Palatin Technologies Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 14, 2023

There are 5 speakers on the call.

Operator

Greetings. Welcome to Palatin's First 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 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 and 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 our 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 First Quarter Fiscal Year 2024 Call. I'm Doctor. 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.

Speaker 1

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

Speaker 2

Thank you, Carl. Welcome everyone. Regarding non financial highlights For our commercial product Vyleesi, which is approved for premenopausal women for the treatment of HSDD, which stands for hypoactive sexual desire disorder. As we've mentioned prior, the goal is to demonstrate commercial product value in the marketplace with an objective of relicensing the U. S.

Speaker 2

Possibly even the global rights to a committed women's Healthcare Company. Palatin's licensee of Vyleesi in China, Fosun Pharma reported its first sale In the Hanian Province of China, Palatin's licensee of Vyleesi in South Korea, Kwangdong Pharmaceuticals Completed enrollment in its Phase 3 clinical trial evaluating the efficacy and safety of Vyleesi in premenopausal women with HSD Day. Data is currently anticipated by calendar year end 2023 with a potential regulatory submission in the first half of calendar twenty twenty four. Talanton entered a strategic partnership with Upscripts Health, a leading direct to consumer telemedicine company providing telemedicine services to pharmaceutical Medical Technology Companies. Regarding operations specific to Vyleesi, for the fiscal Q1 ended September 30, 2023, Gross product sales of $4,600,000 increased 11% over the prior quarter and increased 100% over the comparable quarter last year.

Speaker 2

Net product revenue of $2,100,000 increased 20% over the prior quarter and increased 142% over the comparable quarter last year. Total prescriptions Dispensed increased 14% over the prior quarter and increased 88% over the comparable quarter last year. Refill rates, commercial insurance reimbursement and net revenue per prescription dispense continued with positive and impactful results and trends versus the prior quarter and comparable quarter last year. Vyleesi reported its 7th consecutive quarter of double digit growth across All metrics, both significant and some not as significant. Importantly, Vyleesi's quarterly net product revenue continues to exceed Vyleesi quarterly operating expenses.

Speaker 2

Moving over to overall operations for the fiscal for the Q1 ended September 30, 2023. Regarding revenue, total revenue consists of gross product sales of Vyleesi, net of expenses, allowances and accruals and license and contract revenue. As I mentioned, Vyleesi gross product sales to pharmacy distributors for the quarter ended September 30, 2023 were $4,600,000 with net product revenue of 2,100,000 This compared to gross product sales of $2,300,000 and it looks like it was a double and net product revenue of a little under $1,000,000 for the comparable quarter last year. Gross product sales increased 100 percent. Yes, that'd be a double and net product revenue increased 142% over the comparable quarter last year.

Speaker 2

Regarding operating expenses, total operating expenses were $8,200,000 for the quarter ended September 30, 2023 compared to $9,600,000 for the comparable quarter last year. The decrease in operating expenses was mainly related to the overall decrease in expenses on our MC stands for melanocortin programs and secondarily to the overall decrease in selling expenses related to Vyleesi and to a certain extent the reduction in cost of products sold due to the sale of fully reserved Vyleesi inventory. Regarding cash flows, Palatin's net cash used in operations for the quarter ended September 30, 2023 was $5,900,000 compared to net cash used in operations of $8,600,000 for the same period in 2022. The decrease in net cash used in operations is mainly due to a decrease in net loss offset by working capital changes. Regarding net loss, Palatin's net loss for the quarter ended September 30, 2023 was $5,900,000 or $0.48 per basic and diluted common share compared to a net loss of $8,300,000 or $0.86 per basic and diluted common share for the same quarter in 2022.

Speaker 1

Excuse me, I have a little bit

Speaker 2

of a lingering cough. Regarding cash position, as of September 30, 2023, Palatin's cash, cash equivalents and marketable securities were approximately $5,500,000 Plus $1,300,000 of accounts receivables compared to $11,000,000 plus $2,900,000 of accounts receivables as of June 30, 2023. This $5,500,000 of cash, cash equivalents and marketable securities as of September 30, 2023 does not include $4,500,000 of net proceeds from the registered direct offering, which closed in October 2023. We believe that existing cash, cash equivalents, marketable securities and accounts receivables will be sufficient to fund currently anticipated operating expenses and disbursements into the first half of calendar year twenty twenty four. Now I'll turn it back over to Carl.

