Palatin Applied sciences, Inc. (NYSE:PTN) Q3 2023 Earnings Convention Name Could 16, 2023 11:00 AM ET
Firm Members
Carl Spana – President and Chief Govt Officer
Steve Wills – Govt Vice President, Chief Monetary Officer and Chief Working Officer
Convention Name Members
Joe Pantginis – H.C. Wainwright
Michael Higgins – Ladenburg Thalmann
Operator
Greetings. Welcome to Palatin’s Third Quarter Fiscal Yr 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 details and could also be forward-looking statements. These statements are based mostly on assumptions which will or might not show to be correct and that the precise outcomes might 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 think about 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.
Carl Spana
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 immediately 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?
Steve Wills
Thanks, Carl. Good day, everybody. Relating to monetary highlights, I’ll begin with Vyleesi. Vyleesi is our FDA-approved industrial product for pre-menopausal girls with hypoactive sexual need dysfunction, or HSDD. The aim of the Vyleesi program is to reveal industrial product worth within the market with an goal of licensing the U.S. rights to a dedicated girls’s well being care firm.
For the third quarter ended March 31, 2023, gross product gross sales had been $3.4 million, a rise of 31% over the prior quarter and a rise of 165% over the comparable quarter final 12 months. Internet product income of $1.2 million elevated 16% over the prior quarter and elevated 453% over the comparable quarter final 12 months.
Whole prescriptions allotted elevated 27% over the prior quarter and elevated 147% over the comparable quarter final 12 months. We now have achieved 5 consecutive quarters of double-digit development. Refill charges, industrial insurance coverage reimbursement and web income per prescription allotted continued with optimistic and impactful outcomes and developments versus the prior quarter and comparable quarter final 12 months. We’re notably happy that Vyleesi’s quarterly web product income exceeds Vyleesi’s quarterly working bills. Sure, which means we aren’t dropping any cash on Vyleesi. Additionally, we had been issued a patent titled Use of Bremelanotide in Sufferers with Managed Hypertension with a time period by way of April 29, 2041. Relating to 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.
Transferring over to the precise monetary working outcomes for the third quarter ended March 31, 2023. Relating to income, whole income consists of gross product gross sales of Vyleesi, web of allowances and accruals and license and contract income. I coated the payment income, Vyleesi income numbers prior. Relating to working bills, whole working bills had 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 larger spending on our advertising efforts of Vyleesi.
Relating to money flows, Palatin’s web money utilized in operations was $1.4 million in comparison with web money utilized in operations of $9.5 million for a similar interval final 12 months. The lower in web money utilized in operations is especially as a result of firm’s receipt of proceeds from the State of New Jersey NOL, stands for web working losses; and dealing capital adjustments for the quarter ended March 31, 2023.
Relating to web loss, Palatin’s web loss was $7.1 million or $0.63 per fundamental and diluted frequent share in comparison with a web lack of $7.6 million or $0.80 per fundamental and diluted frequent share for the comparable quarter final 12 months. The lower in web loss over the comparable quarter final 12 months was primarily on account of a rise in web product income of Vyleesi of $1 million, offset by a rise in working bills of roughly $500,000.
Relating to Palatin’s money place, as of March 31, 2023, money and money equivalents had 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 current money and money equivalents and receivables might be enough to fund presently anticipated working bills by way of calendar 12 months 2023. Now I’ll flip the decision again over to Carl.
Carl Spana
Thanks, Steve. At Palatin, we had been targeted on establishing the melanocortin system as a goal for protected inspective medicines to deal with inflammatory and autoimmune illnesses and to develop a pipeline of extremely efficient medication with unparalleled security. By way of analysis in our laboratory, and in collaboration with educational thought leaders, we proceed to advance our understanding of the melanocortin system to establish alternatives for novel modern therapeutics. Our analysis efforts are serving to us to design higher scientific trials and turning into a key help for our enterprise growth actions. We now have three energetic scientific packages based mostly on melanocortin agonists developed from our analysis. As well as, we have now two new ocular packages 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 Section 3 examine in dry eye illness; a Section 2 examine evaluating oral PL8177, a selective melanocortin-1 receptor agonist in ulcerative colitis sufferers; and breakout, a Section 2 examine in diabetic sufferers with kidney illness. We anticipate all three scientific research may have information readouts in calendar 2023.
Transferring 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 modern goal for therapeutics to deal with quite a lot of inflammatory illnesses. And as I mentioned, we’re enrolling sufferers in three scientific research.
