Palatin Applied sciences, Inc. (NYSE:PTN) Q3 2023 Earnings Convention Name Might 16, 2023 11:00 AM ET
Carl Spana – President and Chief Govt Officer
Steve Wills – Govt Vice President, Chief Monetary Officer and Chief Working Officer
Convention Name Contributors
Joe Pantginis – H.C. Wainwright
Michael Higgins – Ladenburg Thalmann
Greetings. Welcome to Palatin’s Third Quarter Fiscal 12 months 2023 Working Outcomes Convention Name. [Operator Instructions] As a reminder, this convention is being recorded. Earlier than we start our remarks, I wish to remind you that statements made by Palatin are usually not historic info and could also be forward-looking statements. These statements are based mostly on assumptions which will or could not show to be correct and that the precise outcomes could differ materially from these anticipated as a result of number of dangers and uncertainties mentioned within the firm’s most up-to-date filings with the Securities and Change Fee. Please take into account such dangers and uncertainties rigorously in evaluating these forward-looking statements by Palatin’s prospects.
Now I wish to flip the decision over to Dr. Carl Spana, President and Chief Govt Officer of Palatin. Please go forward.
Thanks. Good morning and welcome to the Palatin third quarter fiscal 2023 name. I’m Dr. Carl Spana, CEO and President of Palatin. With me on the decision in the present day is Steve Wills, Palatin’s Govt Vice President, Chief Monetary Officer and Chief Working Officer. I’ll now flip the decision over to Steve, and he’ll give the monetary and working replace. Steve?
Thanks, Carl. Good day, everybody. Concerning monetary highlights, I’ll begin with Vyleesi. Vyleesi is our FDA-approved business product for pre-menopausal ladies with hypoactive sexual want dysfunction, or HSDD. The objective of the Vyleesi program is to reveal business product worth within the market with an goal of licensing the U.S. rights to a dedicated ladies’s well being care firm.
For the third quarter ended March 31, 2023, gross product gross sales have been $3.4 million, a rise of 31% over the prior quarter and a rise of 165% over the comparable quarter final 12 months. Web product income of $1.2 million elevated 16% over the prior quarter and elevated 453% over the comparable quarter final 12 months.
Whole prescriptions distributed elevated 27% over the prior quarter and elevated 147% over the comparable quarter final 12 months. We’ve got achieved 5 consecutive quarters of double-digit development. Refill charges, business insurance coverage reimbursement and internet income per prescription distributed continued with constructive and impactful outcomes and tendencies versus the prior quarter and comparable quarter final 12 months. We’re notably happy that Vyleesi’s quarterly internet product income exceeds Vyleesi’s quarterly working bills. Sure, meaning we aren’t shedding any cash on Vyleesi. Additionally, we have been issued a patent titled Use of Bremelanotide in Sufferers with Managed Hypertension with a time period by April 29, 2041. Concerning different, Palatin did obtain $4.7 million in January 2023 from the State of New Jersey’s Expertise Enterprise Tax Certificates Switch program sponsored by the New Jersey Financial Improvement Authority.
Shifting over to the precise monetary working outcomes for the third quarter ended March 31, 2023. Concerning income, whole income consists of gross product gross sales of Vyleesi, internet of allowances and accruals and license and contract income. I lined the payment income, Vyleesi income numbers prior. Concerning working bills, whole working bills have been $8.5 million in comparison with $8 million for the comparable quarter final 12 months. The rise in working bills was primarily the results of greater spending on our advertising efforts of Vyleesi.
Concerning money flows, Palatin’s internet money utilized in operations was $1.4 million in comparison with internet money utilized in operations of $9.5 million for a similar interval final 12 months. The lower in internet money utilized in operations is especially as a result of firm’s receipt of proceeds from the State of New Jersey NOL, stands for internet working losses; and dealing capital adjustments for the quarter ended March 31, 2023.
Concerning internet loss, Palatin’s internet loss was $7.1 million or $0.63 per fundamental and diluted widespread share in comparison with a internet lack of $7.6 million or $0.80 per fundamental and diluted widespread share for the comparable quarter final 12 months. The lower in internet loss over the comparable quarter final 12 months was primarily on account of a rise in internet product income of Vyleesi of $1 million, offset by a rise in working bills of roughly $500,000.
Concerning Palatin’s money place, as of March 31, 2023, money and money equivalents have been roughly $19.6 million, plus roughly $1.7 million of accounts receivable. This was in comparison with money and money equivalents of $21.2 million with $6.5 million of accounts and different receivables as of December 31, 2022, and $29.9 million with $1.8 million of accounts receivable as of June 30, 2022.