Speaker 1

Thank you, Steve. As you know, our focus is on establishing the melanocortin system as a target for safe and effective medicines to treat inflammatory and autoimmune diseases to develop a pipeline of highly effective drugs with unparalleled safety. We have 3 active clinical programs based on melanocortin agonist As we previously reported, we have completed patient enrollment in the PL-nine thousand six hundred and forty three MELODY-one Phase 3 study for dry eye disease. As a reminder, PL-nine thousand six hundred and forty three is a topically delivered melanocortin agonist that works by resolving inflammation on the ocular surface That is the cause or a key cause of dry eye disease. We've also conducted an interim analysis of initial 120 patients enrolled in MELODY-one, which shows statistical separation for clinical efficacy across multiple signs and symptoms of dry eye disease.

Speaker 1

Importantly, CL-nine thousand six hundred and forty three has Excellent ocular safety and tolerability. With the last patient about to complete randomized treatment, we are working to have the top line data by year end. We believe the emerging efficacy and tolerability profile of PL-nine thousand six hundred and forty three gives you the potential to be a leading treatment for dry eye disease. Moving on, our Phase 2 study evaluating oral PL-eight thousand one hundred and seventy seven, a selective melanocortin 1 receptor agonist And ulcerative colitis patients is on track for an interim assessment of the clinical data in the Q1 of 2024. Supporting Oral PL-eight thousand one hundred and seventy seven development are preclinical studies demonstrating that treatment with oral PL-eight thousand one hundred and seventy seven and disease model causes diseasecolon to improve to a healthy state and to resolve the pathological inflammation.

Speaker 1

Resolving inflammation rather than blocking it provides the possibility of efficacy coupled with safety in treating colitis and inflammatory bowel disease. Finally, our breakout study, which is a Phase 2 open label study in diabetic patients with kidney disease is on track for top line data in the first part of 2024 as well. I'd like to take a minute to highlight 2 new clinical studies we are anticipating starting in the Q1 of calendar 2024. The first is a Phase 2 study evaluating a novel formulation combining bremelanotide, melanocortin agonist with a phosphodiesterase 5 inhibitor and these are drugs such as Vyleesi I'm sorry, such as Cialis and Viagra. This is an extension of our commercial efforts in sexual dysfunction.

Speaker 1

Approximately 35% of men with rectal dysfunction fail have an inadequate response to PD5 inhibitor treatment and represent a large underserved market. The only treatment options for these failure patients are highly invasive such as penile injections or penile implants. We have previously conducted clinical trials showing the synergistic effects of combining bremelanotide with a PD-five inhibitor and a treatment for erectile dysfunction. The second clinical study will evaluate melanocortin 4 receptor agonist in obese patients Taking GLP-one agonists. The GLP-one agonists were things such as Ozempic or wegovy.

Speaker 1

These are drugs that are being used. You hear them on the news all the time. These are the drugs that are the current standard of care for treating obese patients. As drug treatment for obesity is now established and growing rapidly, we believe the treatment goal will switch This will require a variety of drugs with differing mechanisms of action that affect not only weight loss, but importantly weight loss maintenance. We strongly believe that drugs targeting the melanocortin system will be an important part of the future of obesity Treatment and overall weight management.

Speaker 1

With our extensive experience in the design and development of melanocortin agonists Just a few operating highlights before we move on to questions. Listen, I just want to just reiterate again, we are so pleased with Vyleesi 7 consecutive quarters as a Double digit growth across all value metrics. Notably, our net product revenue increased 20% over the previous quarter, prescription dispensed another 14% over the prior quarter. Listen, we are also very excited that the lessee quarterly net product revenue continues to exceed Byleesi quarterly operating expenses. As we stated, we're planning to initiate 2 new monoclonal cortin programs with Phase 2 clinical studies starting in the Q1 of calendar 2024 with the data readout in 2024 as well.

Speaker 1

The 2 studies are as we just said, 1, we'll evaluate the co formulation of bremelanotide with a PD-five inhibitor in Patients with erectile dysfunction that have failed first line therapy, so in other words Viagra or Cialis isn't working for them and they need to move on to more aggressive therapy. The second, we'll evaluate the addition of the melanoclonal 4 agonist premelanotide to obese patients taking a GLP-one agonist. Our Ocular programs continue to make impressive advances. Our MELODY-one Phase 3 DED study or dry eye study is fully enrolled, data coming at the end of the year. We remain very excited by the emerging product profile for PL-nine thousand six hundred and forty three, highly differentiated from current treatments.