Our ocular packages 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 offered information from the evaluation of the main inhabitants of the PL9643 MELODY-1 Section 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 opposed occasions. This evaluation was necessary, permitting us to confidently set the first signal and symptom endpoints, ordering of secondary endpoints, evaluation strategies and pattern dimension for the double-blind section of the MELODY-1 Section 3 trial.
We additionally hosted a key opinion chief occasion for traders the place the very thrilling information for MELODY-1 Section 3 trial was offered. For those who’ve missed this occasion, a hyperlink for the replay might be discovered on our web site. We additionally offered information at ARVO on PL9588 on melanocortin-based therapy for glaucoma. In preclinical speedy research, PL9588 confirmed aggressive results on intraocular strain with a single topical dose reducing intraocular strain with a magnitude much like or better than the optimistic controls with latanoprost and timolol with the impact lasting as much as 24 hours. This necessary program is now able to advance into pre-IND actions on the way in which to scientific trials.
Our non-ocular melanocortin packages additionally made vital advances with a number of displays at scientific conferences and publications and peer-reviewed journals in addition to persevering with to enroll sufferers in Section 2 trials. Our experience within the melanocortin system and our modern scientific packages are supporting our enterprise growth actions. Discussions with potential companions for our packages, has elevated and we stay optimistic that we are going to enter into a number of partnerships to advance our packages.
I’d wish to thanks for listening to the Palatin third quarter fiscal 2023 convention name. You’ll find further data on our science and scientific packages on our web site, www.palatin.com. You may as well discover further data on Vyleesi on the vyleesi.com web site.
Steve and I wish to thanks, and we’ll now open the decision to questions.
Query-and-Reply Session
Operator
[Operator Instructions] Your first query for immediately is coming from Joe Pantginis at H.C. Wainwright.
Joe Pantginis
Hello, guys. Good afternoon. Thanks for taking the questions. So first, I need 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 simply’re often holding, proportion within the distribution facilities? And what are your present plans to enhance your – or ongoing efforts to enhance your gross to web at this level?
Steve Wills
Hey, Joe, it’s Steve. Thanks for the query there. The best way our distribution is ready up, we truly solely have one specialty pharmacy known as NPR. So we truly 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 creating positive our dispenses for the month, the quarter, just about match up with the gross sales, which is how we truly report it. So for the primary quarter, March 31, ‘23, we had prescriptions allotted of a bit beneath 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, we have now just about nothing within the distribution chain that’s not already been offered.
Joe Pantginis
That’s – sure, go forward, sorry.
Steve Wills
So half b of your query is what else are we doing. Effectively, we’re – our technique, as we’ve been very clear, we’re not seeking 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 lots of time making an attempt to verify we have now the proper algorithms, if you’ll, for – when sufferers are looking to – for this situation and a therapy possibility that they land on Vyleesi. We do have a couple of gross sales people, 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 anyone be capable to, upon overview, get very snug that they will extrapolate the numbers, based mostly on what we’re doing, we expect we are able to do 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 web gross sales degree and likewise with the prescriptions allotted. We’re growing demand, however that’s not our prime metric. Our metric was to verify we acquired 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 coated by insurance coverage. Three quarters of these dispenses, the affected person truly pays zero. So we expect we have now some very strong insurance coverage protection in that regard. So we’re going to proceed the trail, Joe, which is growing demand a bit, ensuring that our web – gross to web quantity is sweet. And we’re now into the place the place we’re not dropping any cash on Vyleesi. And searching 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.
Joe Pantginis
No. Nice. I recognize that shade. 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 doubtlessly given?
Carl Spana
So Joe, that is Carl. So that is predominantly a proof-of-concept examine, and it’s actually completed by imaging. So 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 further issues like reductions in these instruments and different frequent metrics which are utilized in these research. However it’s predominantly – that is actually a examine that’s actually on the lookout for direct proof of the discount of the irritation and harm that’s occurring within the colon.
Joe Pantginis
Nice. Thanks, guys.
Operator
Your subsequent query for immediately is coming from Michael Higgins at Ladenburg Thalmann.
Michael Higgins
Thanks, guys for taking the questions. Congrats, once more, on all of the pipeline progress this spring. You’ve definitely stored 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 comply with alongside the traces of Joe’s considering on what we’re seeing right here within the allowance of challenge 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. Actually, it accounts for potential returns. It might embody expiration dates in addition to monetary overstocking, after all. So, shocked 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 would come down as that may speed up reported web gross sales. Thanks.
