Q1 2023 Palatin Technologies Inc Earnings Call

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Hello, ladies and gentlemen, and welcome to Palatin first quarter fiscal year 'twenty 'twenty three operating results conference call. As a reminder, this conference call is being recorded before we begin our remarks I would like to remind you that the statements made by Palatin are not historical facts and may be full.

We're looking statements. These statements are based on assumptions that may or may not prove to be accurate and that the actual results may differ materially from those anticipated due to the variety of risks and uncertainties discussed in the company's recent filings with the Securities and Exchange Commission, please consider such risks and uncertainties.

Carefully in evaluating these forward looking statements I policies prospects now I would like to turn the call over to your host Dr. Carl <unk>, President and Chief Executive Officer at Palatin. Please go ahead.

Thank you good morning, and welcome to the power in the first quarter of fiscal 2023 calls and Dr. Cross banner CEO and President of Palatin with me on the call today is Steve Wills, thousands executive Vice President Chief Financial Officer, and Chief operating Officer.

Now I'll turn the call over to Steve and he will give the financial and operating results.

Thank you Carl.

Good morning, good afternoon, and welcome everyone.

Starting with certain business highlights and recent updates.

Regarding part D C, which is FDA approved for hyperactive <unk> sexual desire disorder.

The goal of the Ibs C program is to demonstrate commercial product value in the marketplace with an objective of re licensing the U S rights to a committed women's health care company.

For the fiscal.

First quarter ended September 30, or 22 gross product sales were $2 3 million for the quarter ended September 30 of 'twenty, two and also the June 30th quarter.

Quarter.

Net product revenue increased 13% over the prior quarter with an increase of 445% over the comparable quarter in 2021.

Total prescriptions dispensed increased 17% over the prior quarter and increased 108% compared to the comparable quarter in 2021.

Refill rates commercial insurance reimbursement and net revenue per prescription dispensed increased over the prior quarter and comparable quarter in 2021.

A few other items.

On October 31st 2022, palettes and entered into a securities purchase agreement with a certain institutional investor selling and that's showing the aggregate of 1.020 million shares of our common stock.

And pre funded warrants to purchase up to 798182 shares of Pelican common stock.

And in addition, common warrants to purchase up to 1 million 818182 shares of Palatin common stock.

Each share of common stock was offered with one accompanying common warrant for a combined offering price of $5 50. The offering was completed on November 2nd 2022, gross proceeds amounted to $10 million with net proceeds of approximately $9 1 million.

Okay.

Regarding our reverse stock split the board of directors approved the implementation of a one for 25 reverse stock split on August 32020 to the reverse split reduced the number of shares of <unk> common stock outstanding from approximately 232 million shares to approximately $9 3 million shares but did not change the authorized number.

Shares of common stock, which remain at 300 million shares.

Okay.

Moving over to the.

Fiscal first quarter ended September 30th financial results.

Regarding revenue total revenue consists of gross product sales of <unk> net of allowances at accruals while.

Well at least the gross product sales to pharmacy distributors for the quarter ended September 32022 was $2 3 million with net product revenue of a little under $900000 compared to a gross compared to gross product sales of $1 4 million with net product revenue of approximately $160000 for the comparable quarter in 2020.

One.

Gross product sales increased 64% and net product revenue increased 445% over the comparable quarter in 2021.

Regarding operating expenses total operating expenses for the quarter ended September 30 of 2022 were $9 6 million compared to $7 4 million for the comparable quarter in 2021.

The increase in operating expenses was the result of increased research and development expenses, primarily related to our ongoing pivotal phase III clinical trial.

90, 643, and phase two clinical trial of oral <unk> P. O 80, 177, offset by decreased commercial expenses related to <unk>.

Regarding other income and expenses total other income net consists mainly of unrealized foreign currency transaction gains of approximately $400000 for the quarter ended September 30 of 2022 compared to <unk>.

Approximately 107000 for the comparable quarter in 2021.

Regarding that loss powertrains that loss for the quarter ended September 32022 was $8 3 million.

Compared to a net loss of $7 1 million.

For the same period in 2021.

The increase in net loss for the quarter ended September 30, or 22 over the quarter ended September 30 of 2021 was mainly due to the increase in operating expenses offset by an increase in net product revenue by Lucy.

Regarding cash position as of September 30th 2022, peloton is cash and cash equivalents were $21 2 million with approximately $2 million of accounts receivable compared to cash and cash equivalents.

$29 9 million with approximately $1 8 million of accounts receivable as of June 32022.

The $21 1 million of cash and cash equivalents as of September 30 of 2022 does not include approximately $9 1 million of net proceeds from the registered direct offering which closed in November of 'twenty two.

And does not include the $15 million private placement of redeemable convertible preferred stock. This 15 million is being held in an escrow account pending the investors the election to redeem the shares for cash or notes or convert the shares to common stock.

At this stage Palatin currently expects an operating cash runway through calendar 2023.

I'll now turn the call back over to Carl Carl.

Thank you Steve.

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

Key parts to achieving these objectives. The first is to advance our understanding of how <unk> system works by defining the molecular mechanisms in key signaling pathways that support at physiological effects. This reached Curtis ongoing empowers laboratory it through multiple collaborations with academic researchers.

Our success is measured by our multiple scientific publications and presentations at scientific and medical meetings.

The second more important part is the translation of the science into clinical results and ultimately therapeutics that address unmet medical needs.

We're currently enrolling patients in two clinical trials.

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

For the quarter or at least they continue to show impressive growth in all key metrics, including sales revenue, new prescriptions and repo rates. Our efforts are continuing to increase by this has value to potential partners.

Moving now to our clinical programs melody.

