What happened

Shares of Puma Biotechnology (NASDAQ:PBYI) jumped over 43% today after the company announced fourth-quarter and full-year 2018 operating results. The business continues to reap the rewards of its successful and fast-growing cancer drug franchise, Nerlynx, which drove full-year revenue to $251 million. The company generated just $27.7 million in revenue in all of 2017.

More important for investors is the fact that Nerlynx sales have the business on the path to profitable operations. Puma Biotechnology reported a fourth-quarter 2018 operating loss of $18.6 million, compared to $63.6 million in the year-ago period. Full-year 2018 operating loss improved to $94.7 million, compared to $292.4 million in 2017.

As of 11:04 a.m. EST, the stock had settled to a 40.3% gain.

A man in a suit tossing $100 bills into the air.

Image source: Getty Images.

So what

Nerlynx is approved as a stand-alone treatment for patients with HER2+ breast cancer after they've completed a regimen of Herceptin. Patients who take Nerlynx for one year are more likely to remain disease free five years later than those who don't. It's the only drug asset owned by Puma Biotechnology, but with analysts expecting peak annual sales of at least $1.2 billion, this one-trick pony might do just fine without a robust pipeline.

The fourth-quarter and full-year 2018 earnings press release listed six different milestones expected to occur in 2019, ranging from meetings with regulators before filing applications to expand Nerlynx's use to data from ongoing trials evaluating the drug as a stand-alone or combination therapy.

Puma Biotechnology needs to earn additional marketing approvals for the drug to eclipse $1 billion in annual revenue down the road, but the path ahead is derisked now that Nerlynx is delivering healthy quarterly revenue. In fact, while the business isn't yet posting operating profits, it did generate $7.1 million in cash from operations in the final three months of 2018. It exited last year with $165 million in cash, cash equivalents, and marketable securities.

Click here for the latest earnings call transcript for Puma.

Now what

Last year, Wall Street became worried over the slow pace of Nerlynx sales, which caused Puma Biotechnology shares to fall more than 80%. But investors with a long-term mindset could have seen that the stock was undervalued. After today's rise, the company is valued at a market cap of $1.4 billion, but shares are still trading at less than six times sales -- relatively cheap for a fast-growing and soon-to-be-profitable pharma. If Nerlynx continues to grow throughout 2019 and several milestones fall in the company's favor, then the business could earn a higher valuation.