Palatin Technologies Inc 10-Q for FY2020 Q2

Palatin Technologies Inc (PTN)

10-Q 2020-02-10 For: 2019-12-31

Added on April 06, 2026

About this 10-Q

Palatin Technologies Inc filed this 10-Q on February 10, 2020, covering the quarter ended December 31, 2019 (FY2020 Q2).

Headline figures

Quarter ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $20.61K; compared with $0 a year earlier
Net loss: $5.24M; compared with a net loss of $5.04M 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)

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	PTN	NYSE American

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

	Page

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019	1

Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2019 and 2018	2

Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended December 31, 2019 and 2018	3

Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2019 and 2018	5

Notes to Consolidated Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3. Quantitative and Qualitative Disclosures About Market Risk	24

Item 4. Controls and Procedures	24

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	25

Item 1A. Risk Factors	25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3. Defaults Upon Senior Securities	27

Item 4. Mine Safety Disclosures	27

Item 5. Other Information	27

Item 6. Exhibits	28

Signatures	29

	December 31, 2019	June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$91,459,480	$43,510,422
Accounts receivable	117,989	60,265,970
Prepaid expenses and other current assets	656,599	637,289
Total current assets	92,234,068	104,413,681

Property and equipment, net	167,913	141,539
Right-of-use assets	173,666	-
Other assets	179,916	179,916
Total assets	$92,755,563	$104,735,136

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$135,171	$504,787
Accrued expenses	1,079,591	2,848,692
Notes payable, net of discount	-	332,896
Other current liabilities	160,178	499,517
Total current liabilities	1,374,940	4,185,892

Other liabilities	13,488	-
Total liabilities	1,388,428	4,185,892

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, 2019 and June 30, 2019	40	40
Common stock of $0.01 par value – authorized 300,000,000 shares:
issued and outstanding 229,174,754 shares as of December 31, 2019 and 226,815,363 shares as of June 30, 2019	2,291,748	2,268,154
Additional paid-in capital	394,592,802	394,053,929
Accumulated deficit	(305,517,455)	(295,772,879)
Total stockholders’ equity	91,367,135	100,549,244
Total liabilities and stockholders’ equity	$92,755,563	$104,735,136

	Three Months Ended December 31,		Six Months Ended December 31,
	2019	2018	2019	2018
REVENUES
License and contract	$20,610	$-	$117,989	$34,505

OPERATING EXPENSES
Research and development	3,257,624	2,961,656	6,385,113	6,584,347
General and administrative	2,404,093	2,088,565	4,236,535	4,129,147
Total operating expenses	5,661,717	5,050,221	10,621,648	10,713,494

Loss from operations	(5,641,107)	(5,050,221)	(10,503,659)	(10,678,989)

OTHER INCOME (EXPENSE)
Investment income	399,982	100,169	770,636	253,752
Interest expense	(2,502)	(92,298)	(11,553)	(299,169)
Total other income (expense), net	397,480	7,871	759,083	(45,417)

NET LOSS	$(5,243,627)	$(5,042,350)	$(9,744,576)	$(10,724,406)

Basic and diluted net loss per common share	$(0.02)	$(0.02)	$(0.04)	$(0.05)

Weighted average number of common shares outstanding used in computing basic and diluted net loss per common share	234,923,592	206,487,984	234,018,417	205,724,321

					Additional
	Preferred Stock		Common Stock		Paid-in	Accumulated
	Shares	Amount	Shares	Amount	Capital	Deficit	Total
Balance, September 30, 2019	4,030	$40	227,697,257	$2,276,973	$394,119,078	$(300,273,828)	$96,122,263
Stock-based compensation	-	-	299,775	2,998	801,938	-	804,936
Withholding taxes related to restricted stock units	-	-	(87,179)	(872)	(103,364)	-	(104,236)
Sale of common stock, net of costs	-	-	1,238,040	12,380	989,388	-	1,001,768
Warrant repurchases	-	-	-	-	(1,213,969)	-	(1,213,969)
Warrant exercises	-	-	26,861	269	(269)	-	-
Net loss	-	-	-	-	-	(5,243,627)	(5,243,627)
Balance, December 31, 2019	4,030	$40	229,174,754	$2,291,748	$394,592,802	$(305,517,455)	$91,367,135

	December 31,	June 30,
	2019	2019
Clinical / Regulatory costs	$88,985	$61,798
Insurance premiums	65,892	87,937
Other	501,722	487,554
	$656,599	$637,289

	Carrying Value	Quoted prices in active markets (Level 1)	Other quoted/observable inputs (Level 2)	Significant unobservable inputs (Level 3)
December 31, 2019:
Money Market Account	$91,257,600	$91,257,600	$-	$-
June 30, 2019:
Money Market Account	$43,381,556	$43,831,556	$-	$-

Lease cost	Three months ended December 31, 2019	Six months ended December 31, 2019
Operating lease cost	$50,394	$99,258
Variable lease cost	17,824	35,649
Short-term lease cost	3,600	12,120
Total lease cost	$71,818	$147,027

