Puma Biotechnology Inc (PBYI) 2017 Q4 法說會逐字稿

Good afternoon. My name is Tim, and I will be your conference call operator today. (Operator Instructions) As a reminder, this call is being recorded. I would now like to turn the call over to Mariann Ohanesian, Senior Director of IR for Puma Biotechnology. You may begin your conference.

Thank you, Tim. Good afternoon, and welcome to Puma's conference call to discuss our 2017 fourth quarter and full year financial results. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma Biotechnology; Steve Lo, Chief Commercial Officer; and Charles Eyler, our SVP of Finance and Treasurer. After market close today, Puma issued a news release detailing 4Q and full year 2017 financial results. That news release, the slides that Steve will refer to and a webcast of this call are accessible via the homepage and Investor sections of our website at pumabiotechnology.com.

The webcast and presentation slides will be archived on our website and available for replay for the next 90 days.

Before I turn the call over to Alan for an overview of our performance and operations, I would like to point out that during this conference call, we may be making forward-looking statements within the meaning of federal securities laws and based on current expectations, forecasts and assumptions. Such statements are only predictions, which are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Please refer to the documents that we file from time to time, with the SEC and which are available on our website, including the company's quarterly report on Form 10-Q for the quarter ended September 30, 2017, for information concerning the risks and other factors that could affect the company.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this live conference call, March 1, 2018. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as required by law.

During today's call, we may refer to certain non-GAAP financial measures that involve adjustments to our GAAP figures. We believe these non-GAAP metrics may be useful to investors as a supplement to, but not a substitute for, our GAAP financial measures. Please refer to our 4Q news release for a reconciliation of our GAAP and non-GAAP results. I will now turn the call over to Alan.

Thank you, Mariann, and thank you for joining our call today. The fourth quarter of 2017 represents the first full quarter of commercial availability of NERLYNX Puma's first approved drug. NERLYNX was approved by the U.S. FDA in July 2017, for the treatment of patients with early stage HER2-positive breast cancer, who have previously been treated with a trastuzumab-containing regimen. We are pleased to report NERLYNX net sales of $20.1 million for the fourth quarter of 2017 and $26.2 million for the full year 2017. In a moment, I will turn the call over to Steve Lo, Puma's Chief Commercial Officer, who will provide an update on NERLYNX launch-related activities and detail our commercial progress in the U.S. to date. In June 2016, we submitted a marketing authorization application to the European Medicines Agency for neratinib for the same extended adjuvant indication. Last week, the Committee for Medicinal Products for Human Use, also known as the CHMP, adopted a negative opinion on the NERLYNX's MAA, recommending the refusal of marketing authorization for the medicinal product, NERLYNX. The CHMP noted that Puma may request, a reexamination of that opinion and that a letter of intent to seek a reexamination should be submitted within 15 days of their notification. We anticipate that we will submit our letter of intent to request a reexamination by March 9. Moving forward, we have several additional milestones that we anticipate for neratinib. An abstract with updated data from the ongoing Phase I/II trial of neratinib in combination with Kadcyla, also known as T-DM1, in HER2-positive metastatic breast cancer has been submitted to the American Society of Clinical Oncology Annual Meeting, and if accepted, will be presented in the second quarter of 2018.

In addition, we expect to report the results from the Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer, also known as the NALA trial, in the first half of 2018.

In our presentation at a recent investor conference, we disclosed that the invent rate in the trial was coming in slower than we expected, and that due to this, we anticipate the data to come out in the latter part of the first half of 2018, and more specifically, in late June. We'll continue to update investors on the updated timing of this in the future.

We also anticipate reporting additional data from our Phase II CONTROL study, involving the use of colestipol with loperamide prophylaxis and neratinib-associated diarrhea in HER2-positive early breast cancer in the fourth quarter of 2018.

I will now turn the call over to Steve Lo, who will discuss our U.S. commercialization strategy and progress to-date for NERLYNX. Steve will be followed by Charles Eyler, who will highlight key components of our financial statements for the 2017 fourth quarter and full year.

Thank you, Alan. I am pleased to discuss the progress we have made with the launch of NERLYNX. We continue to be off to a good start and look forward to continuing this momentum. First of all, a reminder that during my presentation, I will be making forward-looking statements. As you may recall, we set up a network of 6 specialty pharmacies who provide NERLYNX directly to the patient when a prescription is received. These specialty pharmacies conduct benefit investigations, obtain a prior authorization approval from the insurance company, and then arrange with the patient to ship NERLYNX to their home. Additional services such as copay assistance, medication counseling, antidiarrheal medications are offered.

