Puma Biotechnology Inc (PBYI) 2021 Q3 法說會逐字稿

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

Thank you, Melinda. Good afternoon, and welcome to Puma's conference call to discuss our financial results for the third quarter of 2021. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma Biotechnology, Maximo Nougues, Chief Financial Officer, and Jeff Ludwig, Chief Commercial Officer. After market close today, Puma issued a news release detailing third quarter 2021 financial results. In that news release the slides that Jeff will refer to and a webcast of this call are accessible via the homepage and investors 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. Today's conference call will include statements about the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of federal securities laws. Such statements are subject to risks and uncertainties, and actual events and results may differ from those expressed in these forward-looking statements. For a full discussion of these risks and uncertainties, please review our periodic and current reports filed with the Securities and Exchange Commission from time to time, including our annual report on Form 10-K for the year ended December 31, 2020. 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, November 4, 2021. 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 also 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 accept Q4, our GAAP financial measures. Please refer to our third quarter 2021 news release for a reconciliation of our GAAP to non-GAAP results. I will now turn the call over to Alan.

Thank you, Mariann, and thank you all for joining our call today. Today, Puma reported total revenue for the third quarter of 2021 of $46.2 million. Total revenue includes product revenue net, which consists entirely of U.S. NERLYNX sales, as well as licensees and royalties from our sub-licensees. Product's revenue net was $43.4 million in the third quarter of 2021, representing declines from the $48.9 million in product revenue net reported in the second quarter of 2021 and $49.3 million in product revenue reported in Q3 of 2020. Product revenue for the quarter was negatively impacted by approximately $3.5 million due to inventory reduction in our specialty pharmacies and specialty distributors. Royalty revenue was $2.8 million in the third quarter of 2021 versus $4.3 million in Q2 of 2021 and $1.5 million in Q3 of 2020.

During the third quarter of 2021, we continued to experience challenges brought on as a result of COVID-19 pandemic and the Delta variance. As Jeff will show in his presentation, we recorded 2,947 bottles of NERLYNX sold in the third quarter versus the 3,354 bottles sold in Q2 of 2021. Bottle sales in the quarter were negatively impacted by the inventory reduction in our specialty pharmacies and specialty distributors mentioned earlier. Jeff will provide further details in his comments and slides. Due to the access limitations presented by COVID-19, call activity on physicians declined approximately 10.5% in Q3 compared to Q2.

New prescriptions were up 2.9% in Q3 compared to Q2, while total prescriptions were down 3.1%. Bottles sold through our specialty distributor network, which we also refer to as our in office network, were down 11.9% in Q3 compared to Q2. I will now provide a clinical review of the quarter, and then Jeff Ludwig will add additional color on the NERLYNX' commercial activities. Maximo Nougues will follow with highlights of the key components of our financial statements for the third quarter of 2021. As we have mentioned on our prior calls, Puma has an ongoing basket trial of neratinib and HER2 mutated cancers referred to as the SUMMIT trial. In the fourth quarter of 2019, Puma met with the FDA to discuss the regulatory path for neratinib in patients with hormone receptor positive or HER2-negative breast cancer who ever a HER2 mutation.

The purpose of the meeting in 2019 was to discuss the potential to file for accelerated approval on the data from the SUMMIT trial on the patients treated with a combination of neratinib plus fulvestrant plus trastuzumab. At that meeting, the FDA suggested and from a modified SUMMIT trial in order to better isolate the contribution of neratinib to the efficacy theme in the SUMMIT trial for the patients treated with the combination of neratinib plus fulvestrant plus trastuzumab. In early 2020, the SUMMIT trial was amended on, the arm will then be expanded up to 18 patients. If less than 4 patients in the expanded arm respond, that arm will be closed to further enrollment.

