Q4 2022 Palatin Technologies Inc Earnings Call
I would 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 that the actual results may differ materially from those anticipated due to the variety of risks and uncertainties discussing the company's recent filings with the security and Exchange Commission.
Please consider such risks and uncertainties carefully in evaluating these forward looking statements by pallets and its prospects.
Now I would like to turn the call over to your host Dr. Carl <unk>, President and Chief Executive Officer of Palatin. Please go ahead.
Thank you and good morning, and welcome to the power in the fourth quarter and fiscal year end 2022 call about the call Spanish CEO and president of Palatin with me on the call today is Steve Wills Pallets, as executive Vice President Chief Financial Officer, and Chief operating Officer.
I'll turn the call over to Steve who will give the financial and operating.
Operating update Steve.
Thank you Carl and good morning, everyone.
Starting with <unk>.
With finally see some highlights by Lisa as our commercial product FDA approved for hyperactive sexual desire disorder.
The <unk> program. This is demonstrated commercial product value in the marketplace with an objective of re licensing in the U S rights to our committed women's health care company and we believe the last two quarters are absolutely showing that brand value and the scalability of the program in the right hands.
Specifically for the fiscal fourth quarter ended June 32002, gross product sales increased 79% over the prior quarter and increased 91% over the comparable quarter in 2021.
Net product revenue increased 257% over the prior quarter and increased 857% over the comparable quarter in 2021.
Total prescriptions.
Dispensed increased 49% over the prior quarter and increased 54% compared to the comparable quarter in 2021.
We felt rates commercial insurance reimbursement and net revenue per prescription dispense all increased over the prior quarter and comparable quarter in 2021.
Patients and health care providers can learn more about HST data by <unk> at <unk> Dot com and <unk> Dot com.
Touching base on a few other.
Somewhat nonfinancial items.
Regarding redeemable convertible preferred stock on May 11, 2022, palettes and entered into a securities purchase agreement with institutional investors.
Total gross proceeds from the offering before deducting offering expenses was $15 million. This money was deposited in and is being held in an escrow account pending the investors election to redeem the shares for cash or notes or convert the shares to common stock.
Regarding our recent reverse stock split at <unk> annual meeting of stockholders held on June 24 2022.
The company's stockholders.
Overwhelmingly approved the amendment to the company's amended and restated certificate of incorporation to effect a reverse stock split of the company's common stock.
The board of directors approved the implementation of a one for 25 reverse stock split effective as of <unk> PM Eastern time on August 30 of 2022.
The reverse stock split reduced the number of shares of <unk> common stock outstanding from approximately 232 million shares to a little over 9 million shares but did not change the authorized number of shares of common stock, which remains at 300 million shares.
Palatin is common stock continue to trade on the new on the NYSE American stock market under the symbol <unk>.
Getting into some of the specific financial highlights for the fourth quarter and fiscal year ended June 30 of 2022.
Revenue total revenue consists of gross product sales of <unk> net of allowances and accruals and license and contract revenue.
The release of gross product sales to pharmacy distributors for the quarter ended June 32002.
We're $2 3 million with net product revenue of approximately 771000 compared to gross product sales of $1 2 million with net product revenue of approximately $81000 for the comparable quarter of 2021.
Gross product sales increased 91% and net product revenue increased 857% over the comparable quarter of 2021.
<unk> gross product sales to pharmacy distributors for the fiscal year ended June 32022 were $5 8 million with net product revenue of $1 2 million. This was compared to gross product sales of $4 7 million with a negative yes, a negative net product revenue of 200.
The 38000 for the fiscal year ended 632021.
Gross product sales increased 23% and net product revenue increased 530% over the fiscal year ended June 32021.
Palatin recognized 250000 license and contract revenue for the fiscal year ended June 30, 22 related to our license agreement with <unk> compared to approximately 95000 of recognized revenue for the quarter and our fiscal year ended June 32021, all related to our license agreement with <unk>.
Regarding operating expenses total operating expenses were $13 9 million for the quarter ended June 30 of 'twenty, two and 'twenty one.
Total operating expenses for the fiscal year ended June 32002 were $38 1 million compared to $33 2 million for the fiscal year ended June 30 of 'twenty one.
The increase in the operating expenses was the result of increased research and development expenses.
Primarily related to our ongoing pivotal phase III clinical trials of <unk> 90, 643 in dry eye disease offset by decreased commercial expenses related to <unk>.