We have also established a separate specialty distribution channel, where the prescription does not need to be sent to the specialty pharmacy. This helps to facilitate the ability for certain patients to obtain NERLYNX directly from their physician's office. This allow patients to have direct access to NERLYNX in physician networks, such as US Oncology, ION, integrated system such as Kaiser Permanente and also the VA.

I will now provide you with our updated launch results since FDA approval. Later on the call, Charles will review the full financial results. What I am showing you in Slide 4 is the monthly and cumulative net sales for NERLYNX through the month of January. Please note that the revenue chart includes both specialty pharmacy and specialty distribution channel. We are pleased to see the month-over-month sales growth during the initial months of our launch and believe this is indicative of the strong initial demand for NERLYNX. Moreover, we have started off 2018 with a strong January and estimated net revenue.

This slide shows a snapshot of January 31 of specialty pharmacy prescriptions. Please note, this is from our specialty pharmacy channel and does not capture NERLYNX's usage through the specialty distribution channel because we do not receive that prescription data. The specialty pharmacy channel represented approximately 89% of the total volume in Q4. From FDA approval through January 31, over 1,600 new patient prescriptions have been received by the specialty pharmacies. Of those, 1,300 patients have received at least 1 shipment of NERLYNX. 265 patients are in process, which means they could be awaiting a prior authorization approval from their insurance company or scheduling a delivery to the patient. At any given time, patients are flowing from prior authorization to insurance approval to delivery.

While it is still early in the launch, we are encouraged to see patients are also receiving their refills in a timely manner. Those specialty pharmacies actively reach out to patients during the first month of NERLYNX to counsel them and provide patient support. So far, we have seen 238 patients discontinue NERLYNX, which is an 18.3% discontinuation rate. Because this is unique specialty pharmacy data, if a patient transfers to another specialty pharmacy or to physician office dispensing or delayed therapy for personal reasons, such as travel, this could be classified in the specialty pharmacy system as a discontinuation. We have conducted monthly audits of this data and believe that discontinuations due to adverse events is only half of the total discontinuations or approximately 9% to 10% discontinuation rates due to adverse events.

In terms of new patient prescriptions in the specialty pharmacy channel, you can see in Slide 6 steady growth every month since launch. As our sales force reaches more physicians, we should continue to see this growth. Once the prescription comes in, the specialty pharmacy work to obtain the insurance approval to dispense NERLYNX.

On Slide 7, you will see both monthly and cumulative dispenses to patients, shown as NRX and TRX in the graph. We have seen that NRX has tick up with the start of the year, likely due to increased penetration in our accounts. Importantly, we have seen a steady growth in NERLYNX refills. Please note that some patients are told by their physician to lower their dose to improve tolerability or stop and start NERLYNX due to side effects. This could result in not every patient refilling every 4 weeks, but every 5 to 6 weeks, but they do remain on the drug.

We are also pleased to see that most patients receive NERLYNX in 10 days or less, and 74% of the patients receive it in 15 days or less, which is a sign of a smooth reimbursement process. There are a small number of patients who choose to wait to start NERLYNX due to personal reasons, such as travel, there are also a small number of patients who have been prescribed NERLYNX for an off-label use, such as metastatic cancer, which we do not market or promote, where the insurance company needs more information. Those situations contribute to the longer times to fill, shown on the right side of the graph.

Now on to prescribers. We are very encouraged to see that there are now over 1,000 unique prescribers as of January 31. The number of prescribers continues to grow, and we are seeing these oncologists prescribe NERLYNX to more patient in their practice. Thus, we are seeing both breadth and depth of prescribers. Recall that our sales force has only been actively promoting NERLYNX since September.

Therefore, as you see on Slide 10, we have made very good progress on penetrating our target physician audience, increasing from 22% in October to 53% in January. While we have made steady progress since launch, we have not fully penetrated our physician audience and there are still more opportunities to reach more physicians, especially increasing their awareness of diarrhea management options. We are highly optimistic we will reach all of our targets in a timely manner, which will result in continued growth in NERLYNX prescribers.

We are also happy to report that in a recent sales force detailing audit through, IQVIA, formerly known as IMS, you can see that in the HER2 setting, our sales force has the highest share of voice amongst the physician surveyed. Combined with reaching more physicians, we are pleased with our current progress and remain optimistic about our continued launch success.

