Palatin Technologies Inc 10-Q for FY2023 Q3

Palatin Technologies Inc (PTN)

10-Q 2023-05-15 For: 2023-03-31

Added on April 06, 2026

About this 10-Q

Palatin Technologies Inc filed this 10-Q on May 15, 2023, covering the quarter ended March 31, 2023 (FY2023 Q3).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.2M; up 453.3% from $216.1K a year earlier
Net loss: $7.15M; compared with a net loss of $7.63M 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 March 31, 2023 and June 30, 2022		1
Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2023 and 2022		2
Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity for the Three and Nine Months Ended March 31, 2023 and 2022		3
Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2023 and 2022		5
Notes to Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		23
Item 4. Controls and Procedures		23

PART II – OTHER INFORMATION
Item 1. Legal Proceedings		24
Item 1A. Risk Factors		24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		24
Item 3. Defaults Upon Senior Securities		24
Item 4. Mine Safety Disclosures		24
Item 5. Other Information		24
Item 6. Exhibits		25

Signatures		26

	·	our significant operating losses since our inception and our need to obtain additional financing has caused management to determine there is substantial doubt regarding our ability to continue as a going concern;

	·	our expectation that we will incur losses for the foreseeable future and may never achieve or maintain profitability;

	·	our business, financial condition, and results of operations may be adversely affected by global health epidemics, including the COVID-19 pandemic, such as, for example, 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 and geopolitical conflicts, and other economic and market conditions, including a decrease in discretionary spending;

	·	our ability to manage the infrastructure to successfully manufacture, through contract manufacturers, Vyleesi, and to successfully market and distribute Vyleesi in the United States, including successfully managing potential delays or impediments in the contract manufacturer chain;

	·	our ability to meet postmarketing commitments of the U.S. Food and Drug Administration;

	·	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, 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 entered Phase 2 clinical trials in the third quarter of 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, geopolitical conflicts and other economic conditions such as inflation and changes in the interest rate environment;

	·	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;

	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 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;

	·	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 and retention of our management team, senior staff professionals, other employees, and third-party contractors and consultants;

	·	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 any geopolitical instability, economic uncertainty, financial markets volatility, or capital markets disruption resulting from the ongoing military conflict between Russia and Ukraine, and any resulting effects on our revenue, financial condition, or results of operations;

	·	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.

	March 31, 2023			June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	19,632,330		$	29,939,154
Accounts receivable		1,699,110			1,780,020
Inventories		630,033			944,471
Prepaid expenses and other current assets		2,277,498			1,932,454
Total current assets		24,238,971			34,596,099

Property and equipment, net		713,567			539,314
Right-of-use assets - operating leases		599,442			878,465
Other assets		56,916			56,916
Total assets	$	25,608,896		$	36,070,794

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,786,313		$	3,157,617
Accrued expenses		5,536,033			6,875,216
Short-term operating lease liabilities		301,169			371,124
Short-term finance lease liabilities		104,998			100,921
Other current liabilities		3,122,850			5,754,986
Total current liabilities		11,851,363			16,259,864

Long-term operating lease liabilities		320,490			529,398
Long-term finance lease liabilities		73,141			152,407
Other long-term liabilities		3,771,400			2,861,250
Total liabilities		16,016,394			19,802,919

Commitments and contingencies (Note 12)

Series B and Series C Redeemable Convertible Preferred Stock of $0.01 par value: authorized 9,000,000 shares, 9,000,000 shares issued and outstanding as of June 30, 2022, with a liquidation preference of $15,000,000		-			15,000,000
Escrowed proceeds		-			(15,000,000	)

Stockholders’ equity:
Preferred stock of $0.01 par value – authorized 10,000,000 shares (including amounts authorized for Series B and Series C Redeemable Convertible Preferred Stock) : shares issued and outstanding designated as follows:
Series A Convertible: authorized 4,030 as of March 31, 2023: issued and outstanding 4,030 shares as of March 31, 2023 and June 30, 2022		40			40
Common stock of $0.01 par value – authorized 300,000,000 shares:
issued and outstanding 11,152,680 shares as of March 31, 2023 and 9,270,947 shares as of June 30, 2022 (Note 1)		111,527			92,709
Additional paid-in capital		414,302,055			404,168,822
Accumulated deficit		(404,821,120	)		(387,993,696	)
Total stockholders’ equity		9,592,502			16,267,875
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity	$	25,608,896		$	36,070,794

