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What changed in PALATIN TECHNOLOGIES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PALATIN TECHNOLOGIES INC's 2023 and 2024 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 2024 report.

+240 added−252 removedSource: 10-K (2024-09-30) vs 10-K (2023-09-28)

Top changes in PALATIN TECHNOLOGIES INC's 2024 10-K

240 paragraphs added · 252 removed · 175 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

44 edited+29 added−38 removed108 unchanged
Biggest changeKey elements of our business strategy include: · Maximizing revenue from Vyleesi by marketing Vyleesi in the United States, supporting our existing licensees for China and Korea, and licensing Vyleesi for the United States and additional regions; · Maintaining a team to create, develop and commercialize MCr products addressing unmet medical needs; · Entering into strategic alliances and partnerships with pharmaceutical companies to facilitate the development, manufacture, marketing, sale, and distribution of product candidates that we are developing; · Partially funding our product development programs with the cash flow generated from Vyleesi and existing license agreements, as well as any future research, collaboration, or license agreements; and · Completing development and seeking regulatory approval of certain of our other product candidates. 1 Table of Contents Pipeline Overview The following chart illustrates the status of our drug development programs and Vyleesi, which has been approved by the FDA for the treatment of premenopausal women with acquired, generalized HSDD.
Biggest changeKey elements of our business strategy include: · Maintaining a team to create, develop and commercialize MCr products addressing unmet medical needs; · Entering into strategic alliances and partnerships with pharmaceutical companies to facilitate the development, manufacture, marketing, sale, and distribution of product candidates that we are developing; · Partially funding our product development programs with the cash flow generated from the sale of the Vyleesi product, including future milestone payments, as well as any future research, collaboration, or license agreements; and · Completing development and seeking regulatory approval of certain of our other product candidates. 6 Table of Contents Pipeline Overview The following chart illustrates the status of our drug development programs and Vyleesi, an FDA approved product for the treatment of premenopausal women with acquired, generalized HSDD acquired by Cosette in December, 2023. * These programs are planned but dependent on funding.
Proprietary Information. We rely on proprietary information, such as trade secrets and know-how, which is not patented. We have taken steps to protect our unpatented trade secrets and know-how, in part with confidentiality and intellectual property agreements with our employees, consultants and certain contractors.
We rely on proprietary information, such as trade secrets and know-how, which is not patented. We have taken steps to protect our unpatented trade secrets and know-how, in part with confidentiality and intellectual property agreements with our employees, consultants and certain contractors.
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.
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; 14 Table of Contents · 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.
Vyleesi and any other drug products manufactured or distributed by us pursuant to FDA approvals, as well as the materials and components used in our products, are subject to pervasive and continuing regulation by the FDA, including: · recordkeeping requirements; · periodic reporting requirements; · GMP requirements related to all stages of manufacturing, testing, storage, packaging, labeling and distribution of finished dosage forms of the product; · monitoring and reporting of adverse experiences with the product; and · advertising and promotional reporting requirements and restrictions.
Any drug products manufactured or distributed by us pursuant to FDA approvals, as well as the materials and components used in our products, are subject to pervasive and continuing regulation by the FDA, including: · recordkeeping requirements; · periodic reporting requirements; · GMP requirements related to all stages of manufacturing, testing, storage, packaging, labeling and distribution of finished dosage forms of the product; · monitoring and reporting of adverse experiences with the product; and · advertising and promotional reporting requirements and restrictions.
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.
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. 15 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 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.
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. 8 Table of Contents The pharmaceutical and biotechnology industries are characterized by extensive research efforts and rapid technological change.
Although we are not aware of any valid United States patents which are infringed by Vyleesi or our other product candidates, we cannot exclude the possibility that such patents might exist or arise in the future.
Although we are not aware of any valid United States patents which are infringed by our product candidates, we cannot exclude the possibility that such patents might exist or arise in the future.
In addition, approved products such as Vyleesi may eventually face competition from generic versions that will sell at significantly reduced prices, be preferred by managed care and health insurance payers, and be eligible for automatic pharmacy substitution even when a prescriber writes a prescription for our product.
In addition, approved products may eventually face competition from generic versions that will sell at significantly reduced prices, be preferred by managed care and health insurance payers, and be eligible for automatic pharmacy substitution even when a prescriber writes a prescription for our product.
The FDA and other government agencies have broad postmarket regulatory and enforcement powers, including the ability to levy civil and criminal penalties, suspend or delay issuance of approvals, seize or recall products and revoke approvals. Pharmaceutical manufacturers, distributors and their subcontractors are required to register their facilities with the FDA and state agencies.
The FDA and other government agencies have broad postmarket regulatory and enforcement powers, including the ability to levy civil and criminal penalties, suspend or delay issuance of approvals, seize or recall products and revoke approvals. 12 Table of Contents Pharmaceutical manufacturers, distributors and their subcontractors are required to register their facilities with the FDA and state agencies.
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. 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.
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. The study uses an adaptive design with an interim assessment by an independent drug monitoring committee after the initial 16 subjects have completed the 8-week evaluation visit. Diabetic Nephropathy Proof-of-Concept Study.
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.
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.
Foreign regulatory bodies also strictly enforce these and other regulatory requirements and drug marketing may be prohibited in whole or in part in other countries. We, our collaborators, licensees or third-party contract manufacturers may not be able to comply with the applicable regulations.
Foreign regulatory bodies also strictly enforce these and other regulatory requirements and drug marketing may be prohibited in whole or in part in other countries. 13 Table of Contents We, our collaborators, licensees or third-party contract manufacturers may not be able to comply with the applicable regulations.
If such patents are valid and we do not obtain a license under any such patents, or we are found liable for infringement, we may be liable for significant monetary damages, may encounter significant delays in bringing products to market, or may be precluded from participating in the manufacture, use or sale of products or methods of treatment covered by such patents.
If such patents are valid and we do not obtain a license under any such patents, or we are found liable for infringement, we may be liable for significant monetary damages, may encounter significant delays in bringing products to market, or may be precluded from participating in the manufacture, use or sale of products or methods of treatment covered by such patents. 10 Table of Contents Proprietary Information.
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 IND and initiating clinical studies. Ocular Research Programs.
Food and Drug Administration (“FDA”) approved melanocortin receptor agonist, Vyleesi® (bremelanotide injection), is an “as needed” therapy used in anticipation of sexual activity and self-administered in the thigh or abdomen via a single-use subcutaneous auto-injector by premenopausal women with hypoactive sexual desire disorder (“HSDD”).
Food and Drug Administration (“FDA”) approved melanocortin receptor agonist, Vyleesi, an “as needed” therapy used in anticipation of sexual activity and self-administered in the thigh or abdomen via a single-use subcutaneous auto-injector by premenopausal women with hypoactive sexual desire disorder (“HSDD”), was acquired by Cosette in December 2023.