Now turning to the rest of the world. We made a strategic decision that working with partners in certain regions that have local regulatory and commercial expertise is best for patient access. We are thrilled that we have licensing agreements in place now with Specialised Therapeutics, Medison and CANbridge. We are confident that these partners will be successful in obtaining regulatory approval in launching NERLYNX.

So to summarize, we are highly encouraged with the progress we've made with physicians, payers and patients. We executed the launch of NERLYNX according to plan, are continuing to reach more prescribers and helping patients receive and stay on their medication. We are committed to ensuring all appropriate patients have access to NERLYNX.

I will now turn the call over to Charles Eyler for a review of our financial results.

Thanks, Steve. Let me start with a quick summary of our financial results for the fourth quarter of 2017. Please note that I will once again be making comparison to Q2 of '17 and Q3 of '17, as we believe this is a better indication of our progress in becoming a commercial company than year-over-year comparisons.

For the fourth quarter of 2017, we reported a net loss, based on GAAP, of $64.1 million or $1.71 per share.

Our GAAP net loss for Q3 and Q2 of 2017 were $77.2 million and $77.8 million, respectively.

Our GAAP net loss for the year was $292 million or $7.85 per share. As Alan mentioned, net revenues from NERLYNX sales were $20.1 million and $26.2 million for the fourth quarter and full year ended 31 December 2017.

Our cost of goods for the fourth quarter and the year-to-date were $4.1 million and $5.6 million, respectively. Included in our cost of sales is the amortization of the milestone payments to licensor of approximately $0.9 million for the fourth quarter and $1.5 million for the year. Going forward, we will continue to recognize amortization of the milestone payment to the licensor.

In the fourth quarter of 2017, we also recognized license revenue of $1.5 million. For the fiscal year 2018, Puma anticipates that NERLYNX net revenues will be in the range of $175 million to $200 million. This only includes revenue from the currently approved extended adjuvant indication.

SG&A expenses, based on GAAP, were $30.9 million in the fourth quarter of 2017, compared to $32.5 million and $24.9 million for the third and second quarters of 2017. Non-GAAP SG&A expenses were $22.7 million for the fourth quarter compared to $24.2 million and $17.5 million for the third and second quarters of 2017, respectively.

Research and development expenses, based on GAAP, were $50.2 million for the fourth quarter compared to $49.5 million and $53.3 million for the third and second quarters, respectively. On a non-GAAP basis, R&D expenses were $32.9 million compared to $31.3 million and $33.7 million for the third and second quarters of 2017, respectively.

Our net cash used in operating activities for the fourth quarter of 2017 was approximately $36 million compared to $55 million and $46 million for the Q3 and Q2. Our cash burn for the quarter was approximately $25 million compared to a cash burn of approximately $45 million and $42 million for the third quarter and second quarter, respectively. As we continue to reduce our cash burn through 28 (sic) [2018], we believe beginning in the fourth quarter, we will transition to cash flow neutral slightly positive cash flow.

We ended the fourth quarter of 2017 with $82 million in cash and cash equivalents. Per our license agreement with CANbridge Life Sciences, we recently received a $30 million upfront payment. Based on the new rev rec standards, issued by FASB, we anticipate recording the $30 million as licensing revenue in the first quarter of 2018. However, we are currently reviewing with our auditors, our position on recording the full amount of revenue in the first quarter.

As previously mentioned, we secured a term loan of $100 million, last October, subject to funding in 2 tranches. The first tranche of $50 million, which was received in October 31, is being used for general corporate purposes and to support the NERLYNX commercial activities. The second tranche of $50 million may be drawn down at Puma's option and is subject to achievement certain milestones. The loan will mature on October 31, 2022.

Overall, we continue to deploy our financial resources, to focus on the advancement of neratinib through ongoing trials and the commercialization of NERLYNX in The United States.

I will now turn it back over to Alan.

Thanks, Charles and Steve. Since we launched NERLYNX for the treatment of early stage HER2-positive breast cancer in the third quarter of 2017, we have continued to receive positive feedback from patients, prescribers and payers. We will continue to move forward with our plans to advance and expand our commercial activities in the balance of 2018 and beyond.

This concludes today's presentation. We will now turn the floor back to the operator for Q&A. Operator?

