Palatin Technologies (NYSEMKT:PTN)
F2Q 2013 Earnings Call
February 14, 2013 11:00 pm ET
Carl Spana - President & CEO
Steve Wills - CFO & COO
Jeff Edelson - CMO
Joe Pantginis - ROTH Capital Partners
Good morning, ladies and gentlemen, and welcome to the Palatin Technologies Second Quarter Fiscal Year 2013 Conference Call. As a reminder, this conference call is being recorded.
Before we begin our remarks, I would like to remind that statements made by Palatin that are not historical facts may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results could differ materially from those anticipated due to a 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 and Palatin’s prospects.
Now I would like to introduce you to your host for today, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.
Thank you and good morning everyone. I am Carl Spana, President and Chief Executive Officer of Palatin Technologies. With me on the call today is Steve Wills, our Chief Financial and Operating Officer and Executive Vice President; Dr. Jeffrey Edelson, our Chief Medical Officer who is busy leading our efforts on the BMT end phase II meeting will be calling in for the Q&A session.
On today’s call we will be providing updates on our product programs and on our most recent quarterly financial results to begin Steve Wills will provide an update on our second quarter ending December 31, 2012 results. Steve?
Thank you, Carl. And good morning, everyone.
Regarding Palatin’s second quarter fiscal 2013 financial results Palatin reported a net loss of $1.7 million or $0.02 per basic and diluted share for the quarter ended December 31, 2012 compared to a net loss of $2.6 million or $0.08 per basic and diluted share for the same period in 2011.
The decrease in net loss for the quarter ended December 31, 2012, compared to the same period last fiscal year was primarily due to an increase in net proceeds from the sale of New Jersey state net operating losses which resulted in the receipt of $1.8 million and $1.1 million respectively in tax benefits.
And secondarily to a decrease in clinical trial operating expenses for the three months ended December 31, 2012 compared to the 2011 period. Regarding cost and expenses, total operating expenses for the quarter ended December 31, 2012 were $3.4 million compared to $3.7 million for the comparable quarter of 2011.
The decrease in operating expenses for the quarter was primarily due to lower cost related to Palatin’s Phase IIb clinical trial with bremelanotide for female sexual dysfunction, for which we reported positive top-line results in November of 2012.
Regarding cash position, Palatin’s cash and cash equivalence was $32.9 million as of December 31, 2012 compared to $3.8 million at June 30, our fiscal year end 2012. With current liabilities up $2 million as of December 31, 2012 compared to $3.5 million as of June 30, 2012.
We believe that existing capital resources will be adequate to fund our currently planned operations including completing analysis of results of our Phase IIb clinical trial with bremelanotide for FSD, holding an end-of-Phase II meeting with the FDA, an advancing Phase III activities to at least calendar year 2013.
Thank you, Steve.
Now for an update on our programs under development starting with our female sexual dysfunction program. In the fourth quarter of calendar 2012, we announced the positive top-line results of our bremelanotide Phase IIb female sexual dysfunction study, which evaluated bremelanotide versus placebo in approximately 400 pre-menopausal women with female sexual dysfunction.
The top-line results clearly demonstrated that treatment with bremelanotide resulted in clinically meaningful and statistical significance versus placebo on improving the number of satisfying sexual events. Overall sexual function and personal distress associated with their sexual dysfunction.
We have now completed a detailed analysis of the bremelanotide’s Phase II data. This analysis confirmed that bremelanotide demonstrates clinically meaningful and statistical significance versus the placebo on the primary endpoint and broad range of secondary endpoints to use in the study. The efficacy results showing clear dose response and consistency over multiple measures of the efficacy.
I mentioned on our last conference call that the detailed data for this study will be presented at a scientific conference in 2013. I’m happy to report that this will occur at the 2013 Annual Meeting of the International Society for the Study of Women's Sexual Health. In one hour symposium on the afternoon of Friday, March 1 has been dedicated for the presentation and discussion of the detailed data from the bremelanotide Phase II FSD trial.
The data will be presented by distinguished panel of experts in the Female Sexual Dysfunction field. The International Society the Study of Women's Sexual Health 2013 Annual Meeting will be held in New Orleans, Louisiana and we will provide additional details about bremelanotide presentation and our other activities at a later date.
We believe that there is a substantial need for novel pharmaceutical treatments for female sexual dysfunction. Female sexual dysfunction is a disorder that affects approximately 20% of women at some point during their adult life. There were no (inaudible) treatments and female sexual dysfunction represents a large potential market opportunity.
We believe that our Phase II results indicate that bremelanotide has a potential to positively impact the treatment of a broad range of pre-menopausal women with female sexual dysfunction and supports the continued development of the bremelanotide as a treatment for female sexual dysfunction as well as its potential as a commercial product.