	December 31, 2019
Operating lease ROU asset and liability	$173,666

Weighted-average remaining lease term (years)	0.7
Weighted-average discount rate	6.25%

	Three months ended December 31, 2019	Six months ended December 31, 2019
Cash paid for the amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$77,096	$148,935
Supplemental non-cash information on lease liabilities arisng from obtaining right-of-use assets:
Right-of-use assets obtained in exchange for new lease obligation	$36,720	$93,435

	December 31, 2019
Year Ending June 30
2020	$154,194
2021	18,360
2022	4,590
Less imputed interest	(3,478)
Total	$173,666

	June 30,
	2019
Notes payable under venture loan	$333,333
Unamortized related debt discount	(295)
Unamortized debt issuance costs	(142)
Notes payable	332,896

Less: current portion	332,896

Long-term portion	$-

	Six Months Ended December 31,
	2019	2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(9,744,576)	$(10,724,406)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization	36,506	27,882
Non-cash interest expense	438	39,462
Decrease in right-of-use asset	144,903	-
Stock-based compensation	1,632,671	2,212,379
Changes in operating assets and liabilities:
Accounts receivable	60,147,981	-
Prepaid expenses and other assets	(19,310)	(21,459)
Accounts payable	(369,616)	(1,603,793)
Accrued expenses	(1,769,101)	(1,001,976)
Operating lease liability	(144,903)	-
Other liabilities	-	42,948
Net cash provided by (used in) operating activities	49,914,993	(11,028,963)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(62,880)	-
Net cash used in investing activities	(62,880)	-

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of withholding taxes related to restricted
stock units	(104,236)	(65,992)
Payment on notes payable obligations	(832,851)	(4,500,000)
Warrant repurchases	(2,547,466)	-
Proceeds from the sale of common stock,
net of costs	1,581,498	2,252,808
Net cash used in financing activities	(1,903,055)	(2,313,184)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	47,949,058	(13,342,147)

CASH AND CASH EQUIVALENTS, beginning of period	43,510,422	38,000,171

CASH AND CASH EQUIVALENTS, end of period	$91,459,480	$24,658,024

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$8,132	$260,890

	December 31,	June 30,
	2019	2019
Clinical / Regulatory costs	$520,470	$943,721
Other research related expenses	504,337	1,361,414
Professional services	32,000	317,500
Other	22,784	226,057
	$1,079,591	$2,848,692

	Three months ended December 31, 2019		Six months ended December 31, 2019
	Warrants	Buyback price	Warrants	Buyback price
Series F Warrants	297,352	$62,712	297,352	$62,712
Series H Warrants	992,387	390,600	1,466,432	577,373
Series J Warrants	1,908,080	760,657	4,774,889	1,907,381
	3,197,819	$1,213,969	6,538,673	$2,547,466

	Number of Shares	Weighted Average Exercise Price	Weighted Average Remaining Term in Years	Aggregate Intrinsic Value
Outstanding - June 30, 2019	14,435,650	0.85	7.3

Granted	-	-
Forfeited	-	-
Exercised	-	-
Expired	(77,100)	2.72
Outstanding - December 31, 2019	14,358,550	$0.84	6.8	$1,503,989

Exercisable at December 31, 2019	8,934,000	$0.77	5.8	$990,474

Expected to vest at December 31, 2019	5,424,550	$0.96	8.5	$513,515

	RSUs
Outstanding at July 1, 2019	10,327,833
Granted	-
Forfeited	-
Vested	(523,775)
Outstanding at December 31, 2019	9,804,058

Fiscal Month Period	Total Number of Warrant Shares Purchased (1)	Average Price per Warrant Share	Total Number of Warrant Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Warrant Shares that May Yet be Purchased Under Announced Plans or Programs (3)
October 1, 2019 through October 31, 2019	3,197,819	$0.38	-	14,508,924
November 1, 2019 through November 30, 2019	-	-	-	-
December 1, 2019 through December 31, 2019	-	-	-	-
Total	3,197,819	$0.38	-	14,508,924

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, 2019 through October 31, 2019	87,179	$1.15	-	-
November 1, 2019 through November 30, 2019	-	-	-	-
December 1, 2019 through December 31, 2019	-	-	-	-
Total	87,179	$1.15	-	-

Exhibit Number	Description	Filed Herewith	Form	Filing Date	SEC File No.
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.	X
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.	X
101.INS	XBRL Instance Document.	X
101.SCH	XBRL Taxonomy Extension Schema Document.	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	X

		Palatin Technologies, Inc.
		(Registrant)



		/s/ Carl Spana
Date: February 10, 2020		Carl Spana, Ph.D. President and Chief Executive Officer (Principal Executive Officer)



		/s/ Stephen T. Wills
Date: February 10, 2020		Stephen T. Wills, CPA, MST Executive Vice President, Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer)