Palatin Technologies Q3 2024 Earnings Call Transcript

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Provided by Quartr
May 15, 2024

There are 4 speakers on the call.

Operator

Greetings. Welcome to Palatin's Third Quarter Fiscal Year 20 24 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. As a reminder, this conference call is being recorded.

Operator

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 consider such risks and uncertainties carefully in evaluating these forward looking statements by Palatin's prospects. Now, I would like to turn the call over to your host, Doctor. Carl Spana, President and Chief Executive Officer of Palatin.

Operator

Please go ahead.

Speaker 1

Thank you. Good morning and welcome to the Palatin 3rd quarter fiscal year 2024 call. I'm Doctor. Carl Spana, 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.

Speaker 1

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

Speaker 2

Thank you, Carl, and hello everyone. For Palatin's fiscal Q3 ended March 31, 2024 financial results, Regarding revenue, total revenue consists of gross product sales of Vyleesi net of allowances and accruals. Pursuant to the completion of the sale of Vyleesi's worldwide rights for female sexual dysfunction to COSAT Pharmaceuticals for up to 171,000,000 in December of 2023, Palatin did not record any product sales to pharmacy distributors for the quarter ended March 31, 2024. For the quarter ended March 31, 2023, gross product sales were $3,400,000 with net product revenue of 1,200,000 dollars Regarding operating expenses, total operating expenses were $9,200,000 compared to $8,500,000 for the comparable quarter last year. The increase was related to greater spending on our melanocortin receptor programs offset partially by the elimination of selling expenses related to Vyleesi.

Speaker 2

Regarding other income and expense, total other income and expense net consists mainly of the change in fair value of warrant liabilities, which Palatin had recorded as a liability on the consolidated financial statements, including revisions of certain prior period amounts to correct the misstatement with respect classifying warrants as equity instead of liability. To be clear, that's all cleaned up. There is no more liability reflection and as we go forward, again, that item has been cleaned up. The statement of operations was adjusted each quarter to reflect changes in the fair value of these warrants. For the quarter ended quarters ended March 31, 2024 and 2023, Powhatan recorded a fair value adjustment gain of $400,000 and a loss of $1,500,000 respectively.

Speaker 2

Regarding cash flows, Palatin's net cash used in operations was $8,600,000 compared to $1,400,000 for the same period last year. The increase is mainly due to changes in working capital. Regarding net loss, Palatin's net loss was $8,400,000 or $0.53 per common share compared to a net loss of $8,700,000 or $0.76 per common share for the comparable period last year. The decrease over the comparable quarter last year was mainly due to a larger operating loss in fiscal 2024 offset by the higher other income, which was primarily from changes in the fair value

Speaker 1

of the warrant liabilities.

Speaker 2

Regarding Cowen's position, as of March 31, 2024, Palatin's cash, cash equivalents and marketable securities were $10,000,000 compared to cash, cash equivalents and marketable securities of $9,500,000 plus $2,300,000 of accounts receivable as of December 31, 2023 and compared to $5,500,000 plus $1,300,000 of accounts receivable as of September 30, 2023. We believe that existing cash and cash equivalents, marketable securities will be sufficient to fund currently anticipated operating expenses and disbursements well into the second half of calendar year twenty twenty four. Now, I'd like to turn the call back over to Carl. Carl?

Speaker 1

Thank you, Steve. 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 indications. These research efforts have resulted in a growing portfolio of melanocortin based therapeutics. We have 3 clinical programs based on melanocortin agonists and are planning to initiate enrollment in 2 new clinical programs by mid-twenty 24 pending resources, all coming from our highly productive research activities. Now for our PL-nine thousand six hundred and forty three dry eye disease program, we reported the positive Phase 3 MELODY-one results earlier in the quarter.

Speaker 1

I'd like to highlight some of the key findings that differentiate PL-nine thousand six hundred and forty three from current therapies and that have us and potential partners very excited. We see excellent ocular tolerability and safety, essentially similar to a dry artificial tear. I don't think there's any product out there approved or in development that has the OCA tolerability of PL-nine thousand six hundred and forty three. We see rapid onset of efficacy for both signs and symptoms of dry eye disease with the primary symptom endpoint of pain and 7 of 11 secondary symptom endpoints reaching statistical significance at 2 weeks, which was the earliest time point that we evaluated. Very importantly, we continue to see improvement of multiple symptom endpoints over the full 12 weeks of treatment.

