Palatin Technologies Inc 10-Q for FY2022 Q2

Palatin Technologies Inc (PTN)

10-Q 2022-02-14 For: 2021-12-31

Added on April 06, 2026

About this 10-Q

Palatin Technologies Inc filed this 10-Q on February 14, 2022, covering the quarter ended December 31, 2021 (FY2022 Q2).

Headline figures

Quarter ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $250K; compared with -$163.97K a year earlier
Net loss: $8.69M; compared with a net loss of $9.99M a year earlier

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Delaware		95-4078884
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4B Cedar Brook Drive Cranbury, New Jersey		08512
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

		Page

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets as of December 31, 2021 and June 30, 2021	1
	Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2021 and 2020	2
	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended December 31, 2021 and 2020	3
	Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2021 and 2020	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	23

Signatures		24

	·	our business, financial condition, and results of operations may be adversely affected by conditions related to global health epidemics, including the novel strain of coronavirus (“COVID-19”) pandemic, such as, for example, the increase in costs of and delays in conducting human clinical trials and the performance of our contractors and suppliers, reduction in our productivity or the productivity of our contractors and suppliers, supply chain constraints, and labor shortages;

	·	our ability to successfully commercialize Vyleesi® (the trade name for bremelanotide) for the treatment of premenopausal women with hypoactive sexual desire disorder (“HSDD”) in the United States, which may be adversely affected by delays or disruptions related to the ongoing COVID-19 pandemic;

	·	our ability to manage the infrastructure to successfully manufacture, through contract manufacturers, Vyleesi, and to develop the infrastructure to successfully market and distribute Vyleesi in the United States;

	·	our ability to meet post marketing commitments of the U.S. Food and Drug Administration (“FDA”);

	·	our expectations regarding the potential market size and market acceptance for Vyleesi for HSDD in the United States and elsewhere in the world;

	·	our expectations regarding performance of our exclusive licensees of Vyleesifor the treatment of premenopausal women with HSDD, which is a type of female sexual dysfunction (“FSD”), including:

	·	our expectations and the ability of our licensees to timely obtain approvals and successfully commercialize Vyleesi in countries other than the United States;

	·	the results of clinical trials with our late stage products, including PL9643, an ophthalmic peptide solution for dry eye disease (“DED”), which entered Phase 3 clinical trials in the fourth quarter of calendar year 2021, and PL8177, an oral peptide formulation for treatment of ulcerative colitis, which is scheduled to enter Phase 2 clinical trials in calendar year 2022;

	·	estimates of our expenses, future revenue, and capital requirements;

	·	our ability to achieve profitability;

	·	our ability to obtain additional financing on terms acceptable to us, or at all, including unavailability of funds or delays in receiving funds as a result of the ongoing COVID-19 pandemic;

	·	our ability to advance product candidates into, and successfully complete, clinical trials;

	·	the initiation, timing, progress and results of future preclinical studies and clinical trials, and our research and development programs;

	·	the timing or likelihood of regulatory filings and approvals;

	·	our expectations regarding the clinical efficacy and utility of our melanocortin agonist product candidates for treatment of inflammatory and autoimmune related diseases and disorders, including ocular indications;

	·	our ability to compete with other products and technologies treating the same or similar indications as our product candidates;

	·	the ability of our third-party collaborators to timely carry out their duties under their agreements with us;

	·	the ability of our contract manufacturers to perform their manufacturing activities for us in compliance with applicable regulations;

	·	our ability to recognize the potential value of our licensing arrangements with third parties;

	o	Shanghai Fosun Pharmaceutical Industrial Development Co. Ltd. (“Fosun”), a subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd., for the territories of the People’s Republic of China, Taiwan, Hong Kong S.A.R. and Macau S.A.R. (collectively, “China”), and

	o	Kwangdong Pharmaceutical Co., Ltd. (“Kwangdong”) for the Republic of Korea (“Korea”);

	·	the potential to achieve revenues from the sale of our product candidates;

	·	our ability to obtain adequate reimbursement from private insurers and other healthcare payers;

	·	our ability to maintain product liability insurance at a reasonable cost or in sufficient amounts, if at all;

	·	the performance of our management team, senior staff professionals, and third-party contractors and consultants;

	·	the retention of key management, employees, and third-party contractors;

	·	the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology in the United States and throughout the world;

	·	our compliance with federal and state laws and regulations;

	·	the timing and costs associated with obtaining regulatory approval for our product candidates, including delays and additional costs related to the ongoing COVID-19 pandemic;

	·	the impact of fluctuations in foreign exchange rates;

	·	the impact of legislative or regulatory healthcare reforms in the United States;

	·	our ability to adapt to changes in global economic conditions as well as competing products and technologies; and

	·	our ability to remain listed on the NYSE American stock exchange.

PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Balance Sheets
(unaudited)

	December 31, 2021			June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	47,325,547		$	60,104,919
Accounts receivable		583,991			1,580,443
Inventories		1,078,896			1,162,000
Prepaid expenses and other current assets		2,379,693			3,059,679
Total current assets		51,368,127			65,907,041

Property and equipment, net		511,316			94,817
Right-of-use assets - operating leases		1,058,241			1,237,813
Other assets		56,916			56,916
Total assets	$	52,994,600		$	67,296,587

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	160,180		$	640,650
Accrued expenses		6,178,200			5,797,378
Short-term operating lease liabilities		360,655			351,853
Short-term finance lease liabilities		96,924			-
Other current liabilities		7,068,033			3,721,907
Total current liabilities		13,863,992			10,511,788

Long-term operating lease liabilities		715,893			900,520
Long-term finance lease liabilities		204,908			-
Other long-term liabilities		3,013,500			6,232,907
Total liabilities		17,798,293			17,645,215

Commitments and contingencies (Note 12)

Stockholders’ equity:
Preferred stock of $0.01 par value – authorized 10,000,000 shares; shares issued and outstanding designated as follows:
Series A Convertible: authorized 264,000 shares: issued and outstanding 4,030 shares as of December 31, 2021 and June 30, 2021		40			40
Common stock of $0.01 par value – authorized 300,000,000 shares:
issued and outstanding 231,695,273 shares as of December 31, 2021 and 230,049,691 shares as of June 30, 2021		2,316,953			2,300,497
Additional paid-in capital		400,473,806			399,146,232
Accumulated deficit		(367,594,492	)		(351,795,397	)
Total stockholders’ equity		35,196,307			49,651,372
Total liabilities and stockholders’ equity	$	52,994,600		$	67,296,587

PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Statements of Operations
(unaudited)

	Three Months Ended December 31,						Six Months Ended December 31,
	2021			2020			2021			2020

REVENUES
Product revenue, net	$	72,140		$	(163,971	)	$	231,622		$	(452,531	)
License and contract		250,000			-			250,000			-
		322,140			(163,971	)		481,622			(452,531	)
OPERATING EXPENSES
Cost of products sold		29,171			29,400			83,104			54,600
Research and development		5,426,397			4,011,418			8,911,161			6,935,269
Selling, general and administrative		3,317,760			5,044,913			7,154,302			7,376,519
Gain on license termination agreement		-			-			-			(1,623,795	)
Total operating expenses		8,773,328			9,085,731			16,148,567			12,742,593

Loss from operations		(8,451,188	)		(9,249,702	)		(15,666,945	)		(13,195,124	)

OTHER INCOME (EXPENSE)
Investment income		1,563			4,800			2,973			16,935
Foreign currency loss		(234,078	)		(745,002	)		(126,719	)		(745,002	)
Interest expense		(2,773	)		(1,871	)		(8,404	)		(9,360	)
Total other expense, net		(235,288	)		(742,073	)		(132,150	)		(737,427	)
NET LOSS	$	(8,686,476	)	$	(9,991,775	)	$	(15,799,095	)	$	(13,932,551	)

Basic and diluted net loss per common share	$	(0.04	)	$	(0.04	)	$	(0.07	)	$	(0.06	)

Weighted average number of common shares outstanding used in computing basic and diluted net loss per common share		238,276,793			236,405,065			238,256,318			236,375,463

PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Statements of Stockholders’ Equity
(unaudited)

