Palatin Technologies, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended June 30, 2023, compared with the year ended June 30, 2022. The filing is an annual report, not a standalone 2022 fourth-quarter report. Palatin is a clinical-stage biopharmaceutical company; its only FDA-approved product is Vyleesi for HSDD in premenopausal women.
Financial and operating performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Total revenue | $4.854 million | $1.468 million |
| Net Vyleesi product revenue | $4.851 million | $1.218 million |
| Gross Vyleesi product sales | $12.460 million | $5.817 million |
| Research and development expense | $22.631 million | $21.327 million |
| Selling, general and administrative expense | $15.291 million | $16.512 million |
| Loss from operations | $32.459 million | $36.588 million |
| Net loss | $27.542 million | $36.198 million |
| Net cash used in operating activities | $28.419 million | $29.923 million |
- Net revenue increased mainly with higher Vyleesi sales volume and lower product allowances as a share of gross sales. The company reported 114% higher sales volume; net Vyleesi sales rose to $4.851 million from $1.218 million.
- Net loss narrowed, helped by higher revenue, a $4.675 million New Jersey tax-benefit from selling NOLs and R&D credits, and a $1.027 million gain from reducing a Lonza purchase commitment. The tax benefit was not evidence of operating profitability.
- R&D spending increased, primarily due to MCr program costs and compensation. SG&A declined, including lower Vyleesi selling costs and the absence of certain FY2022 financing-related expenses.
- FY2023 other income, net, was $0.242 million, including $0.692 million investment income offset by a $0.430 million unrealized foreign-currency loss. The filing does not provide a clear gross-margin figure.
Liquidity, cash flow and obligations
- At June 30, 2023, cash and cash equivalents were $7.990 million and marketable securities were $2.993 million, for combined cash, cash equivalents and securities of $10.982 million. Current assets were $16.322 million; current liabilities were $15.132 million.
- Operating activities used $28.419 million of cash. Investing activities used $3.427 million, including $2.993 million for marketable securities and $0.434 million for property and equipment. Financing activities provided $9.896 million, principally from common-stock and warrant sales.
- Total liabilities were $17.805 million. The balance sheet reports lease liabilities, including $0.152 million of finance leases, but no conventional borrowing balance is shown. Inventory purchase commitments totaled $6.897 million, with $5.940 million accrued as estimated losses at year-end.
- Stockholders’ equity was only $0.134 million at year-end, down from $16.268 million. Common shares outstanding rose to 11.657 million from 9.271 million.
- Management and the auditor identified substantial doubt about the company’s ability to continue as a going concern. Management said existing cash, cash equivalents and marketable securities were expected to fund anticipated operating expenses through calendar 2023, based on plans at the filing date, and additional funding was required. The filing states no financing commitment was in place.
Material changes and notable events
- Gross Vyleesi sales more than doubled year over year, while net sales increased by a larger proportion as allowances declined relative to gross sales. Vyleesi is sold in the U.S. through a specialty pharmacy; Fosun and Kwangdong hold China and Korea licenses, respectively, but those territories had not yet generated commercial sales disclosed here.
- In November 2022, investors redeemed the Series B and C preferred stock; $15.75 million, including a $0.75 million fee, was released from escrow to investors. Those preferred shares were no longer outstanding at June 30, 2023.
- The November 2022 offering and FY2023 at-the-market sales generated financing proceeds. The ATM agreement authorized up to $50 million of share sales; 504,034 shares generated $1.034 million net proceeds in FY2023. After year-end through September 27, 2023, another 217,027 shares generated $0.531 million net proceeds.
- A 1-for-25 reverse stock split took effect August 30, 2022. The filing’s share and per-share figures reflect the split.
Outlook, pipeline and principal risks
- Management expected top-line results from the first Phase 3 PL9643 dry-eye trial in Q4 calendar 2023; a second Phase 3 trial was contingent on positive results. The PL8177 oral ulcerative-colitis Phase 2 study and a diabetic-nephropathy Phase 2 proof-of-concept study were ongoing. These are expectations, not assurances or financial guidance.
- The company expects continuing losses and significant R&D and commercialization spending. It may seek equity or debt financing, licensing or collaboration arrangements, or expense reductions; failure to obtain funding could force program cuts, asset sales, a strategic transaction, or cessation of operations.
- Vyleesi commercialization remains exposed to limited payer reimbursement (Tier 3 classification), patient affordability, competition from Addyi and other therapies, and reliance on third-party manufacturers and distribution. FDA-required Vyleesi postmarketing studies and a lactation clinical trial remain outstanding; adverse outcomes or delays could affect the product.
- Other key risks include clinical-trial failure or delay, regulatory uncertainty, manufacturing and supply constraints, patent challenges, dilution, and stock-price volatility. The company also disclosed foreign-currency exposure tied to inventory commitments.
- Vyleesi’s active-ingredient patent is stated to expire June 28, 2025; the company cautions that patent protection may not prevent generic competition. The filing reports no material pending legal proceedings.
Important facts for investors to verify
- Subsequent liquidity and financing: cash runway, actual post-filing ATM proceeds, and any new funding or cost-reduction measures.
- PL9643 Phase 3 results and the timing and funding of any second Phase 3 trial; progress and outcomes for PL8177 and the diabetic-nephropathy study.
- Vyleesi demand and net sales, allowance and reimbursement trends, and any U.S. commercialization partnership or overseas regulatory approvals.
- Amounts, timing and terms of manufacturing commitments, especially the $5.940 million accrued portion and the Lonza agreement’s June 2024 term.
- Potential dilution from outstanding warrants, options, restricted stock units and future equity sales; the filing disclosed 4.419 million shares underlying dilutive securities as of September 27, 2023.