Palatin Technologies Inc (PTN) 2023 Q1 法說會逐字稿

Hello, ladies and gentlemen, and welcome to Palatin's First Quarter Fiscal Year 2023 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 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 recent filings with the Securities and Exchange Commission.

Please consider such risks and uncertainties carefully in evaluating these forward-looking statements by Palatin's prospects. Now I would like to turn the call over to your host, Dr. Carl Spana, President and Chief Executive Officer at Palatin. Please go ahead.

Thank you. Good morning, and welcome to the Palatin First Quarter Fiscal 2023 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. I'll now turn the call over to Steve, and he will give the financial and operating results.

Thank you, Carl. Good morning, good afternoon, and welcome, everyone. Starting with certain business highlights and recent updates. Regarding Vyleesi, which is FDA approved for hypoactive sexual desire disorder, the goal for Vyleesi program is to demonstrate commercial product value in the marketplace with an objective of relicensing the U.S. rights to a committed women's health care company.

For the fiscal first quarter ended September 30, '22, gross product sales were $2.3 million for the quarter ended September 30, '22 and also the June 30 quarter, with an increase of 64% over the comparable quarter in 2021. Net product revenue increased 13% over the prior quarter with an increase of 445% over the comparable quarter in 2021.

Total prescriptions dispensed increased 17% over the prior quarter and increased 108% compared to the compare quarter in 2021. Refill rates, commercial insurance reimbursement and net revenue per prescription dispensed increased over the prior quarter and comparable quarter in 2021.

A few other items. On October 31, 2022, Palatin entered into a securities purchase agreement with a certain institutional investor selling and issuing an aggregate of 1.02 million shares of our common stock, and prefunded warrants to purchase up to 798,182 shares of Palatin common stock. And in addition, common warrants to purchase up to 1,818,182 shares of Palatin common stock.

Each share of common stock was offered with one accompanying common warrant for a combined offering price of $5.50. The offering was completed on November 2, 2022. Gross proceeds amounted to $10 million with net proceeds of approximately $9.1 million.

Regarding our reverse stock split. The Board of Directors approved the implementation of a 1-for-25 reverse stock split on August 30, 2022. The reverse split reduced the number of shares at Palatin's common stock outstanding from approximately 232 million shares to approximately 9.3 million shares, but did not change the authorized number of shares of common stock, which remained at 300 million shares.

Moving over to the fiscal first quarter ended September 30, financial results. Regarding revenue, total revenue consists of gross product sales of Vyleesi, net of allowances and accruals. Vyleesi gross product sales to pharmacy distributors for the quarter ended September 30, 2022, was $2.3 million with net product revenue of a little under $900,000 compared to gross product sales of $1.4 million with net product revenue of approximately $160,000 for the comparable quarter in 2021. Gross product sales increased 64% and net product revenue increased 445% over the comparable quarter in 2021.

Regarding operating expenses, total operating expenses for the quarter ended September 30, 2022, were $9.6 million compared to $7.4 million for the comparable quarter in 2021. The increase in operating expenses was a result of increased research and development expenses, primarily related to our ongoing pivotal Phase III clinical trial of PL-9643 and Phase II clinical trial of oral PL-8177, offset by decreased commercial expenses related to Vyleesi.

Regarding other income and expenses, total other income net consists mainly of unrealized foreign currency transaction gains of approximately $400,000 for the quarter ended September 30, 2022, compared to approximately $107,000 for the comparable quarter in 2021. Regarding net loss, Palatin's net loss for the quarter ended September 30, 2022, was $8.3 million compared to a net loss of $7.1 million for the same period in 2021.

The increase in net loss for the quarter ended September 30, '22, over the quarter ended September 30, 2021, was mainly due to the increase in operating expenses, offset by an increase in net product revenue of Vyleesi. Regarding cash position, as of September 30, 2022, Palatin's cash and cash equivalents were $21.2 million, with approximately $2 million of accounts receivable compared to cash and cash equivalents of $29.9 million with approximately $1.8 million of accounts receivable as of June 30, 2022.

The $21.1 million of cash and cash equivalents as of September 30, 2022, does not include approximately $9.1 million of net proceeds from the registered direct offering, which closed in November of '22 and does not include the $15 million private placement of redeemable convertible preferred stock. This $15 million is being held in an escrow account, pending the investors the election to redeem the shares for cash or notes or convert the shares to common stock.

At this stage, Palatin currently expects an operating cash runway through calendar 2023. I'll now turn the call back over to Carl. Carl?

Thank you, Steve. Before covering some of the operating results, I would like to go over our key objectives that I believe will help to put the results in context. Our long-term goals are to establish the melanocortin system as a validated target for safe and effective medicines to treat a variety of inflammatory and autoimmune diseases, and through this process develop a pipeline of innovative drugs with unparalleled safety.

There are 2 key parts to achieving these objectives. The first is to advance our understanding of how the melanocortin system works by defining the molecular mechanisms and key signaling pathways that support its physiological effects. This research is ongoing in Palatin's laboratory and through multiple collaborations with academic researchers.

Our success is measured by our multiple scientific publications and presentations at scientific and medical meetings. The second, more important part, is the translation of the science into clinical results and, ultimately, therapeutics that address unmet medical needs.

We are currently enrolling patients in 2 clinical trials. One is a Phase III study in dry eye disease and the second is a Phase II study in ulcerative colitis. We are also on track to initiate patient enrollment in a third clinical program, which will be a Phase II study in diabetic kidney disease.

