Q3 2022 Palatin Technologies Inc Earnings Call
Hello, Ladies and gentlemen, and welcome to Palatin third quarter fiscal year 2022 operating results conference call. As a reminder, this call's being recorded before we begin our remarks I would like to remind you that statements made by Palatin are not historical facts and may be forward looking statements. These statements are based.
On assumptions that may or may not prove to be accurate and actual results may differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company's most recent filings with Securities Exchange Commission. Please consider such risks and uncertainties careful in evaluating these forward looking statements by pelicans prospects.
Now, we'd like to turn the call over to our host Doctor Carl Spanner, President and Chief Executive Officer of Palatin. Please go ahead.
Thank you good morning, and welcome to the Palatin third quarter fiscal 2022 call I've got to call Spanish 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.
So I have to call, Steve who will take us through the financials and other corporate updates.
Thank you Carl and good morning, everyone.
So regarding the third quarter ended March 31, 'twenty two financial results starting with revenue.
Auto revenue consists of gross product sales of Eylea, which is palatin FDA approved product for premenopausal women with hyperactive <unk> sexual desire disorder.
<unk> gross product sales of Eylea Z net of allowance and accruals and license and contract revenue.
The gross product sales, which is the pharmacy distributors for the quarter ended March 31st 22 amounted to 1.3 million with net product revenue of 216000 compared to gross product sales of 1.8 million with net product revenue of approximately 89000 for the comparable quarter of 'twenty one.
Gross product sales decreased 27% and net product revenue increased 144% over the comparable quarter comparable quarter of 'twenty one.
Regarding operating expenses total operating expenses for the quarter ended March 31, 22, where 8 million compared to $6 6 million for the comparable quarter and 21. The increase in operating expenses was the result of increased research and development expenses, primarily related to our ongoing pivotal phase III clinical trial of P. L 90 640.
Three offset by decreased by decreased commercial expenses related to by Lucy.
Regarding cash flows pallet since net cash used in operating operations for the quarter ended March 31, 22 was $9 5 million compared to net cash used in operations of $3 5 million for the same paired in 'twenty. One the increase is primarily due to a $4 three payment received in March 'twenty, one related to our termination agree.
With a mag offset by increased operating expenses.
Regarding that loss Palatin net loss for the quarter ended March 31, 22 was $7 6 million or three cents per basic and diluted common share compared to a net loss of $5 7 million or two cents per basic and diluted common share for the same period in 'twenty one.
The increase in net loss as I mentioned above was mainly due to the increase in the operating expenses.
Regarding pelicans cash position as of March 31, 2020 to Palatin is cash and cash equivalents were $37 7 million.
With <unk> 8 million of accounts receivable compared to cash and cash equivalents of $47 3 million with point $6 million of accounts receivable as of December 31, 2021.
And $60 1 million of cash and cash equivalents with $1 $6 billion of accounts receivable as of June 30, 2021.
Based on our current operating plan.
We believe that existing cash and cash equivalents.
Along with the $15 million of net proceeds raised from our recent private placement of preferred stock assuming conversion of the common stock our debt will be sufficient to fund currently anticipated operating expenses through at least calendar 'twenty three.
Yeah.
Going into a little more specificity regarding by Lucy.
For the quarter ended March 31, 22, gross product sales increased 67% over the prior quarter prior quarter being December 31 2021.
Net product revenue increased 200% over the prior quarter.
Total prescriptions dispensed increased 20% over the prior quarter.
And refill rates commercial insurance reimbursement and net revenue per prescription dispensed increased over the prior quarter and frankly over all the comparable quarters sequentially since we've taken over.
I'd like to before I hand, it back to Carl just cover one additional item and that was our.
$15 million preferred offering that we announced last week.
On May 11th 2022, palettes and entered into a securities purchase agreement with institutional investors selling and issuing.
$8 1 million shares of series B convertible stock.
Stock and 900000 shares of series C convertible preferred stock each share of series B preferred stock and series C preferred stock at a purchase price of $1 67, and is convertible into Palatin common stock at an initial conversion price of 45 cents.
The investors in the series B preferred stock and series C preferred stock also received warrants to purchase purchase up to one <unk>.
Approximately $1 six 7 million shares of common stock at an exercise price of 50.
That $1 $67 billion of common of warrants to purchase common shares equating to approximately 5% warrant coverage.
Total gross proceeds for the offering before deducting offering expenses is $15 million.
Palatin expects to call a meeting of stockholders to seek approval.
Including but not limited to an amendment to our certificate of incorporation authorizing a reverse stock split.
Holders of the series B preferred stock and series a preferred.
