Palatin Technologies, Inc. is a biopharmaceutical company, which engages in the development of medicines based on molecules that modulate the activity of the melanocortin and natriuretic peptide receptor systems. Its primary product candidate is marketed under the Vyleesi brand, the trade name for bremelanotide, a peptide melanocortin receptor 4 agonist for the treatment of premenopausal women with acquired, generalized, hypoactive sexual desire disorder (HSDD). The company was founded by Carl Spana and John K. A. Prendergast on November 21, 1986 and is headquartered in Cranbury, NJ.
We have a history of substantial net losses, and while we had net income for the years ended June 30, 2019 and 2018, we expect to incur substantial net losses over the next few years, and we may never achieve or maintain profitability.
We will need additional funding, including funding to complete clinical trials for our product candidates other than Vyleesi, which may not be available on acceptable terms, if at all.
We have a limited operating history upon which to base an investment decision.
Raising additional capital may cause dilution to existing shareholders, restrict our operations or require us to relinquish rights.
We are substantially dependent on the commercial success of Vyleesi for HSDD, but we and our licensees may never successfully commercialize Vyleesi for HSDD or obtain approvals in countries other than the United States.
We do not control the commercialization of Vyleesi in North America, which is licensed to AMAG, and as a result we may not realize a significant portion of the potential value of the license arrangement with AMAG.
Production and supply of Vyleesi depend on contract manufacturers over whom neither we nor AMAG have any control, and there may not be adequate supplies of Vyleesi.
We depend on AMAG for supply of Vyleesi outside North America, and have not yet signed a supply contract for Vyleesi with AMAG.
Our product candidates other than Vyleesi are still in the early stages of development and remain subject to clinical testing and regulatory approval. If we are unable to successfully develop and test our product candidates, we will not be successful.
If clinical trials for our product candidates are prolonged or delayed, we may be unable to commercialize our product candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.
We may not be able to secure and maintain relationships with research institutions and other organizations to conduct our clinical trials.
Even if our product candidates receive regulatory approval, they may never achieve market acceptance, in which case our business, financial condition and results of operation will be materially adversely affected.
Even if our product candidates receive regulatory approval in the United States, we may never receive approval or commercialize our products outside of the United States.
If side effects emerge that can be linked to our product candidates (either while they are in development or after they are approved and on the market), we may be required to perform lengthy additional clinical trials, change the labeling of any such products, or withdraw such products from the market, any of which would hinder or preclude our ability to generate revenues.
We may not be able to keep up with the rapid technological change in the biotechnology and pharmaceutical industries, which could make any future approved products obsolete and reduce our revenue.
Competing products and technologies may make our proposed products noncompetitive.
We rely on third parties over whom we have no control to conduct preclinical studies, clinical trials and other research for our product candidates and their failure to timely perform their obligations could significantly harm our product development.
Production and supply of our product candidates depend on contract manufacturers over whom we have no control, with the risk that we may not have adequate supplies of our product candidates or products.
If we are unable to establish sales and marketing capabilities within our organization or enter into and maintain agreements with third parties to market and sell our product candidates, we may be unable to generate product revenue.
We will need to hire additional employees in order to commercialize our product candidates in the future. Any inability to manage future growth could harm our ability to commercialize our product candidates, increase our costs and adversely impact our ability to compete effectively.
Our ability to achieve revenues from the sale of our products will depend, in part, on our ability to obtain adequate reimbursement from Medicare, Medicaid, private insurers and other healthcare payers.
Even if we receive regulatory approval for our products in Europe, we may not be able to secure adequate pricing and reimbursement in Europe for us or any strategic partner to achieve profitability.
We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits.
Our internal computer systems, or those of our third-party contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
We are highly dependent on our management team, senior staff professionals and third-party contractors and consultants, and the loss of their services could materially adversely affect our business.
Because we expect Vyleesi for the treatment of HSDD to be classified as a Tier 3 drug with reimbursement by third-party payers similar to approved products for treating ED, demand for this product will be tied to discretionary spending levels of our targeted patient population and particularly affected by unfavorable economic conditions.
Both before and after marketing approval, our product candidates are subject to ongoing regulatory requirements and, if we fail to comply with these continuing requirements, we could be subject to a variety of sanctions and the sale of any approved commercial products could be suspended.
The regulatory approval process is lengthy, expensive and uncertain, and may prevent us from obtaining the approvals that we require.
Legislative or regulatory healthcare reforms in the United States may make it more difficult and costly for us to obtain regulatory clearance or approval of any future product candidates and to produce, market and distribute our products after clearance or approval is obtained.
Changes in healthcare policy could adversely affect our business.
If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property or the patents of our licensors, which could be expensive and time consuming.
If we infringe or are alleged to infringe intellectual property rights of third parties, our business could be harmed.
Our patent applications and the enforcement or defense of our issued patents may be impacted by the application of or changes in U.S. and foreign standards.
We may not be able to protect our intellectual property rights throughout the world.
If we are unable to keep our trade secrets confidential, our technologies and other proprietary information may be used by others to compete against us.
Our stock price is volatile and may fluctuate in a way that is disproportionate to our operating performance and we expect it to remain volatile, which could limit investors’ ability to sell stock at a profit.
As a public company in the United States, we are subject to the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). We can provide no assurance that we will, at all times, in the future be able to report that our internal controls over financial reporting are effective.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
Holders of our preferred stock may have interests different from our common stockholders.
Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gains.
Anti-takeover provisions of Delaware law and our charter documents may make potential acquisitions more difficult and could result in the entrenchment of management.
We are a smaller reporting company and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.
As of September 10, 2019, there were 46,816,721 shares of common stock underlying outstanding convertible preferred stock, options, restricted stock units and warrants. Stockholders may experience dilution from the conversion of preferred stock, exercise of outstanding options and warrants and vesting and delivery of restricted stock units.
Our failure to meet the continued listing requirements of the NYSE American could result in a de-listing of our common stock.
Revenue – For the fiscal year ended June 30, 2019 (“fiscal 2019”), we recognized $60,300,476 in revenue pursuant to our license agreement with AMAG compared to $67,134,758 in revenue for fiscal 2018 pursuant to our license agreements with AMAG and Fosun.
On January 8, 2017, we entered into the AMAG License Agreement which provided for $60,000,000 as a one-time initial payment. Pursuant to the terms of and subject to the conditions in the AMAG License Agreement, AMAG reimbursed us $25,000,000, less certain expenses directly paid by AMAG for direct out-of-pocket expenses we incurred following the effective date of the AMAG License Agreement in connection with development and regulatory activities necessary to file an NDA for Vyleesi for HSDD in the United States, less certain other expenses directly paid or to be paid by AMAG. We recognized $300,476 and $42,134,758 for fiscal 2019 and fiscal 2018, respectively, as license and contract revenue which included additional billings for AMAG-related Vyleesi costs of $300,476 and $1,151,243 in fiscal 2019 and fiscal 2018, respectively.
In addition, pursuant to the terms of and subject to the conditions in the AMAG License Agreement, we were eligible to receive up to $80,000,000 from AMAG in specified regulatory milestone payments upon achievement of certain regulatory milestones. On June 4, 2018, the FDA accepted the Vyleesi NDA for filing, which triggered a $20,000,000 milestone payment to Palatin from AMAG, that was recognized in revenue in fiscal 2018. On June 21, 2019, the FDA granted approval of Vyleesi for use in the United States, which triggered a $60,000,000 milestone payment to Palatin. As a result, we recognized $60,000,000 in revenue related to regulatory milestones in fiscal 2019.