Q2 2024 Palatin Technologies Inc Earnings Call and Business Update

Greetings welcome to Palatin second quarter fiscal year 2024 operating results conference call. At this time, all participants are in a listen only mode.

Operator: Greetings, welcome to Palatin's second quarter fiscal year 2024 operating results conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal process. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Unknown Executive: As a reminder, this conference call is 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. 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 and uncertainties discussed in the company's most recent filings with the Securities and Exchange Commission.

As a reminder, this conference call is 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 that the actual results may differ materially from those anticipated due to the variety of risks and uncertainties discussed in the company's most recent filings with the Securities and Exchange Commission. Please.

Unknown Executive: Please consider such risks and uncertainties carefully in evaluating these forward-looking statements by Palatin's process. Now I would like to turn the call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatin. Please go ahead.

Please consider such risks and uncertainties carefully in evaluating these forward looking statements by Palatin prospects now I would like to turn the call over to our host Dr. Carl <unk>, President and Chief Executive Officer of Palatin. Please go ahead.

Carl Spana: Thank you. Good morning, and welcome to the Palatin Second Quarter Fiscal Year 2024 call. I'm Dr. Carl Spana, the CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Executive Vice President, Chief Financial Officer, and Chief Operating Officer. I'll turn the call over to Steve, and he will give a financial and operating update.

Thank you good morning, and welcome to the <unk> second quarter fiscal year 2024 call, Dr. Carl Spatter, CEO and president of Palatin.

On the call today is Steve Wills palette, as executive Vice President and Chief Financial Officer, and Chief operating Officer.

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

Stephen T. Wills: Thank you, Carl. Good morning. Good afternoon. Good evening, everyone.

Thank you Carl good morning, good afternoon, good evening everyone.

For pallets in fiscal second quarter ended December 31, 2023, certain business highlights and recent updates follow rig.

Stephen T. Wills: For Palatin's fiscal year, the second quarter ended December 31st, 2023. Certain business highlights and recent updates follow. Regarding Bileci, which is our bremelanotide injection for approved, FDA-approved for a hyperactive sexual desire disorder or HSDD. We completed an asset sale to Coset Pharmaceuticals for up to 171 million dollars in December of 2023 for female HSDD. We see $12 million up front, plus potential sales-based milestones of up to $159 million based on annual net sales ranging from $15 million to $200 million.

Regarding by Lucy, which is our <unk> injection for approved FDA approved for hyperactive <unk> sexual desire disorder or H S. D D.

We completed an asset sale to Costar pharmaceuticals for up to $171 million in December of 2023 for female HST day.

We received 12 million upfront plus potential sales based milestones of up to $159 million based on annual net sales ranging from $15 million up to $200 million.

Stephen T. Wills: Importantly, Palatin retained the rights and use of remelanatide for obesity and male erectile dysfunction indications. Regarding other, we had two equity offerings; a registered direct offering on January 30th, 2024. We entered into a securities purchase agreement with healthcare-focused institutional investors, selling and issuing an aggregate of approximately 1.8 million shares of Palatin common stock at a purchase price of $5.46 per share of common stock, which was our market price at the time of the transaction. Palatin also agreed to issue, in a private placement, warrants to purchase up to an aggregate of approximately 1.8 million shares of Palatin common stock at an exercise price of the same $5. The offering was completed on February 1st, 2024 with gross proceeds of $10 million. The common warrants are exercisable beginning six months after the date of issuance and will expire on the date that is four years after the closing date.

Importantly, pallets and retained the rights and use of Brean Atlanta tied by D. C for obesity and male erectile dysfunction indications.

Regarding other we had two equity offerings.

Our registered direct offering in January 30 of 2024, we entered into a securities purchase agreement with health care focused institutional investors selling and issuing an aggregate of approximately one 8 million shares of pallets and common stock at a purchase price of $5 46 per share of common stock, which was our market price at the.

Time of it.

The transaction how it is.

<unk> also agreed to issue and a private placement warrants to purchase up to an aggregate of approximately one 8 million shares of Palatin common stock at an exercise price of the same $5 46 per share.

The offering was completed on February one 2024 with gross proceeds of $10 million. The common warrants are exercisable beginning six months. After the date of issuance and will expire on the date that is four years after the closing date.

Stephen T. Wills: The second equity offering was October 2023. On October 23rd, 2023, we entered into a securities purchase agreement with one institutional investor, selling and issuing an aggregate of approximately 2.4 million shares of Palatin common stock at a purchase price of $2.12 per share of common stock. Palatin also agreed to issue, in a private placement, warrants to purchase up to an aggregate of approximately 2.4 million shares of Palatin common stock at the exercise price of $2.12 per share. This offering was completed on October 24, 2023, with gross proceeds of $5 million. The common warrants are exercisable beginning six months after the date of issuance and will expire on a date that is five and a half years after the closing date.

Second half second equity offering was October 2023.

October 23, 2023, we entered into a securities purchase agreement with one institutional investor selling and issuing an aggregate of approximately $2 4 million shares of Palatin common stock at a purchase price of $2 12 per share of common stock.

<unk> also agreed to issue and a private placement warrants to purchase up to an aggregate of approximately $2 4 million shares a powertrain common stock at the exercised price of $2 12 per share. This offering was completed on October 24, 2023, with gross proceeds of $5 million.

The common warrants are exercisable beginning six months after the date of issuance and will expire on the date that is five and half years. After the closing date.

Moving over to our fiscal second quarter ended December 31, 2023 financial results regarding revenue total revenue consists of gross product sales I buy Lacey net of allowances on accruals.

Stephen T. Wills: Moving over to our fiscal second quarter ended December 31, 2023 financial results regarding revenue, total revenue consists of gross product sales by leasing net of allowances and accruals. Gross product sales to pharmacy distributors for the quarter ended December 31st, 2023 were 4.3 million, with net product revenue of approximately $2 million. This compared to gross product sales of $2.6 million and net product revenue of $1 million for the comparable quarter last year. Gross product sales for this period, the December 31, 2023 quarter, increased 64%, and net product revenue increased 98% over the comparable quarter last year. Regarding operating expenses, total operating expenses were $0.9 million net of a $7.8 million gain on the sale of Vylese compared to $6.6 million net of a $1 million gain on Vylese purchase commitments for the comparable quarter last year. The decrease in operating expenses was mainly the result of the gain recognized on the sale by Lisi to Cosette Pharmaceuticals. Moving over to other income slashes expense.

