PALATIN TECHNOLOGIES INC(PTN)Q3 2026 法說會逐字稿

Hello, everyone. Welcome to Palatin's Third Quarter Fiscal Year 2026 Operating Results Conference Call. Operator Instructions: As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that the statements made by Palatin may be forward-looking statements and are not historical facts. These statements are based on assumptions that may or may not prove to be accurate and the actual results may differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company's recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements by Palatin. 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 2026 Call. I'm Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Chief Financial Officer and Chief Operating Officer. Earlier today, we issued a press release reporting Palatin's financial results for the third quarter of fiscal year 2026 and are now providing a corporate update. Today, we will highlight our progress advancing our melanocortin-4 receptor-based obesity pipeline, review recent strategic and financial milestones and outline our priorities as we move through 2026, followed by a question-and-answer session. First, I will turn the call over to Steve for the financial and operating results. Steve?

Thank you, Carl, and hello, everyone. I will briefly review our financial results for the fiscal third quarter ended March 31, 2026. Beginning with revenue. For the third quarter, we recognized $3.9 million in collaboration and license revenue compared to no revenue in the prior year period. The increase was primarily related to the revenue recognition of the upfront consideration under the Altanispac agreement. Turning to operating expenses. Total operating expenses for the quarter were $5.5 million compared to $4.8 million in the prior year period, which included a $0.4 million gain on purchase commitment. The increase was primarily attributable to higher compensation costs and professional fees. Net cash used in operations for the quarter was $4.4 million compared to $5.4 million in the prior year period. The reduction in cash used in operations was primarily driven by collaboration and license revenue recognized during the quarter.

Net loss for the third quarter of fiscal 2026 was $1.4 million or $0.37 per basic and diluted common share compared to a net loss of $4.8 million or $9.13 per basic and diluted common share for the prior year period. The improvement in net loss was primarily related to collaboration and license revenue recognized during the quarter. Turning to our balance sheet and liquidity position. As of March 31, 2026, Palatin had cash and cash equivalents of $10.2 million in addition to approximately $2.2 million of other receivables, which are expected to be collected during the quarter ending June 30, 2026. Based on our current operating and development plans and our ability to manage the timing of certain operating expenses, we believe our existing cash resources and expected receivables will be sufficient to fund operations through June 30, 2027. With that, I will turn the call back to Carl. Carl?

Thank you, Steve. This quarter, Palatin continued to execute on its strategy of advancing our melanocortin-4 receptor agonist therapies for rare obesity disorders, with a focus on improving tolerability, usability and long-term outcomes in chronic treatment settings. The melanocortin-4 receptor pathway is a clinically and commercially validated target. We strongly believe the next phase of innovation will be defined not just by efficacy, but by improvements in overall treatment profile, particularly tolerability and patient-friendly delivery to support long-term patient adherence. In this context, our goal is very straightforward: it's to develop a best-in-class melanocortin-4 receptor agonist for the treatment of rare syndromic and genetic obesity disorders. We are uniquely positioned to achieve this with our extensive experience in the design of melanocortin-4 receptor selective agonists, along with our recent advancements in the understanding of receptor-ligand interactions.

In rare obesity disorders such as hypothalamic obesity, Prader-Willi syndrome and Bardet-Biedl syndrome, patients face severe hyperphagia, rapid weight gain and significant metabolic complications. These are chronic conditions that require lifelong treatment and current therapeutic options often present challenges for long-term use. As a result, improving tolerability and usability is critical to achieving meaningful sustained outcomes for patients. Updating our obesity pipeline. Our melanocortin-4 receptor agonist peptide program is designed to achieve sustained efficacy with a treatment profile optimized for high selectivity for the melanocortin-4 receptor and a once-weekly delivery. Our once-weekly melanocortin-4 receptor selective peptide agonist remains on track for an initial new drug application submission in the fourth quarter of calendar 2026 and represents our lead clinical asset.

In our oral small molecule program, we are advancing next-generation oral melanocortin-4 receptor selective agonist candidates based on data and learnings from earlier compounds, including PL-7737, recent data from our research work in medicinal chemistry and our advancements in understanding detailed receptor-ligand interactions. In internal preclinical studies, our candidates demonstrate significantly improved melanocortin-4 receptor selectivity with minimal melanocortin-1 receptor activity and increased potency at the melanocortin-4 receptor compared to earlier compounds. We believe this improved selectivity and potency will result in lower dosing requirements and a meaningful reduction in the potential for hyperpigmentation. I want to emphasize the importance of the last point. Hyperpigmentation is a known class effect associated with melanocortin-1 receptor activity and remains a limitation of current therapies.

Our approach is specifically designed to minimize melanocortin-1 receptor off-target interactions and the selectivity data we have supports this conclusion. Our goal is to develop best-in-class therapies with superior efficacy and long-term patient compliance. In addition to advancing our obesity programs, we continue to leverage the broader potential of our melanocortin receptor platform through strategic partnerships and business development activities. Our partnership with Boehringer Ingelheim for retinal diseases continues to provide nondilutive capital, milestone opportunities and potential long-term royalty participation. During the second half of calendar 2025, we received upfront and milestone payments totaling EUR 7.5 million, or approximately $8.8 million. We also completed the sublicensing of PL-9643 for dry eye disease to Altanispac Labs in January of 2026, receiving $3.8 million in upfront consideration while retaining the potential for future payments and royalties.

