Palatin Technologies Inc (PTN) 2022 Q1 法說會逐字稿

Hello, ladies and gentlemen. Welcome to Palatin's First Quarter Fiscal Year 2021 Operating Results Conference Call. As a reminder, this conference is being recorded.

Before we begin our remarks, I'd like to remind you 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 that the actual results 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 the call -- today's call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatin.

Thank you. Good morning, and welcome to the Palatin Technologies First Quarter 2022 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 will now turn the call over to Steve, and he'll provide the financial updates. Steve?

Thank you, Carl, and good morning, everyone.

Regarding our research and development infrastructure, we have strengthened our R&D department with key appointments who have demonstrated a high level of expertise in their field to support the advancement of our development programs. Regarding Vyleesi, which is FDA approved for the treatment of hypoactive sexual desire disorder, or HSDD, in premenopausal women, our goal with this program is to demonstrate product value in the marketplace with an objective of relicensing the U.S. rights to a committed women's health care company or entity. Our measured plan is showing positive trends for the targeted value metrics.

For the quarter ended September 30, 2021, Vyleesi gross product sales increased 18%. Net revenue increased 98%. Net revenue per prescription dispensed increased 45% despite a 13% decrease in total prescriptions dispensed over the prior quarter ended June 30, 2021. Market access, reimbursement coverage and refill rates have all increased over the prior quarter ended June 30, 2021, and also over the successive quarters ended December 31, 2020, and March 31, 2021.

Regarding our overall operating results, specifically revenue. Total net revenues consist of gross product sales of Vyleesi net of allowances and accruals. Vyleesi gross product sales for the quarter ended September 30, 2021, amounted to $1.4 million with net product revenue of $159,482 compared to gross product sales for the period July 25, which was the date Palatin regained North American rights for Vyleesi from AMAG to September 30, 2020, of $809,100 with negative product revenue for the September 30, '20 period, of $288,560.

Regarding operating expenses. Total operating expenses for the quarter ended September 30, 2021, were $7.4 million compared to $3.7 million for the comparable quarter of 2020.

Regarding cash flows, Palatin's net cash used in operations for the quarter ended September 30, 2021, was $6.4 million compared to net cash provided by operations of $3.8 million for the same period in 2020.

Regarding net loss, Palatin's net loss for the quarter ended September 30, 2021, was $7.1 million or $0.03 per basic and diluted common share compared to a net loss of $3.9 million or $0.02 per basic and diluted common share for the same period in 2020. The differences to the operating expenses, the cash flows and the net loss for the quarter ended -- quarters ended September 30, 2021 and 2020 were primarily due to the gain of $1.6 million in the September 30, '20 quarter, which reduced expenses during that quarter recorded and specifically due to the Vyleesi termination agreement with AMAG, secondarily to increased commercial expenses related to Vyleesi.

Regarding cash position. As of September 30, 2021, Palatin's cash, cash equivalents were $53.4 million with approximately $900,000 of accounts receivable compared to cash and cash equivalents of approximately $60.1 million with $1.6 million of accounts receivable as of June 30, 2021. Based on our current operating plan, we believe that existing cash and cash equivalents will be sufficient to fund currently anticipated operating expenses through calendar year 2022. To be clear, the operating plan does include the comprehensive expenses, covering Palatin's significant inflection points of data readout for our Phase III dry eye disease trial and also, data readout for our planned ulcerative colitis Phase II trial, both in the second half of calendar 2022.

At this time, I'll turn the call back over to Carl.

Thank you, Steve. Just a few words on Vyleesi. On the seed leadership, we continue to make strong progress in the core value metrics that support the commercial value of Vyleesi with net revenue up 98% and net revenue per prescription up 45% over the June quarter. Our objective is to relicense Vyleesi to a committed partner, ensuring the continued availability of Vyleesi as a treatment option for premenopausal women with hypoactive sexual desire disorder. We continue to engage with potential partners and in the U.S. and other territories and the timing of the potential license is actually dependent on us reaching acceptable terms with the right partner.

Now we'll move on. Across a multitude of inflammatory and autoimmune diseases, there remains a vital medical need for new treatments to provide patients and clinicians with safe and effective options. Our research and development operations are focused on advancing a new treatment modality for patients suffering from pathological inflammation with a primary focus on ophthalmic diseases such as diabetic retinopathy, dry eye and uveitis, using our unique understanding and expertise in developing drugs that modulate the melanocortin system. Many of the current treatments for inflammatory and autoimmune conditions work by blocking 1 or more pro-inflammatory pathways, which can cause immune suppression and major safety concerns. In addition, many patients' efficacy fades over time.

