Palatin Technologies Inc (PTN) 2010 Q3 法說會逐字稿

Good morning ladies and gentlemen, and welcome to the Palatin Technologies third quarter fiscal year 2010 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 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 Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements and Palatin's prospects. Now I would like to introduce your host for today's call, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies.

Thank you. Good morning, ladies and gentlemen. And welcome to the Palatin conference call. I am Carl Spana, President and CEO of Palatin Technologies. With me today is Steve Wills, Palatin's Executive Vice President of Operations and Chief Financial Officer, and Dr. Trevor Hallam, Palatin's Executive Vice President of Research & Development. Today Mr. Wills will take you through the financial summary for the quarter. That will be followed by Dr. Hallam, who will go through our Research & Development programs and update you on the progress we have made there. I will finish with a summary and overview, and then we will open it up to questions. So to start off our call, I will hand it over to Mr. Wills, who will go through the financial summary.

Thank you, Carl. Good morning everyone. For the quarter ended March 31st, 2010, which is the third quarter of our fiscal year, Palatin reported a net loss of $2 million, or $0.02 per share, compared to a net income of $0.1 million, or $0.00 per share, for the same period in 2009. Total revenues in the quarter ended March 31st, 2010 were $2.6 million, compared to $5.2 million for the same period in 2009. The net loss for the quarter ended March 31st, 2010, compared to the net income for the quarter ended March 31st, 2009, was primarily attributable to a decrease in the recognition of revenue under our agreements with AstraZeneca.

Regarding cost and expenses, total operating expenses for the quarter ended March 31st, 2010 amounted to $4.6 million, compared to $5.1 million for the comparable quarter of 2009. Included as a component of operating expenses were non-cash share-based expenses of $0.2 million and $0.3 million for the third quarter of fiscal year 2010 and 2009 respectively. As of March 31 st, 2010, Palatin's cash, cash equivalents, and investments totaled $10.2 million. This compared to $7.8 million as of June 30th, 2009. The increase in cash, cash equivalents, and investments, is primarily the net result of the receipt of $5 million in milestone payments from AstraZeneca, related to our September 2009 amendment to the license and collaboration agreement, plus net proceeds of approximately $5.2 million from the sale of common stock and warrants, in two registered direct offerings, one in August 2009 and one in March 2010, less the cash utilized to fund operations during the nine months ended March 31st, 2010.

During the quarter ended March 31st, 2010, we received $2.5 million in a milestone payment from AstraZeneca, related to our September 2009 amendment to our collaboration agreement. And in March of 2010, we sold approximately 9.6 million units in a registered direct offering for gross proceeds of $2.6 million, we netted $2.4 million. Each unit consisted of one share of common stock, a Series A warrant exercisable for 0.33 shares of common stock at an exercised price of $0.30, and a Series B warrant exercisable for 0.33 shares of common stock at an exercised price of $0.27. The Series A warrant is exercisable 181 days from the date of issuance, and expires three years thereafter. The Series B warrant is exercisable immediately about issuance, and expires 180 days from the date of issuance. Additionally, during the quarter, we received a letter from the New York Stock Exchange AMEX exchange, determining that Palatin successfully resolved the continued listing deficiencies referenced in a December 2008 letter from the Exchange.

Thank you, Steve. Now Dr. Hallam will give you an update on our Research & Development programs.

Thanks, Carl. Good morning. Let me start as usual with our sexual dysfunction program. You will be aware that we have switched the roots of administration for the development of Bremelanotide, from intranasal dosing to subcutaneous. Over the last 18 months, Palatin has performed a number of preclinical studies, and an additional clinical study with Bremelanotide, to further understand the relationship between Bremelanotide plasma levels, its routes of administration and blood pressure changes. We made progress in demonstrating that subcutaneous injection of BMT has more consistent plasma levels, and a lower incidence of adverse events than observed with intranasal dosing. In the last few months, we have recently conducted a clinical study with the subcutaneous formulation of Bremelanotide in men 45 to 65 years old.

This study will evaluate the effects of BMT on blood pressure at rest, and under conditions of physical stress. Positive results in this study would support the safe transition of Bremelanotide into larger Phase 2 studies in men with Erectile Dysfunction, and not sufficiently responsive to currently marketed Phosphodiesterase 5 inhibitor products. We will have the date mid-calendar year, and then discuss with the FDA the results from this study, together with a rigorous cardiovascular risk analysis of all previous BMT studies administered both by subcutaneous and intranasal means. By completing this rigorous analysis, we aim to establish procedures and protocols, to assure safe execution of Phase 2 at-home studies in the target population.