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.
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 topline date is expected in the first half of calendar year 2025.
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.
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 been completed with positive top line results.
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.
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.
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.
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.
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.
Employees As of September 27, 2024, we employed 30 people full time, of whom 21 are engaged in research and development activities and 9 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.
We believe that our agonist peptides regulate certain inflammatory cytokines, and modulate the activities of immune cells, such as monocytes and T cells, to reduce immune response, and may utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses.
We believe that our agonist peptides regulate certain inflammatory cytokines, and modulate the activities of immune cells, such as monocytes and T cells, to reduce immune response, and may utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses. Bremelanotide Co-administration with Tirzepatide (a GLP-1 agonist) to Treat Obesity .
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”).
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.
There are no reported MC1r agonist drugs in clinical trials for inflammatory bowel diseases, including ulcerative colitis. If one or more of the competing products under development are approved and can effectively treat ulcerative colitis with an acceptable side effect profile, such products could reduce the market for oral PL8177 for inflammatory bowel diseases, including ulcerative colitis. Diabetic Retinopathy.
If one or more of the competing products under development are approved and can effectively treat ulcerative colitis with an acceptable side effect profile, such products could reduce the market for oral PL8177 for inflammatory bowel diseases, including ulcerative colitis. 9 Table of Contents Diabetic Retinopathy.
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.
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.
Most of the companies selling or developing competitive products have financial, technological, manufacturing and distribution resources significantly greater than ours and may represent significant competition for us.
Other companies may also introduce products using new technologies that may be competitive with our proposed products. Most of the companies selling or developing competitive products have financial, technological, manufacturing and distribution resources significantly greater than ours and may represent significant competition for us.
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.
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 cannot guarantee that we will be able to compete successfully in the future or that developments by others will not render our proposed products under development or any future product candidates obsolete or noncompetitive or that our collaborators or customers will not choose to use competing technologies or products. Vyleesi for Treatment of HSDD.
We cannot guarantee that we will be able to compete successfully in the future or that developments by others will not render our proposed products under development or any future product candidates obsolete or noncompetitive or that our collaborators or customers will not choose to use competing technologies or products. Bremelanotide Co-administration with Tirzepatide (a GLP-1 agonist) to Treat Obesity.
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 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.
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.
A melanocortin pan agonist is administered by subcutaneous injection to patients taking conventional renin-angiotensin-aldosterone system (“RAAS”) inhibitors. 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.
We do not have the facilities to manufacture any of our proposed products under GMP. We intend to rely on collaborators, licensees, or contract manufacturers for the commercial manufacture of our proposed products. Vyleesi is manufactured using contract manufacturing companies.
We do not have the facilities to manufacture any of our proposed products under GMP. We intend to rely on collaborators, licensees, or contract manufacturers for the commercial manufacture of our proposed products. Our MC1r and MCr agonist product candidates are synthetic peptides.
With our approach, we believe we are developing an advanced understanding of the factors which drive agonism. Competition General. Our products under development will compete on the basis of quality, performance, cost effectiveness and application suitability with numerous established products and technologies. We have many competitors, including pharmaceutical, biopharmaceutical and biotechnology companies.
Our products under development will compete on the basis of quality, performance, cost effectiveness and application suitability with numerous established products and technologies. We have many competitors, including pharmaceutical, biopharmaceutical and biotechnology companies. Furthermore, there are several well-established products in our target markets that we will have to compete against.
There are no reported MC1r agonist drugs in clinical trials for diabetic retinopathy.
There are no reported MC1r agonist drugs in clinical trials for inflammatory bowel diseases, including ulcerative colitis.
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.
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.
Modulation of these receptors, through use of receptor-specific agonists, which activate receptor function, or receptor-specific antagonists, which block receptor function, can have significant pharmacological effects. Our new product development activities in inflammation disease indications focus primarily on development of MCr peptides for ocular conditions, but also include conditions in the gut and kidney.
Our new product development activities in inflammation disease indications focus primarily on development of MCr peptides for ocular conditions, but also include conditions in the gut and kidney.
Third-Party Reimbursements Successful sales of our proposed products in the United States and other countries depend, in large part, on the availability of adequate reimbursement from third-party payers such as governmental entities, managed care organizations, health maintenance organizations (“HMOs”), and private insurance plans.
We cannot predict whether or when legislation or court decisions impacting our business will be enacted or issued, what FDA regulations, guidance or interpretations may change, or what the impact of such changes, if any, may be in the future. 16 Table of Contents Third-Party Reimbursements Successful sales of our proposed products in the United States and other countries depend, in large part, on the availability of adequate reimbursement from third-party payers such as governmental entities, managed care organizations, health maintenance organizations (“HMOs”), and private insurance plans.
Melanocortin Receptor Programs Our Current Product Development Strategy. We are designing and developing potent and highly selective MC1r agonist peptides and agonist peptides specific for more than one melanocortin receptor for treatment of a variety of inflammatory and autoimmune indications.
We believe that use of two active agents may result in increased efficacy and decreased side effects. We are designing and developing potent and highly selective MC1r agonist peptides and agonist peptides specific for more than one melanocortin receptor for treatment of a variety of inflammatory and autoimmune indications.
We rely on consultants and contractors to provide services for marketing and distribution of Vyleesi. We also rely on independent organizations, advisors, and consultants to provide services, including aspects of manufacturing, testing, preclinical evaluation, clinical management, regulatory strategy, and market research.
We rely on independent organizations, advisors, and consultants to provide services, including aspects of manufacturing, testing, preclinical evaluation, clinical management, regulatory strategy, and market research. Our independent advisors, contractors and consultants sign agreements that provide for confidentiality of our proprietary information and that we have the rights to any intellectual property developed while working for us.
Our corporate offices are located at 4B Cedar Brook Drive, Cranbury, New Jersey 08512 and our telephone number is (609) 495-2200.
Corporate Information We were incorporated under the laws of the State of Delaware on November 21, 1986 and commenced operations in the biopharmaceutical area in 1996. Our corporate offices are located at 4B Cedar Brook Drive, Cranbury, New Jersey 08512 and our telephone number is (609) 495-2200.
Violations of these laws and regulations can, in some cases, lead to invalidation of the tests, requiring such tests to be repeated and delaying approval of the NDA.
Preclinical safety tests must be conducted by laboratories that comply with FDA regulations regarding Good Laboratory Practices and the U.S. Department of Agriculture’s Animal Welfare Act. Violations of these laws and regulations can, in some cases, lead to invalidation of the tests, requiring such tests to be repeated and delaying approval of the NDA.
We believe that our MC1r agonist peptides have broad anti-inflammatory effects and utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses. We are also developing peptides that are active at more than one melanocortin receptor and small molecule MCr agonists. Our U.S.
