Puma Biotechnology Q2 2024 Earnings Call Transcript

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August 1, 2024

There are 7 speakers on the call.

Operator

My name is Diego, and I will be your conference call operator today. At this time, all participants are in a listen only mode. After the speakers' formal remarks, there will be a question and answer session. As a reminder, this conference is being recorded.

Operator

I would now like to turn the call over to Mary Anne Ohanesen, Senior Director of IR for Puma Biotechnology. You may begin your conference.

Speaker 1

Thank you, Diego. Good afternoon, and welcome to Puma's conference call to discuss our financial results for the Q2 of 2024. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma Biotechnology Maximo Noguez, Chief Financial Officer and Jeff Ledwick, Chief Commercial Officer. After market close today, Puma issued a news release detailing Q2 2024 financial results. 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.

Speaker 1

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 Puma'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 SEC from time to time, including our annual report on Form 10 ks for the year ended December 31, 2023. 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, August 1, 2024.

Speaker 1

Puma 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 as substitute for, our GAAP financial measures. Please refer to our Q2 2024 news release for a reconciliation of our GAAP to non GAAP results. I will now turn the call over to Alan.

Speaker 2

Thank you, Mary Anne, and thank you all for joining our call today. Today, Puma reported total revenue for the Q2 of 2024 of $47,100,000 Total revenue includes product revenue net, which consists entirely of NERLYNX sales as well as royalties from our sublicensees. Product revenue net was $44,400,000 the Q2 of 2024, which was an increase from the $40,300,000 reported in Q1 of 2024 and below the $51,600,000 reported in Q2 of 2023. Product revenue for the Q2 of 2024 was impacted by approximately $2,300,000 of inventory drawdown at our specialty pharmacies and specialty distributors. Royalty revenue was $2,700,000 in the Q2 of 2024 compared to $3,500,000 in Q1 of 2024 and $3,000,000 in Q2 of 2023.

Speaker 2

We reported 2,515 bottles of NERLYNX sold in the Q2 of 2024, an increase of 105 bottles from the 2,410 bottles sold in Q1, 2024. Q2, twenty twenty four, we estimate that inventory decreased by about 132 bottles. In Q2, twenty 24, new prescriptions were down approximately 9% compared to Q1 twenty twenty four and total prescriptions were up approximately 3% compared to Q1 of 2024. Jeff will provide further details in his comments and slides. I will now provide a clinical review of the quarter and then Jeff Ludwig will add additional color on Yearling's commercial activities.

Speaker 2

Maximo Nuganes will follow with highlights of the key components of our financial statements for the Q1 of 2024. As we have previously discussed, Puma has initiated a Phase 2 study of our investigational drug alicertib to confirm the efficacy of alicertib monotherapy in patients with small cell lung cancer with biomarkers where Aurora Kinase pathway plays a role. The goal is to correlate the efficacy in these biomarker subgroups in the ALISCA LUNG-one study to the efficacy that was previously seen in the biomarker subgroups from the randomized trial of paclitaxel plus alisertib versus paclitaxel plus placebo that was published in the Journal of Thoracic Oncology in 2020. If the efficacy and biomarker data are comparable from the two studies, the company believes it could represent a potential accelerated approval strategy and would engage FDA to discuss this further. As investors will remember, alacertib was previously tested as a monotherapy in patients with small cell lung cancer and the results of this trial were published in Lancet Oncology in 2015.

Speaker 2

In this trial, alisertib was administered as a monotherapy to 48 patients with small cell lung cancer. The safety results from the study showed that 37 percent of the patients experienced Grade 3, four neutropenia, 17% experienced Grade 3, four anemia, 13% experienced Grade 3, four leukopenia and 10% experienced Grade 3, four thrombocytopenia and 13 patients discontinued treatment due to adverse events. It is believed that these adverse events are due to the alicertib mechanism of action as a cell cycle inhibitor. The efficacy results from the trial showed that for the 36 chemotherapy sensitive the objective response rate was 19% and the PFS was 2.8 months. And for the 12 chemo therapy resistant or relapsed patients, the objective response rate was 25% with a PFS of 1.4 months.

