PALATIN TECHNOLOGIES INC - Quarter Report: 2010 March (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
(Mark
One)
|
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended March 31, 2010
or
|
[ ]
|
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.)
|
|
|
4C
Cedar Brook Drive
Cranbury,
New Jersey
|
08512
|
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(609)
495-2200
(Registrant's
telephone number, including area code)
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 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 x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted 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 and post such files). Yes ¨ No
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨ Accelerated
filer ¨
Non-accelerated
filer ¨ Smaller
reporting company x
(Do not check
if a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No
x
As of May
11, 2010, 107,028,183 shares of the registrant's common stock, par value $.01
per share, were outstanding.
PALATIN TECHNOLOGIES,
INC.
Table of Contents
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Page
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PART
I – FINANCIAL INFORMATION
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Item
1. Financial Statements (Unaudited)
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2
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3
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4
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5
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12
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15
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Item
4. Controls and Procedures
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15
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PART
II – OTHER INFORMATION
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Item
1. Legal Proceedings
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16
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Item
1A. Risk Factors
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16
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16
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Item
3. Defaults Upon Senior Securities
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16
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Item
5. Other Information
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16
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Item
6. Exhibits
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16
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PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
PALATIN TECHNOLOGIES,
INC.
and
Subsidiary
Consolidated Balance Sheets
(unaudited)
|
March
31,
2010
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June
30,
2009
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|||||||
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ASSETS
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||||||||
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Current
assets:
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||||||||
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Cash
and cash equivalents
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$ | 6,775,679 | $ | 4,378,662 | ||||
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Available-for-sale
investments
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3,449,720 | 3,439,650 | ||||||
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Accounts
receivable
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530,092 | 508,528 | ||||||
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Prepaid
expenses and other current assets
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377,303 | 492,824 | ||||||
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Total
current assets
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11,132,794 | 8,819,664 | ||||||
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Property
and equipment, net
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2,688,702 | 3,650,783 | ||||||
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Restricted
cash
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475,000 | 475,000 | ||||||
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Other
assets
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257,420 | 254,364 | ||||||
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Total
assets
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$ | 14,553,916 | $ | 13,199,811 | ||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
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Current
liabilities:
|
||||||||
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Capital
lease obligations
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$ | 19,170 | $ | 87,675 | ||||
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Accounts
payable
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681,190 | 206,363 | ||||||
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Accrued
expenses
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1,477,682 | 1,420,741 | ||||||
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Deferred
revenue
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- | 6,955,553 | ||||||
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Total
current liabilities
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2,178,042 | 8,670,332 | ||||||
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Capital
lease obligations
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19,393 | 33,954 | ||||||
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Deferred
rent
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793,608 | 1,182,026 | ||||||
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Total
liabilities
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2,991,043 | 9,886,312 | ||||||
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Stockholders'
equity:
|
||||||||
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Preferred
stock of $0.01 par value – authorized 10,000,000 shares;
|
||||||||
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Series
A Convertible; issued and outstanding 4,997 shares as of March 31, 2010
and June 30, 2009, respectively
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50 | 50 | ||||||
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Common
stock of $0.01 par value – authorized 150,000,000 shares; issued and
outstanding 106,571,465 and 86,662,901 shares as of March 31, 2010 and
June 30, 2009, respectively
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1,065,715 | 866,629 | ||||||
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Additional
paid-in capital
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215,308,724 | 209,712,379 | ||||||
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Accumulated
other comprehensive income
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126,181 | 116,111 | ||||||
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Accumulated
deficit
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(204,937,797 | ) | (207,381,670 | ) | ||||
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Total
stockholders’ equity
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11,562,873 | 3,313,499 | ||||||
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Total
liabilities and stockholders’ equity
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$ | 14,553,916 | $ | 13,199,811 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements.
2
PALATIN
TECHNOLOGIES, INC.
and
Subsidiary
Consolidated Statements of Operations
(unaudited)
|
Three
Months Ended March 31,
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Nine
Months Ended March 31,
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|||||||||||||||
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2010
|
2009
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2010
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2009
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|||||||||||||
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REVENUES
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$ | 2,559,852 | $ | 5,159,453 | $ | 13,505,770 | $ | 7,124,704 | ||||||||
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OPERATING
EXPENSES:
|
||||||||||||||||
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Research
and development
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3,356,956 | 3,813,878 | 8,739,389 | 10,311,328 | ||||||||||||
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General
and administrative
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1,238,187 | 1,273,365 | 3,526,883 | 3,881,688 | ||||||||||||
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Total
operating expenses
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4,595,143 | 5,087,243 | 12,266,272 | 14,193,016 | ||||||||||||
|
Income/(Loss)
from operations
|
(2,035,291 | ) | 72,210 | 1,239,498 | (7,068,312 | ) | ||||||||||
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OTHER
INCOME/ (EXPENSE):
|
||||||||||||||||
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Investment
income
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16,641 | 34,966 | 120,270 | 195,182 | ||||||||||||
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Interest
expense
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(2,287 | ) | (8,998 | ) | (9,303 | ) | (21,016 | ) | ||||||||
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Gain
on sale of supplies and equipment
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- | - | 95,000 | 550,968 | ||||||||||||
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Total
other income, net
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14,354 | 25,968 | 205,967 | 725,134 | ||||||||||||
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Income/(Loss)
before income taxes
|
(2,020,937 | ) | 98,178 | 1,445,465 | (6,343,178 | ) | ||||||||||
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Income
tax benefit
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- | - | 998,408 | 1,741,476 | ||||||||||||
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NET
INCOME/(LOSS)
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$ | (2,020,937 | ) | $ | 98,178 | $ | 2,443,873 | $ | (4,601,702 | ) | ||||||
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Basic
net income/(loss) per common share
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$ | (0.02 | ) | $ | 0.00 | $ | 0.02 | $ | (0.05 | ) | ||||||
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Diluted
net income/(loss) per common share
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$ | (0.02 | ) | $ | 0.00 | $ | 0.02 | $ | (0.05 | ) | ||||||
|
Weighted
average number of common shares outstanding used in computing basic net
income/(loss) per common share
|
99,873,230 | 86,662,901 | 95,753,143 | 86,273,130 | ||||||||||||
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Weighted
average number of common shares outstanding used in computing diluted net
income/(loss) per common share
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99,873,230 | 86,662,901 | 96,467,914 | 86,273,130 | ||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
3
PALATIN
TECHNOLOGIES, INC.
