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What changed in PALATIN TECHNOLOGIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PALATIN TECHNOLOGIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+157 added−175 removedSource: 10-K (2023-09-28) vs 10-K (2022-09-22)

Top changes in PALATIN TECHNOLOGIES INC's 2023 10-K

157 paragraphs added · 175 removed · 137 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

44 edited+6 added−9 removed140 unchanged
Biggest changeA Phase 2 study in ulcerative colitis using our polymer-encapsulated, delayed-release, oral formulation of PL8177 initiated patent enrollment in September 2022, and may take up to one year to complete. The Phase 2 study is a multi-center, randomized, double-blind, placebo-controlled, adaptive design, parallel group of PL8177 study, with once daily oral dosing in adult ulcerative colitis subjects.
Biggest changeThe Phase 2 study is a multi-center, randomized, double-blind, placebo-controlled, adaptive design, parallel group of PL8177 study, with once daily oral dosing in adult ulcerative colitis subjects. The study uses an adaptive design with an interim assessment by an independent DMC after the initial 16 subjects have completed the 8-week evaluation visit. Diabetic Nephropathy Proof-of-Concept Study.
PL9643 for Dry Eye Disease and Anti-Inflammatory Ocular Indications. PL9643, a peptide melanocortin agonist active at multiple MCrs, including MC1r and MC5r, is our lead clinical development candidate for anti-inflammatory ocular indications, including dry eye disease, which is also known as keratoconjunctivitis sicca. Dry eye disease is a syndrome with symptoms including irritation, redness, discharge and blurred vision.
PL9643, a peptide melanocortin agonist active at multiple MCrs, including MC1r and MC5r, is our lead clinical development candidate for anti-inflammatory ocular indications, including dry eye disease, which is also known as keratoconjunctivitis sicca. Dry eye disease is a syndrome with symptoms including irritation, redness, discharge and blurred vision.
The laws and regulations that may affect our ability to operate include: · the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual or in return for the purchase, lease, or order of any good, facility item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs; · federal civil and criminal false claims laws and civil monetary penalty laws, including, for example, the federal civil False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; · the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private), knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which impose obligations on covered entities, including healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; · the federal physician sunshine requirements under the Patient Protection and Affordable Care Act (“Affordable Care Act”), which require manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members; and · state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be provided to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
The laws and regulations that may affect our ability to operate include: · the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual or in return for the purchase, lease, or order of any good, facility item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs; · federal civil and criminal false claims laws and civil monetary penalty laws, including, for example, the federal civil False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; · the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private), knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; 10 Table of Contents · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which impose obligations on covered entities, including healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; · the federal physician sunshine requirements under the Patient Protection and Affordable Care Act (“Affordable Care Act”), which require manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members; and · state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be provided to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Products under development include perfluorohexyloctane, cyclosporine, TRPM8 selective agonist, aldehyde derivative, partial TrkA receptor agonist, cardiolipin peroxidation inhibitor, tumor necrosis factor agonists, alpha-2 adrenergic receptor agonist, calcineurin inhibitors, and nicotinic receptor agonists, among others. There are no reported MC1r agonist drugs in clinical trials by third parties for dry eye disease.
Products under development include perfluorohexyloctane, cyclosporine, TRPM8 selective agonist, aldehyde derivative, partial TrkA receptor agonist, cardiolipin peroxidation inhibitor, tumor necrosis factor antagonists, alpha-2 adrenergic receptor agonist, calcineurin inhibitors, and nicotinic receptor agonists, among others. There are no reported MC1r agonist drugs in clinical trials by third parties for dry eye disease.
Upon the first commercial sale of Vyleesi in Korea we will receive a $3.0 million milestone payment and will receive mid-single digit to low double-digit royalties on all net sales and may receive up to $37.5 million in sales related milestones. 3 Table of Contents We retain worldwide rights for Vyleesi for HSDD and all other indications outside Korea and China.
Upon the first commercial sale of Vyleesi in Korea we will receive a $3.0 million milestone payment and will receive mid-single digit to low double-digit royalties on all net sales and may receive up to $37.5 million in sales related milestones. We retain worldwide rights for Vyleesi for HSDD and all other indications outside Korea and China.
An interim analysis by an independent Data Monitoring Committee (“DMC”) of the first 120 patients who had completed the MELODY-1 trial recommended the study continue with a sample size of up to 350 patients. Topline results from the MELODY-1 trial are now expected in the second quarter of calendar 2023.
An interim analysis by an independent Data Monitoring Committee (“DMC”) of the first 120 patients who had completed the MELODY-1 trial recommended the study continue with a sample size of up to 350 patients. Topline results from the MELODY-1 trial are now expected in the fourth quarter of calendar 2023.
There are other companies reported to be developing new drugs for FSD indications, some of which may be in clinical trials in the United States or elsewhere. We are not aware of any other company actively developing a melanocortin receptor agonist drug for HSDD. 4 Table of Contents PL9643 for Anti-Inflammatory Ocular Indications.
There are other companies reported to be developing new drugs for FSD indications, some of which may be in clinical trials in the United States or elsewhere. We are not aware of any other company actively developing a melanocortin receptor agonist drug for HSDD. PL9643 for Anti-Inflammatory Ocular Indications.
In addition, the Affordable Care Act provided that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. 10 Table of Contents Achieving and sustaining compliance with these laws may prove costly.
In addition, the Affordable Care Act provided that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. Achieving and sustaining compliance with these laws may prove costly.
This might not be an adequate remedy to us because third parties other than the person who causes the breach will be free to use the information without accountability to us. This is an inherent limitation of the law of trade secret protection. 6 Table of Contents U.S. Governmental Regulation of Pharmaceutical Products General.
This might not be an adequate remedy to us because third parties other than the person who causes the breach will be free to use the information without accountability to us. This is an inherent limitation of the law of trade secret protection. U.S. Governmental Regulation of Pharmaceutical Products General.
Failure to comply with the statutory and regulatory requirements subjects the manufacturer and/or the NDA sponsor or distributor to possible legal or regulatory action, such as a delay or refusal to approve an NDA, suspension of manufacturing, seizure or recall of a product, or civil or criminal prosecution of the company or individual officers or employees. 8 Table of Contents Postmarketing Regulation.
Failure to comply with the statutory and regulatory requirements subjects the manufacturer and/or the NDA sponsor or distributor to possible legal or regulatory action, such as a delay or refusal to approve an NDA, suspension of manufacturing, seizure or recall of a product, or civil or criminal prosecution of the company or individual officers or employees. Postmarketing Regulation.
We also focus our Vyleesi marketing efforts towards healthcare professionals, who play a significant role in increasing HSDD and Vyleesi awareness among their patients. As the commercial potential of Vyleesi is demonstrated, Palatin will explore licensing, marketing and distribution rights for the United States to a marketing partner.
We also focus our Vyleesi marketing efforts towards healthcare professionals, who play a significant role in increasing HSDD and Vyleesi awareness among their patients. As the commercial potential of Vyleesi is demonstrated, Palatin is exploring licensing marketing and distribution rights for the United States to a marketing partner.
The timing and extent of future generic competition is dependent upon both our intellectual property rights and the FDA regulatory process but cannot be accurately predicted. The pharmaceutical and biotechnology industries are characterized by extensive research efforts and rapid technological change.
The timing and extent of future generic competition is dependent upon both our intellectual property rights and the FDA regulatory process but cannot be accurately predicted. 4 Table of Contents The pharmaceutical and biotechnology industries are characterized by extensive research efforts and rapid technological change.
Further, healthcare reimbursement systems vary from country to country, and third-party reimbursement might not be made available for Vyleesi for HSDD under other reimbursement systems. 12 Table of Contents Manufacturing and Marketing To be successful, our proposed products will need to be manufactured in commercial quantities under GMP prescribed by the FDA and at acceptable costs.
Further, healthcare reimbursement systems vary from country to country, and third-party reimbursement might not be made available for Vyleesi for HSDD under other reimbursement systems. Manufacturing and Marketing To be successful, our proposed products will need to be manufactured in commercial quantities under GMP prescribed by the FDA and at acceptable costs.
Additionally, the claims of our issued patents may be narrowed or invalidated by administrative proceedings, such as interference or derivation, inter partes review, post grant review or reexamination proceedings before the USPTO. Future Patent Infringement.
Additionally, the claims of our issued patents may be narrowed or invalidated by administrative proceedings, such as interference or derivation, inter partes review, post grant review or reexamination proceedings before the USPTO. 6 Table of Contents Future Patent Infringement.
The ANDA also will not be approved until any applicable non-patent regulatory exclusivity listed in the Orange Book for the referenced product has expired. 11 Table of Contents Regulatory Exclusivity.
The ANDA also will not be approved until any applicable non-patent regulatory exclusivity listed in the Orange Book for the referenced product has expired. Regulatory Exclusivity.
We own three issued United States patents and a pending patent application in the United States for methods of treating FSD with Vyleesi, with related patents issued or pending in selected countries in Europe and Asia and in Australia and New Zealand.
We own four issued United States patents and pending patent applications in the United States for methods of treating FSD with Vyleesi, with related patents issued or pending in selected countries in Europe and Asia and in Australia and New Zealand.
The IRB at each institution at which a clinical trial is being performed may suspend a clinical trial at any time for a variety of reasons, including a belief that the test subjects are being exposed to an unacceptable health risk.
The IRB at each institution at which a clinical trial is being performed may suspend a clinical trial at any time for a variety of reasons, including a belief that the test subjects are being exposed to an unacceptable health risk. As the sponsor, we can also suspend or terminate a clinical trial at any time.
If a patent is granted, the patents will have a presumptive term until 2041. Until one or more product candidates covered by a claim of one of these patent applications are developed for commercialization, which may never occur, we cannot evaluate the duration of any potential patent term extension under the Hatch-Waxman Amendments.
Until one or more product candidates covered by a claim of one of these patent applications are developed for commercialization, which may never occur, we cannot evaluate the duration of any potential patent term extension under the Hatch-Waxman Amendments.
We are working on a formulation for intravitreal and subcutaneous administration. If results support advancing the program, we will conduct required safety studies and manufacture drug product under Good Manufacturing Practices (“GMP”) regulations needed to file an Investigational New Drug application (“IND”) and initiating clinical studies. Ocular Research Programs.
If results support advancing the program, we will conduct required safety studies and manufacture drug product under Good Manufacturing Practices (“GMP”) regulations needed to file an Investigational New Drug application (“IND”) and initiating clinical studies. Ocular Research Programs.
With respect to post-market product advertising and promotion, the FDA and other government agencies including the Department of Health and Human Services and the Department of Justice, and individual States, impose a number of complex regulations on entities that advertise and promote pharmaceuticals, including, among others, standards and restrictions on direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.
The FDA also may impose other conditions, including labeling restrictions which can materially impact the potential market and profitability of a product. 9 Table of Contents With respect to post-market product advertising and promotion, the FDA and other government agencies including the Department of Health and Human Services and the Department of Justice, and individual States, impose a number of complex regulations on entities that advertise and promote pharmaceuticals, including, among others, standards and restrictions on direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.