Speaker 1

We got excellent ocular tolerability And we think we're going to have broad efficacy across multiple signs and symptoms, and I think we're really excited this can become a leading treatment for dry eye disease as well. And finally, PL-nine thousand five hundred and eighty eight, we've talked about it in the past, but this is a novel melanocortin agonist for glaucoma. We are now on track to file an IND sometime around the end of the first half of twenty twenty four and then move on to Phase 2 clinical studies. I'd like to thank you for listening to the Paladin First Quarter Fiscal year 2024 call. You can find additional information on our science and clinical programs on our website, www.powelon.com.

Speaker 1

You also find additional information on Vyleesi at the Vyleesi website, vyleesi.com. And Steve and I would certainly like to thank you for your support, Your interest and we will now open up the call to questions.

Operator

Certainly. At this time, we will be conducting a question and answer session. Your first question for today is coming from Joe Pantginis with H. C. Wainwright.

Speaker 3

Hey, guys. Thanks a lot. So first, Carl, I wanted to ask about the logistics around the news flow for MELODY-one coming up. So When you say top line data in the late this year and final data in the Q1, I guess I wanted to get a sense of what you're expecting to show For the top line data aspect?

Speaker 1

Sure. Well, we just we'll be focused on the primary endpoints of the study and overall safety. So I mean, there'll be a sign and a symptom. There most likely will be a tear form breakup time, inferior corneal fluorescein staining. Those types of things will be for your signs and then for your symptom and most likely ocular pain.

Speaker 3

And it will be I'm sorry, you'll be getting, like numbers on top line or just more of like you either met those end Points and then we'll get them at the top line or we're actually looking towards numbers at the top line aspect?

Speaker 1

Well, Steve and I like numbers, so

Speaker 2

we put numbers out. There'll be numbers.

Speaker 3

If we hit it, we're

Speaker 1

going to be if we hit it, which I think we will, we're going to be pushing it, promoting it.

Speaker 3

Got it. Got it. And then, look, the data you put out recently on the preclinical front regarding the combination of bromelanotide and the GLP-one for obesity It's exciting and like you said, this is all that we're seeing in the news here. So I'm hoping to get a little more color on the Clinical and regulatory path for this combination, what the studies are going to look like initially and where do you think you can Fit, as the competitive landscape continues to evolve, any particular patients you might be targeting? And then maybe any additional color when you say about maintenance of the weight loss because as it stands right now these GLP-1s you need to Beyond them essentially for life.

Speaker 3

So I want to get a sense of how BMT might contribute to that. Sure.

Speaker 1

So let me take Step back just a second, kind of even more maybe a little more globally in a sense that this is a 20 year process. I mean, not for us, but I mean, your weight loss management Treatment, this is going to roll out similar to hypertension. You're going to have multiple classes of therapeutics enter into the marketplace, each with their own niche And providing their own risk reward and benefits. The overall goal here now is going to be how do we get most of the patients that are coming in to really reach their weight loss goals and Because we as a society is going to pay for this, we're not going to get the benefits. If you lose weight over 6 or 10 months and say you get that £50 off, it comes back on in 6 months, that's not good, right?

Speaker 1

We paid a lot of money and we don't get the overall long term benefits. All those beautiful things that Novo is reporting about their work on reducing cardiovascular risk overall mortality. Those curve because you keep weight off. It's not just the weight loss process itself. So in that context, looking at Say, bremelanotide, for example, which is what the study we're going to be doing in the context of the backdrop of a GLP-one, it's really there as a first step, right?

Speaker 1

We have the preclinical data. There are there were just some recent case studies reported on the use of glanocortin 4 agonist added on to tazepatide or Wegovi treatment showing that you can really enhance weight loss With the two mechanisms together without having to elevate that GLP-one dose. And that's an important point because we hear all about these GLP-1s, We don't really hear about it is really start talking to the patients. A lot of them are taking because they want to lose weight. They're not taking them because they have a great experience on them.

Speaker 1

And so combining mechanisms allows a clinician to have the opportunity to essentially modulate the side effect making sure that each patient gets the Now let's switch to the other side, maintenance. Now probably you guys are probably unaware, but we had a collaboration with AstraZeneca A while back looking at linacortin for weight loss and in particularly weight loss maintenance, but as part of that we actually have paladin compounds That were evaluated in weight loss models. And very interesting there, what we were able to show is that melanocortin, you don't need to give Tremendous amount of melanocortin to actually maintain weight loss. So if you take an animal that's obese, You bring them through the weight loss process and now they're in a state where they're in a weight loss state. One of the things that whether it's an animal or human you're fighting is that Your body wants to go back, right?