Modulation of these receptors, through use of receptor-specific agonists, which activate receptor function, or receptor-specific antagonists, which block receptor function, can have significant pharmacological effects. We believe that our MC1r agonist peptides have broad anti-inflammatory effects and utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses.
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.
A Phase 2 proof-of-concept study is ongoing for diabetic nephropathy, with topline results expected in the fourth quarter of calendar year 2024. 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.
For combination products, CDER will consult with the Center for Devices and Radiological Health to ensure that the device components of the product meet all applicable device requirements. The research, development and approval process requires substantial time, effort and financial resources, and approvals may not be granted on a timely or commercially viable basis, if at all.
For combination products, CDER will consult with the Center for Devices and Radiological Health to ensure that the device components of the product meet all applicable device requirements.
Technologies We Use We used a rational drug design approach to discover and develop proprietary peptide, peptide mimetic and small molecule agonist compounds, focusing on the melanocortin receptor system. Computer-aided drug design models of receptors are optimized based on experimental results obtained with peptides and small molecules that we develop.
We are conducting research in several additional ocular areas, including both front of the eye and back of the eye indications, exploring use of our compounds to treat additional indications. Technologies We Use We used a rational drug design approach to discover and develop proprietary peptide, peptide mimetic and small molecule agonist compounds, focusing on the melanocortin receptor system.
Preclinical testing includes laboratory evaluations to characterize the product’s composition, impurities, stability, and mechanism of its pharmacologic effect, as well as animal studies to assess the potential safety and efficacy of each product. Preclinical safety tests must be conducted by laboratories that comply with FDA regulations regarding Good Laboratory Practices and the U.S. Department of Agriculture’s Animal Welfare Act.
The research, development and approval process requires substantial time, effort and financial resources, and approvals may not be granted on a timely or commercially viable basis, if at all. 11 Table of Contents Preclinical testing includes laboratory evaluations to characterize the product’s composition, impurities, stability, and mechanism of its pharmacologic effect, as well as animal studies to assess the potential safety and efficacy of each product.
Removed
We have conducted preclinical animal studies with MC1r selective and multiple MCr selective peptide drug candidates for selected inflammatory disease and autoimmune indications. MC1r selective agonists may have therapeutic benefit in many diseases, including inflammatory bowel disease and ocular indications such as uveitis, diabetic retinopathy, and dry eye disease.
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We are also developing peptides that are active at more than one melanocortin receptor and small molecule MCr agonists. Our primary focus is on the development of melanocortin receptor system treatments for obesity and for male sexual dysfunction.
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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.
Added
In the second quarter of calendar year 2024 we initiated a Phase 2 clinical study for the treatment of obesity with co-administration of the melanocortin agonist bremelanotide with tirzepatide, a GLP-1 (glucagon-like peptide-1) agonist, and plan to enroll up to 60 patients who are actively on tirzepatide with the primary endpoint of the trial to demonstrate safety and increased efficacy of co-administration of bremelanotide with tirzepatide in reducing body weight.
Removed
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.
Added
We have initiated a clinical program for the evaluation of bremelanotide co-formulated with a phosphodiesterase type 5 inhibitor (PDE5i) for the treatment of erectile dysfunction (ED) in patients that do not respond to PDE5i monotherapy.
Removed
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.
Added
A pharmacokinetics study is targeted for the first half of calendar year 2025, with a Phase 3 clinical trial in PDE5i non-responder ED patients expected to commence in the second half of calendar year 2025.
Removed
Our Phase 2 clinical trial demonstrated improvements in both the signs and symptoms of dry eye disease in moderate to severe patients after just two weeks of treatment, with no adverse safety signals and excellent tolerability.
Added
We are actively engaged in discussions with potential partners and licensees that have the financial and operational resources to progress our products for ocular conditions through development, approval and commercialization. Our U.S.
Removed
We held an end-of-Phase 2 meeting with the FDA in June 2021, which included all aspects of the PL9643 development plan, including study design, endpoints, interim assessment, and patient population for the Phase 3 program. If results of the MELODY-1 clinical trial are positive, we will initiate a second Phase 3 clinical trial. Oral PL8177 for Inflammatory Bowel Diseases.
Added
Melanocortin Receptor Programs Our Current Product Development Strategy.
Removed
We are conducting research in several additional ocular areas, including both front of the eye and back of the eye indications, exploring use of our compounds to treat additional indications. Vyleesi for HSDD. Vyleesi, the registered trademark for bremelanotide injection, was approved by the FDA on June 21, 2019 for the treatment of premenopausal women with acquired, generalized HSDD.
Added
We are developing products which incorporate a melanocortin agonist with another pharmaceutical agent, with an initial focus on an MC4r agonist plus a GLP-1 drug for use in obese patients, and on an MC4r agonist plus a PDE5i for use in treatment of erectile dysfunction in patients who do not respond to PDE5i monotherapy.
Removed
AMAG Pharmaceuticals, Inc. (“AMAG”), which had exclusively licensed Vyleesi for North America, initiated sales and marketing efforts for Vyleesi in the United States in August 2019, with a national launch in September 2019.
Added
In August 2024, we initiated patient dosing for a clinical trial to investigate the safety, tolerability and effectiveness of co-administration of bremelanotide with tirzepatide in treatment of obesity. Prior clinical studies have demonstrated the role of bremelanotide in the regulation of energy storage and food intake, resulting in weight loss.
Removed
In July 2020, Palatin and AMAG entered into a termination agreement, pursuant to which the license agreement was terminated, Palatin regained all North America rights for Vyleesi, and AMAG made a $12.0 million payment to Palatin at closing and a $4.3 million payment to Palatin in the first quarter of calendar year 2021.
Added
Full patient enrollment in this Phase 2 trial is excepted later in calendar year 2024, with topline date readout expected in the first half of calendar year 2025.
Removed
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.
Added
We are initiating Investigational New Drug (“IND”) enabling activities for a novel MC4r selective long-acting agonist later this year, and plan to file an IND in the second half of calendar year 2025. Bremelanotide Co-formulated with a PDE5i for the Treatment of ED in Patients Not Adequately Responsive to PDE5i Monotherapy.
Removed
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.
Added
We have co-formulated bremelanotide with a PDE5i drug and anticipate commencing a Phase 3 clinical study in PDE5i monotherapy non-responder ED patients in the second half of calendar year 2025.
Removed
There may be other companies developing new drugs for FSD indications other than HSDD, which may compete with Vyleesi, some of which may be in clinical trials in the U.S. or elsewhere. Vyleesi may also face competition with products prescribed “off-label” by healthcare providers.
Added
Prior clinical studies by Palatin have demonstrated the synergistic effects of combining bremelanotide with a PDE5i drug as a treatment for ED. 7 Table of Contents PL9643 for Dry Eye Disease and Anti-Inflammatory Ocular Indications.
Removed
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.