(Operator Instructions) Our first question comes from the line of Cory Kasimov of JPMorgan Chase & Co.

Couple of them for you. First of all, on the discontinuation rate, when you disclosed, I think it was 11% on your third quarter call. How much of that was due to adverse events? I'm just, I guess, trying to understand if this aspect of dropout has changed at all since your last update or if it's been pretty consistent? And also what's the rate of dose reductions you are seeing?

Yes. Thanks, Cory. So on the Q3 call, when we mentioned the 11%, about half of those as well are due to adverse events. And as Steve mentioned, what we're seeing is that, there is times that the specialty -- again, we have 2 networks there: with the specialty pharmacy and with the specialty distribution. The specialty distribution is the in-office dispensing. And there's time, like Steve was mentioning, that we get something reported as a discontinuation through the specialty pharmacy, and that can be that you switched to one pharmacy to another because we've got 6 of them or it could be switched over to the in-office dispensing. So through that channel or through that specific pharmacy, there may be a discontinuation, but the patient is actually still on the drug.

Okay. Okay. And then the dose reduction?

That's a great question. So we are definitely seeing that for -- to improve tolerability, patients are going from the 240-milligram dose down to 200 milligrams or even sometimes down to 160 milligrams. And we saw that in the ExteNET trial as well. And again, the pill -- the bottle that they get with the prescription is a 40-milligram pill. They are actually very tiny pill, so patients actually like that, and it's 6 of them a day. So obviously, if they dose down, they are taking either 5 a day or 4 a day. So that obviously can push out when you're getting a refill instead of getting it every 4 weeks, it might be over 5 weeks or 6 weeks. And you could also have dose interruptions where side effects, you stop taking it for 1 day or 2 and then go back on. And again, we saw that in ExteNET as well. We are still working out what percent of the patients fall into those categories, so we're going to get back to you on that.

Okay. And then the one other question I have is, can you talk about some of the key items that go into determining the 2018 guidance you have for NERLYNX? And what that potential key variables are around that number? Because when you look at the pretty impressive growth you've shown quarter-over-quarter of late, especially with that January number, the low end of your guidance seems like there is the possibility of pretty minimal growth from that number as we kind of go over the course of the year?

Yes. So I think we would obviously rather err on the conservative. And I think that's a feedback we've gotten from speaking to shareholders as well, as they would rather err on the conservative side. So there's certainly an element of that as well. It's basically taking conservative guidance and that we are going to just have revenue in the extended adjuvant indication. Until we get results from the metastatic trial, which we still are uncertain as the timing of, we haven't included those in our projections yet.

Our next question comes from the line of Yigal Nochomovitz of Citigroup.

On the NALA study, could you just clarify a bit when you say late June? Is that when you're going to hit the 420-or-so events? Or is that essentially when we're going to get the data, meaning you would need a few weeks or months to analyze the data and get the -- have the event set earlier in the second quarter? If you could just clarify?

Yes. Thanks, Yigal. To clarify, that would be when we would announce the top line data. So in this study, what we are waiting for is centrally confirmed PFS events. So at the local level, at the physician level, they could have a PFS event, but unless essentially confirmed, it doesn't count toward the number we need. So we are seeing that coming in a slower-than-expected rate. As of right now, we would anticipate announcing top line data in late June. To be fair, that could get pushed out, and we will keep investors updated after that -- the timing of that.

Okay. Great. And could you give a little bit more color in terms of market dynamics, regarding types of patients that are coming onto therapy now? Is it -- I think on the last call, you mentioned it was a mix of HER-positive, HER negative. Curious if that's changed or not. And with respect to the risk profile of the patients, are they attending to be the high-risk patients with multiple positive nodes or poor response to neoadjuvant therapy and things like that? Or has it broadened into some of the more moderate risk patients as well?

This is Steve. I will take that question. First of all, we have patients that are very consistent with our label. So they can be hormone receptor negative, hormone receptor positive, lower risk, et cetera. I will say that the new prescribers, typically, I think when they decide which patient to put on neratinib, they will typically go with the hormone receptor positive higher risk patients. But over the course of time, particularly with our more experienced prescribers, they are also using it for the lower risk patients.

Okay. Great. And then just one on the EU process. With regards to the reexamine and potentially submitting more data to the EMA, could you just clarify if the timing of additional data for the budesonide, the colestipol cohort for the CONTROL study to get that 12 months data will fall within the window that you expect for the time frame because for the reexamination procedure? Or would you have to carry through the reexam procedure, get an answer and then do another data submission, potentially, if necessary, if the reexamine didn't work? Can you just help us understand that? And then also, just regard to whether maybe the NALA data would be relevant for that discussion too?