Primarily based on our present working plan, we consider that present money and money equivalents and receivables will probably be adequate to fund at present anticipated working bills by calendar 12 months 2023. Now I’ll flip the decision again over to Carl.
Thanks, Steve. At Palatin, we have been targeted on establishing the melanocortin system as a goal for protected inspective medicines to deal with inflammatory and autoimmune ailments and to develop a pipeline of extremely efficient medicine with unparalleled security. By analysis in our laboratory, and in collaboration with tutorial thought leaders, we proceed to advance our understanding of the melanocortin system to determine alternatives for novel revolutionary therapeutics. Our analysis efforts are serving to us to design higher scientific trials and changing into a key assist for our enterprise improvement actions. We’ve got three lively scientific applications based mostly on melanocortin agonists developed from our analysis. As well as, now we have two new ocular applications prepared, pending assets to start the actions required to begin scientific research.
We’re actively enrolling sufferers within the following scientific trials: MELODY-1, a Part 3 research in dry eye illness; a Part 2 research evaluating oral PL8177, a selective melanocortin-1 receptor agonist in ulcerative colitis sufferers; and breakout, a Part 2 research in diabetic sufferers with kidney illness. We anticipate all three scientific research may have information readouts in calendar 2023.
Shifting on to a few of the highlights for the third quarter, Vyleesi continues to indicate spectacular development, as Steve talked about, 5 quarters of double-digit will increase in all key metrics, and we anticipate this development will proceed. We proceed to make vital progress in establishing the melanocortin system as an revolutionary goal for therapeutics to deal with quite a lot of inflammatory ailments. And as I mentioned, we’re enrolling sufferers in three scientific research.
Our ocular applications proceed to make some spectacular advances this quarter. We’re very excited by the rising product profile for PL9643, our melanocortin-based therapeutic for dry eye illness. PL9643 is very differentiated from present therapies with wonderful ocular tolerability and broad efficacy that we consider will make PL943 the main therapy for dry eye illness.
We introduced information from the evaluation of the main inhabitants of the PL9643 MELODY-1 Part 3 trial on the Annual Assembly of the Affiliation for Analysis in Imaginative and prescient and Ophthalmology. PL9643 demonstrated broad efficacy with statistical separation throughout a number of indicators and signs of dry eye illness and a very good ocular tolerability and security profile with no ocular adversarial occasions. This evaluation was essential, permitting us to confidently set the first signal and symptom endpoints, ordering of secondary endpoints, evaluation strategies and pattern measurement for the double-blind phase of the MELODY-1 Part 3 trial.
We additionally hosted a key opinion chief occasion for traders the place the very thrilling information for MELODY-1 Part 3 trial was introduced. When you’ve missed this occasion, a hyperlink for the replay will be discovered on our web site. We additionally introduced information at ARVO on PL9588 on melanocortin-based therapy for glaucoma. In preclinical speedy research, PL9588 confirmed aggressive results on intraocular stress with a single topical dose reducing intraocular stress with a magnitude much like or higher than the constructive controls with latanoprost and timolol with the impact lasting as much as 24 hours. This essential program is now able to advance into pre-IND actions on the best way to scientific trials.
Our non-ocular melanocortin applications additionally made vital advances with a number of shows at scientific conferences and publications and peer-reviewed journals in addition to persevering with to enroll sufferers in Part 2 trials. Our experience within the melanocortin system and our revolutionary scientific applications are supporting our enterprise improvement actions. Discussions with potential companions for our applications, has elevated and we stay optimistic that we’ll enter into a number of partnerships to advance our applications.
I’d prefer to thanks for listening to the Palatin third quarter fiscal 2023 convention name. Yow will discover extra data on our science and scientific applications on our web site, www.palatin.com. You can even discover extra data on Vyleesi on the vyleesi.com web site.
Steve and I wish to thanks, and we are going to now open the decision to questions.
[Operator Instructions] Your first query for in the present day is coming from Joe Pantginis at H.C. Wainwright.
Hello, guys. Good afternoon. Thanks for taking the questions. So first, I wish to begin with Vyleesi. So good to see the continued early traction right here. So simply curious, what’s the p.c stock that you just’re normally preserving, proportion within the distribution facilities? And what are your present plans to enhance your – or ongoing efforts to enhance your gross to internet at this level?