Three Months Ended December 31, 2021									Additional
	Preferred Stock				Common Stock				Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance, September 30, 2021		4,030	$	40		231,301,673	$	2,313,017	$	399,564,086		$	(358,908,016	)	$	42,969,127
Stock-based compensation		-		-		-		-		623,441			-			623,441
Withholding taxes related to restricted stock units		-		-		-		-		(5,917	)		-			(5,917	)
Warrant exercises		-		-		350,000		3,500		276,500			-			280,000
Option exercises		-		-		43,600		436		15,696			-			16,132
Net loss		-		-		-		-		-			(8,686,476	)		(8,686,476	)
Balance, December 31, 2021		4,030	$	40		231,695,273	$	2,316,953	$	400,473,806		$	(367,594,492	)	$	35,196,307

Six Months Ended December 31, 2021											Additional
	Preferred Stock				Common Stock						Paid-in			Accumulated
	Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, June 30, 2021		4,030	$	40		230,049,691		$	2,300,497		$	399,146,232		$	(351,795,397	)	$	49,651,372
Stock-based compensation		-		-		1,624,158			16,242			1,239,926			-			1,256,168
Withholding taxes related to restricted stock units		-		-		(372,176	)		(3,722	)		(204,548	)		-			(208,270	)
Warrant exercises		-		-		350,000			3,500			276,500			-			280,000
Option exercises		-		-		43,600			436			15,696			-			16,132
Net loss		-		-		-			-			-			(15,799,095	)		(15,799,095	)
Balance, December 31, 2021		4,030	$	40		231,695,273		$	2,316,953		$	400,473,806		$	(367,594,492	)	$	35,196,307

Six Months Ended December 31, 2020
											Additional
	Preferred Stock				Common Stock						Paid-in			Accumulated
	Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, June 30, 2020		4,030	$	40		229,258,400		$	2,292,584		$	396,079,127		$	(318,198,902	)	$	80,172,849
Stock-based compensation		-		-		936,215			9,362			1,674,495			-			1,683,857
Withholding taxes related to restricted stock units		-		-		(160,308	)		(1,603	)		(87,426	)		-			(89,029	)
Net loss		-		-		-			-			-			(13,932,551	)		(13,932,551	)
Balance, December 31, 2020		4,030	$	40		230,034,307		$	2,300,343		$	397,666,196		$	(332,131,453	)	$	67,835,126

PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)

	Six Months Ended December 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(15,799,095	)	$	(13,932,551	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		40,154			23,854
Cash received in excess of gain on termination agreement		-			10,376,205
Decrease in right-of-use asset		179,572			152,447
Unrealized foreign currency transaction loss		126,719			745,002
Stock-based compensation		1,256,168			1,683,857
Changes in operating assets and liabilities:
Accounts receivable		996,452			(446,623	)
Prepaid expenses and other assets		679,986			(1,818,695	)
Inventories		83,104			(213,293	)
Accounts payable		(480,470	)		458,821
Accrued expenses		380,822			(399,536	)
Operating lease liabilities		(175,825	)		(145,167	)
Other liabilities		-			(7,091,452	)
Net cash used in operating activities		(12,712,413	)		(10,607,131	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(146,862	)		-
Net cash used in investing activities		(146,862	)		-

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of withholding taxes related to restricted
stock units		(208,270	)		(89,029	)
Payment of finance lease obligations		(7,959	)		-
Proceeds from exercise of warrants		280,000			-
Proceeds from exercise of stock options		16,132			-
Net cash provided by (used in) financing activities		79,903			(89,029	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(12,779,372	)		(10,696,160	)

CASH AND CASH EQUIVALENTS, beginning of period		60,104,919			82,852,270

CASH AND CASH EQUIVALENTS, end of period	$	47,325,547		$	72,156,110

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	8,404		$	9,360

	December 31,		June 30,
	2021		2021
Clinical / regulatory costs	$	36,352	$	454,750
Insurance premiums		229,365		259,468
Vyleesi contractual advances		1,200,000		1,200,000
Other		913,976		1,145,461
	$	2,379,693	$	3,059,679

	Carrying Value		Quoted prices in active markets (Level 1)		Other quoted/observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2021:
Money Market Account	$	47,053,506	$	47,053,506	$	-	$	-
June 30, 2021:
Money Market Account	$	59,730,428	$	59,730,428	$	-	$	-