The team at Palatin along with our external expert advisors was excited by the bremelanotide’s Phase II results. We have requested and then granted in end-of-Phase II meeting with the FDA and are in the final stages of preparing for the end-of-Phase II meeting. We anticipate this will occur later this calendar quarter. The goals of this meeting will be to discuss our recent Phase II data and to reach agreement with the FDA on the design and conduct of the bremelanotide Phase III Female Sexual Dysfunction Program.
Moving on to our Wheezing and Diabetes Program, this program is under the direction of AstraZeneca. Although the program ran into an issue with the first clinical candidate a subcutaneous injected peptide called AZD2820, AstraZeneca remains committed to the program and continues o make substantial progress. AstraZeneca is currently advancing a new clinical candidate towards first in human studies which may occur as early at the end of the calendar 2013.
AstraZeneca and Palatin remain committed to this collaborative program and to the continued advancement of melanocortin agonist for the treatment of obesity. Melanocortin receptor is a well validated target for obesity therapeutics, hemogenic evidence indicates plays a key role for this receptor and intended pathways in the regulation of food intake and weight loss. In addition our results from earlier clinical trials in obese patients with compounds and target melanocortin-4 receptor showed significant reductions in food intake and weight loss.
Pursuing to the terms of the research collaboration and license agreements with AstraZeneca Palatin is eligible for milestone payments on achieving development and regulatory milestones and further payments on achievement of sales targets and additional royalties on sales of approved products. AstraZeneca has responsibility for product commercialization, product discovery and all development costs. We believe that therapeutics targeting the melanocortin-4 receptor have a potential to demonstrate the safety and efficacy required for approval and to dramatically impact the treatment of obesity. This program has significant commercial potential and we believe that our partner, AstraZeneca, has the resources and commitment to realize this potential.
Moving on PL-3994 is our natriuretic peptide receptor agonist in development for the treatment of acute severe asthma, which is defined as an ongoing asthma episode in which asthma symptoms do not adequately respond to initial bronchodilator or corticosteroid therapy. As we’ve previously stated, a key objective of the PL-3994 program is to identify a development and marketing partner.
In support of this effort, we are conducting a variety of preclinical activities to better define the role of natriuretic pathways in pulmonary and cardiovascular diseases. In addition, we are also engaged in formulation and manufacturing activities needed to support clinical and advancement of PL-3994 by both inhaled and subcutaneous delivery.
A few words about our melanocortin-1 program, we believe that melanocortin-1 receptor based compounds have the potential to treat a variety of inflammatory and immune system based diseases.
The research and corresponding scientific publications supporting the role of melanocortin-1 receptor in the regulation of inflammatory and logical function and disease pathology has been expanding rapidly over the past several years. Palatin’s core technologies and expertise in melanocortin biology and chemistry has put us in a leading position to take advantage of the emerging science in this varied exciting area. Our activities in targeting the melanocortin-1 receptor have generated a substantial interest from potential partners and we are in a position to designate a first clinical lead candidate in the first half of 2013.
Before we go to questions in summary we are extremely pleased to report that a full analysis of the bremelanotide Phase 2 results has been completed and confirms and expands our previously reported top line results. Bremelanotide Phase 2 trial achieved statistical and clinical significance in our primary endpoint, key secondary endpoints and multiple additional secondary endpoints using independently developed and validated measurement tools. Importantly we met the key objectives of the trial which demonstrated excellent safety and efficacy of the drug at identified doses for advanced mix into Phase 3 trials and activities.
We are actively preparing for an end-of-Phase 2 meeting with the FDA, which we anticipate will occur later this calendar quarter. Finally the detailed data from the bremelanotide Phase 2 study will be presented at the 2013 Annual Meeting of the International Society for the Study of Women's Sexual Health. We are also working quite diligently on establishing a corporate collaboration to help advance the bremelanotide Phase 3 female sexual dysfunction program forward, which will also be a 2013 activity.
Regarding the obesity and diabetes program AstraZeneca is advancing novel compounds through preclinical activities towards first-in-man studies. And with regards to 3994, we expect very exciting data to come out on the preclinical front and we’ll also continue to target corporate collaborations. And finally on the melanocortin-1 program, we have targeted the goal of a corporate collaboration in 2013 along with a clinical candidate selection in the same timeframe.
I’d like to thank you for participating on Palatin’s fiscal second quarter 2013 conference call and we’ll now open the call to questions.
Thank you. (Operator Instructions) And we will take Joe Pantginis from ROTH Capital Partners.
Joe Pantginis - ROTH Capital Partners
Couple of questions if you don’t mind, the first two are sort of linked as you are obviously busy now getting ready for your End-of-Phase II Study I guess you have discussed previously call even on the last call that you hosted you are looking at a pretty broad Phase 3 program even beyond sort of the pivotal studies with some sort of support of studies as well. If you just look at the main part of the Phase 3 program, do you anticipate the trial design really differing much from the Phase 2b that you announced in November?