In addition, our PL-8177 ulcerative colitis program remains positioned for potential partnering following positive Phase II proof-of-concept results. These transactions reflect our strategy of leveraging the breadth of our melanocortin receptor platform to generate nondilutive capital, support our pipeline advancements and create multiple potential long-term value drivers for shareholders. In summary, our peptide program remains on track for an IND submission in the fourth quarter of calendar 2026. Our oral small molecule program is advancing next-generation candidates with improved selectivity and potency for an IND in the first half of calendar 2027. We have developed new intellectual property around melanocortin-4 receptor selectivity, and we are continuing to leverage both our vast experience and new data to design melanocortin-4 receptor therapies with improved selectivity and overall better treatment profiles.

We believe this strategy positions Palatin to deliver differentiated best-in-class melanocortin-4 receptor agonist therapies for patients with significant unmet medical need. With that, we will now open the call to questions.

Operator Instructions: Your first question is coming from Scott Henry with AGP.

Just recapping on PL-7737. Is that molecule now discontinued? And if so, was it due to an issue with PL-7737, or did some of the backup compounds present a better profile to take going forward?

Thanks for the question, Scott. We're not going to be first to market in this space. So we really want to make sure we have best-in-class compounds. Our premise for selecting a compound or continuing a compound to go through development into the clinic is pretty stringent. The decision was multifactorial. As we were running through the PL-7737 development, we came to a point where we felt that the selectivity and the dosing that we wanted to achieve to be best-in-class, we didn't necessarily think that the compound would meet that. In addition to that, since we were funded in November of last year, we were able to really push some of these backup compounds forward, and we started to see compounds that are verging on almost the elimination of MC1R activity. So their profiles are coming out better than where PL-7737 is. We had to make the decision on whether to continue to put resources into a compound that may not be best-in-class or to divert those to the peptide, which is highly selective and once-weekly with an excellent profile, and then bring along a second-generation compound that has a much better profile.

So it was a combination of a number of factors that went into the decision. We also have to consider that this is a target that is growing in interest and there's potential competition. When we make final decisions to go into the clinic and start spending lots of investor money, we really want to make sure that it's a very stringent decision and that the compounds we take forward meet a high degree of selectivity for MC4R, have excellent drug-like characteristics and are easier for patients to use, whether oral or once-weekly. PL-7737 is still extremely valuable to the company. We've learned a tremendous amount from it. We're still evaluating it, and we'll continue to be supportive of everything that we're doing.

Okay. In the next-generation oral small molecule compound, would you expect to have a similar clinical game plan as you did for PL-7737 as far as looking at hypothalamic obesity patients as well as Prader-Willi?

Absolutely. It will follow a similar path. I think that the peptides and the oral small molecules will each have their place in treating these patients based on patient preferences, efficacy and side effect profiles. For the next-generation compounds, I expect they won't have any MC1R activity at all. They're going to be quite clean and that will be a major advancement. We have to keep in mind this will be a competitive field, and we want to make sure we're bringing the best we can deliver based on our experience.

Okay. And when you think about the differentiation of your pipeline with compounds on the market and under development, what do you think are the key attributes that separate your pipeline? Obviously, you've mentioned selectivity and hyperpigmentation. Are there any other aspects that you would highlight?

Sure. That's a key aspect. I think the technologies we use for potentially delivering once-a-week injections for peptides can be differentiating as well. The understanding that the PK parameters of these compounds have to put them in a range where we don't need to reach drug exposure levels that exceed the therapeutic window is important so we can eliminate or drastically reduce potential side effects beyond hyperpigmentation. In the small molecule program, we're looking for compounds that limit brain penetration so they don't get into the CNS. There are a number of things built into these programs that will overall make them better drugs. As indications move from first-approved drugs, it's typically with the second or third generation where you get better compounds with better drug-like characteristics, PK parameters, and usability for the patient, and that's what we're aiming for.

Okay, great. Kind of the final question: your game plan has followed a lot of what we've seen with Rhythm and what they've done. How would you compare your products to those of Rhythm? And how far behind do you consider yourself at this point?

Sure. Currently, from an approved standpoint, setmelanotide—or Imcivree—is Rhythm's product. They've done a tremendous job bringing that product forward, expanding indications and beginning to build new markets for MC4R agonists. That's a first-generation peptide with limitations regarding MC1R activity, and it's a daily injectable. I know they have a weekly injectable behind that, but there's very little data publicly available. They also have a small molecule, bivamelagon, which is a first-generation compound that has shown hyperpigmentation in the clinic and is going through some reformulation work; I don't know where that will lead. From my perspective, we aim to deliver better compounds: cleaner, with better drug-like characteristics and PK parameters, and highly competitive to expand and take market share. That's the goal in bringing best-in-class forward. Regarding how far behind we are: for indications where setmelanotide is approved—such as hypothalamic obesity—we are several years behind.