Speaker 2

When Puma licensed Alisertib, we stated that one of the focuses was to try to reduce the adverse event profile of the drug and more specifically the Grade 3, four neutropenia by giving prophylactic G CSF with the administration of alacertib. This is being instituted in the Eliska LUNG-one trial and we look forward to seeing the results of this trial to better assess whether or not the prophylactic use of G CSF improved the adverse event profile of the drug. We'll also be looking at the efficacy of alacertib in the Elisko 1 trial Elisko Lung 1 trial and more specifically we'll be looking at response rate and PFS both by type of relapse after treatment, sensitive versus resistant refractory and by small cell lung cancer molecular subtype, ASCL1, neuro D1, PoU2, F3, and YAP1. As mentioned previously, we will be also be performing a biomarker analysis on the patients in the ALISCA-one study Mung-one study in order to see if the efficacy of alacertib monotherapy in patients with small cell lung cancer correlates with biomarkers where the Aurora kinase pathway plays a role. There are currently 12 patients enrolled in the ALISCA LUNG-one trial with several in screening and prescreening.

Speaker 2

We anticipate that we will be able to share interim data from this trial with investors in late 2024. In addition, 2 clinical presentations on alicertib were made at the 2024 ASCO Annual Meeting in early June. Investors will remember that the Phase 2 trial referred to as TBCRC41, which was a Phase 2 trial of alicertib monotherapy versus alicertib plus endocrine therapy in patients with HER2 negative hormone receptor positive metastatic breast cancer, which was published in JAMA Oncology in 2023. As part of this trial, an analysis of biomarkers was performed in order to determine if the efficacy of alacertib in patients with HER2 negative hormone receptor positive metastatic breast cancer correlates with any biomarkers. Some of the biomarker data from this trial was presented on a poster at the 2024 ASCO Annual Meeting.

Speaker 2

We anticipate the initiation of the ELISCA Breast 1 study, a Phase 2 trial of alacertib in combination with endocrine treatment in patients with chemotherapy naive HER2 negative hormone receptor positive metastatic breast cancer in Q4 of 2024. In addition, there is an ongoing investigator sponsored trial of alacertib given in combination with osimertinib in patients with metastatic EGFR mutant non small cell lung cancer. More specifically, patients with metastatic EGFR mutant non small cell lung cancer are treated with osimertinib and then at the time of progression, alicertinib is added to osimertinib in order to see if alicertinib can overcome Interim data on this trial was previously presented at ASCO prior to Puma licensing this drug. Updated data from this trial was presented as a poster presentation at the 2024 ASCO Annual Meeting. For the 21 evaluable patients, the investigator assessed overall response rate was 9.5% and the disease control rate was 81%.

Speaker 2

The median PFS for all patients was 5.5 months, while the median OS was 23.5 months. For patients with TP53 mutations, n equals 9, The overall response rate was 0% and the disease control rate was 66.7%. For the patients who were T53 wild type, which was 8 patients, the overall response rate was 25% and the disease control rate was 87.5%. For patients with TP53 mutations, progression fee survival was 3.7 months. And for patients who are T53 wild type, the progression fee survival was 8 months.

Speaker 2

The hazard ratio for PFS was 0.42 with a p value of 0.05. Based on these interim results, the trial has been amended such that it will limit future enrollment in the trial to patients who are TP53 wild type. We look forward to updating investors on this data in the future. As previously mentioned on prior earnings calls and in response to investor questions, Puma continues to evaluate several drugs to potentially in license that would allow the company to diversify itself and leverage Puma's existing R and D, regulatory and commercial infrastructure. The company will keep investors updated on this as it progresses.

Speaker 2

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.

Speaker 3

Thanks, Alan. Appreciate it. And thanks to everyone for joining our Q2 earnings call. Before I move into the commercial review, just a reminder that I will be making forward looking statements. Let me start out by reiterating our strategy.

Speaker 3

The commercial team remains largely focused on the extended adjuvant indication where the majority of NERLYNX sales and opportunity exists. Our commercial messaging is focused on HER2 positive patients that are deemed to be at higher risk of reoccurrence. A significant portion of these early stage breast cancer patients are treated in the community oncology setting and are being seen across a large number of community oncologists. Given this distribution of patients, our sales and marketing teams are focused on efficiently increasing reach and frequency for both personal and non personal promotion with an emphasis on trying to reach customers when decisions are being made for the extended adjuvant setting. HCP calls in the 2nd quarter increased about 6% quarter over quarter, but declined about 8% year over year.

