On September 12, 2019 Palatin Technologies, Inc. (NYSE American: PTN), a specialized biopharmaceutical company developing first-in-class medicines based on molecules that modulate the activity of the melanocortin and natriuretic peptide receptor systems, whose product candidates are targeted, receptor-specific therapeutics for the treatment of diseases with significant unmet medical need and commercial potential, reported results for its fourth quarter and fiscal year ended June 30, 2019 (Press release, Palatin Technologies, SEP 12, 2019, View Source [SID1234539479]).
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"The last year was a landmark one for Palatin. We are proud of the recent FDA approval of Vyleesi and the continued advancement of our pipeline programs," said Carl Spana, Ph.D., President and Chief Executive Officer of Palatin. "The FDA approval is an incredible achievement and milestone, and we are excited that premenopausal women now have a safe and effective, as-needed option available to them for the treatment of acquired, generalized HSDD. Our cash and accounts receivable balances at June 30, 2019 of $102 million is sufficient to cover planned operations through at least calendar year 2021. We remain focused on advancing discussions on Vyleesi collaborations for territories outside the currently licensed territories of North America, China, and Korea, and initiating multiple clinical trials for our pipeline programs over the next several quarters for the treatment of dry eye disease, non-infectious uveitis and ulcerative colitis."
2019 Fiscal Year Highlights and Recent Events
Hypoactive Sexual Desire Disorder / Vyleesi (bremelanotide injection)
The U.S. Food and Drug Administration (FDA) granted marketing approval of AMAG Pharmaceuticals, Inc.’s New Drug Application (NDA) for Vyleesi (bremelanotide injection), a melanocortin receptor agonist developed by Palatin, indicated for the treatment of premenopausal women with acquired, generalized hypoactive sexual desire disorder (HSDD). The FDA’s approval of the NDA on June 21, 2019 triggered a $60 million milestone payment to Palatin under its North American license agreement with AMAG that was received in July. Additionally, Palatin is entitled to receive tiered royalties on net sales ranging from high single-digit to low double-digit percentages, and sales milestones based on escalating annual net sales thresholds, the first of which is $25 million, triggered at annual net sales of $250 million.
Vyleesi is the first as needed treatment for premenopausal women with acquired, generalized HSDD. Vyleesi is currently available through specialty pharmacies, Avella and BioPlus, and AMAG will launch Vyleesi nationally with its full sales force in mid-September.
Anti-Inflammatory / Autoimmune Programs
Melanocortin agonist products are under development for the treatment of inflammatory and autoimmune diseases such as dry eye, uveitis, diabetic retinopathy and inflammatory bowel diseases (ulcerative colitis).
We announced positive results of a micro-dose study of radiolabeled PL8177, a selective melanocortin receptor 1 ("MC1r") peptide agonist, using an oral, delayed-release, polymer formulation. The study met all primary and secondary endpoints. PL8177 has potential application in treatment of ulcerative colitis and other inflammatory bowel diseases. The FDA has granted orphan drug designation for PL8177 for the treatment of non-infectious intermediate, posterior, pan and chronic anterior uveitis. Non-infectious uveitis (NIU) is a group of inflammatory diseases that produces swelling and destroys eye tissue and can result in vision loss. A Phase 2 proof-of-concept clinical study with a systemic formulation in NIU patients is anticipated to commence in the fourth quarter of calendar year 2019. A Phase 2 proof-of-concept clinical study with an oral formulation in ulcerative colitis patients is anticipated to commence in the first quarter of calendar year 2020.
An IND application for PL9643, a melanocortin peptide agonist, and commencement of a Phase 2 clinical study in dry eye disease, are currently anticipated in the first quarter of calendar year 2020.
Natriuretic Peptide Receptor ("NPR") System Program
The Company has designed and is developing potential drug candidates that are selective agonist for one or more different natriuretic peptide receptors, including natriuretic peptide receptor-A ("NPR-A"), natriuretic peptide receptor B ("NPR-B"), and natriuretic peptide receptor C ("NPR-C"). Active collaborations with several institutions are ongoing for PL3994, an NPR-A agonist that has potential utility in the treatment of a number of cardiovascular diseases, including genetic and orphan diseases resulting from a deficiency of endogenous active NPR-A, and PL5028, a dual NPR-A and NPR-C agonist in development for cardiovascular diseases, including reducing cardiac hypertrophy and fibrosis. A Phase 2A clinical trial evaluating PL3994 in heart failure patients with preserved left ventricular ejection fraction will begin enrollment in the latter half of calendar year 2019. This trial is supported by a grant from the American Heart Association.
Genetic Obesity Program
The Company’s melanocortin receptor 4 ("MC4r") peptide PL8905 and orally-active small molecule PL9610 are currently under investigation for the treatment of rare genetic metabolic and obesity disorders. These programs are under internal evaluation for orphan designation and potential development.
