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PT

PALATIN TECHNOLOGIES INC (PTN)·Q3 2024 Earnings Summary

Executive Summary

  • Fiscal Q3 2024 delivered no product revenue following the December 2023 sale of Vyleesi; net loss was $8.4M and diluted EPS was -$0.53, modestly better year-over-year but below consensus EPS of -$0.50 and revenue of $0.08M, resulting in a small miss on both lines .
  • Strategic catalysts: positive Phase 3 MELODY-1 results for PL9643 in dry eye disease with rapid onset and broad symptom/sign efficacy; FDA cleared IND to initiate a Phase 2 obesity study co-administering bremelanotide with tirzepatide; both programs targeted for data in 2H CY2024 .
  • Operating focus shifted fully to melanocortin programs; warrant liability classification issues were cleaned up and reclassified to equity, supporting reduced non-operating volatility going forward and contributing to Q3 other income gains .
  • Liquidity: cash, cash equivalents and marketable securities were $10.0M at March 31, 2024; management guides funding into 2H CY2024, with recent equity raises and warrant exercises supplementing runway .

What Went Well and What Went Wrong

What Went Well

  • PL9643 Phase 3 MELODY-1 achieved the co-primary symptom endpoint (pain) and 7 of 11 secondary symptom endpoints; multiple sign endpoints (including all four fluorescein staining endpoints) met significance at 2 weeks, with excellent safety and tolerability. “PL9643…has the potential to be a highly differentiated product” — Carl Spana, CEO .
  • Obesity program advanced: FDA cleared IND for a Phase 2 study adding bremelanotide to tirzepatide; design targets up to 60 patients with topline data expected by year-end 2024 .
  • Non-operating cleanup: “There is no more liability reflection…that item has been cleaned up” — Steve Wills, CFO, referencing warrant liabilities classification, reducing future fair value P&L swings .

What Went Wrong

  • Revenue gap: Q3 recorded no product sales following the Vyleesi divestiture; prior-year Q3 net product revenue was $1.2M, underscoring near-term topline vacuum while pipeline matures .
  • EPS/revenue miss vs consensus: actual EPS -$0.53 vs -$0.50 est., revenue $0 vs $0.08M est.; the miss reflects the transition to R&D-centric operations and absence of commercial revenue .
  • Cash burn increased: net cash used in operations rose to $8.6M vs $1.4M YoY, driven primarily by working capital changes and higher R&D investment .

Financial Results

MetricQ1 2024 (Three months ended 9/30/2023)Q2 2024 (Three months ended 12/31/2023)Q3 2024 (Three months ended 3/31/2024)
Product revenue, net ($USD)$2,105,977 $2,034,113 $0
R&D ($USD)$5,014,630 $5,554,200 $7,159,686
SG&A ($USD)$3,200,244 $3,032,613 $2,033,410
Total operating expenses ($USD)$8,214,874 $860,968 (incl. $7.823M gain on sale) $9,218,298
Other income/(expense), net ($USD)$220,498 $(9,017,179) $782,648
Net (loss)/income ($USD)$(5,888,399) $(7,844,034) $(8,435,650)
Diluted EPS ($USD)$(0.48) $(0.56) $(0.53)
Weighted avg. shares (basic/diluted)12,170,699 14,097,757 15,792,421
Cash & cash equivalents ($USD)$5,524,973 (as of 9/30/2023) $9,485,252 (as of 12/31/2023) $10,014,088 (as of 3/31/2024)

Q3 2024 actuals vs consensus:

MetricActual Q3 2024Consensus Q3 2024
Revenue ($USD)$0 $0.08M
Diluted EPS ($USD)$(0.53) $(0.50)

Notes:

  • Q3 included a $0.429M gain from change in fair value of warrant liabilities within other income; warrants were amended in January 2024 and reclassified to equity, limiting future FV noise .
  • Margins are not meaningful this quarter given zero revenue; focus shifts to expense discipline and cash burn trajectory .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
PL9643 Type C FDA meetingCY Q3 2024Planned for “later this quarter” post topline (Q2 note: meeting expected in 2Q CY2024) Expected CY Q3 2024 Timing refined/shifted later
PL9643 MELODY-2 & MELODY-3 initiation2H CY2024Targeted 2H CY2024 Targeted 2H CY2024 Maintained
PL9643 NDA submission target2H CY2025Not specified earlierTargeted 2H CY2025 New explicit target
Obesity Phase 2 (bremelanotide + tirzepatide) startCY Q2 2024Targeted 1H CY2024; earlier language suggested 1Q CY2024 FDA-cleared; start mid CY Q2 2024 Slight delay vs 1Q target
Obesity Phase 2 topline2H CY20242H CY2024 2H CY2024 Maintained
ED Phase 2 (bremelanotide + PDE5i) startCY Q2 2024Targeted 1H CY2024; earlier 1Q CY2024 Expected CY Q2 2024 Slight delay vs 1Q target
ED Phase 2 topline2H CY20242H CY2024 2H CY2024 Maintained
PL8177 (UC) interimCY Q2 2024Q2 CY2024 Q2 CY2024 Maintained
PL8177 (UC) topline2H CY20242H CY2024 2H CY2024 Maintained
BREAKOUT (DKD) toplineCY Q2 2024Q2 CY2024 Q2 CY2024 Maintained

