Palatin Technologies, Inc. (0KF3) Earnings Call Transcript & Summary

The polls are about to close, so if you have not yet voted, please do so. [Voting]

Since everyone has had the opportunity to vote, it is now 9:12 a.m. and the polls are closed. The inspector of elections has delivered his preliminary report, and I will now announce the preliminary results. Mr. Chairman, based on the inspector of election's preliminary report, each of the nominees for director received sufficient votes cast in favor of his or her election and has been elected as a director of the company to serve for a 1-year term that will expire in 2021 (sic) [ 2022 ]. The ratification of the appointment of KPMG as the company's independent registered public accounting firm received more than 90% and of the votes cast for and against the proposal and the appointment has been ratified. And finally, the resolution on an advisory basis for the compensation of our named executive officers for the fiscal year ended June 30, 2020, received 66% of the votes cast for and against the proposal and has been approved. We will file the final report of the inspector of elections with the records of this meeting. We will also report the results of the voting on a Form 8-K to be filed with the Securities and Exchange Commission within 4 business days of this meeting.

Thank you, Steve. That concludes the business for the meeting. The meeting is now adjourned, and with respect to the proposal to approve an amendment to our Certificate of Incorporation to effect an increase in authorized common stock, the meeting will be reconvened at 9:00 a.m. Eastern Standard Time on Thursday, July 8, 2021, by means of a virtual meeting at the same web address as this meeting. All stockholders of record as of April 13, 2021, and which is the record date for this meeting, will be entitled to vote on such proposal at the reconvened meeting. Dr. Spana and I will now provide a brief overview of Palatin and our programs, following which we will respond to questions submitted during the annual meeting. Please follow the instructions provided on the virtual meeting screen to submit questions. Carl?

Thank you, Steve. Next. So during this part, we're going to give a brief presentation, both Steve and I, over some of the programs that are going on at the company, and we'll start with -- I guess we have -- next slide. Okay. Just to -- we have a disclosure statement. So more information can be found on documents filed with the Securities and Exchange Commission. If you -- and we will be making forward-looking statements, so I encourage you to read that. Next. Okay. So many of you know, Palatin is a company that was focused in sexual function, and we were one of the first to get a melanocortin product approved for female sexual dysfunction. As you think about the future of the company, we've really been pivoting into a different area, which has really been to use our expertise in the development of melanocortin-based therapeutics to focus on the role that, that system plays in regulating inflammation in autoimmune disease. This mechanism is involved in the resolution of harmful inflammation, and we think that there -- has a broad utility in a number of diseases. In the near term, we'll be focusing in 2 therapeutic areas: ocular, which there are multiple indications that affect both the front and the back of the eye, and you'll see it on our program slide; and in the GI system, where we think the mechanism plays a very important role as well. I think this strategy allows us to leverage our deep expertise in the development of melanocortin-based therapeutics and the manufacture and development and the regulatory experience that we've already developed. So if we can move on to the next slide. Next slide is our pipeline slide. I think you can see we have leading off with Vyleesi, which was the first melanocortin product approved. We were very proud of that. That's for treating women with hypoactive sexual desire disorder. That's now being currently marketed. It was originally by AMAG Pharmaceuticals, and now currently by Palatin, and Steve will go over some of the numbers for that in a minute. Behind that, which we're very excited about, is PL-9643, which is a topical treatment for dry eye disease. This compound has completed a Phase II study. Results of that were reported through press release and then more recently presented at a major medical meeting where it was very well received. We'll also be working in other indications in the front of the eye, which we'll speak about a little bit later in the year. And then following on that, we have treatments for the ocular -- in the back of the eye for retinal diseases as well using this mechanism. In addition, we have PL-8177, which is an oral formulation of this peptide, which combines a peptide to the GI track, and that's going to be moving into a Phase II proof-of-principle study later this year as well for treating ulcerative colitis. So as you can see, we've built a very nice pipeline, and we'll continue to advance that pipeline. If you'd like to learn more about the science that's underlying what we do as well as learn more about our ocular programs, I do encourage you to go to the website. It's new and redesigned, and what you will find there is a recent rebroadcast of a key opinion leader or science day that will really go into a lot more detail about why we believe the melanocortin system will have a very key role in regulating harmful inflammation as well as some of the details on our recent dry eye data and where we're going with that program as well as our program in diabetic retinopathy or other types of retinopathies which affect the back of the eye. So I encourage you to do that, it's very easy to do. You can register and see that rebroadcast. I think it's quite comprehensive, and will give you a lot of information. So with that said, I'm going to pass things over to Steve, who will go over the Vyleesi numbers and then some of the financials.