Added
PL9643 treatment demonstrated clinically meaningful (visual analog score reduction of >10 points from baseline) and statistically significant results for the co-primary symptom endpoint of pain (p Oral PL8177 for Inflammatory Bowel Diseases. PL8177, a selective MC1r agonist peptide, is our lead clinical development candidate for inflammatory bowel diseases, including ulcerative colitis.
Removed
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.
Added
Computer-aided drug design models of receptors are optimized based on experimental results obtained with peptides and small molecules that we develop. With our approach, we believe we are developing an advanced understanding of the factors which drive agonism. Competition General.
Removed
Our marketing strategy focuses on efforts to establish Vyleesi as the preferred option for women and healthcare providers seeking a treatment for HSDD, which we implement through media such as direct-to-consumer marketing in search and social media channels.
Added
A large number of companies are developing products and therapies to combat obesity and diabetes, including Novo Nordisk, Sanofi, Merck, Eli Lilly, Roche, Pfizer, Regeneron and Altimmune.
Removed
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.
Added
The recent extensive use of both Food and Drug Administration-approved and compounded versions of GLP-1 receptor agonist drug products, such as Wegovy and Ozempic (semaglutide) for the treatment of obesity, has significantly increased the competition in the obesity market.
Removed
In early September 2017, we entered into a license agreement with Fosun for exclusive rights to commercialize Vyleesi in China. We received an upfront payment of $5.0 million, less required tax withholding, and when regulatory approval for a Vyleesi product is obtained in China we will receive a $7.5 million milestone payment.
Added
There are other melanocortin agonists marketed in the United States, including Imcivree®, the melanocortin agonist setmelanotide, marketed by Rhythm Pharmaceuticals and which is indicated for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity.
Removed
We may receive up to $92.5 million in sales related milestones and will receive high-single digit to low double-digit royalties on net sales in China. In November 2017, we entered into a license agreement with Kwangdong for exclusive rights to commercialize Vyleesi in Korea, and received an upfront payment of $0.5 million, less required tax withholding.
Added
Many of our competitors and potential competitors have substantially greater financial, technological, research and development, marketing and personnel resources than we do. We cannot, with any accuracy, forecast when or if these companies are likely to bring their products and therapies to market in competition with those that we are pursuing.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
Biggest changeAs of September 27, 2024, holders of our outstanding dilutive securities had the right to acquire the following amounts of underlying common stock: · 5,333 shares issuable on the conversion of our immediately convertible Series A Preferred Stock, subject to adjustment, for no further consideration; · 2,249,102 shares issuable upon exercise of stock options with a weighted-average exercise price of $6.12 per share; · 859,613 shares issuable under restricted stock units which will vest on dates between June 22, 2025 and June 4, 2028, 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 of common stock issuable upon exercise of warrants at an exercise price of $12.50 per share, and expire on May 11, 2026; · 2,727,273 shares of common stock issuable upon exercise of Series A warrants at an exercise price of $1.88 per share, and expire on June 24, 2029; · 2,122,642 shares of common stock issuable upon exercise of Series B warrants at an exercise price of $1.88 per share. 498,441 Series B warrants expire June 24, 2024 and 1,624,201 Series B warrants are subject to stockholder approval and will expire on the five-year anniversary from the date of stockholder approval; · 1,831,503 shares of common stock issuable upon exercise of common warrants at an exercise price of $5.46 per share, and that expire on February 1, 2028; · 91,575 shares of common stock issuable upon exercise of the placement agent warrants issued to the placement agent or its designees as compensation in connection with the Company’s February 1, 2024 offering, with an exercise price of $6.825 per share, and an expiration date of February 1, 2028; · 90,909 shares of common stock issuable upon exercise of the placement agent warrants issued to the placement agent or its designees as compensation in connection with the Company’s October 2022 offering, with an exercise price of $6.875 per share, and an expiration date of October 31, 2027; · 943,396 shares issuable upon exercise of warrants issued in the Company’s October 2023 Offering, with an exercise price of $2.12 per share, and that expire on April 24, 2029; · 117,925 shares of common stock issuable upon exercise of the placement agent warrants issued to the placement agent or its designees as compensation in connection with the October 2023 Offering, with an exercise price of $2.65 per share, and an expiration date of October 20, 2028; and · 223,538 shares of common stock available for future issuance under our 2011 Stock Incentive Plan. 38 Table of Contents If the holders convert, exercise, or receive these securities, or similar dilutive securities we may issue in the future, stockholders may experience dilution in the net book value of their common stock.
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.
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; 20 Table of Contents · 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.
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.
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. 28 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.
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 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. 30 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.
Potential delaying events include: · discovery of serious or unexpected toxicities or side effects experienced by study participants or other safety issues; · slower than expected rates of subject recruitment and enrollment rates in clinical trials resulting from numerous factors, including the prevalence of other companies’ clinical trials for their product candidates for the same indication, or clinical trials for indications for which patients do not as commonly seek treatment; · difficulty in retaining subjects who have initiated a clinical trial but may withdraw at any time due to adverse side effects from the therapy, insufficient efficacy, fatigue with the clinical trial process or for any other reason; · difficulty in obtaining IRB approval for studies to be conducted at each site; · delays in manufacturing or obtaining, or inability to manufacture or obtain, sufficient quantities of materials for use in clinical trials; · inadequacy of or changes in our manufacturing process or the product formulation or method of delivery; · changes in applicable laws, regulations and regulatory policies; · delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective contract research organizations (“CROs”), clinical trial sites and other third-party contractors; · failure of our CROs or other third-party contractors to comply with contractual and regulatory requirements or to perform their services in a timely or acceptable manner; · failure by us, our employees, our CROs or their employees or any partner with which we may collaborate or their employees to comply with applicable FDA or other regulatory requirements relating to the conduct of clinical trials or the handling, storage, security and recordkeeping for drug, medical device and biologic products; · delays in the scheduling and performance by the FDA of required inspections of us, our CROs, our suppliers, or our clinical trial sites, and violations of law or regulations discovered in the course of FDA inspections; · scheduling conflicts with participating clinicians and clinical institutions; or · difficulty in maintaining contact with subjects during or after treatment, which may result in incomplete data.