The net loss for the quarter and fiscal year ended June 32002 was $12 8 million and $36 2 million respectively.
Compared to a net loss of $13 9 million and $33 6 million.
Respectively for the same periods in 2021.
The decrease in net loss for the quarter ended June 32002 over the quarter ended June 30 of 'twenty. One was mainly due to our increase of net product revenue of ITC.
The increase in net loss for the fiscal year ended June 32000 to over the fiscal year June 30, 'twenty. One was mainly due to increased operating expenses primarily related to <unk> 90, 643 dry eye disease program, which was also offset by increased by <unk> total revenues.
Regarding our cash position as of June 32022, palettes, and cash and cash equivalents were $29 9 million.
With approximately $1 $8 million of accounts receivable and this was compared to cash and cash equivalents of $37 7 million.
With a little under $1 million of accounts receivable as of March 31, 2022, and $60 1 million of cash and cash equivalents was approximately $1 6 million of accounts receivable as of June 32021.
This $29 9 million of cash and cash equivalents at June 32002 does not include the $15 million private placement of redeemable convertible preferred stock. These funds are being held in an escrow account pending the investors the election to redeem the shares for cash or a notes.
Or convert the shares to common stock.
Palatin is out of the financial statements for the fiscal year ended June 30 of 'twenty two.
Does include and the audit report by the independent registered public accounting firm.
A going concern explanatory paragraph.
We'll talk more during the Q&A, but the going concern is really a math calculation, where you look at over the next four quarters based on your operating plan do you have specifics.
Sufficient cash in place and this is in the normal ordinary course, so I E. The conversion of the debt does not we cannot take that into account at this point.
If we were bringing in collaborations in the future again, we can't take that until into account at this time.
We feel very confident that palatin is in a position to pursue a number of different funding avenues and.
As we move forward, we will keep the shareholders apprised accordingly.
Now at this time I'll turn the call back over to Carl.
Thank you Steve before the operating updates I would like to go over our key objectives that I believe will help put the results into context, our long term goals are to establish <unk> system as a validated target for safe and effective medicines to treat a variety of inflammatory and autoimmune diseases and through this process developed a pipeline of innovative drugs. There are two key parts of achieving these goals.
The first is to.
Advanced our understanding of how the mine a court system works by defining the molecular mechanisms and key signaling pathways that support its physiological effects.
This research is ongoing and palaces laboratory into multiple collaborations with academic researchers our success is measured by our multiple scientific publications and presentations at scientific and medical meetings.
The second part is the translation of the science and the clinical results and ultimately therapeutics that address unmet medical needs.
Our phase III dry eye disease phase II, <unk> <unk> and soon to be initiated phase II diabetic kidney disease studies are all designed to meet these objectives.
Our primary goal for <unk> is to demonstrate that leases value in the marketplace with the aim of re licensing the U S rights to a committed women's healthcare company.
Some of the key operating highlights for the year and quarter as follows.
Starting with <unk>, we continue to show quarter over quarter growth with significant increases in gross sales product revenue prescriptions and refills. The results indicate to us that there is substantial market, we really see the continuing increases by lease these core metrics improves our ability to re licensed by the SEC to a committed partner ensuring the continued availability of at least.
As a treatment option for pre menopausal women with HIFU active sexual desire disorder, and a return on our investment.
Moving on to our clinical programs topically delivered <unk> three is our most advanced Milan Accordant agonist for treating ocular diseases that affect the tissues of the front of the eye first.
The first indication for <unk> as dry eye disease, and we are enrolling in a pivotal phase III <unk> study called <unk> one.
<unk> is using an innovative adaptive trial design.
To evaluate 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 in August the independent data monitoring committee performed its interim assessment of the first 120 patients to complete their 12 weeks of treatment with.
The DMC recommended that the study continue and enroll an additional 230 patients for a total of 350 importantly.
No significant safety concerns were identified NPL 90, 643 continues to demonstrate excellent ocular tolerability profile.
After adjusting for the DMC recommendation and the additional patients topline results are expected.
Quarter of 2023.
For PL 877, oral our MCR one last quick.
One receptor selective agonist, we initiated a phase II clinical trial evaluating the safety and efficacy of PL 877, oral <unk> in patients with ulcerative colitis.