Thank you, Yigal. With regard to the reassessment process in -- with the CHMP, I don't know if we are allowed to submit any new data or if we just have to go on what's already been submitted. I don't know the answer to that. So I think I would rather wait until we meet with rapporteurs, which, I believe, will be in somewhere around 60 days. And then we can get back to you on that. I don't know the answer to that to be accurate. So I need to get back to you on that.

Our next question comes from the line of Olivia (sic)[Alethia Young] of Crédit Suisse.

This is Derek Yuan on for Alethia. I have 2 questions, if I may. So first one is, the NERLYNX price was raising generally. So I was just wondering, how much was the 4Q sales that was due to stocking, and I have a follow-up?

This is Steve. There was no stocking in fourth quarter. The stocking occurred right at the FDA approval. And if you are asking about the growth between December to January, the price increase occurred in January. And our units grew 37%, and our revenue grew 48%. So you can see that it's -- most of that growth is actually from demand and not from the raising of the price.

Okay. And for the reexamination, is this strategy to restrict the high-risk patients, like positive or negative or, like,[normal] status? And was that discussed in [SAG] meeting already? I am asking the question because I want to understand -- you got high likelihood of approval, you proposed the restriction owing to the reexamination?

So in terms of the reassessment period, again, I think we need to wait until we meet with our rapporteurs to see whether or not we're going to be looking for approval in the ITT population or whether or not it's going to be a subgroup. So we'll need to get back to you on that post our meeting with the rapporteurs.

Our next question comes from the line of Michael Schmidt of Leerink Partners.

I had a follow-up on the discontinuation rate. And it's obviously tough to compare the sort of point-in-time to the trial, which was cumulative over 1 year period. But if you would compare the current strength of the market, to the dropouts, to the trials, even the CONTROL or the ExteNET trial at a similar time point, how do the dropout rates compared?

That's a really true question. I don't have that data in front of me. That is a great question. Let me analyze that, and I will get back to you on that. That's a very good question. We just don't have it in front of us.

Just in terms of the commercial setting, typically, when patients do drop off, we see it in the first month. But I will also say that now that we have been in the marketplace, we haven't been in the marketplace for a full year, we have many patients who have gotten their sixth refill, their seventh refill. So I think it's certainly been positive on the commercial setting, because once again the specialty pharmacies spend time and counsel the patients. We also have nurse educators on our team, who work with the physician's practice. So we're certainly doing everything we can to make sure that the patient stay on drug.

Great. And then, I guess, a question on the -- sort of slight decrease in NRX volume in December. Is that just an artifact due to the holidays?

Yes. I don't know if we know the answer to that. That most likely could be what that's due to.

Great. And then did you see any changes to the gross-to-net adjustment of the drug price?

In terms of the drug price -- are you asking whether or not, like, people were trying to get ahead of the drug price or something?

No. I'm just wondering if the discounts and rebates have changed since launch, now that the price increase is there. What is your expectation for gross-to-net adjustment, in general, I guess, going forward?

Yes. Our gross-to-net is actually been fairly stable. So remember, this is an early breast cancer population. So we don't have that many Medicare patient. In fact, only about 13% are Medicare patients. So we aren't subjected to higher rebates. We don't discount the drug, because there isn't a competitor per se. So that remained pretty stable throughout the launch.

Our next question comes from the line of Ying Huang of Bank of America Merrill Lynch.

This is Qian on for Ying from Bank of America Merrill Lynch. So a couple of quick ones. The first one is to follow up on the discontinuation, you do see like 18%, which has increased from the 11%. Can you provide more color on that in terms of, in a real world, what kind of prophylaxis are used in a treatment clinic? And I believe you recently talk about you're going to have a new cohort of patients, collective or alone. Just trying to understand what is your thoughts on that? And second one is, in the real world, like, do we know that the relative use between academic centers and community centers? And lastly, what is your confidence level for the European approval?

Okay. Steve, you want to take the first one?