There are no reported MC1r agonist drugs in clinical trials for diabetic retinopathy. If one or more of the competing product candidates under development is approved and can treat diabetic retinopathy with an acceptable side effect profile, it could reduce the market for MC1r peptide products for this indication. Melanocortin Receptor 1 Agonist Drug Products for Inflammatory and Autoimmune Diseases.
If one or more of the competing product candidates under development is approved and can treat diabetic retinopathy with an acceptable side effect profile, it could reduce the market for MC1r peptide products for this indication. 5 Table of Contents Melanocortin Receptor 1 Agonist Drug Products for Inflammatory and Autoimmune Diseases.
Employees As of September 21, 2022 we employed 33 people full time, of whom 20 are engaged in research and development activities and 13 are engaged in administration and management, and did not have any part-time employees. While we have been successful in attracting skilled and experienced scientific personnel, competition for personnel in our industry is intense.
Employees As of September 28, 2023, we employed 34 people full time, of whom 22 are engaged in research and development activities and 12 are engaged in administration and management, and did not have any part-time employees. While we have been successful in attracting skilled and experienced scientific personnel, competition for personnel in our industry is intense.
After regulatory approvals are obtained, the subsequent discovery of previously unknown problems, or the failure to maintain compliance with existing or new regulatory requirements, may result in: · restrictions on the marketing or manufacturing of a product; · Warning Letters or Untitled Letters from the FDA asking us, our collaborators or third-party contractors to take or refrain from taking certain actions; · withdrawal of the product from the market; · the FDA’s refusal to approve pending applications or supplements to approved applications; · voluntary or mandatory product recall; · fines or disgorgement of profits or revenue; · suspension or withdrawal of regulatory approvals; · refusals to permit the import or export of products; · product seizure; and · injunctions or the imposition of civil or criminal penalties. 9 Table of Contents We may also be subject to healthcare laws, regulations and enforcement and our failure to comply with any such laws, regulations or enforcement could adversely affect our business, operations and financial condition.
After regulatory approvals are obtained, the subsequent discovery of previously unknown problems, or the failure to maintain compliance with existing or new regulatory requirements, may result in: · restrictions on the marketing or manufacturing of a product; · Warning Letters or Untitled Letters from the FDA asking us, our collaborators or third-party contractors to take or refrain from taking certain actions; · withdrawal of the product from the market; · the FDA’s refusal to approve pending applications or supplements to approved applications; · voluntary or mandatory product recall; · fines or disgorgement of profits or revenue; · suspension or withdrawal of regulatory approvals; · refusals to permit the import or export of products; · product seizure; and · injunctions or the imposition of civil or criminal penalties.
Net sales of Vyleesi were $1.2 million in fiscal 2022, compared to negative net sales of $0.3 million in fiscal 2021. Vyleesi is distributed nationally through a home delivery specialty pharmacy.
Net sales of Vyleesi were $4.9 million in fiscal 2023, compared to $1.2 million in fiscal 2022. Vyleesi is distributed nationally through a home delivery specialty pharmacy.
The steps ordinarily required by the FDA before an innovative new drug product may be marketed in the United States are similar to steps required in most other countries and include, but are not limited to: · completion of preclinical laboratory tests, preclinical animal testing and formulation studies; · submission to the FDA of an IND, which must be in effect before clinical trials may commence; · clinical studies to evaluate safety and efficacy; · submission to the FDA of an NDA that includes preclinical data, clinical trial data and manufacturing information; · payment of substantial user fees for filing the NDA and other recurring user fees; · FDA review of the NDA; · satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities; and · FDA approval of the NDA, including approval of all product labeling.
The steps ordinarily required by the FDA before an innovative new drug product may be marketed in the United States are similar to steps required in most other countries and include, but are not limited to: · completion of preclinical laboratory tests, preclinical animal testing and formulation studies; · submission to the FDA of an IND, which must be in effect before clinical trials may commence; · clinical studies to evaluate safety and efficacy; · submission to the FDA of an NDA that includes preclinical data, clinical trial data and manufacturing information; · payment of substantial user fees for filing the NDA and other recurring user fees; · FDA review of the NDA; · satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities; and · FDA approval of the NDA, including approval of all product labeling. 7 Table of Contents For new drug products or for combination products deemed to have a “drug” primary mode of action, primary review of the product will be conducted by the appropriate division within the FDA’s Center for Drug Evaluation and Research (“CDER”).
However, we are aware of several other drugs at various stages of development, most of which are being developed for the treatment of HSDD that are to be taken on a chronic, typically once-daily, basis.
We are not aware of any company actively developing another melanocortin receptor agonist drug for the treatment of HSDD. However, we are aware of several other drugs at various stages of development, most of which are being developed for the treatment of HSDD that are to be taken on a chronic, typically once-daily, basis.
Even if the FDA approves a product, it may limit the approved uses for the product as described in the product labeling, require that contraindications, warning statements or precautions be included in the product labeling, require that additional studies be conducted following approval as a condition of the approval, impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a REMS, or otherwise limit the scope of any approval or limit labeling.
We will be required to assure product performance and manufacturing processes from one country to another. 8 Table of Contents Even if the FDA approves a product, it may limit the approved uses for the product as described in the product labeling, require that contraindications, warning statements or precautions be included in the product labeling, require that additional studies be conducted following approval as a condition of the approval, impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a REMS, or otherwise limit the scope of any approval or limit labeling.
Gross product sales of Vyleesi increased to $5.8 million in the fiscal year ended June 30, 2022 (“fiscal 2022”), compared to $4.7 million in the fiscal year ended June 30, 2021 (“fiscal 2021”), with gross product sales in the fourth quarter ended June 30, 2022 increasing 79% over the prior quarter and 91% over the comparable quarter in 2021.
Gross product sales of Vyleesi increased to $12.5 million in the fiscal year ended June 30, 2023, compared to $5.8 million in the fiscal year ended June 30, 2022 (“fiscal 2022”), with gross product sales in the fourth quarter ended June 30, 2023 increasing 20% over the prior quarter and 78% over the comparable quarter in 2022.
The failure of any manufacturer or supplier to comply with FDA regulations, including GMP or medical device quality systems regulations (“QSR”), or to supply the device component or drug substance and services as agreed, would force us or our licensees to seek alternative sources of supply and could interfere with our and our licensees’ ability to deliver product on a timely and cost-effective basis or at all.
Manufacturing drug product, such as the oral formulation of PL8177, similarly may involve production, formulation and other problems not present in manufacturing at clinical trial or laboratory scale. 13 Table of Contents The failure of any manufacturer or supplier to comply with FDA regulations, including GMP or medical device quality systems regulations (“QSR”), or to supply the device component or drug substance and services as agreed, would force us or our licensees to seek alternative sources of supply and could interfere with our and our licensees’ ability to deliver product on a timely and cost-effective basis or at all.
We have completed subcutaneous dosing of human subjects in a Phase 1 single and multiple ascending dose clinical safety study, and a human microdose pharmacokinetic study to evaluate a polymer-encapsulated, delayed-release, oral formulation of PL8177. 2 Table of Contents For ulcerative colitis and other inflammatory bowel diseases we will administer PL8177 in our oral formulation to deliver PL8177 to the interior wall of the diseased bowel.
PL8177, a selective MC1r agonist peptide, is our lead clinical development candidate for inflammatory bowel diseases, including ulcerative colitis. We have completed subcutaneous dosing of human subjects in a Phase 1 single and multiple ascending dose clinical safety study, and a human microdose pharmacokinetic study to evaluate a polymer-encapsulated, delayed-release, oral formulation of PL8177.
We have developed a PL9643 ophthalmic solution (topical eye drops) in a single use delivery device, and a Phase 3 pivotal clinical trial (“MELODY-1”) designed to support a New Drug Application (“NDA”) which is ongoing.
We have developed a PL9643 ophthalmic solution (topical eye drops) in a single use delivery device, and a Phase 3 pivotal clinical trial (“MELODY-1”) designed to support a New Drug Application (“NDA”) has completed patient enrollment, with top line results expected by December 31, 2023.
As the sponsor, we can also suspend or terminate a clinical trial at any time. 7 Table of Contents Clinical development is typically conducted in three sequential phases, Phases 1, 2, and 3, involving clinical trials with increasing numbers of human subjects. These phases may sometimes overlap or be combined.
Clinical development is typically conducted in three sequential phases, Phases 1, 2, and 3, involving clinical trials with increasing numbers of human subjects. These phases may sometimes overlap or be combined.
Certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We are subject to regulation by both the federal government and the states in which we or our partners conduct our business.
We are subject to regulation by both the federal government and the states in which we or our partners conduct our business.
Evaluation of MCr agonists in rodent animal models have demonstrated therapeutic responses that are statistically significant compared to placebo, and that are equal to or superior to established positive controls. However, success in animal models does not necessarily mean that any of our drug candidates will be able to successfully treat diseases in human patients.
Evaluation of MCr agonists in rodent animal models have demonstrated therapeutic responses that are statistically significant compared to placebo, and that are equal to or superior to established positive controls.
Our website and the information contained in it or connected to it are not incorporated into this Annual Report. The reference to our website is an inactive textual reference only.
Our website and the information contained in it or connected to it are not incorporated into this Annual Report. The reference to our website is an inactive textual reference only. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC ( www.sec.gov ).
The FDA may then approve the new product candidate for all, or some, of the label indications for which the referenced product has been approved, as well as for any new indication or conditions of use sought by the Section 505(b)(2) applicant.
The FDA may then approve the new product candidate for all, or some, of the label indications for which the referenced product has been approved, as well as for any new indication or conditions of use sought by the Section 505(b)(2) applicant. 12 Table of Contents To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.
If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA holder and patent owner once the ANDA has been accepted for filing by the FDA.
If the ANDA contains one or more Paragraph III Certifications, the ANDA cannot not be approved until each listed patent for which a Paragraph III Certification was filed have expired. 11 Table of Contents If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA holder and patent owner once the ANDA has been accepted for filing by the FDA.
The PL8177 drug product oral formulations for ulcerative colitis has been manufactured for clinical trial use. While the production process for making peptide active pharmaceutical ingredient involves well-established technology, there are a limited number of manufacturers capable of scaling up to commercial quantities under GMP at acceptable costs.
While the production process for making peptide active pharmaceutical ingredient involves well-established technology, there are a limited number of manufacturers capable of scaling up to commercial quantities under GMP at acceptable costs. Additionally, scaling up to commercial quantities may involve production, purification, formulation and other problems not present in the scale of manufacturing done to date.
Pursuant to the termination of the license agreement with AMAG, we have assumed contracts relating to manufacturing, and intend to manufacture Vyleesi for sales in the United States and to our licensees throughout the world. Our PL3994 product candidate is a peptide mimetic molecule, incorporating a proprietary amino acid mimetic structure and amino acids.
