Edgar Filing: PUMA BIOTECHNOLOGY, INC.

DFAN14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a–101)

INFORMATION REQUIRED IN CONSENT STATEMENT

SCHEDULE 14A INFORMATION

Consent Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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¨		Definitive Consent Statement

x		Definitive Additional Materials

¨		Soliciting Material Under Rule 14a-12

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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FREDRIC N. ESHELMAN

January 4, 2016

Dear Fellow Puma Investors,

I am writing to you, on my own behalf and on behalf of my fellow board slate nominees, to ask for your support in adding four additional members to the current five-member board of Puma Biotechnology Inc. (the “Company”). The current management and board have presided over share price erosion resulting in the loss of thousands/millions of dollars by individual shareholders, and purportedly up to a billion dollars by institutional firms. None of us should tolerate this any longer. Shareholders deserve better.

In our view board enhancement is needed to address several issues:

Lack of Transparency: The current CEO/Chairman, with apparent board acquiescence, has run the Company with a lack of transparency and refusal to respond to legitimate and legal shareholder inquiries.

Misleading Statements: The Company has repeatedly made misleading statements that were subsequently refuted by actual data. This has seriously eroded share price and resulted in huge destruction of shareholder value.

No Evidence of Launch Preparation: The Company claims to be submitting an NDA in Q1 ’16 for use in the adjuvant setting for breast cancer. We have heard nothing about regulatory (e.g., pre-NDA meeting with FDA), manufacturing or commercial activities to support an early Q1 ’17 launch (in the event that the drug is approvable).

Lack of Specific Plans: Ongoing and likely required clinical studies will cost significantly above current cash resources. Analysts’ estimates for equity raises to get to cash flow positive would indicate dilution of $5-10 per share at current prices, with no specific plans for meeting these needs discussed.

Current Board is Unprepared to Deal With Near-term Challenges: Near-term data reveals are mostly complete and the operational and regulatory path forward significantly more complex. The Company will need to develop, and be prepared to execute on, detailed strategies for the commercialization of neratinib. Thus, the task now becomes careful and comprehensive coordination of many activities, and continuous evaluation of strategic options, all of which requires significant time and review by board members.

Please see our updated investor presentation, which is enclosed as an attachment to this letter, in support of our proposals to enlarge the Company’s board from five to nine members and elect myself and three other highly qualified director nominees as directors of the Company.

We are disappointed that ISS and Glass Lewis, while fundamentally acknowledging many of our concerns, concluded that change is not necessary at this time. However, Proxy Mosaic has endorsed our proposal and validated our view that “[t]he Board’s stewardship failures have been directly linked to the Company’s recent devaluation and narrowing prospects.” Proxy Mosaic’s report underscores the fact that “there is a very real danger that [neratinib’s] commercial potential will not be realized due to the Board’s mismanagement… The timing of Dr. Eshelman’s campaign could not be better.” Further, Proxy Mosaic affirmed that “the additional directors would have a strong positive effect on overall oversight and accountability, neither of which appear to be particularly valuable commodities for the current Board.”

The Company is at an extremely important point, with regulatory, financing and commercial issues all of critical importance. Our proposal to bring more talent and experience to the board will enhance Puma’s ability to successfully navigate to successful outcomes. We are committed to doing the hard work necessary to restore value for shareholders and potentially benefit patients, rather than simply selling our shares and moving on. I am spending several millions of my own money to try to make this right for all of us.

We are asking that you support our consent solicitation to add very experienced and credentialed nominees to the current board. There is no down side to adding four directors who will provide the Company with the tactical know-how and breadth of experience to address the challenges above.

We would very much appreciate your support.

Sincerely,

/s/ Fredric N. Eshelman

Enclosure: Updated Investor Presentation

Additional Information and Certain Disclosures

Dr. Eshelman is the beneficial owner of 150,000 shares of common stock of the Company, representing approximately .5% of the Company’s outstanding shares, based upon the 32,435,748 shares of common stock reported by the Company to be outstanding as of November 2, 2015 in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) on November 9, 2015.

Dr. Fredric N. Eshelman, James M. Daly, Dr. Seth A. Rudnick and Kenneth B. Lee, Jr. (collectively, the “Participants”) have filed a definitive consent statement and accompanying form of consent card with the SEC to be used in the connection with the solicitation of consents (the “Consent Solicitation”) from the stockholders of Puma to increase the size of the Company’s board of directors from five to nine members and elect four new directors. Stockholders of the Company should read the definitive consent statement and other documents related to the Consent Solicitation because they contain important information, including additional information related to the Participants and a description of their director 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.

Investor Inquiries:

Okapi Partners LLC

Bruce Goldfarb / Pat McHugh / Lydia Mulyk

(212) 297-0720 or (877) 869-0171

info@okapipartners.com

Media Inquiries:

Finsbury

Kal Goldberg/ Chuck Nathan / Chris Ryall

(646) 805-2000

kal.goldberg@finsbury.com

charles.nathan@finsbury.com

chris.ryall@finsbury.com

PUMA BIOTECHNOLOGY, INC.

CONSENT SOLICITATION

Information for Investors

January 2016

Certain Disclosures

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.

Bottom Line: Accountability for Management

Management actions have resulted in individual

stockholders losing millions of dollars, and institutional

losses of up to a $1 billion.

Stockholders should hold management accountable.

“Management Team’s Business Execution Talent Less Than Oustanding

… there is the long list of issues associated with neratinib

in the extended adjuvant setting from

the

erroneous

trial

design,

the

several

global

amendments

(first

altering

the

ExteNET

follow-

up from 5 years to 2 years and then reinstating the follow-up back to 5 years), and the

misguided

attempt

pursue

approval

the

extended

adjuvant

setting

ahead

the

metastatic

setting.

Moreover,

there

are

the

significant

delays

between

times

data

readouts

are

announced

reported

and

when

they

are

actually

reported,

the

numerous

half-truths

hidden

the

transcripts

the

public

conference

calls

with

analysts,

and

the

constant

management allusions

that PBYI will eventually be sold at a substantial premium as was the

case with Cougar Biotechnology, a company previously owned and sold for a significant profit

Alan

Auerbach,

the

CEO

PBYI.

Overall,

these

events

are

representative

management

team

that

appears

inexperienced

and

driven

hubris.

Their

conduct

has

undoubtedly

compromised the interests of the company’s shareholders.”

-P. Arora, Seamist

Capital, reported in Seeking Alpha.

Proxy Mosaic Supports Our Campaign

Leading proxy advisory firm Proxy Mosaic has come out in

support of our approach to restoring stockholder value:

“[T]he Company’s focus on three-year relative performance ignores the net effect of

recent comments issued by management, which caused the market to substantially

raise its expectations for Puma, only to reverse course when the Company’s statements

proved to be optimistic.” (p. 13)

“The true value in Dr. Eshelman’s nominees is that they possess the range of skills

necessary

to oversee any of the strategies that the Company could employ going

forward” (p. 16)

“The Board’s stewardship failures have been directly linked to the Company’s recent

devaluation and narrowing prospects… there is a very real danger

that its commercial

potential will not be realized due to the Board’s mismanagement… The timing of Dr.

Eshelman’s campaign could not be better…”

(p. 27)

“[T]he additional directors would have a strongly positive effect

on overall oversight and

accountability, neither of which appear to be particularly valuable commodities for the

current Board.” (p. 27)

“We

recommend shareholders return the WHITE consent card.” (p. 28)

Reaction to ISS

and Glass Lewis

The recent recommendations by ISS and Glass Lewis also

validated many of our concerns:

“[T]he dissident’s assertion that Puma’s board composition is still not optimal

may hold some truth.” (ISS, page 3)

“[I]nvestors

may be appropriately concerned

about the company’s recent

trajectory.” (ISS, page 13)

“Share price returns over the past year has been significantly worse than that of

its peers… the recent significant decline in the Company’s share price is hardly

ideal.” (Glass Lewis, page 9-10)

“[W]e agree with the Dissident, at least to some extent, that the Company could

better

job

setting

realistic

expectations

for

its

clinical

trials.”

(Glass

Lewis, page 10)

However, we disagree with the view that change is not

“necessarily

warranted

this

time"

and

“is

not

prudent

this

stage” –

at this critical juncture, Puma needs an infusion of

expertise.

Founder of Eshelman

Ventures, LLC, an investment company primarily

focused on healthcare companies.

Non-Executive Chairman of The Medicines Company, a global

biopharmaceutical company focused on saving lives, alleviating suffering

and contributing to the economics of healthcare by focusing on the

leading acute and intensive care hospitals worldwide.

Founder and former CEO and Executive Chairman of Pharmaceutical

Product Development, Inc. (“PPDI”), a global contract pharmaceutical

research organization.

Founding Chairman of Furiex

Pharmaceuticals, Inc. (“Furiex”), a company

that licensed and rapidly developed new medicines.

Former director and Senior Vice President, Development of Glaxo, Inc.,

predecessor to GlaxoSmithKline plc.

Education: Pharm.D., University of Cincinnati; B.S., UNC-Chapel Hill.

Fredric N. Eshelman, Pharm.D.

PPDI: Total Shareholder Return

Furiex: Total Shareholder Return

Background Of Investment

•

Between May 18, 2015 and June 4, 2015, I purchased a

total of 150,000 shares of Puma’s common stock.

•

Between October 22, 2015 and November 3, 2015, I

acquired options to purchase 150,000 shares of Puma’s

common stock.

•

Currently, I am the beneficial owner of 150,000 shares,

representing approximately .5% of Puma’s common

stock, after the options expired worthless on December

18, 2015.

•

Meanwhile, over the last two years, current directors

and officers have collectively engaged in net

aggregate sales of stock valued at a total of

approximately

$18,761,916.57.

1. Source: Transactions listed in Participant Transaction Chart on page 44 of the

Company’s Definitive Consent Revocation Statement. filed on December 10, 2015.

Calculations based on closing price for the date of sale listed.

Company Overview

Puma Biotechnology, Inc. (NYSE: PBYI) (“Puma” or the “Company”), a Delaware corporation and

development stage biopharmaceutical company, focuses on the acquisition, development and

commercialization of products for the treatment of various forms of cancer.

Name

% Outstanding

Adage Capital Management LP

17.5%

Fidelity Management &

Research Co.

14.9%

Alan H. Auerbach

12.5%*

The Vanguard Group, Inc.

5.5%

Capital Research &

Management Co. (Global

Investors)

5.4%

T. Rowe Price Associates, Inc.

5.3%

Grantham, Mayo, Van Otterloo

& Co. LLC

5.2%

Orbimed

Advisors LLC

3.7%

Franklin Advisers, Inc.

3.0%

Frank Zavrl

2.8%

•

Alan H. Auerbach

–

CEO

and President

•

Richard Bryce –

SVP,

Clinical Research and

Development

•

Charles R. Eyler

–

SVP,

Finance and Administration

and Treasurer

•

Alan H. Auerbach

–

Chairman

•

Jay M. Moyes

•

Adrian M.

Senderowicz

•

Troy E. Wilson

•

Frank E. Zavrl

•

Headquarters: Los Angeles, CA

•

Full-time

Employees

(12/31/14):

120

•

Market Cap (12/22/15): $2.384 billion

•

Closing price (12/22/15): $73.72 per share

* Excludes 2,116,250 shares exercisable pursuant to anti-dilutive

warrant and options to purchase 399,999 shares exercisable within

60 days of April 17, 2015.

Sources: Capital IQ; SEC Filings; Bloomberg; NASDAQ. Amounts as of

September 30, 2015 unless otherwise indicated. Calculation of

percentage outstanding assumes 32,435,748 shares outstanding as

of November 2, 2015, as reported in Form 10-Q filed on November

9, 2015.

Single Drug Candidate

Neratinib/PB272

(oral): treatment

of breast cancer patients and

exploratory studies in other

tumors.

•

Puma presented three-year data from the

ExteNET

trial of neratinib

on December 11,

2015 at the San Antonio Breast Cancer

Symposium (“SABCS”).

•

The

two-year

data

from

the

ExteNET

trial

will

form the basis of the Company’s new drug

application (“NDA”) which, according to

management, will be filed with the FDA in

Q1’ 2016, according to management. NDA

filings are an onerous and complicated

process that require significant expertise and

experience.

•

data

releases

from

the

ExteNET

trial

have been the main driver of Puma’s stock

value, and the latest data release was no

exception. This data will be analyzed in

more detail to follow.

Company Overview

Source: SEC filings

Source: Puma website.

Why Am I Soliciting Consents?

Board and management practices are reducing stockholder value.

•

Stock price underperformance relative to the biotechnology industry and the Company’s

closest peers over the most recent six-month and one-year periods. Stockholders have been

whipsawed in both directions by management; we have seen significant stock volatility over

the last six to nine months.

•

History of mismanaging market expectations, including making problematic statements and not

meeting announced targets or milestones relating to clinical trials.

•

Stockholder unfriendly executive compensation practices.

•

Board

and

management

unresponsive

and

not

transparent

requests

for

Company

documents, including board minutes, through 220 demands under Delaware Corporate Law,

were denied after repeated requests. I had to file suit in Delaware to obtain requested

stockholder information that is readily available to companies and that I am entitled to as a

shareholder.

Nominees would add unique expertise and bring a more stockholder-friendly perspective.

•

Highly

qualified

and

experienced

slate

nominees

will

add

value

the

board

without

replacing current directors.

•

Improved oversight of management in executing Puma’s value proposition and in navigating

assets through the regulatory process.

•

Initiatives to improve transparency for Puma’s investors.

•

Major near-term clinical data events are over. Now it is a story of regulatory and commercial

expertise and experience, which our slate will provide.

Consent Solicitation

Overview

Consent Solicitation Goals

•

Increase the size of Puma’s board from five to nine

directors.

•

Elect four highly qualified and experienced

directors.

•

No incumbent directors will be replaced.

•

The Nominees will each add unique expertise and

experience to ensure a successful strategy for

navigating the development and regulatory

process, and ultimately, a strategy for bringing

valuable drugs to market.

Consent Solicitation Proposals

•

Proposal 1: Repeal Amendments to the Bylaws

Adoption of Proposal 1 will ensure that the current board cannot (i) prevent or

impair the stockholders’ ability to add the Nominees to the Board or (ii) limit the

Nominees’ ability to take actions in the best interests of the Company and its

stockholders, if elected.

•

Proposal 2: Removal of Directors

Adoption of Proposal 2 will remove any additional directors appointed after

September 9, 2015 and prior to the effectiveness of Proposal 2, but will not

remove any current directors.

•

Proposal 3: Increase the Size of the Board

Adoption of Proposal 3 will increase the size of Puma’s board from five to nine

directors.

•

Proposal 4: Election of the Nominees

Adoption of Proposal 4 will elect the Nominees to serve as directors of the

Company.

Stockholders may consent to the election of all or some of the Nominees.

Dramatic Stock Price Underperformance

Puma shares have significantly underperformed the S&P 500 and NYSE

Arca

Biotechnology Index.