Hey, Joe, it’s Steve. Thanks for the query there. The way in which our distribution is ready up, we really solely have one specialty pharmacy known as NPR. So we really promote to the NPR 3PL after which the NPR 3PL, if you’ll, sells to the pharmacy. We do a, what I consider, an excellent job of constructing certain our dispenses for the month, the quarter, just about match up with the gross sales, which is how we really report it. So for the primary quarter, March 31, ‘23, we had prescriptions distributed of just a little underneath 4,000 for the quarter, and that’s just about what we had that we had offered to the 3PL. So there’s only a level or 2 distinction in that regard. To sum it up, now we have just about nothing within the distribution chain that’s not already been offered.
That’s – sure, go forward, sorry.
So half b of your query is what else are we doing. Properly, we’re – our technique, as we’ve been very clear, we’re not trying to put vital numbers of salespeople, ft on the bottom, if you’ll. Our goal is to do a really knowledgeable and measured digital social media marketing campaign. We spend a whole lot of time making an attempt to ensure now we have the proper algorithms, if you’ll, for – when sufferers are looking out to – for this situation and a therapy possibility that they land on Vyleesi. We do have a number of gross sales folks, however they’re primarily inside and distant, albeit they do, perform a little little bit of touring. So we’re going to proceed the digital and social media. Since our metric is to indicate worth, have any individual be capable to, upon overview, get very comfy that they will extrapolate the numbers, based mostly on what we’re doing, we predict we are able to try this – we are able to present that. It’s been profitable from our goal mannequin standpoint, 5 consecutive quarters of double-digit development. That’s each on the internet gross sales stage and in addition with the prescriptions distributed. We’re growing demand, however that’s not our high metric. Our metric was to ensure we obtained vital insurance coverage protection, making it as profitable to the affected person as attainable. We now have over two-thirds of all our dispensers are lined by insurance coverage. Three quarters of these dispenses, the affected person really pays zero. So we predict now we have some very sturdy insurance coverage protection in that regard. So we’re going to proceed the trail, Joe, which is growing demand a bit, ensuring that our internet – gross to internet quantity is sweet. And we’re now into the place the place we’re not shedding any cash on Vyleesi. And looking out ahead to the time when somebody sees the worth that we’ve had yield, and we find yourself doing a licensing collaboration or promote the asset sooner or later sooner or later.
No. Nice. I respect that coloration. So what, my second query, I’m going to jump over dry eye since you simply – you guys only recently held a KOL occasion on that. So I’m going to ask a fast query on 8177 for ulcerative colitis. So simply curious, once you guys introduced later this 12 months, the primary information set, what sort of metrics are we going to be probably given?
So Joe, that is Carl. So that is predominantly a proof-of-concept research, and it’s actually executed by imaging. In order that they’re going to be – it’s a colonoscopy and we’re taking a look at biopsy and discount of irritation and harm to Vyleesei. So it’s a easy MAYO rating. You additionally get extra issues like reductions in these instruments and different widespread metrics which might be utilized in these research. But it surely’s predominantly – that is actually a research that’s actually in search of direct proof of the discount of the irritation and harm that’s occurring within the colon.
Nice. Thanks, guys.
Your subsequent query for in the present day is coming from Michael Higgins at Ladenburg Thalmann.
Thanks, guys for taking the questions. Congrats, once more, on all of the pipeline progress this spring. You’ve definitely saved us fairly busy. And thanks for placing collectively the KOL occasions. Very useful. Not a lot new within the press launch right here. We do have two questions. The primary will observe alongside the traces of Joe’s pondering on what we’re seeing right here within the allowance of mission returns. We’re seeing it as a comparatively excessive p.c of product sales appears to be sticky there regardless of the time since launch. Definitely, it accounts for potential returns. It could embody expiration dates in addition to monetary overstocking, after all. So, stunned to see the speed on product sales stays so excessive for therefore lengthy. Simply making an attempt to get an understanding of why that’s after which, extra importantly, when it’d come down as that can speed up reported internet gross sales. Thanks.
Sure. Michael, I’m not certain I’m following your query relating to the stickiness or the product sales. It really is – we’re growing each quarter, the product sales. The online gross sales are growing for essentially the most half, each quarter, therefore, the double-digit development. We’ve got little or no allowances for returns as a result of we don’t have a lot from a return standpoint. So, for those who might make clear the query a bit extra, I might respect. However once more, now we have our gross and internet gross sales each quarter. The spreads are getting higher aside from the primary quarter. The distinction – we did have a decrease yield for internet gross sales for the primary quarter, however that was 100% attributable to the primary quarter. The insurance coverage reimbursement was not as excessive, and that’s primarily due to the deductibles that usually hit within the first quarter, first half of the 12 months. And as I have a look at the second quarter, we’re again as much as the place we have been prior.