Pursuant to the termination of the license agreement with AMAG, we have assumed contracts relating to manufacturing, and manufacture Vyleesi for sales in the United States and to our licensees. Our MC1r and MCr agonist product candidates are synthetic peptides.
Further, third parties may challenge the validity or scope of any issued patent, and under the Hatch-Waxman Amendments, potentially receive approval of a competing generic version of our product or products even before a court rules on the validity or infringement of our patents. 5 Table of Contents We have filed patent applications under the Patent Cooperation Treaty claiming PL9643 and other peptides in development for ocular and inflammatory disease indications and have entered national stage prosecution in the United States, European Patent Office, Eurasian Patent Office, and broadly throughout the world.
Further, third parties may challenge the validity or scope of any issued patent, and under the Hatch-Waxman Amendments, potentially receive approval of a competing generic version of our product or products even before a court rules on the validity or infringement of our patents.
We have had a contract manufacturer make the active pharmaceutical ingredient in quantities sufficient for Phase 1 and Phase 2. Our MC1r and MCr agonist product candidates are synthetic peptides. We have had a contract manufacturer make both the PL8177 and PL9643 peptides in suitable scale for toxicity studies and under GMP for clinical trial use.
We have had a contract manufacturer make both the PL8177 and PL9643 peptides in suitable scale for toxicity studies and under GMP for clinical trial use. The PL8177 drug product oral formulation for ulcerative colitis has been manufactured for clinical trial use.
PL8177 activates MC1r present on the interior wall of the bowel in ulcerative colitis and other inflammatory bowel diseases. We believe that PL8177 at MC1r in the bowel wall will maximize treatment effect while minimizing any systemic or off-target effects.
We believe that PL8177 at MC1r in the bowel wall will maximize treatment effect while minimizing any systemic or off-target effects. A Phase 2 study in ulcerative colitis using our polymer-encapsulated, delayed-release, oral formulation of PL8177 initiated patent enrollment in September 2022, and is ongoing.
Vyleesi faces competition primarily from Addyi® (flibanserin), which was introduced into the market in October 2015 for the treatment of HSDD in pre-menopausal women and is marketed by Sprout Pharmaceuticals, Inc. We are not aware of any company actively developing another melanocortin receptor agonist drug for the treatment of HSDD.
Palatin assumed Vyleesi manufacturing agreements, and AMAG transferred information, data and assets related exclusively to Vyleesi, including existing inventory. 3 Table of Contents Vyleesi faces competition primarily from Addyi® (flibanserin), which was introduced into the market in October 2015 for the treatment of HSDD in pre-menopausal women and is marketed by Sprout Pharmaceuticals, Inc.
The study uses an adaptive design with an interim assessment by an independent DMC after the initial 16 subjects have completed the 8-week evaluation visit. Melanocortin Peptides for Diabetic Retinopathy. We conducted preclinical studies with melanocortin peptides in diabetic retinopathy models and have selected a peptide candidate for further development work.
Melanocortin Peptides for Diabetic Retinopathy. We conducted preclinical studies with melanocortin peptides in diabetic retinopathy models and have selected a peptide candidate for further development work. We are working on a formulation for intravitreal and subcutaneous administration.
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PL8177, a selective MC1r agonist peptide, is our lead clinical development candidate for inflammatory bowel diseases, including ulcerative colitis.
Added
However, success in animal models does not necessarily mean that any of our drug candidates will be able to successfully treat diseases in human patients. 2 Table of Contents PL9643 for Dry Eye Disease and Anti-Inflammatory Ocular Indications.
Removed
Palatin assumed Vyleesi manufacturing agreements, and AMAG transferred information, data and assets related exclusively to Vyleesi, including existing inventory. AMAG provided certain transition services to Palatin for a period to ensure continued patient access to Vyleesi during the transition period, for which Palatin reimbursed AMAG for the agreed upon costs of the transition services.
Added
For ulcerative colitis and other inflammatory bowel diseases we administer PL8177 in our oral formulation to deliver PL8177 to the interior wall of the diseased bowel. PL8177 activates MC1r present on the interior wall of the bowel in ulcerative colitis and other inflammatory bowel diseases.
Removed
For new drug products or for combination products deemed to have a “drug” primary mode of action, primary review of the product will be conducted by the appropriate division within the FDA’s Center for Drug Evaluation and Research (“CDER”).
Added
A Phase 2 proof-of-concept study is currently enrolling patients in a study for diabetic nephropathy. Diabetic nephropathy, also called diabetic kidney disease, is the most common cause of end-stage renal disease in the United States and other developed countries. A melanocortin pan agonist is administered by subcutaneous injection to patients taking conventional renin-angiotensin-aldosterone system (“RAAS”) inhibitors.
Removed
We will be required to assure product performance and manufacturing processes from one country to another.
Added
There are no reported MC1r agonist drugs in clinical trials for diabetic retinopathy.
Removed
The FDA also may impose other conditions, including labeling restrictions which can materially impact the potential market and profitability of a product.
Added
We have filed patent applications under the Patent Cooperation Treaty claiming PL9643 and other peptides in development for ocular and inflammatory disease indications and have entered national stage prosecution in the United States, European Patent Office, Eurasian Patent Office, and broadly throughout the world. If one or more patents are granted, the patents will have a presumptive term until 2041.
Removed
If the ANDA contains one or more Paragraph III Certifications, the ANDA cannot not be approved until each listed patent for which a Paragraph III Certification was filed have expired.
Added
We may also be subject to healthcare laws, regulations and enforcement and our failure to comply with any such laws, regulations or enforcement could adversely affect our business, operations and financial condition. Certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business.
Removed
To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.
Removed
Additionally, scaling up to commercial quantities may involve production, purification, formulation and other problems not present in the scale of manufacturing done to date. Manufacturing drug product, such as the oral formulation of PL8177, similarly may involve production, formulation and other problems not present in manufacturing at laboratory scale.
Removed
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC ( www.sec.gov ). 13 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

63 edited+8 added−22 removed222 unchanged
Biggest changeAs of September 21, 2022 holders of our outstanding dilutive securities had the right to acquire the following amounts of underlying common stock: · 2,629 shares issuable on the conversion of our immediately convertible Series A Preferred Stock, subject to adjustment, for no further consideration; · 1,200,000 shares issuable on the conversion of our immediately convertible Series B Preferred Stock, subject to adjustment, for no further consideration; · 133,333 shares issuable on the conversion of our immediately convertible Series C Preferred Stock, subject to adjustment, for no further consideration; · 1,143,774 shares issuable upon the exercise of stock options at a weighted-average exercise price of $15.95 per share; · 282,774 shares issuable under restricted stock units which vested or will vest on dates between June 16, 2022 and June 22, 2026, subject to the fulfillment of service or performance conditions; · 344,162 shares of common stock which have vested under restricted stock unit agreements, but are subject to provisions to delay delivery; and · 66,666 shares issuable upon the exercise of warrants at an exercise price of $12.50 per share, issued in conjunction with the Series B and Series C Preferred Stock, of which 33,333 are currently exercisable and expire on May 11, 2026, and the remaining are exercisable only in the event that a Redemption Consideration Election is made and expire on May 11, 2026.
Biggest changeAs of September 27, 2023, holders of our outstanding dilutive securities had the right to acquire the following amounts of underlying common stock: · 3,550 shares issuable on the conversion of our immediately convertible Series A Preferred Stock, subject to adjustment, for no further consideration; · 1,550,600 shares issuable upon the exercise of stock options at a weighted-average exercise price of $8.27 per share; · 609,449 shares issuable under restricted stock units which vested or will vest on dates between June 16, 2024 and June 20, 2027, subject to the fulfillment of service or performance conditions; · 279,700 shares of common stock which have vested under restricted stock unit agreements, but are subject to provisions to delay delivery; · 66,666 shares issuable upon the exercise of warrants at an exercise price of $12.50 per share, issued in conjunction with the Series B and Series C Preferred Stock, all of which are currently exercisable and expire on May 11, 2026; · 1,818,182 shares of common stock issuable upon exercise of common warrants issued in conjunction with an offering in November 2022; · up to 90,909 shares of common stock issuable upon exercise of placement agent warrants with an exercise price of $6.875 per share issued to the placement agent or its designees as compensation in connection with an offering in November 2022; and · 405,145 shares of common stock available for future issuance under our 2011 Stock Incentive Plan.
The steps ordinarily required by the FDA before a new drug may be marketed in the United States include: · completion of non-clinical tests including preclinical laboratory and formulation studies and animal testing and toxicology; · submission to the FDA of an IND application, which must become effective before clinical trials may begin, and which may be placed on “clinical hold” by the FDA, meaning the trial may not commence, or must be suspended or terminated prior to completion; · performance of adequate and well-controlled Phase 1, 2 and 3 human clinical trials to establish the safety and efficacy of the drug for each proposed indication, and potentially post-approval or Phase 4 studies to further define the drug’s efficacy and safety, generally or in specific patient populations; · submission to the FDA of an NDA that must be accompanied by a substantial “user fee” payment; · FDA review and approval of the NDA before any commercial marketing or sale; and · compliance with post-approval commitments and requirements. 28 Table of Contents Satisfaction of FDA pre-market approval requirements for new drugs typically takes a number of years and the actual time required for approval may vary substantially based upon the type, complexity and novelty of the product or disease to be treated by the drug.
The steps ordinarily required by the FDA before a new drug may be marketed in the United States include: · completion of non-clinical tests including preclinical laboratory and formulation studies and animal testing and toxicology; · submission to the FDA of an IND application, which must become effective before clinical trials may begin, and which may be placed on “clinical hold” by the FDA, meaning the trial may not commence, or must be suspended or terminated prior to completion; · performance of adequate and well-controlled Phase 1, 2 and 3 human clinical trials to establish the safety and efficacy of the drug for each proposed indication, and potentially post-approval or Phase 4 studies to further define the drug’s efficacy and safety, generally or in specific patient populations; · submission to the FDA of an NDA that must be accompanied by a substantial “user fee” payment; · FDA review and approval of the NDA before any commercial marketing or sale; and · compliance with post-approval commitments and requirements. 27 Table of Contents Satisfaction of FDA pre-market approval requirements for new drugs typically takes a number of years and the actual time required for approval may vary substantially based upon the type, complexity and novelty of the product or disease to be treated by the drug.