Source: Capital IQ

While the Company has performed generally in line with peers since its IPO in 2012

and outperformed last year due to management description of forthcoming trial

results and heightened expectations, since disappointing data was released in June

2015 at the at the American Society of Clinical Oncology (“ASCO”) annual meeting,

the Company has underperformed and we believe that value will continue to be

destroyed if there is no change in the status quo.

Preliminary Consent

Solicitation Filed

Dr. Eshelman Initial

Investment

Initial 220

Demand

Dramatic Stock Price Underperformance

Puma has also significantly underperformed its closest peer companies.

Source: Capital IQ

Sharp fall in

Clovis stock due

to prematurely

announcing drug

responses which,

subsequently,

were not

confirmed.

Preliminary

Consent

Statement

Filed

Dr. Eshelman

Initial

Investment

History of Problematic Statements:

Background

ExteNET Trial Description

•

Started by Pfizer Inc. in April 2009.

•

Enrolled 2,840 patients in 41 countries.

•

Double-blind, placebo-controlled, Phase III trial of neratinib vs. placebo

after adjuvant treatment with trastuzumab (“Herceptin”) in women with

early stage HER2+ breast cancer.

•

After one year of adjuvant treatment with Herceptin, patients were

randomized 1:1 to receive extended adjuvant therapy with neratinib or

placebo for one year.

•

Patients were then followed for recurrent disease, ductal carcinoma in

situ or death for a period of two years after randomization into ExteNET,

or three years since the initial start of Herceptin.

Primary

Trial

Support

Q1’16

NDA

History of Problematic Statements:

Optimistic Statements by Puma

“The results of the trial

demonstrated that

treatment with

neratinib resulted in a

33% improvement in

disease free survival

versus placebo.”

–

Puma Press Release,

July 22, 2014

“We saw a 33%

improvement in invasive

disease-free survival.”

Puma Conference call,

May 7, 2015

“Most importantly, a number of those

subgroups are extremely differentiating

from the other HER2 agents that are

commercially available.”

“So, I think there is certainly the

opportunity for the drug to be used in all

patients directly after treatment in year

one with Herceptin.”

–Puma Conference Call, July 22, 2014

Analysts’

high

expectations

followed:

Beginning on July 22, 2014, and continuing until as late as May 7, 2015, Puma claimed that the ExteNET

data would show that neratinib significantly improves results in breast cancer patients over a placebo.

We spoke to Puma about the

upcoming abstracts… In addition to

what is already known, the abstract

from the ph3 ExteNET trial will

include the actual 2yr DFS values,

and key subset analyses

that

will

show

neratinib

forms

well

populations typically challenging for

Perjeta and Kadcyla.

UBS, May 4, 2015

“We see upside potential at ASCO, where

we think ExteNET data will show well.”

UBS, May 5 2015

Given prior comments from PBYI,

investors had expectation of at least a

3% absolute benefit, and perhaps a

benefit as high as 4-5%.

Cowen and Company, May 13, 2015

We continue to expect the

ExteNET

data in Chicago to

show the 3+% difference

between the two arms… We

see a low probability of any

negative data surprises…”

RBC Capital Markets, May

11 2015

History of Problematic Statements:

Impact On Puma’s Stock Price

•

July 22, 2014 closing price: $59.03. Following market close the Company issued a press release and held a

conference call announcing two-year results from the ExteNET

trial.

•

July 23, 2014 closing price: $233.43.

•

Stock reached its historical high of $270.83 per share on September 12, 2014.

“Puma Biotechnology Inc. soared after the company yesterday reported positive trial results

for its breast cancer drug… Puma shares almost quadrupled…”

-Bloomberg, July 23, 2014

Source: Capital IQ

Jul. 22 Release of

Positive ExteNET

Results

Jul. 23 closing

price-

$233.43

Sept. 12

All-time

High

June 1 ASCO

Presentation

History of Problematic Statements:

Clinical Trial Data Inconsistent With Expectations

“[T]he absolute magnitude of difference in DFS was ‘trivial.’ Neratanib’s use is

likely to be limited to a small subset…”

Cowen and Company, May 21, 2015

Between May 13, 2015 and June 1, 2015, Puma released additional ExteNET data, which

was

presented

the

ASCO

annual

meeting.

The

newly

released

ExteNET

data

did

not

meet analyst’s high expectations.

“[T]he point estimate at the 2yr landmark is below the 3pp delta set by investors… One

can debate the expectation management… We recognize anger about expectations

coming in.”

“Most investors and oncologists had approximated the minimum delta between the two arms

to be about 3% in order to achieve meaningful clinical significance. On its face, the 2.3% IDFS

difference falls below expectations… it is not surprising why the stock is down 25%...”

RBC Capital Markets, May 14, 2015

UBS, May 13, 2015

While

the

Company

continued

tout

the

success

the

ExteNET

trial

the

June

2015 ASCO meeting, significant portions of the analyst, investor, and medical

communities saw the data and clearly disagreed. Puma’s stock price

plummeted.

History of Problematic Statements:

Clinical Trial Data Inconsistent With Expectations

We believe that the market reacted primarily to management’s failure to provide a clear

explanation

what

investors

could

expect

from

the

ExteNET

data.

With the release of the three-year data, the Company had an opportunity to learn from its past

mistakes. It could have pursued a more transparent and realistic approach to managing

expectations

about

the

data.

Instead,

the

current

management

chose

confuse

the

situation.

ASCO

Presentation

“[W]e view the sell off as

more of a reaction to

falling

short of misguided

expectations rather than a

fatal flaw in neratinib’s clinical

profile.

The absolute

treatment benefit over

placebo (2.3%) was materially

below where management

had implied when topline

data were first

released in

July 2014.”

-J.P. Morgan, August 27, 2015

All of These Statements Cannot Be True

“And you noted that the

FDA is not going to ask for

any more data from

ExteNET.

But you’re now

essentially a year since you

actually hit the two-year.

a year from now you’re

going to be the two-year, so

you’re going to be—“

A: “… [A]s we mentioned on

the call when we did for

announcing the ExteNET

data,

the curves are

continuing to separate.

that obviously would

strengthen the data set.”

-12/2/2014 Conference Call

Q: “And then on to San Antonio, you mentioned the three-year analysis. Do you plan to show just the three-year curves or should we look for

data to go further out than 3 years?”

would

ideally

able

show

Kaplan-Meier

curve

that

don't

just

truncate

months.

How

much

more,

don't

know

the

answer

to you

yet

because

the

data

still

blinded.

have

not

unblinded

yet,

don't

know

the

answer

that

yet.

Clearly,

the

key

going

to be

what

the

number

patient

risk

is.

it's

just

that

the

cut

took,

didn't

get

lot

patients

out

further

than

you're

down

patients

or something toward the 40-, 42-month period that that would be obviously something of concern. I don't think that's going to happen. I think

should

able

show

somewhere

between

months

and

months.

just

can't

give

you

any

exact

numbers

right

now.

-11/30/2015 Conference Call

“Alan, in terms of the 2-year disease-free

survival endpoint, if you don’t need further

data, why was the protocol restored and

the mandate to improve 5-year results?...”

“[W]hen we were first giving guidance in

what we expected the trial results to show…

What we said that well, we expect the

curves to be separating, but we don’t think

they’d be statistically significant by two

years.

So they were meant—because we

anticipated that the two-year would show

a trend, but the five-year would actually be

what would be statistically significant.

Obviously, we are pleased that the curve

separated enough to be positive at the

two-year.

But it was originally restored

because we thought the curves would be

trending by two years, but not near

positive.”

6/2/15 Conference call

“[C]an you give us a sense as to whether the

separation is widening over time or how would you

describe the curve separation?”

“…If we look at curves going out beyond [two years]… it

looks like the curves are continuing to separate...

