UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a–101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
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PUMA BIOTECHNOLOGY, INC.
(Name of Registrant as Specified in Its Charter)
FREDRIC N. ESHELMAN, PHARM.D.
JAMES M. DALY
SETH A. RUDNICK, M.D.
KENNETH B. LEE, JR.
(Name of Persons(s) Filing Consent Statement, if Other Than the Registrant)
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 Destroying Selected slides from Puma Biotechnology Inc.’s presentation, dated December 4, 2015.
This presentation represents Dr. Fredric N. Eshelman’s commentary on
Puma’s arguments. |
 1 Debunking Puma’s Claim To Be Developing Stockholder Value Management and Board unable to unlock stockholder value: Puma has a valuable asset that could generate significant value for stockholders if managed correctly. To date, Puma’s current Board and management team have failed to do so. Lack of strategic plan: Puma’s current Board does not appear to have an overall business plan to successfully bring Puma’s product to market. Stockholder hopes are pinned to an eventual acquisition. The nominees DO have a plan: We have outlined a full set of business initiatives in the areas of commercialization, marketing, sales and manufacturing – topics that the Company has never addressed publicly – as well as finance, business development and corporate governance. Puma’s current Board has been tested and failed: The current Board is not up to the task of generating acceptable value for stockholders from Puma’s asset. The four highly qualified and experienced nominees Dr. Eshelman
proposes for election will bring critical skills to the Board and equip it to
oversee a successful strategy for realizing the value of
neratinib. Puma’s
inability to manage market expectations creates risk: Mismanagement of market expectations, as evidenced by Puma’s long history of overpromising and delays in presenting trial results, has greatly contributed to
recent stock price volatility and could create significant additional downside
risks for investors. More effective Board oversight of management
is the only way to correct this. Inadequate
transparency and “skin in the game”: Puma has exhibited an alarming lack of transparency with investors, including Dr. Eshelman, something the Nominees will seek to immediately address if elected. In addition,
the four independent directors’ interests are inadequately aligned with
those of stockholders. Rather than show how it intends to “Develop
Shareholder Value,” the Company’s presentation demonstrates the
need for a change. |
 On 8/10/15 anticipated publishing in Q3 ‘15. On 5/11/15 and 3/2/15 anticipated publishing mid- 2015. Stated on 11/13/14 would file in 1H ’15. There are only 3.5 weeks left in 4Q ’15 – yet no definite dates, places or journals (other than SABCS) have been disclosed or publicly scheduled. In light of Puma’s history of delays, it seems highly unlikely that these things will happen on the schedule described here. Still haven’t disclosed which data (two days before ). On 8/10/15 anticipated completing in 3Q ’15. On 5/11/15 and 3/2/15 anticipated completing in 1H ’15. On 11/10/14 anticipated presenting data in 4Q ‘14. Stated on 11/10/15 that it was expected in 2H ‘15. |
 All of these offerings took place before the current board failed to manage investor expectations surrounding the ExteNET data, leading to the stock’s plummeting after the May 2015 ASCO Annual Meeting.
The Company fails to take responsibility for the
role its failure to manage market expectations played in the
stock’s heightened volatility.
