SEC Form 10-Q filed by Palatin Technologies Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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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.
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PALATIN TECHNOLOGIES, INC.
Table of Contents
| i |
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 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; | |
| ● | whether Boehringer Ingelheim International GmbH (“Boehringer Ingelheim”), which in August 2025 acquired certain Palatin intellectual property to first-in-class melanocortin receptor-targeted peptides developed by Palatin, will be able to successfully develop a product for the treatment of retinal diseases, including diabetic retinopathy; | |
| ● | the results of further development, clinical trials and the timing of regulatory submissions with our late-stage products, including PL7737, an oral small molecule MC4R agonist, with an IND filing projected in the first half of calendar year 2026; a novel once-weekly melanocortin receptor-4 (“MC4R”) peptide agonist for obesity indications, with an Investigational New Drug (“IND”) filing projected in the second half of calendar year 2026; PL8177, an oral peptide formulation for treatment of ulcerative colitis, which reported positive topline data in a Phase 2 clinical trial proof-of-concept trial in the first quarter of 2025; and an MC4R agonist for diabetic nephropathy, which reported positive topline date in the fourth quarter of 2024; | |
| ● | 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 contract manufacturers to perform their manufacturing activities for us in compliance with applicable regulations; | |
| ● | 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; | |
| ● | our ability to maintain product liability insurance at a reasonable cost or in sufficient amounts, if at all; |
| ii |
| ● | the performance and retention of our management team, senior staff professionals, other employees, and third-party contractors and consultants; | |
| ● | 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 or conflicts in the Middle East, 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; 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.
| iii |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Balance Sheets
(unaudited)
| December 31, 2025 | June 30, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts Receivable | ||||||||
| Other receivables | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets - operating leases | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Short-term operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term operating lease liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ equity (deficiency): | ||||||||
| Preferred stock of $ par value – authorized shares: shares issued and outstanding designated as follows: | ||||||||
| Series A Convertible: authorized shares as of December 31, 2025: issued and outstanding shares as of December 31, 2025 and June 30, 2025 | ||||||||
| Series D Convertible: authorized shares as of December 31, 2025: issued and outstanding shares as of December 31, 2025 and June 30, 2025 | ||||||||
| Common stock of $ par value – authorized shares: | ||||||||
| issued and outstanding shares as of December 31, 2025 and shares as of June 30, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficiency) | ( | ) | ||||||
| Total liabilities and stockholders’ equity (deficiency) | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 1 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Statements of Operations
(unaudited)
| Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| REVENUES | ||||||||||||||||
| Collaboration and license | $ | $ | $ | $ | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Gain on sale of Vyleesi | ( | ) | ( | ) | ||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Investment income | ||||||||||||||||
| Foreign currency transaction gain | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense), net | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per common share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding used in computing basic and diluted net loss per common share | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)
(unaudited)
Three Months Ended December 31, 2025
| Stockholders’ Equity (Deficiency) | ||||||||||||||||||||||||||||||||||||
| Series A Convertible Preferred Stock | Series D Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Withholding taxes related to restricted stock units | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Equity financing, net of costs | - | - | ||||||||||||||||||||||||||||||||||
| Warrant excercises | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance December 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||||||
Six Months Ended December 31, 2025
| Stockholders’ Equity (Deficiency) | ||||||||||||||||||||||||||||||||||||
| Series A Convertible Preferred Stock | Series D Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Withholding taxes related to restricted stock units | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Equity financing, net of costs | - | - | ||||||||||||||||||||||||||||||||||
| Warrant excercises | - | - | ||||||||||||||||||||||||||||||||||
| Fractional shares | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance December 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Statements of Changes in Stockholders’ Deficiency
(unaudited)
Three Months Ended December 31, 2024
| Stockholders’ Deficiency | ||||||||||||||||||||||||||||
| Series A Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Warrant exercises | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
Six Months Ended December 31, 2024
| Stockholders’ Deficiency | ||||||||||||||||||||||||||||
| Series A Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||
| Withholding taxes related to restricted stock units | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Shares released from abeyance | ( | ) | ||||||||||||||||||||||||||
| Warrant exercises | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
| Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Decrease in right-of-use asset | ||||||||
| Unrealized foreign currency transaction loss | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Gain on sale of Vyleesi | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivables | ||||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of Vyleesi | ||||||||
| Purchases of property and equipment | ( | ) | ||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payment of withholding taxes related to restricted stock units | ( |
) | ( |
) | ||||
| Proceeds from the sale of common stock and warrants, net | ||||||||
| Payment of finance lease obligations | ( | ) | ||||||
| Proceeds from exercise of warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
| (1) | ORGANIZATION |
Nature of Business - Palatin Technologies, Inc. (“Palatin” or the “Company”) is a biopharmaceutical company developing first-in-class medicines based on molecules that modulate the activity of the melanocortin receptor (“MCR”) system. The Company’s product candidates are targeted, receptor-specific therapeutics for the treatment of diseases with significant unmet medical need and commercial potential.
Melanocortin Receptor System. The MCR system has effects on food intake, metabolism, sexual function, inflammation, and immune system responses. There are five melanocortin receptors, MC1R through MC5R. Modulation of these receptors, through use of receptor-specific agonists, which activate receptor function, or receptor-specific antagonists, which block receptor function, can have significant pharmacological effects.
The Company’s product development activities focus primarily on use of MC4R agonists for treatment of obesity, with a primary focus on rare neuroendocrine diseases. The Company is developing MC4R small molecule agonists and peptide agonists with potential utility in obesity and metabolic-related disorders, rare MC4R pathway diseases, such as hypothalamic obesity, Prader-Willi syndrome, and other orphan indications.
