Palatin Technologies, Inc.

Thank you. Good morning, and welcome to the Palatin Technologies, Inc.

second quarter fiscal year 2025 call. I am Dr.

Carl Spana, CEO and President of Palatin Technologies, Inc. With me on the call today is Steve Wills, Palatin Technologies, Inc.'

s Chief Financial Officer and Chief Operating Officer. I'll now turn the call over to Steve, and he'll give the financial update.

Thank you, Carl. And welcome, everyone.

Regarding our financial results, starting with revenue, pursuant to the completion of the sale by leases worldwide rights for female sexual dysfunction to CoSette Pharmaceuticals, for up to $171 million in December of 2023, Palatin Technologies, Inc. did not record any product sales to pharmacy distributors for the second quarter ended December 31, 2024.

For the second quarter ended December 31, 2023, gross product sales were $4.3 million and net product revenue was $2 million. Regarding operating expenses, total operating expenses were $2.6 million net of a $2.5 million gain on the sale by lessee for the second quarter ended December 31, 2024, compared to $0.9 million net of a $7.8 million gain on the sale by lessee for the comparable quarter in 2023.

The increase was mainly the result of the decrease in gain on the sale by lessee to CoSette for the second quarter ended December 31, 2024. Regarding other income and expense, total other income expense net consists mainly of foreign currency transaction gains and losses, and the change in fair value of warrant liabilities, which Palatin Technologies, Inc.

had recorded as a liability on the consolidated financial statement. For the quarter ended December 31, 2023, Palatin Technologies, Inc.

recorded a fair value adjustment loss of $8.1 million and offering expenses of $0.7 million. Regarding cash flows, Palatin Technologies, Inc.'

s net cash used in operations for the quarter ended December 31, 2024, was $4.8 million compared to net cash used in operations of $10.5 million for the same period in 2023. The decrease in net cash used in operations is mainly due to the decrease on the gain on the sale by lessee during the period and secondarily to working capital changes.

Regarding net loss, Palatin Technologies, Inc.' s net loss for the quarter ended December 31, 2024, was $2.4 million compared to a net loss of $7.8 million for the same period in 2023.

The decrease in net loss for the 2024 quarter over the quarter ended in 2023 was driven primarily by the change in fair values of the warrant liability and the elimination of our leasing net product revenue and selling expenses offset by the decrease on the gain of the sale by lessee. Regarding cash position, as of December 31, 2024, Palatin Technologies, Inc.'

s cash and cash equivalents were $3.4 million compared to $2.4 million at September 30, 2024, and $9.5 million as of June 30, 2024. This $3.4 million of cash and cash equivalents as of December 31, 2024, does not include the $4.3 million of net proceeds that we raised in an equity offering which closed in February of 2025.

We are actively engaged with multiple potential funding sources for future operating cash requirements. I'll now turn the call back over to Carl.

Thank you, Steve. I'll now go over some of the operating highlights for the quarter.

Starting with our phase two signal detection study, BMP 801, evaluating the safety and efficacy of the coadministration of the melanocortin 4 receptor agonist brimonidine with risapatide, a GLP-1, GIP-1 dual agonist. This is being done in patients with generalized obesity.

This study has been completed and the database has been locked. Top line data from the study will be available later this month.

The study was designed to evaluate two primary research questions: Does coadministration result in increased weight loss, and can treatment with amyloidone 4 receptor agonist be used for weight loss maintenance by blunting the weight regain seen post-incretin treatment? In addition to safety, the study's primary endpoint is percent weight loss of the combined treatment compared to placebo control at the end of the treatment.

A variety of secondary endpoints such as satiety and preservation of lean body mass were also evaluated. Our obesity and weight loss management portfolio includes both long-acting monoclonal 4 receptive selective peptide agonist and the orally active monoclonal 4 receptor selective small molecule PL 7737.

We are on track to move both programs into IND enabling activities in clinical studies in calendar 2025. Our novel next-generation selective melanocortin-4 receptor compounds have reduced activity at the monoclonal 1 receptor, therefore have reduced potential to cause skin darkening.

Lack of MCR 1 activity, once-weekly dosing, or oral dosing represents significant improvements over current FDA-approved melanocortin treatments. You can find additional information on our clinical trial at clinicaltrials.gov, and our website has recent presentations on our novel next-generation melanocortin-4 receptor selective compounds.

For OPL 8177, our selective monoclonal 1 receptor treatment for Phase two study remains on track for release of top line data in the first quarter of calendar 2025. In anticipation of the data, there has been a significant increase in business development discussions with potential partners, which is in line with our current strategy to outlicense this exciting program.

In December of 2024, we released the top line data from our Phase two breakout study evaluating brimonidine as a treatment for patients with diabetic kidney disease. Key results from the study showed that 71% of the patients in the study achieved a greater than 30% reduction in their urinary protein to creatinine ratio, and 71% of the patients had an improved or stabilized estimated pulmonary filtration rate.

Results validate the modulated line of cortin system could potentially be a new therapeutic strategy and possibly a disease-modifying treatment option for people living with progressive kidney disease. The detailed results of the breakout study have been accepted for presentation at a medical meeting.

Based on the successful outcome of the study, we have initiated discussions with potential partners for out licensing this program, which is in line with our current strategy. Previously announced that we are taking a multi-pronged approach to realizing the value of our ocular melanocortin program.

In support of this, we are actively engaged in discussions with larger potential strategic partners for out licensing, investors interested in funding further development, and with peer companies concerning potential business combinations. Before moving on to take questions, I would like to comment on our strategy.