and
Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
|
Nine
Months Ended March 31,
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||||||||
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2010
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2009
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|||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
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Net
income/(loss)
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$ | 2,443,873 | $ | (4,601,702 | ) | |||
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Adjustments
to reconcile net income/(loss) to net cash
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||||||||
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used
in operating activities:
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||||||||
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Depreciation
and amortization
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969,076 | 997,994 | ||||||
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Gain
on sale of supplies and equipment
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(95,000 | ) | (550,968 | ) | ||||
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Stock-based
compensation
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807,506 | 1,154,121 | ||||||
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Amortization
of deferred revenue
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(11,955,553 | ) | (1,516,670 | ) | ||||
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Changes
in operating assets and liabilities:
|
||||||||
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Accounts
receivable
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(21,564 | ) | (581,064 | ) | ||||
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Prepaid
expenses and other assets
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112,465 | (139,674 | ) | |||||
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Accounts
payable
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474,827 | (436,839 | ) | |||||
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Accrued
expenses and other liabilities
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(331,477 | ) | (740,129 | ) | ||||
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Deferred
revenues
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5,000,000 | 4,100,000 | ||||||
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Net
cash used in operating activities
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(2,595,847 | ) | (2,314,931 | ) | ||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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||||||||
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Proceeds
from sale of supplies and equipment
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95,000 | 700,000 | ||||||
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Purchases
of property and equipment
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(6,995 | ) | (32,884 | ) | ||||
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Net
cash provided by investing activities
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88,005 | 667,116 | ||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Payments
on capital lease obligations
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(83,066 | ) | (204,386 | ) | ||||
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Payment
of withholding taxes related to restricted stock units
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(165,861 | ) | - | |||||
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Proceeds
from sale of common stock and warrants and exercise of common stock
options
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5,153,786 | - | ||||||
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Net
cash provided by (used in) financing activities
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4,904,859 | (204,386 | ) | |||||
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NET
INCREASE/(DECREASE) IN CASH AND
|
||||||||
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CASH
EQUIVALENTS
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2,397,017 | (1,852,201 | ) | |||||
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CASH
AND CASH EQUIVALENTS, beginning
|
||||||||
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of
period
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4,378,662 | 9,421,770 | ||||||
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CASH
AND CASH EQUIVALENTS, end of period
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$ | 6,775,679 | $ | 7,569,569 | ||||
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SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||
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Cash
paid for interest
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$ | 9,303 | $ | 27,016 | ||||
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Unrealized
gain on available-for-sale investments
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$ | 10,070 | $ | 54,445 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements.
4
PALATIN
TECHNOLOGIES, INC.
and
Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(1) ORGANIZATION:
Nature of Business – Palatin
Technologies, Inc. (Palatin or the Company) is a biopharmaceutical company
dedicated to the development of peptide, peptide mimetic and small molecule
agonist compounds with a focus on melanocortin and natriuretic peptide receptor
systems. Palatin has a diverse pipeline of active development programs targeting
melanocortin and natriuretic receptors. The melanocortin system is involved in a
large and diverse number of physiologic functions, and therapeutic agents
modulating this system may have the potential to treat a variety of conditions
and diseases, including sexual dysfunction, obesity and related disorders,
ischemia-reperfusion injury, hemorrhagic shock and inflammation-related
diseases. The natriuretic peptide receptor system has numerous cardiovascular
functions, and therapeutic agents modulating this system may be useful in
treatment of heart failure, hypertension, acute asthma and other cardiovascular
diseases.
The Company’s products in development
include bremelanotide and PL-6983, peptide melanocortin receptor agonists for
treatment of sexual dysfunction, and PL-3994, an agonist peptide mimetic which
binds to natriuretic peptide receptor A for treatment of heart failure. The
Company has an exclusive global licensing and research collaboration agreement
with AstraZeneca AB (AstraZeneca) to discover, develop and commercialize
compounds that target melanocortin receptors for the treatment of obesity,
diabetes and related metabolic syndrome.
Key elements of the Company’s business
strategy include using its technology and expertise to develop and commercialize
therapeutic products; entering into alliances and partnerships with
pharmaceutical companies to facilitate the development, manufacture, marketing,
sale and distribution of product candidates the Company is developing; partially
funding its development and discovery programs with the cash flow from the
Company’s AstraZeneca collaboration agreement and any future agreements with
other companies; and, depending on the availability of sufficient funding,
expanding the Company’s pipeline by using its expertise in drug discovery
technologies for melanocortin and natriuretic peptide receptor systems and
acquiring synergistic products and technologies.