Speaker 1

We have not reached maximal efficacy yet and we believe that as we treat longer in the upcoming Phase 3 program, we'll continue to see even more efficacy for PL-nine thousand six hundred and forty three. We are now currently preparing for the remaining clinical study to support a new drug application submission, which we anticipate will begin in the second half of the enrollment in the second half of calendar 24 and upcoming Type C meeting with the FDA to discuss the remaining program studies that we have to do. Our Phase 2 study evaluating oral PL-eight thousand one hundred and seventy seven, a selective melanocortin 1 receptor agonist in ulcerative colitis patients is on track for an interim assessment release of data in mid-twenty 24. Supporting oral PL-eight thousand one hundred and seventy seven development or preclinical studies demonstrating that treatment with 8,177 causes disease colons to improve toward a healthy state and to resolve inflammation. Resolving inflammation rather than blocking it provides a possibility of efficacy, coupled with significantly differentiating safety in treating ulcerative colitis and other types of inflammatory bowel disease.

Speaker 1

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 release in mid-twenty 24 as well. I'd like to take a minute to highlight 2 new clinical programs that we are planning on starting this year. These two programs leverage our extensive expertise in the chemistry and biology of the melanocortin 4 receptor agonists, both have strong clinical validation and they address large markets in need of new therapeutic options. The first is a Phase 2 obesity clinical study designed to enroll up to 60 of these patients that are currently using tirzepatide at 2.5 milligrams weekly. The primary endpoint is to evaluate the safety and increased efficacy of co administration of bremelanotide with tirzepatide in reducing weight.

Speaker 1

A secondary endpoint will evaluate the weight loss maintenance effect of bromelanotide in patients that have stopped using tirzepatide. The initial drug application and the protocol for this study has been reviewed by the FDA and we are clear to begin enrolling patients. Supporting this study our obesity program in general, we recently hosted a key opinion leader event titled beyond GLPs, The Multiple Roles for Novel Melanocortin 4 Receptor Agonists in Treating Obesity and Weight Loss Maintenance. Speaker was Doctor. Jesse Richards from the University of Oklahoma and he discussed co administration of Linaclotin 4 receptor agonist with trezepatide in obese patients, the continued need for novel obesity treatments and the multiple uses of Linaclotin-four receptor agonists in treating obesity and weight loss maintenance.

Speaker 1

You can find the link to the recording of the event on our website. Drug treatment for obesity is now established and growing rapidly. We believe multiple drugs with different mechanisms of action that affect weight loss and importantly weight loss maintenance are needed. We strongly believe that drugs targeting melanocortin receptor system will be an important part of the future of obesity treatment and weight loss maintenance. Our extensive experience in the design and development of melanocortin agonist for treating obesity include 2 clinical studies, which we completed and published.

Speaker 1

And we are well positioned to be a leader in development of melanocortin based therapeutics for weight loss and weight loss maintenance. We are also planning a Phase 2 clinical study evaluating the co administration of bremelanotide with a PD-five inhibitor for treating rectal dysfunction patients at a failed PD-five inhibitor monotherapy. This clinical study will support the development program for a combination product, which is a co formulation of bromelainotide with a phosphodiesterase-five inhibitor and is an extension of our commercial efforts in sexual dysfunction. Approximately 35% of men with erectile dysfunction fail or have an inadequate response to PD-five inhibitor treatments and these are things like Cialis and Viagra represent a large underserved market. The only treatment options for these Cialu patients are highly invasive such as direct penile injections or penile implants.

Speaker 1

We have previously conducted clinical studies showing the synergistic effects of combining bremelanotide with a PD-five inhibitor as a treatment for erectile dysfunction we feel well positioned for an efficient and successful development program of the co formulated product. Key highlights for the Q3 in fiscal year 2024 are as follows. We reported the positive results for PL-nine thousand six hundred and forty three Phase 3 MELODY-one DRY disease clinical study and PL-nine thousand six hundred and forty three is emerging as a highly differentiated treatment for dry eye disease with excellent ocular tolerability, rapid onset of efficacy and broad relief from multiple symptoms of dry eye disease. We are planning on initiating 2 new melanocortin Phase programs with Phase 2 clinical studies that have data readouts in 2024. And finally, our clinical programs continue to advance with multiple clinical data milestones from 4 clinical programs and the initiation of the remaining PL-nine thousand six hundred and forty three Phase 3 studies by calendar year end.

Speaker 1

Steve and I would like to thank you for listening to the Paladin Q3 fiscal year 2024 conference call. You can find additional information on our science and clinical programs on our website, www.paladin.com, and You can find additional information on Vyleesi@vyleesi.com website. We'd like to thank you and now open the call to questions.

Operator

Certainly. The floor is now open for questions. The first question is coming from Joe Pantginis with H. C. Wainwright.

Operator

Please proceed with your question. Your line is live.

Speaker 3

Hey, guys. Good morning. Thanks for taking the question. So Steve and Carl, I wanted to focus on the overall profile for 9,643 right now. Post the MELLA D1 data, you have an upcoming Type C meeting.

Speaker 3

What are you looking to clarify or get agreement on with regard to moving forward? And before you get that feedback, have any of the learnings from MELODY-one impacted how you're going to potentially approach Melody 2?

Speaker 1

Sure. Let me take that in reverse order. The answer is yes. I mean, obviously, this MELODY-one was a very large clinical trial. There was a lot of data.

Speaker 1

And like most dry disease programs, you continue to learn as you do these studies. You don't always get what you want. But where we're thinking about this is we'd like to do 2 more studies, MELODY-two and MELODY-three to provide the remaining data that we need. And that way it will give us 3 large Phase 3 clinical trials to really support the profile of the drug, the safety and the overall efficacy. And we think that's the most prudent course to go forward.

Speaker 1

It is very atypical for dry eye disease products to be approved on just two studies. They generally most of these programs have 3, 4, 5 Phase 3 studies that support their overall approval. So that's our overall strategy. We've learned, I think, additionally, the endpoint with regards to symptoms will most likely be the ocular pain. But importantly, we really want to continue to highlight the broad efficacy that we're seeing on symptoms.

Speaker 1

I mean, we're seeing 8 symptoms out of the 11 measured, all reach significant starting at 2 weeks and then moving forward. There's no product out there that has that type of symptom relief. So we really want to make sure we get these studies to drive that home. In addition to that, we need to get the sign, the sign is more of a regulatory endpoint. And I think we figured out how to do that, when to measure, what to measure.

Speaker 1

It will be in very corneal fluorescein staining. We'll do it at 2 weeks. So it will be relatively rapid measurement. And so we think we're now really well positioned to deliver the rest of the program and support an NDA submission. With regards to the first part, which is the Type C meeting, there are a number of more technical things there.

Speaker 1

I don't think there's I don't think the agency will have I don't think we're posing any real questions as to the design and overall endpoints that we're using in MELODY 23 and the open label pain, eye dryness, inferior corneumfluorescein staining, these are all well known endpoints and well validated endpoints for use in these trials. The analyses we're doing are pretty straightforward. They're all ITT analyses. So there's no subgroup analysis that we're planning. So I don't think there's anything there.

Speaker 1

So none of the questions will be around just the sufficiency of what we intend to deliver. And I expect that they will agree with that. I think 3 large well controlled studies will be more than sufficient to support an NDA submission and their evaluation. And then in addition, there were a number of questions around manufacturing, what have you that are more things that we need guidance on what the next step should be or they're not they're more I would say you could do either A or B, we just want to make sure which one do you want, you want A, you want B. So nothing really, I think significant just more guidance as to which what type of data they want there.

Speaker 1

So overall, I expect a very fruitful meeting on the Type C. And as I said, we're planning now to really move the next set of studies forward and we're quite excited about the product.

Speaker 3

No, I appreciate those comments. And I guess I'll just take it a little further with regard to potential endpoints for the next study. And you brought up, I guess, one of the interesting concepts in dry eye development where you said you're looking at 8 different signs and like would you look to keep the same sign because I know you basically have to pick 1 in decision with the FDA. So how would you look to address that?

Speaker 1

So on the sign side of the inferior corneal fluorescein staining, on the symptom side, we have a lot we have the flexibility there. Both pain and eye dryness, I think actually eye dryness was reached the highest degree of significance in MELODY-one. Either one is acceptable. I mean one of the questions we will ask the agencies is that if we elevate eye dryness as opposed to pain, will that be and it should be okay, will they accept that in MELODY 1 as well. As we delivered in MELODY 2, MELODY 3, will they accept that in the endpoint and Melody 1 as well.

Speaker 1

And I think that they will do that. But where you're going is we'll probably have a lot more of the secondary endpoints be symptom based because one of the things we do want to discuss with them is if we hit all these symptoms, again, as we replicate them, can we get some of these on the label? Can we get some specific symptoms on the label? And I think that would be another differentiating feature.

Speaker 3

Got it. Got it. Appreciate the comments.

Operator

There are no additional questions in queue. At this time, I would like to turn the floor back over to Doctor. Spana for any closing remarks.

Speaker 1

Great. Thank you. I'd like to thank everyone for participating on the Palatin Technologies Q3 fiscal year 2024 conference call. Have a great day. And Steve and I look forward to updating you on our progress.

Speaker 1

And we're very excited about where we're going with the company and the milestones that we have coming up throughout the remainder of this year. So have a great day and thank you.

Operator

Thank you everyone. This does conclude today's conference call. May disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

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Palatin Technologies Q3 2024
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