Palatin Technologies, Inc. (PTN) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals: while there are promising developments in obesity treatments and a significant cash increase from a public offering, the financial results show widening losses and lower other income. The Q&A highlights cautious optimism in drug development but lacks concrete timelines or efficacy data, which may concern investors. The absence of new partnerships or strong guidance further tempers enthusiasm. Given these factors, the stock is likely to remain stable in the short term, leading to a neutral prediction.
Key Financial Performance
Revenue $116,000 for the quarter compared to $0 in the comparable period last year. This revenue relates to cost reimbursements under our collaboration agreement with Boehringer Ingelheim.
Operating Expenses $7.4 million for the quarter compared to $2.6 million in the prior year period. The increase is due to higher investment in melanocortin-based obesity development programs, increased compensation costs, and professional fees. The prior year period was impacted by a gain on the sale of Vyleesi, which reduced net operating expenses.
Other Income Net $65,000 for the quarter compared to $169,000 in the prior year period. The decrease reflects lower investment income and foreign currency translation gains, partially offset by lower interest expense.
Net Cash Used in Operations $4.8 million for the quarter, consistent with the same quarter last year.
Net Loss $7.3 million or $2.86 per share compared to a net loss of $2.4 million or $5.92 per share in the comparable period last year. The change reflects higher operating expenses associated with advancing pipeline programs and the absence of the Vyleesi divestiture gain recorded in the prior year.
Cash and Cash Equivalents $14.5 million as of December 31, 2025, compared to $1.3 million at September 30, 2025, and $2.6 million at June 30, 2025. The increase is attributed to the completion of an $18.2 million public offering.
PL9643 Sublicensing Transaction Approximately $3.8 million of upfront consideration in January 2026 in the form of noncash debt cancellation. This amount is reflected in the current liabilities as of December 31, 2025, and will be recognized as license revenue in the quarter ending March 31, 2026.
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Operating Highlights
Obesity Pipeline: Advancing melanocortin-4 receptor agonists targeting rare neuroendocrine obesity disorders, including hypothalamic obesity and Prader-Willi syndrome. Lead oral small molecule PL-7737 is progressing through IND-enabling toxicology studies, with an IND submission and Phase I trial initiation planned for the first half of 2026. Next-generation peptide agonists for weekly subcutaneous dosing are also in development, with an IND submission planned for the second half of 2026.
Public Offering: Completed an $18.2 million public offering in November 2025, strengthening the balance sheet and regaining compliance with NYSE American listing standards. Common stock resumed trading under the symbol PTN.
Financial Position: Net proceeds of $16.9 million from the public offering are allocated to advancing obesity programs and general corporate purposes. Cash position as of December 31, 2025, was $14.5 million, with a cash runway extending beyond March 31, 2027.
Sublicensing Transaction: Executed sublicensing of PL9643 for dry eye disease to Altanispac Labs, receiving $3.8 million in upfront consideration. This allows focus on core obesity programs while retaining potential future financial participation.
Strategic Focus: Sharpened focus on core obesity programs by sublicensing PL9643 and advancing differentiated melanocortin-4 receptor-based therapeutics. Emphasis on rare neuroendocrine disorders with potential for co-administration with GLP-1-based therapeutics.
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Risk or Challenges
Financial Stability: The company has a net loss of $7.3 million for the second quarter, reflecting higher operating expenses and absence of prior year gains. While the recent public offering strengthened the balance sheet, there is no assurance that Series J warrants will be exercised, which could limit additional funding.
Revenue Generation: Revenue for the quarter was only $116,000, primarily from cost reimbursements under a collaboration agreement, indicating limited revenue streams and reliance on external partnerships.
Operating Expenses: Total operating expenses increased to $7.4 million due to higher investment in obesity development programs, increased compensation costs, and professional fees, which could strain financial resources.
Regulatory and Development Risks: The company’s lead obesity program is still in preclinical stages, with IND submissions planned for 2026. Delays or failures in regulatory approvals or clinical trials could impact strategic objectives.
Market and Competitive Risks: The focus on rare neuroendocrine obesity disorders and potential co-administration with GLP-1-based therapeutics indicates a niche market. However, competition in the obesity treatment space could pose challenges.
Strategic Focus: The sublicensing of PL9643 and focus on obesity programs may limit diversification, increasing dependency on the success of a single therapeutic area.
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Guidance & Outlook
Obesity Pipeline Development: Palatin is advancing a portfolio of proprietary melanocortin-4 receptor agonists targeting rare neuroendocrine obesity disorders, including hypothalamic obesity and Prader-Willi syndrome. The lead oral small molecule MCR4 agonist, PL-7737, is progressing through IND-enabling toxicology studies, with an IND submission and Phase I clinical trial initiation planned for the first half of 2026. Additionally, next-generation selective melanocortin-4 receptor peptide agonists designed for once-weekly subcutaneous dosing are planned for IND submission in the second half of 2026.