We agree that
there is significant potential value – but improved oversight and additional experience on the board is needed for that value to be realized. The Company has not explained how they intend to achieve this long- term significant value. The Company does not identify a peer group for executive compensation benchmarking in its proxy statement. Therefore, Dr. Eshelman chose Clovis, Oncology, Inc., Seattle Genetics, Inc., Medivation, Inc., ARIAD Pharmeceuticals, Inc., and bluebird bio, Inc. because, of the comparable companies provided by Capital IQ, these were the closest to Puma in
development stage and market cap. The Company has consistently claimed that it is developing three drug candidates in numerous SEC filings, including its most recent 10-K. Puma has never explained what happened to the development of these candidates. However, on slide 11 the Company manages to identify 10 peers in order to show that 2 other life sciences
companies also have 5 directors. The Company provides no discernible
basis or source for its list of peers. Our concern is if
Puma
management is
left unchecked
there is potential
for significant
downside from
continued overstatements - as we saw recently with Clovis Oncology, Inc. |
 Puma’s 4 independent
directors own very little
stock:
• Combined 3.22% beneficial ownership • Combined 0.003% of shares held directly. • Each independent director on average owns less than 0.007%, excluding options and shares which directors do not have any pecuniary interest. NOT No independent director has purchased shares within the last two years. The overwhelming majority of shares beneficially owned by the independent directors are options granted as part of compensation, or were acquired in the Company’s early stages when the stock price was cheap, and do not reflect actual financial commitment. |
 This is a false and
misleading accusation. Dr. Eshelman expressly offered that potentially material information be redacted and stated that he was not seeking material nonpublic information. Rather, he sought to analyze and value his ownership stake and ascertain whether the Board members acted appropriately in in connection with the consideration of any business combinations, asset sales, mergers or other strategic transactions. The Company gave no such assurances . We made no such assumption and clearly identified the shareholder plaintiff claims as allegations. Dr. Eshelman fully understands the relevant metrics and has used Kaplan-Meier for years. The Company continues to
avoid the issue of how its optimistic statements about the
ExteNET data led investors and analysts to consistently
expect that there would be a 3-5% increase in absolute DFS,
which was not the reality and caused stockholder value to
plummet. The Company also fails to address the other cases in which its optimistic statements were followed by high expectations for data releases and other milestones that were not realized.
The Company
only responded
as required by
Delaware law
when Dr. Eshelman filed for expedited proceedings. Puma’s The motion does not demonstrate the truth of the statements. The court has not ruled on the motion, and demonstration of truthfulness is not the legal standard. |
 Each only serves on one other public board. Dr. Eshelman would
leave certain current private boards if appointed as a director
of Puma.
Dr. Eshelman
has extensive
experience in
early stage
cancer companies. Dr. Rudnick developed two different biological compounds used in cancer treatment and led their approval process. Our nominees would add significantly to the board: • Over a century of combined industry experience • Key roles in over $10 billion in M&A sales. • Central roles in developing or launching numerous pharmaceutical products. • Exponentially higher levels of board and governance experience. • Far broader investment and finance experience. |
 Dr.
Eshelman was not replaced as
CEO. Rather, he
initiated and was
fully involved in
planning and executing the company’s succession plan. The Company neglects that most of these analyst statements came during a two-year period when the overall market was significantly down due to the financial crisis. Dr. Eshelman’s tenure at PPDI was approximately 20 years. By the standards the current board uses to judge its own past, PPDI compares very favorably. PPDI sold at an increase of 421% over its initial listing price, while Cougar’s value only increased by 140%, and was even more volatile in the interim than PPDI, twice experiencing declines that brought it back to its initial listing price. |
 Regarding the carcinogenicity studies, Auerbach claimed in December 2014 that he anticipated that these studies would be complete by November 2015: “These carcinogenicity studies with neratinib are anticipated to be completed in November 2015”. On November 30, 2015, he disclosed that only preliminary data was ready for the meeting with the EMA:
“What we showed them – we don't have the final reports yet. What we showed them was the top line data, so kind of the draft, if you will. We do not have the full report yet.” Now the Company claims that it “intends to complete” these studies at some unspecified point (we would note that the fact
these studies were incomplete was also the cause for the
original delay of the NDA filing from 2015 to 2016).
We are not reassured.
If the current board really has an overall strategic business plan, beyond
hoping for an eventual acquisition, it has never described it. The current board should outline its own strategic plan for investors and provide evidence that the necessary groundwork is being done.
The Nominees have
discussed and
outlined a full set of
business initiatives
in the areas of
commercialization,
marketing and sales,
and manufacturing
(topics that the
Company has never
publicly discussed
beyond vague and
canned statements),
as well as finance,
business development, and corporate governance. The Company has a track record of delays, lack of transparency and mismanaging of expectations for all 3 of these items. See our investor presentation. |
 Certain Disclosures 9 DR. FREDRIC N. ESHELMAN (“DR. ESHELMAN”) DOES NOT ASSUME RESPONSIBILITY FOR INVESTMENT DECISIONS. THIS PRESENTATION
DOES NOT RECOMMEND THE PURCHASE OR SALE OF ANY SECURITY.
