PALATIN TECHNOLOGIES INC - Quarter Report: 2014 December (Form 10-Q)

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

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

Delaware		95-4078884
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4B Cedar Brook Drive Cranbury, New Jersey		08512
(Address of principal executive offices)		(Zip Code)

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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	2
Consolidated Balance Sheets as of December 31, 2014 and June 30, 2014	2
Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2014 and 2013	3
Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2014 and 2013	4
Notes to Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3. Quantitative and Qualitative Disclosures About Market Risk	16
Item 4. Controls and Procedures	16
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	17
Item 1A. Risk Factors	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3. Defaults Upon Senior Securities	20
Item 4. Mine Safety Disclosures	20
Item 5. Other Information	20
Item 6. Exhibits	20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

●	estimates of our expenses, future revenue, capital requirements;

 

●	our ability to obtain additional financing on terms acceptable to us, or at all;

 

●	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 results and the timing of results in our Phase 3 clinical trials of bremelanotide for FSD;

 

 

 

●	our expectation regarding the timing of our regulatory submissions for approval of bremelanotide for FSD in the United States and Europe;

 

●	the potential for commercialization of bremelanotide for FSD and other product candidates, if approved, by us;

 

●	our expectations regarding the potential market size and market acceptance for bremelanotide for FSD and our other product candidates, if approved for commercial use;

 

●	our ability to compete with other products and technologies similar to our product candidates;

 

●	the ability of our third-party collaborators to timely carry out their duties under their agreements with us;

 

●	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 Medicare, Medicaid, private insurers and other healthcare payers;

 

●	our ability to maintain product liability insurance at a reasonable cost or in sufficient amounts, if at all;

 

●	the retention of key management, employees and third-party contractors;

 

●	the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

 

●	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 legislative or regulatory healthcare reforms in the United States;

 

●	our ability to adapt to changes in global economic conditions; and

 

●	our ability to remain listed on the NYSE MKT.

 

 

 

 

 

 

 

 

 

 

●

Bremelanotide, an on-demand subcutaneous injectable peptide melanocortin receptor agonist, for treatment of FSD in premenopausal women. Bremelanotide, which is a melanocortin agonist (a compound which binds to a cell receptor and activates a response), is a synthetic peptide analog of the naturally occurring hormone alpha-MSH (melanocyte-stimulating hormone). The novel mechanism of action involves activating endogenous melanocortin hormone pathways involved in sexual arousal response. Phase 3 clinical trials were initiated in December 2014;

 

●

Melanocortin receptor-4, or MC4r, compounds for treatment of obesity and diabetes in collaboration with AstraZeneca pursuant to our research collaboration and license agreement. Results of our studies involving MC4r peptides suggest that certain of these peptides may have significant commercial potential for treatment of conditions responsive to MC4r activation, including FSD, erectile dysfunction, obesity and diabetes;

 

●

PL-3994, a peptide mimetic natriuretic peptide receptor A, or NPR-A, agonist, for treatment of cardiovascular and pulmonary indications. PL-3994 is our lead natriuretic peptide receptor product candidate, and is a synthetic mimetic of the neuropeptide hormone ANP. PL-3994 is in development for treatment of heart failure, acute exacerbations of asthma and refractory hypertension; and

 

●

Melanocortin receptor-1, or MC1r, agonist peptides, for treatment of inflammatory and dermatologic disease indications. Our MC1r peptide drug candidates are highly specific, with substantially greater binding and efficacy at MC1r than at other melanocortin receptors. We have selected one of our MC1r peptide drug candidates, designated PL-8177, as a clinical trial candidate.

 

 

 

 

 

 

 

 

●	Using our technology and expertise to develop and commercialize products in our active drug development programs;

 

●	Entering into strategic alliances and partnerships with pharmaceutical companies to facilitate the development, manufacture, marketing, sale and distribution of product candidates that we are developing;

 

●	Partially funding our product development programs with the cash flow generated from research collaboration and license agreements and any potential future agreements with third parties; and

 

●	Completing development and seeking regulatory approval of bremelanotide for FSD and our other product candidates.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

●	the development and testing of products in animals and humans;

 

●	product approval or clearance;

 

●	regulatory compliance;

 

●	good manufacturing practices (GMPs);

 

●	intellectual property rights;

 

●	product introduction;

 

