Q4 2021 Palatin Technologies Inc Earnings Call

September 29, 2021

<unk> desire disorder or <unk>.

<unk> in premenopausal women our goal with this program is to demonstrate value in the marketplace by increasing health care provider awareness patient engagement and market access.

With an objective of re licensing in the U S rights to our committed women's health care company.

And regarding <unk>.

Regarding progress we are making progress.

And this is with a limited and measured investment for the quarter ended June 30th 2021 gross product sales increased 28% net revenue increased 149% and total prescriptions increased 17% over the quarter ended December 31, 2020, which is palatin first full quarter of.

<unk> operations.

Refill rates increased over the quarters ended December 31, 2020, and March 31.2021.

Market access and reimbursement coverage also increased over the quarters ended December 31, 2020, and March 31.2021.

Regarding revenue.

And getting into our fourth quarter and fiscal year ended 2021 financial results. Total net revenues consists of net product revenues of <unk> and license and contract revenue related to by Lucy.

Lisa grow sales.

For the quarter and year ended June 32021 amounted to $3.0 million and $11.0 million, respectively with net product revenue net of allowances as accruals of 80504 and negative 283286, respectively.

Palatin recognized no product revenues for the quarter and year ended June 32020, because we didn't get the product back until July of 2020.

Palatin did recognize $94689 in license and contract revenues for the quarter.

And year ended June 30 of 2021 and that was related to our license agreement with quandong.

For the policy whites to South Korea.

And this compared to $117989 for the year ended June 32020 related to our license agreement with APAC Pharmaceuticals.

Regarding operating expenses for the quarter and year ended June 32021 were $22.0 million and $35.0 million, respectively, compared to $11.0 million and $30.0 million respectively for the same periods of 2020.

I'm going to expand a bit in some of the other areas, but that $22.0 million of operating expenses included approximately $9.0 million of an adjustment related to a termination with a license agreement with <unk> and that was noncash and nonrecurring.

The increase in operating expenses for 2021 was primarily due to the recognition of noncash expenses on the <unk> license termination agreement, which I just mentioned and also an increase in our selling general and administrative expenses.

Which primarily where the commercial related expenses for the for the <unk> program.

Moving over to net loss.

Cash flows <unk> net loss for the quarter.

Very close to the to the amount of the operating expenses.

Lesser revenue was $22.0 million and $39.0 million or <unk> 14 per basic and diluted common share respectively compared to a net loss of $10.0 million and $26.0 million or <unk>.

<unk> <unk> per basic and diluted common share respectively for the same periods in 2020.

As I mentioned, just with the operating expenses the main difference for the quarter was the.

Noncash nonrecurring adjustment to the <unk> license termination agreement and also some increases in the selling and G&A primarily related to the commercial expenditures.

For for <unk>.

Cash position.

Oh, I'm, sorry cash flow driver.

Allison's net cash used in operations for the quarter and year ended June 30 of 2021 was $13.0 million.

And the main difference, even though we had the operating expenses of $22.0 million and the net loss very close to that the reason the net cash used in operations as is significantly less of $13.0 million is that for approximately $9.0 million noncash nonrecurring adjustment related to the vie lease termination agreement.

And we also had $28.0 million of net cash used in operations for the full fiscal year at June 32021, and this compares with net cash used in operations of $7.0 million and net cash provided by operations of $44.0 million positive cash provided there respectively for the same periods in <unk>.

20.

Moving over to cash position as of June 32021, pallet, <unk> cash and cash equivalents were $61.0 million.

With $7.0 million of accounts receivable compared to cash and cash equivalents of $91.0 million with no accounts receivable as of June 32020.

Based on our.

Current operating plan, we believe that existing cash and cash equivalents will be sufficient to fund currently anticipated operating expenses through the end of calendar 'twenty two.

Carl is going to go a bit more granular, but this does include the inflection points.

<unk> data readout for our phase III dry eye disease trial, and also data readout.

On are also quite a phase II trial in the second half of calendar 2002.

At this time I'll turn it back over to Carl.

Thank you Steve.

We are continuing to operate under the conditions imposed by the ongoing forward.

To date the adjustments we have made have allowed us to continue to advance our preclinical clinical and commercial programs, while maintaining the safety of our employees patients and health care providers and partners.

Before I get into discussing our clinical and development programs I'd like to emphasize the following concerning our release the operating activities.

Upon return of at least the last year, we undertook an extensive review of the at least the commercial infrastructure and activities.

Clearly indicated that a substantial makeover was needed to support barely see commercialization and re licensing.

This was not a trivial or short term project under Steve's leadership that by at least a commercial infrastructure has been redone and the changes that have been put in place have dramatically improved patient experience patient access relationships with prescribers and the profitability of Alicia.

We are now in a position to re license releases to a committed partner ensuring the continued availability of <unk> as a treatment option premenopausal women with <unk> sexual desire disorder.

And a continuing return on our investment.

At this time I would like to present some of the key objectives of our research and development program.

Across a multitude of inflammatory and autoimmune diseases that remains a vital medical need for new treatments to provide patients and clinicians with safe and effective options.

We are working to advance a new treatment modality for patients suffering with these inflammatory conditions with a primary focus on ophthalmic diseases, such as diabetic retinopathy dry eye uveitis, all of which utilize our unique understanding and expertise in developing drugs that modulate the Milan Accordant system.

Over the past year, we have put in place the infrastructure scientist and research and clinical development activities that we believe is successful demonstrate the broad utility of the <unk> system as a target for a variety of new efficacious drugs for treating these diseases.

Our research scientists are using the latest in genomics proteomics and cell biological techniques to advance our fundamental understanding of how the Atlantic quota system resolves inflammation and promotes tissue healing results of these activities are already helping to guide our clinical development programs.

Ah clinical it only programs will primarily focus on developing Milan. According based treatments for ocular indications. However, we are also conducting small proof of concept studies for non ocular indications. These studies are designed to demonstrate the broad utility of Atlantic Court system is a new target for drug development and support our technology licensing efforts.

Of course, our ultimate goal is to development of new safe and effective drugs that advances the treatment options for patients.

As we stated the Atlanta coding system plays a critical role in protecting the eye from harmful inflammation and we are developing multiple microrna based product for ocular diseases.