If for more patients respond, the arm will be open to enroll additional patients. As was discussed on the second quarter earnings conference call for the first 7 patients who were treated in the fulvestrant alone arm of the trial, no patients have received a response. In the 7 patients who were treated in the fulvestrant plus trastuzumab arm in the trial, no patients achieved their response. Enrollment to the fulvestrant alone and fulvestrant plus trastuzumab arms of the trial were therefore, paused.

During the third quarter, Puma convened the study's Independent Data Monitoring Committee, or IDMC, to review the data from both the singlet and the doublet cohorts. The IDMC recommended closing both the singlet and the doublet cohorts. And the first 7 patients who were treated in neratinib IB plus fulvestrant plus trastuzumab arm of the trial, 1 or more responses were seen, and therefore, the criteria is met to expand to stage 2 of assignment 2 stage design. This arm of the trial has been expanded to further enrollment.

Currently, patients on the ER positive -- currently patients with ER-positive, HER2-negative breast cancer with HER2 mutation are only being rolled into this triplet arm in SUMMIT, which treats patients with neratinib plus fulvestrant plus trastuzumab. We anticipate that additional data on this will be presented at San Antonio Breast Cancer Symposium in the fourth quarter of 2021. Puma believes that the data from the randomized portion of the trial has addressed the FDA's request to isolate the contribution of neratinib to the efficacy seen in the SUMMIT trial in the patients treated with the combination of neratinib plus fulvestrant plus trastuzumab.

Puma has therefore scheduled a meeting with the FDA this quarter to discuss the data from the randomized portion of the trial and to discuss the potential pathway to follow for accelerated approval for the combination of neratinib plus fulvestrant plus trastuzumab on the data in patients with ER-positive HER2-negative breast cancer who have a HER2 mutation and have been treated in the SUMMIT trial. At the FDA meeting in 2019, the FDA agreed that patients treated with the triplet of neratinib plus fulvestrant plus trastuzumab who enrolled both prior to the amendment in 2020, as well as those enrolled after the investment will be eligible for inclusion in the efficacy database used to support approval. Puma will continue to update investors on the status of this as it progresses.

As investors are also aware, last November, we announced interim data from another cohort in SUMMIT, and more specifically, the cohort with metastatic non-small cell lung cancer with epidermal growth factor, or EGFR, exon 18 mutations, who have been previously treated with an EGFR tyrosine kinase inhibitor. We are continuing to enroll this cohort of patients and anticipate we will have additional data from this cohort to report in the first half of 2022. I will now turn the call over to Jeff Ludwig, Puma's Chief Commercial Officer, for a review of our commercial performance during the quarter.

Thanks, Alan. Appreciate it, and thanks to everyone for joining our third quarter earnings call. Before I move into the commercial review, just a reminder that I will be making forward-looking statements. In our second quarter earnings call, we announced a quarter-over-quarter increase in net sales and ex-factory bottles. Our goal was and still is to deliver consistent quarter-over-quarter growth, which we were not able to achieve in Q3. Now our ability to deliver consistent growth was largely based on 2 key assumptions: number one, the positive evolving clinical profile of NERLYNX; and 2, an improvement in call activity and access driven by an increase in vaccinations and the loosening of customer restrictions.

As I reflect upon our Q3 performance, I continue to feel very strongly about the evolving clinical data and its ability to shape and change the risk-benefit perceptions of NERLYNX in this underpenetrated market. The assumption that has caused us the biggest challenge is customer access and overall decline in HCP call activity. As Alan mentioned earlier, we saw about a 10% reduction in overall HCP calls in Q3 versus Q2. Now HCP access and engagement is critical when you're trying to reposition a brand and share new evolving clinical data. Given the importance of this leading indicator, let me provide some additional insight.

As I compare our pre-COVID HCP engagement with our current activity, we are still down overall about 40%. We do expect that access caused by COVID restrictions will improve in the future, but given the uncertainty of the pandemic, we are focused on increasing HCP activity through both personal and nonpersonal promotion. With that high level update, let me transition to some of the U.S. commercial slides, and I will provide some additional insights along the way. Once I have finished my remarks, I will turn the call over to Maximo, who will review the full financial results. Looking at Slide 3. As you may recall, we have 2 channels that provide NERLYNX to patients. We refer to these as our specialty pharmacy channel and our specialty distributor channel or in-office dispensing channel.

