Palatin Technologies Inc (PTN) 2007 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Palatin Technologies fourth quarter 2007 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions for the question-and-answer session will be given at the end of the Company's remarks. As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that statements made by Palatin that are not historical facts may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results could differ materially from those anticipated due to a variety of risks and uncertainties discussed in the Company's most recent filings with the Securities and Exchange Commissions. Please consider such risk and uncertainties carefully in evaluating these forward-looking statements and Palatin prospects. Now I would like to turn the call over to Dr. Carl Spana. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome to the Palatin conference call. I am Carl Spana, President and CEO of Palatin Technologies. With me is Stephen Wills, Palatin's Executive Vice President of Operations and Chief Financial Officer, and Dr. Trevor Hallam, Palatin's Executive Vice President of Research and Development. To start our conference call, Steve Wills will provide a financial update.

Thank you, Carl, and good morning. For the quarter ended June 30, 2007, which is the fourth quarter of our fiscal year, Palatin reported a net loss of $6.1 million or $0.07 per share compared to a net loss of $7.9 million or $0.11 per share for the same period in 2006. For the quarter ended June 30, 2007, total revenues were $2.6 million compared to $5 million for the same period in 2006. For the year ended June 30, 2007, total revenues were $14.4 million as compared to $19.7 million for the previous fiscal year. For the year ended June 30, 2007, we reported a net loss of $27.8 million or $0.36 per share compared to a net loss of $29 million or $0.48 per share for the previous fiscal year. The decrease in the net loss and revenue for the current periods was primarily attributable to lower research and development spending on bremelanotide, Palatin's drug under development for the treatment of male and female sexual dysfunction. Cost reimbursement revenue from King Pharmaceuticals also decreased as a result of this lower spending. At June 30, 2007, Palatin's cash, cash equivalents and investments totaled $33.8 million compared to $30.7 million at June 30, 2006.

Regarding revenue, for the quarter ended June 30, 2007, Palatin recognized revenue under our collaboration agreement with King of $1.8 million, which included King's share of bremelanotide development costs and $.7 million of contract revenue related to our February 2007 collaboration with AstraZeneca. In the comparable quarter of 2006, Palatin recognized $4.9 million of contract revenue from King, reflecting higher cost reimbursement revenue to bremelanotide's clinical studies and development activities. Regarding cost and expenses, total operating expenses for the quarter ended June 30, 2007, were $9.1 million compared to $13.2 million for the same period in 2006, reflecting lower development cost of bremelanotide following the completion of two Phase 2B clinical trials in patients with ED, which were partially offset with other redevelopment spending and higher stock-based compensation charges.

Regarding our cash position, as of June 30, 2007, Palatin's cash, cash equivalents and investments totaled $33 .8 million compared to $30.7 million at June 30, 2006. Our current year operating expenses were offset by our February 2007 stock offering netting proceeds of $25.5 million and the receipt of $10 million from AstraZeneca upon the signing of a research and collaboration agreement.

Thank you, Steve. Now Dr. Hallam and I will give a brief update of Palatin's development programs. This will include bremelanotide, our sexual dysfunction therapeutic, NeutroSpec, our diagnostic agent for infections and additional details on our obesity program and other drug discovery pipeline projects. First I will start with bremelanotide. Last week we announced that Palatin has required full rights to bremelanotide, a first in class melanocortin agonists drug candidate for the treatment of male and female sexual dysfunction from King Pharmaceuticals. Palatin and King mutually agreed to end our collaborative development and marketing agreement on bremelanotide. Under the termination of the agreement, Palatin has regained all rights to bremelanotide without any obligation for future payments to King. The mutual decision follows recent responses from representative of the U.S. Food and Drug Administration which raised concerns about the acceptable benefits risk ratio to support the progression of bremelanotide into Phase three studies for erectile dysfunction as a front line therapy in the general population and King's review of it's internal pipeline and alternative strategic opportunities. King has no further obligations for financial payments to Palatin other than (inaudible) incurred costs not yet reimbursed and approved expense to reimbursements related to the wind down of the collaboration. Termination of the collaborative development and marketing agreement is effective December 6, 2007. King retains the Palatin unregistered common stock once previously issued to them.