But at least the gross product sales to pharmacy distributors for the quarter ended December 31 2023.

Were $4 3 million with net product revenue of.

Approximately $2 million this compared to a gross product sales of $2 6 million in net product revenue of $1 million for the comparable quarter last year gross product sales for this period December 31, 2023 quarter increased 64% and net product revenue increased 98% over the comparable quarter last year.

<unk>.

Regarding operating expenses total operating expenses were 0.9 million net of a $7 8 million gain on the sale by D C compared to $6 6 million net of a 1 million gain on by VC purchase commitments for the comparable quarter last year.

The decrease in operating expenses was mainly the result of the gain recognized on the sale by lazy to concert pharmaceuticals.

Moving over to other income slash expense.

This net figure consists mainly of the change in fair value of warrant liabilities, which palatin is recorded as a liability on the consolidated financial statements, including the revisions of certain prior period excuse.

Stephen T. Wills: This net figure consists mainly of the change in fair value of warrant liabilities, which Palatin has recorded as a liability on the consolidated financial statements, including the revisions of certain prior period amounts to correct a misstatement with respect to classifying warrants as equity instead of a liability. The Statement of Operations is adjusted each quarter to reflect changes in the fair value of these warrants. For the quarters ended December 31st, 2023, and 2022, Palatin recorded a fair value adjustment loss of $8.1 million and a gain of $5.2 million, respectively. Regarding warrant liabilities, Palatin has assessed the impact of improperly classifying the warrants related to the October 2022 financing within equity rather than as a warrant liability that is adjusted through charges or credits to the Statement of Operations to reflect changes in the fair value of the warrants. And we've determined that the impact is not material to any prior period impacted. Accordingly, Palatin will adjust prior periods only if those financial statements are presented for comparative purposes in future filings, on January 24, on January 24, 2024. Palatin and the warrant holders amended the terms of the warrants related to the October 22 and October 2023 financing.

Excuse me of certain prior period amounts to correct, a misstatement with respect to classifying warrants as equity instead of a liability.

The statement of operations as adjusted each quarter to reflect changes in the fair value of these warrants for the quarters ended December 31, 2023 and 2022.

<unk> recorded a fair value adjustment loss of $8 1 million and a gain of $5 2 million respectively.

Regarding warrant liabilities peloton is the SaaS the impact of a properly or improperly classifying the warrants related to the October 2022 financing with within equity rather than as a warrant liability adjusted through charges or credits to the statement of operations to reflect changes in the fair value of the warrants.

And we've determined that the impact is not material.

To any prior period impacted accordingly, palatin will adjust prior periods only as those financial statements are presented for comparative purposes and future filings.

On January 24th on January 24, 2024.

Palatin and the warrant holders amended the terms of the warrants related to the October 22, and October 2023 financings.

Stephen T. Wills: As a result, the 11.9 million of warrant liabilities as of December 31, 2023, will be reclassified to additional paid-in capital upon amendment. So, let me give you the concise.

As a result, the $11 9 million of warrant liabilities as of December 31, 2023 will.

We will be reclassified to additional paid in capital upon amendment.

So let me give you the concise.

Version.

Stephen T. Wills: No harm, no foul. There'll be no future adjustments to the Statement of Operations regarding the liability for the warrants starting with the first quarter of 2024, and the liability that's on the balance sheet as of December 31st, 2023 will be reallocated to equity. We amended the warrants to characterize it as equity versus the liability treatment. Regarding Palatin's net loss for the quarter ended December 31, 2023, was $7.8 million or 56 cents per basic and diluted common share compared to income of $2.7 million or 25 cents per basic and diluted common share for the comparable period last year. The change in net loss of the comparable quarter last year was due to several factors. Since the derivative liability accounting took place in the fourth quarter, we have several, and also the sale of Vylese.

No harm no file there'll be no future adjustments to the statement of operations regarding.

The liability regarding the warrants.

Starting with the first quarter of 2024.

Filling and the liability that is on the balance sheet as of December 31, 2023 will be reallocated to act to equity we amended the the warrants too.

Two.

To characterize it as equity versus the the liability treatment.

Regarding pellet, hence net loss.

For the quarter ended December 31, 2023 was $7 8 million or <unk> 56 cents per basic and diluted common share compared to income of $2 7 million or 25 per basic and diluted common share for the comparable comparable period last year.

The change in net loss over the comparable quarter last year. It was due to several factors.

Since the derivative liability accounting took place in the fourth quarter. We are we have several and also the sale of RBC. So specifically, we had an increase in net product revenue of <unk> 1 million compared to the prior quarter of last year, we had a gain on the sale by <unk> of $7 8 million and we had a change in fair value of warrant liabilities.

Stephen T. Wills: So specifically, we had an increase in net product revenue of Vylese of $1 million compared to the prior quarter of last year. We had a gain on the sale of Vylese of $7.8 million, and we had a change in fair value of warrant liabilities of $8.1 million of expense in 2023. For 2022, we had $5.2 million of income related to the change in fair value of warrant liabilities, and we had the recognition of an income tax benefit of $4.7 million during the 2022 period. The income tax benefit is related to that very nice program they have in the state of New Jersey for Net Operating Loss.

Of $8 1 million of expense in 2023.

For 2022, we had $5 2 million of income related to the change in fair value of warrant liabilities and we had the recognition of an income tax benefit of $4 7 million.

During the 2022 periods. The income tax benefit is related to that very nice program. They have in the state of New Jersey for net operating losses.

Moving over to cash position as of December 31, 2023, pelicans cash cash equivalents.