Certain. The – additionally product returns is an accounting measure that’s been used for all product launches, and it gives the traders or anybody, I assume some insights within the accountants into what probably could also be a return, and it’s extremely regulated. It’s one thing that’s not one thing that it’s a really subjective, nevertheless it comes instantly from relationship after which additionally simply returns to what’s coming again. A pharmacy could oversubscribe, after which it goes again. Often, that wears off after the primary, say, 12 months. However we’re previous that now. So, seeing it nonetheless up there’s a bit stunning. We’ve got not modeled it. We’re fairly conservative in that. However finally, that drops. Right here thus far, we’re about 75% of product sales is alongside to product returns. We’re at this stage of the launch. Usually, it’s beneath half. So, sooner or later, that ought to flip, and when that does, that hits internet gross sales. It’s an incredible accelerator. So, I’m simply making an attempt to gauge when which may come. Thanks.
I will help you when it won’t come. It’s not going to come back. The info that you’re referencing will not be correct, 100% not correct. We’ve got zero within the channel. The 3PL that we promote to, they beautiful a lot simply purchase what they want for the week based mostly on the gross sales which might be going to be going over to the pharmacy. And we’re ready to do this since we solely have one pharmacy, and from a distribution standpoint, now we have one 3PL, and they’re each housed in the identical industrial park, which is NPR [ph]. So, I couldn’t stress any higher. I’ve no drawback with stating that, that data is 100% inaccurate. We don’t anticipate, anticipate any vital allowances coming again. There’s nothing within the channel to do this, and we even have very, very low affected person returns of the product.
Sure. I’m simply seeing the 10-Q this morning, so I’m referencing that. However I respect the suggestions there. Carl, one query for you, we’re seeing loads within the melanocortin pipeline advancing, after all, in ophthalmic situations. You might have expanded into ulcerative colitis, diabetic nephropathy. Vyleesi, clearly, is authorized in feminine sexual dysfunction. We’re simply questioning concerning the potential within the BCD given the rationale there and a few success with melanocortin brokers. Thanks.
Certain. Mike, now we have had conversations about this earlier than. Clearly, weight problems, MCR4, weight problems, is a really close to and pricey to the corporate and, definitely, to my coronary heart. We’ve got executed a whole lot of useful resource work there. And we’re definitely – in gentle of the expanse of the GLP-1 inhibitor class within the market and the potential multi – nicely, $100-plus billion market there, we’re definitely actively taking a look at our choices in that area. Our perception relies on what we – our analysis work and really current discussions with prescribers of GLP-1, that there’s a very key and essential function for melanocortin agonist within the therapy of weight problems. And we’re evaluating that. And I might counsel that you’ll hear extra about it within the upcoming quarters as that plan comes into finalization. However we’re very interested by that. And we do suppose it’s an outstanding alternative.
Superior. Respect it. Thanks guys.
[Operator Instructions] We’ve got reached the tip of the question-and-answer session, and I’ll now flip the decision over to administration for closing remarks.
I believe Steve wish to make a fast assertion.
Sure. Simply relating to Michael Higgins’ query on the allowance and the accruals, what he’s really referencing is in our 10-Q, particularly on word – within the first notes, Be aware 3, we get away between product sales to internet gross sales. So really, for the three months ended March 31, 2023, product sales have been $3.4 million. Web gross sales have been $1.2 million. The distinction is what it prices us to go from gross to internet. We’ve got a scarcity of $899, however now we have to pay charges to the pharmacies, charges, reimbursement, if you’ll, to the PBMs, to the assorted insurance coverage protection and all the opposite very customary and customary bills that you’ve once you go from gross to internet. There’s 100% little or no, if none, no prices associated to allowances for that come again. And truly, for those who have a look at our March 31, 2023, quarter, the web gross sales as a proportion of the product sales really elevated. The availability for all the assorted bills was roughly 80% within the first quarter of March of ‘22, and it’s now all the way down to 65% for the primary quarter of ‘23, very vital will increase, all constructive. So, I simply wish to clear that up, for those who didn’t thoughts. Thanks. Carl?
Thanks Steve. So, I might to thank everybody for taking part within the third quarter fiscal 2023 name. Steve and I couldn’t be extra enthusiastic about what we’re doing. It was an incredible quarter with progress in all of the applications. I believe we actually appear to be hitting it fairly nicely proper now, and we’re fairly enthusiastic concerning the future and what the remainder of the 12 months goes to deliver. So, with that being mentioned, thanks all for taking part. We want – Steve and I such as you to have an incredible day, and we sit up for proceed updating you on our progress and on the remainder of 2023. So, thanks.
This concludes in the present day’s convention and chances are you’ll disconnect your traces right now. Thanks to your participation.