Business Risk and Liquidity –
The Company has incurred negative cash flows from operations since its
inception, and has expended, and expects to continue to expend in the future,
substantial funds to complete its planned product development efforts. As shown
in the accompanying consolidated financial statements, the Company has an
accumulated deficit as of March 31, 2010 and despite reporting net income for
the nine months ended March 31, 2010, the Company anticipates incurring
additional losses in the future as a result of spending on its development
programs. To achieve profitability, the Company, alone or with others, must
successfully develop and commercialize its technologies and proposed products,
conduct successful preclinical studies and clinical trials, obtain required
regulatory approvals and successfully manufacture and market such technologies
and proposed products. The time required to reach profitability is highly
uncertain, and there can be no assurance that the Company will be able to
achieve profitability on a sustained basis, if at all.
The Company believes that its cash,
cash equivalents, available-for-sale investments and amounts to be collected
from accounts receivable as of March 31, 2010, are adequate to fund operations
through at least December 31, 2010. The nature and timing of the Company’s
development activities are highly dependent on its financing activities.
Management plans to continue to refine its operations, control expenses,
evaluate alternative methods to conduct its business, and seek available sources
of public or private financing and sharing of development costs through
collaborative agreements or other arrangements. Should appropriate sources of
financing not be available, management will curtail operations and delay
clinical trials and research activities until such time, if ever, as appropriate
financing is available. There can be no assurance that the Company will be able
to obtain financing when required, or that financing efforts will be
successful.
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 and cash equivalents,
available-for-sale investments and accounts receivable. The Company’s cash and
cash equivalents are primarily invested in one money market fund sponsored by a
large financial institution. The Company’s accounts receivable balance as of
March 31, 2010 consists of amounts due from AstraZeneca. For the three and nine
months ended March 31, 2010 and 2009, 100% of revenues were from
AstraZeneca.
(2) BASIS
OF PRESENTATION:
The accompanying unaudited consolidated
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles 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 to present fairly the Company’s financial position as of
March 31, 2010, and its results of operations and its cash flows for the three
and nine months ended March 31, 2010 and 2009. The results of operations for the
three and nine month periods ended March 31, 2010 may not necessarily be
indicative of the results of operations expected for the full year, specifically
that the Company expects to incur a significant loss for the fiscal year ending
June 30, 2010.
The accompanying 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, 2009, filed with the Securities and Exchange
Commission (SEC), which includes consolidated financial statements as of June
30, 2009 and 2008 and for each of the fiscal years in the three-year period
ended June 30, 2009.
(3) SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation –
The consolidated financial statements include the accounts of Palatin and its
wholly-owned inactive subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Use of Estimates – The
preparation of consolidated financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount 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 and 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.
Restricted cash secures letters of credit for security deposits on
leases.
Investments – The Company classifies
its investments as available-for-sale investments and all such investments are
recorded at fair value based on quoted market prices. Unrealized holding gains
and losses are generally excluded from earnings and are reported in accumulated
other comprehensive income/loss until realized. Interest and dividends on
securities classified as available-for-sale are included in investment income.
Gains and losses are recorded in the statement of operations when realized or
when unrealized holding losses are determined to be other than temporary, on a
specific-identification basis.
Fair Value of Financial
Instruments – The Company’s financial instruments consist primarily of
cash equivalents, available-for-sale investments, accounts receivable, accounts
payable, and capital lease obligations. Management believes that the carrying
value of these assets and liabilities are representative of their respective
fair values based on quoted market prices for investments and the short-term
nature of the other instruments.
Property and Equipment –
Property and equipment consists of office and laboratory equipment, office
furniture and leasehold improvements and includes assets acquired under capital
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 five years for laboratory and computer equipment, seven years
for office furniture and equipment and the lesser of the term of the lease or
the useful life for leasehold improvements. Amortization of assets acquired
under capital leases is included in depreciation expense. Maintenance and
repairs are expensed as incurred while expenditures that extend the useful life
of an asset are capitalized.
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.
Deferred Rent – The Company’s operating
leases provide for rent increases over the terms of the leases. Deferred rent
consists of the difference between periodic rent payments and the amount
recognized as rent expense
on a
straight-line basis, as well as tenant allowances for leasehold improvements.
Rent expenses are being recognized ratably over the terms of the
leases.
Revenue Recognition – Revenue
from corporate collaborations and licensing agreements consists of up-front
fees, research and development funding, and milestone payments. Non-refundable
up-front fees are deferred and amortized to revenue over the related performance
period. The Company estimates the performance period as the period in which it
performs certain development activities under the applicable agreement.
Reimbursements for research and development activities are recorded in the
period that the Company performs the related activities under the terms of the
applicable agreements. Revenue resulting from the achievement of milestone
events stipulated in the applicable agreements is recognized when the milestone
is achieved, provided that such milestone is substantive in nature.
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.
Stock-Based Compensation –
The Company charges to expense the fair value of stock options and other equity
awards granted. The Company determines the value of stock options utilizing the
Black-Scholes option pricing model. Compensation costs for share-based awards
with pro rata vesting are allocated to periods on a straight-line
basis.
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 a valuation allowance
against its deferred tax assets based on the history of losses
incurred.
During the nine months ended March 31,
2010 and 2009, the Company sold New Jersey state net operating loss
carryforwards, which resulted in the recognition of $998,408 and $1,741,476,
respectively, in tax benefits.
Net Income/(Loss) per Common
Share – Basic and diluted earnings per
common share (EPS) are calculated in accordance with the provisions of Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic
260, “Earnings per Share.” In June 2008, the FASB issued guidance stating
that non-vested share-based payment awards that include non-forfeitable rights
to dividends or dividend equivalents, whether paid or unpaid, are considered
participating securities, and the two-class method of computing EPS is required
for all periods presented. The Company adopted the provisions of ASC Topic
260 relating to the two-class method of computing EPS effective July 1,
2009.