While we appreciate and thank King, who's development and financial support, having the full rights to bremelanotide allows Palatin complete autonomy with the next stage of development and gives our shareholders the greatest opportunity to realize value from the progression of bremelanotide toward commercialization, including the potential for new collaboration partners. The safety of patients in our clinical programs has always been our number one priority. We continue to review the responses and comments made by the FDA, including discusses with outside clinical and regulatory specialists and are currently engaging the FDA in further discussions in order to determine our next steps relating to the further developed of bremelanotide in both erectile dysfunction and female sexual dysfunction. As soon as our review and assessment is complete, we will as quickly as possible we will convey a comprehensive and definitive plan regarding our continued development of bremelanotide.

Regarding our female sexual dysfunction program, we continue to be committed to advancing the clinical development of bremelanotide for female sexual dysfunction. We have completed an exploratory at-home phase two clinical trial in pre and postmenopausal women and are in the final stages of compiling the data. We will anticipate releasing the results of this trial later this month.

We continue to believe that the market potential for an innovative sexual dysfunction therapeutic with a differentiated product profile is significant. We will be expanding our efforts to identify development partners on a worldwide and territory basis for both erectile dysfunction and female sexual dysfunction indications. I can assure you that the management and employees at Palatin are working diligently to determine the best go-forward strategy; however, this will take time. I reiterate our position that we will convey our go-forward plans with our bremelanotide programs as soon as we completed our review. Regarding NeutroSpec, we continue to believe that NeutroSpec is a product that can benefit the treatment of patients. Our current plan is to meet with the FDA to discuss potential development plans going forward. At this time we ca not issue a prospective time table or definitive plans regarding the future development of NeutroSpec until after our meeting with the FDA. At this time, I would like to turn the call over to Dr. Trevor Hallam, who will talk about our research and development programs and our collaboration with AstraZeneca. Trevor.

Thanks, Carl. As I have reported during prior teleconferences, we have three mature and active internal research and development programs. All three have been clinically presented by our own work and by that of others, which puts all three in a very strong position for success. All three of those programs continue to provide lead candidates for the treatment of sexual dysfunction, obesity and congestive heart failure. The melanocortin four receptor drug discovery program at Palatin began with our core technologies in peptide drug discovery and them coupled with our expertise in melanocortin receptor medicinal chemistry. The result is compounds active at the melanocortin four receptor with pharmacological profiles without development potential as therapeutics for sexual dysfunction or for obesity and related diseases. With respect to obesity and related diseases, multiple lines of evidence point to the melanocortin four receptors as an important regulator of food intake and metabolism. We know that melanocortin four receptor deficient mice are [hypothogic] and obese.

We know that in humans the most common monogenic form of obesity results from loss of function mutation in the melanocortin four receptor. And finally endogenous forms like [laptin] known to be involved in regulating food intake as well as anorectic agents like [flenthoramin] work in part by modulating the activity of effects at the melanocortin four receptors. In preclinical work carried out at Palatin using various animal models of obesity our compounds have been shown to reduce both food intake and cause weight loss in genetic and diet-induced models of obesity. Further, they improve metabolic parameters including levels of blood glucose and plasma insulin and significantly lack sexual side effects. Although the melanocortin four receptor is clearly a very promising obesity drug targets and has been targeted by many in the industry, it has not been an easy target for pharmaceutical drug discovery and development. Activation of melanocortin four receptors are associated with a number of physiological effects, increased decreased food intake and penile erectile genesis in man. Furthermore, melanocortin four receptors are regulated by both an endogenous agonist and antagonist and the development of compounds with the appropriate pharmacology has been difficult. We believe, however, that we have identified compounds with the right pharmacological profile for potential development as therapeutics for obesity, diabetes and metabolic syndrome, and, further, AstraZeneca agreed.

In January, we were excited to announce a collaboration with AstraZeneca to develop agonists at melanocortin receptors three and four for obesity and related disorders. Our collaboration with AstraZeneca will enable our melanocortin four obesity program access to the extensive resources required to develop agents in this field. One of the near-term goals of our collaboration with AstraZeneca will be to finalize selection of a lead drug candidate for clinical evaluation. The program continues to progress well.

Now with respect to congestive heart failure, we are excited about our early development program here. This program is identified as series of novel natriuretic peptide receptor agonists that appear to have desirable renal and cardiovascular properties in animal models over existing products for the treatment of acute decompensated congestive heart failure. The congestive heart failure program has two major objectives, to develop suitable development candidates for use in acutely decompensated patients, and further to develop long-acting compounds for the treatment of chronic congestive heart failure, currently an unmet need. The program has identified a long-acting subcutaneously administered development compound that has completed 28-day [GOP] tolerability study in two species successfully. We intend to progress this compound as a starting point to Phase One clinical studies in man later this year. Thanks, Carl.