	Three Months Ended March 31,						Nine Months Ended March 31,
	2023			2022			2023			2022

REVENUES
Product revenue, net	$	1,195,675		$	216,097		$	3,091,745		$	447,719
License and contract		-			-			-			250,000
Total revenues		1,195,675			216,097			3,091,745			697,719

OPERATING EXPENSES
Cost of products sold		129,235			46,908			314,438			130,012
Research and development		4,830,327			4,980,074			15,224,896			13,891,235
Selling, general and administrative		3,537,376			3,009,528			10,220,518			10,163,830
Gain on purchase commitment		-			-			(1,027,322	)		-
Total operating expenses		8,496,938			8,036,510			24,732,530			24,185,077

Loss from operations		(7,301,263	)		(7,820,413	)		(21,640,785	)		(23,487,358	)

OTHER INCOME (EXPENSE)
Investment income		234,044			1,127			509,006			4,100
Foreign currency (loss) gain		(77,266	)		190,719			(352,121	)		64,000
Interest expense		(3,434	)		(3,019	)		(18,523	)		(11,423	)
Total other income (expense), net		153,344			188,827			138,362			56,677

Loss before income taxes		(7,147,919	)		(7,631,586	)		(21,502,423	)		(23,430,681	)
Income tax benefit		-			-			4,674,999			-
NET LOSS	$	(7,147,919	)	$	(7,631,586	)	$	(16,827,424	)	$	(23,430,681	)

Basic and diluted net loss per common share	$	(0.63	)	$	(0.80	)	$	(1.59	)	$	(2.46	)

Weighted average number of common shares outstanding used in computing basic and diluted net loss per common share (Note 1)		11,432,380			9,552,214			10,613,830			9,537,768

Three Months Ended March 31, 2023

	Redeemable Convertible Preferred Stock										Stockholders' Equity
	Series B				Series C				Escrowed		Series A Convertible Preferred Stock				Common Stock				Additional Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Proceeds		Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance December 31, 2022		-	$	-		-	$	-	$	-		4,030	$	40		10,354,498	$	103,545	$	413,913,202		$	(397,673,201	)	$	16,343,586
Stock-based compensation		-		-		-		-		-		-		-		-		-		396,757			-			396,757
Redemption of convertible series B & series C preferred stock		-		-		-		-		-		-		-		-		-		-			-			-
Warrant exercises		-		-		-		-		-		-		-		798,182		7,982		(7,904	)		-			78
Net loss		-		-		-		-		-		-		-		-		-		-			(7,147,919	)		(7,147,919	)
Balance March 31, 2023		-	$	-	$	-	$	-	$	-		4,030	$	40		11,152,680	$	111,527	$	414,302,055		$	(404,821,120	)	$	9,592,502

Nine Months Ended March 31, 2023

	Redeemable Convertible Preferred Stock															Stockholders' Equity
	Series B						Series C						Escrowed			Series A Convertible Preferred Stock				Common Stock						Additional Paid-in			Accumulated
	Shares			Amount			Shares			Amount			Proceeds			Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, June 30, 2022		8,100,000		$	13,500,000			900,000		$	1,500,000		$	(15,000,000	)		4,030	$	40		9,270,947		$	92,709		$	404,168,822		$	(387,993,696	)	$	16,267,875
Stock-based compensation		-			-			-			-			-			-		-		84,062			841			1,188,077			-			1,188,918
Withholding taxes related to restricted stock units		-			-			-			-			-			-		-		(20,468	)		(205	)		(145,857	)		-			(146,062	)
Redemption of convertible series B & series C preferred stock		(8,100,000	)		(13,500,000	)		(900,000	)		(1,500,000	)		15,000,000			-		-		-			-			-			-			-
Sale of common stock and warrants, net of costs		-			-			-			-			-			-		-		1,020,000			10,200			9,098,917			-			9,109,117
Warrant exercises		-			-			-			-			-			-		-		798,182			7,982			(7,904	)		-			78
Reverse stock split fractional shares		-			-			-			-			-			-		-		(43	)		-			-			-			-
Net loss		-			-			-			-			-			-		-		-			-			-			(16,827,424	)		(16,827,424	)
Balance, March 31, 2023		-		$	-			-		$	-		$	-			4,030	$	40		11,152,680		$	111,527		$	414,302,055		$	(404,821,120	)	$	9,592,502

