Q2 2021 Palatin Technologies Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the Palatin technologies second quarter of fiscal year 'twenty 'twenty, one operating results conference call.
Reminder of this conference is being recorded.
Before we begin our remarks I would like to remind you of of the statements made by Palatin and are not historical facts and maybe forward. The false statements. These statements are based on assumptions that may or may not prove to be accurate and the actual results may differ materially from those anticipated due to a variety of risks and uncertainties discussed and the company's most recent filings with the Securities and Exchange Commission.
Please consider such risks and uncertainties carefully and evaluating these forward looking statements of intelligence prospects.
Now I would like to turn the call over to todays host factor of Cross banner, 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, 'twenty 'twenty, one KOL and got the Carlsbad of CEO and president of apparel.
The on the call today, and you will tell us the executive Vice President and Chief Financial Officer, and Chief operating Officer.
Today's call and provide financial and operating updates I will now turn the call.
And by the financial update as well and an update on by the.
Thank you.
Thank you Paul good morning, everyone.
Regarding the second quarter ended December 31st 2020.
The financial highlights.
Net loss for the quarter was 10 million of four cents per share.
Two of net loss of $5 2 million or true cents per share for the comparable quarter of 2019.
Total operating expenses for the quarter ended December 31, 2020 were $9 1 million compared to $5 7 million for the comparable quarter of 2019.
The increase of net loss and operating expenses was primarily attributable to commercial expenses related to Felicia and true P. L mind, and 643 phase II study for the treatment of dry eye disease.
Of note, we had a number of nonrecurring expenses related to Felicia for the 12 31 'twenty quarter.
Going forward for the next few quarters, we anticipate the operating expenses to decrease prior to initiation of our dry eye treatment and also the quietest trials, which are targeted to commence around midyear.
As of December 31st 2020, we had $72 2 million and cash and cash equivalents and for 7 million and accounts receivable and.
Compared to $82 9 million and cash and cash equivalents and no accounts receivable as of June 30 of 'twenty and 'twenty.
Palatin has no outstanding debt.
Yeah.
A few comments regarding off at least the program.
And can you help frame this.
Where we've been and where we were at the garden violation I think it's helpful to recap some history.
The product the way the feedback for me bag last year was the program that needed the attention.
At the time of the transfer that was limited to no sales and marketing support and we know it and in part that is why range, the 12 million upfront and I do and an additional $4 3 million familiar bag flash.
The slides Covid on March 31st 2021.
To ensure patient access to by leasing and the regulatory compliance during the transition back to Palatin and we entered into a transition services agreement and the.
And importantly commenced the rebuild of the sales and marketing commercial infrastructure and the REIT structure and streamline of the operation of all distribution network, including processes and procedures.
To improve the patient access experience.
Health care provider interactions.
And increased insurance reimbursement.
The call will share additional of specificity.
Around some of our bodies the efforts.
And we're measured plan and the investment is showing positive trends and returns with the significant rise and payer reimbursement.
And double digit increases two month over month prescription numbers continuing through January of 'twenty and 'twenty one.
Carl.
Thank you for you.
And it continues to conduct of our operations under the conditions imposed by the ongoing COVID-19 pandemic. The day, we believe that the adjustments. We have made have allowed us to continue to the NASCAR preclinical and clinical.
And commercial programs, while maintaining the safety or for us our patients and health care providers and partners.
And we have previously disclosed.
For 2020, we required by leasing for any married Pharmaceuticals, as a reminder, amex divestiture of ABC was based on our strategic and operational changes and not on the perpetual.
Oh of RBC.
Well, you've covered the sales and so on.
The lead the commercial plan, there and number of accomplishments that I would like to emphasize.
Definitely required the obesity, we undertook an extensive evaluation of the commercial infrastructure and patient experience.
If the stretch to say that the commercial infrastructure without function properly and we do and is leading to a very suboptimal patient experience and very unfavorable economics.
Understand direction, we have rebuilt the at least the commercial infrastructure and as he mentioned this is a ground up and rebuilt from distribution.
On the marketing, especially fond of all of this had to be redone, we've expanded the patient access for the product.
We believe that the changes that we have put in place over the past six months will be radically improve the patient experience patient access and relationships with prescribers and the profitability of our leases.