The
Company’s outstanding shares of Series A Convertible Preferred stock contain
rights that entitle the holder to a special dividend or distribution of $100 per
share before the Company can pay dividends or make distributions to the common
stockholders. The outstanding share-based compensation awards do not
include non-forfeitable rights to dividends. Accordingly, only the
outstanding Series A Convertible Preferred stock is considered a participating
security and must be included in the computation of EPS. The adoption of
the provisions of ASC Topic 260 relating to the two-class method of computing
EPS did not change the basic and diluted EPS for the three months ended March
31, 2010 or the three and nine month periods ended March 31, 2009. The
adoption of the provisions of ASC Topic 260 relating to the two-class method of
computing EPS reduced the basic and diluted EPS by $0.01 for the nine month
period ended March 31, 2010.
The
following table sets forth the computation of basic and diluted
EPS:
|
Three
months ended March 31,
|
Nine
months ended March 31,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
income/(loss) per common share – Basic:
|
||||||||||||||||
|
Net
income/(loss)
|
$ | (2,020,937 | ) | $ | 98,178 | $ | 2,443,873 | $ | (4,601,702 | ) | ||||||
|
Net
income allocated to Series A Preferred Shares
|
- | (98,178 | ) | (499,700 | ) | - | ||||||||||
|
Net
income/(loss) available to common stockholders
|
$ | (2,020,937 | ) | $ | - | $ | 1,944,173 | $ | (4,601,702 | ) | ||||||
|
Weighted
average common shares outstanding
|
99,873,230 | 86,662,901 | 95,753,143 | 86,273,130 | ||||||||||||
|
Net
income/(loss) per common share - Basic
|
$ | (0.02 | ) | $ | 0.00 | $ | 0.02 | $ | (0.05 | ) | ||||||
|
Net
income/(loss) per common share – Diluted:
|
||||||||||||||||
|
Net
income/(loss)
|
$ | (2,020,937 | ) | $ | 98,178 | $ | 2,443,873 | $ | (4,601,702 | ) | ||||||
|
Net
income allocated to Series A Preferred Shares
|
- | (98,178 | ) | (499,700 | ) | - | ||||||||||
|
Net
income/(loss) available to common stockholders
|
$ | (2,020,937 | ) | $ | - | $ | 1,944,173 | $ | (4,601,702 | ) | ||||||
|
Weighted
average common shares outstanding
|
99,873,230 | 86,662,901 | 95,753,143 | 86,273,130 | ||||||||||||
|
Dilutive
securities
|
- | - | 714,771 | - | ||||||||||||
|
Weighted
average common and dilutive shares outstanding
|
99,873,230 | 86,662,901 | 96,467,914 | 86,273,130 | ||||||||||||
|
Net
income/(loss) per common share - Diluted
|
$ | (0.02 | ) | $ | 0.00 | $ | 0.02 | $ | (0.05 | ) | ||||||
As of March 31, 2010 and 2009, common
shares issuable upon conversion of Series A Convertible Preferred Stock, the
exercise of outstanding options and warrants and the vesting of restricted stock
units amounted to an aggregate of 23,776,907 and 14,118,801 shares,
respectively.
Recently Issued Accounting
Pronouncements – In June 2009, the FASB issued ASC 105-10 (formerly
Statement of Financial Accounting Standards 168), “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles,”
which was effective for the Company beginning July 1, 2009. The FASB Accounting
Standards Codification (the Codification) officially became the single source of
authoritative nongovernmental generally accepted accounting principles (GAAP),
superseding existing FASB, American Institute of Certified Public Accountants,
Emerging Issues Task Force and related accounting literature. After that date,
only one level of authoritative GAAP exists. All other accounting literature is
considered non-authoritative. The Codification reorganizes the thousands of GAAP
pronouncements into roughly 90 accounting topics and displays them using a
consistent structure. Also included in the Codification is relevant SEC guidance
organized using the same topical structure in separate sections within the
Codification. The Company adopted this statement and has updated its existing
GAAP references to the new codification.
In September 2009, the FASB issued
Accounting Standards Update (ASU) 2009-13, Revenue Recognition (Topic 605),
“Multiple-Deliverable Revenue Arrangements (ASU 2009-13)”, which requires
companies to allocate revenue in arrangements involving multiple deliverables
based on the estimated selling price of each deliverable when such deliverables
are not sold separately either by the company or other vendors. ASU
2009-13 eliminates the
requirement
that all undelivered elements must have objective and reliable evidence of fair
value before a company can recognize the portion of the overall arrangement fee
that is attributable to items that already have been delivered. As a
result, the new guidance may allow some companies to recognize revenue on
transactions that involve multiple deliverables earlier than under current
requirements. ASU 2009-13 is effective for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010. Early adoption is permitted at the beginning of a company’s
fiscal year. The Company expects to adopt ASU 2009-13 on July 1, 2010
and does not expect ASU 2009-13 to have a material impact on its consolidated
financial statements.