[I]f you

look at curves in the Herceptin adjuvant trials, so the HERA

study, the BCIRG

study, et cetera, the absolute difference

in disease-free survival increases as you go out year-over-

year...

So, for instance, in the BCIRG

trial, the DFS

difference was

6% at two years, then 7% at three years, then 8% at four

years, et cetera, et cetera.

We’re seeing the same

preliminary trend in the ExteNET

trial where the curves

appear to be continuing to separate as you go out year-

over-year, and the absolute DFS

difference is increasing

year-over-year as well.”

7/22/201414 Conference Call

Mr.

Auerbach

made

numerous

statements

before

December

2015

about

the

ExteNET

data,

including

claims

that

the

DFS

curves

were

separating

beyond

the

two-year

data.

Yet,

less

than

two

weeks

before

the

three

year

data

was

presented,

Auerbach

claimed

that

could

not tell investors what data would be presented at SABCS, as the data was still blinded.

When did Puma see the DFS

data for years 3-5? If the data was blinded, what was the basis for Auerbach’s

statements? If the statements were based on the data, why did Puma claim that it was blinded and avoid being

transparent with investors?

December 11, 2015: Another Missed Opportunity

The actual two and three-year results differed materially from guidance given by management

prior to release. While the stock price has rebounded, share prices are still down more than 60%

over the last five quarters, erasing billions of dollars in stockholder value. 2015 SABCS

has done

nothing to improve the Puma’s position or solve any of its problems.

When the three-year ExteNET

data was finally released, the curves did not separate.

DFS

results in all indications decreased from Year 2 to Year 3, other than HER2+/HR+

results, which were not meaningful.

*Subsequently changed to 2.5% based on additional data.

12/11/2015 SABCS:

Stock drops as much as

22%, closing down almost

Year 2

Year 3

Indication

Absolute

Difference in

DFS

Absolute

Difference in

DFS

Primary

2.3%*

2.1%

Centrally Read HER2+

4.1%

2.2%

HER2+/HR+

4.2%

4.3%

Centrally Read HER2+

and HR+

8.6%

6.4%

The market has spoken loudly about its lack of confidence in current management.

History of Problematic Statements:

Regulatory Plan and Cancer Indication

Source: Capital IQ

“Yes, we are still planning to file the NDA for

the ExteNET Study in the first half of 2015.”

Alan Auerbach, Conference Call,

November 13, 2014

“Since the Company’s initial NDA filing will now be for the extended

adjuvant HER2-positive early stage breast cancer indication…

Puma intends to delay its proposed timeline for filing the NDA until

the first quarter of 2016.”

Puma Press Release,

December 2, 2014

ExteNET

not

aberration

management

has

history

mismanaging

market

expectations.

•

For

example,

Puma

stated

several

occasions,

including

late

November

13,

2014,

that

would

file

NDA

for neratinib during the first quarter of 2015.

•

Less

than

three

weeks

later,

December

2014,

Puma

pushed

the

projected

date

its

NDA

filing

the

first

quarter of 2016.

12%

Decline

•

Puma may claim that the delay was due to

the FDA’s requirement that the Company

file carcinogenicity data, and that it had

no control.

•

We believe that the company should have

known that this data would be required

because filing for a long-term indication

always requires this data.

•

We believe that Puma mismanaged the

regulatory process.

History of Problematic Statements:

Other Trials

The Company held a conference call on December 23, 2013 to discuss HER2

mutation trials.

•

We have tried to locate the transcript but have been unable to do so.

As far as we can tell, the transcript seems to be missing and

unavailable.

However, according to reports written by at least two analysts about the call:

•

With respect to the refractory NSCLC trial, Mr. Auerbach stated that

response rates in both arms of the trial were in the 40-49% range.

•

Data released on September 9, 2014 was not consistent with the earlier

statement (N=27).

NERAT

NERAT + TORISEL

Partial Response

3 (21%)

Stable Disease

7 (54%)

11 (79%)

Clinical benefit

4 (31%)

9 (64%)

History of Problematic Statements:

Public Disclosures & Drug Development Process

Clinical Trials

•

Equivocating on the extent of data to be presented in December 2015 on ExteNET

and other trials.

Public Filings

•

In its S-1/A filed on October 17, 2012, the Company outlined its business strategy:

S-1/A Strategy

Current

Status

An Investigational

New Drug Application

(“IND”)

would

be filed for the IV form of neratinib in 2013.

The Company has not filed an IND for the IV form of

neratinib.

The Company would in-license additional compounds.

The Company has not licensed any additional

compounds.

ExteNET

trial would be wound down.

Important

data

from

the

ExteNET

trial

was

only

released in December 2015.

Compound PB357

would be evaluated for further

development in 2013.

2013 10-K: “We are evaluating PB357

and considering

options relative to its development in 2013.”

2014 10-K: “We are evaluating PB357

and considering

options relative to its development in 2014.”

2015 10-K: “We are evaluating PB357

and considering

options relative to its development in 2015.”

Failure to Address Key Issues: Tolerability Profile

Crucial Issue

•

two

three

patients

out

every

ten

are

affected,

neratinib

has

major

problem.

•

With approximately 2% DFS, MDs must treat 50 patients to benefit one, while treating just three

patients will impair the quality of life in one.

•

Failure

significantly

reduce

grade

diarrhea

perceived

diminished

DFS

benefit

over time

will result in a major reduction in addressable population.

Severe

diarrhea

was

evident

with

neratinib

even

the

early

PFE

data.

•

Why didn’t Puma incorporate protocol amendments much earlier for grade 3 diarrhea

prophylaxis?

Why haven’t trials looking at these issues been more rigorous?

•

December

11,

2015,

Puma

released

interim

results

from

open

label

trial

adjuvant

patients with varying treatment duration. Of the 72 patients in the trial, only 50 were

evaluable

(approximately 30%

were

unevaluable).

The

loperamide

dosage

was

changed

mid

study.

•

The overall results of 16% grade 3 diarrhea were then compared to a table showing a variety of

drugs/combinations for more serious indications, not adjuvant, and then attempting to draw

comparative conclusions.

•

This is voodoo science and will not hold up in regulatory or commercial situations.

Stockholders

were

also

unimpressed

–

Puma’s

stock

price

did

not

even

recover

its level

from the previous week .

Inconsistent Results

•

In the NSABP FB-7 trial, three of the four arms that utilized the prophylaxis had significantly higher

rates (30%, 35% and 23%). The patients in the cohort of the SUMMIT basket trial presented at

SABCS also had a higher rate (35%).

Can stockholders rely on current management to handle this issue from either a

regulatory or comercial standpoint?

M&A

Speculation

There

has

been

speculation

regarding

M&A

for

quite

some

time.

Analysts

have

also

commented:

Cowen 5/5/15:

“..[F]uture

stock performance appears increasingly dependent on M&A, an outcome we

have little visibility on.”

“Puma management has acknowledged that a sale of the company may be the optimal

way

maximize

shareholder

value

and

allow

neratinib

realize

its

full

potential…In

our

view, Puma is likely to generate significant acquisition interest...”

“[O]ur

optimism

for

M&A

exit

somewhat

tempered

the

fact

that

[Puma]

has

been

investigating a potential sale for several months...”

UBS 5/4/15:

“We reiterate our Buy rating and see Puma as a prime acquisition candidate.”

Interestingly,

right

around

the

early

May

timeframe,

the

SVP

left

the

Company.

UBS 5/20/15:

“Will Puma be acquired?

We have felt that there isn’t a rush to acquire until the calendar flips to 2016 so that it’s

dilutive

only

for

one

year

and

carc/filing

de-risked.

