Prepared remarks
Greetings. Welcome to Palatin's Third Quarter Fiscal Year 2024 Operating Results Conference Call. As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that statements made by Palatin are not historical facts. They may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and that the actual results may differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company's most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements by Palatin's prospects. Now I would like to turn the call over to your host, Dr. Carl Spana, President, and Chief Executive Officer of Palatin. Please go ahead.
Thank you. Good morning and welcome to the Palatin third quarter fiscal year 2024 call. I'm Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Executive Vice President, Chief Financial Officer, and Chief Operating Officer. I'll now turn the call over to Steve, and he will give the financial and operating update. Steve.
Thank you, Carl, and hello everyone. For Palatin's fiscal third quarter ended March 31, 2024, financial results. Regarding revenue, total revenue consists of gross product sales of Vyleesi, net of allowances and accruals. Pursuant to the completion of the sale of Vyleesi's worldwide rights for female sexual dysfunction to Cosette Pharmaceuticals for up to $171 million in December of 2023, Palatin did not record any product sales to pharmacy distributors for the quarter ended March 31, 2024. For the quarter ended March 31, 2023, gross product sales were $3.4 million with net product revenue of $1.2 million. Regarding operating expenses, total operating expenses were $9.2 million compared to $8.5 million for the comparable quarter last year. The increase was related to greater spending on our Melanocortin receptor programs, offset partially by the elimination of selling expenses related to Vyleesi.
Regarding other income and expense, total other income and expense net consists mainly of the change in fair value of warrant liabilities, which Palatin had recorded as a liability on the consolidated financial statements. Including revisions of certain prior period amounts to correct the misstatement with respect to classifying warrants as equity instead of liability. To be clear, that's all cleaned up. There is no more liability reflection. And as we go forward, again, that item has been cleaned up. The statement of operations was adjusted each quarter to reflect changes in the fair value of these warrants. For the quarter ended, quarters ended March 31, 2024, and 2023, Palatin recorded a fair value adjustment gain of $0.4 million and a loss of $1.5 million, respectively. Regarding cash flows, Palatin's net cash used in operations was $8.6 million compared to $1.4 million for the same period last year.
The increase is mainly due to changes in working capital. Regarding net loss, Palatin's net loss was $8.4 million or $0.53 per common share compared to a net loss of $8.7 million or $0.76 per common share for the comparable period last year. The decrease over the comparable quarter last year was mainly due to a larger operating loss in fiscal 2024 offset by the higher other income, which was primarily from changes in the fair value of the warrant liabilities. Regarding cash position, as of March 31, 2024, Palatin's cash, cash equivalents, and marketable securities of $10 million compared to cash, cash equivalents, and marketable securities of $9.5 million plus $2.3 million of accounts receivable as of December 31, 2023, and compared to $5.5 million plus $1.3 million of accounts receivable as of September 30, 2023. We believe that existing cash and cash equivalents, marketable securities will be sufficient to fund currently anticipated operating expenses and disbursements well into the second half of calendar year 2024. Now I'd like to turn the call back over to Carl.
Thank you, Steve. Our focus has been on understanding the biology and chemistry of the Melanocortin system to develop selective Melanocortin agonists for various indications. These research efforts have led to a growing portfolio of Melanocortin-based therapeutics. We currently have three clinical programs based on Melanocortin agonists and plan to start enrollment in two new clinical programs by mid-2024, depending on resources from our productive research activities. For our PL9643 dry eye disease program, we shared the positive Phase 3 MELODY-1 results earlier this quarter. I want to highlight some key findings that set PL9643 apart from current therapies, which excites both us and potential partners. We observed excellent ocular tolerability and safety, comparable to dry eye artificial tears. I don't believe there is any product on the market, either approved or in development, that matches PL9643's ocular tolerability.