In January 2010, the FASB issued ASU
2010-06, Fair Value Measurements and Disclosures (Topic 820),
“Improving Disclosures about Fair Value Measurements (ASU 2010-06)”, which
amends the existing fair value measurement and disclosure guidance currently
included in ASC Topic 820, “Fair Value Measurements and Disclosures”, to require
additional disclosures regarding fair value
measurements. Specifically, ASU 2010-06 requires companies to
disclose the amounts of significant transfers between Level 1 and Level 2 of the
fair value hierarchy and the reasons for these transfers, the reasons for any
transfer in or out of Level 3 and information in the reconciliation of recurring
Level 3 measurements about purchases, sales, issuances and settlements on a
gross basis. In addition, ASU 2010-06 also clarifies the requirements
for companies to disclose information about both the valuation techniques and
inputs used in estimating Level 2 and Level 3 fair value
measurements. ASU 2010-06 is effective for interim and annual
reporting periods beginning after December 15, 2009, except for additional
disclosures related to Level 3 fair value measurements, which are effective for
fiscal years beginning after December 15, 2010. The adoption of ASU
2010-06 did not impact the Company’s consolidated financial statements or
results of operations.
(4) AGREEMENT
WITH ASTRAZENECA:
In January 2007, the Company entered
into an exclusive global licensing and research collaboration agreement with
AstraZeneca to discover, develop and commercialize compounds that target
melanocortin receptors for the treatment of obesity, diabetes and related
metabolic syndrome. In June 2008, the licensing and research collaboration
agreement was amended to include additional compounds and associated
intellectual property developed by the Company. In December 2008, the licensing
and research collaboration agreement was further amended to include additional
compounds and associated intellectual property developed by the Company and
extended the research collaboration for an additional year through January 2010.
In September 2009, the licensing and research collaboration agreement was
further amended to modify royalty rates and milestone payments. The
collaboration is based on the Company’s melanocortin receptor obesity program
and includes access to compound libraries, core technologies and expertise in
melanocortin receptor drug discovery and development. As part of the September
2009 amendment to the licensing and research collaboration agreement, the
Company agreed to conduct additional studies on the effects of melanocortin
receptor specific compounds on food intake, obesity and other metabolic
parameters.
In December 2009 and 2008, the Company
also entered into clinical trial sponsored research agreements with AstraZeneca,
under which the Company agreed to conduct studies of the effects of melanocortin
receptor specific compounds on food intake, obesity and other metabolic
parameters. Under the terms of these clinical trial agreements, AstraZeneca paid
$5,000,000 as of March 31, 2009 upon achieving certain objectives plus will pay
all costs associated with these studies. The Company recognized $164,430 and
$407,805, respectively, as revenue in the three and nine months ended March 31,
2010, and $4,025,324 and $4,507,563, respectively for the three and nine months
ended March 31, 2009 under these clinical trial sponsored research
agreements.
The Company received a $10,000,000
up-front payment from AstraZeneca on execution of the licensing and research
collaboration agreement. Under the September 2009 amendment the Company was paid
an additional $5,000,000 in consideration of reduction of future milestones and
royalties and providing specified materials to AstraZeneca. The Company is now
eligible for milestone payments totaling up to $145,250,000, with up to
$85,250,000 contingent on development and regulatory milestones and the balance
contingent on achievement of sales targets. In addition, the Company will
receive royalties on sales of any approved products. AstraZeneca assumed
responsibility for product commercialization, product discovery and development
costs, with both companies contributing scientific expertise in the research
collaboration. The Company provided research services to AstraZeneca through
January 2010, the expiration of the research collaboration portion of the
licensing and research collaboration agreement, at a contractual rate per
full-time-equivalent employee.
The Company has determined that the
license agreement and research services should be evaluated together as a single
unit for purposes of revenue recognition. Accordingly, the aggregate payments of
$15,000,000 have been recognized as revenue over the period ended January 2010.
For the three and nine months ended March 31, 2010, the Company recognized as
revenue $2,045,483, and $10,972,219, respectively, related to these aggregate
payments, and for the three and nine months ended March 31, 2009, the Company
recognized $416,667 and $1,250,000,
respectively.
Per-employee compensation from AstraZeneca for research services was recognized
as earned at the contractual rate, which approximates the fair value of such
services. Revenue recognized for research services for the three and nine months
ended March 31, 2010 were $349,939 and $2,125,746, respectively. Revenue
recognized for research services for the three and nine months ended March 31,
2009 were $717,462 and $1,367,141, respectively.
(5) INVESTMENTS:
The following is a summary of
available-for-sale investments:
|
March
31,
|
June
30,
|
|||||||
|
2010
|
2009
|
|||||||
|
Cost
|
$ | 3,323,539 | $ | 3,323,539 | ||||
|
Gross
unrealized gains
|
161,189 | 116,170 | ||||||
|
Gross
unrealized losses
|
(35,008 | ) | (59 | ) | ||||
|
Total
available-for-sale investments
|
$ | 3,449,720 | $ | 3,439,650 | ||||
The fair value of investments 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 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 as of March 31, 2010 and June 30, 2009:
|
Fair
Value
|
Quoted
prices in active markets (Level 1)
|
Quoted
prices in active markets (Level 2)
|
Quoted
prices in active markets (Level 3)
|
|||||||||||||
|
Mutual
Funds at March 31, 2010
|
$ | 3,449,720 | $ | 3,449,720 | $ | - | $ | - | ||||||||
|
Mutual
Funds at June 30, 2009
|
$ | 3,439,650 | $ | 3,439,650 | $ | - | $ | - | ||||||||
(6) COMPREHENSIVE
INCOME/(LOSS):
Comprehensive income/(loss) consists of
the following:
|
Three
months ended March 31,
|
Nine
months ended March 31,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
income/(loss)
|
$ | (2,020,937 | ) | $ | 98,178 | $ | 2,443,873 | $ | (4,601,702 | ) | ||||||
|
Unrealized
gain on available-for-sale investments
|
17,996 | 32,142 | 10,070 | 54,445 | ||||||||||||
|
Comprehensive
income/(loss)
|
$ | (2,002,941 | ) | $ | 130,320 | $ | 2,453,943 | $ | (4,547,257 | ) | ||||||
(7) STOCKHOLDERS’
EQUITY:
In August 2009, the Company sold
9,484,848 units in a registered direct offering for gross proceeds of
$3,100,000. Each unit consisted of one share of common stock and a five-year
warrant to purchase 0.35 shares of common stock at an exercise price of $0.33
per share. Net proceeds to the Company, after costs of the offering,
were approximately $2,800,000. In addition, the Company issued to the
placement agent warrants to purchase 474,242 shares at an exercise price of
$0.41 per share.