Speaker 1

You've got you want to consume more calories, your skeletal muscles don't work as well, you're using less calories. So you have to fight that process. It turns out that the monocortin mechanism may be very, very well suited there. We noticed that it was 1 6th dose So we think there's a very, very good opportunity there and that's going to be very key to the overall success of weight management. We think about it more globally and where we can play, they're going in multiple pockets where we can play from Being addition to maybe GLP-one therapy so that patients reduce more weight without having to go up in dose or have more tolerable effects, weight loss maintenance, Patients that aren't tolerating the GLP-1s are contraindicated.

Speaker 1

So there are a lot of places where elanocortin can play. And I think it's probably one of the best mechanisms because it's one of the first Mechanism that we that really evolved or was the genesis of thinking about treating weight loss from a pharmaceutical perspective.

Speaker 3

Very helpful colors, Carl. Thanks a lot.

Operator

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

Speaker 4

Hey, good morning. This is Farhana on behalf of Michael. Congrats on the continued progress this quarter and we're really looking forward to the Melodie data. Just wanted to follow-up on Joe's question earlier regarding the Melodie readout. So, I got that the data in the 4th quarter is going to have the primary endpoint and safety.

Speaker 4

But Could you provide some more specifics on what can we see in the final data readout that's going to be in the Q1 next year?

Speaker 1

Sure. Look, I mean, well, there are probably 20 different endpoints that we look at in addition to all of the safety endpoints As well, that so you'll see the full data set as quickly as we can get it done and out if that can be I mean, it's not appropriate for a press release, so that would normally sound a publication or in presentations, but or maybe we'll have a conference call to go over it. You also look at any of the sub analysis that we may do on various types of patients. These are very data rich studies. So I mean, I'm sure we'll be analyzing this data for the next 6 months to see what comes out.

Speaker 1

But in general, we will try to get out as Quickly as we can, the full data set, all of the endpoints that are there, both the primary key secondaries and then the corresponding secondaries and then exploratory endpoints And there'll be a variety of signs and symptoms, everything from all of the different staining Using either fluorescein or lysamine green that we're using or the various symptom endpoints, ocular pain, dryness, stinging, burning, All those types of standard types of things that are evaluated in dry eye studies. So we will try to be as transparent as we can be. The only caveat I will put there is, it is reasonable to assume on a positive study that we may be involved in certain discussions and maybe as Part of that we may not want to disclose anything. But otherwise we will try to be as transparent as we can.

Speaker 4

Okay, great. And then on Vyleesi, so on out licensing of the sale in the U. S, how confident are you that you can complete this maybe by this

Speaker 2

Well, when we were 3 consecutive quarters of double digit growth, we were pretty confident At 7 that confidence has just enhanced and expanded. We don't anticipate We do anticipate 8 consecutive quarters of double digit growth, but we are advancing discussions and we're reasonably confident that We will transact on Vyleesi in the very near future.

Speaker 4

All right. And then one follow-up on the GRC-one program. Could you give us any feedback on the trial design? And In particular, are you looking for any particular type of obese patients to target such as like dose of a minimum BMI or who are refractory to GLPs?

Speaker 1

Sure. So these are patients that will already be on GLP treatment and most likely tirzepatide, so which is a mixed GLP GIP. You're looking for BMI is probably in excess of 35. So these are going to be pretty obese patients. We certainly will genetically profile the patients, so we'll get a full understanding of any mutations they have in the leptin Pompe pathways As well, but we're not stratifying on that.

Speaker 1

We're really looking for more general obesity. I think one of the things that we Really looking for is merely the transition of melanocortins now from more specialized treatment to specific populations, which is getting mutation into the more general obese population. And so this is really just a first look at really confirming the interaction between the two, because I think it will be important To have for the GLP-1s to really reach their maximum potential, right? And not that Lilly or Novo need any help from L'ilPalatin, But really for them to reach their maximum potential, you're going to have to add them you're going to have to add other mechanisms to them because not every patient can tolerate you can't move not every patient can move And the dosing for those treatments. And if you talk to a lot of patients, the side effects that deadening some of the pleasure Not just food intake, but other things that people do can be troublesome and a lot of patients do experience the GI side effects.

Speaker 1

And so being able to minimize those and keep people on so that they really do lose the weight that they need to lose is going to be key.

