarter of 2024, we began paying the principal payments required to be made quarterly at 11.11% of the original face amount. The remaining balance will be paid at maturity. Each principal payment also includes a 2.0% exit payment.
The borrowings under the Athyrium Notes, together with cash on hand, were used to repay our outstanding indebtedness, including the applicable exit and prepayment fees owed to lenders under our prior credit facility with Oxford (the “Prior Oxford Credit Facility”).
The borrowings under the Athyrium Notes, together with cash on hand, were used to repay our outstanding indebtedness, including the applicable exit and prepayment fees owed to lenders under our prior credit facility with Oxford. The Athyrium Notes are secured by substantially all of our assets.
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.
These non-GAAP financial measures are not, and should not be viewed as, substitutes for GAAP reporting measures. 66 Table of Contents Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and GAAP Net Income Per Share to Non-GAAP Adjusted Net Income Per Share (in thousands except share and per share data) For the Year Ended December 31, 2024 2023 GAAP net income $ 30,278 $ 21,591 Adjustments: Stock-based compensation - Selling, general and administrative (1) 5,566 6,908 Research and development (2) 2,679 3,339 Non-GAAP adjusted net income $ 38,523 $ 31,838 GAAP net income per share—basic $ 0.62 $ 0.46 Adjustment to net income (as detailed above) 0.17 0.22 Non-GAAP adjusted basic net income per share $ 0.79 (3) $ 0.68 (3) GAAP net income per share—diluted $ 0.62 $ 0.45 Adjustment to net income (as detailed above) 0.16 0.22 Non-GAAP adjusted diluted net income per share $ 0.78 (4) $ 0.67 (4) (1) To reflect a non-cash charge to operating expense for selling, general, and administrative stock-based compensation.
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 .
License revenue There was no license revenue for the years ended December 31, 2024 and December 31, 2023 . 64 Table of Contents Royalty revenue Royalty revenue was approximately $35.3 million for the year ended December 31, 2024 , compared to $32.5 million for the year ended December 31, 2023 .
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 .
The increase was due to increased product sales by our sub-licensees as they increased commercialization of NERLYNX in international territories, primarily in China. Cost of sales Cost of sales was approximately $64.4 million for the year ended December 31, 2024 , compared to $62.7 million for the year ended December 31, 2023 .
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 .
We recorded cash flows from operating activities of approximately $38.9 million for the year ended December 31, 2024 and recorded cash flows from operating activities of approximately $27.0 million for the year ended December 31, 2023 .
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.
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 periodically evaluate available information, both internal and external, relative to such contingencies and adjust the accrual as necessary. We determine whether a contingency should be disclosed by assessing whether a material loss is deemed reasonably possible.
Legal fees and expenses are expensed as incurred based on invoices or estimates provided by legal counsel. We periodically evaluate available information, both internal and external, relative to such contingencies and adjust the accrual as necessary. We determine whether a contingency should be disclosed by assessing whether a material loss is deemed reasonably possible.
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.
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 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.
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 commenced the ALISCA™ -Breast1 Phase II trial (PUMA-ALI-1201) in the fourth quarter of 2024.
Shipping and handling costs for product shipments occur prior to the customer obtaining control of the goods and are recorded in cost of sales. Reserves for Variable Consideration: Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established.
Product revenue is recorded net of applicable reserves for variable consideration. Shipping and handling costs for product shipments occur prior to the customer obtaining control of the goods and are recorded in cost of sales.
In addition to distribution agreements with these customers, we enter into arrangements with healthcare providers and payors that provide for government mandated and/or privately negotiated rebates, chargebacks and discounts with respect to the purchase of our products. Product revenue also consists of product sales under sub-license agreements to our sub-licensees, who then sell into their respective international territories.
In addition to distribution agreements with these customers, we enter into arrangements with healthcare providers and payors that provide for government mandated and/or privately negotiated rebates, chargebacks and discounts with respect to the purchase of our products.
The increases above were partially offset by: • a decrease in professional fees and expenses of approximately $4.1 million, primarily due to a decrease in consultant and contractor expenses approximately $3.1 million, a decrease in insurance and other expenses of approximately $1.8 million, offset by an increase in legal fees of approximately $0.8 million; and • a decrease in stock-based compensation expense of approximately $1.1 million, primarily due to lower fair value on equity grants as a result of a lower market price for our common stock.
The increases above were partially offset by: • a decrease in stock-based compensation of approximately $0.7 million , primarily due to lower fair value on equity grants as a result of a lower market price for our common stock .
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.
Additionally, the expected timing of payment of the obligations presented below is estimated based on current information. 69 Table of Contents The following table represents our contractual obligations as of December 31, 2024, aggregated by type (in thousands): Contractual Obligations Total Less than 1 year 1 - 3 years Operating Lease Obligations 7,491 5,983 1,508 Long Term Debt Obligations (principal and interest) 74,865 51,147 23,718 Total 82,356 57,130 25,226 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.
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.
Total revenue Total revenue was approximately $230.5 million for the year ended December 31, 2024, compared to $235.6 million for the year ended December 31, 2023. This decrease in total revenue of $5.2 million was due to a decrease in product revenue, net of approximately $7.9 million, partially offset by an increase in royalty revenue of $2.8 million.
