Palatin Technologies Q4 2024 Earnings Call Transcript

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October 1, 2024

There are 5 speakers on the call.

Operator

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 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 year end fiscal 2024 call. I'm Doctor. Carl Espana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Chief Financial Officer and Chief Operating Officer.

Speaker 1

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

Speaker 2

Thank you, Carl. Good morning, good afternoon, everyone. Before reviewing the financial results, I have a few other corporate items to highlight. Regarding Vyleesi, bromelanotide injection, a commercial product Palatin developed for hypoactive sexual desire disorder or HSDD, Palatin closed on an asset sale to COSAT Pharmaceuticals for up to $171,000,000 in December 2023. Terms included $12,000,000 upfront plus potential milestones of up to $159,000,000 based on annual net sales ranging from $15,000,000 to $200,000,000 Importantly, Palatin retains rights to and use of bremelanotide for obesity and male treatment indications.

Speaker 2

Regarding financings, during fiscal year ended June 30, 2024 Palatin raised total gross proceeds of $21,000,000 in registered direct and warrant inducement offerings. Regarding Palatin's 4th quarter and fiscal year ended June 30, 2024 financial results, total revenue consists of gross product sales of Vyleesi, net of expenses, allowances and accruals and licensing contract revenue. Pursuant to the completion of the sale of Vyleesi rights for female sexual dysfunction to Cassette Pharmaceuticals in December of 2023, again for up to 171,000,000 dollars Palatin did not record any product sales for the Q4 ended June 30, 2024. For the Q4 ended June 30, 23, gross product sales were $4,100,000 and net product revenue was 1,800,000 Vyleesi gross product sales to pharmacy distributors for the fiscal year ended June 30, 2024 were $8,900,000 with net product revenue of $4,500,000 compared to gross product sales of $12,500,000 with net product revenue of $4,900,000 for the prior fiscal year. Total operating expenses were $8,700,000 for the Q4 ended June 30, 2024, compared to $12,600,000 for the comparable quarter last year.

Speaker 2

The decrease was mainly the result of lesser spending on our MCR, melanocortin receptor programs and secondarily the elimination of selling expenses related to Vyleesi. Total operating expenses for the fiscal year ended June 30, 2024 were $27,000,000 compared to $37,300,000 for the prior fiscal year. This decrease was mainly due to the $7,800,000 gain recognized on the sale by Lisi and secondarily the elimination of related selling expenses. Regarding cash flows, Palatin's net cash used in operations for the quarter ended June 30, 2024 was $6,500,000 compared to net cash used in operations of $9,600,000 for the same period in 2023. This decrease in net cash used in operations is mainly due to the decrease in operating expenses and secondarily to working capital changes.

Speaker 2

Palatin's net cash used in operations for the fiscal year ended June 30, 2024 was $31,500,000 compared to net cash used in operations of $29,300,000 for the same period in 2023. This increase in net cash used in operations was a result of working capital changes and increased payments made related to inventory purchase commitments. Palatin's net loss for the quarter and fiscal year ended June 30, 2024 was $8,600,000 $29,700,000 respectively, compared to a net loss of $9,800,000 $24,000,000 respectively for the same periods in 2023. Variances were covered above under the revenue and operating expenses. Regarding our cash position, as of June 30, 2024 Palatin's cash and cash equivalents were $9,500,000 compared to cash and cash equivalents of $10,000,000 as of March 31, 2024 and $8,000,000 with $3,000,000 in marketable securities as of June 30, 2023.

Speaker 2

We, Palatin, is actively engaged with multiple parties for potential funding sources for future operating cash needs consisting of both business development efforts and other potential collaborators including entities involved with the same programs that Palatin is advancing. Thank you. And I'll now turn the call back over to Carl.

Speaker 1

Thank you, Steve. Fiscal 2024 was an exciting year for Palatin with significant growth in all of our pipeline programs. Results confirm that targeting the melanocortin system can result in safe, effective and differentiated therapeutics that can improve patient lives and address unmet market needs. Today, I will view some of the significant achievements for each of our therapeutic areas. Since Steve has already covered the sale of Vyleesi to COSET, I'm going to move on and start with some of our ocular programs.

