Credit Suisse Says Gr3 Diarrhea Still A Concern For Puma Biotech, But Pullback Is Overdone

Credit Suisse said in the aftermath a huge selloff in Puma Biotechnology Inc PBYI that the pullback is overdone, although diarrhea remains a concern.

Analyst Kennen MacKay noted that the abstracts for the SABCS conference showed that the rates of gr3 diarrhea rose to 27 percent from 16 percent in the Phase 2 control study of extended adjuvant neratinib combined with prophylactic loperamide. While conceding that the increase is concerning, the analyst said it views the market move as an over-reaction for several reasons:

• Gr3 diarrhea was a single episode event, with episodes restricted to the first cycle of therapy.
• 60 percent of patients experiencing gr3 diarrhea were non-compliant with scheduled loperamide.
• No gr4 events were seen in control, indicating a very low or no incidence of hospitalization due to diarrhea.

Credit Suisse expects physician counseling on gr3 diarrhea as a first cycle event, with the importance of Imodium prophylaxis improving compliance rates, and therefore not precluding the use of neratinib in the extended adjuvant setting.

The firm continues to see potential for neratinib approval and expects it to be used in HER2 positive patients who also have HR+, where neratinib has shown outsized benefit. The firm noted management reasserted the goal of the loperamide/budesonide combo arm is to reduce gr3 diarrhea below the rate of 13-18 percent previously seen with Imodium, which it views as a favorable outcome.

Metastatic breast cancer data for neratinib in combination with fulvestrant showed promise, the firm said quoting the Phase 2 SUMMIT basked trail results in HER2-mutant, HER2-non-amplified breast cancer.

As such, Credit Suisse said neratinib sales in this setting remain upside to its valuation.

Credit Suisse has an Outperform rating and a $111 price target for shares of Puma Biotech.