Thank you, Trevor. While recent events have caused the Company to have to step back and evaluate the best way to move bremelanotide forward, we are excited about the significant strides we have made in our other discovery, development, and commercialization programs, and we are enthusiastic about the potential to increase our future product portfolio. Before we open the call to questions, I would like to summarize our near-term focus. With respect to bremelanotide for the treatment of erectile dysfunction, we will continue to review the responses and comments made by the FDA and are currently engaging the FDA in further discussions in order to determine the next steps related to the further developments of bremelanotide through syndication. With the respect to bremelanotide for the treatment of female sexual dysfunction, we are in the final stages of compiling data from an exploratory at-home Phase Two trial in pre and postmenopausal women and expect to release results later this month. We are also expanding our efforts to bring in new development partners on a worldwide and territorial basis for bremelanotide for both erectile dysfunction and female sexual dysfunction indications. And, finally, we will continue concentrating our efforts on our pipeline. These include partner programs for obesity with AstraZeneca, as well as a lead clinical candidate for the treatment of congestive heart failure progressing into man later this year. I'd like to thank you for listening to the Palatin conference call, and now we're going to open the call for questions.

Thank you, Dr. Spana. The question and answer session will be conducted electronically. (OPERATOR INSTRUCTIONS) And we will pause a moment to give everyone an opportunity to signal for a question. And we will take our first call from Rahul Jasuja.

Morning, everybody. A couple of questions relating to -- to ED. So is there a plan for Europe as far as ED is concerned? My assumption would have been that irrespective of the FDA's decision, Europe could be approached on -- on a parallel track. And then the second question I have is, having said what the FDA said, Carl, could you provide us with some sort of color on maybe a more -- a different clinical strategy, namely dosing and so on to arrive at the therapeutic window for trials going forward? Thanks.

Sure. With regards to the first question, yes there are parallel efforts with regards to bringing bremelanotide forward in markets outside the U.S., primarily Europe. And as we finalize our plans we will be communicating the European strategy as well. So that's under way as we speak. With regards to the second question, we are -- responding back to all of the issues raised by the FDA, certainly moving outside of the general population, which is where the risks that seem to be somewhat troubling to the FDA, gives us a path forward as we get clarification as to what aspects of bremelanotide we need to address in a go-forward plan, most likely in patients that are nonresponsive to [PD five] inhibitors, we will certainly convey that forward. I do think we have a lot of options with regards to how we dose and the dosing schedule that might be used. We just have to make sure that we have adequate discussions with the FDA and make sure that we have their buy-in on how we move this product forward.

Just one other -- just to add a little bit more color to that. I mean, clearly, we are very -- we are going to be coming out with the female results soon, and, of course, any comments about adverse events the FDA have about the compound for ED we will need to very carefully look to whether it is appropriate or whether it's not appropriate to female, and be able to integrate those views. And also with any approach to the Europe, we are not going to be ignoring the FDA's commentary on those. Far from it. They have given us some valuable feedback and we're integrating that in our approaches in the future and that will be part of what we discuss with Europe. So this won't be just -- that will be part of how we take the program through.

Sure. So pertaining to the FDA program, Steve and -- Trevor and Carl, sorry. The -- there are plans to -- to discuss with the FDA regarding FSD given what the FDA has said on the ED, so that for lack of a better word you can mitigate some amount of risk given the concerns of the FDA on the FSD program?

Definitely we are going to discuss what the conclusions are from those discussions -- Carl.

The FDA solely commented only on the erectile dysfunction program as a primary treatment or first-line therapy in men.

Sure.

So we are being conservative and -- and drawing as many conclusions and getting as much clarification so that as we go forward in the female sexual dysfunction indication, we will be, in essence, ahead of the curve having incorporated our learning by what we need to address so that we have a much stronger program and a much stronger approach to the FDA when we seek to go forward in the female indication.

Okay. Thanks.

Okay. Great.

This concludes the question and answer section today. At this time, Mr. Spana, I will turn the conference back over to you.

I would like to thank you for participating in our fourth quarter and fiscal year-end 2007 conference call. As you all know it has been a difficult quarter. We here remain enthusiastic about the prospects of the Company. We will be pushing forward on all fronts, and I look forward to seeing all of you who have participated and many others who have not as we travel around to speak to the investors throughout the next quarter. With that have a good day, and I look forward to speaking to all of you at the earliest convenience. Thank you.

This concludes today's conference. We do appreciate your participation. You may now disconnect.