The Company is also developing, dependent on resources for development activities, MC1R agonist products with potential to treat ocular diseases and inflammatory and autoimmune diseases, such as uveitis, and inflammatory bowel disease. A product candidate MC1R agonist for treatment of dry eye disease, known as keratoconjunctivitis sicca, has been licensed to a third party, and a family of MC1R compounds for treatment of retinal diseases, including diabetic retinopathy and diabetic macular edema, has been licensed to Boehringer Ingelheim. The Company believes that the MC1R agonist peptides in development have broad anti-inflammatory effects and appear to utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses.
The Company’s prior commercial product, Vyleesi®, was approved by the U.S. Food and Drug Administration (“FDA”) in June 2019 for the treatment of hypoactive sexual desire disorder (“HSDD”) in premenopausal women. Vyleesi was initially licensed to AMAG Pharmaceuticals, Inc. in January 2017, terminated July 2020, and subsequently sold to Cosette Pharmaceuticals Inc. (“Cosette”) in December 2023.
Reverse
Stock Split - On August 11, 2025, a
Business
Risks and Liquidity – The Company has incurred operating losses and negative cash flows from operations since inception and
will need additional funding to complete its planned product development efforts. As shown in the accompanying consolidated financial
statements, the Company had an accumulated deficit as of December 31, 2025, of $
As
of December 31, 2025, the Company’s cash and cash equivalents were $
The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern, which requires management to assess the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are issued. While the Company has raised funding in the past, the ability to raise funding in future periods is not considered probable, as defined under the accounting standards. As such, under the requirements of ASC 205-40, management may not consider the potential for future funding in their assessment of the Company’s ability to meet its obligations for the next year.
| 6 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
Based on the Company’s current operating and development plans, the Company expects that its existing cash and cash equivalents as of the date of this filing will be sufficient to enable it to fund operations through the next twelve months following the issuance of the financial statements.
Concentrations – Concentrations in the Company’s assets and operations subject it to certain related risks. Financial instruments that subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents, and accounts receivable. The Company’s cash and cash equivalents are primarily invested in one investment account sponsored by a large financial institution. The Company’s revenue and accounts receivable are generated by one customer.
| (2) | BASIS OF PRESENTATION |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnote disclosures required to be presented for complete financial statements. In the opinion of management, these consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation. The results of operations for the three and six months ended December 31, 2025, may not necessarily be indicative of the results of operations expected for the full fiscal year.
The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025, filed with the U.S. Securities and Exchange Commission (“SEC”), which includes consolidated financial statements as of June 30, 2025 and 2024 and for the fiscal years then ended.
| (3) | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned inactive subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates – The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash,Cash Equivalents – Cash and cash equivalents include cash on hand, cash in banks, and all highly liquid investments with a
purchased maturity of less than three months. Cash equivalents consisted of $
Fair Value of Financial Instruments – The Company’s financial instruments consist primarily of cash equivalents, accounts receivable, and accounts payable. Management believes that the carrying values of cash equivalents, accounts receivable, and accounts payable are representative of their respective fair values based on the short-term nature of these instruments.
Credit Risk – Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. Total cash and cash equivalents balances have exceeded balances insured by the Federal Depository Insurance Company.
Segment Information – The Chief Operating Decision Maker (the “CODM”) assesses performance for its segment based on net loss, which is reported on the consolidated statements of operations. The measure of segment assets is reported on the balance sheet as total assets. The CODM uses cash forecast models in deciding how to invest into the segment. The CODM analyzes the Company’s net loss and monitors budget versus actual results to assess the performance of the Company.
Property
and Equipment – Property and equipment consists of office and laboratory equipment, office furniture, and leasehold improvements
and includes assets acquired under finance leases. Property and equipment are recorded at cost. Depreciation is recognized using the
straight-line method over the estimated useful lives of the related assets, generally
| 7 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
Impairment of Long-Lived Assets – The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of a long-lived asset, management evaluates whether the estimated future undiscounted net cash flows from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset would be written down to fair value. Fair value is determined by an evaluation of available price information at which assets could be bought or sold, including quoted market prices, if available, or the present value of the estimated future cash flows based on reasonable and supportable assumptions.
Leases – At lease inception, the Company determines whether an arrangement is or contains a lease. Operating leases are included in operating lease right-of-use (“ROU”) assets, short-term operating lease liabilities, and long-term operating lease liabilities in the consolidated financial statements. Finance leases are included in property and equipment for ROU assets, short-term finance lease liabilities, and long-term finance lease liabilities in the consolidated financial statements. ROU assets represent the Company’s right to use leased assets over the term of the lease. Lease liabilities represent the Company’s contractual obligation to make lease payments over the lease term. ROU assets and lease liabilities are recognized at the commencement date. The lease liability is measured as the present value of the lease payments over the lease term. The Company uses the rate implicit in the lease if it is determinable. When the rate implicit in the lease is not determinable, the Company uses an estimate based on a hypothetical rate provided by a third party as the Company currently does not have issued debt. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause incremental costs to the Company if the option were not exercised.
The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented as an operating expense separately from interest expense on the lease liability.
The Company has elected not to recognize an ROU asset and obligation for leases with an initial term of twelve months or less. The expense associated with short-term leases is included in selling, general and administrative expenses in the statements of operations. To the extent a lease arrangement includes both lease and non-lease components, the Company has elected to account for the components as a single lease component.
On
December 11, 2025, the Company entered into an office lease agreement at 304 Carnegie Center Drive in Princeton, New Jersey. In connection
with the execution of the lease, the Company recorded a right-of-use asset and corresponding lease liability of $
Revenue Recognition – For licenses of intellectual property, the Company assesses at contract inception whether the intellectual property is distinct from other performance obligations identified in the arrangement. If the licensing of intellectual property is determined to be distinct, revenue is recognized for non-refundable, upfront license fees when the license is transferred to the customer, and the customer can use and benefit from the license. If the licensing of intellectual property is determined not to be distinct, then the license is bundled with other promises in the arrangement into one performance obligation. The Company determines if the bundled performance obligation is satisfied over time or at a point in time. If the Company concludes that the non-refundable, upfront license fees will be recognized over time, the Company assesses the appropriate method of measuring proportional performance.
| 8 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
Research, development and regulatory milestone payments are considered variable consideration subject to constraint and excluded from the transaction price until it is probable that a significant reversal would not occur. At each reporting period, the Company will assess whether there still is significant uncertainty associated with the variable consideration and revenue relating to the milestones recorded in the period where the significant uncertainty is resolved.