Speaker 1

We have multiple ocular programs that have made significant progress over the past year. PL-nine thousand six hundred and forty three is Palatin's topically administered product for treating the signs and symptoms of dry eye disease. We successfully completed the 1st Phase 3 trial MELODY-one and announced deposit results earlier in the year. Current FDA approved treatments for dry eye disease have 3 significant problems that limit their utility. They have poor ocular tolerability, lack broad efficacy

Speaker 2

and they take a long time

Speaker 1

to have symptom relief. The results of MELODY-one clearly demonstrated that PL-nine thousand six hundred and forty three is a truly differentiated treatment for dry eye disease that solves the 3 main problems of current treatments. The PL-nine thousand six hundred and forty three MELODY-one trial show that PL-nine thousand six hundred and forty three had excellent ocular tolerability, broad efficacy in multiple signs and symptoms and demonstrated efficacy as early as 2 weeks. With this emerging product profile, PL-nine thousand six hundred and forty three has the potential to be the leading treatment for dry eye disease. In summary, in the MELODY-one Phase 3 trial results compared to VA controlled included the following.

Speaker 1

PL-nine thousand six hundred and forty three achieved statistical significance for the co primary endpoint of ocular pain in 7 of the secondary symptom endpoints including eye dryness and ocular discomfort. To the best of our knowledge, no FDA approved treatment for dry eye disease has shown such broad effect on the symptoms of dry eye disease. For inferior corneal fluorescein staining, which is a sign, which we have agreed with the FDA that this will be the primary sign endpoint for the next Phase 3 trial and PL-nine thousand six hundred and forty three also achieved statistical significance at the 2 week time point in MELODY-one. PL-nine thousand six hundred and forty three positive effects on the signs and symptoms of dry eye disease were rapid with efficacy at 2 weeks after starting treatment and they continue to improve over the 12 weeks of the treatment. PL-nine thousand six hundred and forty three has excellent ocular tolerability with no subjects discontinuing the study due to an ocular adverse event.

Speaker 1

Data for approved dry disease treatments shows that a lack of efficacy and poor tolerability such as burning, blurry vision, bad taste, stinging has led to a significant amount of patient dissatisfaction and high discontinuation rates. In a recent Type C meeting, the FDA agreed with our plan for the remaining activities required to file a new drug application with the FDA for approval of PL-nine thousand six hundred and forty three as a treatment for the signs and symptoms of dry eye disease. Specifically, we have FDA agreement on our protocols, number of subjects, the primary sign and symptom endpoints and our statistical analysis plan. We are ready to complete the PL-nine thousand six hundred and forty three Phase 3 program with all remaining clinical studies to be conducted and completed in calendar year 2025 and an anticipated NDA filing in the first half of calendar year twenty twenty six. Our 2 other ocular programs also made substantial progress in fiscal 2024.

Speaker 1

PL-nine thousand five hundred and eighty eight is our topically administered treatment and development to treat glaucoma. In the last year, we completed a comprehensive evaluation of PL-nine thousand five hundred and eighty eight in multiple preclinical glaucoma models. Results indicate that PL-nine thousand five hundred and eighty eight not only lowers intraocular pressure, but also provide direct neuroprotection. Direct neuroprotection of the optic nerve is a significantly differentiating factor over current treatments for glaucoma and PL-nine thousand five hundred and eighty eight is now ready to begin the IND enabling studies with clinical trials beginning in calendar year 2025. Retinopathies are a broad category of ocular diseases that cause damage to the retina and can lead to vision loss.

Speaker 1

The global market for treatments is estimated to be approximately $30,000,000,000 by 2,030. PL-nine thousand six hundred and fifty four is our novel differentiated treatment for various retinopathies. In fiscal 2024, we completed an extensive evaluation of PL-nine thousand six hundred and fifty four in multiple models of retinal disease. PL-nine thousand six hundred and fifty four demonstrated the ability to preserve vision, protect the retina from damage and in genomic analysis positively affected multiple pathways that are known to be involved in the progression of retinal diseases. We also made substantial progress in the development of intravitreal injectable formulation and PRC-nine thousand six hundred and fifty four is now ready to enter into IND enabling studies starting in calendar 2025.

Speaker 1

Now I'll move on to our MCR4 or melodeconin 4 receptor obesity program. Drug treatment for obesity is now established and growing rapidly. We have multiple drugs with differing mechanisms of action that affect weight loss and importantly weight loss maintenance are needed. Because of the important role that the MCR4 receptor plays in regulating stored energy and food intake, we strongly believe that MCR4 agonists will be an important part of the future of obesity treatment and weight loss management. Palatin's has a long standing research effort to develop mitocortin therapeutics that selectively activate the MCR4 receptor as treatments for obesity and weight loss maintenance.

