Shares of Puma Biotechnology (PBYI 0.56%), a biopharmaceutical company marketing one cancer drug, fell 12.3% in mid-day trading on Monday after the company announced a new marketing partnership. Investors unimpressed by the terms pushed the stock 8.1% lower to end the session.
Puma's only drug, Nerlynx, earned FDA approval in July 2017, but European regulators didn't approve the treatment until last September. In the U.S., fourth-quarter sales of the drug more than tripled compared to the previous year, to $61.1 million. Less than this amount for European rights was more than some Puma investors could live with.
Nerlynx is an extended adjuvant treatment for HER2-positive breast cancer patients following treatment with Herceptin, which is standard care for this group. When Puma announced a commercialization partnership with the French pharmaceutical company Pierre Fabre, investors weren't impressed with an up-front payment of just $60 million, milestone payments that could reach $345 million, and double-digit royalties on Nerlynx sales throughout Europe.
Puma investors need to remember that in the U.S., Nerlynx has a $10,500-per-month list price. European governments on a budget are highly unlikely to pay anything near that amount for a long-term treatment, even if it does prevent tumors from coming back.
It's a little embarrassing that Pierre Fabre wasn't willing to take a big chance with Nerlynx, but this isn't such an awful deal for Puma. Trying to launch a new cancer drug in the EU requires separate deals with each government payer. They all play by their own rules, and letting Pierre Fabre handle the commercialization and development in that region will save a bundle on consulting fees.