Eshelman Fredric N DFAN14A Additional proxy materials by non-management

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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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.

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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.