Sales-based royalty and milestone payments resulting from customer contracts solely or predominately for the license of intellectual property will only be recognized upon occurrence of the underlying sale or achievement of the sales milestone in the future and such sales-based royalties and milestone payments will be recognized in the same period earned.
The Company recognizes revenue for research and development services under customer agreements as the services are performed. The Company records these services as revenue and not as a reduction of research and development expenses as the Company is the principal in the research and development activities based upon its control of such activities, which is part of its ordinary activities.
Research, development and regulatory milestone payments are generally due 30 business days after the milestone is achieved. Sales milestone payments are generally due 45 business days after the calendar year in which the sales milestone is achieved. Royalty payments are generally due on a quarterly basis 20 business days after being invoiced.
Research and Development Costs – The costs of research and development activities are charged to expense as incurred, including the cost of equipment for which there is no alternative future use.
Accrued Expenses – Third parties perform a significant portion of the Company’s development activities. The Company reviews the activities performed under all contracts each quarter and accrues expenses and the amount of any reimbursement to be received from its collaborators based upon the estimated amount of work completed considering milestones achieved. Estimating the value or stage of completion of certain services requires judgment based on available information. If the Company does not identify services performed for it but not billed by the service provider, or if it underestimates or overestimates the value of services performed as of a given date, reported expenses will be understated or overstated.
Income Taxes – The Company and its subsidiary file consolidated federal and separate-company state income tax returns. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences or operating loss and tax credit carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The Company has recorded and continues to maintain a full valuation allowance against its deferred tax assets based on the history of losses incurred and lack of experience projecting future product revenue and sales-based royalty and milestone payments.
| 9 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
For the three and six months ended December 31, 2025 and 2024, no additional common shares were added to the computation of diluted EPS because to do so would have been anti-dilutive. The potential number of common shares excluded from diluted EPS during the three and six months ended December 31, 2025 and 2024 were and , respectively.
Included in the weighted average common shares used in computing basic and diluted net loss per common share are and vested restricted stock units that had not been issued as of December 31, 2025 and 2024 due to a provision in the restricted stock unit agreements to delay delivery.
Translation of foreign currencies – Transactions denominated in currencies other than the Company’s functional currency (U.S. Dollar) are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in the consolidated statements of operations as unrealized (based on the applicable period-end exchange rate) or realized upon settlement of the transactions.
| (4) | New Accounting Pronouncements |
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 enhances financial reporting by requiring additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The guidance is effective for public business entities for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently planning to adopt this guidance when effective. The Company is assessing the impact of the adoption on the Company’s consolidated financial statements and accompanying footnotes but expects the impact will be enhanced disclosures related to income statement expenses.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 enhances the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance is effective for public business entities for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted. The Company is currently planning to adopt this guidance when effective. The Company is assessing the impact of the adoption on the Company’s consolidated financial statements and accompanying footnotes.
| (5) | AGREEMENT WITH BOEHRINGER INGLEHEIM |
On August 14, 2025, the Company entered into a Research Collaboration, License and Patent Assignment Agreement (the “Assignment Agreement”) with Boehringer Ingelheim International GmbH (“Boehringer Ingelheim” or “BI”) to research, develop and commercialize first-in-class melanocortin receptor-targeted peptides developed by the Company for the treatment of retinal diseases, including diabetic retinopathy.
Under the terms of the Assignment Agreement, the Company assigned certain patent rights and provided a license to Boehringer Ingelheim (the “Assigned Patents”), and the Company will conduct research services on behalf of Boehringer Ingelheim at Boehringer Ingelheim’s expense focused on development during a two-year period, which Boehringer Ingelheim has the right to extend by up to six months. The Company retains an exclusive, fully-paid license to PL9643 for treatment of dry eye disease. The Company determined that two performance obligations exist under the Assignment Agreement (i) patents and license assignment and (ii) research and development services.
The
patents and license assignment performance obligation relates to intellectual property that is distinct from other performance obligations
identified in the arrangement. The consideration received for this performance obligation includes both fixed cash consideration and
variable consideration subject to constraint. During the three and six months ended December 31, 2025, the Company recorded $
| 10 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
The
research and development services performance obligation relates to specific research activities during the research term, and BI will
reimburse the Company for these activities at a full-time equivalent (“FTE”) rate of €
During the three and six months ended December 31, 2025, the Company recorded revenue related to the Assignment Agreement, which consisted of the upfront payment for the Assigned Patents, the achievement of a research milestone during September 2025, and FTE related reimbursements as follows:
Three Months Ended December 31, 2025 | Six Months Ended December 31, 2025 | |||||||
| License and assignment of intellectual property | $ | $ | ||||||
| Research, development and regulatory milestones achieved | ||||||||
| FTE Reimbursements for research and development services | ||||||||
| Total | $ | $ | ||||||
| (6) | RELEASE AND SETTLEMENT AGREEMENT |
On
June 5, 2025, the Company entered into a Release and Settlement Agreement (the “Settlement Agreement”) with Cosette pursuant
to which the Cosette resolved all outstanding obligations and commercialization covenants related to such sales-based milestone payments
and inventory purchase commitments by remitting a single lump sum payment of $
| (7) | PREPAID EXPENSES AND OTHER CURRENT ASSETS |
Prepaid expenses and other current assets consist of the following:
| December 31, | June 30, | |||||||
| 2025 | 2025 | |||||||
| Clinical / regulatory costs | $ | $ | ||||||
| Insurance premiums | ||||||||
| Other | ||||||||
| $ | $ | |||||||
| 11 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
| (8) | FAIR VALUE MEASUREMENTS |
The fair value of cash equivalents is classified using a hierarchy prioritized based on inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The following table provides the assets carried at fair value:
| Carrying Value | Quoted prices in active markets (Level 1) | Other quoted/observable inputs (Level 2) | Significant unobservable inputs | |||||||||||||
| December 31, 2025: | ||||||||||||||||
| Cash equivalents - Money market funds | $ | $ | $ | $ | ||||||||||||
| June 30, 2025: | ||||||||||||||||
| Cash equivalents - Money market funds | $ | $ | $ | $ | ||||||||||||
| (9) | ACCRUED EXPENSES |
Accrued expenses consist of the following:
| December 31, | June 30, | |||||||
| 2025 | 2025 | |||||||
| Clinical / regulatory costs | $ | $ | ||||||
| Other research related expenses | ||||||||
| Professional Services | ||||||||
| Other | ||||||||
| $ | $ | |||||||
| (10) | COMMITMENTS AND CONTINGENCIES |
Inventory Purchases – The Company had certain supply agreements relating to the Vyleesi product with certain manufacturers and suppliers, including Catalent Belgium S.A (“Catalent”), Ypsomed AG (“Ypsomed”), and Lonza Ltd (“Lonza”), all of which were transferred to Cosette on June 5, 2025, pursuant a Release and Settlement Agreement with Cosette (see Note 6).
