Palatin Technologies Inc (PTN) 2021 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Palatin Technologies First Quarter Fiscal Year 2021 Operating Results Conference Call. As a reminder, this conference is being recorded. Before we beginning remarks, I'd like to remind you all that the statements made by Palatin are not historical facts and may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and the actual results that may differ materially from those anticipated due to the 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 turn today's call over to our host, 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' First Quarter Fiscal Year 2021 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. We sincerely hope that you and your families are safe and healthy as you deal with the life-altering changes brought about by the COVID-19 pandemic.

I'm now going to turn the call over to Steve, and he'll provide the financial update as well as an update on Vyleesi. Steve?

Thank you, Carl, and good morning, everyone. Regarding the first quarter ended September 30, 2020, net loss for the quarter was $3.9 million or $0.02 per share compared to a net loss of $4.5 million or $0.02 per share for the comparable quarter of 2019. Vyleesi gross sales for the period July 25 to September 30 amounted to $809,100. We recognized negative $288,560 in Vyleesi net product revenue, and net being net of allowances and accruals. We recognized no contract and license revenue for the quarter compared to $97,379 for the comparable quarter of 2019.

Total operating expenses for the quarter were $3.7 million, including a $1.6 million gain on the license termination agreement related to Vyleesi with AMAG. This compared to a $5 million -- compared to $5 million of operating expenses for the comparable quarter of 2019. As of September 30, 2020, the company had $86.6 million in cash and cash equivalents and $5 million in accounts receivable compared to $82.9 million in cash and cash equivalents and no accounts receivable as of June 30, 2020, and no outstanding debt. The amount of cash and cash equivalents of $86.6 million puts Palatin in a comfortable position to fund its anticipated operating results well through calendar year 2021.

Regarding Vyleesi, in July 2020, Palatin announced the mutual termination of its license agreement with AMAG Pharmaceuticals for Vyleesi. Under the termination agreement, Palatin regained all North American development and commercialization rights for Vyleesi. AMAG made a $12 million payment to Palatin at closing and will make a $4.3 million payment to Palatin on March 31, 2021. Palatin assumed all Vyleesi manufacturing agreements, and AMAG transferred information, data, all the assets related exclusively to Vyleesi, including existing inventory. AMAG is providing certain transitional services to Palatin for a period to ensure continued patient access to Vyleesi and regulatory compliance during the transition back to Palatin. Palatin is reimbursing AMAG for the agreed-upon cost of the transition services. The accounting treatment of this transaction resulted in a $1.6 million gain on the license termination.

Regarding Vyleesi commercial activities, we've been pretty busy the last few months. To a certain extent, there was very limited support for Vyleesi during the first half of 2020 and prior to Palatin regaining the rights. Some of the items that we have made what we believe are very positive steps are: we've solidified the distribution network and procedures, we've improved contact and prescribers with prescribers and health care providers through virtual meetings, we've increased insurance reimbursement coverage and we just recently initiated a highly selective digital marketing and telemedicine campaign to rebuild awareness and demand among premenopausal women with an initial geo-targeting approach to top prescriber and digital locations. Carl will expand on some of these points related to Vyleesi and also give us a program update for Palatin's other programs under development. Carl?

Okay. Great. Thank you, Steve. As we continue to operate under the COVID-19 pandemic, a primary concern of ours has been the safety of our employees, our patients and our health care providers and partners. As such, we've instituted a work-from-home policy in March. It continues to remain in effect for our office staff. However, our research laboratory is open and functioning. Fortunately, for us, most of our key research and development partners continue to remain in operation. And by using teleconferences in various online meeting platforms, we have been effective in continuing to advance our programs. However, we understand with resumption of activities there can be further disruptions to business activity based on resurgence of the virus, which is currently happening across the country, and we will be prepared for this potential outcome.

As Steve mentioned, in July 2020, we reacquired Vyleesi from AMAG Pharmaceuticals. Just as a reminder, AMAG's divestiture of Vyleesi was based on strategic and operational changes at AMAG and not on the potential value of Vyleesi. Though Steve covered some of the details over Vyleesi commercial plan, there are a number of accomplishments that I would like to emphasize.

