Puma to price new cancer med Nerlynx at a higher-than-expected $10K per month: report

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Puma's breast cancer drug Nerlynx may be a bigger blockbuster than initially predicted, analysts say.

Shares of Puma Biotechnology have tripled since the start of the year to more than $95, as the Los Angeles company gets set to launch its debut drug, Nerlynx (neratinib) for HER2-positive breast cancer. Now analysts are predicting premium pricing for the new drug that they believe will drive shares even higher.

On Wednesday, Cowen Group analyst Chris Shibutani sent a note to investors saying he had been tipped off that Nerlynx is likely to bear a sticker of $10,500 a month. He raised his target price on the stock to $120. Shortly after, Leerink analysts set their target price at $125, predicting strong demand for the new drug. Both prognosticators suggest it's likely Puma will be acquired.

Nerlynx was approved by the FDA on Monday amid questions about both safety and efficacy, so a surefire triumph seemed less than certain. The company expects the drug to be available in September, but it has not disclosed the price. Puma refused to comment on the pricing reports.

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Nerlynx was approved for a year's worth of daily dosing to prevent a recurrence of breast cancer in women previously treated with Roche’s Herceptin. Analysts had predicted the drug would peak around $1.25 billion a year in sales, but the FDA’s nod turned out to be broader than most had expected. The label was not restricted to hormone-receptor positive patients, even though the biggest benefit during clinical trials was seen in those women.

And there will be no dreaded black-box warning about side effects, despite concerns about severe diarrhea seen in 40% of the patients in the trials. Cowen’s Shibutani reported that PriceRx, an independent source of drug pricing information, provided the estimated wholesale acquisition cost of $10,500 a month for Nerlynx, or $126,000 a year—40% higher than he had previously predicted. Although pricing is expected to be 25% to 40% lower overseas, he wrote, the higher-than-expected launch price in the U.S. will have a positive ripple effect on pricing in those markets. Nerlynx is currently under review in Europe, with a recommendation expected by the end of the summer.

There are still some lingering concerns, however, about whether oncologists will use the new drug in as many patients at the FDA’s label allows. In one study, the drug seemed to provide only a modest overall benefit: 94.2% of patients taking it did not suffer recurrence or death after two years, vs. 91.9% of patients on a placebo. And because the biggest benefits were seen in hormone-receptor positive patients, some analysts are predicting oncologists will only use the drug in that population.

RELATED: FDA panel backs Puma’s neratinib, clearing path to approval

The biggest upside for Puma investors, then, may come not from the drug’s launch, but rather from M&A. Shibutani and other analysts have pegged Puma as a prime takeover target.

“Separate from the issue of the anticipated U.S. launch of Nerlynx, it has long been explicitly clear that there is potential for the company to be acquired, given Nerlynx is an unencumbered oncology asset with >$1B in commercial sales potential,” Shibutani wrote. Leerink analysts agree, suggesting a buyout would result in as much as a “75% upside” in the company’s stock.

As for the question of just how big a blockbuster Nerlynx might be, analysts are now setting their sights higher based on the broad FDA label—and the new pricing expectations. Shibutani predicts the drug will surpass $2 billion in worldwide sales in 2023.