Series C preferred stock are entitled to vote only on the reverse stock split and any adjournment of the meeting related to the reverse split.
To the extent these shares of the series B R series shape are converted to common shares are redeemed for that which is which is our expect our our expectation. The company will use such net proceeds for working capital and general corporate purposes.
So I'm just checking my notes that's it let me turn it back over to you Carl Thank you Steve.
It's already been <unk>, our operating objective has been to optimize the core metrics that support the commercial value by leasing for the quarter as Steve said, we saw significant increases in gross sales product revenue descriptions refills continuing increases in by leasing core metrics improves our ability to re license or at least to a committed partner ensuring the continued.
Availability of <unk> as a treatment option for premenopausal women with <unk> sexual desire disorder, and a return on our investment.
We continue to engage with potential partners in the U S. In other territories and the timing of potential of your potential license is dependent on reaching acceptable terms with the right partner.
Across the multitude of inflammatory and autoimmune diseases, there remains a vital medical need for new treatments to provide patients with end conditions with safe and effective treatment options. Our research and development operations are focused on developing drugs that modulate the Milan court system, a new treatment modality for patient suffering pathological information for the prime.
Very focused on ophthalmic diseases, such as diabetic retinopathy in dry eye disease.
Many of the current treatments for inflammatory and autoimmune diseases work by blocking one of more pro inflammatory pathways, which can cause immune suppression and major safety concerns.
And have a lot of court system, one of the body's natural mechanisms for resolving inflammation, we can restore the immune system to a normal state and promote tissue healing.
We believe that targeting <unk> system may lead to development of highly differentiated therapeutics with efficacy and a superior safety profile. Our scientists are advancing the understanding of the <unk> system at a molecular level and to establish the clinical validation of <unk> based therapeutics clinic development programs include ocular and non ocular indications and our.
And to demonstrate the broad utility.
Atlanta Court system is a new target for drug development.
If successful we will have developed a new class of therapeutics for the treatment of inflammatory and autoimmune diseases.
Topically delivered PL 9643 is our most advanced <unk> agonist for treating ocular diseases that affect the tissues of the anterior or front of the eye.
The first indication for <unk> as dry eye disease in December 2021, we began enrollment a pivotal phase III dry eye disease study called <unk> one.
So that one is evaluating the safety and efficacy of <unk> 43 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 and includes an interim data assessment that will be conducted by an independent data monitoring committee that will allow us to increase the number of subjects if needed reducing the risk of an underpowered study.
Three co primary of three key secondary endpoints will be comprised of signs and symptoms of dry eye disease and more determined based on detailed analysis of the phase two data.
The only one is currently enrolling patients at multiple sites in the U S and the interim data assessment is on schedule for mid 2022 with preliminary data in the second half of 2022 is successful <unk> will initiate the second phase III PL nine 643 dry eye study called <unk> two an open label safety study called <unk> three.
The three <unk> <unk> or three dry eye disease studies are designed to 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 in dry eye disease <unk>.
Happy.
As the phase II results, Arkansas firmed in the upcoming Phase III clinical study, we believe that PL 943, as the potential for substantial penetration into the multibillion dollar dry eye disease market we.
We believe <unk> 43 in other words monochord Ags will have utility in treating multiple for.
Disease indications and we are planning to advance a second part of this disease indication to an investigational new drug filing in 2022 as well.
As we move on to the back of the eye Peeled 95, <unk> agonist in development for treating various types of retinopathy.
We are currently conducting the preclinical development activities to file a new drug application or sorry, an investigational new drug application with the FDA, which will allow us to begin critical activities with <unk> by four we recently presented preclinical data describing the protective effects appeal of 96, 5% for animal models of retinopathy at the 2022 annual meeting of the.
<unk> for research in vision and ophthalmology.
Current drug market for FDA approved retinopathy drugs.
$20 billion in 2021 and is projected to be in excess of $27 billion by the end of 2025, you remains a large need for new innovative treatments for retinal diseases.
And we believe feel 95 four although early in its development has tremendous potential to positively impact patients with retinal disease and be a significant part of this extremely large market.
Our oral.
<unk> hundred 77 is a selective <unk> one receptor agonist in development for treating ulcerative colitis, we arent scheduled to initiate patient enrollment in a phase II proof of concept study in the second quarter of 2022.
We anticipate initial data to read out by early 'twenty three.
This will be our first clinical study designed to evaluate the potential of a selective <unk> one receptor agonist as a treatment for inflammatory bowel diseases study will evaluate the safety and efficacy of PL 877, and deposit results of the study will add to the validation of the <unk> system as a target for innovative drugs as well as support our business development.
Licensing efforts around oral PL $8 77.