Palatin had a guidance meeting with the FDA late last year to discuss the development program for Bremelanotide as a second line therapy for Erectile Dysfunction patients that had been nonresponsive to the Phosphodiesterase 5 class of inhibitors. The meeting was very constructive, and resulted in a clear plan that we are now in the process of executing. The Phase 2 program will evaluate whether Bremelanotide monotherapy is optimal, or whether adjunct use of Bremelanotide with Phosphodiesterase 5 inhibitors would bring better benefit. Once the Phase 2 studies are progressing in the Erectile Dysfunction program, we aim to seek further guidance from the FDA, with regards to progressing Bremelanotide development for female sexual dysfunction with the subcutaneous means of administration.

As previously described, we have identified backup peptide molecules of which PL-6983 is an example. That at least in preclinical models appears to demonstrate even better separation of efficacy in cardiovascular effects in terms of plasma exposure. At this stage in Bremelanotide development, it is unclear whether better separation is necessary in humans, and so for these reasons, we have decided to hold PL-6983 as a potential backup, and not proceed with the Phase 1 trial at this time. In addition to cyclic peptide molecules, we have also succeeded in designing novel potent and selected orally bioavailable small molecule melanocortin-4 receptor agonists. The ultimate aim is to have an oral on demand simple tablet for use in both female and male erectile dysfunction.

Now I want to progress and talk about our obesity program that is sponsored with AstraZeneca. Our research with AstraZeneca for the discovery of novel melanocortin-4 receptor agonists anti-obesity agents, reached a successful conclusion this year. Two clinical candidates from Palatin's discovery efforts were selected and entered into AstraZeneca's development program. We expect clinical studies to commence in 2010. In addition, Palatin has enabled AstraZeneca to establish a mature discovery program to develop orally bioavailable clinical candidates.

On behalf of AstraZeneca, Palatin has also undertaken to perform proof of principal clinical studies on melanocortin-4 receptor agonists. The data from the initial proof of principal study has formed the basis for translation analysis to confirm selection of commercially viable clinical candidates. Furthermore, further proof of principal clinical studies are being carried out collaboratively with AstraZeneca, under an ongoing clinical study agreement under a new Palatin IND filed with the Division of Endocrinology and Metabolic Products. The results from these studies will be informative for both the melanocortin-4 obesity and sexual dysfunction programs.

Now to our natriuretic peptide receptor program and PL-3994. As we have previously described, Palatin and its scientific advisors believe that chronic stimulation of natriuretic peptide receptors as an approach to treating heart failure patients, may decrease rehospitalization rates and improve survival rates. Clinical and preclinical data from studies with natriuretic peptide agonists, clearly demonstrate that stimulation of natriuretic peptide receptors is an important mechanism to rectify the underlying pathophysiology in heart failure, an exploitation of this approach using chronic exposure to increase tone of the NPR system, has the potential to deliver improved therapeutic agents. Palatin has developed novel natriuretic peptide agonists, that have natriuretic receptor cell activity and desirable pharmacological and drug like attributes, for use as potential chronic therapeutics.

Once such molecule is PL-3994, a long-acting agonist selectively for the NPRA receptor, that possesses the correct attributes to be suitable for daily subcutaneous self-administration. Clinical studies have shown that PL-3994 has a half life of three hours in man, and duration of effects on the cardiovascular system of 8 to 12 hours, making it suitable for daily administration. Our expectation from preclinical is studies is that chronic underlying path of physiologies that ultimately lead to progressive worsening of the heart failure patients after the initial acute decompensation, will be decreased or prevented by a three to six month course of treatment with PL-3994.

We intend to use PL-3994 as an adjunct, a daily subcutaneous injection adjunct to the other medications, such as beta blockers, ACE inhibitors, and angiotensin receptor blockers, to prevent rehospitalization by a combination of decreased cardiac remodeling, and improved kidney function. Going forward in heart failure, the plan is to evaluate PL-3994, and additional Phase 2 studies to characterize safety, pharmacokinetics, pharmacodynamics, and hemodynamics in heart failure patients. The key objective of the Phase 2 program will be to demonstrate the ability of PL-3994 treatment to reduce the rehospitalization rate after the acutely decompensating event.