Speaker 3

The year over year decline was driven by the timing of vacancies. In the Q2, greater than 80% of calls were live interactions. We are continuing to evaluate new data and vendor partners that would allow us to operate more efficiently and effectively with the goal of balancing the needs of NERLYNX with the goals of the broader organization. Let me transition now into some of the commercial slides where I will provide some additional specifics around performance. Once I have finished, I will turn the call over to Maximo for a more detailed review of our financial results.

Speaker 3

Slide 3 provides an overview of our distribution model. This model has not changed and remains separated into 2 distinct channels, the specialty pharmacy channel and the specialty distributor channel or in office dispensing channel. We do typically see quarterly fluctuations, but the majority of our business flows through the specialty pharmacy channel. In Q2, about 72% of our business went through the specialty pharmacy channel and the remaining 28% went through the specialty distributor channel. As a comparison, in Q1, we reported about 74% of our business going to the specialty pharmacy channel and the remaining 26% of our business going to the specialty distributor channel.

Speaker 3

Turning to Slide 4, NERLYNX net revenue in Q2 was $44,400,000 which is a $4,100,000 increase from the $40,300,000 we reported in Q1 of 'twenty four and a $7,200,000 decrease from the $51,600,000 we reported in Q2 of 2023. Inventory changes will impact these comparisons, so let me provide some additional information. In Q2 of 2024, we estimate that inventory decreased by about 2,300,000 As a comparison, we estimate that inventory decreased by about $2,000,000 in Q1 and decreased by about $1,500,000 in Q2 of 2023. Slide 5 shows Q222ex factory bottle sales and also provides both a year over year and a quarter over quarter comparison. In Q2 of 2024, NERLYNX ex factory bottle sales were 2,515, which represents a 4% quarter over quarter increase and a 17% year over year decline.

Speaker 3

Let me again provide more specifics around inventory changes. We estimate that inventory decreased by about 132 bottles in the Q2 of 2024. As a comparison, we estimate that inventory decreased by about 121 bottles in Q1 of 2024 and decreased by about 90 bottles in Q2 of 'twenty three. Now let me share some additional metrics and insights into our Q2 performance. In Q2, we saw new patient starts or NRx decrease by about 9% quarter over quarter and decline about 10% year over year.

Speaker 3

In terms of total prescriptions or TRx, we saw a 3% increase quarter over quarter and a 14% decline year over year. Overall demand increased in the 2nd quarter by about 5% quarter over quarter and declined about 15% year over year. Q2 performance was negatively impacted by the decline in enrollments we discussed in our Q3 and Q4 earnings call. As a reminder, we saw increased softness in enrollments that largely occurred in the 1st part of Q3 last year. Enrollments are obviously an important leading indicator as enrollments turn into new patient starts and new patient starts turn into refills, which impacts demand in subsequent quarters.

Speaker 3

In Q2, enrollments decreased about 5% quarter over quarter and about 11% year over year. The 2nd quarter quarter over quarter decline follows the typical pattern we see with enrollments growing in Q1 quarter over quarter, which we saw this year, but then declining quarter over quarter in Q2. As a reminder, this pattern occurs as some patients delay starting therapy in the 4th quarter to avoid side effects around the holidays. This pattern decreases enrollments in the 4th quarter, but subsequently increases enrollments

Speaker 2

in the

Speaker 3

Q1. Enrollments remain a top priority and the team is focused on improving the year over year enrollment comparisons. Turning to Slide 6. Slide 6 highlights the quarterly adoption of dose escalation since NERLYNX launch. In Q2 approximately 2 thirds of patients started NERLYNX at a reduced dose.

Speaker 3

This is similar to what we reported in Q1 of this year. The benefits of utilizing dose escalation to initiate therapy with NERLYNX continues to be an important part of our commercial messaging. The CONTROL trial showed a significant reduction in Grade 3 diarrhea and improved persistence and compliance when patients were started at a lower dose. We track multiple cohorts of patients and do see improved compliance when patients are started using dose escalation. Slide 7 highlights the strategic collaborations we have formed across the globe.