Potential delaying events include: · discovery of serious or unexpected toxicities or side effects experienced by study participants or other safety issues; · slower than expected rates of subject recruitment and enrollment rates in clinical trials resulting from numerous factors, including the prevalence of other companies’ clinical trials for their product candidates for the same indication, or clinical trials for indications for which patients do not as commonly seek treatment; · difficulty in retaining subjects who have initiated a clinical trial but may withdraw at any time due to adverse side effects from the therapy, insufficient efficacy, fatigue with the clinical trial process or for any other reason; · difficulty in obtaining IRB approval for studies to be conducted at each site; · delays in manufacturing or obtaining, or inability to manufacture or obtain, sufficient quantities of materials for use in clinical trials; 23 Table of Contents · inadequacy of or changes in our manufacturing process or the product formulation or method of delivery; · changes in applicable laws, regulations and regulatory policies; · delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective contract research organizations (“CROs”), clinical trial sites and other third-party contractors; · failure of our CROs or other third-party contractors to comply with contractual and regulatory requirements or to perform their services in a timely or acceptable manner; · failure by us, our employees, our CROs or their employees or any partner with which we may collaborate or their employees to comply with applicable FDA or other regulatory requirements relating to the conduct of clinical trials or the handling, storage, security and recordkeeping for drug, medical device and biologic products; · delays in the scheduling and performance by the FDA of required inspections of us, our CROs, our suppliers, or our clinical trial sites, and violations of law or regulations discovered in the course of FDA inspections; · scheduling conflicts with participating clinicians and clinical institutions; or · difficulty in maintaining contact with subjects during or after treatment, which may result in incomplete data.
Our ability to execute our clinical programs for Vyleesi, PL8177, PL9643 and our other preclinical programs for MC1r and MC4r peptide or small molecule drug candidates depends on our continued retention and motivation of our management and senior staff professionals, including executive officers and senior members of product development and management, including commercialization, who possess significant technical expertise and experience and oversee our development and commercialization programs.
Our ability to execute our clinical programs for PL8177, PL9643 and our other preclinical programs for MC1r and MC4r peptide or small molecule drug candidates depends on our continued retention and motivation of our management and senior staff professionals, including executive officers and senior members of product development and management, including commercialization, who possess significant technical expertise and experience and oversee our development and commercialization programs.
Establishing relationships with new suppliers, who must be FDA-approved, is a time-consuming and costly process. If we are unable to establish sales and marketing capabilities within our organization or enter into and maintain agreements with third parties to market and sell Vyleesi and our product candidates, we may be unable to generate product revenue.
Establishing relationships with new suppliers, who must be FDA-approved, is a time-consuming and costly process. If we are unable to establish sales and marketing capabilities within our organization or enter into and maintain agreements with third parties to market and sell our product candidates, we may be unable to generate product revenue.
In addition, if we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenues are likely to be lower than if we could market and sell any products that we develop ourselves. We may need to hire additional employees in order to commercialize Vyleesi and our product candidates in the future.
In addition, if we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenues are likely to be lower than if we could market and sell any products that we develop ourselves. We may need to hire additional employees in order to commercialize our product candidates in the future.
Similarly, the inflammatory bowel disease and ulcerative colitis markets are highly competitive, with a number of marketed products and products reported to be in late-stage clinical trials. In general, the biopharmaceutical industry is highly competitive. We are likely to encounter significant competition with respect to Vyleesi, MC1r product candidates and MCr product candidates.
Similarly, the inflammatory bowel disease and ulcerative colitis markets are highly competitive, with a number of marketed products and products reported to be in late-stage clinical trials. In general, the biopharmaceutical industry is highly competitive. We are likely to encounter significant competition with respect to MC1r product candidates and MCr product candidates.
These include, but are not limited to: · publicity regarding actual or potential clinical results relating to products under development by our competitors or us; · delay or failure in initiating, completing or analyzing preclinical or clinical trials or unsatisfactory designs or results of these trials; · interim decisions by regulatory agencies, including the FDA, as to clinical trial designs, acceptable safety profiles and the benefit/risk ratio of products under development; · achievement or rejection of regulatory approvals by our competitors or by us; · announcements of technological innovations or new commercial products by our competitors or by us; · developments concerning proprietary rights, including patents; · developments concerning our collaborations; · regulatory developments in the United States and foreign countries; · economic or other crises and other external factors; · period-to-period fluctuations in our revenue and other results of operations; · changes in the structure of healthcare payment systems or other actions that affect the effective reimbursement rates for treatment regimens containing our products; · changes in financial estimates and recommendations by securities analysts following our business or our industry; · sales of our common stock, or the perception that such sales could occur; and · the other factors described in this “Risk Factors” section.
These include, but are not limited to: 35 Table of Contents · publicity regarding actual or potential clinical results relating to products under development by our competitors or us; · delay or failure in initiating, completing or analyzing preclinical or clinical trials or unsatisfactory designs or results of these trials; · interim decisions by regulatory agencies, including the FDA, as to clinical trial designs, acceptable safety profiles and the benefit/risk ratio of products under development; · achievement or rejection of regulatory approvals by our competitors or by us; · announcements of technological innovations or new commercial products by our competitors or by us; · developments concerning proprietary rights, including patents; · developments concerning our collaborations; · regulatory developments in the United States and foreign countries; · economic or other crises and other external factors; · period-to-period fluctuations in our revenue and other results of operations; · changes in the structure of healthcare payment systems or other actions that affect the effective reimbursement rates for treatment regimens containing our products; · changes in financial estimates and recommendations by securities analysts following our business or our industry; · sales of our common stock, or the perception that such sales could occur; and · the other factors described in this “Risk Factors” section.
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.
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. 24 Table of Contents If side effects emerge that can be linked to 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.
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.
The clinical and commercial success of Vyleesi by Cosette 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; · Cosette’s ability to successfully manufacture Vyleesi; · Cosette’s success in educating physicians and patients about the benefits, administration and use of Vyleesi for HSDD; 21 Table of Contents · 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; · Cosette’s 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 for 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 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.
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, 2024. The existence of a “going concern” conclusion may hinder our ability to obtain additional financing in the future.
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.
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.
If the NYSE American delists our securities for trading on its exchange, we could face significant material adverse consequences, including: · a limited availability of market quotations for our securities; · reduced liquidity with respect to our securities; · a determination that our shares of common stock are “penny stock” which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock; · a limited amount of news and analyst coverage for our company; and · a decreased ability to issue additional securities or obtain additional financing in the future.
If the NYSE American de-lists our securities for trading on its exchange, we could face significant material adverse consequences, including: · a limited availability of market quotations for our securities; · reduced liquidity with respect to our securities; · a determination that our shares of common stock are “penny stock” which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock; · a limited amount of news and analyst coverage for our company; and · a decreased ability to issue additional securities or obtain additional financing in the future.
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.
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. 31 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.
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.
As of September 27, 2024, 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.
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.
Our outstanding Series A Preferred Stock, consisting of 4,030 shares on September 27, 2024, 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 ability to successfully commercialize our products, including Vyleesi and our products in development, will depend, in significant part, on the extent to which we or our marketing partners can obtain reimbursement for our products and also reimbursement at appropriate levels for the cost of our products.
Our ability to successfully commercialize our products in development, will depend, in significant part, on the extent to which we or our marketing partners can obtain reimbursement for our products and also reimbursement at appropriate levels for the cost of our products.
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.
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.
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.