●	marketing, sales and competition; and

 

●	obtaining sufficient capital.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

●	the results of our Phase 3 clinical trials for bremelanotide for FSD;

 

●	the timing of, and the costs involved in, obtaining regulatory approvals for bremelanotide for FSD and our other product candidates;

 

●	the number and characteristics of any additional product candidates we develop or acquire;

 

●	the scope, progress, results and costs of researching and developing bremelanotide for FSD, PL-3994 or any future product candidates, and conducting preclinical and clinical trials;

 

●	the cost of commercialization activities if bremelanotide for FSD, PL-3994 or any future product candidates are approved for sale, including marketing, sales and distribution costs;

 

●	the cost of manufacturing bremelanotide for FSD, PL-3994 or any future product candidates and any products we successfully commercialize and maintaining our related facilities;

 

●	our ability to establish and maintain strategic collaborations, licensing or other arrangements and the terms and timing of such arrangements;

 

●	the degree and rate of market acceptance of any future approved products;

 

●	the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing products or treatments;

 

●	any product liability or other lawsuits related to our products;

 

●	the expenses needed to attract and retain skilled personnel;

 

●	the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and

 

●	the timing, receipt and amount of sales of, or royalties on, future approved products, if any.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

●	62,531 shares issuable on the conversion of immediately convertible Series A Convertible preferred stock, subject to adjustment, for no further consideration;

 

●	4,278,580 shares issuable on the exercise of stock options, at exercise prices ranging from $0.60 to $37.50 per share;

 

●	865,900 shares issuable under restricted stock units which vest on dates between June 25, 2015 and June 25, 2018, subject to the fulfillment of service conditions; and

 

●

116,667,522 shares issuable on the exercise of warrants at exercise prices ranging from $0.01 to $1.00 per share, which includes warrants issued in our 2014 private placement for 24,949,325 shares issuable at an exercise price of $0.01 per share and warrants issued in connection with our 2014 venture loan for 666,666 shares issuable at an exercise price of $0.75 per share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit Number	Description	Filed Herewith	Form	Filing Date	SEC File No.
4.1	Form of Series C 2014 Common Stock Purchase Warrant.		8-K	December 30, 2014	001-15543
4.2	Form of Series D 2014 Common Stock Purchase Warrant.		8-K	December 30, 2014	001-15543
10.1	Securities Purchase Agreement, dated December 23, 2014, by and between Palatin Technologies, Inc. and the investors named therein.		8-K	December 30, 2014	001-15543
10.2	Registration Rights Agreement, dated December 23, 2014, by and between Palatin Technologies, Inc. and the investors named therein.		8-K	December 30, 2014	001-15543
10.3	Venture Loan and Security Agreement, dated December 23, 2014, by and between Palatin Technologies, Inc. and Horizon Technology Finance Corporation and Fortress Credit Co LLC.		8-K	December 30, 2014	001-15543
31.1	Certification of Chief Executive Officer.	X
31.2	Certification of Chief Financial Officer.	X
32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.	X
32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.	X
101.INS	XBRL Instance Document.	X
101.SCH	XBRL Taxonomy Extension Schema Document.	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	X

 

 

 

 

 

Exhibit Number	Description	Filed Herewith	Form	Filing Date	SEC File No.
4.1	Form of Series C 2014 Common Stock Purchase Warrant.		8-K	December 30, 2014	001-15543
4.2	Form of Series D 2014 Common Stock Purchase Warrant.		8-K	December 30, 2014	001-15543
10.1	Securities Purchase Agreement, dated December 23, 2014, by and between Palatin Technologies, Inc. and the investors named therein.		8-K	December 30, 2014	001-15543
10.2	Registration Rights Agreement, dated December 23, 2014, by and between Palatin Technologies, Inc. and the investors named therein.		8-K	December 30, 2014	001-15543
10.3	Venture Loan and Security Agreement, dated December 23, 2014, by and between Palatin Technologies, Inc. and Horizon Technology Finance Corporation and Fortress Credit Co LLC.		8-K	December 30, 2014	001-15543
31.1	Certification of Chief Executive Officer.	X
31.2	Certification of Chief Financial Officer.	X
32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.	X
32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.	X
101.INS	XBRL Instance Document.	X
101.SCH	XBRL Taxonomy Extension Schema Document.	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	X