That

said,

one

reason

move

sooner

rather

than

later

execute

the

long-duration

trials

max

out

the

tail

potential.

CVRs

may be acceptable to reflect upside sales optionality.”

However, a company must always be run under the assumption that there may never

be an M&A

offer that fully reflects value and is in the best interest of shareholders.

Stockholder Discontent

“Auerbach and Eyler received nearly $22.3 million in salary and

incentive-based annual compensation in 2014 alone, all materially

enhanced as a result of deceiving the investing public...”

-Stockholder Consolidated Complaint, October 16, 2015

•

A stockholder class action complaint was filed on June 3, 2015 in the U.S. District

Court for the Central District of California against Puma, Alan Auerbach and

Charles Eyler.

•

In the complaint, the stockholder plaintiffs alleged violations of federal securities

laws, including claims under Sections 10(b) and 20(a) of the Exchange Act,

stemming from Defendants’ allegedly problematic statements and failure to

disclose material adverse facts regarding the results of the ExteNET trial and the

efficacy of neratinib.

•

The plaintiffs allege that the defendants, including Auerbach and Eyler, “engaged

in a scheme to deceive investors and the market and a course of conduct that

artificially inflated the price of Puma stock and operated as a fraud or deceit on

Class Period purchasers of Puma stock by misrepresenting and omitting material

information about neratinib…”

•

The outcome of the stockholder litigation is currently pending.

The Company’s problematic statements have already led some

stockholders to take legal action.

Stockholder Unfriendly Executive

Compensation

•

Compensation is excessive and not aligned

with stockholder interests.

•

No formula based incentive plan (noted by ISS

and Glass Lewis).

•

Equity plan is dilutive.

See Appendix A for more details

Failure to Respond to 220 Demand

Puma’s current board and management are not sufficiently committed to

transparent disclosure or responsive to legitimate stockholder concerns.

•

In July 2015, I exercised my right as a stockholder under DGCL Section 220 to request

copies of the Company’s board minutes.

My request was narrowly tailored for the purpose of enabling me to analyze and value

my ownership stake.

The Company engaged in a pattern of delays and requested additional time to

respond.

Eventually, the Company claimed that it is under no obligation to comply based on its

belief that I did not have a legal basis for the request.

I strongly disagree with their position and I provided a valid purpose for the requested

materials.

•

On October 29, 2015 and concurrent with the launch of this consent solicitation, I delivered

a second request to inspect the Company’s stockholder lists pursuant to DGCL Section 220.

Initially, the Company provided limited information purportedly in satisfaction of the

request, and only committed to provide all of the legally required documents after I

filed suit in the Delaware Courts.

The Company’s response reflect the board’s lack of

transparency and an unwillingness to respond to the

legitimate concerns of stockholders.

Value Proposition

Value Proposition And Caveats

Potential Value

•

Depending on how various indications for use are valued commercially, and the

assigned probability of technical and regulatory success, Puma shares may yet offer

investors a value proposition.

•

However, we do not see any path back to previous prices (>$250) and unlikely that

much

over

$100

per

attainable.

This

view

shared

recent

analysts’

reports

with the exception of one who appears to be close with management.

M&A

rumors

have

swirled

around

the

Company

far

back

2013.

•

As recently as 14 December 2015, RBC said that “We view an acquisition by a big

biopharma

as the most likely outcome.

” In the same report, they cut their price target

from $285 to $103.

•

August

2015

JPM

said,

“….we

believe

there

are

too

many

cards

left

unturned

for

suitor

pull

the

trigger

right

now.”

While

some

the

cards

were

revealed

the

SABCS, generally investors were disappointed and the stock fell again.

•

Since management has a history of making misleading and problematic statements

not backed up by actual data, any company having a look at Puma would

undoubtedly

conduct

rigorous

and

lengthy

due

diligence.

Even

then

improbable

that

any

binding

offer

would

made

ahead

FDA

and

EMEA

submissions,

well

waiting to be sure that regulatory authorities would actually file the Applications.

just

too

tight

rely

M&A

strategy

with

’16

NDA

submission

and

potential launch early Q1

’17.

Therefore, massive regulatory, manufacturing and

commercial efforts must be underway now to meet the proposed launch date.

Extended Adjuvant Claim

Puma says it will submit a US NDA Q1

’16 for use of neratinib

in the extended

adjuvant setting based on the results of the ExteNET

Trial.

They indicate that FDA

will evaluate the NDA based on two-year DFS

as the protocol primary

endpoint.

Recently, however, management did waffle about not having heard

from

FDA

about

the

possibility

needing

five-year

data.

have

concerns

about

the viability of this plan:

Trial Design:

There are many issues associated with the trial:

Several protocol changes

High dropout/censoring rates,

40% occurrence of Grade 3 diarrhea,

Potential unblinding

of the trial due to the huge incidence of severe

diarrhea in the treatment arm.

Small Treatment Effect:

•

As shown previously, the DFS

at 3 years was down vs. 2-year rates in every

subgroup except HR+ (no central read of HER2), and even there the rate

change was immaterial (4.2% to 4.3%).

No effect was seen in the HR-

group.

•

Many physicians have indicated that the small overall treatment effect at the

expense of a high rate of severe diarrhea would not make them inclined to use

the drug routinely.

Extended Adjuvant Claim

Much of the residual value still resides in the adjuvant claim, so a

rocky road here would change the valuation outlook substantially.

Approvability Questions:

Management

has

ballyhooed

the

DFS

effect

the

HR+

subgroup,

but

this

was

not

predefined

as the primary endpoint, and thus is unlikely to result in an approval without additional work.

•

Even if one were optimistic and accepted the likelihood of getting the HR+ claim, this cuts

into the overall population in the adjuvant setting, without even considering competitive

threats

Perjeta

and

ONT

380.

•

JPM

was also skeptical about the approval process:

“[A]pproval

is not a shoe-in by any stretch. We

expect the risk-benefit profile will be highly

scrutinized by the Agency, especially given the

well known GI toxicities.” JP Morgan, Dec. 2015

“We don’t expect the review process to be

smooth sailing for neratinib, as we

anticipate that it could come under heavy

scrutiny” –

JP Morgan, Aug. 2015

Lack of Regulatory Preparation:

have

heard

nothing

about

pre-NDA

meeting

with

FDA

with

respect

the

application.

request must be submitted 60 days prior to the meeting, and briefing data must go in 30 days

prior

the

meeting.

Puma

wants

submit

NDA

’16,

this

request

should

have

already been made in order to provide adequate time to react/modify following the meeting

and prior to submission.

Other Claims for Use

The Company’s original strategy was to make metastatic breast cancer

the first submitted application.

While

some information has been

released here, there is no body

of data that we are aware of that would imply a submission for

this indication in the near future.

There have also been some off-the-cuff remarks about the possibility of

submitting for a neoadjuvant claim.

However, recently released data in this setting was disappointing,

and RBC removed neoadjuvant from their valuation model.

Two years ago the Company said, “Puma’s company goal is clearly to

move neratinib into Phase III in the neoadjuvant

setting.” (12/4/13)

We do not know where this stands.

Likewise, other areas such as mutated HER2, CNS metastasis and other

solid tumors are supported by very limited data and do not appear to

be near-term possibilities.

Impact of the SABCS Data Release

Puma has been spinning the new data as positive due to the increase in DFS for

the HER2+, HR+ subset. We have several concerns about this proposed strategy:

•

Regulatory:

The

FDA

may

not

allow

the

Company

use

ExteNET

subgroup

analysis

as the basis for an NDA approval because it was not the pre-selected primary

endpoint.