Contingencies – The Company accounts for litigation losses in accordance with ASC 450-20, Loss Contingencies. In addition, the Company is subject to other contingencies, such as product liability, arising in the ordinary course of business. Loss contingency provisions are recorded for probable losses when management is able to reasonably estimate the loss. Any outcome upon settlement that deviates from the Company’s best estimate may result in additional expense or in a reduction in expense in a future accounting period. The Company records legal expenses associated with such contingencies as incurred.
The Company is involved, from time to time, in various claims and legal proceedings arising in the ordinary course of its business.
On
February 13, 2025, a complaint was filed in the Supreme Court of the State of New York, County of New York, captioned H.C. Wainwright
& Co., LLC (“Wainwright”) v. Palatin Technologies, Inc., Case No: 650878/2025. The complaint named the Company as defendant,
asserting three causes of action for breach of contract and seeking monetary damages of approximately $
On
November 17, 2025, the Company entered into a settlement and release agreement with Wainwright to resolve all outstanding disputes between
the parties. Pursuant to the settlement, the Company paid Wainwright $
| 12 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
| (11) | SEGMENT INFORMATION |
The
Company views its operations and manages its business in
The accounting policies of the Company’s segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for its segment based on net loss, which is reported on the consolidated statements of operations. The measure of segment assets is reported on the balance sheet as total assets. The CODM uses cash forecast models in deciding how to invest into the segment. The CODM analyzes the Company’s net loss and monitors budget versus actual results to assess the performance of the Company.
| Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
| Less: | ||||||||||||||||
| Program spend | ||||||||||||||||
| Personnel costs | ||||||||||||||||
| Gain on sale of Vyleesi | ( | ) | ( | ) | ||||||||||||
| Administrative costs (a) | ||||||||||||||||
| Other segment items (b) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Segment net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (a) |
| (b) |
| (12) | STOCKHOLDERS’ EQUITY (DEFICIENCY) |
Series
D Convertible Preferred Stock – On June 10, 2025, the Company entered into a securities purchase agreement (the “Purchase
Agreement”) with certain accredited investors (the “Purchasers”), pursuant to which the Company agreed to sell and
issue, in a private placement (the “June 2025 Private Placement”),
| 13 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
Series
A Convertible Preferred Stock – As of December 31, 2025, shares of Series A Convertible Preferred Stock were outstanding.
Each share of Series A Convertible Preferred Stock is convertible at any time, at the option of the holder, into the number of shares
of common stock equal to $
Financing Transactions – On November 5, 2025, the Company entered into an underwriting agreement with A.G.P./Alliance Global Partners (“A.G.P.”) relating to the Company’s public offering of shares of common stock (or pre-funded warrants in lieu thereof) together with Series J warrants to purchase up to shares of common stock (the “Series J Warrants”), and Series K warrants to purchase up to shares of common stock (the “Series K Warrants”) at a combined public offering price of $ per share of common stock and accompanying Series J and Series K Warrants (the “November 2025 Offering”). The underwriters also had an option to purchase up to an additional shares of the Company’s common stock and associated Series J and K Warrants on the same terms and conditions.
Each
Series J Warrant has an exercise price of $
The
gross proceeds to the Company from the November 2025 Offering, before deducting the underwriting discounts and commissions and offering
expenses, were approximately $
On May 7, 2025, the Company announced the closing of a reduced previously announced public offering with participation from institutional and accredited investors consisting of shares of common stock together with Series F warrants to purchase up to shares of common stock (the “Series F Warrants”), Series G warrants to purchase up to shares of common stock (the “Series G Warrants”), and Series H warrants to purchase up to shares of common stock (the “Series H Warrants”), at a combined public offering price of $ per share of common stock and accompanying warrants (the “May 2025 Offering”).
| 14 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
The
Series F Warrants have an exercise price of $
The
Company received aggregate gross proceeds from the May 2025 Offering of approximately $
On February 10, 2025, the Company entered into definitive agreements with a single healthcare focused institutional investor for the purchase and sale of shares of its common stock (or common stock equivalents in lieu thereof) in a registered direct offering (the “February 2025 RD Offering”) at a purchase price of $ per share.
The
Company also agreed to issue to the same investor in a concurrent private placement warrants to purchase up to an aggregate of
shares of common stock (the “February 2025 Private Placement” and, together with the February 2025 RD Offering, the “February
2025 Offering”). The warrants issued in the concurrent February 2025 Private Placement have an exercise price of $
The
gross proceeds from the February 2025 Offering totaled $
On
February 11, 2025, the Company entered into a sales agreement (the “2025 Sales Agreement”) with A.G.P., pursuant to which
the Company may, from time to time, sell shares of the Company’s common stock at market prices by methods deemed to be an “at-the-market
offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
No proceeds were raised under the 2025 Sales Agreement during the three and six months ended December 31, 2025.