Three Months Ended March 31, 2022											Additional
	Preferred Stock				Common Stock						Paid-in			Accumulated
	Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, December 31, 2021		4,030	$	40		9,267,811		$	2,316,953		$	400,473,806		$	(367,594,492	)	$	35,196,307
Stock-based compensation		-		-		4,440			1,110			532,669			-			533,779
Withholding taxes related to restricted stock units		-		-		(1,304	)		(326	)		(12,715	)		-			(13,041	)
Net loss		-		-		-			-			-			(7,631,586	)		(7,631,586	)
Balance, March 31, 2022		4,030	$	40		9,270,947		$	2,317,737		$	400,993,760		$	(375,226,078	)	$	28,085,459

Nine Months Ended March 31, 2022											Additional
	Preferred Stock				Common Stock						Paid-in			Accumulated
	Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, June 30, 2021		4,030	$	40		9,201,988		$	2,300,497		$	399,146,232		$	(351,795,397	)	$	49,651,372
Stock-based compensation		-		-		69,406			17,352			1,772,595			-			1,789,947
Withholding taxes related to restricted stock units		-		-		(16,191	)		(4,048	)		(217,263	)		-			(221,311	)
Warrant exercises		-		-		14,000			3,500			276,500			-			280,000
Option exercises		-		-		1,744			436			15,696			-			16,132
Net loss		-		-		-			-			-			(23,430,681	)		(23,430,681	)
Balance, March 31, 2022		4,030	$	40		9,270,947		$	2,317,737		$	400,993,760		$	(375,226,078	)	$	28,085,459

	March 31,		June 30,
	2023		2022
Clinical / regulatory costs	$	118,418	$	310,573
Insurance premiums		483,661		132,413
Vyleesi contractual advances		815,750		815,750
Other		859,669		673,718
	$	2,277,498	$	1,932,454

	Carrying Value		Quoted prices in active markets (Level 1)		Other quoted/observable inputs (Level 2)		Significant unobservable inputs (Level 3)
March 31, 2023:
Money market account	$	18,930,140	$	18,930,140	$	-	$	-
June 30, 2022:
Money market account	$	29,740,565	$	29,740,565	$	-	$	-

		Total				Current				1 - 3 Years
Inventory purchase commitments		$	7,837,100			$	4,065,700			$	3,771,400

	Shares of Common		Exercise Price per		Latest Expiration
Description	Stock		Share		Date
May 2022 Warrants		66,666	$	12.50	May 11, 2026
November 2022 Common Warrants		1,818,182	$	5.83	May 2, 2028
November 2022 Placement Agent Warrants		90,909	$	6.88	October 31, 2027

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

Outstanding - June 30, 2022		1,163,962		$	15.98		7.1	$	-

Granted		33,160			4.58
Forfeited		(274,440	)		12.00
Exercised		-			-
Expired		(38,274	)		18.21
Outstanding - March 31, 2023		884,408			13.05		7.3	$	-

Exercisable at March 31, 2023		430,873		$	14.85		6.1	$	-

Expected to vest at March 31, 2023		453,535		$	11.34		8.4	$	-

Outstanding at June 30, 2022	649,149
Granted	-
Forfeited	(3,312	)
Vested	(84,062	)
Fractional shares	(6	)
Outstanding at March 31, 2023	561,769

	·	Maximizing revenue from Vyleesi by marketing Vyleesi in the United States, supporting our existing licensees for China and Korea, and licensing Vyleesi for the United States and additional regions;

	·	Maintaining a team to create, develop and commercialize MCr products addressing unmet medical needs;

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

	·	Partially funding our 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 other 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.

	·	the market price per share of our common stock after the Reverse Stock Split will rise in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Stock Split or if it does rise that it will sustain the increase in the share price;

	·	the Reverse Stock Split will result in a per share price that will attract brokers and investors who do not trade in lower priced stocks;

	·	the Reverse Stock Split will result in a per share price that will increase our ability to attract and retain employees and other service providers and maintain the minimum stock price required for continued listing on the NYSE American; or

	·	the liquidity of our common stock will increase.

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

3.3	Certificate of Amendment to the Restated Certificate of Incorporation of Palatin Technologies, Inc., as amended.		8-K	August 31, 2022	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: May 15, 2023		Carl Spana, Ph.D. President and Chief Executive Officer (Principal Executive Officer)

		/s/ Stephen T. Wills
Date: May 15, 2023		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

/s/ Stephen T. Wills
Stephen T. Wills, Executive Vice President, Chief Financial Officer and Chief Operating Officer