Q2 2025 Palatin Technologies Inc Earnings Call
Speaker Change: Greetings. Welcome to Palatine's second quarter fiscal year 2025 operating results conference call. At this time all participants are in a listen-only mode. 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. As a reminder, this conference call is being recorded.
Speaker Change: 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.
Speaker Change: 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 Security and Exchange Commission.
Speaker Change: Please consider such risks and uncertainties carefully in evaluating these forward-looking statements by Palatine's prospects. Now I would like to turn the call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatine. Please go ahead.
Speaker Change: Thank you. Good morning and welcome to the Palatine second quarter fiscal year 2025 call. I'm Dr. Carl Spana, CEO and President of Palatine. With me on the call today is Steve Wills, Palatine's Chief Financial Officer and Chief Operating Officer.
Steve Wills: I'll now turn the call over to Steve and he'll give the financial update.
Thank you, Carl, and welcome, everyone.
Regarding our financial results...
starting with revenue.
Steve Wills: Pursuant to the completion of the sale of Vilese's worldwide rights for female sexual dysfunction to Cosette Pharmaceuticals for up to 171 million in December of 2023, Palatin did not record any product sales to pharmacy distributors for the second quarter and did December 31st, 2024.
Steve Wills: For the second quarter ended December 31st, 2023, gross product sales were $4.3 million and net product revenue was $2 million.
regarding operating expenses.
Steve Wills: Total operating expenses were $2.6 million, net of a $2.5 million gain on the sale by lease for the second quarter ended December 31, 2024, compared to $0.9 million, net of a $7.8 million gain on the sale by lease for the comparable quarter in 2023.
Steve Wills: The increase was mainly the result of the decrease in gain on the sale of ILECE 2COSET for the second quarter ended December 31st, 2024.
regarding other income and expense.
Steve Wills: Total other income expense, NET, consists mainly of foreign currency transaction gains and losses and the change in fair value of warrant liabilities, which Palatin had recorded as a liability on the consolidated financial statements.
Steve Wills: For the quarter ended December 31st, 2023, Palatin recorded a fair value adjustment loss of $8.1 million and offering expenses of $0.7 million.
Steve Wills: Regarding cash flows, Palatine's net cash used in operations for the quarter ended December 31st, 2024 was $4.8 million compared to net cash used in operations of $10.5 million for the same period in 2023.
Steve Wills: The decrease in net cash used in operations is mainly due to the decrease on the gain on the sale by leasing during the period and secondarily to working capital changes
Steve Wills: Regarding net loss, Palatine's net loss for the quarter ended December 31st 2024 was 2.4 million.
compared to a net loss of 7.8 million
for the same period in 2023.
Steve Wills: and the elimination of ILECE net product revenue and selling expenses offset by the decrease on the gain of the sale of ILECE.
Steve Wills: Regarding cash position, as of December 31st, 2024, Palatine's cash and cash equivalents were $3.4 million compared to cash and cash equivalents of $2.4 million as of September 30th, 2024, and $9.5 million as of June 30th, 2024.
Steve Wills: This 3.4 million of cash and cash equivalents as of December 31st, 2024 does not include the 4.3 million of net proceeds that we raised in an equity offering which closed in February of 2025.
Steve Wills: we are in active we are actively engaged with multiple potential funding sources for future operating cash requirements
I'll now turn the call back over to Carl.
Carl Spana: Thank you, Steve. I'll now go over some of the operating highlights for the quarter.
Carl Spana: Starting with our Phase 2 Signal Detection Study, BMT-801, evaluating the safety and efficacy of the co-administration of the melanocortin-4 receptor agonist, bremelanotide,
with Drosephatide, a GLP-1, GIP-1 dual agonist.
Carl Spana: This is being done in patients with generalized obesity. This study has been completed and the database has been locked. Top line data from the study will be available later this month. The study was designed to evaluate two primary research questions.
Carl Spana: Does co-administration result in increased weight loss, and can treatment with imlanocortin 4-receptor agonists be used for weight loss maintenance by blunting the weight regain theme post-increase in treatment?
Carl Spana: In addition to safety, the study's primary efficacy endpoint is percent weight loss of the combined treatment compared to placebo control at the end of the treatment.
Carl Spana: A variety of secondary endpoints such as satiety and preservation of lean body mass were also evaluated.
Carl Spana: Our Obesity and Weight Loss Management Portfolio includes both long-acting monocortinol-4-receptor-selective peptide agonist and the orally active monocortinol-4-receptor-selective small molecule PL7737.
Carl Spana: We are on track to move both programs into IND-enabling activities and clinical studies in calendar 2025.
Carl Spana: Our novel next-generation selective melanocortin-4 receptor compounds have reduced activity at the melanocortin-1 receptor and therefore have reduced potential to cause skin darkening. The lack of MCR-1 activity in once-weekly dosing or oral dosing represents significant improvements over current FDA-approved melanocortin treatments.
Carl Spana: You can find additional information on our clinical trial at clinicaltrials.gov and our website has recent presentations on our novel next generation line of Quarantine 4 receptive selective compounds.
for OPL8177, Forly Selective Melanocortin-1 Receptor Treatment for Ulcerative Colitis.
Carl Spana: Phase 2 study remains on track for release of top-line data in the first quarter of calendar 2025. In anticipation of the data, there has been a significant increase in business development discussions with potential partners, which is in line with our current strategy to out-license this exciting program.
Carl Spana: in their urinary protein to creatinine ratio, and 71% of the patients had an improved or stabilized estimated glomerular filtration rate. The results validate the modulated melanocortin system could potentially be a new therapeutic strategy and possibly...
Carl Spana: and possibly disease-modifying treatment option for people living with progressive kidney disease. The detailed results of the breakout study have been accepted for presentation at an upcoming medical meeting.
Carl Spana: Based on the successful outcome of the study, we have initiated discussions with potential partners for outlicensing this program, which is in line with our current strategy.
Carl Spana: We previously announced that we are taking a multi-pronged approach to realizing the value of our Ocular Melanocortin programs. In support of this, we are actively engaged in discussions with larger potential strategic partners for out licensing, investors interested in funding further development, and with peer companies concerning potential business combinations.
Carl Spana: Before moving on to take questions, I would like to comment on our strategy. We are focusing our research and development efforts on our melanocortin-4 receptor obesity assets.
Carl Spana: We believe that the pharmacological treatment of obesity in the early stages of a multi-year cycle of innovation will have a market value in excess of 100 billion dollars per year. The Melanocortin system plays a critical role
Carl Spana: In regulating stored energy and food intake, we strongly believe that amladicortin-4 receptor agonists will be an important part of the future of obesity treatment and weight loss management.
Carl Spana: Palatin has a long-standing research effort to develop thalanticortin therapeutics that selectively activate thalanticortin-4 receptor as treatments for obesity and weight loss maintenance.
Carl Spana: With our extensive experience and the design and development of melanocortin agonists for treating obesity, including two clinical studies previously completed and published, we are well positioned to be a leader in the development of melanocortin-based therapeutics for weight loss and, importantly, weight loss maintenance.
Carl Spana: Thank you for your time. We will now open the call to questions.
Speaker Change: Thank you. 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 toll will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star 1 on your phone at this time if you wish to ask a question. And one moment please while we poll for questions.
Speaker Change: And the first question today is coming from Joe Pangenis from H.C. Wainwright.
Joe, your alarm is live.
Thanks.
Speaker Change: Well, that's a good question, but maybe we think about it slightly differently.
So,
Speaker Change: The answer to your question is, you know, this is a signal detection study, so we don't a priori, are not a priori going in with, you know, some preconceived number, right? What we're really looking for is a very clear signal.
Speaker Change: So what we'd like to see in the study is that the combined arm is a higher percentage of weight loss.
