Conspiracy Theory: Did Puma Biotech Exec Resign Because of Bad News Ahead?
May 5, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Los Angeles-based Puma Biotechnology filed an 8-K with the U.S. Securities and Exchange Commission (SEC) indicating that the company’s senior vice president, Regulatory Affairs, Robert Charnas, was resigning “for health reasons.”
That seems straightforward enough and could easily be taken at face value. But some analysts are speculating on a more negative story. Charnas submitted his resignation on April 28, indicating his last day with the company will be May 15. The U.S. Food and Drug Administration (FDA)’s advisory panel is meeting nine days later to provide recommendations on the company’s neratinib.
“That’s a bad look,” writes Adam Feuerstein, for TheStreet. “So, of course, sell-side analysts rushed to Puma’s defense. But they told conflicting stories, which only adds to the uncertainty surrounding Charnas’ departure.”
Alethia Young, an analyst with Credit Suisse, reportedly spoke to Alan Auerbach, Puma’s chief executive officer, last night. She gave the company an “outperform” rating and in a note to investors, indicated that Charnas’ resignation was unrelated to the advisory panel or neratinib’s odds of a positive recommendation. “’Instead,’ writes Feuerstein, “’Charnas leaving Puma was the result of ‘negative interactions’ with other Puma employees that were ‘jeopardizing the team’s ability to function.’”
If that raises more questions, it’s understandable, since it seems to say that Charnas’ health problems are related to stress related to his interactions with other staffers. Is he being forced out? Are the health conditions related to the stress of being forced out? Or is it just health-related? Did he have an early look at the FDA briefing book regarding the upcoming meeting?
This sort of speculation can take on a circular aspect. Another analyst, Yigal Nochomovitz, with Citi, also spoke with Auerbach, and his note to investors said that the market “completely misinterpreted” Charnas’ resignation.
Puma took a drop at the news, and is currently trading at $36.55.
Nochomovitz recommended that his clients “buy on free dip,” which apparently means, the price dropped for no real reason, buy now.
On April 19, when the meeting of the Oncologic Drugs Advisory Committee (ODAC) was announced Feuerstein noted that the committee’s Rick Pazdur had only scheduled five hours for the meeting, which he believes is bad news for Puma, although there are opposing opinions.
Feuerstein wrote then, “If FDA history is a guide, an abbreviated turn in front of a panel of outside experts spells a bad outcome for Puma. Over the past five years, Pazdur has often used half-day sessions of the FDA Oncologic Drugs Advisory Committee (ODAC) to administer public floggings to flawed cancer drugs.”
Neratinib is an investigational drug for the extended adjuvant treatment of early stage HER2-positive breast cancer that has previously been treated with a trastuzumab containing regimen. The committee will evaluate Puma’s New Drug Application (NDA) for the drug based on results from the Phase III ExteNET clinical trial and Phase II CONTROL trial.
The Phase III ExteNET trial showed the drug had a two-year disease-free survival (DFS) rate of 93.9 percent compared with 91.6 percent in the placebo group. The NDA was originally planned for the first quarter of 2016, but was delayed after the FDA requested a new statistical analysis of the ExteNET trial data. The analysis, according to OncLive, “data were censored for patients who missed two or more scheduled disease assessments prior to recurrence or death.”
Resulting analysis showed DFS rates were 94.2 percent and 91.9 percent for neratinib and placebo, respectively. The biggest strike against neratinib appears to be severe diarrhea, although the re-analyzed data doesn’t provide a dramatic improvement over placebo, either.
Meanwhile, Charnas is leaving the company on May 15, regardless of what the committee decides.