Palatin Technologies Inc (PTN) 2019 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Palatin Technologies Second Fiscal Quarter 2019 Operating Results Conference Call. As a reminder, this conference call is being recorded.

Before we begin our remarks, I would like to remind you that the 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'd like to introduce you to your host for today, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Thank you. Good morning, and welcome to the Palatin Technologies Second Quarter Fiscal Year 2019 Call. I'm Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Executive Vice President, Chief Financial Officer and Chief Operating Officer.

On today's call, we will provide financial and operating updates. I'm going to turn the call over to Steve, who will provide financial updates. Steve?

Thank you, Carl, and good morning, everyone. Regarding Palatin's quarter ended December 31, 2018, and recent operational and financial highlights, with respect to Vyleesi, which is under development for female Hypoactive Sexual Desire Disorder or HSDD, the FDA PDUFA date is June 23, 2019. Of note, if approved, Palatin is due to receive a $60 million milestone from AMAG Pharmaceuticals, our North American licensee. On the Vyleesi business development front, Palatin is in discussions with potential collaboration partners for certain regions outside the license territories of North America, China and South Korea. Carl will expand on the Vyleesi program during his portion of the presentation as well as our other programs under development.

Regarding the quarter ended December 31, 2018 financial results, Palatin reported a net loss of $5 million or $0.02 per basic and diluted share for the quarter ended December 31, 2018, compared to net income of $3 million or $0.02 per basic and diluted share for the same period in 2017. The difference in financial results between the 3 months ended December 31, 2018 and 2017 was mainly due to the recognition of $10.6 million in license and contract revenue during the 2017 period pursuant to our license agreement with AMAG. Regarding revenue, there were no revenues recorded in the 3 months ended December 31, 2018. For the 3 months ended December 31, 2017, 100% of the revenue Palatin recognized was related to our license agreements with AMAG.

Regarding operating expenses. Total operating expenses for the quarter ended December 31, 2018, were $5.1 million compared to $7.7 million for the comparable quarter in 2017. The decrease in operating expenses reflects the completion of the Vyleesi Phase III clinical trial program and related ancillary studies necessary to file the NDA in 2018. Regarding our cash position and working capital, Palatin's cash and cash equivalents were $24.7 million at December 31, 2018, compared to $32.6 million at September 30, 2018, and $38 million at June 30, 2018, our natural fiscal year. Current liabilities were $4.5 million at December 31, 2018, compared to $8.5 million at September 30, 2018. Palatin has also decreased its debt and related liabilities from $7.2 million at June 30, 2018, to $5.3 million at September 30, 2018, to $2.8 million at December 31, 2018. We believe that existing capital resources will be sufficient to fund our planned operations through at least March 31, 2020. Carl?

Thank you, Steve. I will start the operation update with Vyleesi, our lead clinical product. Vyleesi is a first-in-class melanocortin agonist, which is the only on-demand drug to complete Phase III clinical trials for Hypoactive Sexual Desire Disorder. The product's format is a simple, single-use subcutaneous autoinjector, self-administered by the patient approximately 1 hour prior to sexual activity. We've been working with AMAG Pharmaceuticals, our North American licensing partner, for Vyleesi to support the Vyleesi New Drug Application, which AMAG committed to the FDA in March 2018. The NDA was accepted for review by the FDA in June 2018, and the PDUFA date for Vyleesi NDA is June 23, 2019.

In November 2018, as part of our discussions with the FDA regarding its review of the New Drug Application submitted for Vyleesi, the FDA requested additional data assessing 24-hour ambulatory blood pressure with short-term daily use of Vyleesi. Palatin and AMAG are currently conducting the study and will have the data submitted to the FDA in advance of the Vyleesi June 23, 2019 PDUFA date.

In the 2 large North American Phase III Vyleesi studies, subjects used Vyleesi approximately 3 to 4 times a month or about once per week. However, there was a small subset of subjects that used Vyleesi more frequently. The requested study is designed to provide data on the short-term daily dosing of Vyleesi for informed labeling purposes.