The clinical and commercial success of Vyleesi and our product candidates will depend on a number of factors, including the following: · timely completion of, or need to conduct additional clinical trials and studies, for our product candidates, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the accurate and satisfactory performance of third-party contractors; · the ability to demonstrate to the satisfaction of the FDA the safety and efficacy of future product candidates through clinical trials; · whether we or our licensees are required by the FDA or other similar foreign regulatory agencies to conduct additional clinical trials to support the approval of Vyleesi and future product candidates; · our ability to successfully manufacture Vyleesi for worldwide markets; · our success and the success of our licensees in educating physicians and patients about the benefits, administration and use of Vyleesi for HSDD; · the prevalence and severity of adverse events experienced with Vyleesi for HSDD or any future product candidates or approved products; · the adequacy and regulatory compliance of the autoinjector device, supplied by an unaffiliated third party, used as part of the Vyleesi combination product; · the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; · our ability to raise additional capital on acceptable terms to achieve our goals; · achieving and maintaining compliance with all regulatory requirements applicable to Vyleesi for HSDD or any future product candidates or approved products; · the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments; 17 Table of Contents · the effectiveness of our own or our future potential strategic collaborators’ marketing, sales and distribution strategy and operations; · the ability to manufacture clinical trial supplies of any future product candidates and to develop, validate and maintain a commercially viable manufacturing process that is compliant with current GMP; · our ability to successfully commercialize Vyleesi for HSDD in the United States; · our ability to successfully commercialize any future product candidates, if approved for marketing and sale, whether alone or in collaboration with others; · our ability to enforce our intellectual property rights in and to Vyleesi for HSDD or any future product candidates; · our ability to avoid third-party patent interference or intellectual property infringement claims; · acceptance of Vyleesi for HSDD or any future product candidates, if approved, as safe and effective by patients and the medical community; and · a continued acceptable safety profile and efficacy of Vyleesi for HSDD or any future product candidates following approval.
The clinical and commercial success of Vyleesi and our product candidates will depend on a number of factors, including the following: · timely completion of, or need to conduct additional clinical trials and studies, for our product candidates, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the accurate and satisfactory performance of third-party contractors; · the ability to demonstrate to the satisfaction of the FDA the safety and efficacy of future product candidates through clinical trials; · whether we or our licensees are required by the FDA or other similar foreign regulatory agencies to conduct additional clinical trials to support the approval of Vyleesi and future product candidates; · our ability to successfully manufacture Vyleesi for worldwide markets; · our success and the success of our licensees in educating physicians and patients about the benefits, administration and use of Vyleesi for HSDD; · the prevalence and severity of adverse events experienced with Vyleesi for HSDD or any future product candidates or approved products; · the adequacy and regulatory compliance of the autoinjector device, supplied by an unaffiliated third party, used as part of the Vyleesi combination product; · the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; · our ability to raise additional capital on acceptable terms to achieve our goals; · achieving and maintaining compliance with all regulatory requirements applicable to Vyleesi for HSDD or any future product candidates or approved products; · the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments; · the effectiveness of our own or our future potential strategic collaborators’ marketing, sales and distribution strategy and operations; · the ability to manufacture clinical trial supplies of any future product candidates and to develop, validate and maintain a commercially viable manufacturing process that is compliant with current GMP; · our ability to successfully commercialize Vyleesi for HSDD in the United States; · our ability to successfully commercialize any future product candidates, if approved for marketing and sale, whether alone or in collaboration with others; · our ability to enforce our intellectual property rights in and to Vyleesi for HSDD or any future product candidates; · our ability to avoid third-party patent interference or intellectual property infringement claims; · acceptance of Vyleesi for HSDD or any future product candidates, if approved, as safe and effective by patients and the medical community; and · a continued acceptable safety profile and efficacy of Vyleesi for HSDD or any future product candidates following approval.
Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with corporate collaborators. We currently carry $10 million liability insurance in the aggregate as to certain product liability and commercialization risks and certain clinical trial risks.
Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with corporate collaborators. We currently carry $10.0 million liability insurance in the aggregate as to certain product liability and commercialization risks and certain clinical trial risks.
Our future capital requirements depend on many factors, including: · our ability to develop and maintain manufacturing, marketing and distribution capability for sales of Vyleesi in the United States, including our ability to enter into agreements with one or more third parties to conduct activities relating to the commercialization of Vyleesi; · our ability to enter into one or more licensing or similar agreements for Vyleesi outside of Korea and China; · the timing of obtaining regulatory approvals for Vyleesi for HSDD in markets outside the United States; · the expense and timing of obtaining regulatory approvals for our other product candidates; · the number and characteristics of any additional product candidates we develop or acquire; · the scope, progress, results and costs of researching and developing our future product candidates, and conducting preclinical and clinical trials; · the cost of commercialization activities if any future product candidates are approved for sale, including marketing, sales and distribution costs; · the cost of manufacturing any future product candidates and any products we successfully commercialize; · our ability to establish and maintain strategic collaborations, licensing or other arrangements and the terms and timing of such arrangements; · the degree and rate of market acceptance of any future approved products; · the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing products or treatments; · any product liability or other lawsuits related to our products; · the expenses needed to attract and retain skilled personnel; · the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and · the timing, receipt and amount of sales of, or royalties on, future approved products, if any.
Our future capital requirements depend on many factors, including: · our ability to develop and maintain manufacturing, marketing and distribution capability for sales of Vyleesi in the United States, including our ability to enter into agreements with one or more third parties to conduct activities relating to the commercialization of Vyleesi; · our ability to enter into one or more licensing or similar agreements for Vyleesi outside of Korea and China; · the timing of obtaining regulatory approvals for Vyleesi for HSDD in markets outside the United States; · the expense and timing of obtaining regulatory approvals for our other product candidates; · the number and characteristics of any additional product candidates we develop or acquire; · the scope, progress, results and costs of researching and developing our future product candidates, and conducting preclinical and clinical trials; 15 Table of Contents · the cost of commercialization activities if any future product candidates are approved for sale, including marketing, sales and distribution costs; · the cost of manufacturing any future product candidates and any products we successfully commercialize; · our ability to establish and maintain strategic collaborations, licensing or other arrangements and the terms and timing of such arrangements; · the degree and rate of market acceptance of any future approved products; · the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing products or treatments; · any product liability or other lawsuits related to our products; · the expenses needed to attract and retain skilled personnel; · the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and · the timing, receipt and amount of sales of, or royalties on, future approved products, if any.
If our products, methods, processes, and other technologies infringe the proprietary rights of other parties we could incur substantial costs and we may have to: · obtain licenses, which may not be available on commercially reasonable terms, if at all; · redesign our products or processes to avoid infringement; · stop using the subject matter claimed in the patents held by others; · pay damages; or · defend litigation or administrative proceedings, which may be costly whether we win or lose, and which could result in a substantial diversion of our management resources. 31 Table of Contents 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 our products, methods, processes, and other technologies infringe the proprietary rights of other parties we could incur substantial costs and we may have to: · obtain licenses, which may not be available on commercially reasonable terms, if at all; · redesign our products or processes to avoid infringement; · stop using the subject matter claimed in the patents held by others; · pay damages; or · defend litigation or administrative proceedings, which may be costly whether we win or lose, and which could result in a substantial diversion of our management resources. 30 Table of Contents 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 our third-party contractors do not carry out their duties under their agreements with us, fail to meet expected deadlines or fail to comply with appropriate standards for preclinical or clinical research, our ability to develop our product candidates and obtain regulatory approval on a timely basis, if at all, may be materially adversely affected. 23 Table of Contents 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 our third-party contractors do not carry out their duties under their agreements with us, fail to meet expected deadlines or fail to comply with appropriate standards for preclinical or clinical research, our ability to develop our product candidates and obtain regulatory approval on a timely basis, if at all, may be materially adversely affected. 22 Table of Contents 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.
Furthermore, even if any of our product candidates receive marketing approval, as greater numbers of patients use a drug following its approval, if the incidence of side effects increases or if other problems are observed after approval that were not seen or anticipated during pre-approval clinical trials, or if the incidence of side effects increase or other problems are observed with Vyleesi, a number of potentially significant negative consequences could result, including: · regulatory authorities may withdraw their approval of the product; · we may be required to reformulate such products or change the way the product is manufactured; 22 Table of Contents · we may become the target of lawsuits, including class action suits; and · our reputation in the marketplace may suffer resulting in a significant drop in the sales of such products.
Furthermore, even if any of our product candidates receive marketing approval, as greater numbers of patients use a drug following its approval, if the incidence of side effects increases or if other problems are observed after approval that were not seen or anticipated during pre-approval clinical trials, or if the incidence of side effects increase or other problems are observed with Vyleesi, a number of potentially significant negative consequences could result, including: · regulatory authorities may withdraw their approval of the product; · we may be required to reformulate such products or change the way the product is manufactured; · we may become the target of lawsuits, including class action suits; and · our reputation in the marketplace may suffer resulting in a significant drop in the sales of such products.
Failure on our part to have effective internal financial and accounting controls would cause our financial reporting to be unreliable, could have a material adverse effect on our business, operating results, and financial condition, and could cause the trading price of our common stock to fall dramatically. 34 Table of Contents If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
Failure on our part to have effective internal financial and accounting controls would cause our financial reporting to be unreliable, could have a material adverse effect on our business, operating results, and financial condition, and could cause the trading price of our common stock to fall dramatically. 33 Table of Contents If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
Our independent registered public accounting firm has issued their report, which includes an explanatory paragraph for going concern uncertainty on our consolidated financial statements as of and for the year ended June 30, 2022. The existence of a “going concern” conclusion may hinder our ability to obtain additional financing in the future.
Our independent registered public accounting firm has issued their report, which includes an explanatory paragraph for going concern uncertainty on our consolidated financial statements as of and for the year ended June 30, 2023. The existence of a “going concern” conclusion may hinder our ability to obtain additional financing in the future.
If we exercise this right, it could be more difficult for a third party to acquire a majority of our outstanding voting stock. 35 Table of Contents In addition, our equity incentive plans generally permit us to accelerate the vesting of options and other stock rights granted under these plans in the event of a change of control.
If we exercise this right, it could be more difficult for a third party to acquire a majority of our outstanding voting stock. 34 Table of Contents In addition, our equity incentive plans generally permit us to accelerate the vesting of options and other stock rights granted under these plans in the event of a change of control.
We do not have the facilities to manufacture our early-stage potential products such as PL8177, PL9643, PL3994 and other melanocortin receptor agonist compounds for use in preclinical studies and clinical trials. Contract manufacturers must perform these manufacturing activities in a manner that complies with FDA regulations.
We do not have the facilities to manufacture our early-stage potential products such as PL8177, PL9643, PL9654 and other melanocortin receptor agonist compounds for use in preclinical studies and clinical trials. Contract manufacturers must perform these manufacturing activities in a manner that complies with FDA regulations.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, or results of operations. 32 Table of Contents 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.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, or results of operations. 31 Table of Contents 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.
Holders of registered underlying shares could resell the shares immediately upon issuance, which could result in significant downward pressure on our stock price. 36 Table of Contents Our failure to meet the continued listing requirements of the NYSE American could result in a de-listing of our common stock.
Holders of registered underlying shares could resell the shares immediately upon issuance, which could result in significant downward pressure on our stock price. 35 Table of Contents Our failure to meet the continued listing requirements of the NYSE American could result in a de-listing of our common stock.
We have not yet received regulatory approval to commercialize Vyleesi in China or Korea, and regulatory approval in these countries cannot be assured. Our near-term prospects, including our ability to finance our company and generate revenue, will be impacted by the successful commercialization of Vyleesi for HSDD, as well as preclinical and clinical results with our future product candidates.
