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01/09 23:04
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with increased revenue and net income due to the BI agreement. Operating expenses decreased, improving cash flow. The Q&A revealed confidence in product differentiation and market potential despite competitive risks. The BI milestone payment and recent public offering enhance financial health. Overall, the financial and strategic outlook is positive, with potential for further growth from pipeline developments.
Revenue For the quarter ended September 30, 2025, Palatin recognized approximately $8.8 million in collaboration license revenue compared to $0 for the comparable quarter last year. The increase in collaboration license revenue is all related to the Boehringer Ingelheim (BI) agreement, which consisted of the upfront payment, the achievement of a research milestone, and certain cost-related reimbursements.
Operating Expenses Total operating expenses were $4.2 million for the first quarter ended September 30, 2025, compared to $7.8 million for the comparable quarter last year. The decrease was mainly related to a decrease in spending on MCR development programs (melanocortin receptor system-related development programs).
Cash Flows Palatin's net cash used in operations for the quarter ended September 30, 2025, was $1.6 million compared to net cash used in operations of $7 million for the comparable quarter last year. The decrease in net cash used in operations was mainly due to the recognition of license and contract revenue related to the BI agreement recognized during the quarter.
Net Income/Loss Palatin reported net income for the quarter ended September 30, 2025, of $4.7 million compared to a net loss of $7.8 million for the comparable quarter last year. The increase in net income was mainly due to the revenue recognized pursuant to the BI agreement and partially for the decrease in operating expenses.
Cash Position As of September 30, 2025, Palatin's cash and cash equivalents were $1.3 million, compared to $2.6 million as of June 30, 2025. The $1.3 million does not include approximately $6.5 million milestone payment pursuant to the BI agreement for retinal diseases, which was received in October 2025, and the net proceeds of $16.9 million from the underwritten public offering, which closed on November 12, 2025.
Development of melanocortin-4 receptor agents: Focused on treating syndromic and genetic obesity, such as hypothalamic obesity. Developed a portfolio of selective melanocortin-4 receptor agonists, including orally active small molecules and long-acting peptides. PL-7737, an orally active small molecule, is undergoing preclinical testing and is on track for an IND filing in the first half of 2026.
Melanocortin-4 receptor extended duration peptides: Designed for once-weekly or bi-weekly dosing. IND-enabling studies are expected in the first half of 2026, with human trials anticipated in the second half of 2026.
Collaboration with Boehringer Ingelheim: Entered into a collaboration for retinal disease treatments. Received $2.3 million upfront and $6.5 million in research milestones. Eligible for up to $14.5 million in near-term research milestones and $307 million in development, regulatory, and commercial milestones, plus royalties on net sales.
Public offering and NYSE American listing: Closed an $18.2 million public offering, regaining compliance with NYSE American listing standards. Gross proceeds were $16.9 million, with potential additional proceeds of $18.2 million from milestone-related warrants.
Financial performance: Reported $8.8 million in collaboration license revenue for Q1 FY2026, compared to $0 in the prior year. Operating expenses decreased to $4.2 million from $7.8 million. Net income was $4.7 million, compared to a $7.8 million loss in the prior year.
Cash position: Cash and equivalents were $1.3 million as of September 30, 2025, excluding a $6.5 million milestone payment and $16.9 million from the public offering. Cash runway is expected to extend beyond December 2026.
Focus on melanocortin receptor system: Plans to out-license programs for ocular, inflammatory bowel, and kidney diseases. Collaboration with Boehringer Ingelheim validates the melanocortin system's potential.
Cash Position: Palatin's cash and cash equivalents were $1.3 million as of September 30, 2025, which is low compared to $2.6 million as of June 30, 2025. Although the company received additional funds from a milestone payment and a public offering, the low cash position could pose a risk to operations if future funding milestones or warrant exercises are not achieved.
Warrant Exercise Uncertainty: The company anticipates receiving proceeds from the exercise of Series J and Series K warrants, but there is no guarantee that these warrants will be exercised. This creates uncertainty in securing additional funding for operations and strategic initiatives.
Regulatory and Development Milestones: Palatin's future revenue depends on achieving regulatory and development milestones, such as FDA acceptance of investigational new drug applications for obesity treatments. Delays or failures in meeting these milestones could adversely impact financial performance and strategic goals.
Dependence on Licensing Agreements: The company relies heavily on licensing agreements, such as the one with Boehringer Ingelheim, for revenue. Any disruption or failure in these partnerships could significantly impact financial stability and operational plans.
Market Competition in Obesity Treatments: Palatin is developing melanocortin-4 receptor agents for obesity treatment, but the market is highly competitive. The success of these treatments depends on differentiation from existing FDA-approved options, which poses a strategic risk.
Pipeline Development Risks: The company is advancing multiple preclinical and clinical programs, including PL-7737 and other melanocortin receptor system candidates. Delays, failures in clinical trials, or regulatory hurdles could impact the timeline and success of these programs.
Development of melanocortin-4 receptor agents: Palatin will focus on developing highly selective melanocortin-4 receptor agents for treating syndromic and genetic obesity, such as hypothalamic obesity. These agents include orally active small molecules and long-acting peptides, with reduced activity at the melanocortin-1 receptor to minimize side effects like skin darkening.
PL-7737 IND filing and clinical studies: PL-7737, an orally active small molecule targeting melanocortin-4 receptors, is on track for an IND filing in the first half of 2026. Initial clinical studies, including single and multiple ascending studies in healthy obese and hypothalamic patients, are expected to yield data in the second half of 2026.
Extended duration peptides for obesity: Melanocortin-4 receptor extended duration peptides are expected to begin IND-enabling studies in the first half of 2026, with first-in-human studies anticipated in the second half of 2026.
Out-licensing programs and collaborations: Palatin plans to out-license multiple programs targeting the melanocortin system for ocular indications, inflammatory bowel diseases, and kidney diseases. The collaboration with Boehringer Ingelheim for retinal diseases validates this approach and includes potential milestone payments and royalties.
Financial outlook and cash runway: Palatin expects a cash runway extending beyond December 31, 2026, supported by recent equity offerings and milestone payments from collaborations.
The selected topic was not discussed during the call.
The earnings call highlights strong financial performance with increased revenue and net income due to the BI agreement. Operating expenses decreased, improving cash flow. The Q&A revealed confidence in product differentiation and market potential despite competitive risks. The BI milestone payment and recent public offering enhance financial health. Overall, the financial and strategic outlook is positive, with potential for further growth from pipeline developments.
The earnings call highlights several negative aspects: trading suspension and delisting from NYSE, no revenue due to the sale of Vyleesi, and a significant cash position decrease. Although operating expenses and net loss decreased, concerns about financial viability and market perception persist. The Q&A section provided limited positive insights, with management's unclear responses adding to uncertainties. The absence of shareholder return plans further contributes to a negative outlook. Given these factors, a negative stock price movement is expected.
The earnings call summary indicates significant challenges: liquidity concerns with cash dropping from $9.5M to $2.4M, no product sales in Q1 2025, and increased net loss. Despite a deferred payment and potential partnerships, the focus on MCR-4 obesity limits diversification and increases risk. Q&A insights reveal interest but lack concrete partnership details, adding uncertainty. Overall, the negative financials and strategic risks outweigh the potential positives, leading to a negative sentiment prediction.
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