Yeah, and now in a position and focus our efforts on improving the obesity prescription numbers.
The partnership discussions go early the eventual result of on going you were targeting efforts are beginning to improve RBC subscriptions and reimbursement, which we are working to expand it.
Use of Congress. This will put us on a strong position to demonstrate the potential value of RBC and a cost effective manner.
And our ultimate objective because the license because all of you see the committed partner.
During the continued available on other treatment options for premenopausal women with high Tech practice of sexual desire disorder that makes the SaaS the return on investment.
Moving on our clinical and preclinical pipeline programs continue to advance and we had some pretty exciting results for the past quarter.
As a reminder, our primary sites of the focus is on the mill out of course, the system, which is involved and the regulation of the energy balance, including crude and take sexual function and resolution of the Atlanta, Florida responses.
Our first of all of the core programs is based on the roll right. According to the irregular and regulating sexual function.
This research work resulted in the discovery of the Lucy and its approval by the FDA as the first part of it on treatment for premenopausal women with <unk>.
The <unk> sexual desire disorder.
Wanted to know if the lease he was also the first and the line of court and day therapeutic approved by the FDA.
Our current research focuses on developing drugs that target the ability of the monarch, one system for the resolve or turned out and inflammation and reduce fibrosis.
We are working to build a portfolio of a lot of coronary therapeutics that we believe will have significant potential and treating a variety of ocular diseases.
We have developed a critical piece of our candidates for Aqua diseases, such as dry eye disease.
The corner of disease indications not affect this uveitis and retinal diseases.
North of the clinical stage, where we deliver drug habit for gastrointestinal diseases, such as the opposite of crisis.
Well first of all out of court and therapeutic properties delivered he on.
Non core classics for three.
We reported positive data for phase III of dry eye disease, starting in December of 'twenty and 'twenty. The study met the primary objective, which was to provide the data required to continue the bathroom for P. On 94 three.
So I'd argue disease also known as quite of Conjunctivitis Zika effects of the cornea and conduct the vote of the I was hoping the irritation redness pain and blurred vision of.
Because of the varied and we believe the by activating the waterborne and system locally deliver T. O of 94, three will reduce of resolve inflammation that underlies many negative aspects of of dry eye disease.
The P. L. Nine six for three phase II studies with the multi centered randomized controlled study of preparing properly delivered P of life at four three for placebo over a 12 week treatment period.
The study enrolled 160 subjects and evaluated the safety tolerability and efficacy as measured by improvement and multiple signs and symptoms of dry eye disease.
The co primary endpoints, where you're forcing corneal staining, which is a sign of dry eye disease and ocular discomfort with the the symptoms of dry eye disease. The study also included multiple secondary endpoints to provide a detailed measure of the effect of the topical liberty of Hiseq four three moving the size of the symptoms of dry eye disease.
And the overview of the data statistical significant improvement in multiple size and since this was achieved and the moderate and severe patient population at the two weeks of dosing at the 12 week visit there were no safety signals identified and the PR logic for three of excellent. After the probability. However, this was significant for the primary endpoint was not achieved and.
Overall, the population of that included the mild moderate and severe patients.
And the subpopulation of the boxes of your patients.
I think for three achieved statistical significance of techniques to the week 12, the bulk of the signs including and.
Inferior superior and total corneal working standard temple nasal and pillow conjunctival staining tearful break apart and multiple ocular symptoms, including the popular discovered.
Additionally, multiple signs of the measures trended toward significance.
I think it is important to note. This was our first drive the study with T O plastics for Threep.
And yes. The results were broad based in terms of the pooling of the cornea and get them through automation and positive effects were seen as early as two weeks and maintained over the course of treatment.
The result of the study have allowed us to identify the patient population and point Powerpoint and regulatory pathway for the continued development of T. On 94, three for the treatment for dry eye disease.
And we're currently preparing for the end of phase two meeting with USDA and the store.
For the phase II III.
And 94, three clinical study and driver and as far as the start and mid tier.
And probably one data readouts and of course half of 'twenty to 'twenty two.
The reminder, detailed data on the reasonably conclude the phase two study will be presented at the annual meeting of the association for research and vision and ophthalmology and early may of this year.
In summary, the emerging profile of appeal nicely for three with its rapid therapeutic onset and excellent tolerability profile has the potential of distinct fast and drive therapy if the.