In February 2010, the Company sold
9,629,629 units in a registered direct offering for gross proceeds of
$2,600,000. Each unit consisted of one share of common stock, a Series A warrant
exercisable for 0.33 shares of common stock at an exercise price of $0.30 per
share of common stock and a Series B warrant exercisable for 0.33
shares of
common stock at an exercise price of $0.27 per share of common stock. The Series
A warrant is exercisable 181 days from the date of issuance and expires three
years thereafter, the Series B warrant is exercisable immediately upon issuance
and expires 180 days from the date of issuance. Net proceeds to the Company,
after costs of the offering, were approximately $2,300,000. In addition, the
Company issued to the placement agent warrants to purchase 481,481shares at an
exercise price of $0.34 per share.
In October 2006, the Company made
grants of restricted stock units to three executive officers for an aggregate of
975,000 shares of common stock. Under the original vesting conditions, 325,000
shares vested if the quoted market price of Palatin’s common stock was $4.00 or
more for 20 consecutive trading days, an additional 325,000 shares vested if the
quoted market price of Palatin’s common stock was $6.00 or more for 20
consecutive trading days and the remaining 325,000 shares vested if the quoted
market price of Palatin’s common stock was $8.00 or more for 20 consecutive
trading days. The fair value of the restricted stock units was estimated at the
grant date using a lattice-type model. The Company’s assumptions for expected
volatility, dividends and risk-free rate were 80%, 0% and 4.56%, respectively.
The expected volatility was based on the Company’s historical volatility and the
risk-free rate was based on U.S. Treasury yields for securities with terms
approximating the contractual term of the units. The aggregate fair value of the
units at the date of grant was $1,846,000, which was recognized over a
weighted-average period ended December 31, 2009. For the nine months ended March
31, 2010, the Company recognized $201,500 of share-based compensation expense
related to these restricted stock units. The Company recognized $100,750 and
$369,281, respectively, of share-based compensation expense related to these
restricted stock units for the three and nine months ended March 31,
2009.
In March 2008, the Company’s
Compensation Committee revised the vesting conditions of the above restricted
stock units granted to the three executive officers. Under the revised
conditions, the restricted stock units granted to each of the executive officers
became fully vested on March 26, 2010 and on such date, after adjusting for
certain withholding taxes, 661,605 shares of common were authorized for
issuance. The restricted stock unit agreements require that each executive
officer retain ownership of at least 33% of the stock received for the duration
of the executive’s employment with the Company unless there is a change in
control or for hardship as determined by the Board of Directors. In addition to
the original grant-date fair value of these awards, the Company recognized an
incremental fair value adjustment to these restricted stock units, totaling
$273,000, on a straight-line basis through March 26, 2010. For the three and
nine months ended March 31, 2010 and March 31, 2009, the Company recognized
$34,125 and $102,375, respectively, of stock-based compensation expense related
to these restricted stock units.
Stock-based compensation costs for the
three and nine months ended March 31, 2010 for stock options and equity-based
instruments issued other than the restricted stock units described above totaled
$138,273 and $503,631, respectively, and $194,588 and $682,465, respectively,
for the three and nine months ended March 31, 2009.
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.
Statements in this quarterly report on
Form 10-Q, 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 on Form 10-Q do not constitute guarantees of future performance.
Investors are cautioned that statements that are not strictly historical
statements contained in this quarterly report on Form 10-Q, including, without
limitation, current or future financial performance, management’s plans and
objectives for future operations, clinical trials and results, product plans and
performance, management’s assessment of market factors, as well as statements
regarding our strategy and plans and our strategic partners, constitute
forward-looking statements. Such forward-looking statements involve known and
unknown 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 in this report, in
our annual report on Form 10-K for the year ended June 30, 2009 and in our other
Securities and Exchange Commission (SEC) filings.
We expect to incur losses in the future
as a result of spending on our planned development programs and losses may
fluctuate significantly from quarter to quarter.
In this quarterly report on Form 10-Q,
references to “we”, “our”, “us” or “Palatin” means Palatin Technologies, Inc.
and subsidiary.
Critical
Accounting Policies and Estimates
Our significant accounting policies 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, 2009,
and have not changed from June 30, 2009 through March 31, 2010. We believe that
our accounting policies and estimates relating to revenue recognition, accrued
expenses and stock-based compensation are the most critical.
Overview
We are a biopharmaceutical company
dedicated to the development of peptide, peptide mimetic and small molecule
agonist compounds with a focus on melanocortin and natriuretic peptide receptor
systems. We have a diverse pipeline of active development programs targeting
melanocortin and natriuretic receptors, including development of proposed
products for treatment of sexual dysfunction, heart failure, hypertension, acute
asthma, obesity, diabetes and metabolic syndrome.