For developing new compounds, the timing varies; it might be a year to 1.5 years in some cases. Investors always ask how far behind you are; it's relative. We're not that far behind in terms of being able to come in with a better candidate and a better product. The important part is who's going to have compounds that better solve adherence and usability issues while maintaining efficacy. That's ultimately what will determine the market.

Operator Instructions: Your next question is coming from Yale Jen with Laidlaw & Company.

Your oral compound is now pushed out probably roughly a year compared to PL-7737. My question is do you see any challenges to have that become IND-ready next year? Any specifics you can mention without revealing too much on the competitive side?

Sure. Whenever you're dealing with orally active small molecules, as we did with PL-7737, we run a tremendous amount of preclinical studies to evaluate efficacy, selectivity, drugability, side effect profiles, metabolism and other factors. Even though we use state-of-the-art in silico tools and wet chemistry, until you get into animal studies, you're not going to fully know what you have and how high you can dose. I would characterize it as we have a very good handle on what's required. We understand the pharmacophores we're dealing with very well. They are druggable with respect to interactions with CYPs, metabolism and so on. We have a high degree of confidence that we can deliver a candidate. But until we get through the work, I can't tell you the actual outcome. We will do the work, get the candidate forward and go through the process, and I am confident it will have a great profile. But until it's done, I can't comment definitively.

Fair enough. That's very helpful. Without revealing too much, should I think about this as heading to animal study or is it already in animal study?

We haven't made a final selection, so it depends on the candidate. Some are in animal studies, some are a little further back. We'll make a final selection later in the year on the actual candidate we want to move forward with. So it varies depending on the candidate.

Okay, great. Maybe the last question: for the subcutaneous weekly peptides that you are slightly ahead—I thought last time we expected you might start in the third quarter, but I guess it's slightly pushed out to the fourth. Was there any issue you wanted to resolve? It seems like this will be the new product going forward?

There's no issues. We want to make sure we have the right compound. With the funding we obtained in the third or fourth quarter of last year, we've been able to accelerate medicinal chemistry work for both peptides and small molecules. Particularly on the peptide side, for the candidate we selected we wanted to ensure it was the best we had, not something good that gets superseded a month later by something better. We've been productive in understanding receptor and receptor-ligand interactions and pushing how to eliminate MC1R activity and build that into these compounds. We want to make sure we pick the best one. The peptide program is moving along nicely. I think we have an excellent candidate and we're entering IND-enabling studies. I see that moving along and staying on track.

Okay, great. Maybe one last quick question: you mentioned contemplating PWS, Prader-Willi syndrome. At this point, would that be second priority to hypothalamic obesity or might you move into PWS even earlier?

Everything is based on resources. I think they're both equal in terms of commercial and medical importance. Both indications have extremely high medical need for innovative treatments. Given resources, we'd like to move them in parallel.

Operator Instructions: Your next question is coming from Dev Prasad with Lucid Capital.

I have a few questions. One: is the goal with the new oral compound to eliminate hyperpigmentation entirely or are you trying to reduce its frequency and severity? Two: what preclinical species or model is most predictive for MC1R-mediated hyperpigmentation? And then on the once-weekly injectable, what are the key IND-enabling studies still remaining before the planned 4Q IND submission?

A lot there, so let's go through it. For the small molecule, what we're seeing is the potential to eliminate MC1R activity. That doesn't mean that when you treat chronically you won't see some small amount, but that's the goal and that's what we're seeing preclinically: a very significant separation between MC1R and MC4R activity. But until you get into the clinic, you won't know for sure. Regarding animal models: in species like rats, dogs or mice, the skin isn't pigmented the same way as humans, so you look at fur darkening as a surrogate and there are models for that. If compounds have significant MC1R activity you will see that translate in these models, and we believe there's a high degree of predictability to human translation. If you're showing large separations between where you see weight loss and where you see potential pigmentation changes, that should translate to humans as well. Regarding where we are in development: we're beginning IND-enabling studies. That includes a suite of in vitro assays required—CYP binding, metabolism and so on—along with animal work that will start. We have everything moving together so we will have the documentation to file with the FDA and open up an IND in the fourth quarter of the year for the peptide program.

There are no more questions in queue at this time. I would now like to turn the call back over to Carl Spana for any closing remarks.

So I'd like to thank everyone for their participation on the call. We're excited about where we are and where we're going. I thank the analysts for their questions that allow us opportunities to speak a little beyond what we have in the script and give more color and context to what we're doing. I think the advances we're making are significant. We're generating some very good IP that will support our work and make it a little more difficult for those following behind. We feel very well positioned and confident that we're going to deliver some really phenomenal compounds into the clinic. With that, thank you. Have a great day, and we look forward to keeping everybody updated as we continue to make progress on our programs. Steve?

Thanks also. Have a great rest of the day. Take care.

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.