The majority of our business flows through the specialty pharmacy channel. More specifically, in Q3, approximately 77% of our business went through this channel, with the remaining 23% of the business flowing through the specialty distributor channel. This is in line with what we reported in the Q2 earnings call as well. Moving to Slide 4. Slide 4 shows U.S. quarterly net sales of NERLYNX since FDA approval. As Alan noted, our net U.S. product sales were $43.4 million in the third quarter of 2021. This is a decrease from the $48.9 million we reported in Q2 of 2021. Look, we clearly do not want to see a decline in quarterly net sales, but I do want to provide a little more insight into this decline. Approximately $3.5 billion or 60% of this decline was due to a reduction in distributor inventory.

Moving to Slide 5. Slide 5 shows the bottles of NERLYNX sold by quarter since launch. Please note that this slide shows ex-factory bottles sold, so it represents sales into our specialty pharmacy and specialty distribution channel and not end-user demand. We sold 2,947 bottles of NERLYNX in Q3 of 2021, which is a decrease of 407 bottles from our Q2 2021 bottle sales of 3,354. Again, approximately 60% of this decline was from a reduction in distributor inventory. As we look at our overall business, we pay very close attention to our leading indicators. We already talked about HCP call activity, but another key leading indicator is NRx or new patient starts. These new patients turn into continuing patients and tend to benefit the subsequent quarter in terms of overall results. Looking back a few quarters, we saw an increase in new patient starts in Q1, which helped drive positive growth in Q2. We unfortunately did not sustain that same level of new patient starts in Q2, which impacted the Q3 results, which we are discussing now.

In focusing specifically on Q3, we did see an increase in new prescriptions of about 3% in Q3, and the commercial team is focused on improving that trend moving forward. As previously reported, we were excited to have dose escalation added to our label in late June for both our extended adjuvant indication, as well as our metastatic indication. As you can see, we saw a significant increase in the adoption of dose escalation in the third quarter were approximately 57% of patients were started on NERLYNX at a lower dose. This is a large increase from the 38.7% of patients we reported in Q2, which we believe is a result of the updated label.

We are pleased with the increasing adoption of dose escalation and believe that this increased adoption will improve the overall tolerability of NERLYNX, increase the average length of therapy and ultimately allow more patients to receive the full benefit of NERLYNX. This remains a key commercial priority, and we are working to ensure dose escalation as highlighted on pathways, formularies and dosing compendia. Our Slide 7 highlights the strategic collaborations we have formed across the globe with the goal of making NERLYNX available to more patients around the world. We continue to be pleased with our global partners and the progress being made.

In terms of updates, we recently received regulatory approval in South Korea in the extended adjuvant setting, metastatic regulatory approval in Taiwan and are happy to report that NERLYNX was launched in Peru. In addition, we are watching Mexico and Brazil closely as we're expecting regulatory decisions in the very near future. We are continuing to work very closely with our partners and look forward to future potential launches in additional countries in Europe, Latin America, Asia and the Middle East. Before I turn the call over to Maximo, I wanted to provide some additional updates that are important to our future success.

I mentioned earlier that I am happy with the evolving clinical profile of NERLYNX. We have presented or published some important clinical updates over the last year that I have discussed on prior earnings calls. I'm excited to say that we will also have a nice presence at this year's San Antonio Breast Cancer Symposium, where we have 9 abstracts that have been accepted. Continuing to present and highlight the evolving clinical profile of NERLYNX is a cornerstone of our strategy. We believe that these clinical updates, coupled with the increasing adoption of dose escalation will collectively help us strengthen the risk-benefit profile of NERLYNX and allow us to appropriately expand utilization.