We also noted a rapid onset of efficacy for both signs and symptoms of dry eye disease, with primary symptom endpoints of pain and 7 of 11 secondary symptom endpoints reaching statistical significance at two weeks, the earliest evaluation point. Importantly, we continue to witness improvement across multiple symptom endpoints throughout the full 12-week treatment period. We have not yet achieved maximal efficacy, and we anticipate that prolonged treatment in our upcoming Phase 3 program will yield even greater efficacy for PL9643. We are currently preparing for the remaining clinical studies needed to support a new drug application submission, which we expect to begin enrollment in the second half of 2024, along with an upcoming Type C meeting with the FDA to discuss the remaining studies we need to conduct. Our Phase 2 study evaluating oral PL8177, a selective melanocortin-1 receptor agonist in ulcerative colitis patients, is on track for an interim data assessment release by mid-2024.
Supporting the development of oral PL8177 are preclinical studies showing that treatment with 8177 leads diseased colons to improve toward a healthy state and resolves inflammation. This approach of resolving inflammation instead of merely blocking it offers the potential for effective treatment with significantly better safety profiles for ulcerative colitis and other inflammatory bowel diseases. Our Phase 2 open label study evaluating a melanocortin agonist in diabetic patients with kidney disease is also on track for top-line data release in mid-2024. Additionally, I want to highlight two new clinical programs we plan to start this year. These programs leverage our considerable expertise in the chemistry and biology of the melanocortin-4 receptor agonist, both showing strong clinical validation and addressing large markets in need of new treatment options. The first program is a Phase 2 obesity clinical study, intending to enroll up to 60 patients currently using tirzepatide at 2.5 milligrams weekly.
The primary endpoint is to assess the safety and increased efficacy of co-administering bremelanotide with tirzepatide for weight reduction. A secondary endpoint will evaluate the weight loss maintenance effect of bremelanotide in patients who have discontinued tirzepatide. The initial drug application and study protocol have been reviewed by the FDA, and we are approved to begin enrolling patients. To support this study and our broader obesity program, we held a key opinion leader event titled Beyond GLPs, discussing the multiple roles for novel Melanocortin Receptor 4 Agonists in treating obesity and weight loss maintenance. Dr. [Name] from the University of Oklahoma presented on co-administering Melanocortin-4 receptor agonists with tirzepatide in obese patients, emphasizing the ongoing need for novel obesity treatments and the various applications of Melanocortin-4 receptor agonists in this area.
You can access the event recording on our website. Obesity drug treatments are now well-established and growing rapidly. We believe that multiple drugs with various mechanisms of action will be essential for effective weight loss and maintenance. We are confident that drugs targeting the melanocortin receptor system will play a crucial role in the future of obesity treatment and maintenance. Our extensive experience in designing and developing melanocortin agonists for obesity includes two previously completed and published clinical studies, positioning us as leaders in the development of melanocortin-based therapeutics for weight loss and maintenance. We are also planning a Phase 2 clinical study to evaluate the co-administration of Bremelanotide with a PDE5 inhibitor for treating erectile dysfunction patients who have not responded adequately to PDE5 inhibitor monotherapy. This study will further support the development of a combination product, co-formulating Bremelanotide with a PDE5 inhibitor, extending our commercial efforts in sexual dysfunction.
Approximately 35% of men with erectile dysfunction do not respond effectively to PDE5 inhibitor treatments like Cialis and Viagra, representing a significant underserved market. Current options for these patients are highly invasive methods, such as penile injections or implants. We have conducted previous studies demonstrating the synergistic effects of combining Bremelanotide with a PDE5 inhibitor for erectile dysfunction treatment, and I feel optimistic about an efficient and successful development program for this co-formulated product. Highlights for the third quarter of fiscal year 2024 include the positive results from the PL9643 Phase 3 MELODY-1 dry eye disease clinical study, with PL9643 establishing itself as a highly differentiated treatment with excellent ocular tolerability, rapid efficacy onset, and comprehensive symptom relief. We are set to initiate two new Melanocortin programs with Phase 2 clinical studies that will have data readouts in 2024.
Lastly, our clinical programs are progressing, achieving multiple data milestones across four clinical programs with plans to initiate the remaining PL9643 Phase 3 studies by the end of this calendar year. Steve and I appreciate your attention during the Palatin third quarter fiscal year 2024 conference call. More information about our science and clinical programs is available on our website, as well as details about Vyleesi on vyleesi.com. Thank you, and we are now open to questions.