Speaker 3

In Q2, NERLYNX received regulatory approval in Brazil in the metastatic setting and regulatory approval in Saudi Arabia in the extended adjuvant setting. In addition, NERLYNX was just recently launched in South Africa, also in the extended adjuvant setting. We truly appreciate the work being done by our partners and look forward to supporting their continued success moving forward. I'd like to wrap up by thanking my Puma colleagues for their dedication. The team remains passionate about making a difference in the lives of patients and their families battling cancer.

Speaker 3

We are committed to being more efficient and effective with our resources and also committed to balancing the short term and long term priorities of Puma and its shareholders. I will now turn the call over to Maximo for a review of our financial results. Maximo?

Speaker 4

Thanks, Jeff. I will begin with a brief summary of our financial results for the Q2 of 2024. Please note that I will make comparisons to Q1 2024, which we believe is a better indication of our progress as a commercial company refiled today and includes our consolidated financial statements. For the Q2 of 2024, we reported a net loss based on GAAP of $4,500,000 or $0.09 per share. This compares to a net loss in Q1 2024 of $4,800,000 or $0.10 per share.

Speaker 4

On a non GAAP basis, which is adjusted to remove the impact of stock based compensation expense, we reported a net loss of $2,500,000 or $0.05 per share for the Q2 of 2024. Gross revenue from Neliq sales was $55,800,000 in Q2 2024 and $52,600,000 in Q1 2024. As Alan mentioned, net product revenue from Nellix sales was $44,400,000 an improvement from the $40,300,000 reported in Q1 2024. Higher demand and lower gross net adjustments drove the higher sales versus Q1 2024. Inventory drawdown by our distributors was approximately $2,300,000 in Q2 versus approximately $2,000,000 of drawdown in Q1 2024.

Speaker 4

Royalty revenue totaled $2,700,000 in the Q2 of 2024 compared to $3,500,000 in Q1 2024. Our gross to net adjustment in Q2 2024 was about 20.4% compared to the 23.4% gross to net adjustment reported in Q1 2024. Lower Medicaid share, coverage GAAP and lower co pay were the main drivers of the decline versus Q1 2024. COFTOS sales for Q2 2024 was $10,700,000 including $2,400,000 for the amortization of intangible assets related to our neratinib license. Cost of sales for Q1 2024 was also 10,700,000 dollars Going forward, we will continue to recognize amortization of milestones in the licensor of about $2,400,000 per quarter ex cost of sales.

Speaker 4

For fiscal year 2024, Puma continues to anticipate that net NERLYNX product revenue will be in the range of $183,000,000 to $190,000,000 We also anticipate that our gross to net adjustment for the full year 2024 will be between 21% 22%, higher than 2023 due to the impact of the Inflation Reduction Act and higher expected Medicaid rebates. In addition, for the fiscal year 20 receiving royalties from our partners around the world in the range of $30,000,000 to $33,000,000 We expect license revenue in 2024 in the range of $1,000,000 to $2,000,000 We also expect that net income for the full year will be in the range of $12,000,000 to 15,000,000 dollars We anticipate that for Q3 2024, Nelim MEX product revenue will be in the range of $50,000,000 to $53,000,000 Please note that the Q3 net product revenue guidance includes almost $6,000,000 of product sales to 1 of our global partners as well as U. S. Net revenue, which we expect to be in the range of $44,000,000 to $47,000,000 The sales to our global partners will also contribute to the large royalty revenue that we expect in Q3. We expect Q3 royalty revenues will be in the range of $20,000,000 to $22,000,000 and we anticipate no license revenue.

Speaker 4

We further estimate that the gross to net adjustment in Q3 2024 will be approximately 18.5 percent to 19.5%. Puma anticipates Q3 net income between $11,000,000 $13,000,000 We anticipate that Puma will be net income positive for the full year. SG and A expenses were $25,000,000 in the Q2 of 2024 compared to $21,800,000 for the Q1 of 2024. SG and A expenses included noncash charges for stock based compensation of $1,400,000 for Q2 2024, down from $1,500,000 in Q1 2024. Research and development expenses were $13,600,000 in the Q2 of 2024, unchanged from the Q1 of 2024.