•

Market Share:

Even in the best case scenario, the HER2+, HR+ centrally confirmed

subset is not large enough to support the type of sales that would be necessary to

justify the Company’s current market cap. If the approval is limited to a series of

small subsets, it will be very difficult for a small company like Puma to execute a

commercialization plan.

•

Sales:

Building a sales force a serious challenge that could create significant

operating losses in the future.

•

Partnerships:

Any attempt to commercialize via partnership will likely harm the

Company economically.

•

M&A:

It seems unlikely that there will be any acquirers for Puma until the regulatory

situation has been clarified.

Puma’s options are becoming more limited and more expensive.

High risk from the standpoint of probability of technical and regulatory

success, thereby requiring a thoughtful, objective, reality based

strategy going forward.

Overall Position

•

Here is what JP Morgan had to say in two recent reports (August and

December 2015):

“[T]he spotlight will now shift to progress with regulators.”

“[N]eratinib’s

commercial prowess remains a major question mark, if it even gets that

far.”

“Even

approved,

reversing

sentiment

neratinib

could

Herculean

task.”

“Therefore we believe that Puma faces a daunting task to shift the negative

perception of its lead product.”

•

agree

with

all

these

statements.

pointed

out

before,

there

evidence of a comprehensive plan to get the drug approved and positioned

correctly,

have all of the manufacturing issues dealt with and launch stocks

available, and do the upfront commercial work necessary to be ready to

launch the drug.

•

Relying on

M&A

at an acceptable valuation in the immediate future is a

huge gamble, and if it does not happen shareholders will once again be left

holding the bag.

•

Now, more than ever, the Company needs an infusion of highly experienced

board

members

all

aspects

technical/regulatory,

commercial,

M&A

and

finance.

Shareholders deserve a better shot at restoration and enhancement of value.

Our Plan to Improve Transparency

The Nominees will work with management to improve transparency and manage street and investor

expectations, specifically by providing greater clarity with respect to the following issues:

•

Confirm Q1 ’16 NDA for extended adjuvant and possible neoadjuvant indication.

•

Address carcinogenicity data if problematic.

•

Events triggering payments of $187 million milestones due to PFE; cash flow to support R&D going forward,

and potential needs for additional financing.

•

Refine

and

disclose

regulatory

and

other

plans

place

response

ExteNET

results,

other

claims,

etc.

•

Correct any previous problematic statements and improve expectations provided by management going

forward.

•

Make management (as appropriate) other than CEO available on conference calls, meetings, etc.

•

Give complete outline of ongoing/planned studies, with firm reporting times.

•

Give complete report of all trial results (or topline at least) ready but heretofore unreleased (Pfizer and

Puma).

•

Show how all of the above line up with commercial expectations and valuations for various indications.

•

Update on Perjeta and other competitive threats.

•

PR with oncology community in order to promote better understanding of drug effects and

prevention/management of side effects.

•

Disclose firm, detailed business plan and value enhancing strategy.

In this uncertain environment, transparency is especially important for

investors. Unfortunately, Puma has lacked transparency in the past.

seek to increase transparency and achieve full value for stockholders.

Business Initiatives Nominees Plan to Pursue

The Nominees have outlined a set of business initiatives that address the following areas that they

have identified as critical to their oversight function and a value-maximizing strategy:

•

While it is difficult to know precisely what actions should be taken without full data access, it is

quite clear that an overall comprehensive plan must be adopted and executed expeditiously.

•

Unfortunately, the current board has not been fully transparent, and has not engaged in public

discussion of important issues including: integrating/launching commercial planning,

manufacturing/finishing launch stocks of drug, looking at cash flow to support this activity.

•

The current board has given no indication that such comprehensive planning/implementation

has been done.

The Nominees are committed to helping Puma develop a comprehensive plan.

Regulatory, Clinical and R&D Plan

Commercial/Competitive Situation, Label Indications and Valuations, Marketing and Sales Plan Preparatory

Activities

Manufacturing Considerations

Finance and Business Development

Investor Relations and Corporate Communications

Governance, Management Evaluation, Board Self-Study

Minority Slate of Highly

Qualified Nominees

Highly Qualified Slate of Nominees

The Nominees have the experience and expertise to help guide Puma

down the complicated path to a successful launch of neratinib:

Dr. Eshelman invested in Puma, undertook this consent solicitation, and

assembled an outstanding nominee slate because he believes in the

opportunity neratinib presents and is committed to bringing this valuable drug

to the market, with the ultimate goal of improving cancer care for patients.

•

Highly qualified with excellent, relevant track records and significant

experience, comparing favorably with current directors.

•

Proven commitment to enhancing stockholder value and to patient care.

•

Addition of four new directors brings breadth and depth to the current

board of directors.

•

No incumbent directors will be removed.

•

Each of the Nominees is independent of Dr. Eshelman and will fulfill their

fiduciary duties to act in the best interest of all Company stockholders.

Optimal Board Size: Nine is Fine

Of 31 peer companies identified by either ISS, Capital IQ, or

Bloomberg:

•

Seven peers have boards with nine directors.

•

Notably, CEO Alan Auerbach sits on the board of Radius

Health

Inc., which has nine members.

Radius Health’s

market cap and product pipeline are similar to Puma’s.

•

13 peer boards have nine or more members.

•

NONE

of Puma’s peers has a board with fewer than six

members.

ISS: “A board of between nine and 12

members is considered ideal.”

Glass Lewis: “[F]ive directors is almost

always a minimum

for an effective and

properly functioning board.” (2015 Puma

Biotechnology Proxy Paper)

Council of Institutional Investors

Corporate Governance Policies: “[A]

board should have no fewer than five

and no more than 15 members.”

Puma’s current board would have you believe that a five member board “is appropriate

for effectively governing the Company” and that the board’s current size “provides for

efficient decision-making.”

Puma’s claims contradict best practices and industry norms:

Best Practices

Industry Norms

Numerous companies, including Fortune 500 companies, have boards with nine directors: United Natural Foods

Inc., Windstream Holdings, Inc., Dr. Pepper Snapple Group, Inc., Lennar Corporation, Laboratory Corp of America Holdings, Cliffs Natural Resources, PulteGroup

Inc, Graybar Electric Company Inc. Wynn Resorts, Limited, St. Jude Medical, Inc., Asbury Automotive Group, Big Lots, Inc., Tractor Supply Company, Insight

Enterprises Inc., Quintiles Transnational Holdings Inc., Joy Global Inc., Lorillard, Inc., Sanmina, First American Financial Corporation, Avery Dennison Corporation,

Allergan Inc., Omnicare Inc., Dick’s Sporting Goods, NCR Corporation, Waste Management, Inc., PPG Industries Inc., Marathon Oil Corporation, Casey’s General

Stores, Inc., Agilent Technologies Inc., Symantec Corporation, HollyFrontier Corporation, PBF Energy Inc., Kohl’s Corporation, AbbVie Inc, Vertex Pharmaceuticals

Incorporated, Clovis Oncology, Inc., Tesoro Corporation, ARIAD Pharmaceuticals, Inc., Dynavax Technologies Corporation, Lexicon Pharmaceuticals, Inc.,

Seattle Genetics, Inc., Tesaro, Inc., World Fuel Services Corporation, INTL FCStone Inc., Best Buy Co. Inc, Reliance Steel & Aluminum Co., Stryker Corporation,

Cognizant Technology Solutions, Ball Corporation, Broadcom Corporation, CenterPoint Energy, Franklin Resources, Inc., Oaktree Capital Group LLC, Jarden

Corporation, Mohawk Industries, Inc., UGI Corporation, The Pantry, Inc., Tyson Foods Inc., Jabil Circuit, Inc., AutoNation Inc., Lear Corporation, Automatic Data

Processing Inc., Liberty Interactive Corporation, Ameriprise Financial, Inc., Centene Corporation, Huntsman Corporation, Devon Energy Corporation, Publix Super

Markets, Inc., Tech Data Corporation, RiteAid Corporation, National Oilwell Varco, Inc., Xerox Corporation, Arrow Electronics, Gentherm Inc., Cree, Inc

Belden Inc., Eastgroup Properties Inc., La-Z-Boy Inc., Amphenol Corporation, CVR Energy Corp, International Bancshares Corp. 1-800-Flowers.com Inc.