If we exercise this right, it could be more difficult for a third party to acquire a majority of our outstanding voting stock. 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 will need additional funding, including funding to complete clinical trials for our product candidates other than Vyleesi , which may not be available on acceptable terms, if at all. We intend to focus future efforts on our MC1r product candidates, primarily for ocular indications.
We will need additional funding, including funding to complete clinical trials for our product candidates other than Vyleesi , which may not be available on acceptable terms, if at all. We intend to focus future efforts on our bremelanotide combination products MC1r product candidates, primarily for ocular indications.
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.
We do not have the facilities to manufacture our early-stage potential products such as bremelanotide in combination with a PDE5i, bremelanotide in combination with tirzepatide, 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.
Any inability to manage future growth could harm our ability to commercialize Vyleesi and ultimately our product candidates, increase our costs and adversely impact our ability to compete effectively.
Any inability to manage future growth could harm our ability to commercialize our product candidates, increase our costs and adversely impact our ability to compete effectively.
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.
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.
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.
We may not achieve or sustain profitability in future years, depending on numerous factors, including whether and when development and product commercialization 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. 18 Table of Contents We expect to incur significant expenses as we continue our development of MC1r and MCr products.
If regulatory approval is delayed or never obtained, our business, financial condition and results of operations would be materially adversely affected. Some of our products or product candidates may be used in combination with a drug delivery device, such as an injector or other delivery system. Vyleesi is considered a drug-device combination product because of its injection delivery device.
If regulatory approval is delayed or never obtained, our business, financial condition and results of operations would be materially adversely affected. Some of our products or product candidates may be used in combination with a drug delivery device, such as an injector or other delivery system.
We will not have product revenue from our products in development unless and until we receive approval from the FDA or other equivalent regulatory authorities outside the United States, and to date the only approved product is Vyleesi in the United States. We have devoted substantially all of our efforts to research and development, including preclinical and clinical trials.
We will not have product revenue from our products in development unless and until we receive approval from the FDA or other equivalent regulatory authorities outside the United States. We have devoted substantially all of our efforts to research and development, including preclinical and clinical trials.
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.
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 $29.7 million for the year ended June 30, 2024.
Further, if we were no longer listed on the NYSE American, our common stock would not be covered securities and we would be subject to regulation in each state in which we offer our securities. Item 1B. Unresolved Staff Comments None.
Further, if we were no longer listed on the NYSE American, our common stock would not be deemed covered securities and we would be subject to regulation in each state in which we offer our securities. 39 Table of Contents Item 1B. Unresolved Staff Comments None.
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.
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. 29 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.
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.
We expect to incur substantial net losses over the next few years, and we may never achieve or maintain profitability. As of June 30, 2024, we had an accumulated deficit of $441.8 million.
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 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.
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.
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, 2024, there were 11,385,637 shares of common stock underlying outstanding convertible preferred stock, options, restricted stock units and warrants.
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.
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.
To commercialize Vyleesi and ultimately our product candidates, we will need to hire or contract with experienced sales and marketing personnel to sell and market those product candidates that we decide to commercialize, and we will need to expand the number of our managerial, operational, financial and other employees to support commercialization.
To commercialize our product candidates, we will need to hire or contract with experienced sales and marketing personnel to sell and market those product candidates that we decide to commercialize, and we will need to expand the number of our managerial, operational, financial and other employees to support commercialization. Competition exists for qualified personnel in the biopharmaceutical field.
Competitors may infringe our intellectual property, including our patents or the patents of our licensors. As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming.
As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming.
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.
Military conflict, such as the ongoing conflicts between Russia and Ukraine and between Israel and Hamas, may disrupt or otherwise adversely impact our operations and those of third parties upon which we rely.
While we cannot predict with certainty the impact the Leahy-Smith Act or any potential future changes to the U.S. or foreign patent systems will have on the operation of our business, the Leahy-Smith Act and such future changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, results of operations, financial condition and cash flows and future prospects.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, which could adversely affect our competitive position. 34 Table of Contents While we cannot predict with certainty the impact the Leahy-Smith Act or any potential future changes to the U.S. or foreign patent systems will have on the operation of our business, the Leahy-Smith Act and such future changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, results of operations, financial condition and cash flows and future prospects.
In addition, we have limited control over the resources that these contractors devote to our programs, and they may not assign as great a priority to our programs or pursue them as diligently as we would if we were undertaking such programs ourselves.
These outside contractors are not our employees and may terminate their engagements with us at any time. In addition, we have limited control over the resources that these contractors devote to our programs, and they may not assign as great a priority to our programs or pursue them as diligently as we would if we were undertaking such programs ourselves.
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.
Our future capital requirements depend on many factors, including: · 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. 19 Table of Contents We have a limited operating history upon which to base an investment decision.
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.
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.
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.
For the 12-month period ended June 30, 2024, the price of our stock has been volatile, ranging from a high of $5.65 per share to a low of $1.43 per share.
As a smaller company, it may be difficult for us to attract or retain the interest of equity research analysts. A lack of research coverage may adversely affect the liquidity of and market price of our common stock. We do not have any control of the equity research analysts or the content and opinions included in their reports.
A lack of research coverage may adversely affect the liquidity of and market price of our common stock. We do not have any control of the equity research analysts or the content and opinions included in their reports.
Even if we are successful, domestic, or foreign litigation or USPTO or foreign patent office proceedings may result in substantial costs and distraction to our management.
Litigation or USPTO proceedings brought by us may fail or may be invoked against us by third parties. Even if we are successful, domestic, or foreign litigation or USPTO or foreign patent office proceedings may result in substantial costs and distraction to our management.
The time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United States as well as other risks.
The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United States as well as other risks.
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.
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.
We rely on third parties and independent contractors, such as researchers at CROs and universities, in certain areas that are particularly relevant to our research and product development plans. We engage such researchers to conduct our preclinical studies, clinical trials and associated tests. These outside contractors are not our employees and may terminate their engagements with us at any time.
We have limited research and development staff. We rely on third parties and independent contractors, such as researchers at CROs and universities, in certain areas that are particularly relevant to our research and product development plans. We engage such researchers to conduct our preclinical studies, clinical trials and associated tests.
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.
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.
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.
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.
We have a limited operating history upon which to base an investment decision. Our operations are primarily focused on acquiring, developing and securing our proprietary technology, conducting preclinical and clinical studies and formulating and manufacturing, through contract manufacturers, our principal product candidates on a small-scale basis.
Our operations are primarily focused on acquiring, developing and securing our proprietary technology, conducting preclinical and clinical studies and formulating and manufacturing, through contract manufacturers, our principal product candidates on a small-scale basis. These operations provide a limited basis for stockholders to assess our ability to commercialize our product candidates.
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.
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.
As of June 30, 2023, we had cash, cash equivalents and marketable securities of $11.0 million, with current liabilities of $15.1 million.