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.
Selling, general and administrative expenses: Selling, general, and administrative expenses For the Year Ended Change (in thousands) December 31, $ % 2024 2023 2024/2023 2024/2023 Payroll and related costs $ 31,555 $ 33,436 $ (1,881 ) -5.6 % Provision for credit loss (recovery) (519 ) 881 (1,400 ) -158.9 % Professional fees and expenses 29,873 34,011 (4,138 ) -12.2 % Travel and meetings 5,344 5,537 (193 ) -3.5 % Facilities and equipment costs 4,960 5,116 (156 ) -3.0 % Stock-based compensation 5,566 6,909 (1,343 ) -19.4 % Loss on impairment of asset — 625 (625 ) -100.0 % Other 3,384 3,418 (34 ) -1.0 % $ 80,163 $ 89,933 $ (9,770 ) -10.9 % Total SG&A expenses were approximately $80.2 million and $89.9 million for the years ended December 31, 2024 and December 31, 2023.
Our sales specialists are supported by an experienced sales leadership team consisting of regional managers and directors, as well as a commercial team of experienced professionals in marketing, access and reimbursement, managed markets, marketing research, commercial operations and sales force planning and management.
We currently market NERLYNX in the United States using our direct specialty sales force consisting of approximately 35 sales specialists. Our sales specialists are supported by an experienced sales leadership team consisting of several regional business leaders and a VP of sales, as well as experienced professionals in marketing, managed markets, access and reimbursement, research, and sales planning and operations.
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 are also required to maintain minimum cash balances and 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, 2024, we were in compliance with such covenants.
As of the date these financial statements have been made available for issuance, the SEC has not yet removed any related disclosure. The Company does not expect the adoption of ASU 2023-06 to have a material effect on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
We do not expect the adoption of ASU 2023-06 to have a material effect on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
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.
To date, our major sources of working capital have been proceeds from produc t and license revenue, public offerings of our common stock, proceeds from our credit facility and sales of our common stock in private placements.
Legal Contingencies and Expense For legal contingencies, we accrue a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. Legal fees and expenses are expensed as incurred based on invoices or estimates provided by legal counsel.
We recognize royalty revenue when the performance obligations have been satisfied. Legal Contingencies and Expense For legal contingencies, we accrue a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated.
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.
Research and development expenses: Research and development expenses For the Year Ended Change (in thousands) December 31, $ % 2024 2023 2024/2023 2024/2023 Clinical trial expense $ 17,091 $ 13,611 $ 3,480 25.6 % Internal R&D 32,248 30,731 1,517 4.9 % Consultant and contractors 2,917 2,701 216 8.0 % Stock-based compensation 2,679 3,339 (660 ) -19.8 % $ 54,935 $ 50,382 $ 4,553 9.0 % 65 Table of Contents Total R&D expenses increased approximately 9.0% to $54.9 million for the year ended December 31, 2024 from approximately $50.4 million for the year ended December 31, 2023.
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.
Other income and expenses: Other income (expenses) For the Year Ended Change (in thousands) December 31, $ % 2024 2023 2024/2023 2024/2023 Interest income $ 4,724 $ 2,605 $ 2,119 81.3 % Interest expense (12,452 ) (13,330 ) 878 -6.6 % Other income 862 759 103 13.6 % $ (6,866 ) $ (9,966 ) $ 3,100 -31.1 % Interest income For the year ended December 31, 2024, we recognized approximately $4.7 million in interest income compared to approximately $2.6 million of interest income for the year ended December 31, 2023.
Revenue is recognized by measuring the progress toward complete satisfaction of the performance obligations using an input measure. Royalty Revenue: For sub-license agreements that are within the scope of ASC 606, we recognize revenue when the related sales occur in accordance with the sales-based royalty exception under ASC 606-10-55-65.
Royalty Revenue: For sub-license agreements that are within the scope of ASC 606, we recognize revenue when the related sales occur in accordance with the sales-based royalty exception under ASC 606-10-55-65. Royalty revenue consists of consideration earned related to international sales of NERLYNX made by our sub-licensees in their respective territories.
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.
As of December 31, 2024 , the principal balance outstanding under the Athyrium Notes was $66.7 million, representi ng all of our debt. Current and Future Financing Needs We did not receive or record any product revenue until the third quarter of 2017.
As a result, we may have to significantly limit our operations, and our business, financial condition and results of operations would be materially harmed.
As a result, we may have to significantly limit our operations, and our business, financial condition and results of operations would be materially harmed. 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.
Recently Issued Accounting Standards In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements – Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The ASU modifies the disclosure or presentation requirements of a variety of Topics in the Codification to align with the SEC’s regulations.
See Note 2–Significant Accounting Policies for further information. 72 Table of Contents Recently Issued Accounting Standards In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements – Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.
We recognize revenue on product sales when the specialty pharmacy or specialty distributor, as applicable, obtains control of our product, which occurs at a point in time (upon delivery). Product revenue is recorded net of applicable reserves for variable consideration.