Current Board’s Lack Of Experience

Puma claims that the current board members “posses a well diversified range of

experience” and the current board “has the experience necessary to guide the

Company through the next stages of its development.”

•

The current board has limited public company corporate governance and oversight

experience:

The current board has collectively only served on 6 public boards other than Puma.

•

Of these companies, the five that remain public have a current combined market cap of $3.21 billion,

only slightly larger than Puma itself, of which Radius Health, Inc. accounts for $2.63 billion. Their average

market cap was only $642.9M.

•

Mr. Wilson serves on the board of Zosano, Inc. which since becoming public in 2015 is down

approximately 75%.

•

The stock price of Radius Health, Inc., where Mr. Auerbach is a director, fell 11% after the company

delayed an NDA filing for “work health balance,” and was down 23% from its peak in July 2015.

The Nominees are far more experienced than the current board:

•

The four Nominees have served on at least 20 public company boards –

more than 3x

the five

current board members.

•

The four Nominees have served as Chairman or Lead Director on at least 10 public and private

company boards –

10x

the five current board members.

•

The four Nominees have at least 110 years of combined relevant industry experience in the

pharmaceutical and biotechnology industry as officers and directors –

nearly double

the five

current board members’ purported 60 years of experience.

1. All calculations as of November 24, 2015.

Nominee Experience

Puma claims that the Nominees “provide no additional experience or expertise.”

In fact, the Nominees will add extensive expertise that the current board lacks:

Drug Development and Regulatory

Current

Board

Nominees

Auerbach’s experience

at Cougar was limited to

an in-licensed drug -

early development was

completed by PFE;

Cougar was sold before

any NDA filing.

Three Nominees have extensive development experience:

•

Dr. Seth A. Rudnick was responsible for the development and approval of two significant biologicals -

alpha interferon and erythopoietin, at Schering Plough/Biogen and Johnson & Johnson, respectively.

•

Dr. Eshelman has supervised drug development and approvals in many therapeutic areas.

•

Mr.

James M. Daly worked closely on clinical development, regulatory, and oncology pipeline strategy

at both Amgen Inc. and Incyte Corporation.

M&A

Current

Board

Nominees

No one on the current

board has M&A

experience other than

Auerbach, who was

involved in the sale of

Cougar for $1.1B.

Three Nominees have played key roles in large strategic transactions:

•

Dr.

Eshelman’s

companies

combined

have

sold

for

approximately

billion-

than

the

value of Auerbach’s previous transaction that Puma touted in its Revocation Statement.

•

Mr. Kenneth B. Lee, Jr. served as a director for three companies that were sold in transactions with a

combined value of approximately $7.8B, and served on the Transaction Committee and Audit

Committee of Pozen Inc. during its acquisition of Tribute Pharmaceuticals Canada Inc.

Lee also founded the Center for Strategic Transactions at Ernst & Young LLP.

•

Mr. Daly played a key role in Amgen’s acquisitions of Micromet and BioVex, both oncology products.

Oncology

Current

Board

Nominees

The

current board

members have

limited

oncology background.

All Nominees have significant oncology experience:

•

Dr. Rudnick is a medical oncologist and completed an oncology fellowship at Yale University.

•

Daly served as head of Amgen’s oncology business. He oversaw the successful launches of five

oncology products and played a key role in two oncology product acquisitions.

•

Dr.

Eshelman has served on the boards of numerous

companies that developed oncology products.

•

Mr. Lee served on the board of an oncology company, OSI Pharmaceuticals, Inc., that had a

marketed

product

and

was

acquired

Astellas

Pharma,

Inc.

Nominee Experience

Investment

Current Board

Nominees

Only one current board

member has significant

investment experience.

Three

Nominees have significant investment experience focused on breakthrough and early stage

companies, at funds with a venture capital model.

•

Dr. Eshelman: Founder of Eshelman Ventures LLC., a fund managing investments in numerous

healthcare companies.

•

Dr. Rudnick: 15 years of investment experience.

Venture Partner at Canaan Partners, led

investments in several breakthrough companies, including CombinatoRX, Esperion, Genaiisance

Pharmaceuticals and Pozen.

•

Mr. Lee: General Partner of Hatteras BioCapital Fund., L.P., where he managed portfolios

valued at over

$200M.

Accounting

Current

Board

Nominees

No current board

members have

accounting experience

except for Jay M.

Moyes, who spent 12

years at KPMG LLP.

Mr. Lee spent 28 years at Ernst & Young LLP.

•

Titles included: Managing Director of Health Sciences Investment Banking Group & Co-Chairman

of International Life Sciences Practice.

•

Strong understanding of GAP and GAAP as applied to life sciences.

•

Unique experience structuring transactions at ALZA Corporation.

Marketing

Current

Board

Nominees

No current board

members have

significant marketing

experience.

Mr. Daly was responsible for marketing in his role as Chief Commercial Officer at Incyte and during

his time at Amgen, where he served as SVP North America Commercial Operations and SVP Global

Marketing and Commercial Development.

•

During Daly’s tenure at Incyte, annual

oncology

sales increased from $130M to $600M per year,

and during his tenure

as head of the oncology business at Amgen sales increased from $1B to

$4B.

CAREER HIGHLIGHTS

Age: 66

Founder of Eshelman Ventures, LLC, an investment company primarily focused on

healthcare companies.

Non-Executive Chairman of The Medicines Company, a global biopharmaceutical

company focused on saving lives, alleviating suffering and contributing to the

economics of healthcare by focusing on the leading acute and intensive care

hospitals worldwide

Founded and served as CEO and Executive Chairman of Pharmaceutical Product

Development, Inc.,

a global contract pharmaceutical research organization. In 2008,

PPD was selected by Forbes for its Platinum 400 list of the best big companies in

America and as best-managed company in health care equipment and services.

PPD was sold to a private equity consortium for $3.9 billion in December 2011.

Served as Founding Chairman and largest shareholder of Furiex Pharmaceuticals,

Inc., which licensed and rapidly developed new medicines.

Furiex was separated

from PPD in a tax-free spin-off in June 2010 and sold to Forest Labs/Actavis for $1.1

billion in July 2014.

Served as Senior Vice President, Development of Glaxo, Inc., predecessor to

GlaxoSmithKline plc, as well as in various management positions with Beecham

Laboratories and Boehringer Mannheim Pharmaceuticals.

Served on the executive committee of the Medical Foundation of North Carolina and

the Board of Trustees for UNC-Wilmington. In 2011, Dr. Eshelman was appointed by the

North Carolina General Assembly to serve on the Board of Governors for the state's

multi-campus university system as well as the North Carolina Biotechnology Center. In

addition, he chairs the board of visitors for the School of Pharmacy at UNC-Chapel

Hill, which was named the UNC Eshelman School of Pharmacy in recognition of his

many contributions to the school and the profession.

Awards received by Dr. Eshelman include the Davie and Distinguished Service

Awards from UNC and Outstanding Alumnus from both the UNC and University of

Cincinnati schools of pharmacy, as well as the North Carolina Entrepreneur Hall of

Fame Award.

FREDRIC N. ESHELMAN, PHARM.D.