We are focusing our research and development efforts on the line of Cortisol four receptor BC assets. We believe that the pharmacological treatment of obesity in the early stages of a multiyear cycle of innovation will have a market value in excess of $100 billion per year.

The Laticore system plays a critical role in regulating stored energy and food intake. We strongly believe that amyloidin four receptor agonists will be an important part of the future of obesity treatment and weight loss management.

Palatin Technologies, Inc. has a long-standing research effort to develop monoclonalcortin therapeutics that selectively activate the line of cortin four receptor as treatments for obesity and weight loss maintenance.

With our extensive experience in the design and development of Latticorn Agnes for treating obesity, including two clinical studies previously completed and published, we are well-positioned to be a leader in the development of Lidocort-based therapeutics for weight loss and, importantly, weight loss maintenance. Thank you for your time.

We will now open the call to questions.

Hey, guys. Good morning.

Good afternoon. I wanted to focus on the upcoming obesity data.

I know you cannot say much right now after the database locks, but first, I wanted to just discuss the benchmark, and you can correct me if my numbers are wrong. So if you look at the tirzepatide data alone, after eight weeks, we are looking at about a 6% weight loss, maybe around 4% for placebo adjusted.

So with that benchmark in mind, what would you consider a win for your study with regard to weight loss at eight weeks and whether it is the same or not, what would you consider to be enough percentage weight loss to move the program forward?

Well, that is a good question, but maybe we think about it slightly differently. So the answer to your question is, you know, this is a signal detection study.

So we do not a priori or not a priori going in with, you know, some frequency number. Right?

What we are really looking for is a very clear signal. So what we would like to see in the study is that the combined arm is a high percentage of weight loss.

And then in addition to that, we are looking at some, you know, other key metrics. For example, you know, the percentage of patients that are achieving either 4, 5, 6, 7, or 8% weight loss in that eight-week period, you know, combined versus, you know, combined versus tirzepatide alone.

Because that is a little bit more important. It is more important a clinical question.

Right? You know, if you put somebody on this, how many of them are going to get, you know, 5% weight loss, which is really clinically meaningful and the FDA level of approvals.

So that is one message we are looking at. The second way of looking at it also is, you know, tirzepatide is going as if you think about things in four-week increments.

Right? Tirzepatide monotherapy is going to, you know, probably have its maximal effect in the first four weeks.

It is going to start to slow down. Yep.

And as you go forward from there. So can we reverse that slowdown?

Right? Can we see more patients losing more weight, you know, the second four weeks, say, versus the first four weeks when we compare the coadministration versus the monotherapy arm.

So those are all those are the three things that we are looking for. We are looking for an increase in the absolute weight on a percentage basis.

There is no number, there is no magical number. And what I mean by that is this is not an optimized study.

You know, this is a very low dose of brimonidine. So, you know, we are not optimized for, you know, necessarily to see some big jump.

But I think we are certainly, you know, dosing high enough to get a nice clear signal. The other point that I do want to bring up though is really we talk about, you know, combination versus the monotherapy arm.

Let us think about the brimonidine alone arm versus the placebo arm. I expect, yep, you know, after placebo patients that are going on to placebo, you know, they will have weight loss in their first treatment period on tirzepatide.

They should regain weight. And we would really like to see if this low dose can blunt that weight regain.

Really speaking to the concept of a weight loss maintenance. So those are kind of the three major concepts that we are looking for a signal on.

No. I understand totally about how you are looking at it, and it makes sense.

I guess, the reason for my question is, when you look at, I guess, the analyst's viewpoint and investment community viewpoint, I think they are going to be, you know, automatically comparing, you know, right or wrong, you know, having, you know, comparing against the benchmark. So I think that is what is driving the, you know, what would be expected to be a win from a percentage standpoint, but I understand your, you know, your approaches here and it makes sense.

I guess when you look forward for the program, are there additional indications you might consider beyond sort of the broader weight loss community? Any sort of orphan indications that you might consider from MCR four standpoint?

Sure. Certainly.

You know, listen, there is a, I think, a growing opportunity to think about the use of Melanocortin four receptor agonists in, you know, in rare and orphan syndromic diseases. There are a number of mutations in the leptin and the right quadrant system.

There is Prader Willi syndrome. There is Bardet Biedl.

These are things that this is not unknown. I mean, Rhythm is out there.

They have their products and a lot of typos in there. But hypothalamic obesity is a very key one because that is probably the largest market opportunity.

And it is one where we think we, you know, our new compounds coming through will be very competitive. And, you know, that gives us a, you know, in a nice way, you know, there are two of us in that in monoclonal four receptor agonists in looking at that orphan rare space.

When you go to the general obesity side, you will, although I believe this is the best mechanism, we will, you know, we are going to get moved into a bunch of other mechanisms that are out there. So I think it is so I think we will be focusing likely be focusing in that rare space.

No. It makes sense, and good luck for the upcoming data.

Thanks a lot for the details.

Sure.

So thank you, Joe. Thank you for your questions.

And everybody, thank you for your time. Steve and I are always grateful that you give us your time and you take meetings with us, talking about the company.

Like you have a great day. It is going to be an exciting quarter for us.

And we are really looking forward to it is actually going to be exciting 2025 for us. So we really cannot be more excited in what we are doing here and look forward to reporting our results out.

So from Steve and I, thank you everybody. And have a great day and a great quarter.

Thank you.