We have not yet received regulatory approval to commercialize Vyleesi in China or Korea, and regulatory approval in these countries cannot be assured. 17 Table of Contents Our near-term prospects, including our ability to finance our company and generate revenue, will be impacted by the successful commercialization of Vyleesi for HSDD, as well as preclinical and clinical results with our future product candidates.
Any of these events or other delaying events, individually or in the aggregate, could delay the commercialization of our product candidates and have a material adverse effect on our business, results of operations and financial condition. We may not be able to secure and maintain relationships with research institutions and other organizations to conduct our clinical trials.
Any of these events or other delaying events, individually or in the aggregate, could delay the commercialization of our product candidates and have a material adverse effect on our business, results of operations and financial condition. 20 Table of Contents We may not be able to secure and maintain relationships with research institutions and other organizations to conduct our clinical trials.
We may not be able to secure and maintain suitable research institutions or organizations to conduct our clinical trials. 21 Table of Contents 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.
We may not be able to secure and maintain suitable research institutions or 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.
If we do not obtain, or experience difficulties in obtaining, such marketing authorizations, our business, financial condition and results of operations may be materially adversely affected. 29 Table of Contents The FDA has required that two postmarketing studies and a clinical trial be conducted on Vyleesi.
If we do not obtain, or experience difficulties in obtaining, such marketing authorizations, our business, financial condition and results of operations may be materially adversely affected. The FDA has required that two postmarketing studies and a clinical trial be conducted on Vyleesi.
As a result, our share price would likely decline significantly, and we would have difficulty raising necessary capital for future projects. Production and supply of Vyleesi depend on contract manufacturers over whom we do not have any control, and there may not be adequate supplies of Vyleesi .
As a result, our share price would likely decline significantly, and we would have difficulty raising necessary capital for future projects. 18 Table of Contents Production and supply of Vyleesi depend on contract manufacturers over whom we do not have any control, and there may not be adequate supplies of Vyleesi .
The clinical and commercial success of our product candidates will depend on a number of factors, including the following: · the ability to raise additional capital on acceptable terms, or at all; · timely completion of our clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; · whether we are required by the FDA or similar foreign regulatory agencies to conduct additional clinical trials beyond those planned to support the approval and commercialization of our product candidates or any future product candidates; · acceptance of our proposed indications and primary endpoint assessments relating to the proposed indications of our product candidates by the FDA and similar foreign regulatory authorities; · our ability to demonstrate to the satisfaction of the FDA and similar foreign regulatory authorities, the safety and efficacy of our product candidates or any future product candidates; · the prevalence, duration and severity of potential side effects experienced with our product candidates or future approved products, if any; · the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; · achieving and maintaining, and, where applicable, ensuring that our third-party contractors achieve and maintain, compliance with our contractual obligations and with all regulatory requirements applicable to our product candidates or any future product candidates or approved products, if any; · the ability of third parties with whom we contract to manufacture clinical trial and commercial supplies of our product candidates or any future product candidates, remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with the FDA’s current GMP regulations; · a continued acceptable safety profile and efficacy during clinical development and following approval of our product candidates or any future product candidates; · our ability to successfully commercialize our product candidates or any future product candidates in the United States and internationally, if approved for marketing, sale and distribution in such countries and territories, whether alone or in collaboration with others; · acceptance by physicians and patients of the benefits, safety and efficacy of our product candidates or any future product candidates, if approved, including relative to alternative and competing treatments; · our and our partners’ ability to establish and enforce intellectual property rights in and to our product candidates or any future product candidates; · our and our partners’ ability to avoid third-party patent interference or intellectual property infringement claims; and · our ability to develop, in-license or acquire additional product candidates or commercial-stage products that we believe can be successfully developed and commercialized. 16 Table of Contents If we do not achieve one or more of these factors, many of which are beyond our control, in a timely manner or at all, we could experience significant delays or an inability to obtain regulatory approvals or commercialize our product candidates.
The clinical and commercial success of our product candidates will depend on a number of factors, including the following: · the ability to raise additional capital on acceptable terms, or at all; · timely completion of our clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; · whether we are required by the FDA or similar foreign regulatory agencies to conduct additional clinical trials beyond those planned to support the approval and commercialization of our product candidates or any future product candidates; · acceptance of our proposed indications and primary endpoint assessments relating to the proposed indications of our product candidates by the FDA and similar foreign regulatory authorities; · our ability to demonstrate to the satisfaction of the FDA and similar foreign regulatory authorities, the safety and efficacy of our product candidates or any future product candidates; 16 Table of Contents · the prevalence, duration and severity of potential side effects experienced with our product candidates or future approved products, if any; · the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; · achieving and maintaining, and, where applicable, ensuring that our third-party contractors achieve and maintain, compliance with our contractual obligations and with all regulatory requirements applicable to our product candidates or any future product candidates or approved products, if any; · the ability of third parties with whom we contract to manufacture clinical trial and commercial supplies of our product candidates or any future product candidates, remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with the FDA’s current GMP regulations; · a continued acceptable safety profile and efficacy during clinical development and following approval of our product candidates or any future product candidates; · our ability to successfully commercialize our product candidates or any future product candidates in the United States and internationally, if approved for marketing, sale and distribution in such countries and territories, whether alone or in collaboration with others; · acceptance by physicians and patients of the benefits, safety and efficacy of our product candidates or any future product candidates, if approved, including relative to alternative and competing treatments; · our and our partners’ ability to establish and enforce intellectual property rights in and to our product candidates or any future product candidates; · our and our partners’ ability to avoid third-party patent interference or intellectual property infringement claims; and · our ability to develop, in-license or acquire additional product candidates or commercial-stage products that we believe can be successfully developed and commercialized.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 25 Table of Contents 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.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 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.
In addition, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in domestic and foreign intellectual property laws. 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.
In addition, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in domestic and foreign intellectual property laws. 32 Table of Contents 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 outstanding Series A Preferred Stock, consisting of 4,030 shares on September 21, 2022, provides that we may not pay a dividend or make any distribution to holders of any class of stock unless we first pay a special dividend or distribution of $100 per share to the holders of the Series A Preferred Stock.
Our outstanding Series A Preferred Stock, consisting of 4,030 shares on September 27, 2023, provides that we may not pay a dividend or make any distribution to holders of any class of stock unless we first pay a special dividend or distribution of $100 per share to the holders of the Series A Preferred Stock.
Upon (i) liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, (ii) sale or other disposition of all or substantially all of the assets of the Company, or (iii) any consolidation, merger, combination, reorganization or other transaction in which the Company is not the surviving entity or in which the shares of common stock constituting in excess of 50% of the voting power of the Company are exchanged for or changed into other stock or securities, cash and/or any other property, after payment or provision for payment of the debts and other liabilities of the Company, the holders of Series A Preferred Stock will be entitled to receive, pro rata and in preference to the holders of any other capital stock, an amount per share equal to $100 plus accrued but unpaid dividends, if any.
Upon (i) liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, (ii) sale or other disposition of all or substantially all of the assets of the Company, or (iii) any consolidation, merger, combination, reorganization or other transaction in which the Company is not the surviving entity or in which the shares of common stock constituting in excess of 50% of the voting power of the Company are exchanged for or changed into other stock or securities, cash and/or any other property, after payment or provision for payment of the debts and other liabilities of the Company, the holders of Series A Preferred Stock will be entitled to receive, pro rata and in preference to the holders of any other capital stock, an amount per share equal to $100 plus accrued but unpaid dividends, if any Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our stockholders’ sole source of gains.
We are evaluating requirements, timelines and costs for these studies and the clinical trial. We do not know the outcomes of the studies or the clinical trial, and do not know whether the outcomes would adversely affect approvals of Vyleesi.
We are evaluating requirements, timelines and costs for these studies and the clinical trial, and seeking further guidance from the FDA. We do not know the outcomes of the studies or the clinical trial, and do not know whether the outcomes would adversely affect approvals of Vyleesi.
If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including: · restrictions on the products or manufacturing process; · warning letters; · civil or criminal penalties; · fines; · injunctions; · imposition of a Corporate Integrity Agreement requiring heightened monitoring of our compliance functions, overseen by outside monitors, and enhanced reporting requirements to, and oversight by, the FDA and other government agencies; · product seizures or detentions and related publicity requirements; · suspension or withdrawal of regulatory approvals; · regulators or IRBs may not authorize us or any potential future collaborators to commence a clinical trial or conduct a clinical trial at a prospective trial site; · total or partial suspension of production; and · refusal to approve pending applications for marketing approval of new product candidates. 27 Table of Contents Changes in the regulatory approval policy during the development period, changes in or the enactment of additional regulations or statutes, or changes in the regulatory review for each submitted product application may cause delays in the approval or rejection of an application.
If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including: · restrictions on the products or manufacturing process; · warning letters; · civil or criminal penalties; · fines; · injunctions; · imposition of a Corporate Integrity Agreement requiring heightened monitoring of our compliance functions, overseen by outside monitors, and enhanced reporting requirements to, and oversight by, the FDA and other government agencies; 26 Table of Contents · product seizures or detentions and related publicity requirements; · suspension or withdrawal of regulatory approvals; · regulators or IRBs may not authorize us or any potential future collaborators to commence a clinical trial or conduct a clinical trial at a prospective trial site; · total or partial suspension of production; and · refusal to approve pending applications for marketing approval of new product candidates.
Several provisions of the law have affected us and increased certain of our costs. Since its enactment, there have been executive, judicial, and congressional challenges to certain aspects of the PPACA. In addition, other legislative changes have been adopted since the PPACA was enacted. Some of these changes have resulted in additional reductions in Medicare and other healthcare funding.
Several provisions of the law have affected us and increased certain of our costs. Since its enactment, there have been executive, judicial, and congressional challenges to certain aspects of the PPACA. In addition, other legislative changes have been adopted since the PPACA was enacted.
Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and · state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and · state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. 25 Table of Contents Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
We may not achieve or sustain profitability in future years, depending on numerous factors, including profitability of Vyleesi, whether and when development and sales milestones are met, whether and when we enter into license agreements for any of our products under development, regulatory actions by the FDA and other regulatory bodies, the performance of our licensees, and market acceptance of our products.
We may not achieve or sustain profitability in future years, depending on numerous factors, including profitability of Vyleesi, whether and when development and sales milestones are met, whether and when we enter into license agreements for any of our products under development, regulatory actions by the FDA and other regulatory bodies, the performance of our licensees, and market acceptance of our products. 14 Table of Contents We expect to incur significant expenses as we continue our development of MC1r and MCr products.
For example, the Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it.
In addition, recent health care reform legislation has strengthened these laws. For example, the Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it.
These operations provide a limited basis for stockholders to assess our ability to commercialize our product candidates. 15 Table of Contents While we completed Phase 3 clinical trials on Vyleesi for HSDD in premenopausal women, together with AMAG filed an NDA on Vyleesi for HSDD with the FDA, and received approval on Vyleesi from the FDA, we have not yet demonstrated our ability to perform the functions necessary for the successful commercialization of any of our current product candidates.