UNDER NO CIRCUMSTANCES IS THIS PRESENTATION TO BE USED OR CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY. IT IS POSSIBLE THAT THERE WILL BE DEVELOPMENTS IN THE FUTURE THAT CAUSE ONE OR MORE OF THE
PARTICIPANTS FROM TIME TO TIME TO SELL ALL OR A PORTION
OF THEIR SHARES IN OPEN MARKET TRANSACTIONS OR OTHERWISE “INCLUDING VIA SHORT SALES), BUY ADDITIONAL SHARES (IN OPEN MARKET OR PRIVATELY NEGOTIATED TRANSACTIONS OR OTHERWISE) OR TRADE IN OPTIONS, PUTS, CALLS OR OTHER DERIVATIVE INSTRUMENTS RELATING TO
SUCH SHARES. DR. ESHELMAN RESERVES THE RIGHT TO CHANGE ANY OF HIS OPINIONS EXPRESSED HEREIN AT ANY TIME AS HE DEEMS APPROPRIATE. DR. ESHELMAN
DISCLAIMS ANY OBLIGATION TO UPDATE THE INFORMATION
CONTAINED HEREIN. CERTAIN DATA AND INFORMATION USED IN THE ACCOMPANYING ANALYSES CONTAINED HEREIN HAS BEEN OBTAINED FROM SOURCES THAT DR. ESHELMAN BELIEVES TO BE RELIABLE, IS SUBJECT TO CHANGE WITHOUT NOTICE, IS NOT GUARANTEED TO
BE ACCURATE, AND MAY NOT CONTAIN ALL MATERIAL
INFORMATION CONCERNING THE SECURITIES WHICH MAY BE THE SUBJECT OF THE ANALYSES. DR. ESHELMAN HAS NOT SOUGHT OR OBTAINED CONSENT FROM ANY THIRD PARTY TO USE ANY STATEMENTS OR INFORMATION INDICATED IN THIS PRESENTATION AS HAVING BEEN
OBTAINED OR DERIVED FROM STATEMENTS MADE OR PUBLISHED BY
THIRD PARTIES. ANY SUCH STATEMENTS OR INFORMATION SHOULD NOT BE VIEWED AS INDICATING THE SUPPORT OF SUCH THIRD PARTY FOR THE VIEWS EXPRESSED HEREIN. DR. ESHELMAN MAY HAVE RELIED UPON CERTAIN QUANTITATIVE AND QUALITATIVE ASSUMPTIONS WHEN PREPARING THE ANALYSES HEREIN WHICH MAY
NOT BE ARTICULATED AS PART OF SUCH ANALYSES. THE
REALIZATION OF THE ASSUMPTIONS ON WHICH SUCH ANALYSES WERE BASED IS SUBJECT TO SIGNIFICANT UNCERTAINTIES, VARIABILITIES AND CONTINGENCIES AND MAY CHANGE MATERIALLY IN RESPONSE TO SMALL CHANGES IN THE ELEMENTS THAT COMPRISE THE
ASSUMPTIONS, INCLUDING THE INTERACTION OF SUCH ELEMENTS.