Speaker 4

Okay. I'm going to ask one more and then I'll hop back in the queue. With regards to Bremelon in the breakout study, Is the primary goal to out license this as well or do you see yourselves developing it?

Speaker 1

There were 2 objectives. One was to Look, we believe that as from an autoimmune anti inflammatory type of diseases that Melanocortin system will play a key role there. So this is one to show how broad it can be. So that's we have a UC study, we have kidneys, we have the ocular studies that are going on. And it was also to support our licensing.

Speaker 1

I don't see us necessarily moving forward as a kidney company. It's really to support our licensing or continued use. Keep in mind behind bremelanotide and any of our programs, we have an extensive portfolio of selective Compounds for the various monoclonal receptors. So this is we're using bremelanotide in many cases such as potentially for obesity and kidney studies, for example, As a proof of concept, proof of mechanism, and then if there are opportunities for bromelainotide itself, great, we'll Try to pursue those or bring in 3rd parties to help us. If not, it does provide the evidentiary basis for earlier And we're seeing that in other indications where We've gotten previous data and now the fact that we have novel compounds with is attracting larger companies.

Speaker 4

Okay, great. I'm going to hop back in the queue. Thank you.

Operator

You do have a follow-up question coming from Michael Higgins.

Speaker 4

Hey, Heather. So with regards to PL-eight thousand one hundred and seventy seven in ulcerative colitis, are you seeing the data in real time? And if So any feedback for us?

Speaker 1

Well, there's a blinded study, it's not an open label study. So I don't like to really speak out of school on it. Let's just say, We are optimistic that there will be a signal. Let's leave it just that. Okay.

Speaker 1

All

Speaker 4

right. And then Last one from me. With regards to the erectile dysfunction study, can you share with us your regulatory plan for this combination? Like how many patients in Phase 2 and 3? And then any specifics regarding the number of refractory attempts with a single PD Beto?

Speaker 1

Sure. So in general, we would stick with general guidance on that. So you'd like to see that A patient to be a PD5 inhibitor failure should be on a maximum dose of the PD5 inhibitor with correct instructions and then We would probably use the international index of erectile function, the erectile function subdomain score. So we would look and we would characterize them based on the cutoff on that domain. I'm blanking on the exact numbers, but they're established and well published.

Speaker 1

And but you've hit on a key thing. One of the things that we will as a regulatory process as we advance from a Study that we're doing now to more of a formal registration study, we will have to reach final With the agency on the exact definition of a failure. But that should be pretty easy to do, as I said, based on your guidance That's already out there publications that are already out there using the international index of rectal function and making sure that patients have been on a maximal dose with appropriate education.

Speaker 4

Okay, great. Thank you so much for all the feedback.

Speaker 1

No problem.

Operator

We have reached the end of the question and answer session. And I will now turn the call over to Carl for Closing remarks.

Speaker 1

Great. Steve and I would like to thank you for your participation. Obviously, the great questions from Our analysts, we appreciate their support as well. We look forward to keeping you updated. Obviously, Q4 for us, big quarter And as everyone is, but we're really looking forward to what we're going to deliver over the next couple of quarters.

Speaker 1

So Stephen, I'd like to thank you. Have a great day And happy holidays.

Operator

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

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Key Takeaways

  • Vyleesi posted strong Q1 FY24 results with gross sales of $4.6 million (up 11% sequentially and 100% year-over-year) and net product revenue of $2.1 million (up 20% sequentially and 142% year-over-year), marking its seventh consecutive quarter of double-digit growth and net revenue exceeding operating expenses.
  • Palatin’s licensees achieved key milestones as Fosun Pharma reported the first sale of Vyleesi in China and Kwangdong Pharmaceuticals completed enrollment in its Phase 3 trial in South Korea, with data expected by year-end 2023.
  • The PL-9643 dry eye Phase 3 MELODY-One study is fully enrolled, showed positive interim separation for signs and symptoms, and is on track for topline data by late 2023 with full results in Q1 2024.
  • Two new Phase 2 studies are slated to start in Q1 2024: a bremelanotide plus PDE5 inhibitor trial for patients with refractory erectile dysfunction and a melanocortin-4 receptor agonist add-on study in obese patients already taking GLP-1 agonists.
  • As of September 30, 2023, Palatin held $5.5 million in cash and equivalents plus $1.3 million in receivables (not including $4.5 million from an October financing) with net cash used in operations improving to $5.9 million, supporting runway into H1 2024.
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