No, I mean we were very pleased with the results of the Phase IIb study, we did a trial design and we used and the patient population that we studied is the appropriate and was successful and we don’t anticipate much in the way of changes as we move into Phase 3, it really will be designed to replicate the Phase II results.
Joe Pantginis - ROTH Capital Partners
And then with regard to I know you mentioned like potential drug interaction studies as part of the Phase 3 program. When you look at specific populations of patients whether its breast cancer or women on antidepressants for example, would those be sort of adjunct studies or separate Phase 2s or maybe part of the Phase 3 program?
Well, I don’t think, they wouldn’t be directly part of the pivotal trials but from a drug interaction standpoint certainly we’d like to look at the women on antidepressants such as SSRIs and SNRIs. I think we are discussing a secondary specialty population in women that have either breast cancer because the rates of sexual dysfunction are very high in those populations. Jeff I don’t know if you want to add anything additional?
No, you covered it nicely Carl, I mean these are all populations of interest, where we think there is potential efficacy, but as Carl said probably not part of the registrational program.
Joe Pantginis - ROTH Capital Partners
And then, I guess, now that you’ve been highlighting your business development activities more, maybe you can review for us a little bit since it is something you would like to do in 2013, the sort of internal goals you might have as to what you are looking for in a partnership or how you would look to bring the drug forward with someone and also any additional color that you can add as to where these discussions stand?
Hi, Joe. I mean, I will start off and I will top hand it over to Steve to give a little additional information. Certainly it is a goal of ours to go through and look for a partnership to help bring bremelanotide forward and into commercialization. I mean we believe that this drug has legs to go to be successful in Phase 3 and to be approved, so certainly we are looking for a deal that provides a substantial backend for Palatin or substantial part of the revenue of the product for Palatin because we believe that we are going to get there. We’ve been very nicely pleased with the amounts of interest we’ve had and we believe that as we come out of the end of Phase 2 meeting and have the details of the Phase 3 programs are better defined we should be able to move towards a partnership with one of the companies we are currently talking to. I don’t know, Steve, if you want to add little more color?
Not too much more color since you’ve pretty much covered it there, but as maybe to just to reiterate the top line results only came out in November of 2012, so our - what we would call substantive business development activities really only started in January, primarily we had some - a lot of time around the JPMorgan Conference in the first week of January out in San Francisco area. We are extremely pleased with the feedback that we’ve received. We have more chatting with multiple partners, some at different stages and as Carl mentioned we would anticipate that the more substantive type of diligence and discussions will take place post the FDA meeting, once we have a bit more specificity on the path going forward if you will.
Joe Pantginis - ROTH Capital Partners
Sure, that visibility would certainly be important. And I guess the last question is I guess more maybe anecdotal is since you’ve announced the data in November and you put out your different responder analyses, what kind of sort of physician feedback have you been getting as you’ve been discussing this with sort of the doctor communities out there especially with your ability to also present the data having the placebo subtracted data as well.
I think, Joe, the key aspect of the type of data we collecting in sexual dysfunction studies is to look at (healthier) responder analysis and we’ve been very pleased to see a substantial percentage of patients responding to very well to bremelanotide very consistent across the broad range of endpoints that we used. And certainly when you subtract out the placebo I mean we’ve got a substantial number of women that are getting (inaudible) pure drug benefit from bremelanotide treatment. And a lot of this data in a number of different ways of looking at it will be the subject of one of the segments of the presentation actually at the ISSWSH meeting.
Because the general corporate presentation you have the types of things we see is, we are looking at more than a doubling over the placebo response in the number of responders from most of the endpoints. So quite robust for a PRO based study. And in addition to that we’ve also looked at return to normal function and again based on number of measurements returned to normal function is appropriate we see very robust those response for bremelanotide.
So we feel that no matter how you really look at the data whether it’s absolute numbers on the scales that we use and conjunction responder analysis, it was a very robust study, very solid data, clear dose response and we’re excited to get into Phase III and replicate this.
Joe Pantginis - ROTH Capital Partners
I don’t know, Jeff, do you want to add a little more color no, yes.
Yeah, sure. Joe, as Carl said nice dose response broad range of endpoints, the two things that are also worth mentioning maybe are the effects in various sub-populations that were available in this study in terms of diagnostic grouping of FSD. And secondly, the overall congruous of responses really impactful and the feedback we’ve had from FSD experts is really been extraordinarily positive.
It appears there are no further questions at this time. I’d like to turn the conference back over to Dr. Carl Spana.
Okay. Thank all of you for participating in the Palatin’s 2013 second quarter quarterly conference call. Have a great day and we look forward to updating you on our progress as the year continues and as Joe said this is a big year for us and we’re quite excited about the prospects of the company. Thank you.
This concludes today’s conference. We thank you for your participation.
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