We delivered <unk> 43 is our most advanced monochord agonist for treating ocular diseases that affect the tissues that comprise the anterior segment or front of the eye.

The first indication for <unk> four three as dry eye disease, and we are as we previously reported positive data from our phase two study.

The last quarter, we have had a successful end of phase II meeting with the FDA, where we reached agreement on the key aspects of the TL mindset for three phase III clinical development program.

These include patient population endpoints in clinical trial designs for the first of two phase III pivotal registration studies.

Firstly on <unk> III phase III dry eye disease study called melody, one will 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.

He is targeted to enroll 240 patients but included.

The interim data assessment.

To be conducted by an independent data monitoring committee that will allow us to increase the number of subjects if needed thus, reducing the risk of an underpowered study three.

Three co primary.

And three key secondary endpoints will be comprised of signs and symptoms of dry eye disease.

And we are determined based on detailed analysis of the phase III data.

<unk>, one will begin enrollment in the fourth quarter of calendar 2021, with an interim data assessment in the first half of 2022 and preliminary data is anticipated early in second half 2022.

If successful <unk> will initiate the second phase III Pn 943, dry eye study.

<unk> two an open label safety study called <unk>. Three is successful three <unk> 94, three drive. These studies will provide the safety and efficacy data required to file a new drug application with the FDA.

The emerging profile of <unk> with its rapid therapeutic onset excellent ocular tolerability and safety profile as a potentially distinct advance and dry eye therapy.

If the phase two results are confirmed in the upcoming phase III clinical study, we believe that <unk> has the potential for substantial penetration into the multibillion dollar dry eye disease market.

We believe that PL 943, and other one linerboard agonists will have utility in treating.

Other front of the eye diseases, and we are planning to conduct a clinical study and a second front of the eye indication in the first half of 2022. The indication for this study has not yet been finalized but will be based on data from our research and clinical need.

Over the past year, we have made significant advancement in understanding the potential of targeting <unk> system for treating back of the eye diseases, such as diabetic retinopathy and macular edema.

In preclinical models of retinal injury in diabetic retinopathy, she moves our peptide PL nine six 504 in Atlanta, Horton agonism improves retinal pathology protected against photo receptor cell loss and very importantly maintain vision.

$95 four data supports advancement into clinical development and we are currently working on developing a formulation for sustained release of PM and manitex by four that will be administered by <unk> injection, a common technique used to deliver drugs for treating retinopathy.

The current market for various retinopathy drugs is in excess of $10 billion annually.

And is anticipated to continue to grow there remains a large need for new innovative treatments for retinal diseases, and we believe PL nine six 504, although early in its development has tremendous potential to positively impact patients retinal disease and garner a significant part of this very large and growing market.

In parallel with our ocular research and clinical development activities, we have been conducting an extensive communication effort targeting ophthalmologist and optometrist palisson scientists and collaborators have made presentations at most of the major medical meetings and we haven't actively publishing our research as a result of these efforts palaces and now beginning to be recognized as a company developing.

Exciting new treatments for ocular diseases.

Moving onto our <unk>.

877 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 early second half 2022.

This will be our first clinical study designed to evaluate the potential of a selective <unk> one receptor agonist as a treatment for ulcerative colitis.

The study will evaluate the safety and efficacy of oral <unk> hundred 77, if positive results of the study will add to the validation of Atlanta coding system as an innovative target for new drugs as well as support our efforts to license <unk> 877.

The market for drugs that treat various inflammatory bowel diseases as a multibillion dollar and there remains a large need for new safe and effective treatment options to expand and advance the treatment of these patients.

The emerging safety and efficacy profile of oral <unk> hundred 77, if confirmed would be a potentially major advance in the treatment of inflammatory bowel diseases, particularly in the pediatric patient population, where there remains an extremely high unmet medical need.

Finally, our natriuretic peptide program continue to advance.

<unk> thousand 904, which is a selective naturally peptide receptor a agonist is continuing to enroll patients in a phase Iia clinical study in heart disease patients with preserved ejection fraction. The clinical study is being conducted in cooperation with two major academic medical centers and is supported by a grant from the American Heart Association.

We anticipate preliminary data from this study should be available in early 2022.

So this was just a small snapshot of some of the very exciting programs that we're doing at Palatin and you can certainly find more and additional information on our website www dot Palatin dot com.

In closing the past year has been transformative at Palatin, a little over a year ago with return of at least where a company with a single female health product and need of a major overhaul in some very early but interesting preclinical programs.

As we began fiscal year 2022, we are a different company advancing a new mechanism for treating a variety of inflammatory and autoimmune diseases based on drugs that modulate the mine. According system with a focus on ocular diseases. Our first ocular Atlanta, CT based drug Pn 940, <unk> III will start a phase III dry eye disease study before calendar year end.

And we are advancing pn 900 by four into the drug development process as a treatment for retinal diseases.

Both of these innovative drugs have the potential to be significant players in the growing multibillion dollar markets. We are also planning to move a second part of that.

<unk> disease program into clinical trials in the first half of 2022.

The foundation for this transformation is our unique understanding of the mine. According system our experience in the development and approval of drugs that modulate the system.

Over the past year, we've put in place the infrastructure scientists and research activities that are advancing our understanding of how the line. According system works and the <unk>.

<unk> are already helping to guide our clinical programs we.

We remain on track started phase II proof of concept clinical study with our oral formulation of PL 877 in the first half of 2022 with data to follow later in the year.

Under Steve's Wills directions are releasing commercial activities have made significant progress. These changes are beginning to have a positive impact of increasing believes these prescriptions revenue prescription refills and we anticipate realizing what we see.

By calendar year end in closing as we look forward to 2022, Steve and I are excited by the tremendous opportunity we have to advance innovative drugs that will positively impact patients and build shareholder value we'd like to thank you for listening to our call and your continued support the colon that will be opened for questions.

Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if youre using a speakerphone. Please make sure your mute function. It turned off to allow your signal to reach our equipment again press star one to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal for questions.

Okay.

We'll take our first question from Joe pension jet with HC Wainwright.

Hey, guys. Thanks for taking the question.

So.