Thank you, Carl. So as Carl mentioned, Vyleesi is FDA approved -- I'm sorry. Our next slide, please. Next slide. Okay. So actually, one more slide. The slide that we just presented is that Vyleesi is sold in a 4-pack of 4 auto-injectors. We're -- we believe Vyleesi is a valuable asset. It's FDA-approved products with limited competition. Our goal is to demonstrate the commercial value of Vyleesi and relicense to a committed partner. As Carl mentioned, we did receive the product back from AMAG late July of 2020, and there was work to be done for -- with this product. We think we've made significant progress in that regard. Our most recent quarter, quarter ended March 31, 2021, highlights include: gross product sales increased 89%; net revenue increased 154%; and prescriptions increased 24%. We have a -- primarily a digital social media campaign from a marketing standpoint. And these applications are reaching thousands of health care providers and millions of premenopausal women monthly and has resulted in increased website and telemedicine traffic. Regarding market access, we've achieved 75% of commercially insured lives and 50% of commercial formulary coverage. To reiterate, our goal and objective is, as we're showing the enhanced value of Vyleesi, is to find a committed partner and execute a collaboration agreement before the end of calendar 2021. Next slide, please. Regarding a financial snapshot. Palatin, as of March 31, 2021, had $68.6 million of cash and cash equivalents. And our working capital at March 31, 2021, was $69.4 million. We have no debt. A quick summary of our capitalization as of March 31, 2021. We have 230.1 million common shares outstanding and our fully diluted total is 274.2 million. Of note, we have a little under 13 million warrants that will be expiring. The majority, approximately 9 million, in August of this year, and the remaining 5 million in December of this year. All right. That is the presentation part of today's annual meeting. Those slides -- we do have a corporate presentation on the -- on our website, which is a bit more comprehensive than this little bit of a short and sweet presentation that we just went through. So the next stage we have is the questions and answers. So I will pause -- Carl and I will pause for a few seconds as we gather the questions from the shareholders. So...

All right. We have the -- we some questions coming in. The first question is regarding Vyleesi. And I think I'll start with that response, and Carl will add color accordingly. So the question is regarding Vyleesi. You've had the product back. It's been -- they say 11 months, but it's actually -- I'm going to correct it, it's been about 10 months. When will we see a relicensing? As we mentioned in the presentation, this -- the goal is definitely to relicense the product with a partner that is -- has the type of commitment and importantly, the commercial infrastructure to advance the product and move it forward. And as I mentioned, to be clear, this product was not in a condition to be licensed when we got it back from AMAG. We needed to address several material issues, and we've made a lot of progress. I'm not going to repeat the 3/31 quarterly results that we -- that I just presented, but we've made a lot of progress, and we anticipate increased value as we go forward. And our objective and goal is to have this relicensed before the end of the year. And not just for the U.S., we also anticipate additional regions throughout the globe that we would relicense. Okay. Bear with me a little bit. There's a pause between the questions because I have to scroll down and read them there. All right. This one is a short one regarding our cash. You say your cash -- they say $69 million, which is approximately correct. What is the runway regarding the cash? We have sufficient cash to fund the currently planned operations through calendar year 2022, and so we're -- kind of from a comfort standpoint, we're in a reasonable position in that regard. Okay. The next question. Dr. Spana, get ready. This is on PL-9643 for dry eye disease. Could you please comment on the differences of PL-9643 versus the current commercial treatments? And what are the time lines to NDA submission and approval?