On
April 12, 2023, the Company entered into a new equity distribution agreement (the “2023 Equity Distribution Agreement”) with
Canaccord Genuity LLC (“Canaccord”), pursuant to which the Company may, from time to time, sell shares of the Company’s
common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under
the Securities Act .
No proceeds were raised under the 2023 Equity Distribution Agreement during the three and six months ended December 31, 2025 and 2024.
| 15 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
Stock Warrants – During the three and six month ended December 31, 2025, the Company received proceeds from the following warrant exercises:
Three Months Ended December 31, 2025 | Six Months Ended December 31, 2025 | |||||||||||||||||||
| Series | Exercise Price | Warrants | Proceeds | Warrants | Proceeds | |||||||||||||||
| Series F Warrants | $ | $ | $ | |||||||||||||||||
| Series G Warrants | $ | |||||||||||||||||||
| Series H Warrants | $ | |||||||||||||||||||
| Series J Warrants | $ | |||||||||||||||||||
| Series K Warrants | $ | |||||||||||||||||||
| $ | $ | |||||||||||||||||||
As
a result of the Series G warrant exercises, investors received and Series H warrants at an exercise price of $
On
December 13, 2024, the Company entered into a letter agreement (the “December
2024 Inducement Letter”) with a holder (the “December 2024 Exercising Holder”) of outstanding common stock purchase
warrants that the Company issued on June 24, 2024, with an initial exercise price of $
| 16 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
As of December 31, 2025, the Company had outstanding warrants for shares of common stock as follows:
| Shares of Common | Exercise Price per | Latest Expiration | ||||||||
| Description | Stock | Share | Date | |||||||
| May 2022 Warrants | $ | |||||||||
| October 2022 Placement Agent Warrants | $ | |||||||||
| October 2023 Placement Agent Warrants | $ | |||||||||
| January 2024 Private Warrants | $ | |||||||||
| January 2024 Placement Agent Warrants | $ | |||||||||
| June 2024 Series B Warrants | $ | |||||||||
| December 2024 Series C Warrants | $ | |||||||||
| December 2024 Series D Warrants | $ | |||||||||
| February 2025 Series E Warrants | $ | |||||||||
| May 2025 Series F Warrants | $ | |||||||||
| May 2025 Series G Warrants | $ | |||||||||
| May 2025 Series H Warrants | $ | ** | ||||||||
| June 2025 Series I Warrants | $ | |||||||||
| November 2025 Pre-funded Warrants | $ | N/A | ||||||||
| November 2025 Series J Warrants | $ | *** | ||||||||
| November 2025 Series K Warrants | $ | **** | ||||||||
| November 2025 Placement Agent Warrants | $ | |||||||||
| November 2025 HCW Settlement Warrants | $ | |||||||||
| * |
| ** |
| *** |
| **** |
Stock Options – For the three and six months ended December 31, 2025, the Company recorded stock-based compensation related to stock options of $ and $, respectively. For the three and six months ended December 31, 2024, the Company recorded stock-based compensation related to stock options of $ and $, respectively.
| 17 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Term in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding - June 30, 2025 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Fractional shares | ( | ) | ||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Exercised | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Outstanding - December 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2025 | $ | $ | ||||||||||||||
| Expected to vest at December 31, 2025 | $ | $ | ||||||||||||||
Stock options granted to the Company’s executive officers and employees generally vest over a 48-month period, while stock options granted to its non-employee directors vest over a 12-month period.
During the three months ended December 31, 2025, executive officers of the Company were granted an aggregate of time-based stock options and performance-based stock options. , upon certification by the Compensation Committee that specified performance objectives have been achieved. Compensation expense for these awards will be recognized when achievement of the applicable performance conditions is considered probable.
In addition, the executive officers received an aggregate of performance-based stock options with an 18-month performance period. These options vest upon acceptance by the FDA of an IND application for an in-house compound, subject to certification by the Compensation Committee.
All of the stock option grants described above are subject to stockholders approving an increase in the Company’s 2011 Equity Incentive Plan. In accordance with ASC 718, no compensation cost related to these awards will be recognized until stockholder approval is obtained and the awards are considered granted for accounting purposes.
Included in the outstanding options in the table above are and unvested performance-based stock options granted to executive officers and other employees, respectively, which were granted in June 2022, 2023, 2024 and December 2025. Grants in June 2022, 2023, 2024 and December 2025 were , , and , respectively. The performance-based stock options vest on annual performance criteria through the fiscal years ending June 30, 2030 relating to advancement of MC1R programs, including initiation of clinical trials and licensing of Vyleesi in additional countries or regions.
Restricted Stock Units – For the three and six months ended December 31, 2025, the Company recorded stock-based compensation related to restricted stock units (“RSUs”) of $ and $, respectively. For the three and six months ended December 31, 2024, the Company recorded stock-based compensation related to RSUs of $ and $, respectively.
| Outstanding at June 30, 2025 | ||||
| Granted | ||||
| Forfeited | ||||
| Vested | ( | ) | ||
| Expirations | ( | ) | ||
| Fractional shares | ||||
| Outstanding at December 31, 2025 |
| 18 |
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
During the three months ended December 31, 2025, executive officers of the Company were granted, subject to stockholder approval, an aggregate of time-based RSUs and performance-based RSUs. , upon certification by the Compensation Committee that specified performance objectives have been achieved. Compensation expense for these awards will be recognized when achievement of the applicable performance conditions is considered probable.
In addition, the executive officers received an aggregate of performance-based RSUs with an 18-month performance period. These RSUs vest upon acceptance by the FDA of an IND application for an in-house compound, subject to certification by the Compensation Committee.