Results of confirmed and larger clinical studies, we believe the appeal of life of 43 has the potential because of statute penetration into the multi billion dollar of dry eye disease market.
The stated earlier and the call we believe that the mono based therapeutics paclitaxel to treat a variety of ocular diseases.
He was the ocular diseases can be divided in two broad categories for the eye for a period of segment.
Well the lack of the eye for serious segment. The anterior segment includes the re yourself, the dry eye disease and colonial per foot.
And we're evaluating and critical catalyst for additional and theory of seven indications and anticipate making the decision on our next I'm curious on the disease indication in mid 2000.
'twenty one.
Plus the recycling of the reason.
And the accrued various retinopathy and uveitis, we are planning for it and have the critical time of it forward for treating the retinal disease indication for <unk> 'twenty 'twenty, one as well.
Moving on to our P O eight seven and seven oral formulation for ulcerative colitis.
Ducting activities required to conduct the phase two proof of concept study, which is targeted to start thinking of enrollment for the second half of FY 'twenty one.
The data readout in 2022 this will be our first clinical study designed to evaluate the potential of a selective non accruals of one receptor agonist at the treatment for ulcerative colitis.
Study will evaluate the safety and.
Central efficacy of what we believe.
The all at once and uncertain if part of that the results of the study will support our episode of license PL eight months of episodic.
Regarding up the only one set of startup of pulmonary indications and particular and people for COVID-19 patients. We continue to conduct the activities required if all of the IMD and conducted the studies I think of it.
The treatment for patients with COVID-19 infection and feel it.
Seven and seven may reduce the emulation.
And a lot of fibrosis associated with the disease.
As discussed on previous calls on our press releases and in our 10-K.
Sorry for asking for conducting clinical studies, and COVID-19 patient because rapidly evolving.
And perhaps the design risk and ability of conducting the studies and COVID-19 patients safe.
Based on true and uncertainty of the conducting clinical studies of Covid patients, who started with 877 and COVID-19 clinical study is dependent on external funding we.
We continue to seek a sales support and look forward to hopefully finding support for the very promising program.
Yeah.
Finally based on our research work on and actually peptide system of our drug candidate PL, three nine and I for which is the selective master the peptide separate items.
And is being evaluated and the phase II clinical study and heart disease patients with preserved ejection fraction.
The clinical studies and cooperation with two major academic medical centers and the supported by a grant for the American Heart Association.
Late last year of the study you got a of the patient is currently ongoing and we anticipate delivery of data and 2022.
And can provide additional information on our programs on our website www dot powered on desktop.
Which parts of the pandemic the depth of Madison employees and the board of director of acted quickly to adjust our business operations every of the able to continue to advance our program.
And just as the COVID-19, pandemic and took immediate action to ensure the safety of our employees patients and health care partners and our ability to adapt our day.
The other programs our strong cash position will allow us kind of look and converge with the pandemic and our strong position.
While the leasing towards the activities and made significant progress obviously, it will direct and we have put in place and actually the commercial team that has addressed the deficiencies and inherit for every pharmaceutical.
And that'll be good for selected markings of IBP.
We continue to work with our Chinese and Korean partners, which are now of the I think there'll be some of the clinical studies and to support the regulatory submissions.
For a dry eye disease program and completed our first phase II study with positive results.
To start the phase two three study and mid 2021, and Additionally, we continue to build on a lot of corn based off of the therapeutics product portfolio with the.
Additional clinical studies and new indications starting in the second half of 2021.
For the rest of 2021 of the other strong pipeline of novel clinical candidate and rules and focused on the advancement.
The thing I would like to think of pellet and team and all of our apartments with the rapid adjustments to and be working environment and their continued dedication to the basket of our program and we'll now open the call for questions.
And if he would like to ask the question. Please thanks for thanks.
Star one on your telephone keypad.
And we're using a speaker phone. Please make sure that your mute function is turned off to all of your signals for me.
And our equipment again on a star one to ask the question and our first question will come from John Newman with Canaccord. Please go ahead, hi, guys Hi, there guys. Thanks for taking my question. So actually two questions and the first one is.
For Steve Steve just curious as to what the <unk>.
Additional steps are that you would like to take a with the commercial approach for AAC, obviously, you've done a lot to this point of already but just curious as to what the next steps on over the next few quarters.