The studies utilizing adaptive design with an interim assessment scheduled in the first quarter of 2023 and topline data in the second quarter of 2023.
In the fourth quarter, we anticipate initiating a phase II clinical trial evaluating the safety and efficacy of <unk> agonist in patients with diabetic nephropathy initial results from this study are anticipated in the second half of 2023.
You can find additional information about our clinical programs and clinical trials Dot Gov.
For fiscal year 2022, our commercial research and clinical programs were successful in meeting their objectives, Steve and I look forward with great anticipation to 2023, the continued advancement of our programs to meet our corporate objectives. Thank you for listening to the pallets in fourth quarter and fiscal year end 2022 conference call you can find additional information on our science and clinical.
Graham's on our website www <unk> com and you can also find additional information as you said at the <unk> <unk> at <unk> Dot Com website. Thank.
Thank you, we'll now open the call for questions.
Thank you and then if you would like to ask a question. Please signal pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure any new function is turned off to allow your signal to reach our equipment.
Star one if you'd like to ask a question we will take our first question from Joe <unk> with H C. Wainwright. Please go ahead.
Hey, guys. Good afternoon, thanks for taking the question so.
Carlin, Steve I, just wanted to focus on <unk> for a bit.
I appreciate the growth that you've been having with.
Very little effort and showing that the potential success of the drug based on that.
So first when you look at the current drug status can you discuss the overall reimbursement that you're seeing in the rates and.
Anything else that needs to be done and the blocking and tackling side on the payer side.
Sure. Thanks, Joe This is Steve.
Specifically there is.
When most people talk about the <unk>.
<unk> lives in.
Getting these contracts Theres really three three big boys.
We have contracts with two two of the three.
The third one frankly, we are not really pursuing a contract because were just one.
100% have to be on the contract to be on the formulary. So we're doing well enough we believe in the marketplace.
While we're not pursuing that additional contract and when you correlate.
I think the best phrase too to help help shareholders and analysts understand where we are with the reimbursement approximately 60% of all of our dispensers are covered by insurance.
When we have a co pay system and the number is eight which is now my favorite number because the more rates there are the more insured drug covered.
So 60% is a very good number for our for our drug.
No one is going to get 100% Theres always plans and even within the plans youll cover that could be a high deductible.
On the formulary not covered by the.
Having a 60% rate is considered definitely a.
A very good rate.
And just to correlate that a little bit from where we started when we when we took this product over in the second half of 2020, we were below 30%.
And it's tough to scale our model when you have more money going out the door that's coming in the door are pretty much 101. So that was one of Karl in my number one targets from a metric standpoint, you got to have that insurance in place and the foundation.
And we've targeted other other metrics, but hopefully that was responsive to your insurance reimbursement question.
No. It certainly was Steve I appreciate that and I guess I wanted to focus a bit on our next potential steps provide Lee C. Obviously, you've talked about what the company's primary goal is with regard to out licensing. So first is can you maybe describe the maturity of those discussions, but I guess more importantly, as you go down.
Your corporate decision tree.
<unk> that you have like if if.
I hope it comes to fruition I think it is going to come to fruition with regard to your primary goal, but when you look at future options options. If it doesn't happen with regard to out licensing.
What do you think you'd like to do with it.
Alright, Thanks, Joe I'll take that one.
The.
The primary objective is to re license it in.
There are several criteria and why we think that that makes the most sense one is.
For the patients we're just not in a position and is not part of our corporate strategy to be investing in our sales force most companies, whether it's even with one product in most of our products.
5100, 200, 200 sales folk.
We have single digit so our plan always has been and we maintain it that it's an informed targeted approach in that regard. The show that brand has has value and it's and it's very readily scalable I will tell you because of the results in the first quarter March 31st quarter in the second quarter.
We're in a much better position for these discussions.
We're.
For lack of a better phrase we're running a process, where we're talking to.
A number of parties some of the parties, we might have talked to in the past certain times strategies change, but what I think changes. The fact that this change in the most of these discussions as we're able to show the metric the value metrics are.
Quite strong and this is.
Yes, it's tough for me to say, but there are smarter people out there than may and Carl.
But there's definitely more of those in the right hands. We believe this product could be a very.
Three significant significantly valuable asset so again because of our recent because of the work we've put in.
And the results we've gotten we believe these discussions are going to advance and we were reasonably confident that we will have a licensing deal with the right party by the end of the year.