My question wants to focus on 877 for ulcerative colitis, but I guess the basis also talks to your overall platform and mechanisms of action around the underlying Atlanta accordance system. So I guess first can we start a brown.

When you look at 877, how can you compare it versus the current commercial treatments and I think one of the next questions could be since you have a differentiated mechanism of action is there any potential for combine ability that could be beneficial for the competitive profile of the asset.

Sure. Thanks, Joe.

Ill.

So let's see how we can tackle this in a simple way.

Certainly I think key points here are you mentioned differentiating mechanism of action.

One of the things that we liked about the <unk> system is that we're not blocking some.

Pathway, that's causing inflammation, where fundamentally working to resolve the inflammatory <unk>.

Process Thats going on Thats gotten out of control and to bring it back into control and as part of that you actually get promotional tissue healing.

One is that we see with this mechanism is that not only we have the potential to generate safety.

Efficacy, but it's quite safe we're not.

We're not suppressing the immune system, so breakthrough infection rare disease, a rare inflammatory autoimmune disease conditions or a cancer is really are not anticipated to recover. This mechanism. So it's really quite safe so from a positioning standpoint.

Look, we certainly can't speak to efficacy oven.

Tremendous potential of course, but until we conduct clinical trials and begin to collect the data and we really can't.

So that question a lot of detail, but we do anticipate that we should see good efficacy based on.

Preclinical data, we would anticipate it would probably be used before you move to the biologics so there.

Also quite as in other inflammatory diseases today.

There isn't an existing armamentarium that can be effective in a number of patients, but they have all have their safety issues and concerns and tolerability concerns and usually for many patients at some point. These these options begin to stop working so we would really anticipate us being somewhere.

Going from the generic.

Treatments, maybe post steroids before you move on to a biologic we're quite excited because of the safety Kleen. Mike. This is a peptide that is being given orally. There is no systemic absorption we know that from the clinical studies that we've already done.

So it was quite safe and there remains a really really high need in the pediatric population.

Dealing with some of the key opinion leaders there. They are quite excited about the potential that this drug works, we really do think that in the pediatric population, which we intend to include those patients as soon as we have enough safety data to do that.

We really think it could become potentially almost first line treatment in these patients because of its safety and potential efficacy. So we're quite excited about what we really can do with this.

That's good color, thanks for that and I guess it might be too early for this question, but obviously I mean, you have a broader pipeline now one asset that's about to enter phase III in earlier assets that are percolating, So I guess.

At this point what is your your goals on the BD front are you looking to out license or key potential territories or what are your overall goals right now from a high level.

Sure I think one of the things that I tried to emphasize in Stephen I have Steve started in his part is we're not we have some very exciting programs, but it's also the advance of that underlying science, what how does yes. We are focused in the ocular space and we think there's tremendous potential there with multiple opportunities as we see them.

Beginning to emerge as you know.

18 months ago, we didn't have an active program and we had nothing in clinical trials and network and ready to start. The first one is a phase III that's pretty good.

The goal would likely also the quietest and we have another indication that will add on what we'll tell you about that and it is.

Non ocular indications that we'll be adding on we'll talk about that on our next call is really to show the breadth of this mechanism I mean, if we could put this tree modality on the map I mean, youre not talking about a brand new treatment modality of inflammatory and autoimmune diseases.

That's going to help a lot of patients and it's going to be a tremendously valuable.

For our shareholders.

So that's really what the goal is on a longer term, but also as quite as we.

We will not go forward, we want to license that program.

Dry eye disease, and other orphan indications.

If conditions are right data is supported and conditions are right. We are.

Certainly we like to retain those longer if we can but.

I think if we hit it out of the park like I think we will I'm sure there's going to be a lot of interest in.

So as much as we may want to keep those programs I think.

Don't know that well have the opportunity to do that I think the larger companies that will want them.

And we'll be willing to pay quite a lot more of them.

Got it got it thanks for all that and good luck on the new fiscal year.

Thanks Joshua.

We will take our next question from John Newman with Canaccord.

Hi, guys. Thanks for taking my question.

Curious if you could talk a little bit about the.

Design of the <unk> one study.

Specifically, if you have disclosed.

Which sciences symptoms you would like to look at in that study. Thanks.

We haven't yet, but we will I mean, theyre not there'll be posted fairly soon we'll be filing a protocol with clinical trials dot Gov, but.

They're pretty standard so the design of the study is a pretty typical dry eye disease study. There is a run in period, where we obviously diagnosed patients and we qualify them that they meet all the entry criteria. So if they actually have moderate severe disease.

Patients will studies in the United States and dry as these are generally conducted in what's called a.

<unk>.

Adverse environment, so we put them into chamber that essentially drives out there is it's a way that's used commonly to standardize the patient population. So that we get a more standardized it was a highly variable disease. So we want to try and standardize that.

And as you pointed out there are two types of things that we look at and they are signs and symptoms with signs being evidence of disease, such as inflammation in the front of the eye redness tier from breakup time Geo film production.

So on and so forth. So the study will be looking at.

Corn disease.

Fluorescein staining of the cornea as well as listening green staining conjunctival.

So those would be.

Will be totally will be looking at regional such as inferior and then total so there are three staining.

Endpoints.

We'll be looking at two will be a primary <unk> secondary the primary sign will be ocular discomfort, and then key secondaries will be.

I think we have we are burning I forget the other one.

But there'll be there'll be up.

Part of ocular discomfort for the most part and then we'll articulate those in the protocol when we file it and we'll put that out in the press release, when we stated.

And so the other thing that we have studied that.

Okay.

Another question is.

Will you be looking at patients that have had experience with other agents for dry eye in the study or.

Only patients that have not yet been treated with other products.

They haven't asked the Washington, we allow we don't have artificial tears in the study or use it in the study, but as long as they're washed out of the study where they're allowed it as long as they are.

Currently on active treatment.

They will be allowed in the study and the other thing that you talked about design I think one of things that we have that is a little unique is.

As.

You guys are probably no maybe the audience.

Dry eye disease is multifactorial, both on the regions of the either from you either can cause it as well as the types of patients their age underlying immune status and so on and so forth, which is a drug developer we don't always liked because it leads to a lot of variability.

