Palatin Technologies, Inc. (NYSEMKT:PTN)
Q4 2010 Earnings Call
February 24, 2011 11:00 am ET
Carl Spana – President and Chief Executive Officer
Stephen T. Wills – Chief Financial Officer and Executive Vice President – Operations
Good morning, ladies and gentlemen, and welcome to the Palatin Technologies Second Quarter Fiscal Year 2011 Conference Call. All participants are in a listen-only mode.
Due to certain disclosure restrictions surrounding Palatin's announcement this morning of its pricing of a public offering of its common stock and warrants, there will not be a question-and-answer session at the end of the company's remarks. As a reminder, this conference call is being recorded.
Before we begin our remarks, I would you like to remind you 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 your host for today's call, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Go ahead, sir.
Thank you. Good morning. I'm Carl Spana, President and CEO of Palatin Technologies. With me on the phone today is Steve Wills, our Executive Vice President of Operations and Chief Financial Officer, and Dr. Jeffrey Edelson, our Chief Medical Officer.
Earlier today the company announced the pricing of a public offering of our common stock and warrants. This financing is truly transformational for Palatin, allowing us to concentrate on advancing our programs and not to be concerned with doing small capital raises several times per year.
Due to certain disclosure restrictions surrounding our financial announcement this morning, there will not be a question-and-answer session at the end of our remarks. It is our intention to have an investor and analyst conference in the near future, after this quiet period has passed, to go over our programs and plans in more detail.
Steve Wills today will provide an update on our fiscal second quarter financial results and I will then cover an update on the status of our key programs. Steve?
Stephen T. Wills
Thank you, Carl. Good morning, everyone. Regarding the financial update, Palatin's net loss for the quarter ended December 31, 2010 was $1.1 million or $0.09 per basic and diluted share, compared to net income of $4.5 million or $0.42 per basic and diluted share for the quarter ended December 31, 2009.
The net loss for the quarter ended December 31, 2010, compared to net income for the same period last fiscal year, was primarily due to a decrease in revenue recognized under Palatin's research collaboration and license and clinical trial agreements with AstraZeneca, as a result of the successful completion of the research collaboration portion of the agreement in January 2010.
Revenues for the quarter ended December 31, 2010 were $1.0 million, consisting of $847,000 in grant revenue received under the Patient Protection and Affordable Care Act of 2010 and $195,000 in contract revenue pursuant to our agreement with AstraZeneca.
Revenues for the quarter ended December 31, 2009 consisted solely of $7.3 million related to AstraZeneca. The difference was that we recognized outstanding AstraZeneca related deferred revenues in the 2009 quarter.
For the quarter ended December 31, 2010, total operating expenses were $2.9 million, compared to $3.8 million for the comparable quarter of 2009. The decrease in operating expenses for the quarter was primarily related to our previously disclosed realignment of resources and reduction in staffing levels. At December 31, 2010 Palatin's cash, cash equivalents and investments totaled $3.7 million, compared to $8.9 million at June 30, 2010.
Regarding this morning's pricing announcement, we announced today the pricing of our underwritten public offering of 23 million units consisting of 23 million shares of our common stock, Series A warrants to purchase 2 million shares of our common stock and Series B warrants to purchase 21 million shares of our common stock at a price to the public of $1 per unit. We expect that the gross proceeds will be $23 million and the net proceeds of the offering to be approximately $21.1 million, after deducting underwriting discounts and commissions and other estimated offering expenses.
The offering is expected to close on or about March 1, 2011, which I believe is next Tuesday, subject to the satisfaction of customary closing conditions. We intend to use the proceeds from this offering for general corporate purposes and working capital, including our clinical trial programs with bremelanotide for female sexual disfunction and secondarily, for our PL-3994 development programs of asthma and a development program for new peptides for sexual disfunction.
With $21.1 million from this financing and based on our current program and inside expense projections, we anticipate being able to fund our operations through December 31, 2012.
Thank you, Steve. Now, for an update on our programs. Regarding our sexual disfunction program, we are focusing our development efforts on the female disfunction indication. We believe that female disfunction represents an area of medical need and a substantial commercial opportunity.
We submitted a protocol and held a meeting with the FDA on initiation of an at-home Phase II clinical trial of subcutaneously administered bremelanotide for premenopausal women with female disfunction. At that meeting, we reached agreement with the FDA on the protocol and clinical trial design.
We will be submitting a revised protocol to the FDA reflecting that agreement and intend to start this Phase II at-home clinical trial for premenopausal women with FSD in the second quarter of 2011.
We anticipate that if the safety and efficacy results in this study are positive, they will support the transition of the subcutaneous bremelanotide program into a Phase III clinical trial for this indication.
Moving on, regarding Palatin's PL-3994, our adrenergic natriuretic peptide receptor in development as a treatment for acute exacerbation of asthma. Acute exacerbation of asthma, also called acute severe asthma, is an ongoing asthma episode in which asthma symptoms do not adequately respond to initial bronchodilator or corticosteroid therapy.
Inhaled beta-2 adrenergic receptor agonists, such as albuterol and inhaled corticosteroids, are primary treatments for asthma episodes. Some patients with acute exacerbation of asthma become unresponsive to beta-2 adrenergic natriuretic receptor agonists, significantly limiting treatment options and increasing risk.
We have submitted an INDA, or Initial New Drug Application, with a clinical trial protocol to the FDA for a proof-of-concept trial for asthma using a subcutaneously administered formulation of PL-3994. The FDA has reviewed the IND application and protocol and has informed us this trial may proceed at any time.
We have also commenced development of an inhaled formulation of PL-3994. We are now seeking a development and marketing partner for PL-3994, which would include both the proof-of-concept, human trial for asthma using the subcutaneously administered formulation, and the development of the inhaled formulation as well.
We do not intend to initiate either the proof of concept human trial or the preclinical inhaled toxicity studies unless and until we reach agreement with a developing a marketing partner or receive funding for these activities from a third-party such as a grant-funding agency such as the federal government.
Now for the melanocortin receptors obesity and diabetes program, which, as you know, is partnered with AstraZeneca. The development of lead compounds targeting the MCR-4 receptor is progressing under the direction of AstraZeneca and we anticipate that clinical trials will be initiated in the first half of calendar year 2011.
In addition to the development programs that I have outlined above, the company has a number of interesting preclinical research programs that we intend to seek development and commercialization partnerships for.
In closing, over the past two quarters there have been a number of key accomplishments. We have instituted a strategic strategy to focus on our clinical development programs, eliminating our research activities. We restructured and realigned our workforce to be in line with our strategy and reducing our operating costs. We obtained the regulatory guidance required to move our programs forward and we have conducted a public offering to obtain the funding required.
We believe that these accomplishments have put the company in a strong position to advance our programs and to generate substantial value for our shareholders.
I'd like to thank you for your time today and we look forward to keeping you informed of our progress. Have a good day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.
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