	December 31,		June 30,
	2021		2021
Clinical / regulatory costs	$	1,898,088	$	778,705
Other research related expenses		1,163,489		569,370
Professional services		54,854		84,094
Inventory purchases		1,917,633		2,340,000
Selling expenses		1,027,073		1,839,724
Other		117,063		185,485
	$	6,178,200	$	5,797,378

		Total				Current				1 - 3 Years				4 - 5 Years
Inventory purchase commitments		$	11,049,033			$	7,068,033			$	2,958,000			$	1,023,000

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Term in Years		Aggregate Intrinsic Value


Outstanding - June 30, 2021		21,882,500		$	0.72		7.2	$	1,034,273

Granted		103,150			0.49
Forfeited		(118,152	)		0.70
Exercised		(43,600	)		0.37
Expired		(73,349	)		0.70
Outstanding - December 31, 2021		21,750,549		$	0.72		6.7	$	373,722

Exercisable at December 31, 2021		13,571,910		$	0.75		5.6	$	370,833

Expected to vest at December 31, 2021		8,178,639		$	0.68		8.6	$	2,889

Outstanding at June 30, 2021	14,840,762
Granted	-
Forfeited	(81,117	)
Vested	(1,624,158	)
Outstanding at December 31, 2021	13,135,487

	·	Discovering and developing melanocortin-based therapeutics for treating inflammatory and autoimmune diseases, with a focus on ocular diseases;

	·	Growing our Vyleesi net revenue by marketing Vyleesi in the United States and supporting the development activities of our existing licensees for China and South Korea;

	·	Entering into licenses for the sale, distribution and marketing of Vyleesi in the United States and additional regions;

	·	Recruiting and maintaining employees to discover, develop and commercialize our MCr and NPR therapeutic products;

	·	Entering into strategic alliances and partnerships with pharmaceutical companies to facilitate the development, manufacture, marketing, sale, and distribution of therapeutic products we are developing;

	·	Partially funding our therapeutic product development programs with the cash flow generated from Vyleesi and existing license agreements, as well as any future research, collaboration, or license agreements; and

	·	Completing development and seeking regulatory approval of certain of our therapeutic product candidates.

	·	the development and testing of products in animals and humans;

	·	product approval or clearance;

	·	regulatory compliance;

	·	good manufacturing practices (“GMP”) compliance;

	·	intellectual property rights;

	·	product introduction;

	·	marketing, sales, and competition; and

	·	obtaining sufficient capital.

Fiscal Month Period	Total Number of Shares Purchased ⁽¹⁾		Weighted Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under Announced Plans or Programs
October 1, 2021 through October 31, 2021		12,589	$	0.47		-		-
November 1, 2021 through November 30, 2021		-		-		-		-
December 1, 2021 through December 31, 2021		-		-		-		-
Total		12,589	$	0.47		-		-

Exhibit Number	Description	Filed Herewith	Form	Filing Date	SEC File No.

3.1	Amended and Restated Bylaws of Palatin Technologies, Inc.		8-K	September 17, 2021	001-15543

3.2	Restated Certificate of Incorporation of Palatin Technologies, Inc., as amended.		10-K	September 27, 2013	001-15543

31.1	Certification of Chief Executive Officer.	X

31.2	Certification of Chief Financial Officer.	X

32.1	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	*

32.2	Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	*

101.INS	Inline XBRL Taxonomy Extension Instance Document (the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).	X

101.SCH	Inline XBRL Taxonomy Extension Schema Document.	X

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	X

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	X

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	X

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	X

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		Palatin Technologies, Inc.
		(Registrant)

		/s/ Carl Spana
Date: February 14, 2022		Carl Spana, Ph.D. President and Chief Executive Officer (Principal Executive Officer)

		/s/ Stephen T. Wills
Date: February 14, 2022		Stephen T. Wills, CPA, MST Executive Vice President, Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer)

	1.	I have reviewed this Quarterly Report on Form 10-Q of Palatin Technologies, Inc.;

	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

		(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

		(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Carl Spana
Carl Spana, President and Chief Executive Officer