Corporate
Cash and accounts receivable balances at June 30, 2019 of $102 million is sufficient to cover planned operations through at least calendar year 2021. Included in the accounts receivable balance is a $60 million milestone payment due from AMAG for the Vyleesi FDA approval, which was received in July 2019.
Debt and related liabilities decreased from $7.2 million at June 30, 2018 to $0.8 million at June 30, 2019, with a final payment remitted in July 2019.
Fourth Quarter and Fiscal 2019 Financial Results
Palatin reported net income of $52.2 million, or $0.25 per basic and $0.23 per diluted share, for the fourth quarter ended June 30, 2019, compared to net income of $11.8 million, or $0.06 per basic and diluted share, for the same period in 2018.
The difference between the three months ended June 30, 2019 and 2018 was attributable to the recognition of license and contract revenue pursuant to our license agreement with AMAG of $60.3 million for the quarter ended June 30, 2019 compared to $20.6 million in 2018.
For the year ended June 30, 2019, Palatin reported net income of $35.8 million, or $0.17 per basic and $0.16 per diluted share, compared to net income of $24.7 million, or $0.12 per basic and diluted share for the year ended June 30, 2018.
The difference in net income for the years ended June 30, 2019 and 2018, was primarily the result of a $16.6 million decrease in operating expenses to $24.6 million for the year ended June 30, 2019, compared to $41.2 million for the year ended June 30, 2018, partially offset by the recognition of license and contract revenue of $60.3 million for the year ended June 30, 2019, compared to $67.1 million of license and contract revenue for the year ended June 30, 2018.
Revenue
For the quarter and year ended June 30, 2019, Palatin recognized $60.3 million in license and contract revenue related to our license agreement with AMAG.
For the quarter and year ended June 30, 2018, Palatin recognized $20.6 million and $62.1 million, respectively, in license and contract revenue related to our license agreement with AMAG and an additional $5 million in license revenue for the year ended June 30, 2018 related to our license agreement with Fosun.
Operating Expenses
Total operating expenses for the quarter ended June 30, 2019 were $8.1 million, compared to $8.3 million for the comparable quarter of 2018. For the year ended June 30, 2019, Palatin incurred $24.6 million of operating expenses, compared to $41.2 million for the year ended June 30, 2018.
The decrease in operating expenses reflects the completion of the Vyleesi Phase 3 clinical trial program and ancillary studies necessary to file the NDA with the FDA in March 2018.
Other Income/Expense
Total other income, net, for the quarter and year ended June 30, 2019 was approximately $38,000 and $29,000, respectively.
Total other expense, net, for the quarter and year ended June 30, 2018 was $0.2 million and $1.1 million, respectively.
Total other income (expense), net consisted of investment income offset by interest expense related to venture debt.
Income Tax
Palatin recorded no income tax expense for the quarter and year ended June 30, 2019 as a result of the utilization of net operating losses.
Income tax expense was $0.3 and $0.1 million, respectively, for the quarter and year ended June 30, 2018. Income tax expense for the year ended June 30, 2018 related to $0.6 million in tax withholding requirements related to our Fosun and Kwangdong license agreements that was recorded as an expense during the fiscal year ended June 30, 2018 offset by a tax benefit of $0.5 million related to the release of a valuation allowance against Palatin’s federal alternative minimum tax credit as a result of the Tax Cuts and Jobs Act.
Cash Position
Palatin’s cash and cash equivalents were $43.5 million with accounts receivable of $60.3 million at June 30, 2019, compared to cash and cash equivalents and no accounts receivable of $38.0 million at June 30, 2018. Included in the accounts receivable balance at June 30, 2019 is a $60 million milestone payment due from AMAG for the Vyleesi FDA approval, which was received in July 2019. Current liabilities were $4.2 million as of June 30, 2019, compared to $10.8 million at June 30, 2018.
Palatin Drug Discovery Programs
During the conference call and webcast, management will update and discuss next steps in Palatin’s portfolio of drug development programs. These include Palatin’s melanocortin MC1r agonist peptides for treatment of inflammatory indications and natriuretic peptide receptor agonist compounds for treatment of cardiovascular and fibrotic diseases.
Conference Call / Webcast
Palatin will host a conference call and audio webcast on September 12, 2019 at 11:00 a.m. Eastern Time to discuss the results of operations in greater detail and provide an update on corporate developments. Individuals interested in listening to the conference call live can dial 1-888-254-3590 (U.S./Canada) or 1-323-994-2093 (international), conference ID 1394071. The audio webcast and replay can be accessed by logging on to the "Investor/Webcasts" section of Palatin’s website at View Source A telephone and webcast replay will be available approximately one hour after the completion of the call. To access the telephone replay, dial 1-888-203-1112 (U.S./Canada) or 1-719-457-0820 (international), passcode 1394071. The webcast and telephone replay will be available through September 19, 2019.