Lastly, I want to let you know about some important commercial organizational changes that we are implementing. It is clear that the oncology market continues to evolve and that COVID has likely caused additional access restrictions, both from an acute and a chronic perspective. Given our inability to drive consistent growth, it does not make sense to maintain the same size and structure. I have taken actions to streamline our commercial organization not only to better align our financial resources, but as importantly, to simplify reporting structures, reduce layers of management and improve ownership and execution at the customer level. We have reduced the number of sales representatives and consequently adjusted the size of our territories to ensure appropriate coverage and to better account for the new hybrid environment, which consists of both live and virtual interactions.

We have revised our targeting to help our teams better focus their efforts where we'll have the greatest potential impact on patients, and we are building out a core strategic accounts team to better align with our largest customers. Collectively, with these changes, I expect to be able to reduce the overall commercial footprint by approximately 40%. These changes will cause some disruption within the organization, but we have worked to appropriately manage vacancies over the last few months to reduce the impact on individuals. These changes are being put in place as we speak, and I look forward to updating you all on future calls as to the impact we are seeing.

Puma was founded on a commitment to making a difference in the lives of patients and their families battling breast cancer. I want to thank the commercial team for their passion and commitment to making a difference. We know more must be done, and we will not stop until we have achieved our goals. I will now turn the call over to Maximo for a review of our financial results.

Thanks, Jeff. I will begin with a brief summary of our financial results for the third quarter of 2021. Please note, that I will make comparisons to Q2 2021, which we believe is a better indication of our progress as a commercial company and year-over-year comparisons. For more information, I recommend that you refer to our 10-Q, which will be filed today and includes our consolidated financial statements. For the third quarter of 2021, we reported a net loss based on GAAP of $44.7 million or $1.09 per share. In Q2 2021, we reported a net loss of $5.1 million. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation, we reported a net loss of $40.4 million or $0.99 per share for the third quarter of 2021. Gross revenue from NERLYNX sales was $53.8 million in Q3 2021 versus $59.3 million in Q2 2021.

As Alan mentioned, net product revenue from NERLYNX sales was $43.4 million compared to the $48.9 million we reported in the second quarter of 2021. Royalty revenue totaled $2.8 million in the third quarter of 2021 versus $4.3 million in Q2 2021. Our gross net adjustment in Q3 2021 was about 19.4%, an increase from the 17.7% gross net adjustment in Q2 2021. The increase was driven by primarily, driven by higher Medicare rebates. Cost of sales for the Q3 2021 was $10.3 million, including $2 million for the amortization of intangible assets related to our neratinib license. Cost of sales for Q2 2021 was $12 million. Going forward, we will continue to recognize amortization of milestones to the licensor or about $2 million per quarter as cost of sales.

For fiscal year 2021, Puma anticipates that the net profit revenue will be in the range of $180 million to $182 million, lower than our prior guidance. The reduction to guidance reflects our expectations for lower-than-anticipated improvement in access to HCP. We also anticipate that our gross to net adjustment in 2021 will be between 19% and 20%. Furthermore, for fiscal year 2021, we anticipate receiving royalties from our partners around the world in the range of $13 million to $14 million and license revenue in the range of $50 million to $52 million. We recognize there is a great deal of uncertainty regarding the impact of Covid-19, and this may continue to negatively impact our sales, royalties and license revenue.

We anticipate that Q4 2021 NERLYNX net sales will be in the range of $42 million to $44 million, and royalty revenues will be in the range of $3.50 million to $4.5 million. Historically, in Q4, we have seen a decrease in new patient starts as patients choose to delay starting NERLYNX until after the COVID. So we are incorporating this assumption into our Q4 net sales guidance. We anticipate that the gross to net adjustment in Q4 2021 will be approximately 19.5% to 20.5%. SG&A expenses were $26.1 million in the third quarter of 2021 compared to $39.4 million for Q2 2021, respectively. SG&A expenses included non-cash charges for stock-based compensation of $3 million for the third quarter of 2021 compared to $16.7 million for Q2 2021. Stock-based compensation expenses in Q2 2021 included approximately $13.6 million, resulting from a modification approved by stockholders in the term of an employee warrant.