Earnings Call Themes & Trends

TopicQ1 FY2024 (9/30/2023)Q2 FY2024 (12/31/2023)Q3 FY2024 (3/31/2024)Trend
PL9643 DED efficacy and regulatory pathFully enrolled; top-line expected late CY2023; focus on primary endpoints and safety Database lock; topline expected in Feb; planning program elements Successful Phase 3 with broad symptom/sign efficacy; Type C meeting; MELODY-2/3 to start 2H CY2024; NDA targeted 2H CY2025 Strengthening momentum
Obesity program (MCR4 + GLP-1)Planned Phase 2; weight loss maintenance rationale; broad opportunity Phase 2 targeted to start 1H CY2024; KOL event planned FDA-cleared IND; Phase 2 to start mid CY2024; topline 2H CY2024 Progressing with slight timing push
ED combo (bremelanotide + PDE5i)Initiation planned; addressing PDE5i non-responders Phase 2 targeted 1H CY2024 Phase 2 expected to commence CY Q2 2024; topline in 2H Progressing with slight timing push
PL8177 (UC)Interim 1Q CY2024; optimistic for signal Interim Q2 CY2024; topline 2H CY2024 Interim Q2; topline 2H CY2024 On plan
BREAKOUT (DKD)Topline 1H CY2024 Topline Q2 CY2024 Topline Q2 CY2024 On plan
Warrant liabilities / non-GAAP itemsN/ALarge FV loss; plan to amend and reclassify FV gain; CFO: “cleaned up,” reclass to equity done in Jan Reduced non-op volatility
Liquidity/runway$5.5M cash + AR; funding into 1H CY2024 $9.5M cash + AR; funding into 2H CY2024 (excl. Feb offering proceeds) $10.0M cash; funding into 2H CY2024 Improving cushions

Management Commentary

  • “PL9643…has the potential to be a highly differentiated product…statistically significant for the co-primary symptom endpoint of pain and 7 of 11 exploratory secondary endpoints…as early as two weeks” — Carl Spana, CEO .
  • “We are excited to launch two new therapeutic area clinical trials…a Phase 2…MCR4 agonist plus a GLP-1 in obese patients…[and] bremelanotide co-formulated with a PDE5i for erectile dysfunction” — Carl Spana .
  • “There is no more liability reflection…that item has been cleaned up” — Steve Wills, CFO, on warrant liabilities .
  • “We strongly believe that drugs targeting melanocortin receptor system will be an important part of the future of obesity treatment and weight loss maintenance” — Carl Spana .
  • On endpoints and label strategy for DED: “We want to continue to highlight the broad efficacy…8 symptoms out of the 11 measured…We think…corneal fluorescein staining at 2 weeks…we’re now really well positioned to deliver the rest of the program” — Carl Spana .

Q&A Highlights

  • Regulatory path for PL9643: Management plans two additional Phase 3 studies (MELODY-2 & 3), expects Type C meeting to confirm endpoints (ocular pain and eye dryness; corneal fluorescein staining at 2 weeks), and aims to leverage broad symptom relief in labeling .
  • Obesity trial design: Patients already on tirzepatide; BMI >35; focus on safety/effectiveness of co-administration and potential weight loss maintenance role of melanocortin agonism; genetic profiling planned but not stratified .
  • ED combo strategy: Define PDE5i non-responders at maximal dose; use well-published erectile function scoring; pathway aligned with regulatory guidance .
  • Warrant liabilities: CFO clarified reclassification to equity and removal of future FV liability noise .

Estimates Context

  • S&P Global consensus data was unavailable via tool integration for PTN in Q3 FY2024 due to missing mapping; we used publicly available consensus from Seeking Alpha: EPS consensus -$0.50 vs actual -$0.53 (miss $0.03), revenue consensus $0.08M vs actual $0 (miss). Over the last 3 months into the print, EPS estimates saw 0 upward and 3 downward revisions, indicating negative estimate momentum .

Key Takeaways for Investors

  • The Q3 print was operationally in line with a post-divestiture biotech: no revenue, elevated R&D, and a modest EPS miss; near-term stock narrative hinges on PL9643’s strong Phase 3 profile and clarity from the upcoming FDA Type C meeting .
  • The PL9643 dataset shows rapid onset and broad symptom/sign efficacy with excellent tolerability—key differentiators in DED that can drive partnering and valuation upside as MELODY-2/3 initiate and labeling strategy crystallizes .
  • Obesity combination strategy (MCR4 + GLP-1) is de-risked by FDA IND clearance; mid-2024 trial start and 2H 2024 topline provide multiple shots on goal and potential momentum into year-end .
  • ED co-formulation targets a large underserved segment (PDE5i non-responders); Phase 2 initiation in Q2 sets up additional 2H 2024 readout optionality .
  • Non-operating volatility from warrants has been addressed; reclassification supports cleaner P&L going forward, reducing estimate risk around other income/(expense) swings .
  • Liquidity extends into 2H CY2024; monitor cash burn (~$8.6M in Q3) and additional financing/partnering milestones to support Phase 3 and broader pipeline execution .
  • Near-term trading catalysts: FDA Type C outcome, initiation of MELODY-2/3, obesity/ED Phase 2 starts and interim topline updates; any partnering announcements for PL9643 could be a material upside catalyst .