Stephen T. Wills: Moving over to the cash position, as of December 31, 2023, Palatin's cash, cash equivalents, and marketable securities were $9.5 million. Plus, we had $2.3 million of accounts receivable compared to cash, cash equivalents, and marketable securities of $5.5 million plus $1.3 million of accounts receivable as of September 30, 2023. The $9.5 million of cash, cash equivalents, and marketable securities as of December 31, 2023 does not include the $9.2 million of net proceeds from the Registered Direct Equity Offering, which closed in February of 2024. So, pro forma as of December 31, and January 1, 2024, we have approximately $18.7 million of cash, cash equivalents, and marketable securities.

And marketable securities were $9 5 million, plus we had $2 $3 million of accounts receivable compared to cash cash equivalents in marketable securities of $5 5 million plus $1 3 million of accounts receivable as of September 32023.

The $9 5 billion of cash cash equivalents in marketable securities as of December 31, 2023 does not include the $9 2 million of net proceeds from the registered direct equity offering which closed in February of 2024, so pro forma as of <unk>.

December 31 January one 2024, we have approximately $18 7 million of cash cash equivalents and marketable securities.

Carl Spana: We believe that existing cash, cash equivalent to marketable securities, and accounts receivable will be sufficient to fund currently anticipated operating expenses and disbursements into the second half of calendar year 2024. Now, I'll turn the call back over to Carl.

We believe that existing cash cash equivalents in marketable securities and accounts receivable will be sufficient to fund currently anticipated operating expenses and disbursements into the second half of calendar year 2024.

Now I'll turn the call back over to Carl Carl Thank you Steve.

Carl Spana: Thank you, Steve. A nice lesson in accounting. As you know, our focus has been on understanding the biology and chemistry of the melanocortin system with the goal of developing selective melanocortin agonists for a variety of medical indications. Our research efforts have resulted in a growing portfolio of melatonin-based therapeutics. We have three active clinical programs based on Gordon Agonis with multiple new programs ready to advance into clinical development pending resources, all coming from our highly productive research activity. As we have previously reported, we have locked the database and instructed the Statistical Contract Research Organization to unblind the data for the PL9643 Melody 1 Phase 3 study in dry eye disease. We expect to report the top-line data this month.

Nice lesson in accounting.

Yes.

As you know our focus has been on understanding the biology and chemistry of the Milan Court system with the goal of developing selective mine accord agonists for a variety of medical indications.

Our research efforts have resulted in a growing portfolio of onboard phase therapeutics we.

We have three active clinical programs based on the linerboard agonists with multiple new programs ready to advance into clinical development pending resources, all coming from our highly productive research activities as.

As we have previously reported we have locked the database and instructed to statistical contract research organization to unwind the data for the Pn 940, <unk> one phase III study in dry eye disease, we expect to report topline data this month.

Carl Spana: Our phase two study evaluating oral PL8177, a selective melanocortin receptor 1 agonist in ulcerative colitis patients, is on track for an interim assessment of the clinical data in the first half of 2024. Supporting Oral-Peel 8177 development are preclinical studies demonstrating that treatment with Oral-Peel 8177 and disease models causes diseased colons to improve toward a healthy state and resolve inflammation Dissolving inflammation rather than blocking it provides the possibility of efficacy coupled with significantly differentiating safety in treating colitis and inflammatory bowel disease.

Our phase II study evaluating oral <unk> hundred 77, a selective <unk> receptor agonists in ulcerative colitis patients is on track for an interim assessment of the clinical data in the first half of 2024.

Supporting oral pill, a 177 development, our preclinical studies demonstrating that treatment with oral appealed 877, and these models causes disease Collins to improve toward a healthy state and to resolve inflammation.

Resolving inflammation rather than blocking it provides the possibility of efficacy coupled with significantly differentiating safety intriguing colitis and inflammatory bowel disease additional.

Carl Spana: Additionally, research work at Palatin has mapped clear mechanisms of action pathways of melanocortin agonists in supporting the resolution of inflammation. Breakout, our phase 2 open-label study evaluating a melanocortin agonist in diabetic patients with kidney disease, is also on track for top-line data in the first half of 2024. So clearly, this is a big half for us, three clinical trial readouts. As far as what is on the horizon at Palatin, I would like to take a minute to highlight two new clinical studies that we are anticipating starting in the first half of calendar 2024. The first is a phase 2 study evaluating co-administration of bremelanotide, a melanocortin agonist, with a phosphodiesterase 5 inhibitor. And those are just Viagra and Cialis.

Additionally, research work apparel is mapped clear mechanisms of action pathways.

<unk> agonists and supporting the resolution of inflammation.

Breakout our phase two open label study evaluating <unk> agonists in diabetic patients with kidney disease is also on track for topline data in the first half of 2024. So clearly this is a big half Russ three clinical trial Readouts.

As far as what is on the horizon that Allison I would like to take a minute to highlight two new clinical studies that we are anticipating starting in the first half of calendar 2024.

First is a phase II study evaluating co administration of <unk> and <unk> agonist with a fossil Odessa has five inhibitor and those are just by accuracy. Alice. So those are the drugs that are currently used to treat erectile dysfunction. This would be an erectile dysfunction patients that have not responded to current therapy.

Carl Spana: So those are the drugs that are currently used to treat erectile dysfunction. This would be in erectile dysfunction patients that have not responded to current therapy. So these are guys that are failing Cialis-Viagra, and so on.

So these are guys that are failing cialis viagra.

And so on.

This clinical study will support the development program of a combination product, which is the co formulation of our MCR four agonist <unk> with a <unk> inhibitor just as a reminder.

Carl Spana: This clinical study will support the development program of a combination product, which is the co-formulation of our MCR-4 agonist brimolanotide with a phosphoridesterase-5 inhibitor. Just as a reminder, brimolanotide is the active agent in Vilese, our approved product for female sexual dysfunction. All of this work is an extension of our commercial efforts in the field of sexual dysfunction. Just to note, approximately 35% of men with erectile dysfunction fail or have an inadequate response to current therapy. We represent a large underserved market. The only treatment options for these failure patients are highly invasive, such as direct penile injections or penile implants.

Under <unk> as the active agent in <unk> are approved product for female sexual dysfunction.