When we reacquired Vyleesi in late July, there have been limited marketing efforts and nominal focus on the distribution and patient access of Vyleesi. This has led to a suboptimal patient experience and very unfavorable economics. Under Steve's directions, we have assembled an excellent and motivated commercial team that has rapidly addressed these issues. Over the last quarter, we had solidified Vyleesi distribution network, improved the patient experience by retraining our specialty pharmacies and we have expanded insurance coverage. In addition, we are engaging with health care providers through virtual office visits and virtual meetings. These activities are leading to a much better patient experience, improved relationships with prescribers and improved economics and have laid the foundation for us to begin, as Steve mentioned, a selective geo-targeting marketing campaign.

These accomplishments that have been done at what I believe is a record pace have put us in a strong position to demonstrate the potential value of Vyleesi in a cost-effective manner and obtain our ultimate objective to relicensing of Vyleesi to a committed partner ensuring the continued availability of Vyleesi as a treatment option for premenopausal women with HSDD or hyperactive sexual desire disorder and as a financial return on our investment.

As we move on, many of you know, Palatin has a primary scientific focus on melanocortin system, which is involved in the regulation of energy balance, including food intake, sexual function and resolution of inflammatory responses. Our first successful melanocortin program was based on the role of the melanocortin system in regulating sexual function. This research work resulted in the discovery of Vyleesi and its eventual approval by the FDA as the first on-demand treatment for premenopausal women with hypoactive sexual desire disorder. Our current research focus is on developing drugs that target the ability of the melanocortin system to resolve or turn down inflammation. We have developed multiple drug candidates that, in preclinical models, have demonstrated the potential to resolve a variety of inflammatory conditions. And research conducted by us and others have shown that targeting immune cells with drugs that modulate the melanocortin system results in the resolution of pro-inflammatory processes.

These pro-resolution activities include mediating conversion of immune cells from inflammatory to regulatory states, the inhibition of the production of inflammatory or pro-inflammatory cytokines such as TNF-alpha and interleukin-6 and others and the upregulation of anti-inflammatory cytokines such as interleukin 10. In addition, the melanocortin system plays a role in reducing the fibrotic response that occurs as part of many inflammatory diseases. The fibrosis resulting from inflammatory diseases has long-term negative consequences for the health of patients. Therefore, we believe that melanocortin drugs will have broad utility in treating inflammatory diseases. We have developed clinical stage drug catalysts for ocular diseases such as dry eye disease, other corneal disease indications, noninfectious uveitis and retinal diseases. We also have a clinical stage drug candidate for gastrointestinal diseases such as ulcerative colitis.

Our PL-9643 in a melanocortin receptor agonist that began Phase II study in dry eye disease using an eye drop formulation in January of 2020. Dry eye disease, also known as keratoconjunctivitis sicca, affects the cornea and the conjunctiva of the eye resulting in irritation, redness, pain and blurry vision. Causes are varied, and we believe that by activating the melanocortin system locally, PL-9643 will reduce the inflammation that underlies many negative aspects of dry eye disease.

In July of 2020, the study was fully enrolled with 160 dry eye disease patients, and we are on track for data in December of 2020. The primary objective of this study is to provide the data required to advance PL-9643 ophthalmic solution into later-stage clinical trials, which would start in the first half of 2021. With data coming before year-end, I would like to review the trial design and our regulatory strategy.

Endpoints for dry eye disease clinical studies are divided into 2 categories: signs and symptoms. A sign is direct evidence of disease, examples are corneal lesions and tear productions. Symptoms are patient experience aspects of disease and examples of blurry vision and itchy eyes. PL-9643 Phase II study is a multicenter randomized controlled study comparing PL-9643 to placebo with a 12-week treatment period. The co-primary endpoints are a sign of dry eye disease, which is corneal -- inferior corneal fluorescein staining and a symptom, which is ocular discomfort measured by a validated Ora scale. We have also included multiple secondary endpoints that measure PL-9643 effects on signs and symptoms of dry eye disease. It is typical to use only a single primary endpoint in a Phase II study with multiple secondary endpoints. However, after discussions with the FDA, we chose to use co-primary endpoints with the strategy that the current Phase II study could potentially be used as 1 of the 2 required Phase III pivotal studies if both of the co-primary endpoints are statistically significant.

We have designed the study so that multiple outcomes support the advancement of PL-9643. These potential outcomes include statistical significance for 1 or both co-primary endpoints or other signs or symptoms in the primary or specific subpopulations that are part of the secondary endpoint analysis.

Following the strategy reduces Phase II risk and allows with a possibility that the Phase II study may be used as 1 of the 2 required Phase III pivotal studies. Market for dry eye disease treatments represents a substantial commercial opportunity, over $2 billion in annual sales and continued growth based on patient demographics. We believe that the potential efficacy and favorable tolerability and safety profile of PL-9643 will allow for substantial market penetration of the dry eye market.