Speaker 4

R and D expenses included noncash charges for stock based compensation of $600,000 in the Q2 of 2024, down from $900,000 from the Q1 of 2024. On the expense side, Ooma continues to anticipate flat total operating expenses in 2024 compared to 2023. More specifically, we anticipate SG and A expenses to decrease by 8% to 12% and R and D expenses to increase by 16% to 19% year over year. In the Q2 of 2024, Puma reported cash burn of approximately $10,300,000 This compares to cash earned of approximately $11,200,000 in Q1 2024. Please note that during Q2, we made our first principal loan payment of $11,100,000 related to our obligation with Athyrium.

Speaker 4

As a result of this, our total outstanding principal debt balance decreased from $100,000,000 to approximately 89,000,000 dollars At June 30, 2024, we had approximately $96,800,000 in cash, cash equivalents and marketable securities versus about $96,000,000 at year end 2023. Our accounts receivable balance was $28,100,000 Our accounts receivable terms range between 10 68 days, while our days sales outstandings are 46 days. We estimate that as of June 30, 2024, our distribution network maintained approximately 3 weeks of inventory. Overall, we continue to deploy our financial resources to focus on

Speaker 2

Thanks, Maximo. Puma senior management in cooperation with the Board of Directors continues to remain focused on NERLYNX sales trends in 2020 4 and beyond and recognizes its fiscal responsibility to shareholders to continue to maintain positive net income. In the Q4 of 2021, we implemented a reduction in expenses with the goal of reducing expenses in order to maximize operating cash flows. We believe the positive net income that was seen in 2023 resulted from these expense reductions. The expense reductions that we have previously performed and continue to perform are also a major contributor to the positive net income that the company is guiding for full year 2024.

Speaker 2

The company remains committed to continuing to achieve this positive net income and will continue to reduce expenses if needed to achieve this in the future. We look forward to updating investors on this in the future. It 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 ways at helping these patients during their journey, and we will continue to strive to achieve that goal. This concludes today's presentation.

Speaker 2

We will now turn the floor back to the operator for Q and A. Operator?

Operator

We will now begin the question and answer Your first question comes from Mark Fryham with TD Cowen. Please proceed with your question.

Speaker 5

Thanks for taking my questions. Maybe just on the planned disclosure around Palesca 1 in Q4 or late in the year. Leon, can you just walk through thanks for the granularity that we don't often see on patient enrollment heading into it. But 9 is not a ton of patients and maybe response data on just 9 patients wouldn't be the most meaningful. I know you intend to have a few more.

Speaker 5

How kind of rigid is that timeline to presenting data no matter what in Q4 versus is it really in your head a number of patients that you want to get to and you're hoping that's Q4, but if it happens to be Q1, you'd get you'd push it out? That's one question. And then the other is just can you just remind us the latest on some of these subsets based on the genetic background? Just what do we know about the outcomes for those patients on kind of standard of care and therefore how to comp your data when you do show it for those subsets?

Speaker 2

Yes, Mark, thanks for the question. So first of all, Mark, there's 12 patients currently enrolled, not 9. Sorry, 12. Yes, 12, yes. And then several are in screening.

Speaker 2

So look, it's August. So if we present the data, let's say, in December, obviously, more time to get some more patients too, right? So, will it be 12, will it be 15, don't know. I would rather be a good steward of shareholder capital and present the data even if early, just so that people know what's happening, rather than kind of just delay it till we get to some magic number or something. We obviously have the 2 things we're looking at.

Speaker 2

We have the safety aspect of it and the efficacy aspect of it. As you'll remember, in the trial that was done and published in Journal of Thoracic Oncology, which was the paclitaxel plus alacertib against paclitaxel placebo, we would anticipate that would be our future randomized trial for full approval. In that study from the safety perspective, I don't have the numbers in front of me, but it's like I remember this track, it was like 30% of the patients couldn't tolerate the paclitaxel plus alicertib combination due to neutropenia. So that obviously compromised that arm. So clearly, using the prophylactic G CSF, we can reduce the neutropenia and improve the tolerability.

Speaker 2

I would obviously think that would portend for a more favorable future randomized trial there as well. In terms of the efficacy side of it, so we mentioned the previous data in Lancet Oncology. The main difference between those patients and the ones we're

Speaker 4

testing now is, at the time the

Speaker 2

Lancet Oncology study was going on, incorporated

Speaker 3

into

Speaker 2

standard care. So, I don't think

Speaker 4

any of those patients have

Speaker 2

seen prior IO. Incorporated into standard care. So, I don't think any of those patients have seen prior IO. All of our patients will have seen that because now that's standard of care. Does that change anything?

