What happened

Shares of Puma Biotechnology (PBYI 6.82%) fell more than 40% after the company reported first-quarter 2019 operating results. The pharma has only one drug in its pipeline and on the market -- and it didn't get off to a great start to the year.

Nerlynx generated Q1 revenue of $45.6 million. While that compared favorably to the $36 million in sales from the year-ago period, it was lower than the company expected. It also lagged well behind Wall Street expectations for $66 million in sales, according to FiercePharma.

As of 2:24 p.m. EDT, the stock had settled to a 37.4% loss.

A pink trendline crashing through the bottom of the x-axis of a chart.

Image source: Getty Images.

So what

Technically, companies that sell drug products report net revenue, which accounts for some expenses and reimbursements from distributors in the healthcare system. Puma Biotechnology CEO Alan Auerbach noted there was an increase in expenses charged to gross revenue during Q1, which sapped net revenue.

However, he also said that there was "an increase in patients discontinuing treatment of Nerlynx." On the first-quarter 2019 earnings conference call, he further explained:

The reasons for the discontinuations include side effects, progression of metastatic disease, or loss of insurance. ... There are some patients who have had a dose delay or modification, resulting in fewer bottles per patient being sold in the quarter. I would like to also add that, during the first quarter, we had a higher-than-average vacancy rate in our sales force, as 18 of our 80 sales territories did not have a sales rep at some point in the quarter. This may have also contributed to the decrease in bottle volume in the quarter.

Now what

Given the difference between Wall Street estimates and the actual sales figure, there are likely multiple reasons for the sluggish growth. It's something investors will need to pay close attention to, especially considering Nerlynx is the company's only drug. If this proves to be a fluke, however, then shares of Puma Biotechnology are priced pretty cheap. Investors should exercise caution until it can be concluded that the discontinuation trend doesn't continue or accelerate.