Now moving on to PL-8177 for pulmonary disease, in particular, our COVID-19 program, preclinical disease models, PL-8177 has demonstrated anti-inflammatory activity and the ability to protect lung tissue from damage due to fibrosis. As a potential treatment for patients with COVID-19 infection, PL-8177 may reduce the inflammation of lung fibrosis associated with progressive disease.

In the second quarter of calendar 2020, we held discussions with BARDA concerning PL-8177 as a potential treatment for patients with COVID-19 infections. And one of the outcomes of this discussion was the advice that we move PL-8177 forward and begin discussions with the FDA concerning a potential clinical trial in COVID patients. In the second quarter of 2020, we submitted a pre-IND data package to the FDA and received detailed advice on the requirements to progress PL-8177 into clinical studies. Following our current PL-8177 COVID-19 plan, we are conducting all the required activities needed to file an Investigational New Drug application or an IND and begin clinical studies in COVID-19 patients. These include such activities as clinical protocol development, selection of a CRO, clinical trial site identification and the manufacturer PL-8177 placebo in active doses.

However, the COVID-19 pandemic has impacted our ability to complete the required manufacturing activities due to a delay in acquiring the syringes needed to manufacture active and placebo doses. We anticipate that we will not be able to complete the PL-8177 manufacturing until the first half of 2021. Until these activities are completed, we will not be able to file an IND and begin a study with PL-8177.

As discussed in previous calls, press releases and our 10-K, the landscape for treating and conducting clinical studies in COVID-19 patients is rapidly evolving, which impacts the design, risk and ability to conduct clinical studies in COVID-19 patients. As we have considered the risk and uncertainty of conducting COVID-19 clinical studies, the start of the PL-8177 clinical study is subject to receiving external funding and operational support, and we are in the process of applying to government programs that provide such support. Earlier this year, we applied to the government's ACTIV program to support PL-8177 and we recently received a positive review, but we're unfortunately informed that the ACTIV program is no longer funding earlier clinical programs and has prioritized the funding of only Phase III programs. We continue to seek other sources of external support and look forward to hopefully finding successful support for this program.

Our clinical trial for retinal disease indication is scheduled to begin in the second half of 2021. This is a slight delay due to the impact of COVID-19, and we are using the additional time to expand our scientific understanding of the melanocortin system in ocular diseases.

Updating our oral colon release formulation for PL-8177 as a treatment for ulcerative colitis and other inflammatory bowel diseases, we are conducting the required preclinical activities. And drug manufacturing in this program remains on track to begin a Phase II proof-of-mechanism study in the first half of 2021.

And finally, based on our research work in the natriuretic peptide system, our drug candidate PL-3994, which is a natural peptide receptor A agonist, is going to be evaluated in a Phase IIa clinical study in heart failure patients with preserved ejection fraction. The clinical study is in collaboration with 2 major academic medical centers and is supported by the American Heart Association. I'm happy to report that patient enrollment has begun, and the first patient has been dosed. You can find additional information on our programs on our website, www.palatin.com.

In response to the pandemic, the executive management, employees and Board of Directors acted quickly to adjust our business operations, and we have been able to continue to advance our programs. Addressing the COVID-19 pandemic, we took immediate actions to ensure the safety of our employees, patients and health care partners. Our ability to continue to advance our development programs and our healthy cash position will allow Palatin to emerge from the pandemic in a strong position.

Our Vyleesi commercial activities have made significant progress. Under Stephen Wills directions, we have put in place an excellent commercial team that has addressed many of the deficiencies we inherited from AMAG Pharmaceuticals and we have now begun a selective marketing of Vyleesi. We continue to work with our Chinese and Korean partners, which are now advancing Vyleesi in the clinical studies and to support their regulatory submissions for ultimate approval and sale of Vyleesi in those territories. We continue to believe in the value of Vyleesi as a treatment for women with HSDD and view this as a major opportunity to increase the value of our company.

For our dry eye disease program, we initiated a complete enrollment of Phase II clinical study. We are on track for data in December and prepared to move forward if the data is positive. As we continue to look forward to the rest of 2021, we will continue to deal with the operational challenges imposed by the COVID-19 pandemic. We have a strong pipeline of novel clinical candidates, and we will remain focused on their advancement. Based on the research work completed in the past year, we are positioned to start clinical studies in COVID-19 patients, ulcerative colitis and one or more ocular disease indications in 2021.