All of this work as an extension of our commercial efforts and sexual dysfunction.

Just to note approximately 35% of men with erectile dysfunction sale or have an inadequate response to current therapy and represent a large underserved market.

Treatment options for these failure patients are highly invasive such as direct P&L injections or penile implants. We have previously conducted clinical trials showing the synergistic effects of combining <unk> with a PDE five inhibitor as a treatment for erectile dysfunction and feel well positioned for it.

Carl Spana: We have previously conducted clinical trials showing the synergistic effects of combining bremelanotide with a PD-5 inhibitor as a treatment for rectal dysfunction and feel well-positioned for an efficient and successful development program of this co-formulated product. The second planned study will evaluate a melanocortin 4 receptor agonist in obese patients taking a glucagon-like peptide one or GLP-1. And you know those as Monjaro and Wagobe.

Patient is successful development program of this co formulated products.

Second plant study will evaluate <unk> four receptor agonist and obese patients taking a glucagon like peptide one or the quick ones and you know those <unk>. These are all the rage now. These are the current treatments that are being used for obesity.

Carl Spana: These are all the rage now. These are the current treatments that are being used for obesity. Since drug treatment for obesity is now established and growing rapidly, we believe the treatment goal will switch from driving down weight loss to overall weight management. This will require a variety of drugs with differing mechanisms of action that affect weight loss and, very importantly, weight loss maintenance.

Since drug treatment for obesity is now established and growing rapidly. We believe the treatment goal will switch from driving down weight loss to overall weight management.

This will require a variety of drugs with different mechanisms of action that affect weight loss and very importantly weight loss maintenance, we strongly believe that drugs targeting Atlanta court system will be an important part of future obesity.

Carl Spana: We strongly believe that drugs targeting the melanocortin system will be an important part of future obesity treatment and weight loss management. With our extensive experience in the design and development of latic organ agonists for treating obesity, including two clinical studies, we are well positioned to be a leader in the development of line-of-court and base therapeutics for weight loss and, importantly, weight loss maintenance. The operating highlights for the second quarter of fiscal year 2024 are as follows. As Steve noted, we completed the asset sale of Ilesi to Cosa Pharmaceuticals for up to $171 million, with $12 million received as an upfront payment. We are planning on initiating two new Milan Accord programs.

Treatment and wastewater weight loss management through our extensive experience in the design and development of a <unk> agonist for treating obesity, including two clinical studies completed and published we are well positioned to be a leader in the development of <unk> based therapeutics for weight loss and importantly, weightloss maintenance.

The operating highlights for the second quarter of fiscal year 2024 as follows.

Steve noted, we completed the asset sale of Liza to Casa Pharmaceuticals were up to 171.

With 12 million received upon as an upfront payment.

We are planning on initiating two new <unk> programs.

Carl Spana: Phase II clinical studies starting in the first half of calendar 24 with readout later in the calendar year. And as we noted, these studies are one in which we'll evaluate the co-formulation of remelanatide with a PD-5 inhibitor in ED patients that have failed first-line therapy. And the second, as we also noted, we'll evaluate the addition of a monocortin 4 receptor agonist and Ambry Melatatyte to these patients taking ECLIP1 agonists. Our clinical programs also continue to make good advancements in our PL9643 Melody 1 Phase 3 dry eye disease study. We should report top-line data this month. The emerging product profile for PL9643 is highly differentiated from current treatments, with excellent ocular tolerability and broad efficacy that we believe will make it a leading treatment for dry eye disease.

Phase II clinical study starting in the first half of calendar 'twenty four with readout later in the calendar year and as we noted two studies are one will evaluate the co formulation of <unk> tied with the PDE five inhibitor and <unk> patients at a sales first line therapy and the second as we also noted we will evaluate.

The addition of a <unk> four receptor agonist.

<unk> to these patients taking a quick one agonist.

Our clinical programs also continued to make good advancements for appeal 94, three <unk> one phase III dry eye disease study, we should report topline data this month.

The emerging product profile for <unk> is highly differentiated from current treatments with excellent ocular tolerability and broad efficacy that we believe will make it a leading treatment for dry eye disease, our oral <unk> hundred 77 clinical trial in ulcerative colitis will have the interim analysis in the first half of this year as well a breakout open label Phase II study.

Carl Spana: Our oral PL8177 clinical trial in ulcerative colitis will have its interim analysis in the first half of this year, as will our breakout open-label phase two study evaluating melanocortin agonist in diabetic kidney disease. I'd like to thank you for listening to the Palatin Second Quarter Fiscal Year 2024 Conference Call. You can find additional information on our science and clinical programs on our website, www.palatin.com.

Evaluating the linerboard agonist in diabetic kidney disease.

I'd like to thank you for listening to the <unk> second quarter fiscal year 2024 conference call you can find additional information on our science and clinical programs on our website www dot pallet in Dot Com and you can find additional information on <unk> at <unk> Dot Com website, Steve and I would like to thank you all for participating on the conference call and we will now open the call.

Operator: Steve and I would like to thank you all for participating in the conference call, and we will now open the call to questions. All right. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question area.

Two questions.

Certainly at this time, we will be conducting a question and answer session.

You would like to ask a question. Please press star one on your telephone keypad.

Information tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: You may press star 2 if you would like to remove your question from. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. Your first question for today is coming from Joe Pantginis at HC. Hey guys, good morning. Thanks for taking the time to answer the question. A couple of questions first, if you don't mind, Carl, starting at the back end of your comments, I was hoping you could provide me with this: Hello. It looks like we lost the line just one moment. Can you hear me now? Okay, I have no idea what happened there because I don't even have a mute on the phone. I was not on mute.

Your first question for today is coming from Joe Pan Janus at H C. Wainwright.

Hey, guys. Good morning, Thanks for taking the question a couple of questions first if you don't mind Carl starting at the back end of your comments I was hoping you could provide.

Okay.

No.

It looks like we lost the line just one moment.

Yes.

Okay.

Can you hear me now.