Speaker 2

I don't know why it would, but that's why you do these studies obviously. Now in terms of the various biomarkers and subgroups etcetera, I mentioned a lot of the genetic subgroups. I don't know from a regulatory perspective, how much those will play a role. So that would be a future discussion with FDA. In terms of the biomarkers that we are involved in the Aurora Kinase pathway, such as C MYC, such as RB1 loss and things like that.

Speaker 2

If you go and look at the randomized study, which was the study of the general thoracic oncology paclitaxel alcer against paclitaxel alone, the patients who had those biomarkers, whether it was a CMIC amplification or a RB1 loss of function mutation, my recollection is those tended to do worse than the ITT group. So, that should I would perceive select for a higher risk group of patients.

Speaker 6

Okay. Thank you.

Speaker 2

Sure.

Operator

Thank you. And this concludes our question and answer session. I would like to turn the conference back to Mary Anne for closing remarks. Actually one moment, one question just came up. My apologies, we do have one that just came up.

Operator

And that question comes from Ed White with H. C. Wainwright. Please state your question.

Speaker 6

Hi, thanks for taking my questions. Just a question on sales in the U. S. Guidance is given for NERLYNX sales on the Q1 results conference call. It was changed during the year during the quarter and then you just reported numbers that actually hit the original numbers.

Speaker 6

I'm just wondering what was changing within the quarter that had to change your guidance? And then the second question is just on the royalty number. You're having a huge bolus of revenues expected for royalties in the Q3. I'm just wondering what's the reasons behind that? Thank you.

Speaker 6

Yes.

Speaker 2

Hi, Ed. It's Alan. On your first comment, we didn't change our Q1 revenue guidance for NERLYNX. Can you clarify that? We have no we're all looking at each other very puzzled here around the table.

Speaker 2

We never changed our guidance. So can you clarify that?

Speaker 6

I'm sorry. I had that you had original guidance that you gave in the Q1 for the Q2 of $43,000,000 to $45,000,000 for the Q2. And then during the quarter in a PowerPoint presentation that you had on your website, the guidance was changed to $38,000,000 to $40,000,000 unless I'm mistaken and maybe I was looking at an older presentation.

Speaker 2

Yes. We never changed it. Okay. Thanks, Alan. That's my mistake, Alan.

Speaker 2

I apologize. We checked the website. I don't have any I apologize that I'm not I was not aware there was a presentation put on a website doing that. If it was, it was an error. We never changed the Q2 revenue number.

Speaker 2

There was no revenue guidance change. So I apologize if for some reason that happened. We will check on that error. It was It was never it may have been some older presentation or something that somehow got linked somewhere or something, but we never changed our Q2 revenue U. S.

Speaker 2

NERLYNX revenue guidance. Any Q2 guidance was never changed from what we put out on our Q1 earnings call.

Speaker 6

Okay. Thanks, Alan, for the clarification.

Speaker 2

Yes, I know. It's my apologies for the confusion. I wish I was aware of that earlier. I didn't know that. So again, we'll check on that.

Speaker 2

We'll get back to you. Thank you for bringing it to our attention. On the second one, which is the bolus in the royalties, For all of our the various regions, we get our royalties at basically as they're sold, if you will. So, it's kind of direct. The one outlier is in China, which is that we get our sales kind of when they're sold into the channel.

Speaker 2

And so that's what gets this lumpiness. So kind of if you look at our historical royalties, you'll always see like once a year or so this big bolus and that's usually just one big shipment into China. So, it's not based on end user demand. It's more based on sales into the channel. So, we get this lumpiness.

Speaker 2

It happens once a year. I realize it creates some confusion, but that's the nature of the way the agreement is set up.

Speaker 3

Okay. Thanks, Alan.

Speaker 2

Sure.

Operator

Thank you. And that concludes our question and answer session. I would like to turn the conference back to Mary Anne for closing remarks.

Speaker 1

Thank you for joining us today. As a reminder, this call may be accessed via replay of the webcast at pumabiotechnology.com beginning later today. Have a good evening.

Operator

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.

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Earnings Conference Call
Puma Biotechnology Q2 2024
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