In closing, I would like to thank the Palatin team and all our development partners for their rapid adjustments to a new working environment and their continued dedication to the advancement of Vyleesi commercial activities and our other novel drug candidates. We'll now open the call to questions.

Thank you. (Operator Instructions) Our first question will be from John Newman from Canaccord.

First question is just wondered how much longer AMAG will continue to provide transitional services for Vyleesi. And I also wondered if you could talk about potential licensing discussions for Vyleesi and what you'd be looking for here?

John, thanks for the question. It's Steve. I'll take this one, and Carl will jump in with color. The -- it's confidential on the period of time, but suffice to say, it's going to be orderly. We negotiated with AMAG what we think is a very reasonable amount of time regarding the transitional services and that also carries over. I think you're probably aware, AMAG is going to be acquired by Covis. I believe that transaction is targeted to close very shortly, if not this month. So we don't see any issues with -- in that regard.

Regarding the relicensing, say for the U.S. or the North America, we are in multiple discussions where we're trying to go about it in what we call a very direct way in that the first few months post the termination of the license and us regaining the rights. They were just, as Carl has more than alluded to on his presentation -- during his prepared remarks, there was just a lot of work that had to be done before we could, if you will, have what we consider substantive discussions and move forward. So that is underway. It's -- for the most part, it's pretty traditional. We're looking for someone that plays in the female health care space, that landscape, has the infrastructure and is committed.

We have a lot of flexibility at Palatin because we can be a very supportive partner depending on the company, the size, the focus, we could handle the CMC, anything in a nice way other than the commercial efforts, even though we are handling that right now. So I think that puts us in a position to be flexible. I think the work we've done in the past, it's been less than 4 months that we've gotten the product back. And to be clear, the suit wasn't completely tailored in that regard. So we're -- we do believe that we will be in a position at some point in the future to seriously consider a relicensing and make the best decision for the shareholders. Carl?

I think that John -- (inaudible) is a little margin and what we've also accomplished is really -- which will help in licensing is really stopping our dependency on AMAG. So a lot of these things like manufacturing, distribution, these agreements have already been transferred over to Palatin. So a lot of the things that will need to be in place that you can have a valuable license and a quick license turnover are really transitioning or have already transitioned from AMAG to Palatin. And as we've been saying, they needed attention and they've now been cleaned up and they're functioning. So we would like to be able to turn over to the partner a -- like a well-oiled machine that's functioning so that this can be just dropped into the bag, and they could just focus on the commercial activities. And I think that's the way that we'll get maximum value for the product. And a lot of those things have been done already. And I think relatively shortly, we really won't be that dependent on AMAG for much of anything.

Our next question will be from Joe Pantginis from H.C. Wainwright.

So first, just based on your earlier comments about AMAG and the sale to Covis. I just wanted to dot the final I here. So is there anything that we need to be aware of with regard to the change of control, number one. And then number two, when you look at the pipeline, you are seeking additional -- or you're seeking funding, external funding for the COVID-19 program for 8177. So I thought it might be a good opportunity to just give us a little bit of a reminder and me a little bit of a reminder with regard to the preclinical data that you have in hand that gives you encouragement for the program.

Great. Sure. Just dealing with the transition. We've already been in contact and Steve -- so Steve has really already been in contact with the Covis senior management. They confirmed that they are -- will be in place and continue to support any other transitional services that we need from them. So I don't think there'll be -- we just think there will be nominal if no impact of that transition, which should close shortly.

Well, moving on to this, you highlighted for PL-8177 for potentially as a treatment for COVID patients, we'll take that in a couple of directions. So from a preclinical standpoint, clearly, we know the PL-8177 through a variety of models has shown a suppression -- reduction of proinflammatory cytokines. What was quite interesting to us and quite encouraging to us was really work that was done in a model of lung disease, which is for interstitial pulmonary fibrosis, which is done -- it's called the bleomycin model, which is one of the standard models that really looks at the effect of a drug to impact lung fibrosis, which is really a key detriment in these patients. And we saw really nice success in reducing the fibrosis that occurs in lungs in that model.

So that -- so there is a nice set of preclinical data from both the anti-inflammatory side and then from the antifibrotic side that really supports transitioning into clinical trials. And really, we've had review by both the BARDA program and the ACTIV program and the scientific reviews have been very positive. It's just that with the wealth of compounds moving through and the desire to have late-stage compounds, we -- it's -- we end up with great scientific reviews, but come back when you're ready for Phase III type of responses.