You can find additional information on our science and programs on our website www Palatin Dot com.
We are well positioned to advance a new mechanism for treating inflammatory autoimmune diseases based on drugs that modulate the Milan Court system. This year is an exciting one for palatin with data readout from two major clinical programs and additional programs advancing towards clinical studies before we move on to the Q&A session.
To summarize beyond 90, 643 is actively enrolling patients in a phase III pivotal dry eye disease study called <unk> one.
<unk> already enrolled more than 120 patients required for the interim assessment, which remains on schedule for mid 2022 with data by year end.
<unk> hundred 77% of treating ulcerative colitis remains on schedule to begin patient enrollment in the second quarter of 2022.
In a phase II proof of concept clinical study with preliminary data by early 2023.
Our pipeline of innovative new treatments continues to grow with <unk> by four and novel <unk> agonist for treating retinopathy is advancing toward.
Investigational new drug filing.
As well as melanoma recorded agonists <unk> second part of the.
Treatment also advancing towards an IND filing by leasing commercial activities continued to show significant improvement in the core metrics of insurance reimbursement net revenue per prescription and prescription refills.
Our communications efforts, we're establishing Palo has a company developing exciting new treatments for ocular diseases. As we look forward to the remainder of 2022, Steve and I are excited by the tremendous opportunity that we have to advance the portfolio highly differentiated innovative drugs that will positively impact patients and build shareholder value.
Thank you for listening to our call and your continued support colon I'll be open for questions.
Thank you, ladies and gentlemen, if you'd like to ask a question may do so by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to let your signal to reach our equipment.
<unk> Star one to ask a question, we'll pause a moment to assemble the phone queue.
[laughter].
We will take our first question from Joe.
Pat <unk> with H C. Wainwright. Please go ahead.
Hi, and thank you for taking our question. This is Nick on for Gal.
My first question is regarding PL nine six or three you did mentioned that you are looking into the second and the second part of the eye indication.
I was wondering if you could provide some insight into what are some of the indications that youre.
Currently assessing to study.
Sure. So it actually won't be <unk> III, it will be a different <unk> agonist that we've moved forward.
Indications.
Anywhere from.
Treatment for post surgery cataract surgery.
Len surgery as.
Well as glaucoma, although glaucoma is that traditionally in front of the eye.
Categorize it that way because it's generally treated with topical eyedrops.
So those are some of the indications that we are looking at.
Follow on dry eye disease.
Okay, great. Thank you and and also.
Also moving into I P O eight months that does that infer austerity colitis I know.
The trial initiation will be soon and I was wondering if you can maybe expand on some differentiating factors for this particular agent versus other current.
Commercial treatments for UC.
Sure so.
No.
77 is designed to treat the colon topically. So this is a peptide that's in an oral formulation. That's released when the drug gets into the colon. So it's in case in a polymer that protects it from being some digestion until its released when it gets to the right spot where we're doing is we're targeting <unk> one receptors that are.
On the epithelium cells of the lumen facing alumina of the colon.
What you see here is the drug is not systemically absorbed so so it's very safe. So we have has the potential to essentially provide efficacy with an extremely good safety profile. So we're not.
Not immune suppressing here. So it also it's quite as another inflammatory bowel diseases.
As you get past first line therapy, now move into steroids or immune modulators or biologics all of which deliver some level of efficacy.
Certainly represent a huge market, but at the end of the day. They all are mainly given systemically and they have immune suppressive properties that really come at a pretty high cost from both economically as well as from the medical or safety standpoint. So we really have the potential here to deliver a safe effective treatment option, although it doesn't really currently exist.
IBD space, and certainly would be ideally suited for pediatric patients.
Where you don't necessarily want patients that are progressing.
Bolt onto really.
Severe immune suppressive treatments that essentially.
Probably not going to have a great outcome for them over over a number of years.
Okay. Thank you and lastly, I do plan on will there be an interim assessment for this trial.
Okay. So yes, we are.
Trial, as well as well as the drive these trials.
Somewhat of adaptive designs and when the first 16 patients go through we'll take we'll do an interim assessment.
If there are any adjustments that are needed to the types of patients that were doing timing of assessment of endpoints, so on and so forth.
We'll have the study really as a pure proof of concept study and it's really designed to give us the information.
I wanted to show that the drug test indeed significant efficacy to go forward and then the types of patients and the endpoints that are most appropriate for this mechanism.
Okay, great. Thank you so much.
We'll take our next question from Michael Higgins with Ladenburg. Please go ahead.
Hi.
On behalf of Mike We have for question. So I guess just following up on the 624 877 could you provide more detail to Hanmi base.