You can do your line is okay I've no idea what happened there because I don't even have a mute on the spa was not immune but anyway. So I was hoping maybe starting at the back end of your comments about providing some level of the mechanistic rationale of combining <unk> Atlanta tied with a G. L. P. One.

Joseph Pantginis: Anyway, so I was hoping maybe starting at the back end of your comments about providing some level of the mechanistic rationale for combining bremelanotide with a GLP-1 agonist or one of those therapies for weight loss right now about whether it could be the maintenance setting or why those two drugs can really work together for the broader audience. Sure, I'll try to do it in a simple way. Well, first and foremost, we've done and presented data on combining an Atlantic Hornet 4 agonist with a Glyphon agonist, and they work quite nicely together. They work quite synergistically. When you think about it, in part, the GLPT-1s probably have multiple mechanisms of how they bring about a patient feeling satiated and changing their energy use, and part of that is actually through the leptin-melanocortin system, so these things are working in kind of similar pathways.

You know agonist or are you are you know one of those therapies for weight loss right now about whether it can be the maintenance setting or why why those two drugs can really work together for the broader audience.

Sure I'll try to do it in a simple way well first of all most we've done.

And have presented data on combining a radical four agonist with a <unk> one agonist.

Work quite nicely together work.

They were quite Synergistically.

When you think about it would be in part be glib ones have probably multiple mechanisms how they bring about a.

Patient feeling being satiated and changing their energy use and part of that is actually through the left in Milan Accordant system. So these things are working in and kind of similar pathways, but when you add the adequate for agonist on top you get you get full activation of leptin Atlanta Gordon pathway, and that's a very key pathway in regulating.

Joseph Pantginis: But when you add the melanocortin-4 agonist on top, you get full activation of the leptin-melanocortin pathway, and that's a very key pathway in regulating energy homeostasis overall. And that actually leads us into why it will also be very useful in weight loss maintenance. There have actually been several studies published, preclinical studies published on weight loss maintenance using an imilanocortin agonist in animals, and both of those are actually with palatin compounds.

Energy homeostasis overall and that actually leads us into why.

Also very useful and weight loss maintenance.

There have actually been several studies published preclinical studies published on <unk> maintenance using Atlanta Gordon agonist.

In animals and both of those are actually with Palatin compounds.

Carl Spana: And you see very, very nice maintenance of the reduced weight state. And one way to think about this is that there are differences in how obese patients respond to various treatments for weight loss. For example, when you're obese, you respond one way. When you are losing weight, you respond slightly differently.

And you see very very nice.

Maintenance of the reduced wait state and one way to think about this is there are there are differences in how obese patients respond to various treatments for weight loss. For example, when you are obese.

You respond one way when you are losing weight you respond slightly differently, but importantly, when you get to that weight loss reduced state.

Carl Spana: Importantly, when you get to that weight loss reduced state, you don't always respond the same way to the GLP1s as you do when you're obese, and you're going to need treatments like that affect the leptin and imilanocortin pathways, things like brimelanotide or some of the new compounds that we are bringing forward to actually maintain that weight. And that's really the key here.

You don't always respond the same way to the Sip ones as you do when you are obese and you're going to need treatments like.

The effect of the left them line of cord pathways things like <unk> or some of the new compounds that we are bringing forward to actually maintain that weight and thats really the key here you know we can drive a lot of weight loss with eclipse and the other incretin therapies, but we really need to keep these patients out to reduce weight. If you want to have a long term benefit. So if you think that the weight loss.

Carl Spana: We can drive a lot of weight loss with the GLPs and other increases in therapies, but we really need to keep these patients at a reduced weight if you want to have a long-term benefit. So if you think that the weight loss market is huge, the weight loss maintenance market is probably smaller because these patients are gonna be on treatment for many, many years. So that's why we're very excited about where we stand and really, the biology and the science behind targeting the leptomelanocortin pathway for weight loss maintenance are pretty compelling. I hope that's a helpful summary. I appreciate that. So I have a specific question, which will then segue into sort of a broader strategy question.

Market is used the way it wasn't maintenance market is probably dwarfs. It because these patients are going to be on treatment for many many years.

So that's why we're very excited about where we stand and really the biology and the science behind our.

Targeting the left in Milan, Accordant pathway for weight loss maintenance is pretty compelling.

That's a helpful summary, I appreciate that so I have a specific question, which will then segue into sort of a broader strategy question. So when you look at the upcoming 80 177, ulcerative colitis data you have interim data coming up or I'm, sorry, an interim analysis coming up which is part of my question. What is your communication strategy.

Joseph Pantginis: So when you look at the upcoming 8177 ulcerative colitis data, you have interim data coming up, or, I'm sorry, an interim analysis coming up, which is part of my question. What is your communication strategy around the interim analysis? Is this, you know, just a continuous plan type of announcement that we hope to see? Or will you be providing any data? No, we'll provide, we're trying to be transparent.

Around the interim analysis is this a J.

Just a continuous planned type of announcement that we hope to see or will you be providing any data.

Now we will provide we're trying to be transparent Joseph.

Carl Spana: So if we have it, we'll provide the data that we have, you know, and to the best of our ability, or, you know, how we see it playing out from the interim analysis to the final analysis. Your goal here is to, we do want this out in the public because one of our key goals is to, you know, to, continue to work with people that are interested in licensing this product, so we want to make sure that it's out there, and people understand where we're going in the ulcerative colitis space. Not perfect.

We'll provide the data that we have.

And to the best of our ability.

How we see it playing out from the interim analysis of the final analysis.

Our goal here is to.

We do want this out in public because one of our key goals is to.

Two.

We continue to work with people that are interested licenses in this product and we want to make sure that it's out there and people understand where we're going.

Also quite a space.

Perfect and then I met with us, having saying alternative colitis, I said going to the broader question and strategy.

Joseph Pantginis: And then with us having said that, I'll sort of collide, as I said, going to the broader question and strategy. You know, when you look at the indications that you guys are addressing overall with your different assets, you know, these are very large markets. So I guess, you know, as of today, you know, how do you view your business development strategy, you know, because they're very large markets, you know? Are you looking at, you know, the potential for global regional growth when you're balancing against your current cash needs? Well, you've hit the nail on the head. Let me backtrack for a second. I'm talking a little bit faster or thinking faster than I'm talking.