So what we're doing along those lines is we've actually brought in a group that specializes in helping to get funding for programs such as PL-8177, and we're resubmitting grants and other applications to get for support. Unfortunately, because we've had a little bit of delay in the manufacturing, we will have the time to play these things out.

Irrespective of the financing, if it comes in or not, we may choose not to go forward if we don't get financing in COVID patients, but we do believe in the value of PL-8177 for treating acute lung diseases in general. And we would look at maybe moving in a different indication that may be easier for us to get at clinical trial sites and patients that with that, it will be harder to do with COVID patients right now without support. So we do think that we'll go forward in lung disease in one manner or another. It's just not clear until we really play out the granting process and the external funding process which way we'd go.

Got it. Very helpful. Looking forward to a lot of important catalysts in the near future.

Us too.

Our next question will be from Michael Higgins from Landenburg Thalmann.

This is Edward on for Michael. Just starting with Vyleesi here. It looks like there was a $1.1 million charge in the quarter that generated the negative net sales. Just wondering if that's correct and whether this is a recurring charge? And in terms of net margin, I'm just wondering what we should look for in the next few quarters.

It's Steve. Well, that number is not correct, I have to talk to our outside auditors that it is correct. The strategy out of the gate by AMAG was about demand. They did not, if you will, have certain procedures in place where you'd have the insurance reimbursement. That was just not their initial strategic strategy. They were going to evolve into, if you will, instituting those procedures where you'll get the insurance reimbursement. They started the procuring coverage, expanding the coverage and then the divestiture process started. So what you see is, if you understand how Vyleesi is being distributed and sold, the first script, and the script being defined is for auto-injectors. Palatin subsidized and AMAG had done it prior, subsidizes 100% of that. So that means the patient has $0 co-pay, zero out-of-pocket for the first -- for the script -- first script. All subsequent scripts, the refills, they're at a pocket cannot exceed $99.

So what you have is a little bit of a perfect storm right now as we got the product back in that we're expanding the coverage, and I think we're making some very significant increases in that regard. But we -- importantly, we adjusted the procedures with the specialty pharmacies, whereby we are seeking insurance reimbursement on all the doses. So as of right now, you have a very substantial amount of, say, offsets, the rebates, the allowances from the, say, the positive gross -- the gross sales that for this period resulted in net sales. As we go forward, that's going to be turned to positive sales and ideally significant positive sales.

A little bit further down in the statement, we also had the cost of goods sold. You can see that it's -- we have a very, very good margin. Even once we get some things in place and the insurance reimbursement and the demand is moving in the right direction, our gross profit margin will exceed 90%. So the takeaway there, Edward, is this is a timing difference. We've remediated certain procedures and processes. They're in place now and it is increasing every week and every month.

All right. That sounds great. I appreciate that clarity. And just as a follow-up on that point, it looks like you have -- sales were about $800,000. You have $5 million run rate for the year. And then are these initial revenues then based on demand? Or does it include some of the stocking and destocking from the AMAG transition?

You know what? We're -- we believe the -- I wouldn't extrapolate from what we just did for July 25 through September 30. As Carl highlighted in his prepared remarks, and I commented there, there was work to be done before we could move forward with the -- attacking the awareness and the demand. The insurance coverage needed to be expanded precertain procedures to allow for insurance reimbursement needed to be modified and corrected at the specialty pharmacy level. So our position is that demand will increase and ideally significantly as we go forward. We did also just recently start this geo-targeting, digital marketing campaign and you might say, well, yes, recently within the last few weeks. And even though we've had the product for a little under 4 months, it would have made no sense to start that campaign prior. You don't want to increase the demand and also it will have a negative impact on what type of revenue dollars and cash dollars you were ignoring as a manufacturer. So we believe we're in a really good position with that to -- as we're attacking the demand going forward to have that upswing in the demand curve.

I'm going to just kind of maybe put in -- because I'm not an accountant. Unfortunately, according to Steve, I'm going to put it in more blunt terms. What we inherited was a product that was really just aborted and it had a negative net sales. We couldn't tolerate that. We need to make money when we sell or fill a Vyleesi script. And we needed to put a lot of things in place to do that, and we've done that now. So we're now in a position where we can work on increasing the demand because instead of having increased demand costing us money, we're not going to make money.