One our phase III clinical trial evaluating topical Pel 90, 643 as a treatment for dry eye disease continues to enroll patients and we expect complete enrollment in the first quarter of 2023 with data readout in the second quarter of 2023.

As a reminder in August the study's data monitoring committee evaluated data from the first 120 patients to complete the study to.

The data monitoring committee recommended that the study continue to enroll a total of 350 patients. This indicates that one or more of the endpoints was promising and we believe the study has been substantially derisked.

Our second clinical program is evaluating an oral formulation of PL eight $1 77, a selective <unk> receptor agonist.

<unk> II study in ulcerative colitis patients. The study is evaluating the safety and efficacy of oral PL 877, utilizing an adaptive design with an interim assessment plan for the first quarter of 2023 and top line data in the second half of 2023.

<unk> is going well and we do not anticipate any changes to the program timeline.

Our next clinical study will be a phase II clinical trial evaluating the safety and efficacy of <unk> agonists are patients with diabetic nephropathy for kidney disease.

Investigational new drug application for this study has been approved by the FDA in the first patients should be enrolled this quarter. The results from this study are anticipated in the second half of calendar 2023.

You can find additional information about our clinical programs and clinical trials Dot Gov for.

For the first quarter fiscal 2023, our research and clinical programs continue to meet their objectives and by leasing continued to show impressive quarter over quarter growth in all key metrics.

Stephen I would like to thank you for listening to the pallets in the first quarter of fiscal 2023 conference call. You can find additional information on our science and clinical programs on our website www Dot pallets dot com and you can find additional information of at least <unk> of <unk> Dot Com website.

We'll now open the call to questions I'm going to hand, it back over to the operator.

As a reminder, if you would like to ask a question or make a contribution on todays call. Please press star one on your telephone keypad.

Draw your question. Please press star two.

The first question comes from the line of Michael Hagan.

Broke alma please go ahead.

Thanks, operator, good morning, guys. Congrats on the continued progress.

<unk> taken a couple of questions.

On the second front of the eye indication.

Can you give us an update on your thoughts on what that might be.

Yes.

Well, we haven't selected one yeah, Michael it can be a variety of potential indications.

And right now at the moment with three clinical trials enrolling patients will probably not initiate that and so.

Clearly, we got through the second quarter of next year.

We have quite a lot of our plate.

With that being said I mean, it may be in glaucoma it may be in.

Related to corneal transplantation.

We have.

Good data preclinical data supports clinical catalysts and although those types of indications I think right now due to resources.

And what have you I think we're going to probably sit tight with the three clinical trials that we're enrolling.

Yes that makes sense just to follow up on that.

Regarding maybe back of the eye diabetic macular edema.

Retinopathy.

Any updated thoughts on those or is that similar outlook here youre.

Youre going to pace those after these three are completed.

Well.

That's a little bit of a different indications as I said the timelines there are substantially longer.

We will have a decision probably first quarter next year on our final clinical candidate and route of administration once that's done.

Ill start the toxicology program, because we will need longer term tox for that so that program probably will continue to go forward towards the clinic, but.

From a clinical standpoint that will not get into the clinic until 2024.

One of things that we are looking to accomplish there is yes.

We haven't published it yet, but we will be publishing probably in the first half of next year, we have some really exciting data in various models.

Based on how this mechanism is working there and one of the goals is we may look to partner that a little bit earlier than we had previously thought.

We think that that market is huge really dominated only by the anti VEGF and you have a new novel mechanism that has nothing to do directly with affecting neovasc utilization.

I think will be quite attractive potential partners.

<unk>.

We will be looking to do we will continue to move forward. We will also maybe we can do in earlier clinical trials of corporate transactions.

That's super helpful. Thanks, and then.

Just switching over to appeal, a 177 in quite as.

If you could just confirm for US are you seeing data along the way.

So is there anything you can share with us and then for the interim look what type of data would you plan to share with us. Thanks.

So that study is a is a placebo controlled study. So we do not see I mean, obviously, you always see safety data.

Any data we do see is blinded.

So really it really that's what we really got to look at the.

PMC.

Quarter of next year, where we have our first look at that.

Okay.

And then when do you do post results primary secondary indications.

Trevor I am sure well.

Sure the way that's going to look at it it will be similar to what we did in the dry eye data monitoring committee. So they'll take a look and there'll be look if they sanction the trial to continue that will mean that one the most like the primary primary endpoint is looking good a nice way.

What that means is that the basic modeling is correct.

It's coming in a supportive and it is likely that should have a positive study as you as you continue to enroll.

Understood. Okay I appreciate it thanks guys.

Okay.

Okay.

Alright, I'll jump and since we have that a bit of an awkward silence I think we're having a little little trouble with.

The Q&A.

Please press <unk> one.

To ask a question.

Okay.

Okay, I think carbonite undertaken.

Got got operator.

Alright as it.

A reminder, please if you would like to ask a question press star one on your telephone keypad.

Okay.

Okay. I think we have further questions on the line.

Turn the call back to Dr. Steiner.

Okay great.

Thank you everyone for participating in the palace in first quarter 2023 quarterly conference call.

Thank you for your questions. They help us to eliminate really exciting things that are going on of Palatin.

Steve and I and team there working hard here I can't tell you. The enthusiasm we have around <unk> continued growth I think.

A lot of people should be paying attention to that.

Skepticism about female sexual dysfunction, I think what we're doing by Lisa shows that that's not correct that there is a quite a nice market for it in our product and continue to grow.

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

Hello, everyone.

Thank you for joining today's call you may now disconnect. Your lines hosts please stay on the line and away from Jackson.

Okay.