To advance the treatment of patients with inflammatory and autoimmune diseases, there is a strong need for new mechanism of actions that can result in efficacious treatments with better safety. The melanocortin system is one of the body's natural mechanism for resolving inflammation and restoring the immune system to a normal state and to promote tissue healing. We believe that therapeutics that activate the melanocortin system will be highly differentiated delivering efficacy with a superior safety profile. We have a multilayered plan that is designed to advance our understanding of how the melanocortin system works at a molecular level and to provide the clinical validation of melanocortin-based therapeutics. If successful, we will have developed a new class of therapeutics for the treatment of inflammatory and autoimmune diseases.

Our research scientists are using the latest and genomic, proteomic and cell biological technologies to advance our fundamental understanding how the melanocortin system resolves inflammation and promotes tissue healing. The results of these activities are already helping to guide our clinical development programs, and we look forward to communicating them through scientific publications and presentations in 2022.

Our clinical development programs are primarily focused on developing melanocortin-based treatments for ocular indications. However, we are also conducting small proof-of-concept studies for nonocular indications. These studies are designed to promote the broad utility of the melanocortin system as a new target for drug development and support our technology licensing efforts. Of course, our ultimate goal is the development of new and differentiated therapeutics that provide efficacy and superior safety treatment options for patients.

The melanocortin system plays a critical role in protecting the eye from harmful inflammation, and we are developing multiple melanocortin-based products for ocular diseases. Topically delivered, the PL-9643 is our most advanced melanocortin agonist for treating ocular diseases that affect the tissues that comprise the anterior segment or the front of the eye. The first indication of PL-9643 is dry eye disease, and we had, as we have previously reported, positive data from the Phase II dry eye disease clinical study.

We had a successful end of Phase II meeting with the FDA, where we reached agreement on the key aspects of the PL-9643 Phase III clinical development program. These include patient population, endpoints and clinical trial design for the first of 2 Phase III pivotal registration studies. The first PL-9643 Phase II dry eye disease study is called MELODY-1, and we'll evaluate the safety and efficacy of PL-9643 versus vehicle control in patients with moderate to severe dry eye disease over a 12-week treatment period. The study is targeted to enroll 240 patients but includes an interim data assessment to be conducted by an independent data monitoring committee that will allow us to increase the number of subjects if needed, reducing the risk of an underpowered study.

The 3 co-primary and 3 key secondary endpoints will be comprised of signs and symptoms of dry eye disease and were determined based on a detailed analysis of the Phase II data. MELODY will initiate in the fourth quarter of calendar 2021, with an interim data assessment in the first half of calendar 2022 and preliminary data is anticipated in the second half of calendar 2022.

If successful, we will initiate the second Phase III study in dry eye disease called MELODY-2 and open-label safety study, called MELODY-3. If successful, the 3 MELODY PL-9643 dry eye disease studies will provide the safety and efficacy data required to file a new drug application with the FDA. The emerging profile of PL-9643 with its rapid therapeutic onset, excellent ocular tolerability and safety is a potential distinct advance in dry eye therapy. If the 2 Phase II results are confirmed in the upcoming Phase III clinical study, we believe that PL-9643 has the potential for a substantial penetration into the multibillion-dollar dry eye disease market.

We also believe that PL-9643 and other melanocortin agonists will have utility in treating multiple front-of-the-eye diseases, and we are planning to initiate a clinical study in a second front of the eye indication in calendar 2022. The indication for this study has not yet been finalized, but will be based on our data and research.

Over the past year, we have also made significant advancement in the understanding of the potential of targeting melanocortin system for treating back-of-the-eye diseases such as diabetic retinopathy and macular edema. In preclinical models of retinal injury, in diabetic retinopathy, treatment with our peptide PL-9654, a melanocortin agonist, improved retinal morphology, protected against photoreceptor cell loss and importantly maintained vision. The PL-9654 data supports advancement into clinical development, and we are currently working on developing a formulation for sustained release of PL-9654 that would be administered by intravitreal injection, a common technique used to deliver drugs for treating retinopathies.

The current market -- drug market for the various retinopathy drugs was approximately $20 billion in 2021 and is projected to be $27 billion by the end of 2025. There remains a large need for new innovative treatments for retinal diseases, and we believe PL-9654, although early in its development, has a tremendous potential to positively impact patients with retinal disease and go on a significant part of this very large market.

