ptn_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission file number: 001-15543

PALATIN TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

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)

(609) 495‑2200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange

on Which Registered

Common Stock, par value $0.01 per share

PTN

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date (May 14, 2024): 16,136,640

PALATIN TECHNOLOGIES, INC.

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		Page

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 2024 and June 30, 2023		5
Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2024 and 2023		6
Consolidated Statements of Changes in Stockholders Equity (Deficiency) for the Three and Nine Months Ended March 31, 2024		7
Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders Equity for the Three and Nine Months Ended March 31, 2023		8
Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2024 and 2023		9
Notes to Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures About Market Risk		26
Item 4. Controls and Procedures		26

PART II – OTHER INFORMATION
Item 1. Legal Proceedings		27
Item 1A. Risk Factors		27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		48
Item 3. Defaults Upon Senior Securities		48
Item 4. Mine Safety Disclosures		48
Item 5. Other Information		48
Item 6. Exhibits		49

Signatures		50

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Special Note Regarding Forward-Looking Statements

In this Quarterly Report on Form 10-Q (this “Quarterly Report”) references to “we,” “our,” “us,” the “Company” or “Palatin” mean Palatin Technologies, Inc. and its subsidiary.

Statements in this Quarterly Report, as well as oral statements that may be made by us or by our officers, directors, or employees acting on our behalf, that are not historical facts constitute “forward-looking statements,” which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements in this Quarterly Report do not constitute guarantees of future performance. Investors are cautioned that statements that are not strictly historical facts contained in this Quarterly Report, including, without limitation, the following are forward looking statements:

	·	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 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 economic disruptions;

	·	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 increases 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;

	·	the ability of Cosette Pharmaceuticals, Inc. (“Cosette”), which acquired Vyleesi® (the trade name for bremelanotide) for the treatment of premenopausal women with hypoactive sexual desire disorder (“HSDD”) from us, to increase sales and make sales-based milestone payments to Palatin;

	·	the results of clinical trials with our late-stage products, including

	o	PL9643, an ophthalmic peptide solution for dry eye disease (“DED”), for which the Company announced top line results from the first Phase 3 clinical trial in February 2024;

	o	PL8177, an oral peptide formulation for treatment of ulcerative colitis, which entered Phase 2 clinical trials in the third quarter of calendar year 2022; and

	o	a proof-of-concept melanocortin agonist clinical trial for diabetic nephropathy, which entered a Phase 2 clinical in the fourth quarter of calendar year 2022;

	·	estimates of our expenses, future revenue and capital requirements;

	·	our ability to achieve profitability;

	·	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;

	·	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;

	·	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;

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

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	·	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;

	·	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;

	·	our ability to timely recognize and identify any material weaknesses in our accounting controls and procedures; and

	·	our ability to remain listed on the NYSE American stock exchange.

Such forward-looking statements involve risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. Our future operating results are subject to risks and uncertainties and are dependent upon many factors, including, without limitation, the risks identified under the caption “Risk Factors” and elsewhere in this Quarterly Report, and any of those made in our other reports filed with the U.S. Securities and Exchange Commission (the “SEC”). Except as required by law, we do not intend, and undertake no obligation, to publicly update forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

PALATIN TECHNOLOGIES, INC.

and Subsidiary

Consolidated Balance Sheets

(unaudited)

	March 31, 2024			June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	10,014,088		$	7,989,582
Marketable securities		-			2,992,890
Accounts receivable		-			2,915,760
Inventories		-			526,000
Prepaid expenses and other current assets		254,554			1,897,281
Total current assets		10,268,642			16,321,513

Property and equipment, net		465,410			684,910
Right-of-use assets - operating leases		615,269			876,101
Other assets		56,916			56,916
Total assets	$	11,406,237		$	17,939,440

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable	$	3,443,247		$	4,303,527
Accrued expenses		2,364,964			6,511,059
Short-term operating lease liabilities		371,280			354,052
Short-term finance lease liabilities		73,141			106,392
Other current liabilities		2,280,150			3,856,800
Total current liabilities		8,532,782			15,131,830

Long-term operating lease liabilities		262,220			544,323
Long-term finance lease liabilities		-			46,014
Other long-term liabilities		1,032,300			2,083,200
Warrant liabilities		-			1,850,544
Total liabilities		9,827,302			19,655,911

Commitments and contingencies (Note 13)

Contingently redeemable warrants		-			263,400

Stockholders’ deficiency:
Preferred stock of $0.01 par value – authorized 10,000,000 shares: shares issued and outstanding designated as follows:
Series A Convertible: authorized 4,030 shares as of March 31, 2024: issued and outstanding 4,030 shares as of March 31, 2024 and June 30, 2023		40			40
Common stock of $0.01 par value – authorized 300,000,000 shares:
issued and outstanding 16,136,640 shares as of March 31, 2024 and 11,656,714 shares as of June 30, 2023		161,366			116,567
Additional paid-in capital		434,933,649			409,933,959
Accumulated deficit		(433,516,120	)		(412,030,437	)
Total stockholders’ equity (deficiency)		1,578,935			(1,979,871	)
Total liabilities and stockholders’ equity (deficiency)	$	11,406,237		$	17,939,440

The accompanying notes are an integral part of these consolidated financial statements.