Carl Spana
Sure. Michael, I’m not positive I’m following your query relating to the stickiness or the product sales. It truly 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 now have little or no allowances for returns as a result of we don’t have a lot from a return standpoint. So, when you may make clear the query a bit extra, I’d recognize. However once more, we have now our gross and web gross sales each quarter. The spreads are getting higher aside from the primary quarter. The distinction – we did have a decrease yield for web 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 take a look at the second quarter, we’re again as much as the place we had been prior.
Michael Higgins
Certain. The – additionally product returns is an accounting measure that’s been used for all product launches, and it offers the traders or anybody, I suppose some insights within the accountants into what doubtlessly 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, however it comes straight from courting after which additionally simply returns to what’s coming again. A pharmacy might oversubscribe, after which it goes again. Normally, 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 now have not modeled it. We’re fairly conservative in that. However ultimately, that drops. Right here to date, 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 web gross sales. It’s an important accelerator. So, I’m simply making an attempt to gauge when which may come. Thanks.
Carl Spana
I will help you when it won’t come. It’s not going to return. The information that you’re referencing will not be correct, 100% not correct. We now have 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 are 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, we have now one 3PL, and they’re each housed in the identical industrial park, which is NPR [ph]. So, I couldn’t stress any better. I’ve no drawback with stating that, that data is 100% inaccurate. We don’t anticipate, anticipate any vital allowances coming again. There may be nothing within the channel to do this, and we even have very, very low affected person returns of the product.
Michael Higgins
Sure. I’m simply seeing the 10-Q this morning, so I’m referencing that. However I recognize the suggestions there. Carl, one query for you, we’re seeing rather a lot within the melanocortin pipeline advancing, after all, in ophthalmic circumstances. You’ve got expanded into ulcerative colitis, diabetic nephropathy. Vyleesi, clearly, is authorised 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.
Carl Spana
Certain. Mike, we have now had conversations about this earlier than. Clearly, weight problems, MCR4, weight problems, is a really close to and expensive to the corporate and, definitely, to my coronary heart. We now have completed lots 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 – properly, $100-plus billion market there, we’re definitely actively taking a look at our choices in that house. Our perception is predicated on what we – our analysis work and really latest discussions with prescribers of GLP-1, that there’s a very key and necessary function for melanocortin agonist within the therapy of weight problems. And we’re evaluating that. And I’d recommend that you’ll hear extra about it within the upcoming quarters as that plan comes into finalization. However we’re very excited by that. And we do assume it’s an outstanding alternative.
Michael Higgins
Superior. Recognize it. Thanks guys.
Operator
[Operator Instructions] We now have reached the top of the question-and-answer session, and I’ll now flip the decision over to administration for closing remarks.
Carl Spana
I believe Steve wish to make a fast assertion.
Steve Wills
Sure. Simply relating to Michael Higgins’ query on the allowance and the accruals, what he’s truly referencing is in our 10-Q, particularly on word – within the first notes, Notice 3, we escape between product sales to web gross sales. So truly, for the three months ended March 31, 2023, product sales had been $3.4 million. Internet gross sales had been $1.2 million. The distinction is what it prices us to go from gross to web. We now have a scarcity of $899, however we have now to pay charges to the pharmacies, charges, reimbursement, if you’ll, to the PBMs, to the varied insurance coverage protection and all the opposite very normal and customary bills that you’ve got once you go from gross to web. There may be 100% little or no, if none, no costs associated to allowances for that come again. And really, when you take a look at our March 31, 2023, quarter, the online gross sales as a proportion of the product sales truly elevated. The availability for all the varied bills was roughly 80% within the first quarter of March of ‘22, and it’s now right down to 65% for the primary quarter of ‘23, very vital will increase, all optimistic. So, I simply need to clear that up, when you didn’t thoughts. Thanks. Carl?
Carl Spana
Thanks Steve. So, I’d 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 amazing quarter with progress in all of the packages. I believe we actually appear to be hitting it fairly properly proper now, and we’re fairly enthusiastic concerning the future and what the remainder of the 12 months goes to carry. So, with that being mentioned, thanks all for taking part. We want – Steve and I such as you to have an important day, and we stay up for proceed updating you on our progress and on the remainder of 2023. So, thanks.
Operator
This concludes immediately’s convention and chances are you’ll disconnect your traces right now. Thanks in your participation.