The RSU grants described above are subject to stockholders approving an increase in the Company’s 2011 Equity Incentive Plan. In accordance with ASC 718, no compensation cost related to these awards will be recognized until stockholder approval is obtained and the awards are considered granted for accounting purposes.
Included in outstanding RSUs in the table above are vested shares that have not been issued as of December 31, 2025, due to a provision in the RSU agreements for deferred delivery.
Included in the outstanding RSUs in the table above are and unvested performance-based RSUs granted to executive officers and other employees, respectively, which were granted in June 2022, 2023, 2024 and December 2025. Grants in June 2022, 2023, 2024 and December 2025 were , , and RSUs, respectively. The performance-based RSUs vest on annual performance criteria through the fiscal years ending June 30, 2028, relating to advancement of MC1R programs, including initiation of clinical trials.
| (13) | SUBSEQUENT EVENT |
On
January 8, 2026, the Company entered into a sublicense agreement (the “Altanispac Agreement”) with Altanispac Labs, LLC (“Altanispac”),
exclusively licensing PL9643, an MCR1 agonist for dry eye disease. In partial consideration for the rights to PL9643, the Altanispac
Agreement provided for upfront consideration in the form of non-cash debt cancellation of approximately $
In addition, the agreement provides for potential future payments to the Company under the sublicensing agreement, including the sale of the asset, commercialization of the product, and royalties. The receipt of future payments is dependent upon future events that are uncertain and not within the control of the Company. The Company will recognize amounts related to future payments, if earned, in the period such amounts become realizable and earned, in accordance with applicable accounting guidance.
| 19 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements filed as part of this report and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2025.
The following discussion and analysis contain forward-looking statements within the meaning of the federal securities laws. You are urged to carefully review our description and examples of forward-looking statements included earlier in this Quarterly Report immediately prior to Part I, under the heading “Special Note Regarding Forward-Looking Statements.” Forward-looking statements are subject to risk that could cause actual results to differ materially from those expressed in the forward-looking statements. You are urged to carefully review the disclosures we make concerning risks and other factors that may affect our business and operating results, including those made in this Quarterly Report and our Annual Report on Form 10-K for the year ended June 30, 2025, as well as any of those made in our other reports filed with the SEC. You are cautioned not to place undue reliance on the forward-looking statements included herein, which speak only as of the date of this document. We do not intend, and undertake no obligation, to publish revised forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.
Critical Accounting Policies and Estimates
Our significant accounting policies, which are described in the notes to our consolidated financial statements included in this report and in our Annual Report on Form 10-K for the year ended June 30, 2025, have not changed during the three and six months ended December 31, 2025. We believe that our accounting policies and estimates relating to the carrying value of inventory, revenue recognition, accrued expenses, purchase commitment liabilities, warrants and stock-based compensation are the most critical.
Our Business
We are a biopharmaceutical company developing first-in-class medicines based on molecules that modulate the activity of the melanocortin receptor systems. Our product candidates are targeted, receptor-specific therapeutics for the treatment of diseases with significant unmet medical need and commercial potential. Our primary focus is the development of novel ‘next generation’ melanocortin-4 receptor (“MC4R”) agonists for treatment of rare neuroendocrine diseases.
Melanocortin Receptor System. The melanocortin receptor (“MCR”) system has effects on food intake, metabolism, sexual function, inflammation, and immune system responses. There are five melanocortin receptors, MC1R through MC5R. Modulation of these receptors, through use of receptor-specific agonists, which activate receptor function, or receptor-specific antagonists, which block receptor function, can have significant pharmacological effects.
Our prior commercial product, Vyleesi®, was approved by the U.S. Food and Drug Administration (“FDA”) in June 2019 and was initially marketed in the United States by AMAG Pharmaceuticals, Inc. (“AMAG”) for the treatment of hypoactive sexual desire disorder (“HSDD”) in premenopausal women pursuant to a license agreement for Vyleesi for North America, which was entered into on January 8, 2017 (the “AMAG License Agreement”). The AMAG License Agreement was terminated effective July 24, 2020, and we commenced marketing Vyleesi in North America. Effective December 19, 2023, Cosette Pharmaceuticals, Inc.(“Cosette”) acquired all rights to Vyleesi. As disclosed in Note 6 to the Consolidated Financial Statements, effective June 5, 2025, we entered into a Release and Settlement Agreement with Cosette.
In August 2025, as disclosed in Note 5 to the Consolidated Financial Statements, we entered into a Research Collaboration, License and Patent Assignment Agreement with Boehringer-Ingelheim International GmbH (“Boehringer Ingelheim”) to research, develop and commercialize first-in-class melanocortin receptor-targeted peptides we developed for the treatment of retinal diseases, including diabetic retinopathy.
In January 2026, as disclosed in Note 13 to the Consolidated Financial Statements, we entered into a sublicense agreement with Altanispac Labs, LLC to exclusively license PL9643, a clinical development MCR1 agonist for the treatment of dry eye disease.
Our new product development activities focus on obesity, primarily MC4R agonists for the treatment of rare MC4R pathway diseases, like hypothalamic obesity (HO) and Prader-Willi syndrome (PWS); and secondarily on ocular, gastroenterology, and renal indications. We are actively engaged in discussions with potential partners and licensees that have the financial and operational resources to progress non-obesity products through development, approval and commercialization.
| 20 |
Pipeline Overview
The following charts illustrate the status of our drug development programs. Multiple clinical trials are planned in calendar year 2026 for treatment of rare MC4R pathway diseases:
The following programs have been out-licensed, or are available to out-license or otherwise transfer:
Our Strategy
Key elements of our business strategy include:
| ● | Maintaining a team to create, develop and commercialize MC4R agonists addressing unmet medical needs for rare MC4R pathway diseases; | |
| ● | Entering into strategic alliances and partnerships with companies to facilitate the development, manufacture, marketing, sale, and distribution of product candidates that we are developing, including products for indications other than obesity; | |
| ● | Partially funding our product development programs with the cash flow generated from the sale of Vyleesi to Cosette, our agreement with Boehringer Ingelheim, and existing license agreements, as well as any future research, collaboration, or license agreements; and | |
| ● | Completing development and seeking regulatory approval of certain of our product candidates. |
| 21 |
Corporate Information
We were incorporated under the laws of the State of Delaware on November 21, 1986 and commenced operations in the biopharmaceutical area in 1996. Our corporate offices are located at 301 Carnegie Center Drive, Suite 304 Princeton, New Jersey 08540, and our telephone number is (609) 495-2200. We maintain an Internet site, where among other things, we make available free of charge on and through this website our Forms 3, 4 and 5, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) and Section 16 of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our website and the information contained in it or connected to it are not incorporated into this Quarterly Report on Form 10-Q. The reference to our website is an inactive textual reference only.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (www.sec.gov).