In parallel with our ocular research and clinical development activities, we have been conducting an extensive communication effort targeting ophthalmologists and optometrists. Palatin scientists and collaborators have made presentations at most of the major medical meetings. We have been actively publishing our research. Our presentation describing the protective effects of PL-8331 and PL-9654 in mouse models of retinopathy presented at the 2021 Annual Meeting of the American Society of Rental Specialists was awarded a top-10 poster designation. Our communication efforts are establishing Palatin as a company developing exciting new treatments for ocular diseases.

Moving on to our PL-8177 oral formulation for ulcerative colitis, we are conducting the activities required to initiate a Phase II proof-of-concept study, which is targeted to start patient enrollment in the first half of 2022 with initial data readout in the second half of 2022. This will be our first clinical study designed to evaluate the potential of a selective melanocortin-1 receptor agonist as a treatment for ulcerative colitis. The study will evaluate the safety and potential efficacy of oral PL-8177. If positive, results of the study will add to the validation of the melanocortin system as a target for innovative drugs as well as support our licensing efforts for PL-8177.

The market for drugs that target or treat various inflammatory bowel diseases is multibillion dollars, and there remains a large need for new, safe and effective treatment options to expand and advance the treatment of these patients. Emerging safety profile and efficacy profile of oral PL-8177, if confirmed, would be a potential major advance in the treatment of inflammatory bowel disease, particularly in the pediatric population.

Our natriuretic peptide program continues to advance our drug candidate PL-3994, which is a selective natriuretic peptide receptor A agonist and is being evaluated in a Phase IIa clinical study in heart disease, patients with preserved ejection fraction. The clinical study is being conducted in cooperation with a major academic center and is supported by a grant from the American Heart Association. The study continues to enroll patients, and we anticipate preliminary data in early 2022. You can find additional information on our research and development programs on our website, palatin.com.

In closing, a little over a year ago, with return of Vyleesi, we were a company with a single female health product and early but very interesting preclinical programs. As we begin calendar 2022, we are a different company, advancing a new mechanism of treating a variety of inflammatory autoimmune diseases based on drugs that modulate the melanocortin system with the focus on ocular diseases.

Our first ocular melanocortin-based drug, PL-9643 will start Phase III dry eye disease study before calendar year-end, and we are advancing PL-9654 into the drug development process as a treatment for retinal diseases. Both of these innovative drugs have the potential to be significant players in growing multibillion dollar markets. We are also planning to move a second front-of-the-eye program into clinical studies in 2022.

Foundation for this transformation is our unique understanding of the melanocortin system and experience in developing and the approval of drugs that modulate this system. Over the past year, we have put in place the infrastructure, scientists and research activities that are advancing our understanding of how the melanocortin system works, and the results are already beginning to help guide our clinical programs. We remain on track to start a Phase II proof-of-concept clinical study with an oral formulation of PL-8177 in ulcerative colitis patients in the first half of 2022 with readout in the second half of 2022.

Under Steve's direction, our Vyleesi commercial activities have made significant progress. And these changes are beginning to have a positive impact on increasing Vyleesi prescriptions and revenue, and we are actively engaged in utilizing Vyleesi to a committed partner.

In closing, we look forward to 2022, Steve and I are excited by the tremendous opportunity that we have to advance a portfolio of highly differentiated innovative drugs that will positively impact patients and build shareholder value. We thank you for listening to our call and your continued support. We'll now open the call to questions.

(Operator Instructions) Our first question comes from Joe Pantginis from H.C. Wainwright.

A couple if you don't mind. So first, I know it's hard to predict. But with regard to Vyleesi, can you at least describe, I guess, the maturity of these discussions and the tenor of the discussions?

Joe, it's Steve. We're not going to go, if you will, that specific regarding the discussions where we are chatting with multiple companies, and there are different levels of those discussions. I will tell you the progress we've made over the last few quarters has been significant, and it's frankly made for better discussions. It's really no different than when you're doing drug development there. You go through Phase I, Phase II, you get your safety to proof-of-concept and then you move forward.

We're showing those metrics. What we highlighted today, we're quite pleased with -- based on our limited investment that we've been able to make this type of progress. And to frame that a little bit, Joe, when we took over in late July of 2020, there was less than 5% of the scripts running through with insured being reimbursed. We're now over 40% at this point. We actually had negative I'm not stuttering. Negative net product revenue. We now have positive net product revenue. And very importantly, the revenue per dispensed script has gone up significantly. And that's really the Holy Grail, which is to get your -- if you have a non -- if you have a model where insurance reimbursement is very significant, which ours is, because we have a very good WACC. The higher amount you get in that area, frankly, the -- obviously, the higher amounts you're going to get for the net revenue.