For the quarter, Vyleesi continued to show impressive growth in all key metrics, including sales, revenue, new prescriptions and refill rates. Our efforts are continuing to increase Vyleesi's value to potential partners. Moving down to our clinical programs. MELODY-1, our Phase III clinical trial evaluating topical PL-9643 as a treatment for dry eye disease, continues to enroll patients, and we expect complete enrollment in the first quarter of 2023, with data readout in the second quarter of 2023.

As a reminder, in August, the study's data monitoring committee evaluated data from the first 120 patients to complete the study. The data monitoring committee recommended that the study continue to enroll a total of 350 patients. This indicates that one or more of the endpoints was promising, and we believe the study has been substantially derisked.

Our second clinical program is evaluating an oral formulation of PL-8177, a selective melanocortin receptor 1 agonist in a Phase II study in ulcerative colitis patients. The study is evaluating the safety and efficacy of oral PL-8177 utilizing an adaptive design with an interim assessment plan for the first quarter of 2023 and top line data in the second half of 2023.

Enrollment is going well, and we do not anticipate any changes to the program time line. Our next clinical study will be a Phase II clinical trial evaluating the safety and efficacy of the melanocortin agonist in patients with diabetic nephropathy or kidney disease.

Investigational new drug application for this study has been approved by the FDA, and the first patient should be enrolled this quarter. The results from the study are anticipated in the second half of calendar 2023. You can find additional information about our clinical programs at clinicaltrials.gov.

For the first quarter fiscal 2023, our research and clinical programs continue to meet their objectives, and Vyleesi continues to show impressive quarter-over-quarter growth in all key metrics. Steve and I would like to thank you for listening to the Palatin First Quarter Fiscal 2023 Conference Call.

You can find additional information on our science and clinical programs on our website, www.palatin.com, and you can find additional information on Vyleesi at the vyleesi.com website. Thank you. We'll now open the call to questions. I'm going to hand it back over to the operator.

(Operator Instructions)

The first question comes from the line of Michael Higgins from Ladenburg Thalmann.

Congrats on the continued progress. On the second front of the eye indication, can you give us an update on your thoughts on what that might be?

Well, we haven't selected one yet, Michael. It can be -- there's a variety of potential indications. Right now at the moment with 3 clinical trials enrolling patients, we'll probably not initiate that until really we get to the second quarter of next year. We have quite a lot on our plate.

But -- with that being said, I mean, it may be in glaucoma, it may be in something related to corneal transplantation. We have really good data -- preclinical data that supports clinical catalysts in both of those types of indications. I think right now, due to resources and what have you, I think we're going to probably sit tight with the 3 clinical trials that we're enrolling.

Yes, that makes sense. Just to follow up on that regarding maybe back to the eye, diabetic macular edema, retinopathy, any updated thoughts on those? Or is that a similar outlook, you're going to pace those after these 3 are completed?

Well, that's a little bit of a different indication. As I said, the time lines there are substantially longer. We will have a decision probably around first quarter next year on a final clinical candidate and route of administration. Once that's done, we'll probably start the toxicology program because we will need longer-term tox for that. So that program probably will continue to go forward towards the clinic.

But from a clinical standpoint, that will not get into the clinic until 2024. One of the things that we are looking to accomplish there is -- we haven't published it yet, but we will be publishing probably in the first half of next year. We have some really exciting data in various models based on how this -- our mechanism is working there.

And one of those goals is we may look -- we partnered that a little bit earlier than we had previously thought. We think that, that market is huge, really dominated only by the anti-VEGFs and we have a new novel mechanism that has nothing to do directly with affecting neovascularization. I think we'll be quite attractive potential partners. So we'll be looking to do -- we will continue to move forward, but we will also may be looking to do an earlier clinical -- a corporate transaction.

That's super helpful. And then just to switch it over to the PL-8177 and colitis. If you could just confirm for us, are you seeing data along the way? If so, is there anything you can share with us? And then for the interim look, what type of data would you plan to share with us then?

So that study is a placebo-controlled study. So we do not see -- I mean, obviously, we always see safety data, any data we do see is blinded. So really not until we really get a look at the DMC in the first quarter of next year will we have our first look at that.

And then when you do post results, primary, secondary indications or end points (inaudible). Anything you can share with us...

Sure. The way that's going to look at it -- it would be similar to what we did in the dry eye data monitoring committee, so they'll take a look and they'll be -- and if they sanction the trial to continue, that will mean that one -- that most likely the primary endpoint is looking good in a nice way. That means is that the basic modeling is correct. The results coming in are supported, and it is likely that you have a positive study as you continue to enroll.

(Operator Instructions)

We have no further questions on the line. So I'll turn the call back to Dr. Spana.

Okay. Great. Well, I'd like to thank everyone for participating in the Palatin First Quarter 2023 Quarterly Conference Call. Michael, and thank you for your questions. They help us to illuminate really exciting things that are going on at Palatin.

Steve and I and team are working hard here. I can't tell you the enthusiasm we have around Vyleesi's continued growth. I think a lot of people should be paying attention to that. There's been a lot of skepticism about female sexual dysfunction. I think what we're doing with Vyleesi shows that, that's not correct, that there's quite a nice market for it, and that product is going to continue to grow.

And we're really excited about having 3 clinical trials by the end of the year. We've got a lot of exciting things coming on up in 2023. So that being said, thank you, Steve. Thank you, everybody. Have a great day, and we'll talk to you next quarter.

Take care, everyone.

Thank you for joining today's call. You may now disconnect your lines.