Speaker 1

With our extensive experience in the design and development of melanocortin agonist for treating obesity, including 2 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 weight loss maintenance. As I'm sure you all know, incretin based therapeutics such as ZEPBOUNDS and MIGOVI are the primary treatment for obesity and they have demonstrated impressive growth. However, up to 67% of patients that begin treatment discontinued in the 1st year, mainly due to side effects and a plateau effect and they often quickly regain the weight that they have lost. Additional approaches are needed to provide patients an opportunity to safely and tolerably reach their weight loss goal. Research by Palatin and academic groups indicate that combining MCR4 receptor agonists with GLP-one receptor agonists like tirzepatide may result in synergistic effects on weight loss allowing for increased or sustained weight loss at lower and better tolerated doses.

Speaker 1

To investigate the potential additive effects of combining MCE4R receptor agonists with a CLP-one receptor agonist, we initiated a Phase 2 clinical study in August. In the study, these subjects will co administer the MCR4 receptor agonist bremelanotide along with trusseprotide. The study is designed to enroll approximately 60 of these subjects at 4 sites in the U. S. The primary endpoint is to demonstrate the safety and increased efficacy of the co administration of bremelanotide with tirzepatide on reducing body weight over just tirzepatide alone.

Speaker 1

Patients will be treated with weekly tirzepatide for 4 weeks, having eligibility confirmed and then randomized to 1 to 4 treatment arms, which consists of weekly and daily study drug, including weekly tirzepatide and daily bremelanotide. Patients who undergo multiple assessments of safety and efficacy to help profile the effectiveness of bremelanotide in treating general obesity as a standalone treatment or in conjunction with GLP-one therapy. This study will be completely enrolled this quarter with data in Q1 of calendar 2025. We've also developed next generation highly selective melanocortin-four receptor peptide agonists as well as small molecules for the treatment of obesity and weight loss maintenance. Our new MCR4 receptor peptide agonists are highly selective for the MTR-four receptor versus the MTR-one receptor and are not anticipated to have skin darkening as a side effect.

Speaker 1

They're designed using a proprietary technology to have once a week dosing. We anticipate final lead selection in the Q1 of calendar 2025 with an IND and first in human clinical studies in the second half of calendar twenty twenty five. Now we'll move on to our work in sexual dysfunction. Our research and the use of melanocortin agonists to treat various male and female sexual dysfunction has led to the development of a novel product that is a co formulation of remelanotide and a phosphodiesterase 5 inhibitor. Those are compounds such as Viagra and Cialis.

Speaker 1

We believe this product could be an ideal treatment for the 35% of men with erectile dysfunction that have an inadequate response to PD-five inhibitor therapy. These patients have limited options and represent a large underserved market. We have initiated a development and clinical program for the evaluation of bromelainotide co formulated with a PD-five inhibitor for the treatment of rectal dysfunction in patients that are non responsive to PD-five inhibitor monotherapy. A pharmacokinetic study is expected to initiate in the first half of calendar twenty twenty five and patient recruitment in a Phase 2 clinical study is anticipated in the second half of calendar twenty twenty five with top line results in 2026. The final program I want to cover is our PL-eight thousand one hundred and seventy seven for ulcerative colitis, which is in a Phase 2 study evaluating oral PL-eight thousand one hundred and seventy seven, a selective melanocortin 1 receptor agonist in ulcerative colitis patients.

Speaker 1

The study is nearly completed enrollment and we expect data from the interim analysis later this quarter. In support of the oral PL-eight thousand one hundred and seventy seven program, our preclinical studies demonstrated that treatment with oral PL-eight thousand one hundred and seventy seven causes disease colons to improve toward a healthy state and to resolve inflammation. Dissolving inflammation rather than blocking it provides the possibility of efficacy coupled with significantly differentiated safety in treating colitis and inflammatory bowel diseases. As we look forward, we want to continue to build on the successes of the past year by focusing on the continued development of our key programs in obesity and dry eye disease. And importantly, collaborations and partnerships for dry eye disease program, our other ocular programs in glaucoma and retinopathies and our ulcerative colitis program.