While we completed Phase 3 clinical trials on Vyleesi for HSDD in premenopausal women, together with AMAG filed an NDA on Vyleesi for HSDD with the FDA, and received approval on Vyleesi from the FDA, we have not yet demonstrated our ability to perform the functions necessary for the successful commercialization of any of our current product candidates.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. As of September 21, 2022 there were 3,173,338 shares of common stock underlying outstanding convertible preferred stock, options, restricted stock units and warrants.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. As of September 27, 2023, there were 4,419,056 shares of common stock underlying outstanding convertible preferred stock, options, restricted stock units and warrants.
We anticipate that the PPACA, as well as other healthcare reform measures that may be adopted in the future in the U.S. or abroad, may result in more rigorous coverage criteria and an additional downward pressure on the reimbursement our customers may receive for our products.
Some of these changes have resulted in additional reductions in Medicare and other healthcare funding. 29 Table of Contents We anticipate that the PPACA, as well as other healthcare reform measures that may be adopted in the future in the U.S. or abroad, may result in more rigorous coverage criteria and an additional downward pressure on the reimbursement our customers may receive for our products.
Until we commenced selling Vyleesi in July 2020 upon termination of our license agreement with AMAG, we had not had any product available for commercial sale since 2005 and we have not received any revenues from the sale of our product candidates.
Until we commenced selling Vyleesi in July 2020 upon termination of our license agreement with AMAG, we had not had any product available for commercial sale since 2005 and we have not received any revenues from the sale of our product candidates. Because our marketing program for Vyleesi is limited and relatively new we cannot accurately forecast sales of Vyleesi.
Each share of Series A Preferred Stock is convertible at any time, at the option of the holder, and such conversion could dilute the value of our common stock to current stockholders and could adversely affect the market price of our common stock.
As of September 27, 2023, there are 4,030 shares of Series A Preferred Stock outstanding. Each share of Series A Preferred Stock is convertible at any time, at the option of the holder, and such conversion could dilute the value of our common stock to current stockholders and could adversely affect the market price of our common stock.
We had $36.2 million in net loss for the year ended June 30, 2022, compared to $33.6 million in net loss for the year ended June 30, 2021.
We had $27.5 million in net loss for the year ended June 30, 2023, compared to $36.2 million in net loss for the year ended June 30, 2022.
If one or more equity research analysts ceases coverage of us, or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.
If one or more equity research analysts ceases coverage of us, or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline. Holders of our Series A Preferred Stock may have interests different from our common stockholders.
We can issue shares of our preferred stock in one or more series and can set the terms of the preferred stock without seeking any further approval from our common stockholders.
We are permitted under our certificate of incorporation to issue up to 10,000,000 shares of preferred stock. We can issue shares of our preferred stock in one or more series and can set the terms of the preferred stock without seeking any further approval from our common stockholders.
Recently there has been heightened governmental scrutiny in countries worldwide over the manner in which manufacturers set prices for their marketed products. 30 Table of Contents In the U.S., there have been several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drug products.
In the U.S., there have been several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drug products.
Therefore, pricing and reimbursement for our products will have to be negotiated on a “Member State by Member State” basis according to national rules, as there does not exist a centralized European process.
In most European markets, demand levels for healthcare in general and for pharmaceuticals in particular are principally regulated by national governments. Therefore, pricing and reimbursement for our products will have to be negotiated on a “Member State by Member State” basis according to national rules, as there does not exist a centralized European process.
Moreover, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act. 26 Table of Contents If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Competition exists for qualified personnel in the biopharmaceutical field. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
Competition exists for qualified personnel in the biopharmaceutical field. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees.
We expect to incur significant expenses as we continue our development of MC1r and MCr products. These expenses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity, total assets and working capital.
These expenses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity, total assets and working capital.
Based on our available cash and cash equivalents, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued and we intend to seek additional funding to complete development activities and required clinical trials for our MC1r product candidates and, if those clinical trials are successful (which we cannot predict), to complete submission of required regulatory applications to the FDA. 14 Table of Contents We cannot predict product sales for Vyleesi for HSDD in the United States, so we may not have significant recurring revenue and may need to depend on financing or partnering to sustain our operations.
Based on our available cash, cash equivalents and marketable securities, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued and we are seeking additional funding to complete development activities and required clinical trials for our MC1r product candidates and, if those clinical trials are successful (which we cannot predict), to complete submission of required regulatory applications to the FDA.
Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our stockholders’ sole source of gains. We do not anticipate paying any cash dividends in the foreseeable future and intend to retain future earnings, if any, for the development and expansion of our business.
We do not anticipate paying any cash dividends in the foreseeable future and intend to retain future earnings, if any, for the development and expansion of our business.
Additional factors that could inhibit the successful development of our product candidates include: · lack of effectiveness of any product candidate during clinical trials or the failure of our product candidates to meet specified endpoints; · failure to design appropriate clinical trial protocols; · uncertainty regarding proper dosing; · for injectable products, inability to develop or obtain a supplier for a suitable autoinjector device that meets the FDA’s medical device requirements; · insufficient data to support regulatory approval; · inability or unwillingness of medical investigators to follow our clinical protocols; · inability to add a sufficient number of clinical trial sites; or · the availability of sufficient capital to sustain operations and clinical trials. 20 Table of Contents You should evaluate us in light of these uncertainties, difficulties and expenses commonly experienced by early stage biopharmaceutical companies, as well as unanticipated problems and additional costs relating to: · product approval or clearance; · regulatory compliance; · good manufacturing practices; · intellectual property rights; · product introduction; and · marketing and competition.
Additional factors that could inhibit the successful development of our product candidates include: · lack of effectiveness of any product candidate during clinical trials or the failure of our product candidates to meet specified endpoints; · failure to design appropriate clinical trial protocols; · uncertainty regarding proper dosing; · for injectable products, inability to develop or obtain a supplier for a suitable autoinjector device that meets the FDA’s medical device requirements; · insufficient data to support regulatory approval; 19 Table of Contents · inability or unwillingness of medical investigators to follow our clinical protocols; · inability to add a sufficient number of clinical trial sites; or · the availability of sufficient capital to sustain operations and clinical trials.
If side effects emerge that can be linked to Vyleesi or any of 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.
Failure to obtain regulatory approval in other countries or any delay or setbacks in obtaining such approval would impair our ability to develop foreign markets for our product candidates and may have a material adverse effect on our results of operations and financial condition. 21 Table of Contents If side effects emerge that can be linked to Vyleesi or any of 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.
To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or applications relating to our technology, intellectual property, research and development or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed.
To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or applications relating to our technology, intellectual property, research and development or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed. 24 Table of Contents 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 have a history of substantial net losses, including a net loss of $36.2 million for the year ended June 30, 2022, we expect to incur substantial net losses over the next few years, and we may never achieve or maintain profitability. As of June 30, 2022, we had an accumulated deficit of $388.0 million.
We expect to incur substantial net losses over the next few years, and we may never achieve or maintain profitability. As of June 30, 2023, we had an accumulated deficit of $415.5 million.
Outside the United States, our ability to market our product candidates will also depend on receiving marketing authorizations from the appropriate regulatory authorities. The foreign regulatory approval process generally includes all of the risks associated with FDA approval described above. The requirements governing the conduct of clinical trials and marketing authorization vary widely from country to country.
The foreign regulatory approval process generally includes all of the risks associated with FDA approval described above. The requirements governing the conduct of clinical trials and marketing authorization vary widely from country to country.
Our ability to achieve revenues from the sale of our products will depend, in part, on our ability to obtain adequate reimbursement from private insurers and other healthcare payers.
Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. 23 Table of Contents Our ability to achieve revenues from the sale of our products will depend, in part, on our ability to obtain adequate reimbursement from private insurers and other healthcare payers.
Currently, we have no commitments to obtain any additional financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.
Currently, we have no commitments to obtain any additional financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. We have a history of substantial net losses, including a net loss of $27.5 million for the year ended June 30, 2023.
The ongoing military conflict between Russia and Ukraine could cause geopolitical instability, economic uncertainty, financial markets volatility and capital markets disruption, which may adversely affect our revenue, financial condition, or results of operations. The current military conflict between Russia and Ukraine may disrupt or otherwise adversely impact our operations and those of third parties upon which we rely.
The current military conflict between Russia and Ukraine may disrupt or otherwise adversely impact our operations and those of third parties upon which we rely.
Obtaining reimbursement from governmental payers, insurance companies, HMOs and other third-party payers of healthcare costs is a time-consuming and expensive process.
Obtaining reimbursement from governmental payers, insurance companies, HMOs and other third-party payers of healthcare costs is a time-consuming and expensive process. Vyleesi for HSDD is classified as a Tier 3 drug, so reimbursement for Vyleesi is limited for treatment of premenopausal women with HSDD.
In addition, our competitors may independently develop substantially equivalent technologies and processes or gain access to our trade secrets or technology, either of which could materially or adversely affect our competitive position. 33 Table of Contents Risks Related to the Ownership of Our Common Stock 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.
Risks Related to the Ownership of Our Common Stock 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.
For the 12-month period ended June 30, 2022, the price of our stock has been volatile, ranging from a high of $24.00 per share to a low of $6.45 per share on an adjusted Reverse Stock Split basis.
For the 12-month period ended June 30, 2023, the price of our stock has been volatile, ranging from a high of $8.60 per share to a low of $1.82 per share.
Adverse experiences with the product must be reported to the FDA and could result in the imposition of market restriction through labeling changes or in product removal. Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following approval.
Adverse experiences with the product must be reported to the FDA and could result in the imposition of market restriction through labeling changes or in product removal.
We may seek to license, sell or otherwise dispose of our product candidates, technologies and contractual rights on the best possible terms available.
If we are unable to raise sufficient additional funds when needed, we may be required to curtail operations significantly, cease clinical trials and decrease staffing levels. We may seek to license, sell or otherwise dispose of our product candidates, technologies and contractual rights on the best possible terms available.
Vyleesi for HSDD is classified as a Tier 3 drug, so reimbursement for Vyleesi is limited for treatment of premenopausal women with HSDD. 24 Table of Contents 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.
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. Even if one or more of our products are approved in Europe, we may be unable to obtain appropriate pricing and reimbursement for such products.
As of June 30, 2022, we had cash and cash equivalents of $29.9 million, with current liabilities of $16.3 million.
As of June 30, 2023, we had cash, cash equivalents and marketable securities of $11.0 million, with current liabilities of $15.1 million.
To obtain additional funding, we may need to enter into arrangements that require us to develop only certain of our product candidates or relinquish rights to certain technologies, product candidates and/or potential markets. If we are unable to raise sufficient additional funds when needed, we may be required to curtail operations significantly, cease clinical trials and decrease staffing levels.