So we've been concentrating on those areas, and those areas are absolutely bearing fruit. So again, the discussions are frankly better just because we're able to show that type of activity. Our metric is not to increase the scripts. Are we okay if scrips increase? Absolutely. But we're not -- we don't have a sales force. We're not spending the types of monies that other companies that you're very aware of, say, in the female health care space are spending, whether it's DTC, digital, social media, whatever. So we're pleased that the metrics that we targeted with our limited investment are starting to show very, very positive trends.

And from a timing standpoint, we've talked about it being done by the end of the year. We've adjusted a little bit of that guidance and that we think it's going to roll into the -- very well roll into the first half of '22. But that's our objective, and it's a timing difference. We're always data-driven. We're not gate driven. We want to make sure we have the right partner to go forward. And frankly, give Vyleesi, the attention it needs. So let me pause there. Is that responsive enough, Joe?

Yes. It is. I appreciate the color, Steve. And I guess, my next 2 questions are somewhat related, but it really focuses on your I guess, call it, really broadening activities for your melanocortin platform and you guys are quite busy. So I guess with regard to all of your efforts either for 9643 or your additional assets, how are you with regard to, say, formulation work for assets in development and manufacturing readiness?

So obviously, for PL-9643, actually, we're just getting ready to release drug product to clinical trial sites. The format there is very simple. It's a little single-use plastic called blow-fill dispenser, a is a single dose of the drug. So that technology is very well established and certainly, we're on track to have validated manufacturing that supports Phase III. And then as we're doing the Phase III, we'll be working to put in place the final commercial for that.

More importantly and probably more where you were going was 9643 -- or 9654, sorry, for retinopathies, which we really are -- I can't tell you how excited we are with that product. I mean, what it's doing and the way it's performing is preclinically -- I mean if we can do that in the clinic, it's going to be great. We're pretty lucky there. We should be getting the first formulation data coming in soon to take a look at. And because the drug is an agonist, and we're giving relatively low dosing, so we don't have to load the eye up with drug.

The expectation and what we're seeing so far is that it's going to behave pretty much like the vehicle carriers. So we have -- we're pretty bullish that as we get into the beginning of the year, we'll have a formulation that will begin animal testing and pretty much by midyear, we hope to have that really moving into the preclinical activities, safety and so on and so forth to get into patients. So we think that's a pretty low risk, but one that we're really, really pushing on.

And then finally, oral, again, for PL-8177, again, a peptide and we're there delivering into the colon -- I mean gastrointestinal tract where we're treating a lumen through oral delivery of that formulation. I would characterize it as appropriate forward stage of development. And our manufacturing team is working with vendors to move past the Phase II formulation and to have in place a much better -- more robust manufacturing process to support licensing when that data comes in. So we're in good shape there I think overall, and the team is working pretty hard on that. And as you know, we've experienced setting up manufacturing for commercialization with our experience of Vyleesi.

Yes. And that what I'm just going to use one of your comments with 9654 and what you're doing there as a little bit of a segue for my last point, it's like with regard to being so busy, once you develop the formulation for 9654, how quickly do you think you could really move into or want to move into back-of-the-eye disorders based on your current punch list?

I mean I think it's going to certainly move into early '23. If we're -- let's put it this way, if we're well situated by midyear, mid-'22, which I think we will be, we'll have -- it will take about 9 months to file an IND. And of course, because of the retinopathy space is very large and it's dominated by large players, we will be actively looking to have partnership discussions throughout the development process of 9654.

Of course, you never show when you'll get a deal done, but we certainly want to -- we will continue to move that forward because the patients with various retinopathy is really -- they have the current treatment options with predominantly with anti-VEGFs. And they certainly do work in some patients, but they don't treat all patients and there remains a very, very strong need. These patients will eventually go blind, if they don't get treatment. And even those that are on current treatment, over time, the efficacy does wane. So there is a very, very strong need. And it's just astounding how large that market is. $27 billion by 2025. I mean that's a large market that we're going for. So I'm sure at some point, we're going to need some help, and we want to make sure that we get it in place.

(Operator Instructions) There are no further questions in the queue. I would like to hand the call back over to Dr. Carl Spana for any additional or closing remarks.

We'd like to thank all of you for participating in our fiscal first quarter 2022 call. Calendar 2022 is a big year for us. We've got a lot of clinical readouts. There are a number of things that we haven't yet disclosed to you that we will be disclosing to you probably on our next call that are quite exciting developments. So we really couldn't be more excited here. Teams are really cranking out, and we're going to have a lot of milestones and accomplishments next year. So with that being said, enjoy your day, your end of the year festivities and holidays, and we'll talk to you soon.

Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.