And then also curious regarding the partnership discussions for <unk> C Wonder.
I wonder if.
You believe those are really tied to any weighted too.
The commercial progress for for at least here or if that is really independent and sort of more focused on a longer term potential there. Thanks.
Alright, Thanks, John and this is Steve.
And we regarding regarding the violation and and.
And the commercial strategy.
As I mentioned in the call called illuminate a little bit more.
The other things from the infrastructure standpoint, they just had to be has to be modified and.
Being somewhat specific is the prior authorization process was not was not being implemented the way the way it should be implemented and the prior authorization process, which is done by the specialty pharmacies.
And how we get reimbursed for the for the product so that level of reimbursement was significantly lower than what we think it should be especially with the amount of coverage that we have in place the covered lives with the with the with the payers. So that was an absolute a item that the of attack and we believe.
It's definitely improved and we anticipate by the end of February and it'll it'll be and the position that we think it should be and in addition, we've we've attacked the.
Telemedicine is a pretty significant.
And having them. So we revamped that experience for the patient made it more of a streamlined and also working on with the pharmacies that has been a work in process not true. We believe we'll be in the position that we think it should be and by the by the end of February the those items are very significant tenants.
<unk> for for the violation of value.
Greater insurance coverage means greater profitability.
Making the patient experience and also the ATP and interaction in that regard is of course, a plus and that'll drive the script growth.
Regarding the other part of your question the.
And.
The brand and the steps we're doing right now are going to increase the brand and value it.
It's the brand values increase we're going to have.
We'll be on a much better position regarding our dialogue with potential.
The partners collaborators regarding the the license of our leasing for the for the U S. And also other regions, we as I mentioned and the last call. We did slow down some of those discussions with the other regions because we wanted to concentrate on on the rebuilding.
And we building the the value of she brand and the and the U S. We still have ongoing discussions we anticipate having partnerships for the rest of the world.
Later on the year and for the U S that is that is our strategy. We have dialogue. We think it's gonna be a later and the year event and that's frankly because of certain things that where we can kind of that made sense to.
The modified the police and commercial operations.
So it was that recently the response to John.
Yes, thank you very much.
Yeah.
And our next question will come from Michael Higgins with Ladenburg Thalmann.
So I think you are.
Thank you thanks, guys for taking the questions. Congrats on the continued execution on a couple of and by leaves you could start off here and he can give us a little help on the reimbursements and you've mentioned and it's been increasing can you give us some level of of detail and see how many lives are covered all of that's been changing recently.
Yeah, if it stays like all of jumping a little bit when when we first started.
Let me also of practice the way these lives of calculated if you actually put them altogether.
And it would be greater than 100 per cent.
But notwithstanding that we would increase the.
On the covered lives and and importantly, we've increased the contracts with the.
The way the covered lives on.
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The contracts and play some of these contracts were in place with Hey, Maggie and tried some transfer of those where we've had some attitude just palatin all of the contracts right now and palaces named and we've been spending time with our market access group to Peter.
The tweak the contracts really customizing it to provide easy and where we should be positioned and that.
That in addition to.
Implementing a more robust.
Probably the authorization process has has generated multiple insurance coverage for my yeah, we might have been out of the X X one of the first half.
The first started and now what multiples of that ex but on the covered lives standpoint, you know the.
The way most people do the calculation of where in that 70% range, even though we're just in that 70 per cent range recently.
And that's considered very good coverage, you're not kind of get 100 and 100% coverage.
The majority of the Big Boys and there's only so many big boys and this and this landscape we have in place the one or two that we don't have in place with some of the regional players, we always dance and.
That dialogue with our market access group and we anticipate not hope we anticipate that we will have those additional contracts and agreements in place over the next several several months.
Okay, and that's really helpful. Appreciate that a little more detail.
In terms of the Oh, the profitability on a quarterly basis of the SaaS. It obviously is as you've alluded to and described in great detail and you put a lot of marketing one of the rebuilt from the ground up that you've done the.
The expenses appear to be around $1 1 billion and the last couple of quarters.
Is that a fair number to look at going forward it might be and increase.
Yeah, it's going to be a little bit it kind of fluctuate depending on what we're doing what we did.