As of June 30, 2024, we had cash, cash equivalents and marketable securities of $9.5 million, with current liabilities of $9.7 million.
The standards that the USPTO and foreign patent offices use to grant patents are not always applied predictably or uniformly and can change. Consequently, our pending patent applications may not be allowed and, if allowed, may not contain the type and extent of patent claims that will be adequate to conduct our business as planned.
Consequently, our pending patent applications may not be allowed and, if allowed, may not contain the type and extent of patent claims that will be adequate to conduct our business as planned.
We are authorized to issue up to 300,000,000 shares of common stock. To the extent that we sell or otherwise issue authorized but currently unissued shares, this could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock.
To the extent that we sell or otherwise issue authorized but currently unissued shares, this could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock. 37 Table of Contents Our charter authorizes us to issue up to 10,000,000 shares of preferred stock and to determine the terms of those shares of stock without any further action by our stockholders.
Although we currently meet the NYSE American’s listing standards, which generally mandate that we meet certain requirements relating to stockholders’ equity, market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure our investors that we will be able to continue to meet the NYSE American’s listing requirements.
As a result, we are subject to NYSE American’s listing standards, which generally mandate that we meet certain requirements relating to stockholders’ equity, market capitalization, aggregate market value of publicly held shares and distribution requirements.
Accordingly, we cannot assure investors that we will be able to generate sufficient revenue through direct sales of Vyleesi for HSDD in the United States and the license agreements with Fosun and Kwangdong, or through the sale of any future product candidate, to continue our business.
Accordingly, we cannot assure investors that we will be able to generate sufficient revenue through the sale of any future product candidate, to continue our business.
We must demonstrate that our product candidates are safe and effective for use in patients in order to receive regulatory approval for commercial sale. Preclinical studies in animals, using various doses and formulations, must be performed before we can begin human clinical trials. Even if we obtain favorable results in the preclinical studies, the results in humans may be different.
Preclinical studies in animals, using various doses and formulations, must be performed before we can begin human clinical trials. Even if we obtain favorable results in the preclinical studies, the results in humans may be different.
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.
We had $29.7 million in net loss for the year ended June 30, 2024, compared to $24.0 million in net loss for the year ended June 30, 2023.
Our product candidates, including PL9643 for dry eye disease and PL8177 for the treatment of ulcerative colitis, are at various stages of research and development, will require regulatory approval, and may never be successfully developed or commercialized. Our product candidates will require significant further research, development and testing before we can seek regulatory approval to market and sell them.
Our product candidates, including the combination products bremelanotide and a PDE5i agent and bremelanotide and tirzepatide or another GLP-1 agonist, PL9643 for dry eye disease, and PL8177 for the treatment of ulcerative colitis, are at various stages of research and development, will require regulatory approval, and may never be successfully developed or commercialized.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, or results of operations.
In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods.
Even if our product candidates receive regulatory approval in the United States, we may never receive approval or commercialize our products outside of the United States. In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy.
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.
We do not know whether or to what extent Cosette will meet milestone payment benchmarks. 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 by Cosette, as well as preclinical and clinical results with our future 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.
These expenses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity, total assets and working capital. We sold our Vyleesi product to Cosette in December 2023 and have the potential to receive milestone payments based on sales of Vyleesi by Cosette.
In addition, there is a risk that one or more of our current service providers, manufacturers, or other partners may be adversely impacted by deteriorating economic conditions, which could directly affect our ability to attain our operating goals and to accurately forecast and plan our future business activities.
In addition, there is a risk that one or more of our current service providers, manufacturers, or other partners may be adversely impacted by deteriorating economic conditions, which could directly affect our ability to attain our operating goals and to accurately forecast and plan our future business activities. 22 Table of Contents Our product candidates including our combination products for treatment of obesity and ED, as well as PL9643 for dry eye disease and PL8177 for the treatment of ulcerative colitis, are still in the early stages of development and remain subject to clinical testing and regulatory approval.
An adverse determination of any litigation or other proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
An adverse determination of any litigation or other proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing. 33 Table of Contents Interference, derivation, or other proceedings brought at the USPTO may be necessary to determine the priority or patentability of inventions with respect to our patent applications or those of our licensors or collaborators.
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.
We may seek to license, sell or otherwise dispose of our product candidates, technologies and contractual rights on the best possible terms available.
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.
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.
We rely on third parties over whom we have no control to conduct preclinical studies, clinical trials and other research for our product candidates and their failure to timely perform their obligations could significantly harm our product development. We have limited research and development staff.
In addition, academic institutions, hospitals, governmental agencies, and other public and private research organizations are also conducting research and may develop competing products or technologies on their own or through strategic alliances or collaborative arrangements. 25 Table of Contents We rely on third parties over whom we have no control to conduct preclinical studies, clinical trials and other research for our product candidates and their failure to timely perform their obligations could significantly harm our product development.
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.
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.
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.
Obtaining reimbursement from governmental payers, insurance companies, HMOs and other third-party payers of healthcare costs is a time-consuming and expensive process. 26 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.
For more information regarding government healthcare reform, see “U.S. Governmental Regulation of Pharmaceutical Products” in Part I, Item 1 of this Annual Report. Risks Related to Our Intellectual Property If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish.
Risks Related to Our Intellectual Property If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish.
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.
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. 27 Table of Contents We may use artificial intelligence in our business, and challenges with properly managing its use, as well as uncertainty regarding the legal landscape surrounding the use of artificial intelligence ("AI”) could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.
As a public company in the United States, we are subject to the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). We can provide no assurance that we will, at all times, in the future be able to report that our internal controls over financial reporting are effective.
As a public company in the United States, we are subject to the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).
We have registered or agreed to register for resale substantially all of the underlying shares listed above.
In addition, the sale or availability for sale of the underlying shares in the marketplace could depress our stock price. We have registered or agreed to register for resale substantially all of the underlying shares listed above. Holders of registered underlying shares could resell the shares immediately upon issuance, which could result in significant downward pressure on our stock price.
These competitive products or technologies may be more effective and useful or less costly than Vyleesi or our MC1r product candidates and MCr product candidates. In addition, academic institutions, hospitals, governmental agencies, and other public and private research organizations are also conducting research and may develop competing products or technologies on their own or through strategic alliances or collaborative arrangements.
These competitive products or technologies may be more effective and useful or less costly than Vyleesi or our MC1r product candidates and MCr product candidates.
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.
As a result, our share price would likely decline significantly, and we would have difficulty raising necessary capital for future projects. Ongoing military conflict 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.
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.
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.
Moreover, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.
Moreover, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. 32 Table of Contents Legally mandated price controls on payment amounts by governmental and private third-party payers or other restrictions could harm our business, results of operations, financial condition, and prospects.