When you look at the indications that you guys are addressing overall with your different assets. These are very large markets. So I guess you know as of today, how do you view your business development strategy because they are very large markets. You know are you looking at the potential for global regional when you're balancing against your current Nash cash.

Needs.

Well.

You've hit on the head.

Well let.

Let me backtrack for a second half I'm talking a little bit faster or thank you faster I'm talking.

Carl Spana: When it comes to ulcerative colitis or dry eye disease, our goals for those are really to partner those programs. They represent very large markets, but in the case of dry eye disease, we have multiple larger, assuming success with 9-6-4-3, there are still several phase three trials that have to be done, plus all the commercial manufacturing. And that, really, in today's world, is more of a commercial market, a consumer market. So we really like to see that product, assuming success, in the hands of a larger company that's going to eventually market it and has the ability to do the outreach there. And that's not really what Palatin plays.

When it comes to also colitis or dry eye disease.

Our goals are those are really to partner those programs.

They represent a very large markets, but in the case of dry eye disease, we have multiple larger assuming success with 943. There are still several phase II trials that have to be done plus all the commercial manufacturing and that really in today's world is a more of a commercial market <unk>.

The consumer market. So we really like to see that product assuming assuming success in the hands of a larger company that's going to eventually marketed and has the ability to do the outreach there that's not really a pallet in place.

Carl Spana: Steve will tell you he learned a tremendous amount about marketing to consumers through Vilese. But it's expensive, and it requires a very consistent effort. And that's not how Palatin is set up, and certainly not with the resources we currently have. Again, with ulcerative colitis, medical need is extremely high. But again, a competitive marketplace, meaning there are lots of therapies out there competing for patients for larger trials and then for voice in the commercial sphere. But with that being said, the need is very high. And believe it or not, that's one of the programs that, even in its early stage, has a huge amount of corporate interest already.

Steve will tell you he learned a tremendous amount about marketing to consumers through <unk> <unk>.

It's expensive and it requires a very consistent effort and that's not kind of where <unk> is setup and certainly not with the resources. We currently have again would also colitis.

The medical need is extremely high but again, a competitive marketplace, meaning there are lots of therapies out there competing for patients for the larger trials and then for voice in the commercial sphere.

That being said.

Need is very high so.

Believe it or not that's one of the programs that even in its early stage has huge amount of corporate interest already.

Carl Spana: And then again, when we think about where we want to go with regard to obesity and erectile dysfunction, the erectile dysfunction one is an area we know extremely well. We've studied thousands of patients there. It's one where a company of our size can probably make good headway, meaning that we know how to take it, we know how to get it into commercialization, and there are already distribution channels available, and there's high awareness among patients. So that's one where we would probably try to keep longer because it's one where we can conceptualize thinking about assuming things go well for us in commercialization. Obesity, the market is hot, and I think we're trying to position ourselves, which is in particular in that weight loss maintenance, and then in the supplementation or the adjunct therapy, the GLYP1s. Those are novel spaces where people aren't thinking about them, but I think very shortly they will be, and I think we'll be in a great position to monetize our early assets there relatively quickly.

And then again, when we think about where we want to go with regards to the obesity and retinal dysfunction. The erectile dysfunction. One is an area. We know extremely well we've studied thousands of patients there.

It's one where a company of our size can probably make good headway in meeting that would be yes.

We know how to take it we know how to get to into commercialization and Theyre already distribution channels available and is high awareness among patients. So thats, one where we would probably try to keep them longer.

Because it's one where we can conceptualize.

Thinking about assuming things go well for us commercializing it.

Obesity.

The market is hot and I think we're.

We're trying to position ourselves, which in particular isn't that way. It was maintenance and then in the supplementation or the agent therapeutic with ones. Those are novel spaces, where people aren't thinking about them I think very shortly they will be and I think we'll be in a great position to.

Monetize our early assets there relatively quickly.

Carl Spana: I hope this is very cool in a new way, and Steve actually, Steve has business development people directly reporting to him and is really on top of all the business development activities that we're doing and making sure that they're getting done. Got it. Appreciate it, man.

Got it Thats very significant way.

We are saying it and Steve actually Steve has a business development people to work directly reporting to him and he is really on top of all the business development activities that we're doing and making sure that they're getting done.

Got it I appreciate it man.

Your next question for today is coming from Michael Higgins with Ladenburg Thalmann.

Operator: Your next question for today is coming from Michael Higgins with Lattenberg. Thanks, Seth Green. Good morning, guys. How are you?

Thanks, Barry and good morning, guys how are you.

Michael John Higgins: Hello Michael, as you can hear me all right. Congratulations on the quarter. Looking forward to seeing Melody at a readout here in February. I wonder, ahead of the data here, what you would consider to be a clinically meaningful threshold from this readout, whether it be signs, symptoms, or both, what is beyond that segment but you may feel is important for its commercial value. I think that, you know, in tri-eye disease, the FDA does not require, you know, they only require a statistically significant end point. And with regard to... The only thing the FDA accepts for signs outside of tear production is a complete resolution of the disease, which is unrealistic. Really, what we think about is really on the symptom side, which is really more important because that's really what affects the patient. The signs of dry eye disease, the staining results, patients don't understand that. It doesn't really mean anything.

Hello, Michael.

So as you can hear me all right.

In the quarter looking forward to seeing all of the data read out here in February.

Wondering ahead of the data here.

You would consider to be clinically meaningful threshold from this readout would there be signs and symptoms of both.

What is beyond that.

You may feel is important for its commercial value.

I think the.

In dry eye disease. The FDA does not require the only requires statistical significant endpoint and with regards to.

The signs there really arent, the only and the FDA.

<unk> four signs outside of tier production is a complete resolution of the disease, which is an unrealistic really what we think about it it's really on the symptom side, which is really more important because thats really where the that's really what affects the patient.

The signs of dry eye disease.