Sure. Thank you. So PL-9643 is a little bit different in that it's -- in a couple of ways. First of all, the tolerability is much better. We've got very good ocular comfort and ocular tolerability. So there are 2 main products approved for treating dry eye, Xiidra and Restasis, and both of those have tolerability issues that limit their uptake and utility. In addition, they also have a fairly long time until they work. So with PL-9643, we're seeing very good efficacy starting as early as 2 weeks post treatment, and the ocular tolerability is really quite good so -- compared to those other treatments. From a time line standpoint, we'll be enrolling in the first Phase III study later this year. That will read out in the first half of calendar 2022. We'll need to do a -- 2 additional studies, which is a second Phase III and then we're required to also do a longer-term safety study, which we'll run in parallel. Those will also complete probably by the end of 2022, putting us in a position to file an NDA, assuming everything is positive in 2023 that generally -- and we should be -- see approval in late '23.

All right. Thanks, Carl. Next question we have is on our PL-8177 oral treatment for ulcerative colitis. Is the objective to license this product or commercialize it internally? And if it is to license the product, what type of data points do you believe are needed to ensure a high probability of licensing?

So yes, the definite goal here is definitely a licensing -- an out-licensing goal. We are not in position nor do we believe we'll be moving into large Phase III studies in ulcerative colitis or any other GI indications. However, we do believe that this mechanism, like [indiscernible] plays a very key role in regulating gut homeostasis and potentially harmful inflammation in the gut, and we've got quite a lot of information along those lines. So what do we need? I think there are a couple of things. One, we need to show that the oral treatment gets to the target tissue and actually engages the target and does something beneficial to the patient. That generally means a reduction in their episodes of diarrhea, [indiscernible] stools and abdominal pain. In addition to that, which those will be key endpoints that we'll have in the upcoming study, in addition to that, we'll be looking at a variety -- a large variety of biomarkers that would really give us a lot better detail as to how this product is working, what pathways it's affecting, and essentially how it's bringing about a beneficial effect. What's also very interesting and one thing that we're currently exploring is really we do believe that this product, because of its safety and the fact that this product is contained in the gut doesn't get into systemic circulation. So there's very good safety and very good tolerability and it may be very well suited for the pediatric population. So the pediatric ulcerative colitis population is really in desperate need of new treatment options that have a degree of safety. The currently treatments, such as the biologics and new modulators, steroids, although used in that population, they are with some reticence because of their side effects and putting young people on steroids. These other treatments may not be ideal. So we think there's a great opportunity there. That's one that we'll also be exploring. So I think this is a very highly differentiated product with a great safety profile. We need to nail down some efficacy in the upcoming trial, and I think we won't have any problem out-licensing the product.

Thank you, Carl. Great. The -- this is going to be the last question. I think the other questions I see are somewhat repetitive. So the last question we're going to be taking is regarding the proposal to increase the share count. Why should we vote for a dilution? Well, we are asking shareholders to approve an increase in our authorized common stock from 300 million to 400 million. We currently have less than 10% of authorized stock available. We have no current plans to initiate an equity offering even if this proposal is passed. The increase is about future flexibility. We need to have access to capital to ensure we have sufficient funds to advance our development programs and execute on our business plan, and that we have the necessary resources to take advantage of any strategic opportunities that could result in an increase to shareholder value. As an additional FYI, the leading independent shareholder voting advisory groups, ISS and Glass Lewis, have recommended that shareholders vote for this proposal and also the other proposals. At this time, we're going to conclude the question-and-answer stage and also the meeting. Carl and I would like to thank you for attending today's meeting, and it always -- as always, we're available for any shareholder questions or comments. We're very easy to get a hold of. Best through the e-mail. So Carl, any concluding remarks, sir?

No. Thank you, Steve. It's been a pleasure being here. I think we've got a very exciting company and with a lot of great things going on, and we appreciate your support, and we always look forward to continuing to update you on a quarterly basis as has been our norm. So have a great day, and we look forward to our next call. Thank you.

Thank you. At this time, the 2021 Annual Meeting of Palatin Technologies shareholders has now come to an end. The meeting will be reconvened at 9 a.m. Eastern Standard Time on Thursday, July 8, to consider approval of an amendment to the company's restated Certificate of Incorporation to increase our authorized common stock from 300 million shares to 400 million shares. Thank you for attending, and you may now disconnect.