And one of the ways you combat that is by putting large numbers of patients in the studies, but what we were able to agree with the agency is a little bit of a unique design, which is we've got a well powered study based on the 240 patients.

But.

As history will tell you drive these studies don't always come out the way you want so in order to protect ourselves and allow ourselves to put in more patients are needed. We've actually built in what's called an interim data assessment. So it will be analyzing the data.

From a statistical endpoint looking at.

Now the endpoints are doing is looking at the power calculation that will allow us to determine if we need to put more patients in the last thing. We like you don't want to do is we just miss on 240% and if we have put 300 in the study were to hit it and the reason why that's important is because from an FDA regulatory perspective.

We all were looking for is a statistical difference in the endpoint.

Some control versus active where theres, no measurement or or.

Our attribution of clinical benefit agency doesn't require that all they look for is a physical difference. So therefore, you want to really make sure you don't have an underpowered study and if you need to put in 120 more patients to hit it you want to be able to do that so we think we're going to head into 240, but if we need to put in more we've already worked out with the agency and we have a mechanism for doing that.

Okay, great. Thanks very much.

We'll take our next question from Michael Higgins with Ladenburg Thalmann.

Hey, guys. Thanks for taking the questions. Congrats on the continued progress with the pipeline.

Couple of questions here. The first is a follow up on John's question.

In the interim.

Just trying to get a sense here in the early days you have not started the trial yet.

Has the current trials right up in front of us, but I'm just trying to get some sense for what we will see from the interim look.

If at this point.

Subject to change of course, but at this point if you're looking for.

Issuing a press release of.

Yes interim <unk> suggested a go forward increase.

Increase in numbers.

Yeah.

Would be highlighted at that point.

But really the question is how much evidence would you provide at that point.

The endpoints or do you just expect just to say.

As I mentioned.

<unk>.

Patients to change or not.

So we won't be we will not be getting any data on what.

Better.

Youre hitting it youre not hitting all their look they will convey to us will be.

Keep the study is it.

And go to your $42.0, and complete the study.

For they will tell us.

Okay.

Quick.

150, more patients in study or put 50 more patients in the study we recommend that you put 50 more patients in the study 100 more patients in the study.

That's why we're so, especially with the press release would be.

The interim analysis has occurred.

Track, we will continue to go to 240, or we will go up a certain number of patients.

And that that we won't be we won't they won't give us anything.

<unk> it.

And the reason for that is this is not a data analysis. This is really just a powers calculation assessment.

We don't want to take any statistical hits for multiplicity.

It's purely to protect against the variability in these studies, which.

Which can be high so we want to make sure we get enough patients in.

That makes sense. Thanks, I just wanted to clarify that.

And then I just wanted to follow up on your comments made.

And three 9% for congrats.

That you are looking for data now early 2022.

This has been a program that's been.

Huge upside for really been out of your hands, given the ALJ grants and waiting for sites starting to get going and all that so it's been kind of a slow roller. So now we've got data here within the next six months or so tell us what youre looking for.

Any feedback that you've had so far.

<unk> and other studies progressing.

So.

<unk> been fine it's been slow.

The study is actually in two parts. The first part is <unk>.

Collecting safety and hemodynamic data and that's what we should have by the end of the year. The second part will then go on and look at actually more of a Pharmacodynamic response, so we'll be looking at biopsy and other markers of.

Improvement in cardiovascular cardiovascular function. So so the first part.

Should be completed pretty soon I think those patients are actually either.

Been enrolled or that identified and are being enrolled so as soon as they complete.

We'll get the data from that first part, which we hemodynamic data, which are actually very important it would be very nice to see the effects of <unk> on pulmonary capillary wedge pressure because that's really very important.

Patients.

And as I said, the second part we should get data around mid next year, which will be the.

Markers of cardiovascular we improved markets.

Heart failure and these patients and keep in mind. These are preserved ejection fraction patients where the need is quite high.

In addition to that just as a little prelude to upcoming attractions, we will have some more information out.

Early next year on our overall natural peptide program beyond <unk> four we have some great things going on there, but the time that allow for us to really get into that.

On this call.

Makes sense I appreciate the additional feeling there thanks.

And then one last one here on <unk>.

There's quite a gap obviously between the gross and the net sales. So looking ahead into 'twenty, two and even into the remainder of this calendar year.

How should we look for that gap to shrink what's remaining.

And accounting standpoint, and also from stocking.

Stocking standpoint before.

Before we see if there was that gap shrink.

Yes.

<unk>.

The objective and the target is not so much the shrink that gap.

And what we're really targeting and spending our time and focus on is the market access to <unk> to increase the coverage.

The net ASP, if you will with our limited investment in tobacco.

That investment was funded by the the termination agreement, we did receive $19.0 million from APAC with the regaining of the Reits, albeit we did pick up some some obligations regarding regarding San Jose, but you're I don't anticipate a significant difference in the fourth quarter versus.

The fourth quarter being 12.31 in the third quarter.

It is June 30th or 930.

We will we are showing improvements right now I mean, we look at things every day and obviously, we have full vision into July and August all the metrics, whether it's the refills the prescriptions and importantly in our mind. We think this is the most significant metric.

<unk> access.

The scripts that are that are coming in that are insured drug covered which is my favorite number which is code eight because when I see the the report there is a code eight I know, we havent shared drug covered.

So we were spending the majority of our focus.

Not so much a time per se, but just concentrating on that metric to increase it so.

We're comfortable that we're showing the progress and this is the type of progress that's needed when youre doing the re license with with our partners they want to say that.

What does the data can extrapolate can they get a comfort level that in their hands in their hands are right partner has the infrastructure. They have a team of market access people, obviously much much more significant.

Sales infrastructure than what we have so we're comfortable with this with this measured unlimited.

<unk> that we are we are showing progress.

We have a very good whack.

We do have a number of subsidies from our co pay standpoint, but we're seeing a lot of positive <unk>.

<unk>, albeit at the H eight.

The health care providers.

With with new health care providers coming on the scripts going up and again the market access is our is our primary metric and that is improving so hopefully that was responsive I know, it's a bit long there Michael.

No worries that that's great I appreciate the feedback guys and congrats again.