Outside of North America, we are working with our Chinese licensee Fosun Pharma, and our South Korean licensing partner, Kwangdong Pharmaceuticals, to advance Vyleesi development in those territories towards regulatory filings. In addition, the Committee for Medicinal Products for Human Use of European Medicines Agency has provided advice on the European Union's Vyleesi development program, indicating that only a single Phase III study in the European Union is needed to support a licensing application.

Now moving on to Palatin's earlier drug development programs, which include development of melanocortin and natriuretic peptide agonist. Palatin is currently prioritizing our melanocortin program, which has 2 broad therapeutic areas of interest, which are autoimmune and inflammatory diseases, and rare genetic forms of obesity that may be treated with a melanocortin-4 receptor agonist.

We have developed new families of highly selective melanocortin receptor agonists, with potentially broad applications in the treatment of a variety of inflammatory and autoimmune diseases, including inflammatory bowel disease, dry eye, uveitis and other retinal diseases. Our lead development candidate, PL-8177, is a highly selective and potent melanocortin-1 receptor agonist, which we believe will have broad applications in treating inflammatory and autoimmune diseases.

The recently announced favorable results from a single ascending and multiple ascending dose study, Phase I study of PL-8177 in healthy volunteers. In this study, subcutaneously administered PL-8177 was well tolerated and no potential safety concerns were noted. We've also completed a Phase I pharmacokinetic study of an oral dosing formulation of PL-8177 as a potential treatment for inflammatory bowel disease. The data is expected in the first quarter of 2019.

Our next step with PL-8177 is to conduct a clinical study that will evaluate the safety and activity of PL-8177 in a variety of autoimmune diseases. This study is designed to provide the data needed to support larger Phase II efficacy studies and is anticipated to start in the first half of 2019.

PL-8331 is our dual melanocortin receptor 1 and 5 agonist that in preclinical models has demonstrated the potential to treat a variety of ocular autoimmune diseases, such as dry eye, uveitis and diabetic retinopathy. We have developed an eye drop formulation of PL-8331 as a potential treatment for dry eye, and IND-enabling activities have been started. Clinical studies in dry eye are anticipated to start in the second half of calendar 2019.

We have also worked to expand our product portfolio by leveraging our expertise in melanocortin biology and chemistry. We have developed an orally active small molecule that's active against the melanocortin-4 receptor, called PL-9610. PL-9610 has demonstrated efficacy in a number of animal models of rare human genetic obesity and preclinical IND-enabling activity to support an IND filing and first human studies has started. We also anticipate filing for orphan drug designations for a number of autoimmune and genetic obesity indications for melanocortin compounds.

Finally, our natriuretic peptide development candidate, PL-3994, is scheduled to start a Phase II trial sponsored by the American Heart Association in conjunction with major research centers in the first half of 2019. We believe that PL-3994 has a potential as a treatment for heart failure patients with both preserved or reduced ejection fractions.

Our PL-5028 is a dual natriuretic peptide A and receptor C agonist, for use in cardiovascular and fibrotic diseases, including reduction of cardiac fibrosis. This peptide is in preclinical evaluation as a potential treatment for fibrotic diseases.

We provide additional information on our programs on our website, www.palatin.com. And now at this point, I'm going to stop and open the call for questions and answers. Thank you.

(Operator Instructions) Our first question will come from John Newman, Canaccord.

So Carl, you gave us an update on the -- some of the clinical data that the FDA have asked you for, I'm just curious if you could talk to us about why you think the agency is asking for this study at this particular time point? And also, just remind us, the blood pressure monitoring that was done in clinical studies as I know that you've previously looked at that?