Research and development expenses were $18.8 million in the third quarter of 2021 compared to $18.6 million for Q2 2021. R&D expenses included in non-cash charges or stock-based compensation of $1.3 million in the third quarter compared to $1.5 million for Q2 2021. Other expenses include an increase for our legal accrual of $24.5 million, mostly to reflect the settlement in principle arrived for the class action lawsuit in October for October of approximately $54.2 million and an $8.4 million charge related to our debt refinancing in July 2021. The third quarter of 2021, Puma reported cash burn of around $21.4 million compared to cash burn of $0.1 million in Q2.

If we exclude one-time cash flow events that impacted Q3 2021, we would have seen positive cash flow of $0.1 million. As a result of cost containment actions across the company, such as the commercial restructuring that Jeff described, Puma is expecting lower operating expenses in Q4 and ongoing for SG&A as well as in research and development. We ended the third quarter of 2021 with $87.5 million in cash, cash equivalents and marketable securities. Our accounts receivables balance at September 30 was $23.8 million. Our accounts receivable terms range between 10 and 68 days, but our day sales outstanding are about 48 days.

We estimate that as of September 30, 2021, our distribution network, maintaining approximately 3 weeks of inventory. Overall, we continue to deploy our financial resources to focus on the advance of neratinib through ongoing clinical trials and the commercialization of NERLYNX.

Thanks, Maximo. The COVID-19 pandemic has continued to present commercial challenges to Puma. However, we are hopeful that with the vaccinations that have been occurring in 2021 and will continue to occur throughout the year that will reduce these barriers in the future, which should improve the ability of our commercial team to access and interact with healthcare providers to increase their awareness of the NERLYNX' data. We also recognize the uncertainty as to when accessed healthcare providers will improve, and we are remaining conservative in our outlook for improvement and access for the remainder of the year. Puma's senior management in cooperation with the Board of Directors continues to remain focused on NERLYNX revenue and sales growth in 2021 and beyond. We look forward to updating investors on this in the future. There continues to remain a significant unmet need for patients battling breast cancer, lung cancer and other solid tumors.

We at Puma are committed and passionate about finding more effective way than helping these patients during their journey, and we will continue to strive to achieve that goal.

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

(Operator Instructions) Your first question comes from Yigal Nochomovitz with Citi.

This is Carly on for Yigal. We have 2 questions. First, we're just hoping you could elaborate further on the rationale for sort of the restructuring within the commercial organization and sort of how specifically, the overall commercial strategy is shifting, as a result of these changes? And then the second question is on 2022 and sort of as the pandemic eases, how you're thinking about the revenue trajectory heading into next year?

Carly, thanks for the questions. Jeff, would you like to handle those?

Sure. Let me talk through the restructuring of the organization, the commercial side. We talked a lot about share of voice. And let me just talk about share of voice in a broader sense. Our share of voice has not been restricted because of the number of people we have in the field, but it's really been restricted because of the changes in access largely due to COVID. So in our previous structure, we essentially had excess capacity in regardless of how hard we try to change and adjust, we were just not able to efficiently use that capacity or those resources.

Looking at a little more granular, we definitely see accounts that have restricted access to the industry. And in those cases, as you can guess, it typically does not make sense to deploy the resources the same way. It's an inefficient utilization of headcount. The continuing trend in oncology has been toward more restrictions versus less restriction. With that said, we do expect access restrictions caused by COVID to improve in the future, but the timing is uncertain. But ultimately, we're going to see some accounts continue to restrict access. Others are going to open back up to a more hybrid situation, virtual and live. If you can guess, you can be more efficient with resources there, and there'll be some that open up fully. And that's the ones we like.