Speaker 1

Upcoming milestones and activities for our novel and differentiated programs include the following. For MCR4 VCA program, we want to complete the Phase 2 study evaluating the co administration of remelanotide intersepatide and we expect to have that data reported out in the Q1 of calendar 2025. We also are on track to advance our selected MTR-four long acting peptide agonist through 1st in human studies and to see the program for a Phase 2 dose ranging efficacy during calendar year 2025. For our dry eye disease program, we want to start and complete the Phase 3 trials, MELODY-two and MELODY-three with beta expected by calendar year end 2025 and also we want to complete all manufacturing activities needed to file a new drug application with the FDA in the first half of calendar twenty twenty six. To facilitate moving this program forward, we are in active discussions with potential corporate collaborators and funding partners.

Speaker 1

For our male sexual dysfunction program, We want to get our pharmacokinetics study started and completed in the first half of calendar year twenty twenty five and begin patient recruitment in a Phase twothree study, which is anticipated to start in the second half of calendar twenty twenty five. Importantly, we have also increased our business development activities to support the licensing of our major programs as well as our earlier pipeline programs. Steve and I and the whole Paladin team are extremely excited and enthusiastic by the potential of these programs to bring novel, innovative treatments to improve patient lives and address significant unmet medical needs. We'll now turn the call over to questions.

Operator

Certainly. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset and if listening on the speakerphone to provide optimum sound quality. Please hold just a moment while we pull for questions.

Operator

Your first question is coming from Joe Pantginis with H. C. Wainwright. Please proceed with your question. Your line is live.

Speaker 3

Hey, guys. Thanks for the details and thanks for taking the question. So, two sets of questions. First on your weight loss program with GLP-one, wanted to talk about the benchmarks of success for the study. Are you looking for a minimum or limit of weight loss to see to move to the next stage?

Speaker 3

What impacts on lean muscle mass? Hopefully, you could share that with us as well as what are you looking to do to eliminate or alleviate or mitigate some of the pigmentation issues?

Speaker 1

Sure. All right. So that's a number of things, Joe. So let me talk about what the expectations are for the current Phase 2 trial where we're using bremelanotide in conjunction with tirzepatide. The main primary question there is, is there an additive effect?

Speaker 1

And that can be 101 equals 2, 101 equals 3, etcetera. So the primary analysis will be the comparison of the co administered versus tirzepatide alone. And there's no set we're looking for is essentially a measurable or significant separation. Now these patients are not on long term treatment, so their weight losses are not going to be 10% to 15% over 4 weeks. You're going to be in that 2% to 3% range, 2% to 5% range.

Speaker 1

We want to see an additive effect, which we think based on the design and based on what we expect we're going to see, we should be able to achieve. So again, it's not we're not using, again, it's not a long term study where you're going to expect explosive numbers, but we should really see a very clear signal from the study that these 2 are additive or synergistic.

Speaker 3

Got it, got it. And the pigmentation?

Speaker 1

So skin darkening with the 1st generation of MCR4 agonists, there were several approved, bromelainotide being one of them, is driven by activity against the melanocortin-one receptor. And in the case of short term use, it's not an issue. But when we move on to more chronic use in obese patients, it can be an issue for patients they don't like the skin darkening. So in order to do that, you need next generation compounds that are really devoid of MCR1 activity. And based on the extensive number of years I've been working in this field, we've been able to achieve that.

Speaker 1

So compounds that we are in final evaluation have substantial separation between the two receptors. And in fact, many of them are not non active at MCR1. So we don't expect any skin darkening with those compounds. And then those are on the peptide front. And when we think about small molecules, that pharmacophore is much smaller and it's really highly selective MCR4.

Speaker 1

It doesn't have any MCR1 activity at all.

Speaker 3

No, that's helpful. Thanks. Sorry. Yes. I just wanted to switch to the dry eye program because I think it's great you already have the great visibility and discussions from the FDA and looking forward to the start of these programs.

Speaker 3

So I guess do you think or how mature are your discussions on business development, but more from a logistical standpoint, the guidance from the FDA, I just wanted to make sure, are these the same signs and symptoms from MELODY-one? Are they different? And how would they look to in assessing the primary endpoints in the end?

Speaker 1

Sure. So I'll go well, I'll kind of work backwards. So the symptom is the exact same one that was used in MELODY-one. The sign is we're moving from Lissamine Green to inferior corneofluoracine staining, because we all of the fluorescein stains reach significance at the 2 week time point in Melody 1. And inferior corneofluoracine staining is just a better sign in that, meaning that it's generally accepted sign that is used in dry eye disease studies.