Okay.

Yes.

That concludes today's question and answer session. Dr. Spin at this time I will turn the conference back to you for any additional or closing remarks.

Well, let me. Thank all of you for participating on the call and our analysts for their questions that help us to have better illuminate what we're doing look forward to continuing to Steve and I look forward to continuing to update you on what we're doing.

And I would really say that the staff here and the people here, even though we're working under pandemic conditions. There is a tremendous amount of excitement and what we can do.

We're really looking forward to 2022 and a number of significant events that are going to occur with this company. So stay tuned and you have a great day.

This concludes today's call. Thank you for your participation you may now disconnect.

Okay.

[music].

Hello, Ladies and gentlemen can work with important fourth quarter and fiscal year end 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 maybe forward looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results may differ materially from those anticipated due to the variety of risks in them.

Certainty as discussed in the company's most recent filings with the Security Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward looking statements intelligent prospects now I'd like to turn today's call over to our host Dr. Carl Scanner, President and Chief Executive Officer of Palatin.

Okay.

Thank you good morning, and welcome to the power technologies fourth quarter and fiscal year end 2021 call I'm Doctor call Spatter, CEO and president of Palatin with me on the call today is Steve Wills, <unk> 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.

Provide the financial update Steve.

Thank you. Thank you Colin and good morning, everyone.

For for framing purposes, and and as Carl will expand on pallets and strategy is to advance our mine. According based anti inflammatory and autoimmune programs within ocular focus.

Regarding by Lee C, which is FDA approved for the treatment of hyperactive <unk> sexual desire disorder or.

Our H S D day in pre menopausal women.

Our goal with this program is to demonstrate value in the marketplace by increasing health care provider awareness patient engagement and market access.

With that objective of re licensing in the U S rights to our committed women's health care company.

And regarding.

Regarding progress we are making progress.

Although I do see operations.

Refill rates increased over the quarters ended December 31, 2020, and March 31.2021.

Market access and reimbursement coverage also increased over the quarters ended December 31, 2020 and March 31st 2021.

Okay.

Regarding revenue and.

And getting into our fourth quarter and fiscal year ended 2021 financial results. Total net revenues consists of net product revenue was up by Alicia and license and contract revenue related to <unk> bye.

At least the gross sales.

For the quarter and year ended June 32021 amounted to $3.0 million and $11.0 million, respectively with net product revenue net of allowances at accruals of 80504 and negative 283286, respectively.

Palatin recognized no product revenues for the quarter and year ended June 30 of 2020, because we didn't get the product back till July of 2020.

Palatin did recognize $94689 in license and contract revenues for the quarter.

And year ended June 30 of 2021 and that was related to our license agreement with quandong.

For the policy whites to South Korea.

And this compared to $117989 for the year ended June 32020 related to our license agreement with APAC Pharmaceuticals.

Regarding operating expenses for the quarter and year ended June 32021, with $22.0 million and $35.0 million, respectively, compared to $11.0 million and $30.0 million respectively for the same periods of 2020.

I'm going to expand a bit in some of the other areas, but that $22.0 million of operating expenses included approximately $9.0 million of an adjustment related to our termination with the license agreement with APAC and that was noncash and nonrecurring.

Which primarily where the commercial related expenses for the <unk> program.

Moving over to net loss.

Cash flows palisson slight loss for the quarter.

Very close to the to the amount of the operating expenses.

Less the revenue was $22.0 million and $39.0 million or <unk> 14 per basic and diluted common share respectively compared to a net loss of $10.0 million and $26.0 million or three.

And 10 cents per basic and diluted common share respectively for the same periods in 2020.

As I mentioned, just with the operating expenses the main difference for the quarter was the noncash.

Noncash nonrecurring.

Adjustments to the VLCC license termination agreement and also some increases in the selling and G&A primarily related to the commercial expenditures.

Four four for <unk>.

Cash position.

I'm, sorry cash flows rather.

Allison's net cash used in operations for the quarter and year ended June 30 of 2021 was $13.0 million.

And the main difference, we even though we had the operating expenses of $22.0 million and the net loss very close to that the reason the net cash used in operations as is significantly less of $13.0 million is that for approximately $9.0 million noncash nonrecurring adjustment related to the <unk> termination agreement.

And we also had $28.0 million of net cash used in operations for the full fiscal year at June 30 of 2021, and this compares with net cash used in operations of $7.0 million and net cash provided by operations of $44.0 million positive cash provided there respectively for the same periods.

2020.

Moving over to cash position as of June 32021, Palatin is cash and cash equivalents were $61.0 million.

With $7.0 million of accounts receivable compared to cash and cash equivalents of $91.0 million with no accounts receivable as of June 32020 base.

Based on our.

Current operating plan, we believe that existing cash and cash equivalent will be sufficient to fund currently anticipated operating expenses through the end of calendar 'twenty two.

Carl is going to go a bit more granular, but this does include the inflection points.

Data read out for our phase III dry eye disease trial, and also data readout.

On are also quite a phase II trial in the second half of calendar 'twenty two.

At this time I'll turn it back over to Carl.

Thank you Steve.

We are continuing to operate under the conditions imposed by the ongoing COVID-19.

Demick to date the adjustments we have made have allowed us to continue to advance our preclinical clinical and commercial programs, while maintaining the safety of our employees patients and health care providers and partners.

Before I get into discussing our clinical and development programs I'd like to emphasize the following concerning our release the operating activities.

Upon return of at least the last year, we undertook an extensive review of the <unk> commercial infrastructure and activities.

So <unk> clearly indicated that a substantial makeover was needed to support for at least the commercialization and re licensing.

This was not a trivial or short term project under Steve's leadership that by at least see commercial infrastructure has been redone and the changes that have been put in place have dramatically improve the patient experience patient access relationship with prescribers and the profitability of our leases.

We are now in a position to realize as we lease it to a committed partner ensuring the continued availability of Alicia as a treatment option premenopausal women with <unk> sexual desire disorder.

And a continuing return on our investment.

At this time I would like to present some of the key objectives of our research and development program.