Results of Operations
As we continue to explore commercial opportunities and partners in both U.S. and international markets, we remain attentive to evolving global economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics. Although these factors have not had a material impact on our operations to date, future changes in trade regulations, tariff structures, or logistical constraints could influence the cost, availability, or timing of materials, services and other components associated with the development of our product candidates and manufacturing capabilities. We continue to monitor these developments closely to maintain operational efficiency and help mitigate potential future impacts.
Three and Six months ended December 31, 2025, Compared to the Three and Six months ended December 31, 2024:
Revenues – For the three and six months ended December 31, 2025, we recognized $116,036 and $8,963,586 in collaboration and license revenue compared to $0 for the three and six months ended December 31, 2024. The increase in collaboration and license revenue is related to the BI Agreement which consisted of an upfront payment, the achievement of a research milestone during the three months ended September 30, 2025, and FTE related reimbursements.
Research and Development – Research and development expenses were $4,319,767 and $6,845,533 for the three and six months ended December 31, 2025, respectively, compared to $3,429,479 and $9,173,233 for the three and six months ended December 31, 2024, respectively. The increase for the three months ended December 31, 2025 compared to the three months ended December 31, 2024 was primarily related to an increase in spending on our MCR programs. The decrease for the six months ended December 31, 2025 compared to the six months ended December 31, 2024 was primarily related to a decrease in spending on our MCR programs.
Research and development expenses related to our MCR programs were $2,290,073 and $3,260,702 for the three and six months ended December 31, 2025, respectively, compared to $1,888,065 and $5,969,102 for the three and six months ended December 31, 2024, respectively. The increase for the three months ended December 31, 2025 compared to the three months ended December 31, 2024 was primarily related to an increase in spending on our MCR programs. The decrease for the six months ended December 31, 2025 compared to the six months ended December 31, 2024 was primarily related to a decrease in spending on our MCR programs.
The amounts of project spending above exclude general research and development spending which was $2,029,694 and 3,584,831 for the three and six months ended December 31, 2025, respectively, compared to $1,662,717 and $3,204,131 for the three and six months ended December 31, 2024. The increase is primarily attributable to an increase in compensation-related expenses.
Cumulative spending from inception to December 31, 2025, was approximately $311,900,000 on our Vyleesi program and approximately $254,500,000 on all our other programs (which include melanocortin receptor agonists, other discovery programs and terminated programs). Due to various risk factors described in our Annual Report on Form 10-K for the year ended June 30, 2025, under “Risk Factors,” including the difficulty in currently estimating the costs and timing of future Phase 1 clinical trials and larger-scale Phase 2 and Phase 3 clinical trials for any product under development, we cannot predict with reasonable certainty when, if ever, a program will advance to the next stage of development or be successfully completed, or when, if ever, related net cash inflows will be generated.
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General and Administrative – Selling, general and administrative expenses, which consist mainly of compensation and related costs, were $3,124,817 and $4,785,548 for the three and six months ended December 31, 2025, respectively, compared to $1,681,844 and $3,702,775 for the three and six months ended December 31, 2024, respectively. The increase is a result of increased compensation costs and professional fees.
Other Income (Expense) – For the three and six months ended, December 31, 2025, total other income (expense), net was $64,687 and $81,168, respectively. For the three and six months ended, December 31, 2024, total other income (expense), net was $168,841 and $109,877, respectively. The decrease was a result of a decrease in investment income and foreign currency translation gain, offset by a decrease in interest expense.
Liquidity and Capital Resources
Since inception, we have generally incurred net operating losses, primarily related to spending on our research and development programs. We have financed our net operating losses primarily through debt and equity financings and amounts received under collaborative and license agreements.
Our product candidates are at various stages of development and will require significant further research, development, and testing and some may never be successfully developed or commercialized. We may experience uncertainties, delays, difficulties, and expenses commonly experienced by early-stage biopharmaceutical companies, which may include unanticipated problems and additional costs relating to:
| ● | the development and testing of products in animals and humans; | |
| ● | product approval or clearance; | |
| ● | regulatory compliance; | |
| ● | good manufacturing practices (“GMP”) compliance; | |
| ● | intellectual property rights; | |
| ● | product introduction; | |
| ● | marketing, sales, and competition; and | |
| ● | obtaining sufficient capital. |
Failure to enter into or successfully perform under collaboration agreements and obtain timely regulatory approval for our product candidates and indications would impact our ability to generate revenues and could make it more difficult to attract investment capital for funding our operations. Any of these possibilities could materially and adversely affect our operations and require us to curtail or cease certain programs.
During the six months ended December 31, 2025, net cash used in operating activities was $6,426,227 compared to $11,863,319 for the six months ended December 31, 2024. The decrease was primarily related to license and produce revenue recognized during the six months ended December 31, 2025.
During the six months ended December 31, 2025, net cash used in investing activities was $12,816 which consisted of cash used for the purchase of property and equipment. During the six months ended December 31, 2024, net cash provided by investing activities was $2,500,000, which consisted of proceeds from the sale of Vyleesi.