That said if I have a quick coconut hotdog in between this is not costing palatin much money right, we'd be we don't have 500 sales folks.
We were very close to cash flow breakeven.
If we maintain the growth we have just between the first quarter in the second quarter and the third quarter and the fourth quarter will be breakeven by the end of the year. So.
That means we have some optionality right I want to be clear that carls objective and my objective is to license the product get it in the right hands get it as much awareness and engagement with the patient population.
That is suffering from from HST day.
And concentrate 100% on our autoimmune anti inflammatory.
We couldn't be any more excited with our dry eye disease ulcerative colitis, and then the things we have behind that so I don't want to say, it's a distraction, but it's really not part of our our core strategy as we go forward, but we have optionality.
And it's and it's.
But the primary objective is to license it by year end so.
Any.
You have a follow on question I've tried to be.
Responsive, but also add a bit more color. So you can understand how we're how we're looking at it in that even if even though again the target is the license by the end of the year if it slides for the first part of next year, because we're always data driven the market is.
As a challenging market out there.
Breakeven by year end.
Understood I appreciate that color, Steve Thanks, a lot.
Thank you once again Thats star one and connect to ask a question. We will hear next from Michael Higgins with Ladenburg Thalmann.
Okay.
Thanks, operator, good morning, guys how are you.
Well. Thank you hey, guys. Good good a couple of questions.
And different buckets here, let me just stay with <unk> 43 for a bit.
Just wanted to circle back to the interim results and what the SMB did at a moment when they were reviewing this.
Did they.
And making their decision assess the potential P value considering the variability that they saw with that first dataset to project out to 350 patients I believe they did just wanted to confirm that and if so are you aware of those results.
Okay.
Thanks for the question Michael.
So the interim assessment is.
Essentially it's determined if.
One or more of the primary or key secondary endpoints as in the promising zone.
And if so.
How many more patients would you have to add it.
P value. So the answer is yes, they did.
So it's so based on their interim assessment.
It's logical that one or more of the endpoints for and would be successful.
Again considering.
No need to share it with you I guess when they stay proceed forward with $3 50, and Thats their answers, yes at $3 50. This release that say now we just need to enroll and the other 200 plus patients of confirm it.
Sure.
Okay.
That would be a good.
Good assumption.
Okay.
Then rolling to the second question here, if I could.
Any amendments or changes in the enrollment practices since the trial started.
Yes.
Again, we made no changes.
<unk> patients coming in will be treated identical to the <unk>.
120.
Sounds good and then lastly, here and then 643.
There are several dry highlights that are approved but not necessarily some well what do you consider a meaningful clinical response as we wait until the <unk> results.
I think the ideal response for us would be obviously that we hit multiple signs and symptoms in the same study and I think that would bode very well for the drug.
It is.
As we go forward.
But.
I think as we think about dry dry eye studies that doesn't always happen and of course, we don't know.
We'll get but.
Assumption that we had at least one time or at least one symptom we have a pathway forward.
From a commercial perspective, a lot of the market is driven by the Tolerability after tolerability.
Concerns that patients have and Thats one of the things that we were very pleased in both the phase II study and the first one.
Patients plus I've gone through the product.
<unk> to maintain excellent ocular tolerability.
<unk>.
From a clinical efficacy standpoint.
There really arent no validated scales are measures of that necessarily rate the FDA doesn't require a measurement of clinical benefit.
They look for is a statistical separation between your vehicle control in your active.
So I think one has to look at it more or less how many patients are responding and are responding to those signs and symptoms.
Thats, what you hit Youre in a really good position I think from a commercial standpoint.
I.
Great. Thanks, guys I'll jump back in the queue.
Okay.
Thank you and at this time. It appears there are no additional questions in the queue I would like to turn the conference back over to Dennis for any additional or closing remarks.
Okay.
Okay, well if there are no additional questions.
I'd like to thank all of your participant participating in the Palatin and fourth quarter and fiscal year end 2022 conference call as.
As always Steve and I appreciate your support and we look forward to continue to update your 2023 is shaping up to be a really great year I as I said across all fronts for the company. So we're quite excited employees you are quite excited.
And as I said, we look forward to keeping you updated so have a great day and we'll talk to everybody soon thank you.
Thank you and this concludes today's conference. We thank you all for your participation you may now disconnect.
Yes.
Yes.