Speaker Change: And in addition to that, we're looking at some other key metrics, for example, the percentage of patients that are achieving either 4, 5, 6, 7, or 8 percent weight loss in that 8-week period, combined versus
Speaker Change: which is appetite alone, because that's a little bit more important. It's more important from a clinical question, right? You know, if you put somebody on this, how many of them are going to get, you know, 5% weight loss, which is really clinically meaningful and the FDA level of approval. So that's one metric we're looking at.
Speaker Change: And the second way of looking at it also is, you know, trizepatide is going, if you think about things in four-week increments, right, trizepatide monotherapy is gonna, you know, probably have its maximal effect in the first four weeks, and then it's gonna start to slow down, you know.
Speaker Change: as you go forward from there. So can we reverse that slowdown, right? Can we see more patients losing more weight the second four weeks versus the first four weeks when we compare the co-administration versus the monotherapy arm?
Speaker Change: There's no number for magical number, and what I mean by that is this is not an optimized study. This is a very low dose of remelanitide.
Speaker Change: So, you know, we're not, we're not optimized for, you know, necessarily to see some big jump. But I think we are certainly, you know, dosing high enough to get a nice clear signal.
Speaker Change: The other point that I do want to bring up though is really we talk about your combination versus the monotherapy arm But let's think about the bremelanotide alone arm versus the placebo arm. I expect
Speaker Change: you know, after placebo, patients that are going on to placebo, they will have weight loss in their first treatment period on terzapatide, they should regain weight. And we'd really like to see if this low dose can blunt that weight regain, really speaking to the concept of weight loss maintenance.
Speaker Change: So those are kind of the three major concepts that we're looking for a signal on.
Speaker Change: Now I understand totally about how you're looking at it and it makes sense. I guess, you know, the reason for my question is, you know, when you look at, I guess, the analyst's viewpoint and investment community viewpoint, I think they're going to be, you know, automatically comparing, you know, right or wrong, you know, comparing against the benchmark. So I think that's what's driving the, you know, what would be expected to be a win from a percentage standpoint, but I understand your...
Speaker Change: You know, your approach is here and it makes sense. I guess when you look forward for the program, are there additional indications you might consider beyond sort of the broader weight loss community, any sort of orphan indications that you might consider from MCR-IV standpoint?
Sure.
Certainly, you know, listen, they're, they're, they're...
Speaker Change: is a, I think, a growing opportunity to think about the use of melanocortin for receptor agonists in, you know, in rare and orphan syndromic diseases. There are a number of mutations in the leptomelanocortin system. There's Prader-Willi syndrome, there's Bardet-Bartle. And these are things, though, this is not unknown. I mean, the rhythm is out there. They have, you know, their products have melanotype folks in there.
Speaker Change: But hypothalamic obesity is a very key one because that's probably the largest market opportunity and it's one where we think, you know, our new compounds coming through will be very competitive and, you know, that gives us a...
Speaker Change: In a nice way, there's two of us in that line of court in poor receptor agonism, and looking at that orphan rare space, when you go to the general obesity side, although I believe this is the best mechanism,
Speaker Change: We're going to get moved into a bunch of other mechanisms that are out there. So I think we'll be focusing, likely be focusing in that rare space.
Speaker Change: Now it makes sense and good luck for the upcoming data. Thanks a lot for the details.
Thank you.
Carl Spana: Thank you. And there were no other questions at this time. I would now like to hand the call back to Dr. Carl Spana for closing remarks.
Speaker Change: So good. Thank you, Joe. Thank you for your questions. Everybody, thank you for your time. Steve and I are always grateful that you give us your time and you take meetings with us talking about the company.
Carl Spana: I'd like to have a great day. It's going to be an exciting quarter for us. And we really are looking forward to it. It's actually going to be exciting 2025 for us. So we really can't be more excited about what we're doing here. And I look forward to reporting our results out.
Speaker Change: So, from Steve and I, thank you, everybody, and have a great day and a great quarter. Thank you.
Speaker Change: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.