We currently have the following active
drug development programs:
|
|
·
|
Bremelanotide,
a peptide melanocortin receptor agonist, for treatment of sexual
dysfunction, targeting erectile dysfunction (ED) in patients
non-responsive to current therapies and female sexual dysfunction
(FSD).
|
|
|
·
|
PL-6983,
a peptide melanocortin receptor agonist, for treatment of sexual
dysfunction.
|
|
|
·
|
PL-3994,
a peptide mimetic natriuretic peptide receptor A (NPR-A) agonist, for
treatment of heart failure, refractory or difficult-to-control
hypertension and acute severe
asthma.
|
|
|
·
|
Melanocortin
receptor-based compounds for treatment of obesity, diabetes and related
metabolic syndrome pursuant to a research collaboration and global license
with AstraZeneca AB (AstraZeneca).
|
Key elements of our business strategy
include: using our technology and expertise to develop and commercialize
therapeutic products; entering into alliances and partnerships with
pharmaceutical companies to facilitate the development, manufacture, marketing,
sale and distribution of product candidates we are developing; partially funding
our development and discovery programs with the cash flow from our AstraZeneca
collaboration agreement and any future agreements with other companies; and,
depending on the availability of sufficient funding, expanding our pipeline by
using our expertise in drug discovery technologies for melanocortin and
natriuretic peptide receptor systems and acquiring synergistic products and
technologies.
We incorporated in Delaware in 1986 and
commenced operations in the biopharmaceutical area in 1996. Our corporate
offices and research and development facility are located at 4C Cedar Brook
Drive, Cranbury, New Jersey 08512 and our telephone number is (609) 495-2200. We
maintain an Internet site at http://www.palatin.com,
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 shall not be deemed to be incorporated into this quarterly
report on Form 10-Q.
Results
of Operations
Three and Nine Months Ended March
31, 2010 Compared to the Three and Nine Months Ended March 31,
2009
Revenue – For the three and
nine months ended March 31, 2010, we recognized $2.6 million and $13.5 million,
respectively, in revenue pursuant to our license agreement with AstraZeneca,
compared to $5.2 million and $7.1 million, respectively, for three and nine
months ended March 31, 2009.
Revenue for the three and nine months
ended March 31, 2010 consisted of $0.5 million and $2.5 million, respectively,
related to our research services performed during those periods, and $2.1
million and $11.0 million, respectively, of revenue related to AstraZeneca’s
license fees. Revenue for the three and nine months ended March 31, 2009
consisted of $4.8 million and $5.9 million, respectively, related to our
research services performed during those periods, and $0.4 million and $1.2
million, respectively, of revenue related to AstraZeneca’s license fees. The
increase in revenue relating to AstraZeneca’s license fees is related primarily
to revision of the period during which we may perform research services for
purposes of revenue recognition and secondarily to the receipt of additional
license fees. The research services obligation under our agreement with
AstraZeneca expired in January 2010. There were no substantive development
activities on our NeutroSpec program during the three and nine months ended
March 31, 2010 and 2009, and we do not anticipate any substantive development
activities on the NeutroSpec program in the fiscal year ending June 30, 2010,
though the agreement with Mallinckrodt has not been terminated. We may also earn
contract revenue based on the attainment of milestones under our agreement with
AstraZeneca.
We continue to conduct studies of the
effects of melanocortin receptor specific compounds on food intake, obesity and
other metabolic parameters under our clinical trial sponsored research
agreements with AstraZeneca. AstraZeneca will pay all costs
associated with these studies, including per-employee compensation, earned at
the contractual rate, for research services.
Research and Development –
Research and development expenses decreased to $3.4 million for the three months
ended March 31, 2010 from $3.8 million for the three months ended March 31,
2009. Research and development expenses decreased to $8.7 million for the nine
months ended March 31, 2010 from $10.3 million for the nine months ended March
31, 2009. The decrease is the result of the restructuring of our clinical-stage
product portfolio and development programs.
Research
and development expenses related to our bremelanotide, PL-3994, PL-6983,
obesity, NeutroSpec and other preclinical programs were $1.4 million and $2.5 million,
respectively, for the three and nine months ended March 31, 2010 compared to
$1.6 million and $3.2 million, respectively, for the three and nine months ended
March 31, 2009. Spending to date has been primarily related to the
identification and optimization of lead compounds, and secondarily to study the
effects of melanocortin receptor-specific compounds on food intake, obesity and
other metabolic parameters and preclinical studies and a Phase 1 trial with
subcutaneously administered bremelanotide. The amount of such spending and the
nature of future development activities are dependent on a number of factors,
including primarily the availability of funds to support future development
activities, success of our clinical trials and preclinical and discovery
programs, and our ability to progress compounds in addition to bremelanotide and
PL-3994 into human clinical trials.
The
historical amounts of project spending above exclude general research and
development spending, which decreased to $2.0 million and $6.2 million,
respectively, for three and nine months ended March 31, 2010 compared to $2.2
million and $7.1 million, respectively, for three and nine months ended March
31, 2009. The decrease is primarily related to management’s refinement of
operations and expense control.
Cumulative spending from inception to
March 31, 2010 on our bremelanotide, NeutroSpec and other programs (which
includes PL-3994, PL-6983, obesity, and other discovery programs) amounts to
approximately $131.1 million, $55.5 million and $55.4 million, respectively. Due
to various risk factors described in our periodic filings with the SEC,
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, net cash inflows will be
generated.