Our new structure should allow us to increase call activity from our current levels, and we believe we can be more effective with better targeting in our evolving clinical data and also with the reduced layers of management, we think we can execute in a more efficient and effective manner. I will end, though, by looking at Alan across the table for me that if we get to a position where we're not able to fully engage the customers the way we want from a capacity standpoint, I can make a very simple business case and we can adapt very, very quickly moving forward.

So Carly, let me add a little to that. We're certainly recognizing the challenges for our reps to interact with healthcare providers. And as Jeff had said, if we compare kind of our HCP calls, to grow they were pre-COVID, it's down about 40%. So if you want to kind of look at it as a quantitative aspect of the cost per rep, that number is down 40%. So what we're kind of doing here is, putting our cost per rep back to where it was pre-COVID by just reducing the number of reps. Now Jeff is absolutely right. If we see in 2022 that things are opening up, and there is a need to add reps and go back to what we have previously we're happy to do so. It's just we're recognizing the need to be fiscally responsive to fiscally responsible to the shareholders of the company. And if we see the need to grow that fine, it's just given the limited access, it just doesn't make sense to have that infrastructure right now.

Carly, one other comment here, which is we are building out a strategic accounts team and capability, which we previously really haven't had. And we think it's really important that we'll be able to better align with some of our largest, most important customers going forward. And clearly, a large potential or large part of the opportunity resides with those customers. So we see that as a better way of moving forward as well.

And do you want to handle the 2022?

Carly, can you repeat that question? I'm sorry, I missed the second part of that question.

I was just asking about 2022 and just preliminary thoughts on sort of the revenue trajectory into next year?

So I don't know that we've reduced -- we've publicly stated anything about 2022 revenue expectations. But obviously, I'm hoping that we can put -- we can leverage the new data that we have, the evolving clinical data. We're hoping that this new organizational structure will play out to be more efficient and effective. And obviously, we're working very hard to increase our call activity and engagement with customers. The goal is to drive growth, and that's what we're continuing to try to do.

And Carly, in terms of potential new opportunities, obviously, the mutations would be 1 in terms of increasing awareness in those. And the other is, we have an ongoing trial, which is the TBCRC-022, which is looking at neratinib in patients with brain mets in combination with Kadcyla. We're looking for that data to be presented sometime in the first half of 2022. My guess would be ASCO. And certainly due to the huge unmet medical need in HER2-positive breast cancer for patients with brain mets, and we're already in the NCCN guidelines or brain mets. There is a possibility you're going to see uptake of NERLYNX there.

Your next question comes from Marc Frahm with Cowen.

One clarification, just on the headcount reductions on the sales force. I think you said that footprint would be down 40%. Is that just that headcount is down 40%? Should we also expect expenses to be 40% or kind of one-to-one relationship there? Or is there a little bit of a disconnect? And then I think also in your comments, you mentioned the OpEx will go down, not just for SG&A, but also R&D. Can you quantify that at all?

Yes. So in terms of Jeff's comment on the 40%, the headcount would be commercial individuals that he was talking about, being down 40%. In terms of the expenses, that won't be down 40%. Maximo, do you want to give some guidance on that?

Yes. Our expectation is quarter-over-quarter, so Q4 versus Q3, expenses will go down 10%, operating expenses in total.

And Marc, just so you know, R&D expenses will go down just because we don't have a lot of trials ending, but also the way our reporting structure is lower record expenses, the medical affairs department, which is technically commercial, their expenses get reported through research and development. So although it's a commercial group, just the way it's structured, their expenses come in through research and development.

And then I'm guessing there's often some one-time charges in there. Should that -- is that 10% reduction in Q4 likely to increase a bit more as we get into 2022? And the one-time charges aren't in the results as well?

We're not aware of any one-time charges for 2022. So I -- from an R&D perspective, we had ones like Maximo said in the last quarter, the biggest of which was a payment to the licensor. We had payment to Pfizer for European approval. That's the main one.