Standing result patients don't understand that it doesn't really mean anything to them. So on the symptom front you'd like to see a 10 point change 10 point difference between vehicle and active that would be clinically meaningful clinically meaningful change. So that's what we that would be really nice response for us if we could talk 10% 10.

Carl Spana: So on the symptom front, you'd like to see a 10-point change, a 10-point difference between vehicle and active. That would be clinically meaningful. So that would be a really nice response for us if we could top 10 points on the scale. We hope to see that too.

10 points on the on the scale.

We hope to see that too thanks for that detail.

Michael John Higgins: Thanks for that detail. And ahead of this, we won't hold you to it, but just get your sense for timing for additional data. Obviously, you'll have a very busy first half of the year. Is there a chance you can get additional data out at conferences? How do you expect to give us a bit more than the top line we're going to see here this month?

And ahead of this we won't hold you to it but just to get your sense for timing for additional data obviously you'll have.

A very busy first half of the year.

Is there a chance you can get additional data out at conferences, how do you expect to give us a bit more than the top line or to speak of this month sure I think the.

<unk>.

There are a lot of ocular meetings throughout the year.

Carl Spana: Sure. I think there are a lot of Ocula meetings throughout the year. Assuming positive data, we'll have presentations at every one of the upcoming Ocula meetings. If, again, positive data comes in, we'll go for late breaking if it's good. So we keep a very good flow out on the data. That'd be great.

Ed.

Assuming positive data we will have we will have we will have presentation that of every one of the upcoming ocular meetings.

Again positive data will go through the ARVO, which is in the midst the date there, but we'll go for late breaking if it's if it's good so we'll keep we'll keep a very good blowout.

On the data.

That'd be great look forward to that and then switching over to breakout any feedback you can give us as to what type of data we will see when you do read that out for us.

Michael John Higgins: I look forward to that. And then, switching over to breakout, any feedback you can give us as to what type of data we'll see when we do read that out for, Yeah, I think this is an open-label study. It's a single dose study. It really was one.

Yes, I think there's always this is an open label study with the <unk>.

Single dose studies, it's really was one.

Carl Spana: It's really, It's really a supportive study because people realize we haven't had a chance to talk about it, but we're actually in the final stages of selecting an orally active small molecule that targets the M01 receptor, so this is really a study that was kind of set up for that. It's an injectable study. But what we'd expect to see is really a drop in proteinuria, and the creatinine-protein ratios change. These patients don't really spontaneously, they don't spontaneously remit, so any change you see, any improvement you see is going to be really due to the drug activity. They don't get better; they just get worse. So one of the reasons why we chose this indication is that although the disease progresses relatively slowly, it doesn't have spontaneous remission, so you can do an open-label study, and if you see effects on kidney function, they'll most likely be pretty much due to the drug. Right, yeah, we're big fans.

Yeah.

It's really a supportive study because people realize is we havent had chance to talk about it but we're actually in the final stages of selecting and actually an orally active small molecule that targets. The MCR. One receptor. So this is really a study that was kind of set up for that so the injectable study.

But what do we expect to see is really a drop in proteinuria and the creatinine protein ratios aimed at.

These patients don't really spontaneous they don't spontaneously remit.

So any change you see any improvement you see is going to be really due to the drug activity.

And if they don't get better they just they just progressed with you get worse. So one of the reasons why we chose the indication although the disease progresses relatively slowly it doesn't have spontaneous remission. So you can do an open label study and if you see effects.

On your kidney function there'll be most likely really pretty much due to the drug.

Right, Yeah look forward to seeing that and then on the obesity NBD programs have you.

Michael John Higgins: I look forward to seeing that. And then on the obesity and ED programs, have you met with the agency to, excuse me, discuss trial designs yet? I'm not clear on that. For the ED1, neither have been submitted yet. We haven't opened up INDs.

That with the agency.

Excuse me to discuss trial designs, yet I'm not clear on that.

For the EDI one.

Neither have been submitted yet we haven't opened up <unk>.

Carl Spana: We're going to probably run the ED study for expediency as a physician-sponsored trial. We have clinicians that were involved in the early days working with us in the early development of remelanotide that are urologists, and they have some large practices that can really help get us a lot of patients very quickly. So that will probably be run, as I said, as a physician-sponsored IND. We should be submitting the IND or the pre-IND request to the agency by the end of this month for the obesity study. Interesting.

We're going to probably probably run the <unk> study for expediency as a physician sponsored trial we have.

We have conditions that were involved in the early days working with us in the early development of <unk> that are very urologists into very end. They have some large practices that can really get a lot of patients very quickly. So that will be probably a run as I've said assistant sponsored IND, we should be submitting I think the.

Or the pre R&D request to the agency by the end of this month for the obesity study.

Interesting and then the follow up on the obesity.

Michael John Higgins: And then a follow-up on the obesity. I believe your phase 2 on this would be BMT, but your phase 3 would be kind of a BMT XR version. Is that right?

I believe your phase two on this would be with DMT, which your phase III would be kind of a BMT.

XR version is that right.

Carl Spana: So we have, so we've been using bremelanotide as a test molecule for adding extended release to our various peptides across the board, and it's been working very, very well. We can extend bremelanotide quite nicely. The overall program, although bremelanotide is being used as a proof of concept, we will go forward, and we'll be having a little bit more information out on this probably in the second quarter of this calendar year. We have novel compounds that are really highly selective for the melanocortin 4 receptor, so they have a much cleaner profile than bremelanotide does, and they're much more suited for long-term chronic use.

So we have.

Using the <unk> as a.

As a as a.

Test molecule for adding extended release onto all various peptide through a across the board and it's been working very very well, where we can extend and wildfire quite nicely.

The overall program, although it really reminds that is being used.

As a proof of concept.

We want we will go forward and we'll be having a little bit more information out on this problem.

The second quarter of the year of this calendar year, we have novel compounds that really are highly selective for <unk> four receptor.

So they have a much cleaner profile than <unk> does.

They are much more suited for long term chronic use and also the receptor profiling or.