Product revenue also consists of product sales under sub-license agreements to our sub-licensees, who then sell into their respective international territories. 70 Table of Contents We recognize revenue on product sales when the specialty pharmacy or specialty distributor, as applicable, obtains control of our product, which occurs at a point in time (upon delivery).
Interest expense For the year ended December 31, 2023, we recognized approximately $13.3 million in interest expense compared to approximately $11.6 million of interest expense for the year ended December 31, 2022.
The $2.1 million increase in interest income was primarily the result of increased balances in cash equivalents and marketable securities. Interest expense For the year ended December 31, 2024 , we recognized approximately $12.5 million in interest expense compared to approximately $13.3 million of interest expense for the year ended December 31, 2023 .
Liquidity 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.
Liquidity and Capital Resources The following table summarizes our liquidity and capital resources as of and for the years ended December 31, 2024 and 2023 and is intended to supplement the more detailed discussion that follows: As of As of Liquidity and capital resources (in thousands) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 69,219 $ 84,585 Marketable securities $ 31,746 $ 11,354 Working capital $ 51,547 $ 56,803 Current portion of long-term debt $ 45,329 $ 33,997 Long-term debt $ 21,719 $ 65,659 Stockholders’ equity $ 92,125 $ 53,442 The following table summarizes our cash flows (uses) for the years ended December 31, 2024 and 2023 Year Ended Year Ended December 31, 2024 December 31, 2023 Cash provided by (used in): Operating activities $ 38,918 $ 27,009 Investing activities (20,438 ) (19,125 ) Financing activities (33,846 ) — Net (decrease) increase in cash, cash equivalents and restricted cash $ (15,366 ) $ 7,884 67 Table of Contents Operating Activities We recorded net income of approximately $30.3 million and $21.6 million for the years ended December 31, 2024 and 2023 , respectively.
Total changes in cash flows from operations were due to changes in working capital and included a decrease in inventory of approximately $2.6 million and a decrease in prepaid expenses and other of approximately $2.4 million.
Total changes in cash flows from operations were due to a change in working capital related primarily to a decrease in accrued expenses of approximately $15.8 million, an increase in inventory of approximately $1.6 million (increase in inventory purchases), offset by a decrease in accounts receivable related to collection of royalties receivable.
Reserves for variable consideration were approximately 17.9% of product revenue for the years ended December 31, 2023 and 2022.
Reserves for variable consideration were approximately 19.5% and 17.9% of product revenue for the years ended December 31, 2024 and 2023, respectively. The increase in the variable consideration (gross-to-net reserve) was due to prior year adjustments related to lower Medicaid claims.
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.
These efforts will require funding in addition to the cash and cash equivalents totaling approximately $69.2 million and approximately $31.7 million in marketable securities available at December 31, 2024.
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.
Investing Activities During the year ended December 31, 2024, cash used in investing activities was approximately $20.4 million. Cash used in investing activities was primarily due to the purchase of available-for-sale securities of approximately $76.2 million, partially offset by the maturities of available-for-sale securities of approximately $55.8 million.
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.
Net cash provided by operating activities for the year ended December 31, 2024 was $38.9 million which consisted of net income of $30.3 million, adjusted for non-cash items of approximately $19.3 million, including stock-based compensation of $8.2 million, and depreciation and amortization of $11.5 million and recovery of credit loss of $0.5 million.
The approximately $1.7 million increase in interest expense was primarily related to higher interest rates on our Athyrium Notes, which is partially determined by the three-month SOFR rate, as well as imputed interest on $8.0 million related to the final installment payment on the Eshelman litigation settlement due on or before November 1, 2024.
The approximately $0.9 million decrease in interest expense was due to the pay down of debt in 2024 as well as ending imputed interest on $8.0 million related to the final installment payment on the Eshelman litigation settlement paid in October 2024.
Contractual Obligations Contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude contingent liabilities for which we cannot reasonably predict future payment. Our contractual obligations result from leases for office space and office equipment and the principal and interest owed under our Note Purchase Agreement.
Off-Balance Sheet Arrangements We do not have any “off-balance sheet arrangements,” as defined by SEC regulations. Contractual Obligations Contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude contingent liabilities for which we cannot reasonably predict future payment.
The ASU also makes those requirements applicable to entities that were not previously subject to the SEC’s requirements. The ASU is effective for the Company two years after the effective date to remove the related disclosure from Regulation S-X or S-K.
The ASU is effective for us two years after the effective date to remove the related disclosure from Regulation S-X or S-K. As of the date these financial statements have been made available for issuance, the SEC has not yet removed any related disclosure.
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.
We incurred $1.9 million of deferred financing costs with the initial borrowing of the Athyrium Notes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe 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.
Biggest changeWe also h ave interest rate exposure as a result of borrowings outstanding under the Athyrium Notes. As of December 31, 2024, the aggregate outstanding principal amounts of the Athyrium Note s was $66.7 million.
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.
We invest our excess cash primarily in cash equivalents such as money market investments as of December 31, 2024. 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.
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.
If overall interest rates had increased by one hundred basis points during the year ended December 31, 2024, our interest expense would have increased by $0.7 million.

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