I was meant, one-time charges associated with the resizing of the sales force.

With the restructuring.

Yes. So the one-time charge, we expect about $1.2 million for the quarter. So that's included in our estimate.

And then maybe from a data perspective, Alan, thanks for the review of the design of the HER2 mutation study in breast cancer, and the analysis that was done on the 7 patients, the first 7 patients within the Simon 2-stage design. Is that the exact data set that we will see at San Antonio Breast? Or should we expect a more updated data set with potentially more follow-up on those patients and maybe even some additional patients since the trial continued?

Yes, that is a good question. We do not know the answer to that right now. Yes. I apologize. My memory isn't as good that once was. I recently saw that presentation. I don't -- I know it was the 7 patients from the triplet arm. And the updated follow-up on them. I don't know if we -- like the patients enrolled post randomization, I don't know if they'll be part of that. It's a poster presentation, and that's part of information that its poster presentation. I don't know that -- I don't remember if we're going to put in anything else from post randomization. So I apologize, I don't have that right now.

No worries. I'll keep track up.

Your next question comes from -- I apologize, it looks like we have Paul Choi with Goldman Sachs.

This is Kate on for Paul. We have 2 of them. First, for the EGFR lung study, what additional data will the FDA require beyond the SUMMIT data to support an accelerated approval? And then second, what sort of feedback have you gotten from physicians regarding the new dose escalation regimen?

Let me take the first one. In terms of the EGFR loan, we are specifically looking at patients with exon 18 mutated, exon 18 EGFR mutated lung cancer, who have already failed an EGFR TKI. To answer your question, what will the FDA require? I don't think we know the answer to that right now because we've not had a discussion with them post the data, if you will, to know what they would require. I imagine, I think we have in our milestones that we're going to plan a meeting with the FDA to discuss that. My speculation would be that we have certainly seen a lot of these rare mutations in lung that the FDA has required a single-arm trial, I think, if I remember correctly, it's usually around 50 or 100 patients or so. I would assume the data from SUMMIT would suffice for that, so we could just expand into that. That would be my assumption. I don't have any concrete words from FDA on that. The trial has been enrolling very well. I think we're close to like 30 patients in that arm already. So we're well on our way.

I just don't -- I can't give you any feedback because we even had that specific discussion with the FDA. On your second question on the dose escalation, I will answer it, and Jeff, you can add in. The universal feedback we have got has been very favorable. They definitely have said that it makes a notable difference in the grade 3 diarrhea rate and also the overall tolerability of it. And I would say we continue to hear very, very positive feedback on that. Jeff, would you like to add?

Yes, Alan, I'll try not to be redundant. I would say the same thing. We've seen very good feedback from customers. The evidence really is the significant uptick we saw in Q3. And as you can guess, that is a blended number for all of Q3. So we continue to see weekly and monthly, very nice uptake of dose escalation. That data is based off of the control data, and that's why the FDA-approved it, that showed the greater than 60% reduction in grade 3 diarrhea and greater than 80% reduction in discontinuations. So customers believe in that data, they're seeing early feedback that is very positive as they treat patients. It's helping the nursing staff as well. And we think, ultimately, it will help patients stay on drug and get the full benefit of NERLYNX, which we obviously believe is very, very important to us.

Our next question comes from Geoff Meacham with Bank of America.

This is Alec on for Geoff Meacham. So our first one is, when you look at the commercial access disruptions caused by COVID, how do you see the script potentially recovering once the pandemic subside? I think it will be a spike quarter-over-quarter? Or do you think it will be maybe something a little bit more gradual. And the second one is, any color that you can provide on the global partner launches during the quarter? In terms of feedback you've been receiving from the field? So those are my 2.

Yes, Jeff, would you like to answer both those, please.