Across a multitude of inflammatory and autoimmune diseases remains a vital medical need for new treatments to provide patients and clinicians with safe and effective options. We are working to advance a new treatment modality for patients suffering with these inflammatory conditions with a primary focus on ophthalmic diseases, such as diabetic retinopathy dry eye uveitis.

All of which utilize our unique understanding and expertise in developing drugs that modulate the Atlanta coordinate system.

Over the past year, we have put in place the infrastructure scientist and research and clinical development activities that we believe is successful demonstrate the broad utility of Atlanta coding system as a target for a variety of new efficacious drugs for treating these diseases.

Our research scientists are using the latest in genomics proteomics and cell biological techniques to advance our fundamental understanding of how the Atlanta coding system resolves inflammation and promotes tissue healing results of these activities are already helping to guide our clinical development programs.

Our clinical development programs, our primarily focus on developing the line. According based treatments for ocular indications. However, we are also conducting small proof of concept studies for non ocular indications. These studies are designed to demonstrate the broad utility of Atlanta Court system, and a new target for drug development and support our technology licensing efforts of.

Of course, our ultimate goal is to development of new safe and effective drugs that advances the treatment options for patients.

As we stated the Atlanta coding system plays a critical role in protecting the eye from harmful inflammation, we are developing multiple monochord based product for ocular diseases.

Topically delivered <unk> 96 for three is our most advanced mine accord agonist for treating ocular diseases that affect the tissues that comprise the anterior segment or front of the eye.

The first indication for <unk> dry eye disease, and we are as we previously reported positive data from our phase two study.

So last quarter, we have had a successful end of phase II meeting with the FDA, where we reached agreement on the key aspects of the PL 943 phase III clinical development program.

These include patient population endpoints in clinical trial designs for the first of two phase III pivotal registration studies.

Firstly on license for three phase III dry eye disease study called melody, one will 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 included.

The interim data assessment.

To be conducted by an independent data monitoring committee that will allow us to increase the number of subjects if needed thus, reducing the risk of an underpowered study.

Three co primary.

And three key secondary endpoints will be comprised of signs and symptoms of dry eye disease.

And we are determined based on detailed analysis of the phase III data.

<unk>, one will begin enrollment in the fourth quarter of calendar 2021, with an interim data assessment in the first half of 2022 and preliminary data is anticipated early in second half 2022.

<unk> will initiate the second phase III Pn 940 <unk> study.

<unk> two an open label safety study called <unk> three is successful three <unk> feel ninety-fourth retry. These studies will provide the safety and efficacy data required to file a new drug application with the FDA.

The emerging profile of <unk> 43, with its rapid therapeutic onset excellent ocular tolerability and safety profile as a potentially distinct advance and dry eye therapy.

If the phase II results are confirmed in the upcoming phase III clinical study, we believe that PL nine 643 has the potential for substantial penetration into the multibillion dollar dry eye disease market.

We believe that PL 94, three and other <unk> agonists will have utility in treating.

Other photos of the eye diseases, and we are planning to conduct a clinical study and a second part of the eye indication in the first half of 2022. The indication for this study has not yet been finalized but will be based on data from our research and clinical need.

Over the past year, we have made significant advancement in understanding the potential of targeting in Atlanta Court system for treating back of the eye diseases, such as diabetic retinopathy and macular edema.

In preclinical models of retinal injury in diabetic retinopathy, she moves our peptide PL nine six 504 in Atlanta Court action has improved retina oncology protected against photo receptor cell loss and very importantly maintain vision.

$95 four data supports advancement into clinical development and we are currently working on developing a formulation for sustained release of <unk> 95 for that will be administered by intramuscular injection, a common technique used to deliver drugs for treating retinopathy.

The current market for various retinopathy drugs is in excess of $10 billion annually.

And is anticipated to continue to grow there remains a large need for new innovative treatments for retinal diseases and we believe 96.504, although early in its development has tremendous potential to positively impact patients retinal disease and garner a significant part of this very large and growing 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 and we have been actively publishing our research as a result of these efforts palatin and now beginning to be recognized as a company developing exciting.

<unk> new treatments for ocular diseases.

Moving onto our <unk>.

877 oral formulation for ulcerative colitis, we are conducting the activities required to initiate a phase II proof of concept study, which is talking to start patient enrollment.

In the first half of 2022.

With initial data readout in early second half 2022.

This will be our first clinical study designed to evaluate the potential of a selective <unk> receptor agonists as a treatment for ulcerative colitis. The study will evaluate the safety and efficacy of oral <unk> hundred 77, if positive results of the study will add to the validation of Atlanta coding system as an innovative target for new drugs as well as support.

Our efforts to license <unk> 877.

The emerging safety and efficacy profile of oral <unk> hundred 77, if confirmed would be a potentially major advance in the treatment of inflammatory bowel diseases, particularly in the pediatric patient population with remains an extremely high unmet medical need.

Finally, our natural peptide program continue to advance.

We anticipate preliminary pulmonary data from this study should be available in early 2022.

So this was just a small snapshot of some of the very exciting programs that we're doing at Palatin and you can certainly find more and additional information on our website www dot Palatin dot com.

Yes.

In closing the past year has been transformative palatin a little over a year ago with return of at least where a company with a single female health product and need of a major overhaul in some very early but interesting preclinical programs.

As we begin fiscal year 2022, we are a different company advancing a new mechanism for treating a variety of inflammatory and autoimmune diseases based on drugs that modulate the mine a court system with a focus on ocular diseases. Our first ocular Atlanta based drug <unk> 943 will start a phase III dry eye disease study before calendar year end.

And we are advancing PL nine six 504 into the drug development process as a treatment for retinal diseases.

Both of these innovative drugs have the potential to be significant players in the growing multibillion dollar markets. We are also planning to move a second part of the year.

<unk> disease program into clinical trials in the first half of 2022.

The foundation for this transformation is our unique understanding of the Atlanta Court system, how our experience in the development and approval of drugs that modulate the system.

Over the past year, we put in place the infrastructure scientists and research activities that are advancing our understanding of having a line of coding system works.

<unk> are already helping to guide our clinical programs we.

We remain on track starting phase II proof of concept clinical study with our oral formulation of PL 877 in the first half of 2022 with data to follow later in the year.

