What happened

Shares of Puma Biotechnology (PBYI -3.48%) continued their dismal year-to-date performance by slipping over 24% last month, according to data provided by S&P Global Market Intelligence. The pharma company didn't announce any company-specific news, but investors were eager to hedge their bets ahead of the second-quarter 2019 earnings release. That's understandable after seeing the first-quarter performance.

The business reported a worrisome trend in patients discontinuing treatment of its lone drug product, Nerlynx, in the first three months of the year. The amount of churn, coupled with a relatively small survival benefit and high cost of treatment, made Wall Street question the drug's long-term growth potential.

A declining yellow line chart

Image source: Getty Images.

So what

In the first quarter of 2019, Puma Biotechnology reported a 25% decline in revenue compared to Q4 2018. Management remained unfazed, and stuck with its initial full-year 2019 guidance calling for roughly $230 million in total revenue. Investors weren't so sure the drug franchise could recover.

Nonetheless, Nerlynx demonstrated solid results in a phase 3 trial in HER2-positive metastatic breast cancer, including an improvement in progression-free survival (PFS) and the potential to prevent metastasis in the central nervous system. The results were showcased at the American Society of Clinical Oncology (ASCO) 2019 annual meeting in June, and included in a supplemental new drug application (sNDA) filed in early July.

Now what

On the one hand, the ability of the drug to earn supplemental approvals is key to its long-term growth potential. On the other hand, growth won't do much good if the company is only replacing patients who were forced to discontinue treatment because of side effects. To better gauge the trajectory of Puma Biotechnology, investors will have to wait for Q2 operating results.