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PALATIN TECHNOLOGIES, INC.

and Subsidiary

Consolidated Statements of Operations

(unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2024			2023			2024			2023

REVENUES
Product revenue, net	$	-		$	1,195,675		$	4,140,090		$	3,091,745

OPERATING EXPENSES
Cost of products sold		-			129,235			97,637			314,438
Research and development		7,159,686			4,830,327			17,728,516			15,224,896
Selling, general and administrative		2,033,410			3,537,376			8,266,267			10,220,518
Gain on sale of Vyleesi		25,202			-			(7,798,280	)		-
Gain on purchase commitment		-			-			-			(1,027,322	)
Total operating expenses		9,218,298			8,496,938			18,294,140			24,732,530

Loss from operations		(9,218,298	)		(7,301,263	)		(14,154,050	)		(21,640,785	)

OTHER INCOME (EXPENSE)
Investment income		139,273			234,044			272,929			509,006
Foreign currency gain (loss)		215,600			(77,266	)		68,653			(352,121	)
Interest expense		(1,254	)		(3,434	)		(13,741	)		(18,523	)
Offering expenses		-			-			(696,912	)		(1,115,765	)
Change in fair value of warrant liabilities		429,029			(1,521,413	)		(6,962,562	)		3,725,895
Total other income (expense), net		782,648			(1,368,069	)		(7,331,633	)		2,748,492

Loss before income taxes		(8,435,650	)		(8,669,332	)		(21,485,683	)		(18,892,293	)
Income tax benefit		-			-			-			4,674,999
NET LOSS	$	(8,435,650	)	$	(8,669,332	)	$	(21,485,683	)	$	(14,217,294	)

Basic and diluted net loss per common share	$	(0.53	)	$	(0.76	)	$	(1.53	)	$	(1.34	)

Weighted average number of common shares outstanding used in computing basic and diluted net loss per common share		15,792,421			11,432,380			14,013,848			10,613,830

The accompanying notes are an integral part of these consolidated financial statements.

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PALATIN TECHNOLOGIES, INC.

and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)

(unaudited)

Three Months Ended March 31, 2024

				Stockholders' Equity (Deficiency)
				Series A Convertible Preferred Stock				Common Stock
	Contingently Redeemable Warrants			Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total
Balance December 31, 2023	$	423,100			4,030	$	40		14,305,137	$	143,051	$	413,552,953	$	(425,080,470	)	$	(11,384,426	)
Stock-based compensation		-			-		-		-		-		390,195		-			390,195
Sale of common stock, net of costs					-		-		1,831,503		18,315		9,144,198		-			9,162,513
Conversion of liability classified warrants		-			-		-		-		-		11,423,203		-			11,423,203
Reclassification of contingently redeemable warrants		(423,100	)		-		-		-		-		423,100		-			423,100
Net loss		-			-		-		-		-		-		(8,435,650	)		(8,435,650	)
Balance March 31, 2024		-			4,030		40		16,136,640		161,366		434,933,649		(433,516,120	)		1,578,935

Nine Months Ended March 31, 2024

			Stockholders' Equity (Deficiency)
			Series A Convertible Preferred Stock				Common Stock
	Contingently Redeemable Warrants		Shares		Amount		Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total
Balance June 30, 2023	$	263,400		4,030	$	40		11,656,714		$	116,567		$	409,933,959		$	(412,030,437	)		(1,979,871	)
Stock-based compensation		-		-		-		98,372			984			1,329,518			-			1,330,502
Withholding taxes related to restricted stock units		-		-		-		(25,467	)		(255	)		(56,146	)		-			(56,401	)
Sale of common stock, net of costs		-		-		-		2,048,530			20,485			9,673,397			-			9,693,882
Conversion of liability classified warrants		-		-		-		-			-			11,423,203			-			11,423,203
Conversion of liability classified warrants upon warrant exercise		-		-		-		2,358,491

SEC Form 10-Q filed by Palatin Technologies Inc.