Sure. I mean, I think, as I noted in the presentation or in the discussion, for the most part, the Vyleesi is used about once a week. That's probably going to be the average use pattern for the product. However, there -- it turned out that there was a small flood of patients that clustered their dosing, so they may have taken the drug for 4 or 5 days in a row versus, say, once a week. In our Phase III program -- or in our overall program, we extensively evaluated the effects of Vyleesi on blood pressure using ambulatory blood pressure measurements in a once-a-week format, and I think the agency was very pleased with that data. They accepted it and realized that there's a small 2- to 4-millimeter transient change in blood pressure. However, we didn't have the data -- or we didn't have comprehensive data on what happens if patients took it every day for, say, 4 or 5 days. And that's really what the study is doing. It's really just evaluating the use of Vyleesi over 8 consecutive days and measuring and characterizing the blood pressure effect. I don't anticipate that we're going to see anything different than we saw in the once a week, but I think the agency is doing its job in being careful if there's a nonlife-threatening indication, and I think that they're dotting the Is and crossing the Ts in making sure that they can provide a label to patients and prescribing physicians that really characterize the effects of the drug. I did determine if there are any subsets of patients that you might not want to take the drug or it should have some precaution when taking it. So that's really the nature of this. I don't think this -- this is not an issue. I don't anticipate that we're going to see anything that we haven't already seen or don't really understand. But it will be a formal study that will characterize the effect over short-term daily use, which will allow the agency to feel comfortable in putting the appropriate label on the product.

Our next question will come from Joe Pantginis, H.C. Wainwright.

Carl, since you just mentioned the label, curious, if the data come out clean from this blood-pressure study, could this lead to a potentially better label for the drug?

Certainly -- I mean, compared to not having it, yes, and in the absence of the data, the agency would have had to put a very precautionary label on because it didn't exist. Or they weren't comfortable with data over there or the extent of it. So I think that we will wind up with a label that is appropriate for the product that highlights or has all of the pertinent information that allows for the safe use of the product. So the answer's yes.

No, totally. And just out of curiosity, did the -- or did the filing, the NDA filing with the Phase III data, did that have the level of granularity for patients enrolled in the reconnect studies that had, sort of, as you described it, the clustering use and any impacts on blood pressure that would sort of act as a supplement to this study?

So in the Phase III program, that's a more general study, so we just -- the blood pressure there was characterized through blood pressure cuff measurements. We certainly had patients of -- different type of patients there, premenopausal women that were relatively healthy, premenopausal women that were controlled hypertensives were in that study. In general, over -- up to almost 18 or 24 months of use, there were no signals, there's no change in blood pressure over time with it, but that's not the type of study -- format that you would use to characterize the potential effect. We did have other Phase I data over short-term daily use, but not using as extensive ambulatory blood pressure measurements over 24 hours. We use them over short -- over the duration of dosing, for example, 12 hours, we didn't have 24 hours. So there was enough data in there to want to indicate that there's not a high probability that there's going to be an effect here, but we didn't -- it didn't -- we've always characterized the drug as a pure-end drug, [with a subset] to be taking once or twice per week. And I think what came out -- and when the agency got to the point of looking at the label and looking at the dosing density, there was a subset of patients that did use it on a daily basis, and this is just really a study that's just better characterized the blood pressure effect in those patients. I'm going to say, I don't anticipate, based on what we know, based on previous Phase I studies, that there's going to be any cumulative effect. We know that there doesn't appear to be at all. It's just that this is really a formal study that poses that question and answers it using up-to-date methodology that wasn't necessarily used in the earlier programs -- earlier studies.

Got it. And then my last question is, I don't if you can answer this based on either direct feedback from the regulatory agents -- or from the FDA in this case, or from even body language regard to the need or the desire for them to conduct an AdCom at this point, assuming the data are clean?

I can't -- what I can tell you is there was an AdCom scheduled for June -- or January 15 that obviously did not occur. And I think based on -- I think, if we get this study done in a timely fashion, which we will, and submit it to the agency with sufficient time for review, I think if there's no -- if it's a clean study, which I anticipate it will be, I don't think that there will be -- I don't personally think there will be a need for AdCom, and there certainly would not be time from where we would submit it to the June 23 date. So I'll leave it at that.

Your next question will come from Michael Higgins, Ladenburg Thalmann.

A couple on Vyleesi (inaudible) out of the pipeline. The plan outside the U.S., I believe, started bridging a study in Europe in the first half of '19. Is that still the case? And also, I noted in your PR and your Q, ongoing discussions with partners outside of where you currently partnered Vyleesi, can you give us some feedback on the timing of those discussions from -- great to have those little surprises happening there. Are your partners involved with your discussions with European authorities, and when do we -- when do we look for an (inaudible) [the next year or next few months], as it relates to the European potential?