Speaker 1

So we're going with that. And again, we have concurrence with the FDA on the use of both of those in the study. With regards to being ready to go, assuming the appropriate finances and what have you, the protocols are together, SAP is together, those CROs hired and done. So I mean, we're really pretty much ready to go forward as soon as we can we secure the appropriate funding. And that kind of leads into your first part of your question, which was where are we with that?

Speaker 1

And where in I would say, we've had very good interest from a corporate standpoint. There was a lot of pending a lot of those entities were an ongoing discussions waiting for the results of the Type C meeting. Now that we have those, we've reengaged those entities and we're in the middle of discussions with them and moving toward and hopefully moving towards what will be a conclusion of a licensing deal or some sort of transaction. In addition to that, we've had some very good uptake more recently with discussions in larger funds that would be also interested in potentially funding the Phase 3 program and moving it forward as well. So we're really attacking it on two fronts.

Speaker 1

And obviously, I've taken a little of Steve's thunder because Steve actually leads those discussions. But I think we've been pretty pleased with the progress we've been making.

Speaker 3

Well, it's good to hear about the optionality and thanks for the details, Carl.

Speaker 2

Thanks, Joe.

Operator

Your next question is coming from John Newman with Canaccord Genuity. Please proceed with your question. Your line is live.

Speaker 4

Good morning. Thanks for taking the question. Question here for Karl. Karl, the question is, do you see the potential to co formulate some of your MCR4 agonist with drugs like tirzepatide? The reason I'm asking is because there's obviously been a revolution in weight loss treatment, which has been fantastic with the GLP-1s.

Speaker 4

But we do know that eventually some of those products at least will be selected for price reductions. But one way to potentially address that is to combine the GLP-1s with novel molecules. And so I'm just curious if maybe over the long term, maybe not immediately, but longer term, that's a potential avenue for your compounds? Thanks.

Speaker 1

Sure. Yes. So along those lines, we haven't yet done any of that work. However, I think it's highly feasible. The formulations for these compounds are pretty these are pretty soluble compounds, both the GLP-1s and what stuff that we're working with.

Speaker 1

So along those lines, it should be relatively easy to come up with formulations in which the 2 are combined. Now of course, I say that not being the guy who actually does the lab work, but I think from an theoretical standpoint, it should be relatively easy to do that to get the 2 together.

Speaker 4

Okay, great. Thank you.

Operator

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

Speaker 1

Well, Steve and I and the whole Palatin team would like to thank all of you for listening to the Palatin year end fiscal 2024 call. I'd like to thank the analysts for their insightful questions as well. We're very excited here. I mean, this is for a small company, we have tremendous amount of opportunity and we're really looking forward to what we can deliver over the next year and keeping you updated on our progress on your press releases and quarterly calls and presentations at various scientific and investor meetings. With that being said, I hope all of you have a great day and we look forward to keeping you updated.

Speaker 1

Thank you.

Operator

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

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Key Takeaways

  • Palatin closed an asset sale of its commercial product Vyleesi to COSAT Pharmaceuticals for $12 million upfront and up to $159 million in sales‐based milestones, while retaining rights to bremelanotide for obesity and male sexual dysfunction indications.
  • The Phase 3 MELODY-1 trial of PL-9643 in dry eye disease demonstrated broad efficacy across multiple signs and symptoms, excellent ocular tolerability and symptom relief as early as two weeks, and the FDA has agreed on protocols to complete the remaining Phase 3 studies in 2025 with an NDA filing planned for H1 2026.
  • In obesity, a Phase 2 study combining bremelanotide with tirzepatide is fully enrolled with weight‐loss data expected in Q1 2025 to assess additive efficacy, and next-generation selective MCR4 agonists are on track for lead selection in Q1 2025 and an IND in H2 2025.
  • Palatin’s other pipeline advances include IND-enabling preparations in 2025 for its glaucoma candidate PL-9588 and retinopathy candidate PL-9654, plus an interim readout later this quarter from the Phase 2 study of oral PL-8177 in ulcerative colitis.
  • During fiscal 2024 Palatin raised $21 million in financings, ended June 30 with $9.5 million in cash, reported a $29.7 million net loss for the year, and is actively engaging partners and investors to fund its ongoing programs.
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Earnings Conference Call
Palatin Technologies Q4 2024
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