Palatin Technologies' CEO Discusses F2Q2012 Results - Earnings Call Transcript

Palatin Technologies Inc. ( PTN)

F2Q12 Earnings Call

February 15, 2012 11:00 am ET

Executives

Dr. Carl Spana - President & CEO

Steve Wills - CFO & COO

Analysts

Rahul Jasuja - Noble Financial

David Moskowitz - Roth Capital

Adam Selkin - Chardan Capital Markets

Presentation

Operator

Good morning, ladies and gentlemen and welcome to the Palatin Technologies second quarter fiscal year 2012 conference call. As a reminder, this conference call is being recorded.

Before we begin our remarks, I would like to remind you that statements by Palatin that are not historical facts maybe forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results could differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company’s most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements and Palatin’s prospects.

Now I would like to introduce you to your host for today, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Dr. Carl Spana

Thank you. Good morning. I’m Carl Spana, President and CEO of Palatin Technologies. With me on the call today is Steve Wills, our Chief Financial and Operating Officer and Executive Vice President; and Dr. Jeffrey Edelson, our Chief Medical Officer.

On today’s call, we will be providing updates on our product programs and financial results. To begin, Steve Wills will provide an update on our fiscal second quarter 2012 financial results. Steve?

Steve Wills

Thank you, Carl. Good morning, everyone. First of, I just want to put out an FYI that inadvertently Dow Jones wire services picked up on their tagline regarding Palatin’s operating results that we had $1.9 million of cash and cash equivalents. The actual figure is $11.9 million, so inadvertently they dropped the one and we are working with Dow Jones to correct that.

Regarding our results, Palatin’s net loss for the quarter ended December 31st, 2011 was $2.6 million or $0.08 per basic and diluted share compared to a net loss of $1.1 million or $0.09 per basic and diluted share for the quarter ended December 31st, 2010.

The increase in net loss for the quarter ended December 31st, 2011 compared to the same period last fiscal year was attributable to costs related to our ongoing Phase 2b clinical trial with bremelanotide for female sexual dysfunction and a decrease in grant and contract revenue. The decrease in net loss per share reflects the impact of a greater number of shares outstanding in the quarter ended December 31st, 2011 compared to the same period last fiscal year due to our sale of shares of common stock in March 2011.

Regarding revenue, total revenue for the quarter ended December 31st, 2011 was $11,000 which consisted entirely of amounts recognized under our collaboration agreement with AstraZeneca. For the quarter ended December 31st, 2010 we recognized revenue of $1 million consisting of $200,000 pursuant to our collaboration with AstraZeneca and $800,000 in grant revenue received under the Patient Protection and Affordable Care Act of 2010.

Regarding cost and expenses for the quarter ended December 31st, 2011 total operating expenses were $3.7 million compared to $2.9 million for same period in 2010. The increase in operating expenses for the quarter ended December 31st, 2011 compared to the comparable quarter in 2010 was primarily due to costs related to our ongoing Phase 2b clinical trial with bremelanotide for female sexual dysfunction.

Regarding our cash position, our cash and cash equivalents as of December 31st, 2011 were $11.9 million, again $11.9 million not $1.9 million. We also reflected $1.1 million in accounts receivable due from the sale of New Jersey State net operating loss carry forwards which we received upon in January of 2011. Our current liabilities amounted to $2.2 million as of December 31st, 2011.

Cash and cash equivalents as of June 30, 2011, our last fiscal year end were $18.9 million with current liabilities of $2.8 million. We believe based on our current operating plans that our cash and cash equivalents will be sufficient to fund our operations through at least calendar year 2012. Carl?

Dr. Carl Spana

Thank you Steve and now I am going to update on our programs. I will start with obesity and diabetes, melanocortin-4 receptor program which is partnered with AstraZeneca. This program under the direction of AstraZeneca continues to make substantial progress. In 2011, Astra designated lead compound AZD2820 which was developed by Palatin as a candidate for clinical development.

AstraZeneca has completed a Phase 1 study with AZD2820 and results from this study indicate that AZD2820 has a safety and pharmacokinetic properties for further development.

AstraZeneca plans to conduct a second clinical study in obese subjects that will evaluate the safety and the acceptable food intake of AZD2820. The details of this study can be found on the website, clinicaltrials.gov and is our understanding that this study is anticipated to start in this calendar quarter.

The commercial drug candidate AZD2820 is melanocortin-4 receptor for partial agonist developed by Palatin as part of its collaborative research program with AstraZeneca. The decision to move this program into clinical development was in part based on exciting clinical data generated by Palatin as part of our collaboration with AstraZeneca.

Results and proof-of-principle of clinical trials in obese patients with non-commercial compounds that target the melanocortin-4 receptor showed significant reductions in food intake and weight loss.

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