However, such financing arrangements may not be available on acceptable terms, or at all. To obtain additional funding, we may need to enter into arrangements that require us to develop only certain of our product candidates or relinquish rights to certain technologies, product candidates and/or potential markets.
We may raise additional funds through public or private equity or debt financings, collaborative arrangements on our product candidates, or other sources. However, such financing arrangements may not be available on acceptable terms, or at all.
We cannot predict product sales for Vyleesi for HSDD in the United States, so we may not have significant recurring revenue and may need to depend on financing or partnering to sustain our operations. We may raise additional funds through public or private equity or debt financings, collaborative arrangements on our product candidates, or other sources.
If we are not able to obtain adequate supplies of Vyleesi, it will be difficult for us to market and commercialize Vyleesi and compete effectively. We may need to obtain a new manufacturer of the Vyleesi active drug ingredient , which will be a time consuming and costly process. Our agreement with Lonza Ltd.
If we are not able to obtain adequate supplies of Vyleesi, it will be difficult for us to market and commercialize Vyleesi and compete effectively. The ongoing military conflict between Russia and Ukraine could cause geopolitical instability, economic uncertainty, financial markets volatility and capital markets disruption, which may adversely affect our revenue, financial condition, or results of operations.
Removed
Because our marketing program for Vyleesi is limited and relatively new, and because of the impact of COVID-19 on marketing outreach, we cannot accurately forecast sales of Vyleesi.
Added
These operations provide a limited basis for stockholders to assess our ability to commercialize our product candidates.
Removed
Although we had positive net sales after product allowances for the year ended June 30, 2022, we had sales and marketing expenditures in excess of net sales which may continue in future years.
Added
If we do not achieve one or more of these factors, many of which are beyond our control, in a timely manner or at all, we could experience significant delays or an inability to obtain regulatory approvals or commercialize our product candidates.
Removed
(“Lonza”) to manufacturer the Vyleesi active drug ingredient expires December 31, 2022, and Lonza has advised us that they will not renew our contract, but we remain in discussions with Lonza on contract peptide manufacturing.
Added
You should evaluate us in light of these uncertainties, difficulties and expenses commonly experienced by early stage biopharmaceutical companies, as well as unanticipated problems and additional costs relating to: · product approval or clearance; · regulatory compliance; · good manufacturing practices; · intellectual property rights; · product introduction; and · marketing and competition.
Removed
We are actively evaluating potential new contract manufacturers but establishing a new contractual relationship and establishing and validating manufacturing in a manner that complies with FDA regulations is a time-consuming and costly process.
Added
Moreover, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.
Removed
We believe we have sufficient supplies of Vyleesi active drug ingredient to meet forecast demand for at least the next several years, but if we are not able to obtain adequate new supplies of Vyleesi active drug ingredient once existing supplies are exhausted, we will not be able to manufacture the Vyleesi combination product. 18 Table of Contents The effect of COVID-19 and other possible pandemics and outbreaks could result in material adverse effects on our clinical trials, business, financial condition. and results of operations.
Added
Changes in the regulatory approval policy during the development period, changes in or the enactment of additional regulations or statutes, or changes in the regulatory review for each submitted product application may cause delays in the approval or rejection of an application.
Removed
We have active and planned clinical trial sites in the United States, and our licensees have planned clinical trial sites in Asia-Pacific countries.
Added
Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following approval. 28 Table of Contents Outside the United States, our ability to market our product candidates will also depend on receiving marketing authorizations from the appropriate regulatory authorities.
Removed
As the COVID-19 pandemic continues around the globe, we may experience disruptions that could severely impact our clinical trials, including Phase 3 clinical trials with PL9643 in the United States for dry eye disease, a Phase 2 clinical trial with PL8177 for ulcerative colitis, and clinical trials planned to be conducted in China and Korea by our licensees for Vyleesi, Fosun and Kwangdong.
Added
Recently there has been heightened governmental scrutiny in countries worldwide over the manner in which manufacturers set prices for their marketed products.
Removed
It is possible that the COVID-19 pandemic may delay enrollment in our clinical trials due to prioritization of medical and hospital resources toward the outbreak, and some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results.
Added
In addition, our competitors may independently develop substantially equivalent technologies and processes or gain access to our trade secrets or technology, either of which could materially or adversely affect our competitive position.
Removed
The COVID-19 pandemic may also result in the inability of our suppliers to deliver clinical drug supplies on a timely basis or at all. In addition, medical centers and hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an infectious disease.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease approximately 3,600 square feet of laboratory space in the Township of South Brunswick, NJ under a lease that expires in October 2023. We believe our present facilities are adequate for our current needs. We do not own any real property.
Biggest changeWe also lease approximately 3,600 square feet of laboratory space in the Township of South Brunswick, NJ under a lease that expires in October 2026. We believe our present facilities are adequate for our current needs.
Added
The corporate offices include private offices, meeting rooms and work spaces for all administrative personnel and over half of the research and development personnel, with the remainder of research and development personnel stationed at the laboratory facility. We do not own any real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are involved, from time to time, in various claims and legal proceedings arising in the ordinary course of our business. As of the date of this filing, we are not aware that we are a party to any pending or threatened legal proceeding or proceeding by a governmental authority.
Biggest changeItem 3. Legal Proceedings We are involved, from time to time, in various claims and legal proceedings arising in the ordinary course of our business. As of the date of this filing, we are not aware that we are a party to any pending or threatened legal proceeding or proceeding by a governmental authority. Item 4.
Added
Mine Safety Disclosures Not applicable. 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIt previously traded on The Nasdaq SmallCap Market under the symbol “PLTN.” On September 20, 2022 we had approximately 34 record holders of common stock and the closing sales price of our common stock as reported on the NYSE American was $8.06 per share.
Biggest changeIt previously traded on The Nasdaq SmallCap Market under the symbol “PLTN.” On September 25, 2023 we had approximately 90 record holders of common stock and the closing sales price of our common stock as reported on the NYSE American was $1.45 per share.
There were no shares withheld during the quarter ended June 30, 2022, at the direction of the employees as permitted under the 2011 Stock Incentive Plan in order to pay the minimum amount of tax liability owed by the employee from the vesting of those units and options. Dividends and dividend policy .
There were no shares withheld during the quarter ended June 30, 2023, at the direction of the employees as permitted under the 2011 Stock Incentive Plan, in order to pay the minimum amount of tax liability owed by the employee from the vesting of those units and options. Dividends and dividend policy .
Our outstanding Series A Preferred Stock, consisting of 4,030 shares on September 20, 2022, provides that we may not pay a dividend or make any distribution to holders of any class of stock unless we first pay a special dividend or distribution of $100 per share to the holders of the Series A Preferred Stock. Equity compensation plan information.
Our outstanding Series A Preferred Stock, consisting of 4,030 shares on September 27, 2023, provides that we may not pay a dividend or make any distribution to holders of any class of stock unless we first pay a special dividend or distribution of $100 per share to the holders of the Series A Preferred Stock. Equity compensation plan information.
The aggregate market value of the common and non-voting common equity held by non-affiliates on such date, computed by reference to the closing sales price of our common stock on that date, was $73,353,012. Issuer purchases of equity securities.
The aggregate market value of the common and non-voting common equity held by non-affiliates on such date, computed by reference to the closing sales price of our common stock on that date, was $16,879,088. Issuer purchases of equity securities.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncome Taxes – For fiscal 2022 and fiscal 2021, the Company recorded no income tax benefit or expense as a result of the generation of and utilization of net operating losses that were subject to a full valuation allowance. 40 Table of Contents Effects of Inflation We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.
Biggest changeEffects of Inflati on - We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented. Liquidity and Capital Resources Since inception, we have generally incurred net operating losses, primarily related to spending on our research and development programs.
During fiscal 2022, net cash provided by financing activities was $18,358 which consisted of proceeds from the exercise of outstanding warrants of $280,000 and proceeds from exercise of stock options of $16,132 offset by payment of withholding taxes related to restricted stock units of $221,311, and payment of finance lease obligations of $56,463.
During fiscal 2022, net cash provided by financing activities was $18,358 which consisted of proceeds from the exercise of outstanding warrants of $280,000 and the exercise of stock options of $16,132 offset by payment of withholding taxes related to restricted stock units of $221,311, and payment of finance lease obligations of $56,463.
The provisions of ASC Topic 606 require the following steps to determine revenue recognition: (1) Identify the contract(s) with a customer; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction price to the performance obligations in the contract; and (5) Recognize revenue when (or as) the entity satisfies a performance obligation. 38 Table of Contents In accordance with ASC Topic 606, we recognize product revenue when our performance obligation is satisfied by transferring control of the product to a customer.
The provisions of ASC Topic 606 require the following steps to determine revenue recognition: (1) Identify the contract(s) with a customer; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction price to the performance obligations in the contract; and (5) Recognize revenue when (or as) the entity satisfies a performance obligation. 37 Table of Contents In accordance with ASC Topic 606, we recognize product revenue when our performance obligation is satisfied by transferring control of the product to a customer.
We will continue to evaluate the impact that these events could have on the operations, financial position, and the results of operations and cash flows during fiscal year 2023 and beyond.
We will continue to evaluate the impact that these events could have on the operations, financial position, and the results of operations and cash flows during fiscal year 2024 and beyond.
Based on our available cash and cash equivalents, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued.
Based on our June 30, 2023, cash, cash equivalents and marketable securities, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued.
Cumulative spending from inception to June 30, 2022 was approximately $311,900,000 on our Vyleesi program and approximately $188,400,000 on all our other programs (which include PL8177, PL9643, other melanocortin receptor agonists and terminated programs).
Cumulative spending from inception to June 30, 2023 was approximately $311,900,000 on our Vyleesi program and approximately $211,600,000 on all our other programs (which include PL8177, PL9643, other melanocortin receptor agonists and terminated programs).
Any of these possibilities could materially and adversely affect our operations and require us to curtail or cease certain programs. During fiscal 2022, net cash used in operating activities was $29,922,749 compared to net cash used in operating activities of $22,647,991 in fiscal 2021.
Any of these possibilities could materially and adversely affect our operations and require us to curtail or cease certain programs. During fiscal 2023, net cash used in operating activities was $28,419,001 compared to net cash used in operating activities of $29,922,749 in fiscal 2022.
We may not attain profitability in future years, which is dependent on numerous factors, including, but not limited to whether and when development and sales milestones are met, regulatory actions by the FDA and other regulatory bodies, the performance of our licensees, and market acceptance of our products.
We had a net loss for fiscal 2023 of $27,541,887. We may not attain profitability in future years, which is dependent on numerous factors, including, but not limited to whether and when development and sales milestones are met, regulatory actions by the FDA and other regulatory bodies, the performance of our licensees, and market acceptance of our products.
Research and development expenses related to our Vyleesi, MCr programs, and other preclinical programs were $15,867,511 for fiscal 2022 compared to $8,634,713 for fiscal 2021. The increase is primarily related to an increase in spending on our MCr programs.