During the six months ended December 31, 2025, net cash provided by financing activities was $18,350,940 which consisted of proceeds $16,911,453 of proceeds from an equity financing and $1,458,932 of proceeds from the exercise of warrants, offset by $19,444 for payment of withholding taxes related to RSUs. During the six months ended December 31, 2024, net cash provided by financing activities was $3,252,527, which consisted of $3,398,023 of proceeds from the exercise of warrants, offset by $99,482 for payment of withholding taxes related to RSUs and $46,014 for payment of finance lease obligations
We have incurred cumulative negative cash flows from operations since our inception, and have expended substantial funds to advance our planned product development efforts. Continued operations are dependent upon our ability to complete equity or debt financing activities and to enter into additional licensing or collaboration arrangements. As of December 31, 2025, our cash and cash equivalents were $14,476,162 and our current liabilities were $6,332,648.
On January 8, 2026, we entered into a sublicense agreement (the “Altanispac Agreement”) with Altanispac Labs, LLC (“Altanispac”), exclusively licensing PL9643, an MCR1 agonist for dry eye disease. In partial consideration for the rights to PL9643, the Altanispac Agreement provided for upfront consideration in the form of non-cash debt cancellation of approximately $3,800,000, which is reflected in our current liabilities as of December 31, 2025. We will recognize this $3,800,000 million as license revenue in our Consolidated Statements of Operations for quarter ending March 31, 2026. There have been no material changes outside the ordinary course of business to our contractual obligations and commitments, as disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025.
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We intend to utilize existing capital resources for general corporate purposes and working capital requirements, including preclinical and clinical development of our MC4R programs for the treatment of rare MC4R pathway diseases.
Based on the Company’s current operating and development plans, the Company expects that its existing cash and cash equivalents as of the date of this filing will be sufficient to enable it to fund operations through the next twelve months following the issuance of the financial statements.
We will need additional funding to complete required clinical trials for our product candidates and development programs and, if those clinical trials are successful (which we cannot predict), to complete submission of required regulatory applications to the FDA. However, current economic conditions (including current economic uncertainty, high interest rates, rising inflation, tariffs, and the potential for local and/or global economic recession) may negatively impact our operations, including possible effects on our financial condition, ability to access the capital markets on attractive terms or at all, liquidity, operations, suppliers, industry, and workforce. We will continue to evaluate the impact that these events could have on the operations, financial position, and the results of operations and cash flows during fiscal year 2026 and beyond.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required to be provided by smaller reporting companies.
Item 4. Controls and Procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2025.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2025, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We may be involved, from time to time, in various claims and legal proceedings arising in the ordinary course of our business. On February 13, 2025, a complaint was filed in the Supreme Court of the State of New York, County of New York, captioned H.C. Wainwright & Co., LLC (“Wainwright”) v. Palatin Technologies, Inc., Case No: 650878/2025. The complaint names the Company as defendant, asserting three causes of action for breach of contract and seeking monetary damages of approximately $1,000,000and the award of warrants allegedly due. The breach of contract claims relate to engagement agreements entered into by the Company and Wainwright during 2023 and 2024. On March 20, 2025, the Company filed its answer in response to the complaint, in which it denied all liability and asserted several affirmative defenses. In November 2025, the Company entered into a Settlement and Release Agreement with Wainwright, pursuant to which the complaint was dismissed and the Company paid Wainwright $500,000, issued warrants to purchase 10,000 shares of the Company’s common stock at an exercise price of $10.00 per share, and repriced 6,007 other warrants to an exercise price of $10.00 per share.
We are not currently a party to any other claim or legal proceeding.
Item 1A. Risk Factors.
This report and other documents we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs, and our management’s assumptions. These statements are not guarantees of future performance, and they involve certain risks, uncertainties and assumptions that are difficult to predict. You should carefully consider the risks and uncertainties facing our business.
Other than set forth below, there have been no material changes to our risk factors disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended June 30, 2025.
Inadequate funding for the FDA, the SEC and other U.S. government agencies leading to government shut downs or other disruptions to these agencies’ staffing and operations could prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our operations.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government funding, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC, and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, in recent years, the U.S. government shut down and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities. If a prolonged government shutdown continues to occur, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Separately, the risk factor from our Annual Report on Form 10-K for the year ended June 30, 2025, titled “Our common stock has been suspended from trading on the NYSE American. If we fail to regain compliance with the NYSE American listing standards, our common stock may be delisted from the NYSE American”, is no longer a material risk to the Company, as the Company resumed trading on the NYSE American effective November 12, 2025.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
As disclosed in the table below, 1,530 shares of common stock were withheld during the three months ended December 31, 2025, at the direction of the employees and as permitted under the 2011 Stock Incentive Plan in order to pay the minimum amount of tax liability owed by the employees from the vesting of previously issued restricted stock units:
| Fiscal Month Period | Total Number of Shares Purchased (1) | Weighted Average Price per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum that May Yet be Purchased Under Announced Plans or Programs | ||||||||||||
| October 1, 2025 through October 31, 2025 | - | $ | - | - | - | |||||||||||
| November 1, 2025 through November 30, 2025 | 912 | 6.97 | - | |||||||||||||
| December 1, 2025 through December 31, 2025 | 618 | 21.38 | - | - | ||||||||||||
| Total | 1,530 | $ | 12.71 | - | - | |||||||||||
(1) Consists solely of 1,530 shares that were withheld to satisfy tax withholding amounts due from employees upon the vesting of previously issued restricted stock units.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the Company’s fiscal quarter ended December 31, 2025, no director or officer, as defined in Rule 1a-1(f),
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Item 6. Exhibits.
Exhibits filed or furnished with this report:
*In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certification furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
† Management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Palatin Technologies, Inc. | ||
| (Registrant) | ||
| /s/ Carl Spana | ||
| Date: February 17, 2026 | Carl Spana, Ph.D. President and Chief Executive Officer (Principal Executive Officer) |
|
| /s/ Stephen T. Wills | ||
| Date: February 17, 2026 | Stephen T. Wills, CPA, MST Executive Vice President, Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer) |
|
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