Questions and answers
The first question is coming from Joe Pantginis with H.C. Wainwright & Co LLC.
Hey, guys. Good morning, thanks for taking the question. So, Steve and Carl, I wanted to focus on the overall profile for 9643 right now. Post the MELODY-1 data you have an upcoming Type C meeting. What are you looking to clarify or get agreement on with regard to moving forward? And before you get that feedback, have any of the learnings from MELODY-1 impacted how you're going to potentially approach MELODY-2?
Sure. Let me respond to that in reverse order. The answer is yes. Clearly, the MELODY-1 trial was extensive and generated a lot of data. As with most drug programs, we continue to gain insights during these studies. You may not always achieve your desired outcomes, but our current plan is to conduct two additional studies, MELODY-2 and MELODY-3, to gather the necessary remaining data. This will provide us with three significant Phase 3 clinical trials to effectively support the drug's profile regarding safety and overall effectiveness. We believe this is the most sensible approach to take. Typically, products for dry eye disease are not approved based on just two studies; they generally require three to five Phase 3 studies for overall approval. Thus, this is our overall strategy. Additionally, we've learned that the primary endpoint concerning symptoms will likely focus on ocular pain.
It's crucial for us to emphasize the broad efficacy we are observing regarding symptoms. We have found that eight out of the eleven symptoms we measured achieved significance starting at two weeks and continuing thereafter. No other product achieves this level of symptom relief. Therefore, we want to ensure these studies effectively communicate that. Furthermore, we also need to capture the sign, which serves as a regulatory endpoint. We have determined the best approach for measuring this—it will involve inferior corneal fluorescein staining, measured at two weeks, allowing for a timely assessment. As a result, we feel well-positioned to advance the remaining program and support an NDA submission. Regarding the first part about the Type C meeting, there are several technical aspects to consider. I don't anticipate any significant challenges from the agency concerning the design and overall endpoints for MELODY-2 and MELODY-3, including open-label pain, eye dryness, and inferior corneal fluorescein staining.
These endpoints are recognized and validated for use in these types of trials. The analyses we plan to conduct are straightforward ITT analyses, meaning we are not planning any subgroup analyses. Therefore, I don't foresee any issues regarding the sufficiency of our proposed data. I expect the agency will agree that three large, well-controlled studies will sufficiently support an NDA submission and their review. Additionally, there are a few manufacturing-related questions where we are looking for guidance on the next steps. These are more about clarifying whether they prefer option A or option B. Overall, I anticipate a productive meeting regarding the Type C discussions.
No, I appreciate those comments. And I guess I'll just take it a little further with regard to potential endpoints for the next study. And you brought up, I guess one of the interesting concepts in dry eye development where you said you're looking at eight different signs and like would you look to keep the same sign because I know you basically have to pick one in decision with the FDA. So how would you look to address that?
On the sign side, it will be inferior Corneal fluorescein staining. On the symptom side, we have a lot of flexibility. Both pain and eye dryness could be considered, and in fact, eye dryness reached the highest level of significance in MELODY-1. We will inquire with the agency if emphasizing eye dryness instead of pain would be acceptable. We expect it should be fine. We will also ask if they would accept this as an endpoint in MELODY-1, as we did in MELODY-2 and MELODY-3. I believe they will agree. However, it seems that many of the secondary endpoints will likely focus on symptoms. One discussion point will be whether we can include specific symptoms on the label if we adequately replicate our findings. I think this could serve as another differentiating feature.
There are no additional questions in queue. At this time, I would like to turn the floor back over to Dr. Spana for any closing remarks.
Great. Thank you. I'd like to thank everyone for participating in the Palatin Technologies third quarter fiscal year 2024 conference call. Have a great day, and Steve and I look forward to updating you on our progress, and we're very excited about where we're going with the company and the milestones that we have coming up throughout the remainder of this year. So have a great day and thank you.
Thank you everyone. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.