Research and development expenses related to our Vyleesi, MCr programs, and other preclinical programs were $16,202,432 for fiscal 2023 compared to $15,867,511 for fiscal 2022. The increase is primarily related to an increase in spending on our MCr programs.
The decrease is primarily attributable to $4,737,426 of selling expenses related to Vyleesi in fiscal 2022 compared to $6,605,901 of selling expenses related to Vyleesi in fiscal 2021 partially offset by $1,135,438 of expenses incurred in fiscal 2022 related to the issuance of redeemable convertible preferred stock and warrants.
The decrease is primarily attributable to $4,621,001 of selling expenses related to Vyleesi in fiscal 2023 compared to $4,737,426 of selling expenses related to Vyleesi in fiscal 2022 and $1,135,438 of expenses incurred in fiscal 2022 related to the issuance of redeemable convertible preferred stock and warrants.
Selling, General and Administrative – Selling, general and administrative expenses, which consist of costs related to Vyleesi in addition to compensation and related costs, were $16,511,942 for fiscal 2022 compared to $17,336,913 for fiscal 2021.
Selling, General and Administrative – Selling, general and administrative expenses, which consist of costs related to Vyleesi in addition to compensation and related costs, were $15,290,836 for fiscal 2023 compared to $16,511,942 for fiscal 2022.
The amounts of program spending above exclude general research and development spending, which were $5,459,923 for fiscal 2022, compared to $4,291,846 for fiscal 2021. The increase in general research and development spending is primarily attributable to increased compensation costs due to an increase in the number of employees in fiscal 2022.
The amounts of program spending above exclude general research and development spending, which were $6,428,145 for fiscal 2023 compared to $5,459,923 for fiscal 2022. The increase in general research and development spending is primarily attributable to increased compensation costs.
Continued operations are dependent upon our ability to generate future income from sales of Vyleesi in the United States and from existing licenses, including royalties and milestones, to complete equity or debt financing activities and enter into additional licensing or collaboration arrangements. As of June 30, 2022, our cash and cash equivalents were $29,939,154 with current liabilities of $16,259,864.
Continued operations are dependent upon our ability to generate future income from sales of Vyleesi in the United States and from existing licenses, including royalties and milestones, to complete equity or debt financing activities and enter into additional licensing or collaboration arrangements.
See Note 3 to the consolidated financial statements included in this Annual Report for a description of recent accounting pronouncements that affect us. 39 Table of Contents Results of Operations Year Ended June 30, 2022 Compared to the Year Ended June 30, 2021: Revenue – For the fiscal year ended June 30, 2022 (“fiscal 2022”) we recognized $1,218,457 of product revenue, net of allowances, as the result of our regaining all North American development and commercialization rights to Vyleesi in July 2020 and $250,000 in license and contract revenue pursuant to our license agreement with Fosun.
See Note 3 to the consolidated financial statements included in this Annual Report for a description of recent accounting pronouncements that affect us. 38 Table of Contents Results of Operations Year Ended June 30, 2023 Compared to the Year Ended June 30, 2022: Revenue – For the fiscal year ended June 30, 2023 (“fiscal 2023”) we recognized $4,850,678 of product revenue, net of allowances, and $3,000 in license and contract revenue pursuant to our license agreement with Fosun.
Cost of Products Sold – Cost of products sold was $217,529 for fiscal 2022 compared to $147,840 for fiscal 2021. Research and Development – Total research and development expenses, including general research and development spending, were $21,327,434 for fiscal 2022 compared to $12,926,559 for fiscal 2021. The increase is a result of higher spending on our MCr programs.
Research and Development – Total research and development expenses, including general research and development spending, were $22,630,577 for fiscal 2023 compared to $21,327,434 for fiscal 2022. The increase is a result of higher spending on our MCr programs.
These expenses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity, total assets, and working capital. 41 Table of Contents We have incurred cumulative negative cash flows from operations since our inception, and have expended, and expect to continue to expend in the future, substantial funds to develop the capability to market and distribute Vyleesi in the United States and to complete our planned product development efforts.
We have incurred cumulative negative cash flows from operations since our inception, and have expended, and expect to continue to expend in the future, substantial funds to develop the capability to market and distribute Vyleesi in the United States and to complete our planned product development efforts.
We expect to incur significant expenses as we continue to develop marketing and distribution capability for Vyleesi in the United States and continue to develop our MC1r MCr product candidates.
We expect to incur significant expenses as we continue to develop marketing and distribution capability for Vyleesi in the United States and continue to develop our MCr product candidates. These expenses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity, total assets, and working capital.
Assuming no additional funding and based on our current operating and development plans, we expect that our existing cash and cash equivalents as of the date of this filing will be sufficient to enable the company to fund its operations into the second half of its fiscal year ending June 30, 2023.
Based on our current operating and development plans, we expect that our existing cash, cash equivalents and marketable securities as of the date of this filing will be sufficient to fund currently anticipated operating expenses through calendar year 2023.
Our product candidates are at various stages of development and will require significant further research, development, and testing and some may never be successfully developed or commercialized.
We have financed our net operating losses primarily through debt and equity financings and amounts received under collaborative and license agreements. 39 Table of Contents Our product candidates are at various stages of development and will require significant further research, development, and testing and some may never be successfully developed or commercialized.
For the fiscal year ended June 30, 2021 (“fiscal 2021”) we recognized $283,286 of negative product revenue, net of allowances and $94,689 in license and contract revenue pursuant to our license agreement with Kwangdong. The increase in net revenue is a result of increased sales volume of 22% and reduced product sales allowances during fiscal 2022.
For the fiscal year ended June 30, 2022 (“fiscal 2022”) we recognized $1,218,457 of product revenue, net of allowances, and $250,000 in license and contract revenue pursuant to our license agreement with Fosun.
The difference in cash used in operations in fiscal 2022 compared with fiscal 2021 was primarily related to cash received related to the termination agreement for Vyleesi in fiscal 2021, partially offset by lower payments made related to inventory purchase commitments, an increase in accounts payable and accrued expenses, and other working capital changes.
The decrease in cash used in operations in fiscal 2023 compared with fiscal 2022 was a result of a lower net loss in fiscal 2023 due to an increase in net revenue and the sale of NOLs, offset by working capital changes, and increased payments made related to inventory purchase commitments.
During fiscal 2022, net cash used in investing activities was $261,374 compared to $5,722 during fiscal 2021, which consisted of leasehold improvements and the acquisition of equipment.
During fiscal 2023, net cash used in investing activities was $3,426,817 which consisted of $2,992,890 used for the purchase of marketable securities and $433,927 of leasehold improvements. During fiscal 2022, net cash used in investing activities was $261,374 which consisted of leasehold improvements.
For fiscal 2021, we recognized $212,526 of unrealized foreign currency loss and $23,440 of interest expense offset by $23,572 of investment income. The increase in unrealized foreign currency gain is a result of increased unrealized foreign currency gains on our inventory purchase commitments.
For fiscal 2023, we recognized investment income of $691,981 offset by $429,971 of unrealized foreign currency loss and $20,013 of interest expense. For fiscal 2022, we recognized unrealized foreign currency gain of $389,868 and investment income of $29,963 offset by $29,682 of interest expense. The increase in investment income is a result of increased interest rates.
Our long-term obligations include aggregate lease obligations of $521,337 for the year ending June 30, 2023, and $746,564 for the years ending June 30, 2024 and 2025, and aggregate inventory purchase commitments of $6,174,986 for the year ending June 30, 2023, of which $5,754,986 is included in current liabilities as of June 30, 2022 and $3,349,500 for the years ending June 30, 2024 through June 30, 2026.
As of June 30, 2023, our cash, cash equivalents and marketable securities were $10,982,472 with current liabilities of $15,131,830. 40 Table of Contents Our obligations include aggregate lease obligations of $460,444 for the year ending June 30, 2024 and $590,337 for the years ending June 30, 2025, 2026 and 2027, and aggregate inventory purchase commitments of $5,940,000 which include $3,856,800 in current liabilities as of June 30, 2023 and $2,083,200 included in other long term liabilities.
Removed
Loss on License Termination Agreement – On July 27, 2020, Palatin and AMAG announced that they had mutually terminated the license agreement for Vyleesi effective July 24, 2020 pursuant to a termination agreement (the “Vyleesi Termination Agreement”). Under the terms of the Vyleesi Termination Agreement, we regained all North American development and commercialization rights for Vyleesi.
Added
The increase in net revenue is a result of increased sales volume of 114% and reduced product sales allowances as a percentage of gross sales during fiscal 2023. Cost of Products Sold – Cost of products sold was $418,470 for fiscal 2023 compared to $217,529 for fiscal 2022.
Removed
AMAG made a $12,000,000 payment to us at closing and a $4,300,000 payment on March 31, 2021.
Added
Gain on Purchase Commitment - Gain on purchase commitments was $1,027,322 for fiscal 2023 as a result of the Company amending the minimum purchase commitment that was previously reserved under the Lonza Agreement. Other Income (Expense) – Total other income, net was $241,997 for fiscal 2023 compared to $390,149 for fiscal 2022.
Removed
We assumed all Vyleesi manufacturing agreements, for which we initially recorded a liability related to estimated losses of $18,194,000, as well as accrued expenses for an inventory production run, and AMAG transferred information, data, and assets related exclusively to Vyleesi, including, but not limited to, existing inventory.
Added
The increase in unrealized foreign currency loss is a result of increased unrealized foreign currency losses on our inventory purchase commitments. Income Tax Benefit – Income tax benefit for fiscal 2023 was $4,674,999 as a result of the Company selling New Jersey state net operating losses (“NOLs”) and R&D credits .
Removed
AMAG provided certain transitional services to us for a period of time to ensure continued patient access to Vyleesi during the transition back to us. We reimbursed AMAG for the costs of the transition services. During fiscal 2021, we recorded a loss of $2,784,192 as a result of the Vyleesi Termination Agreement.
Added
During fiscal 2023, net cash provided by financing activities was $9,896,246 which consisted of proceeds from the sale of common stock and warrants, net of issuance costs of $10,143,152 and the exercise of outstanding warrants of $78 offset by payment of withholding taxes related to restricted stock units of $146,062, and payment of finance lease obligations of $100,922.
Removed
(See Note 4 of the accompanying consolidated financial statements). Other Income (Expense) – Total other income, net was $390,149 for fiscal 2022 compared to total other expense, net of $212,394 for fiscal 2021. For fiscal 2022, we recognized unrealized foreign currency gain of $389,868 and investment income of $29,963 offset by $29,682 of income expense.
Removed
Liquidity and Capital Resources Since inception, we have generally incurred net operating losses, primarily related to spending on our research and development programs. We have financed our net operating losses primarily through debt and equity financings and amounts received under collaborative and license agreements.
Removed
During fiscal 2021, net cash used in financing activities was $93,638 which consisted of payment of withholding taxes related to restricted stock units. We had a net loss for fiscal 2022 of $36,198,299.

Other PTN 10-K year-over-year comparisons