Sure. I'll start and then I'll pass over to Steve. What we did -- one of the things that we wanted to accomplish prior to really finalizing any business development activities with the -- around the rights to Vyleesi in the European market in particular, was really to understand and get feedback from the EMA, the regulatory authority for the territory as to what would be required for the development of bremelanotide, or Vyleesi in that territory. We had some earlier discussions with them, and we wanted to confirm structure of the trial, what it would look like, we obviously want to conduct a trial that is very similar, almost identical to what we did in North American marketplace, and we wanted to confirm that a single study would be sufficient in conjunction with the North American studies for a licensing application. We have just -- towards the end of last year, got our feedback. We were pleased with the feedback. I think we were able to conduct a trial using end points that were identical to what we used in the U.S., and that a single Phase III trial would be sufficient for a filing. So that now really opens up the door for us to accelerate -- or reinstitute and accelerate the discussion that we were having, and I'll turn that over to Steve as he's been leading that activity.

Thanks, Carl. As Carl mentioned, the AI that we needed was -- we needed more specificity, granularity around the specific protocol for approval in Europe. We have that now. And as Carl mentioned, we were pleased with the response and the dialogue from EMEA/CHMP. So that activity has definitely increased, not just us calling, but also inbound calls. We're actively and aggressively in discussions with all the regions outside other license territories of North America with AMAG, China with Fosun, and South Korea with Kwangdong Pharmaceuticals. So we -- and as we get closer to the PDUFA date and the approval, I'm very comfortable that these discussions will even advance greater. We're also working closely with our existing rest-of-the-world partners i.e., Fosun Pharma and Kwangdong. They are in active discussions with the related regulatory, (inaudible), CFDA in China and the same equivalent in South Korea, on planning their specific regulatory path. So we're very excited and enthusiastic with the activity and the interest and -- with the assumption and caveat that we're approved in June. We would anticipate that, frankly, all the reasons outside the existing territories would be licensed before the end of calendar 2019.

Okay. That's great that you've got (inaudible) protocol that's identical to what you've done in the U.S. Last week, on AMAG's conference call, management suggested that an AdCom may signal that the FDA [who are of] the opinion of outside experts on the blood pressure signal. Is that your view as well that without the AdCom agency's more bullish on the NDA, and is early May, the time at which we would expect to hear whether or not there will be an AdCom ahead of the PDUFA?

Sure. So I mean, just (inaudible) I mean, I think that each product is evaluated by -- on its own merits, on its own risk/reward profile. Vyleesi is a pure end medication, the vast majority of patients are going to have exposures of 3 to 4 times per month. There will be a very limited subset of patients that may have it a few more times than that. Keep in mind, our dosing limitations that we only would anticipate approximately 6 to 8 doses being available per month on a prescription basis. So I think that Vyleesi falls into a category where you're characterizing the blood pressure effect. The risk is -- the clinical risk is low, and probably, I don't think the agency would necessarily have to go out and seek advice from an AdCom. I think that the personnel that we've been working with at the agency that are coming from the cardiorenal group are quite conversant with -- meet the type of study designs we're using and the potential risk of intermittent changes -- small changes in blood pressure. So I think that we're okay there. However, with that being said, we will be submitting the data back. The agency has the right to take -- to have additional time to review that data should they choose to do so. I don't think at the moment, based on our discussions with them, that they will do that. But we always have to plan for that, that they could.

Okay. And then just on the timing. If it's early May, there's no AdCom requested, is that a reasonable timeframe to look for that would signal that you wouldn't need an AdCom or do you think you'll have discussion with the FDA and you can pass that on?