General and Administrative –
General and administrative expenses decreased to $1.2 million and $3.5 million,
respectively, for the three and nine months ended March 31, 2010 compared to
$1.3 million and $3.9 million, respectively, for the three and nine months ended
March 31, 2009. The decrease is primarily related to management’s refinement of
operations and expense control
Liquidity and Capital
Resources
Since inception, we have incurred net
operating losses, primarily related to spending on our research and development
programs. We have financed our net operating losses primarily through equity
financings and amounts received under collaborative 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;
• intellectual
property rights;
• product
introduction;
• marketing,
sales and competition; and
• obtaining
sufficient capital.
Failure
to obtain timely regulatory approval for our product candidates and indications
would impact our ability to increase 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 or our operations.
During the nine months ended March 31,
2010, we used $2.6 million of cash for our operating activities, compared to
$2.3 million used in the nine months ended March 31, 2009. Our periodic accounts
receivable balances will continue to be highly dependent on the timing of
receipts from collaboration partners and the division of development
responsibilities between us and our collaboration partners.
During the nine months ended March 31,
2010, cash provided by investing activities of $0.1 million consisted primarily
of the sale of supplies. During the nine months ended March 31, 2009, cash
provided by investing activities of $0.7 million consisted primarily from the
sale of equipment.
During the nine months ended March 31,
2010, cash provided by financing activities was $4.9 million, consisting
primarily of net proceeds of approximately $5.2 million from the sales in August
2009 and February 2010 of 9,484,848 units and 9,629,629 units, respectively, in
registered direct offerings. Each unit from the August 2009 offering consisted
of one share of common stock and a five-year warrant to purchase 0.35 shares of
common stock at an exercise price of $0.33 per share. Each unit from the
February 2010 offering consisted of one share of common stock, a Series A
warrant exercisable for 0.33 shares of our common stock at an exercise price of
$0.30 per share of common stock and a Series B warrant exercisable for 0.33
shares of common stock at an exercise price of $0.27 per share of common stock.
The Series A warrant is exercisable one 181 days from the date of issuance and
expires three years thereafter, the Series B warrant was exercisable immediately
upon issuance and expires 180 days from the date of issuance.
In
September 2009, we signed an amendment to our collaboration agreement with
AstraZeneca which provided for $5.0 million in payments to us. The entire $5.0
million has been received as of March 31, 2010.
As of
March 31, 2010, our cash and cash equivalents were $6.8 million, our
available-for-sale investments were $3.4 million and our accounts receivable
were $0.5 million. We believe that these amounts are adequate to fund operations
through at least December 31, 2010. We will need additional funds to continue
development of bremelanotide, PL-3994 and PL-6983, as well as our early stage
research and discovery programs, and to fund operations after that
date.
We intend
to seek additional capital through public or private equity financings,
collaborative arrangements on our product candidates, milestone payments or
other sources. However, additional funding may not be available on acceptable
terms or at all. If adequate funds are not available, we will further curtail
operations significantly,
including
the delay, modification or cancelation of product candidate development plans
and further decreases in staffing levels. We plan to continue to monitor the
progress of our development programs and the timing and amount of related
expenditures and potential milestone receipts, refine our operations, control
expenses, evaluate alternative methods to conduct our business and seek
additional financing and sharing of development costs through strategic
collaboration agreements or other resources. No assurance can be given that we
will earn future milestone payments that are contingent on specified events or
that we will not consume a significant amount of our available resources before
that time. We may also be required to seek collaborators for our product
candidates at an earlier stage than otherwise would be desirable and on terms
that are less favorable than might otherwise be available, and relinquish,
license or otherwise dispose of rights on unfavorable terms to technologies and
product candidates that we would otherwise seek to develop or commercialize
ourselves.
We anticipate incurring additional
losses over at least the next few years. To achieve profitability, we, alone or
with others, must successfully develop and commercialize our technologies and
proposed products, conduct preclinical studies and clinical trials, obtain
required regulatory approvals and successfully manufacture and market such
technologies and proposed products. The time required to reach profitability is
highly uncertain, and we do not know whether we will be able to achieve
profitability on a sustained basis, if at all.
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. There were no changes in our internal control over financial
reporting that occurred during our most recent fiscal quarter that materially
affected, or that are reasonably likely to materially affect, our internal
control over financial reporting.
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. We are not currently a party to any such
claims or proceedings that, if decided adversely to us, would either
individually or in the aggregate have a material adverse effect on our business,
financial condition or results of operations.
Item 1A. Risk Factors.
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 fiscal year ended June 30,
2009.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
None.
Item
3. Defaults Upon Senior
Securities.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
Exhibits
filed or furnished with this report:
31.1 Certification
of Chief Executive Officer. *
31.2 Certification
of Chief Financial Officer. *
|
|
32.1 Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as added by
Section 906 of the Sarbanes-Oxley Act of 2002.
*
|
|
|
32.2 Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as added by
Section 906 of the Sarbanes-Oxley Act of 2002.
*
|
____________________
* Exhibit
filed with this report.
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)
|
Palatin
Technologies, Inc.
|
|
|
(Registrant)
|
|
|
Date:
May 12, 2010
|
/s/
Carl
Spana
|
|
Carl
Spana, Ph.D.
President
and
Chief
Executive Officer (Principal
Executive
Officer)
|
|
|
Date:
May 12, 2010
|
/s/
Stephen T.
Wills
|
|
Stephen
T. Wills
Executive
Vice President and
Chief
Financial Officer (Principal
Financial
and Accounting Officer)
|
EXHIBIT INDEX
31.1
Certification of Chief Executive Officer. *
31.2
Certification of Chief Financial Officer. *
32.1
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
added by Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
added by Section 906 of the Sarbanes-Oxley Act of 2002. *
____________________
* Exhibit
filed with this report.