Product Differentiation Goals: Palatin aims to enhance patient tolerability by reducing gastrointestinal side effects and minimizing off-target effects such as hyperpigmentation in its obesity treatments. The company is focusing on rare neuroendocrine disorders and plans registration clinical studies for hypothalamic obesity and Prader-Willi syndrome. Preclinical and early clinical data also support the potential for co-administration of melanocortin-4 receptor agonists with GLP-1-based therapeutics.
Financial Position and Cash Runway: Following a successful $18.2 million public offering in November 2025, Palatin has strengthened its financial position. The company expects its cash runway to extend beyond March 31, 2027, supporting the advancement of its obesity pipeline and maintaining operational flexibility.
Sublicensing of PL9643: In January 2026, Palatin sublicensed PL9643, a selective melanocortin-1 receptor agonist for dry eye disease, to Altanispac Labs. This transaction provided $3.8 million in upfront consideration and allows Palatin to focus on its core obesity programs while retaining potential future financial participation through milestones and royalties.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What preclinical or translational signals give confidence in differentiation versus current or emerging MC4R agonists, particularly around tolerability?
A:The compound is designed to be more selective for the melanocortin-4 receptor than the melanocortin-1 receptor, reducing hyperpigmentation. GI side effects are controlled through mechanisms like slowing absorption to avoid large spikes.
Q:How is patient selection and endpoints being approached for the Phase I SAD/MAD trial?
A:The single-ascending and multi-ascending dose studies are primarily safety studies. The single-ascending dose study focuses on confirming oral bioavailability and defining a dosing window. The multi-ascending dose study, conducted in healthy obese patients, will assess safety, reduction in body weight, control of hyperphagia, and other obesity-related parameters.
Q:Is there an increased emphasis on Prader-Willi syndrome?
A:Prader-Willi syndrome has always been a focus in the background. The company is looking for indications that meet rare and orphan designation criteria with substantial patient populations, such as HO and Prader-Willi.
Q:How will the oral small molecule and once-weekly injection products be positioned?
A:The two products are complementary, with each suited for different patient populations. The weekly injectable peptide may offer higher efficacy, while the oral small molecule provides an alternative. Both are needed for managing chronic conditions requiring long-term aggressive therapy.
Q:Was there any onetime noise in the Q2 fiscal OpEx of $7.4 million, and how should we think about OpEx in the March quarter?
A:The Q2 fiscal OpEx included over $2 million in onetime extraordinary expenses, which are not expected to recur. The March quarter OpEx is expected to be approximately $2.5 million less than Q2.
Q:How will safety issues, such as those seen in current Prader-Willi syndrome drugs, be addressed in the Phase I study?
A:The Phase I study will assess tolerability and safety profiles. The company expects lower discontinuation rates due to controllable GI side effects and reduced hyperpigmentation by avoiding MCR1 activation. However, clinical data is needed to confirm this.
Q:How will hyperphagia and weight reduction be assessed in the Phase I and Phase II studies for Prader-Willi syndrome?
A:The Phase I study will focus on safety and target engagement, with some expected reduction in food intake and body mass in healthy obese patients. Phase II studies will assess hyperphagia control and weight reduction in Prader-Willi syndrome patients.
Q:When will Prader-Willi syndrome studies be pursued more aggressively?
A:Prader-Willi syndrome studies will be pursued more aggressively next year, with Phase II/III studies starting mid-2027.
Q:What role will GLP-1 play in product development or clinical studies?
A:GLP-1 may be combined with the company's products for patients with severe hyperphagia, such as those with Prader-Willi syndrome. While monotherapy will be the focus during clinical development, combination therapy is expected in the long term.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the efficacy of the products in Prader-Willi syndrome patients, emphasizing the need for clinical data to confirm expectations. They also did not provide precise timelines or detailed plans for combination therapy with GLP-1, focusing instead on general positioning and long-term possibilities.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CEO Director
Co Founder
Director today
Founder President
Hello result
IND house
Ingelheim period
NYSE American
NYSE listing
Officer Today
PL transaction
PTN result
Palatin result
President CEO
Secretary Hello
Series warrant
Today progress
Vyleesi divestiture
Vyleesi period
absence Vyleesi
acceptance IND
advancement obesity
exercise price
gain
income
investment
loss share
melanocortin
offering exercise
price share
proceeds offering
stock
warrant exercise
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Palatin Technologies, Inc. (PTN) Q2 2026 Earnings Call Transcript
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The earnings call reveals mixed signals: while there are promising developments in obesity treatments and a significant cash increase from a public offering, the financial results show widening losses and lower other income. The Q&A highlights cautious optimism in drug development but lacks concrete timelines or efficacy data, which may concern investors. The absence of new partnerships or strong guidance further tempers enthusiasm. Given these factors, the stock is likely to remain stable in the short term, leading to a neutral prediction.
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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.
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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.
PTN Report
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