Sure. Let me give it a shot. So Alex, I think the first comment is, let me go on record to say that I've been wrong on COVID every step of the way. We've been in the ebbs and flows that spikes along the way, so that's been challenging. But as we've seen COVID across the country, what we see is pockets and spikes, we see some loosing of restrictions, some go in the other direction. So everything that we're counting on there in our forecast is that we're going to see a slow, steady, hopefully, reduction in COVID cases and a slow steady increase in access. That's what we would count out. We obviously would hope for a much greater spike, but that's just not what we've been seeing as we've monitored over the last 17 months here.

And if I can just add to that, real quick, Alex. I think we were optimistic early in 2021 that with the vaccinations and COVID numbers dropping, that we would start to see access improving. And as Jeff said, we're wrong. We just have not yet seen that. At some juncture, I think we will. It's just very hard to predict when that will be. And Jeff, do you want to answer the one on the global partner?

Yes, Alex, obviously, we're -- as we mentioned in the upfront conference, we're very pleased with the partnership, our global partners. They're doing a nice job of moving NERLYNX to regulatory approval and launches. We were excited that NERLYNX was launched in Peru just recently. We expect it to be launched in metastatic in Taiwan soon. And as I stated, we're excited to see what happens in Mexico and Brazil. The initial launches from the customers on the ground has been positive. There's unmet need across the globe. And we think NERLYNX fills a nice niche in that unmet need. So we're seeing some nice slow steady uptake that is important to us. Yes.

And Alex, I can add to that. We've been very lucky to have some really great partners, our largest, which is PFR who's been doing a wonderful job of it, and we've been very pleased with their execution.

Your next question comes from Gena Wang with Barclays.

This is Sheldon on for Gino. Maybe one on the TBCRC Kadcyla combo data. So this is in during that patient population and what type of endpoints would you present? And could you talk about the benchmark and regulated paths? And your thoughts on the future commercial landscape in this indication, given that right now are other drugs in the second and third-line also showed pretty strong activity in the CNS.

Yes. Let me take that question. So the TBCRC-022 trial is a trial that originated with Pfizer, when we license the drug we took it on, and we have expanded it. The trial originally looked at neratinib alone in patients with HER2-positive metastatic breast cancer that had brain mets. We expanded it to look at the combination with capecitabine, which is the [mod A], and then we stated again to look combination with Kadcyla. The reason we were looking at combination with Kadcyla is that the preclinical data shows that neratinib being an irreversible HER2 inhibitor, ends up increasing internalization of the HER2 receptor. So you end up bringing more of the -- when you combine with an ADC, you end up bringing more of the ADC inside the cell. And so you have kind of a synergistic effect.

We have a trial of that combination, neratinib plus Kadcyla called SP10, which we reported at ASCO, a 60% response rate, which is more trial than we expected, which we believe is a testament to that. In terms of the patients in TBCRC-022, these are all patients with HER2-positive breast cancer with brain mets. It's been -- again, it's neratinib With Kadcyla, and there are 2 cohorts of patients. One of the patients who have previously been treated with Kadcyla, the second is the patients who have not been previously treated with Kadcyla. My understanding from the investigators is it is likely both of those cohorts where we're reporting out, most likely at ASCO next year.

Because of the timing of when the trial has been going, I would expect we would also have a number of patients in the trials we've been treated with some of the newer agents like in HER2 or to Kadcyla. In terms of what I would say is the benchmark, you're looking at patients who are late stage, failed all their existing therapies, there's really no treatment for these patients because other than to Kadcyla, I don't think there's any drug that actually has HER2-positive metastatic breast cancer with brain mets in their label or even has much data on it.

I would say anything north of a 20% response rate, I think, would be viewed as encouraging. I don't know that we're looking to go run a large Phase 2 trial in this indication, but we would certainly look to try to submit it to the NCCN guidelines. As you're aware, neratinib is already in the NCCN guidelines for brain mets. So I think we would look to update those guidelines with this new data.

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

Thank you for your interest in Puma Biotechnology. As a reminder, this call may be accessed via a replay of the webcast at pumabiotechnology.com beginning later today. Have a good evening.

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