Carl Spana: And also, receptor profiling for long-term ABC treatment, so in other words, the degree of, I don't know, let me not go through that prior to this end point, but how you interact with the receptor should maybe be a little bit different than bremelanotide. So one of the things that, again, not to bore the laypeople that are listening is that we have a tremendous understanding of the structural function relationships with regard to all the various melanocortin receptors and their peptide agonists, and we're able to dial in a degree of activity that we think is probably really ideal for an ABC treatment. And that's what you're going to see going forward towards the phase twos and the eventual phase three studies. Yeah, these are really exciting programs.

The long term of VC treatments in other words the degree of it.

Let me now go through that part of the endpoint, but how you interact with the receptor should maybe be a little bit different every melano type so.

One of the things that again.

Not to bore them lay people that are listening is that we have a tremendous understanding of the structural function relationships.

With regards to all the various amount of corn receptors and their peptide agonist.

And we're able to dial in a degree of activity that we think is probably really ideal for obesity treatment and thats, what youre going to see going forward.

Towards the Fayetteville.

<unk> II and the phase of eventual phase III studies.

Yes. These are really exciting program. So your expertise and as we're looking forward to seeing in detail. So thanks for that.

Michael John Higgins: So your expertise in this, we're looking forward to seeing it in greater detail. So thanks for that. That's it for us for now.

For us we're now congrats again thanks.

Operator: Congratulations again. Thanks. Your next question for today is coming from John Newman with Canuck.

Thanks, Michael.

Your next question for today is coming from John Newman with Canaccord.

John Lawrence Newman: Hi guys, thanks a lot for taking the question. Carl, so I just had a general question about the dry eye program rather than get into the data details. You know, we've had several dry eye products proven, and I know that sometimes the endpoints can be hard to use in order to gauge the effectiveness and success of the product. But I wonder if you could talk more about how. Would you believe 9-6-4-3 could be differentiated from some of the other products in the market, maybe on the safety side as well as the effort side? Well, John, I think you hit the nail on the head; your last statement kind of hits it.

Hi, guys. Thanks, a lot for taking my question.

Carl So just a general question about the dry eye program, rather than getting into the data details.

<unk> had several dry eye products approved.

And I know that sometimes the endpoints can be.

Well hard to use in order to gauge the effectiveness and success of the product, but I wondered if you could talk more about how.

Do you believe 90 643, it could be differentiated from some of the other products in the market maybe on the safety side as well thanks.

Well I think you hit it.

Kind of hits I think at the end of the day most of the treatments that are approved for dry eye disease have tolerability issues.

Carl Spana: I think, you know, at the end of the day, most of the treatments that are approved for dry eye disease have, you know, tolerability issues; your safety in these treatments is pretty good, you know, you're giving a small amount of the drug topically. So you know, there's not an overall large concern about systemic effects. So it's really about patient acceptance and tolerability and long-term use. And that's what's really plagued a lot of the drugs that have been in the market for a long period of time and are coming into the marketplace. PL 9643 has really excellent ocular tolerability and safety, so that would be a very key differentiating factor. You know, a comfortable installation without, you know, itching and tearing and burning or feeling goopiness or an odd taste and things of that nature is really key for a product like this, because, as I said, it is very consumer driven.

Safety and these treatments are pretty good youre, giving a small amount of drug topically. So theres not an overly large concerned about systemic effects. So it's really about the patient acceptance and tolerability and long term use and thats whats really plagued a lot of the drugs.

We're in the market for a long period of time and that are coming into the marketplace.

PL 943, you has really excellent ocular tolerability and safety, so that would be a very key differentiating factor.

A comfortable installation without itching, and tearing and burning or feeling goofiness or off tastes and things of that nature is really key to <unk> for a product like this because I said it is very consumer driven.

Carl Spana: So that's going to be a key important factor. I think one of the things I'd like to kind of distinguish is that in the dry ice space, we see different types of products, right? So a product like 9643 really is trying to address the underlying disease. So we're trying to modify the disease, condition, and through that have an overall effect on the corneal surface health, and then how the patient perceives their disease, so whether their symptoms improve or not. That's a little bit of a much more difficult challenge than agents that are what I would classify just really symptomatic treatment. In other words, i.e., they just cause a tearing of the eye, short-term tearing of the eye that maybe can alleviate symptoms over a relatively short period of time but don't really have long-term benefit in treating dry eye disease.

So that's the key important factor I think one of the thing I'd like to kind of distinguish us in the dry eye space, we see different types of products right. So a product like 94, three really is trying to address the underlying disease. So we're trying to modify the disease condition.

And through that have an overall effect on the corneal surface health and then how the patient procedure disease, who either symptoms improving.

A little bit of a much more difficult challenge than agents that are what I would classify just really symptomatic treatment in other words I E. They just drive a.

Tearing of the eye.

Short term tearing of the eye that maybe can alleviate symptoms.

The relatively short period of time, but don't really have long term benefit in treating.

Dry eye disease.

So there is another distinct signaling factor there again, assuming success, we're really we're likely to be having that success, because we're really modifying the underlying disease not just.

Carl Spana: So there's another distinct factor there. Again, assuming success, we're likely to be having that success because we're really modifying the underlying disease, not just addressing a symptom. Great, thank you. We have reached the end of the question and answer session, and I will now turn the call over to Carl for closing remarks. Thank you. Steve and I would like to thank everyone for participating in the call. And we'd like to thank our analysts for the very insightful questions that they ask. It helps us, Steve and I, to more or less illuminate what we're doing here. So again, thanks, everyone. A big half for us, obviously a big month for us.

Addressing a symptom.

Okay, great. Thank you.

Okay.

We have reached the end of our question and answer session and I will now turn the call over to Karl for closing remarks.

Thank you, Steve and I would like to thank everyone for participating on the call and we'd like to thank our analysts for the very insightful questions that they asked it helps us to Steve and I to more or less illuminate.

Doing here.

So again thanks, everyone.

Half for Us, obviously, a big month for us so.

Carl Spana: So we're looking forward to the data, and take care, and we'll catch up with you soon. Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

We're looking forward to the data and.

Take care.

You up with you soon thank you.

Yes.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.