And you'd have a we did initiate a geo targeted digital marketing campaign.
And the fourth quarter, where and the process of revamping that now that we have the data back and and see where we need to tweak it whether it's the region or go after a different different having the landscape for the digital marketing.
There is.
We get out of several one one time expenses, the nonrecurring and in the fourth quarter.
But that number I mean, it could go if the mix.
I don't think it's kind of go down much of.
Maybe for you on 1000, but of course it could also go up by a few hundred thousand just depends on what's transpiring and that margin.
Okay, that's sort of great. Thank you.
Last one here on <unk> and <unk>.
In terms of time and for partnering.
I guess, our assumption of that you're making some efforts youre getting the private club going is there any kind of the level that you can allude to with which you will increase your partner and efforts on I don't think you want to partner. It until you really can demonstrate that this is the.
A product that the consumer really wants.
And as you get the going that probably is the best optimal time them to the partners.
Is that something you might see here. This year is that something more of a 2022.
Thanks.
Well I definitely think the dialogue will increase.
And in 'twenty, one as we're advancing the.
For for this type of brand the two.
To maintain effect the partners are looking for are the <unk>.
The increase obviously, the the retail increase but also on the insurance coverage for Joe We believed floor, we're attacking all three of those items and and and we're showing the showing significant progress. So we're not going to wait until the end of the year to start the conversation and some of the conversations are ongoing but I do.
And Paul.
And I anticipate those discussions will flow will enhance definitely and the second half of the year and if the things makes sense will you know, we're we're not opposed to doing something as soon as the later it really just depends on the on.
And the type of deal of the part of the collaboration but that that's sort of strategy until we licensed the product invest a what we call it a reasonable and a measured amount and we have an approved product. This is this is a product that we received $165 million.
Since the first quarter of 2017, and it's a very valuable assets of wear.
You know, where we want to give it the.
And we only give the certain amount of attention that the palatin and 10, but it's not going to be the same level of attention that a of.
And much larger part of that's say committed and the female healthcare space as you see with all the presentation, we have a number of other programs.
And that we're evolving towards with the autoimmune and anti inflammatory but we think we are of great I sat here and we're going to be increasing the value of that and later and later in the year or the first half of 'twenty two.
We license our product.
I appreciate the all the detail and I had just a one last question here, it's on a P L mind and 643.
And just the again the numbers and used for the NDA file and.
And the.
The size of the upcoming trial and if you think that that's all of that you didn't need and you need of the phase III I guess is what I'm going to kind of know quite well and if you can update us.
Yeah, I think the kind of broke up a little bit.
Try and purpose the group through the AR for the can.
And so right now.
We completed our first study, we're very pleased with the results and and we and the.
As I said, we'll have the details of the presentations occurring.
All of it later and the year so the upcoming trial requirement of phase two three we'll be looking at both.
Well the co primary endpoint again there'll be a signing of the timken.
And the and size.
And it hasn't been and finally set yet.
And.
From a statistical standpoint, you you don't need it and maybe you could probably get away with the 60 to 80 per arm.
And see it.
And have a good power so it will probably be higher than that it's just too because the cause of safety.
And that's why should you have any additional safety data to support everybody.
And it's worth submission.
And the requirements of the yesterday and with these two trials.
So the two trials with the cold.
You hit on both the fires and clinical trial.
So we'd look to do and how is the get the trial kicked off and mid year.
We will be taking advantage of of adaptive.
And adapt the clinical trial design and so by the.
Third quarter of this year, probably the fourth quarter. This year, we'll get a sense of how the trial is going.
And we'll make the decision on how quickly you want it's of course, the second phase III trial, which could be and early as late this year or probably the no later than the first quarter next year.
And that's where do you kind of range there's probably.
Probably going to come in around 200 for two to 300 patients per per study.
It's the bigger part.
What kind of effect.
Yeah.
Of course.
Very helpful. Appreciate it thanks, Karl Thanks, Steve.
Thank you Mike.
And this will conclude today's question and answer session I would now like to turn the call.
Well I don't know if we're still on.
We are everybody. Thank you for participating in our power technologies second quarter fiscal year 2021 conference call. The safety and we look forward to continuing to update you over the next quarter. Thank you and have a great day.
And this concludes today's conference. Thank you for your participation you may now disconnect.
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