NOMINEE

EDUCATION

Received

Pharm.D.

from

the

University

Cincinnati,

and

completed

residency

Cincinnati

General

Hospital

and

B.S.

pharmacy

from

UNC-

Chapel

Hill.

Dr.

Eshelman

graduate

the

Owner/President

Management

program

Harvard

Business

School.

CAREER HIGHLIGHTS

Age:

Mr.

Daly

served

Executive

Vice

President

and

Chief

Commercial

Officer

Incyte

Corporation,

biopharmaceutical

company,

from

October

2012

until

June

2015.

Mr.

Daly

has

served

one

Chimerix

Inc’s

directors

since

2014.

Prior

joining

Incyte,

Mr.

Daly

served

Senior

Vice

President

North

America

Commercial

Operations

and

Global

Marketing/Commercial

Development

Amgen

Inc.,

global

pharmaceutical

company,

where

was

employed

from

January

2002

December

2011.

Prior

his

employment

with

Amgen,

Mr.

Daly

was

Senior

Vice

President

and

General

Manager

the

Respiratory/Anti-infective

business

unit

GlaxoSmithKline,

where

was

employed

from

June

1985

December

2001.

JAMES M. DALY

NOMINEE

EDUCATION

Received

B.S.

and

M.B.A.

degree

from

the

University

Buffalo,

The

State

University

New

York.

CAREER HIGHLIGHTS

Age: 66

Dr. Seth Rudnick has been venture partner and previously general

partner at Canaan Partners, a venture capital firm, since 1998, from

which he is now retired.

Formerly, Dr. Rudnick was the Chief Executive Officer and Chairman of

CytoTherapeutics Inc., a company developing stem cell-based

therapies. He helped found and served as the Head of Research and

Development for Ortho Biotech, a division of Johnson & Johnson

focusing on cancer and chronic illnesses.

Dr. Rudnick currently serves on the boards of directors of the following

privately held biotechnology companies: Envisia Therapeutics, LQ3

Therapeutics, Meryx Pharmaceuticals, for which he serves as Chairman,

Liquidia Technologies, Inc., for which he serves as Chairman, and G1

Therapeutics, for which he serves as Executive Chairman.

Dr. Rudnick also served on the board of Square 1, a public company

until its October 2015 acquisition by Pacific Western Bank. Currently Dr.

Rudnick

is a Clinical Adjunct Professor of Medicine at University of North

Carolina, Chapel Hill.

SETH A. RUDNICK, M.D.

NOMINEE

EDUCATION

Received

M.D.

from

the

University

Virginia.

Completed

residency

Washington

University

Barnes

Hospital

and

fellowship

medical

oncology

Yale

University.

Holds

B.A.

history

from

the

University

Pennsylvania.

CAREER HIGHLIGHTS

Age: 67

Managing member of Hatteras BioCapital, LLC

and the general

partner of Hatteras BioCapital Fund, L.P., a venture capital fund

focusing on life sciences companies.

Mr. Lee most recently served as managing director of the firm’s

Health Sciences Corporate Finance Group.

Currently, Mr. Lee serves on the boards of directors of the following

publicly held biotechnology companies: Biocryst Pharmaceuticals,

Inc.

and

Pozen Inc., for which he serves as Lead Director, Chairman

of the compensation committee and as a member of the audit

committee.

Mr. Lee also serves on the boards of directors of two private

companies,

Clinverse, Inc., and Clinipace Worldwide Inc., for which

he serves as Chairman, and is a co-founder of the National

Conference on Biotechnology Venture.

Between 2002 and 2013, Mr. Lee served on the Boards of several

public companies: Maxygen, Inc.; OSI Pharmaceuticals, Inc.; CV

Therapeutics, Inc.; Abgenix, Inc. and Inspire Pharmaceuticals, Inc.

Mr. Lee was formerly national director of the life science practice at

Ernst and Young LLP, where he advised biotechnology and

pharmaceutical companies throughout the world on a wide range

of financial and strategic planning issues.

KENNETH B. LEE, JR.

NOMINEE

EDUCATION

Received

B.A.

from

Lenoir-Rhyne

College

and

M.B.A.

from

the

University

North

Carolina

Chapel

Hill.

Contact

Legal Inquiries:

Cadwalader, Wickersham & Taft LLP

Richard Brand

(212) 504-5757

richard.brand@cwt.com

Investor Inquiries:

Okapi Partners LLC

Bruce Goldfarb/ Pat McHugh/ Lydia Mulyk

(212) 297-0720 or (877) 869-0171

info@okapipartners.com

Media Inquiries:

Finsbury

Kal

Goldberg/ Chuck Nathan / Chris Ryall

(646) 805-2000

kal.goldberg@finsbury.com

charles.nathan@finsbury.com

chris.ryall@finsbury.com

Appendix A

Executive Compensation

History of Problematic Statements:

Soaring Stock Price & Effect On Executive Compensation

While the stock price was high between July 2014 and June 2015, Chairman, President

and CEO Alan Auerbach and SVP Finance and Administration and Treasurer Charles Eyler

were each rewarded with generous cash and stock bonuses for 2014.

In its Proxy statement, filed in April 2015, the Company justified its 2014 executive

compensation program on the following factors:

•

Price of the common stock increased approximately 1,302% between the

Company’s initial OTC listing in April 2012 and the end of its 2014 fiscal

year.

•

Price of the common stock increased approximately 83% during the

Company’s 2014 fiscal year.

•

Positive ExteNET results announced by the Company in July 2014.

Eyler:

•

$117,610 cash bonus

•

Options to purchase 31,500 shares

•

Total Value: $4,499,559

Auerbach:

•

$300,000 cash bonus

•

Options to purchase150,000 shares

•

Total Value: $17,797,606

Sources: SEC Filings.

Stockholder Unfriendly

Executive Compensation

The Company’s overall executive compensation program is excessive, is

not aligned with shareholder interests, and does not reflect best

practices.

Puma’s executive and director compensation levels are excessive.

•

Alan Auerbach’s total annual compensation for 2014 was almost 8x the ISS

peer group median and included an outsized equity award equal to more

than 26x his base salary.

•

Puma’s outside directors each received compensation in excess of $1.175

million for 2014.

Failure to implement formula-based incentive plans with objective metrics and

goals.

•

Puma has a discretionary executive cash bonus program and does not use

any performance-vesting equity awards for its executives.

•

Both ISS and Glass Lewis have identified Puma’s executive compensation

program as not being linked to performance and concerns with the structure

of long-term incentive pay.

Stockholder Unfriendly

Executive Compensation

Executive compensation practices that are not consistent with best practices and

investor expectations.

•

Puma only provides its stockholders with an opportunity to vote on its executive

compensation program once every three years (triennial say-on-pay). In 2014, only 15.4%

of Russell 3000 companies provided triennial votes.

•

Puma discloses no clawback, anti-hedging or anti-pledging policies.

•

CEO Auerbach has 280G gross-up protection.

Puma’s equity incentive plan is dilutive and expensive.

•

More than 1/3 of Puma’s stockholders voted against the 2015 and 2014 equity plan

proposals to approve additional shares to increase plan capacity.

•

According to Glass Lewis, the total potential dilution from the plan is 31.97%, while peer

average total dilution is 20.41% and the peer median is 18.67%, and the three-year burn

rate is more than 2x the peer median rate (5.64% v. 2.80%). ISS calculated the one-year

2014 burn rate at 6.62%.

•

Glass Lewis calculated the projected annual cost of the plan per employee at more than

22x the peer average, with an annual per employee cost of over $2.5 million.

1. Source: Towers Watson.

Puma’s compensation practices reflect a board that is not responsive to

shareholder concerns.