Under Steve's Wills directions are releasing commercial activities had made significant progress. These changes are beginning to have a positive impact of increasing believes these prescriptions revenue prescription refills and we anticipate realizing is that we see.

We'd like to thank you for listening to our call and your continued support the colon and that will be opened for questions.

Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned out to allow your signal to reach our equipment again press star one to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal for questions.

We'll take our first question from Joel <unk> with H C Wainwright.

Hey, guys. Thanks for taking the question.

So.

My question wants to focus on 877 for ulcerative colitis, but I guess the basis also talks to your overall platform and mechanisms of action around the underlying Milan Accordant system. So I guess first can we start around the.

When you look at 877, how can you compare it versus the current commercial treatments and I think one of the next questions could be since you have a differentiated mechanism of action is there any potential for a combine ability that could be beneficial for the competitive profile of the asset.

Sure. Thanks, Joe.

Yes.

So let's see how we can tackle this in a simple way.

Certainly I think key points here are you mentioned differentiating mechanism of action.

One of these that we like about the <unk> system is that we're not blocking some.

Pathway, that's causing inflammation, where fundamentally working to resolve the inflammatory <unk>.

Process Thats going on Thats gotten out of control and to bring it back into control and as part of that you actually get promotional tissue healing.

One thing that we see with this mechanism is that now.

Or a potential generate safety.

<unk>, but it's quite safe we're not.

We're not suppressing the immune system, so breakthrough infection rare diseases are rare.

I'm, sorry on immune to the conditions or a cancer is really are not anticipated to recover. This mechanism. So it's really quite safe so from a positioning standpoint.

Look, we certainly can't speak to efficacy oven.

Tremendous potential of course, but we conduct clinical trials and begin to collect the data and we really cant answer that question a lot of detail, but we do anticipate that we should see good efficacy based on the preclinical.

Preclinical data, we would anticipate it would probably be used before you move to the biologics so there.

<unk> quite as in other inflammatory diseases today.

There isn't an existing armamentarium that can be effective in a number of patients, but they all have their safety issues and concerns and tolerability concerns and usually for many patients at some point. These options begin to stop working so we would really anticipate us being somewhere.

Going from the generic.

Treatments maybe.

Steroids before you move on to a biologic.

We're quite excited because of the safety Kleen. Mike. This is a peptide is being given orally. There is no systemic absorption we know that from the clinical studies that we've already done.

So it was quite safe and there remains really really high need in the pediatric population.

The only with some of the <unk>.

Key opinion leaders, they're quite excited about.

This drug works, we really do think that in the pediatric population, which we intend to include those patients as soon as we have enough safety data to do that.

We really think it could become potentially almost personalized treatment in these patients because of its safety and potential efficacy. So we're quite excited about what we really can do with it.

Licensor for the key potential territories or what are your overall goals right now from a high level.

Sure I think one of the things that I tried to emphasize in Stephen.

<unk> started in his part is we're not we have some very exciting programs.

It's also the advance of that underlying science, what how does.

Yes, we are focused in the ocular space and we think there's tremendous potential there with multiple opportunities.

As you see them beginning to emerge as you know.

18 months ago, we didn't have an active program and we had nothing in clinical trials and network and ready to start. The first one is a phase III that's pretty good.

But the goal would likely also is quite is and we have another indication that will add on what we'll tell you about that in.

It's a non ocular indications that we'll be adding on we'll talk about that on the next call.

Is really to show the breadth of this mechanism I mean, if we could put this treatment modality on the map I mean, youre not talking about a brand new treatment modality in inflammatory and autoimmune diseases.

That's going to help a lot of patients and it's going to be a tremendously valuable.

For our shareholders.

So that's really what the goal is on a longer term, but also as quite as good.

We knock off what we want to license that program.

Dry eye disease, and other orphan indications.

If conditions are right data is supported and conditions are right.

Certainly we'd like to retain those longer if we can but I.

I think if we hit it out of the park like I think we will I am sure theres going to be a lot of interest in those.

As much as we may want to keep those programs I think.

I don't know that well have the opportunity to do that I think the larger companies that will want them.

And we'll be willing to pay quite a lot for them.

Got it got it thanks for all that and good luck on the new fiscal year.

Thanks, guys sure.

We will take our next question from John Newman with Canaccord.

Hi, guys. Thanks for taking my question.

Just curious if you could talk a little bit about the.

Design of the analogy one study.

Specifically, if you have disclosed.

<unk> Sciences symptoms, you would like to look at in that study.

We haven't yet, but we will I mean, they're not there'll be posted fairly soon we'll be filing a protocol with clinical trials dot Gov.

<unk>.

They're pretty standard so the design of the study is a pretty typical dry eye disease study. There is a run in period, where we obviously diagnosed patients and we'd qualify them that they meet all the entry criteria. So if they actually have modest severe disease.

Patients will studies in the United States and drive these are generally conducted in what's called a <unk>.

As you pointed out there are two types of things that we look at and they are signs and symptoms with signs being evidence of disease, such as inflammation in the front of the eye redness tier from breakup time tear film production.

So on and so forth. So the study will be looking at.

Good morning.

Fluorescein staining of the cornea as well as listening green staining of the conjunctival.

So those would be.

There'll be totally will be looking at regional such as inferior and then total so there are three staining.

Endpoints.

We'll be looking at to will be primary and one will be secondary the primary sign will be ocular discomfort, and then key secondaries will be I.

I think we have we are burning I forget the other one.

But there'll be there'll be up.

Part of ocular discomfort for the most part and then we'll articulate those in the protocol when we file it and we will put that out in the press release when we when we stated.

And so the only thing we haven't studied it.

Okay.

Oh one.

Another question is.

Will you be looking at patients that have had experience with other agents for dry eye in the study or.

Only patients that have not yet been treated with other products. So that they have they have to Washington.

We allow we don't have artificial tears in the study or use it in the study, but as long as they are washed out of the study where they are allowed and they are not currently on active treatment.

There'll be allowed in the study and the idea that you were talking.

By design I think one of the things that we have that is a little unique is.

As.

You guys are probably maybe the audience.

Dry eye disease is multifactorial, both on the reasons of the either frankly, either can closet as well as the types of patients their age underlying immune status and so on and so forth, which is a drug developer we don't always liked because that it leads to a lot of variability.