FURTHERMORE, THE ASSUMPTIONS ON WHICH THE ANALYSES WERE BASED MAY BE NECESSARILY ARBITRARY, MAY BE MADE AS OF THE DATE OF THE ANALYSES, DO NOT NECESSARILY REFLECT HISTORICAL EXPERIENCE WITH RESPECT TO SECURITIES SIMILAR TO THOSE THAT MAY
BE CONTAINED IN THE ANALYSES, AND DO NOT CONSTITUTE A
PRECISE PREDICTION AS TO FUTURE EVENTS. BECAUSE OF THE UNCERTAINTIES AND SUBJECTIVE JUDGMENTS INHERENT IN
SELECTING THE ASSUMPTIONS ON WHICH THE ANALYSES WERE BASED AND BECAUSE FUTURE EVENTS AND CIRCUMSTANCES CANNOT BE PREDICTED, THE ACTUAL RESULTS REALIZED MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
ANALYSES. NOTHING INCLUDED IN THESE ANALYSES CONSTITUTES ANY REPRESENTATION OR WARRANTY BY DR. ESHELMAN AS TO FUTURE PERFORMANCE. NO
REPRESENTATION OR WARRANTY IS MADE BY DR. ESHELMAN AS TO
THE REASONABLENESS, ACCURACY OR SUFFICIENCY OF THE ASSUMPTIONS ON WHICH THE ANALYSES WERE BASED OR AS TO ANY OTHER FINANCIAL INFORMATION THAT IS CONTAINED IN THE ANALYSES, INCLUDING THE ASSUMPTIONS ON WHICH THEY WERE BASED. DR. ESHELMAN SHALL NOT BE LIABLE FOR EITHER (I) ANY ERRORS OR OMISSIONS MADE IN DISSEMINATING THE DATA OR ANALYSES CONTAINED
HEREIN OR (II) DAMAGES (INCIDENTAL, CONSEQUENTIAL OR
OTHERWISE) WHICH MAY ARISE FROM YOUR OR ANY OTHER PARTY’S USE OF THE DATA OR ANALYSES CONTAINED HEREIN.
THE INFORMATION THAT IS CONTAINED HEREIN SHOULD NOT BE CONSTRUED AS
FINANCIAL, LEGAL, INVESTMENT, TAX, OR OTHER ADVICE. YOU ULTIMATELY MUST RELY UPON YOUR OWN EXAMINATION AND THAT OF YOUR PROFESSIONAL ADVISORS, INCLUDING LEGAL COUNSEL AND ACCOUNTANTS AS TO THE LEGAL,
ECONOMIC, TAX, REGULATORY, OR ACCOUNTING TREATMENT,
SUITABILITY, AND OTHER ASPECTS OF THE ANALYSES HEREIN. ON NOVEMBER 18, 2015, DR. ESHELMAN, JAMES M. DALY, SETH
A. RUDNICK AND KENNETH B. LEE, JR. (TOGETHER WITH DR. ESHELMAN, THE "PARTICIPANTS") FILED A DEFINITIVE CONSENT STATEMENT AND ACCOMPANYING FORM OF CONSENT CARD WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
“SEC”) ON SCHEDULE 14A TO BE USED IN
CONNECTION WITH THE SOLICITATION OF CONSENTS (THE “CONSENT SOLICITATION”) FROM THE STOCKHOLDERS OF PUMA BIOTECHNOLOGY, INC. (THE "COMPANY") TO INCREASE THE SIZE OF THE COMPANY’S BOARD OF DIRECTORS FROM FIVE TO NINE MEMBERS AND ELECT FOUR NEW
DIRECTORS. ALL STOCKHOLDERS OF THE COMPANY ARE ADVISED
TO READ THE DEFINITIVE CONSENT STATEMENT AND OTHER DOCUMENTS RELATED TO THE CONSENT SOLICITATION BY THE PARTICIPANTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS AND A DESCRIPTION OF
THEIR DIRECT OR INDIRECT INTERESTS BY SECURITY
HOLDINGS. THE DEFINITIVE CONSENT STATEMENT AND ACCOMPANYING CONSENT CARD HAVE BEEN FURNISHED TO SOME OR ALL OF THE COMPANY'S STOCKHOLDERS AND ARE, ALONG WITH OTHER RELEVANT DOCUMENTS, AVAILABLE AT NO CHARGE ON THE INTERNET AT
WWW.OKAPIVOTE.COM/PUMABIOTECHNOLOGY OR ON THE SEC'S WEBSITE AT
HTTP://WWW.SEC.GOV/. IN ADDITION, OKAPI PARTNERS LLC, DR. ESHELMAN'S CONSENT SOLICITOR, WILL PROVIDE COPIES OF THE DEFINITIVE CONSENT STATEMENT AND ACCOMPANYING CONSENT CARD WITHOUT CHARGE UPON REQUEST BY
CALLING (877) 869-0171 OR BY EMAILING
INFO@OKAPIPARTNERS.COM. |