I don't know, maybe I'm a little silly. I think when you sell something, you want to make money when you sell it. So we needed to fix, put in place the infrastructure that allowed us to do that. And that's now the case, and that's going to expand. As Steve, again, a little bit modest, we have good insurance coverage, and we're going to have even better as we get into the new year. We've got a great team working with us, and we're expanding coverage almost every day. Any other question?

So -- yes, you sort of framed in my next question there. You mentioned on the previous call about the digital marketing campaign and the coverage and you provided a few numbers around that. I was hoping you could talk a little bit about how much you're investing? What sites you're looking at for the digital marketing campaign? And then if you could provide any updates on the coverage compared to the last quarter's call.

Yes, it's Steve. The coverage coming in, and it was really advancing as we were taking the product back from AMAG, was in that 50% range. We were able to get that into the mid-60 range. The mid-60 range being defined as the covered lives out there, which is the acronym that people use. And we're -- but we're aggressively moving forward. We have a third-party expert consultant that's assisting us in this endeavor. And our target is a clear 75%, if not 80% by the first quarter of next year. The -- so that's about as much specificity I can give around the coverage, and it's always confidential on the type of who's covering us, but it's the general rule of thumb is there's 5 main coverage groups that handle, if you will, 80% of the covered lives. So we're in a pretty good position there. We're not seeing any pushback. Once we get the right person and the right attention, this is a product that's on demand. We don't have any safety issues. The pricing and things of that nature are -- there's no pushback in that regard. So it's just a matter of a timing difference again. So our plan is to come -- by end of the first quarter that we'll have north of 75%, if not 80% of covered lives.

Digital marketing.

Okay, excellent. That's exactly...

Yes, regarding the digital marketing, it's -- I mean we're not a -- we're not a full commercial activity. We don't have a sales force. And I believe and Carl believes and a lot of other people, there'll probably be limited impact on the sales force during this stage of the pandemic. So we're utilizing the digital marketing, the Facebooks, the Instagrams, the Telemedicine. And it's -- the investment is what we think is reasonable. It's between $500,000 and maybe $750,000 for the first few months, as you're layering the foundation in there. Thereafter, it probably will go down maybe 50%. And as I mentioned earlier, this is a geo-targeting. We're -- we view this as a heightened proof of concept, right? We're not going out national. There are certain areas that we want to show that if you invest the dollars, you have the impact, you have the demand, you have the value proposition regarding the net sales. And that's going to put us in what we believe, a much

better position regarding the relicensing.

Okay. Makes sense. And then just one final question on 9643. Just about the Phase III going forward. Just if you could provide -- you've provided a little bit of time line for the outlook. If you could also touch a little bit on the cost in the likelihood of partnering or retaining this asset depending on the Phase III results and going forward?

I mean, just in general terms, if we're -- if we have positive outcome and we're fortunate enough that we're running a full Phase III program next year, you're going to be -- it's going to be about $20 million to complete all the activities for a full Phase III program. Meaning all the manufacturing, additional task work, validation work, all the clinical work and being in a position to get those studies done, they would be done next year. The good thing about dry eye studies is they're very quick. So if we start them in the first half of the year, they'll be done in the second half of the year and you're in a position to file. So it's a very rapid program. And it's not -- for a Phase III program that would lead towards an NDA submission, it's not particularly expensive, but it would be in the $20 million range to really conduct all the activities we need to do and then be in a position to file an NDA late next year or early in 2022.

Okay. So it sounds like you'll be doing this in-house then?

Yes, I mean, we -- until we have the data, and we see it. We certainly have had -- Steve handles a lot of the business development activities, and we certainly have had preliminary discussions with potentially larger companies that would be interested in a dry eye product, But really until you have the data and your regulatory path forward is fully clear, you can't do much. No one's going to do a deal with us with data pending. So when that data comes out, we certainly will look at business development options if they're on the table, and we'll go from there.

Thank you. That concludes the question-and-answer session today. I would like to turn the call back over to Carl Spana.

Great. Well, thank you. Thank you, everyone, for participating on the call. Good questions that we received, helped us clarify what's going on in the company. We look forward to continuing to update you as things occur. I'm sure I'd be surprised if we don't have another call based around the data coming out from the dry eye disease study in December. We look forward to that, and we look forward to keeping everybody informed with the progress that we're making here. The team here is working quite hard, and there will be a lot of the conferences that are coming and will continue to come. So thank you. Be safe. Have a great day.

Thank you.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.