And one of the ways you combat that is by putting a large numbers of patients in the studies, but what we were able to agree with the agency is a little bit of a unique design, which is we've got a well powered study based on the 240 patients.

But.

As history will tell you dry eye disease studies don't always come out the way you want so in order to protect ourselves and allow ourselves to put in more patients are needed. We've actually built in what's called an interim data assessment. So it will be analyzing the data.

From a statistical endpoint looking at.

The endpoints are doing is looking at the power calculation that will allow us to determine if we need to put more patients and the last thing we'd like you don't want to do is we just missed on $42.0, and if we have put 300 in the study were to hit it.

And the reason why that's important is because from an FDA regulatory perspective.

We all were looking for is a statistical difference in the endpoint.

From control versus active.

No measurement or.

Our attribution of clinical benefit the agency doesn't require that all they look for is a physical difference. So therefore, you want to really make sure you don't have an underpowered study and if you need to put in 120 more patients to hit it you want to be able to do that so we think we're going to head into 240, but if we need to put in more we've already worked out with the agency and we have a mechanism for doing that.

Okay, great. Thanks very much.

We will take our next question from Michael Higgins with Ladenburg Thalmann.

Alright, guys. Thanks for taking the questions. Congrats on the continued progress with the pipeline.

Couple of questions here. The first is a follow up on John's question.

In the interim.

Just trying to get a sense here in the early days you have not started the trial yet.

Has the clinic trials right up in front of us, but I'm just trying to get some sense for what we will see from the interim look.

If at this point.

So if you could change of course, but at this point if you're looking for.

Issuing a press release of yes interim <unk> suggested a go forward increase.

Increase in numbers.

Would be highlighted at that point.

Really the question is how much evidence would you provide at that point.

The endpoints or do you just expect just to say as.

As I mentioned.

<unk>.

<unk> to change or not.

We won't we will not be getting any data on what.

You bet you.

You are hitting it youre not hitting all their look they will convey to us will be.

Keep the study is it.

And go to your $42.0, and complete the study.

For they will tell us.

Sure.

Yes.

50 more patients this study or for 50 more patients in the study we recommend that you put 50 more patients in the study are hodgkin patients in this study.

So that's why we're so, especially with the press release would be.

The interim analysis has occurred.

On track, we will continue to go to 240, or we will go up a certain number of patients.

But beyond that we won't be we won't they won't give us anything and and the reason for that is this is not a data analysis. This is really just a power calculation assessment we.

We don't want to take any statistical hit for multiplicity.

So it's purely to protect against the variability in these studies, which.

Ed.

Which can be high so we want to make sure we get enough patients in.

That makes sense. Thanks, just wanted to clarify that.

And then just wanted to follow up on your comments made.

And 384 congrats.

Looking for data amount early 2022.

This has been a program that's been.

Huge upside for really been out of your hands, given the ALJ grants and waiting for sites starting to get going and all of that so it's been kind of a slow roller. So now we've got data here within the next six months or so tell us what youre looking for.

Any feedback that you've had so far on the enrollment and other studies progressing.

So enrollment has been has been fine it's been slow.

That is actually in two parts the first part.

Is.

Improvement in cardiovascular cardiovascular function. So so the first part.

Should be completed pretty soon I think those patients have actually either.

Been enrolled or identified and are being enrolled so as soon as they complete their work.

Get the data from that the first part was we hemodynamic data, which are actually very important it would be very nice to see the effects of 394 on pulmonary capillary wedge pressure because thats really very important.

Patients.

And as I said, the second part we should get data mid next year, which will be the.

Markers of cardiovascular improved markers of heart failure, and these patients and keep in mind. These are preserved ejection fraction patients where the need is.

Hi.

In addition to that just as a little prelude to upcoming attractions, we will have some more information out.

Early next year on our overall natural peptide program beyond <unk> four we have some great things going on there, but at the time that allow for us to really get into that.

On this call.

Yes.

Makes sense I appreciate the additional children there. Thanks.

And then one last one here.

<unk>.

There's quite a gap obviously between the gross and the net sales looking ahead into 'twenty, two and even into the remainder of this calendar year.

How should we look for that gap to shrink what's remaining.

I'm, an accounting standpoint, and also from from a stocking standpoint before.

Before we see is that was that gap shrink.

Yes.

<unk>.

The objective and the target is not so much the shrink that gap.

And what we're really targeting and spending our time and focus on is the market access to <unk> to increase the coverage.

Net asps, if you will with our limited investment in tobacco.

But I don't anticipate a significant difference in the fourth quarter versus.

The fourth quarter being 12.31 in the third quarter.

It is June 30th or 930.

<unk> access.

The scripts that are that are coming in that are insured drug covered which is my favorite number which is code eight because when I see the report there is a code eight I know we haven't covered.

So we were spending the majority of our focus.

Not so much a time per se, but just concentrating on that metric to increase it so.

We're comfortable that we're showing the progress and this is the type of progress that's needed when youre doing the re license with with the partners they want to say that.

Sales infrastructure than what we have so we're comfortable with this with this measured unlimited.

<unk> that we are we are showing progress.

We have a very good whack.

We do have a number of subsidies from a co pay standpoint, but we're seeing a lot of positive <unk>.

<unk>, albeit at the H D H.

The health care providers.

With new health care providers coming on the scripts going up and again the market access is our is our primary metric and that is improving so hopefully that was responsive I know, it's a bit long there Michael.

No worries that that's great I appreciate the feedback guys and congrats again.

Okay.

That concludes today's question and answer session. Dr spend at this time I will turn the conference back to you for any additional or closing remarks.

Well just thank all of you for participating on the call and our analysts for their questions that help us to have better illuminate what we're doing look forward to continuing to Steve and I look forward to continuing to update you on what we're doing.

And I would really say that the staff here and the people here, even though we're working under pandemic conditions. There is a tremendous amount of excitement and what we can do.

And we're really looking forward to 2022 and a number of significant events that are going to occur with this company so stay tuned.

And you have a great day.

This.

Today's call. Thank you for your participation you may now disconnect.

Q4 2021 Palatin Technologies Inc Earnings Call

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