Sure. I mean, I'd -- look -- I'm not going to get it to the exact timeline that we're going to be submitting. We'll be submitting sufficiently in advance of the PDUFA date. The agency will make a decision relatively quickly. I'm sure, on whether or not they will deem it a major submission and request additional time or not. So I think, what I would say is, I would anticipate there would be an announcement that we filed the data back. And then if you don't hear anything within 1 to 2 weeks, you can anticipate that they're moving towards a decision on the June PDUFA date, and they won't wait long. The data is pretty simple. It's pretty straightforward. It's going to be a few graphs. They'll make a decision relatively quickly, I would think, on whether or not they want to maintain the current timeline or they want additional time. And obviously, if there's any change in that, we'd have -- we would communicate that.

This is a follow-up to that. Any plans to press release the blood pressure results from the study?

That is not -- the study is in conjunction with AMAG, and the NDA is filed in AMAG's name, so although we are heavily involved in the conduct of the study, AMAG is -- will be submitting the data. So that will be up to them as to what they do. I would guess that they will have some statement of -- concerning the data when they submit it, but I can't speak for them. And we have to be guided by them by what they want to disclose.

Right. Okay. Very good. A couple of questions on the pipeline if I could, the PL-8177, when do you expect to start and enroll a report the subcu formulation's Phase II (inaudible) data?

We're targeting probably a second quarter start, and the study design that we used -- anticipating are relatively quick. So I would expect, if we start in the second quarter, we'll get preliminary data late fourth quarter, early first quarter from those studies. They're not designed to be long-term studies, they're designed to have a 30 -- [28-day] treatment periods, so they go quickly.

Okay. Great. And then (inaudible) program that you really like, what's the next event there? I think it may be Phase I results, if you could give us any help on that, that would be great?

I missed -- you broke up on, which program?

The 9610, the MC4r (inaudible)

Yes, so that -- sure. So 9610 right now -- sure, 9610 is in scale at manufacturing for drug product -- for the active pharmaceutical ingredient that will be done probably second quarter, and then we'll institute the formal phase -- preclinical studies. So I would expect you're really talking about a first half 2019 first in human studies for that compound. You will see -- so we will put out some data on the compound. We haven't put any data out on some of the preclinical modeling we've done. So we will -- it's probably second quarter, we will begin to put out some of that data at some point.

Just quick correction, Carl said first half of 2019, he meant 2020 for that initiation study.

Sorry. Correct.

Got you. Okay. Okay, sounds good. And then one final one here, on 8331, the dry eye, were you planning sort of Phase II back half of '19, is that the oral or the subcu?

So that's for -- 8331, the dry eye is a ocular -- they're eyedrops. And that program is progressing, and we would expect to start in the second half of this calendar year. That's actually -- we have that already scaled. We are actually working with a CRO called [Ore Pharmaceuticals] out of the Boston area, and this is all they do. So they will be helping us lead that charge and we feel comfortable with the time lines they put forward.

Our next question will come from Joe Pantginis, H.C. Wainwright.

Just out of curiosity, and you can say, "Joe, it's too early to ask these questions." But if we get the good news that we're all expecting in June and the drug is approved, maybe this is a question even more for AMAG. But what do you think the potential launch timing or turnaround could be, number one; and then number two, can you give some comments about the supply chain of the finished device, your readiness for that?

Joe, just quickly, in their public disclosures, they're anticipating a second half calendar 2019 launch. Steve's been working with them very closely on the supply side, so I'll just turn it over to him.

Yes, as Carl stated, they -- AMAG has publicly disclosed that, assuming we have that June PDUFA date and approval that they will be launching commercially in the third quarter of calendar 2019. Everything is moving towards that, planning for success, albeit whether it's the education or all the various fronts, AMAG is an excellent partner, really fits the profile, we're extremely pleased with the relationship. And when I say planning for that launch, that does include obviously commercial inventory.

At this time, we have no further questions in the queue so I'd like to turn the conference back over to Dr. Spana.

Well, thank you. I'd like to thank all of you for participating in the Palatin Technologies Second Fiscal Quarter 2019 Call. We look forward to updating you next quarter. It's exciting times at the company. We have a lot of great things going on, and we're quite excited about the prospects of the company. So have a great day, and we'll talk to you soon. Bye-bye.

Thank you very much. Ladies and gentlemen, at this time, this now concludes this morning's conference. You may disconnect your phone lines and have a great rest of the week. Thank you.