Yes. I will take the first few questions and then I'll turn it over to Alan. So you had a question regarding the discontinuation rate and why the change. So remember one thing, when we first reported last quarter, we had patients who were only on drug for a short amount of time, and many patients had not even started drug. So I think, essentially the maturing of the patient population certainly get's us a better handle of that. What I also will remind you is that, we have done some audits with our discontinuation that we see that, it's about 9% to 10% related to adverse events. So from my perspective, I think that's certainly better than what we've seen with the clinical trial, which has no prophylaxis. So the good news is that, we are seeing with the right education that physicians are using loperamide, they are also because of the San Antonio poster, et cetera, they are using colestipol, budesonide. I think it's a handful of choices that the physician can use, but that's certainly happening, and that's why it helps us keep patients on the medication. Your next question was on academics versus community physicians. Most of our prescriptions are coming from the community, which I think is very promising. Now as you know, a lot of academic physicians don't see these patients once they are in the early breast cancer setting. So it is, again, promising that we are seeing most of our growth and most of our prescriptions coming from the community.

So -- and then to add to what Steve was saying, on what regimen is being used. We don't really get that transparency because we don't have access to prescription data for colestipol or something like that. So we really just get it more anecdotally. We are definitely hearing good feedback on the colestipol regimen. But to your second question, which was the new cohort that was opened in the CONTROL trial, that is correct. We -- the data that was previously reported was a combination of loperamide with colestipol. The feedback we were getting from a lot of the physicians was that, the satisfaction with loperamide, which was the fatigue, et cetera, were the ones that were most concerning to the patients. So we now have a cohort that is enrolling, and it's just colestipol only. It's -- I believe, it's 1 pill twice a day or something. So it's pretty easy regimen to take as well. And we should have data on that at the San Antonio Breast Cancer meeting this year. And then your last question regarding Europe, in terms of our confidence level with the European reassessment, I think we need to wait for feedback from the rapporteurs, and then we can get much better feedback on that.

Our next question comes from the line of Kennen MacKay of RBC Capital Markets.

Two questions. Last quarter, you had provided a little bit of insight on how much free drug was provided. I was wondering if you could help us out with that this quarter. And -- wanted to get a sense of gross-to-net on the quarter? And whether with the new accounting rules relating to inventory, whether any sort of minimal inventory it sounded like -- was in Q4 -- whether there was any recognition of the donut hole early in Q4? Or if that just wasn't an issue because, again, there was some inventory? And then second, just a question on the guidance of becoming cash flow positive or potentially profitable by the end of the year. I wanted to get a sense of whether that was thinking about GAAP or non-GAAP, and specifically if that was referring to Q4? And it was also helping if you could maybe help us think about the expenses once the NALA trial concludes? And how maybe those could come down?

Yes. This is Steve. I will take the pre-drug question as well as the [indiscernible] question. So first of all, these lines will be available online for you later, but on Slide 5 of my presentation, we do talk about that 5.6% of those patients that we received prescriptions for are on free drugs. And those are typically patients who are uninsured, where they do not have access to Medicaid coverage, et cetera. So only 5.6%. In relation to the donut hole, remember that we only have about 13% payer mix related to Medicare. So we didn't come across many patients who were subject to the donut hole. If they were, they were referred to a foundation and practically in most cases, they were able to receive the medication. If they were subject to that, let's say, around December, many of them just started the drug in January. So that hasn't been a major hurdle to patients starting on drug. And then what I will do is, I will pass the rest of the questions first to Alan.

Yes. Kennen, so in terms of your question on gross-to-net. We actually saw an improvement in gross-to-net this quarter, it was 11.3%. So we saw an improvement there. And then in terms of the -- drivers in terms of becoming cash flow neutral/cash flow positive in the fourth quarter, I think you can expect R&D expenses to be flat to trending down toward the end of the year. And so as we can see, the majority of that -- and you saw in the quarter, our cash burn went from $45 million in Q3 to $25 million in Q4, that was largely driven by revenue growth. So obviously, with us keeping a good tight fix on expenses -- and as I said, R&D will trend down -- and increasing revenues, that's where we believe the driver is going to be to get to cash flow neutral/cash flow positive in the fourth quarter of 2018.

This concludes our question-and-answer session. I would like to turn the conference back to Mariann for closing remarks.

We appreciate your interest in Puma Biotechnology. As a reminder, this call may be accessed via replay of the webcast at pumabiotechnology.com beginning in about an hour. Thank you, again, for your time and attention today.

Ladies and gentlemen, thank you for participating in today's conference call. This concludes our program. Everyone, have a great day. You may now disconnect.