I want to spend a little more time on other indications for the natriuretic peptide program generally, and specifically for PL-3994. So in the past year, we have expanded the medical treatment indications. We believe that PL-3994 has the potential to treat patients with a resistant and potentially refractory hypertension. A proof of principal study is in the process of being designed to evaluate the potential use of PL-3994 as an adjunct to the standard three to four care medications presently prescribed, in an attempt to control these patients' blood pressures. Additionally, Palatin has conducted a number of preclinical studies to evaluate the feasibility of use of PL-3994 in the emergency room, for acute severe asthmatics. In acute severe asthma, patients presenting in the emergency room are commonly unresponsive to beta 2 agonists. This unresponsiveness often relates to the overuse of Beta 2 agonists, that then render the airways unable to adequately dilate. There are no alternative bronchodilators that have been shows to provide relief under these conditions.

Published data both preclinical as well as clinical studies, with infused indigenous peptides have shown promise for NPRA agonists. Palatin believes that the improved half life of PL-3994 that allows either subcutaneous or nebulizer administration, is likely to bring great benefit to the acute severe asthmatic in the emergency room. This represents an entirely different mechanism from that of Beta agonists. The program would explore the current subcutaneous route of administration, as well as emergency room use of nebulizer for optimal therapy. If effective, further developments of formulations and devices will be warranted to provide wider availability, to broader asthma and COPD populations.

Finally, to touch on our late-stage discovery research, the work has succeeded in identifying extremely potent and selective melanocortin ligaments that will be evaluated in sophisticated ex-vivo human disease models of airway's bronchodilation and inflammation, as potential glucocorticoids-sparing or replacement therapy. If successful we aim to progress the clinical development and target the smoking asthmatic population that accounts for 20% to 25% of the total asthmatic population, and because of their smoking, are poorly responsive to glucocorticoids. We would envision that the clinical population that would derive benefit, could be expanded also to those with Chronic Obstructive Pulmonary Disease. Now I am going to hand back to Carl.

Trevor, thank you very much for that overview. Just a few more words before we open up the call to questions. At Palatin we are very excited about our product pipeline, the depth and potential of our programs. In the near term, we will continue to focus on our melanocortin programs for sexual dysfunction and obesity and diabetes. Because of our strength in melanocortin research, our partnership with AstraZeneca, and the size of the commercial opportunities that we believe these programs represent the best risk/return ratio for our shareholders.

The sexual dysfunction space we are targeting is an area where there is clinical need with limited products in development. Approximately 35% of the patients with erectile dysfunction do not respond to current PD 5 inhibitor therapy, and an additional 20% are only marginally satisfied. We believe this nonresponsive population is an excellent commercial opportunity for Bremelanotide, based on our clinical experience with Bremelanotide, we believe that Bremelanotide will have significant benefit in this patient population. Our recent work to address the potential safety concerns of Bremelanotide has increased our confidence that Bremelanotide can be commercialized with an acceptable risk to benefit ratio. Regarding female sexual dysfunction, patients and their doctors have limited treatment options, based on our clinical data, we believe that melanocortin-4 targeted therapy, such as Bremelanotide, holds great potential for treating these patients.

Finally regarding our natriuretic peptide program, our lead molecule PL-3994 and the expansion of this program into two new therapeutic areas, has increased our confidence in the potential to attract corporate partnerships to access the resources required to move these exciting programs forward. In closing, we continue to make substantial progress on all of our programs, while maintaining tight control of our expenses, and increasing our cash flows by expanding our collaboration with AstraZeneca. We are looking forward to an exciting year in 2010, with the recommencement of the Bremelanotide sexual dysfunction program in ED and FSD, and the potential of the corporate collaboration or partnership for our natriuretic peptide program. Thank you all for participating on our call. And now the operator will open the call up to questions.

Thank you. (Operator Instructions). We will pause just for a moment to assemble the queue. With no questions in the queue, I would like to turn it back to Carl Spana for any additional or closing remarks.

Thank you. Once again I would like to thank all of you for participating on our third quarter conference call. We remain very excited here at Palatin, and I look forward to seeing many of you as I go out and talk to investors over the next quarter. And we of course look forward to updating you on our progress next quarter. Thank you all. Have a great day.

This does conclude today's conference. We thank you for your participation.