Risks Related to Our Business, Strategy, and Industry The commercial success of Vyleesi for HSDD is a component of our corporate strategy, but we and our licensees may never successfully commercialize Vyleesi for HSDD or obtain approvals in countries other than the United States.
Risks Related to Our Business, Strategy, and Industry The commercial success of Vyleesi for HSDD is a component of our corporate strategy, but we may not receive significant milestone payments under our purchase agreement with Cosette. In December 2023 we sold Vyleesi to Cosette under a purchase agreement providing for contingent, sales-base milestone payments of up to $159 million.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe 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.
Biggest changeThe corporate offices include private offices, meeting rooms and workspaces 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. Item 4.
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.
Removed
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 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.
Biggest changeIt previously traded on The Nasdaq SmallCap Market under the symbol “PLTN.” On September 27, 2024 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 $0.84 per share.
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 .
There were no shares withheld during the quarter ended June 30, 2024, 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 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.
Our outstanding Series A Preferred Stock, consisting of 4,030 shares on September 27, 2024, 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 $16,879,088. 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 $16,051,587. 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 changeThe 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 .
Biggest changeIncome 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 . 43 Table of Contents Effects 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.
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.
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 2025 and beyond.
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.
Based on our June 30, 2024, 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.
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.
We had a net loss for fiscal 2024 of $29,736,113. 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.
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).
Cumulative spending from inception to June 30, 2024 was approximately $311,900,000 on our Vyleesi program and approximately $234,000,000 on all our other programs (which include PL8177, PL9643, other melanocortin receptor agonists and terminated programs).
Trade accounts receivable due to us from contracts with our customers are stated separately in the consolidated balance sheet, net of various allowances as described in the Trade Accounts Receivable policy in Note 2- Summary of Significant Accounting Policies in the accompanying consolidated financial statements. Product revenues consist of sales of Vyleesi in the United States.
Trade accounts receivable due to us from contracts with our customers are stated separately in the consolidated balance sheet, net of various allowances as described in the Trade Accounts Receivable policy in Note 2- Summary of Significant Accounting Policies in the accompanying consolidated financial statements.
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.
During fiscal 2023, net cash provided by financing activities was $10,748,591 which consisted of proceeds from the sale of common stock and warrants, net of issuance costs of $10,995,497 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.
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.
The amounts of program spending above exclude general research and development spending, which were $6,888,233 for fiscal 2024 compared to $6,428,145 for fiscal 2023. The increase in general research and development spending is primarily attributable to increased compensation costs.
You are urged to carefully review our description and examples of forward-looking statements included earlier in this Annual Report immediately prior to Part I, under the heading “Forward-Looking Statements.” Forward-looking statements are subject to risk that could cause actual results to differ materially from those expressed in the forward-looking statements.
You are urged to carefully review our description and examples of forward-looking statements included earlier in this Annual Report on Form 10-K (this “Annual Report”) immediately prior to Part I, under the heading “Special Note Regarding Forward-Looking Statements.” Forward-looking statements are subject to risk that could cause actual results to differ materially from those expressed in the forward-looking statements.
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.
During fiscal 2023, net cash used in investing activities was $3,426,757 which consisted of $2,992,830 used for the purchase of marketable securities and $433,927 of leasehold improvements.
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.
We expect to incur significant expenses as we 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.
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.
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.
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.
Selling, General and Administrative – Selling, general and administrative expenses, which consist of costs related to Vyleesi in addition to compensation and related costs, were $12,270,046 for fiscal 2024, compared to $15,290,836 for fiscal 2023.
We intend to utilize existing capital resources for general corporate purposes and working capital, including establishing marketing and distribution capabilities for Vyleesi in the United States and preclinical and clinical development of our MC1r and MC4r programs, and development of other portfolio products.
We intend to utilize existing capital resources for general corporate purposes and working capital, including preclinical and clinical development of our MC1r and MC4r programs, and development of other portfolio products.
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.
Research and development expenses related to our Vyleesi, MCr programs, and other preclinical programs were $15,512,149 for fiscal 2024 compared to $16,202,432 for fiscal 2023. The decrease is primarily related to a decrease in spending on our MCr programs.
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.
Any of these possibilities could materially and adversely affect our operations and require us to curtail or cease certain programs. During fiscal 2024, net cash used in operating activities was $31,461,441 compared to net cash used in operating activities of $29,271,346 in fiscal 2023.
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.
Research and Development – Total research and development expenses, including general research and development spending, were $22,400,372 for fiscal 2024 compared to $22,630,577 for fiscal 2023. The decrease is a result of lower spending on our MCr programs.
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.
Based on our current existing cash and cash equivalents as of the date of this filing will be sufficient to fund currently anticipated operating expenses through the second half of calendar year 2024.
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.
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.
Per our contracts with customers, control of the product is transferred upon the conveyance of title, which occurs when the product is sold to and received by a customer.
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. Per our contracts with customers, control of the product is transferred upon the conveyance of title, which occurs when the product is sold to and received by a customer.
Purchase Commitment Liabilities Losses on firm commitment contractual obligations are recognized based upon the terms of the respective agreement and similar factors considered for the write-down of inventory, including expected sales requirements as determined by internal sales forecasts. Accrued Expenses Third parties perform a significant portion of our development activities.
Product sales are also subject to return rights, which have not been significant to date. Purchase Commitment Liabilities Losses on firm commitment contractual obligations are recognized based upon the terms of the respective agreement and similar factors considered for the write-down of inventory, including expected sales requirements as determined by internal sales forecasts.
We review the activities performed under all contracts each quarter and accrue expenses and the amount of any reimbursement to be received from our collaborators based upon the estimated amount of work completed considering milestones achieved. Estimating the value or stage of completion of certain services requires judgment based on available information.
Accrued Expenses Third parties perform a significant portion of our development activities. We review the activities performed under all contracts each quarter and accrue expenses and the amount of any reimbursement to be received from our collaborators based upon the estimated amount of work completed considering milestones achieved.
If we do not identify services performed for us but not billed by the service-provider, or if we underestimate or overestimate the value of services performed as of a given date, reported expenses will be understated or overstated. Stock-Based Compensation We expense the fair value of stock options and other equity awards granted to employees and nonemployees for services.
Estimating the value or stage of completion of certain services requires judgment based on available information. If we do not identify services performed for us but not billed by the service-provider, or if we underestimate or overestimate the value of services performed as of a given date, reported expenses will be understated or overstated.
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.
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.
Compensation expense is not adjusted for subsequent changes in the estimates used to calculate fair value or for actual experience. Forfeitures are recognized as they occur. As the amount and timing of compensation expense to be recorded in future periods may be affected by the achievement of performance conditions and employee terminations, stock-based compensation may vary significantly period to period.
Compensation expense is not adjusted for subsequent changes in the estimates used to calculate fair value or for actual experience. Forfeitures are recognized as they occur.
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.
The decrease is primarily attributable to $1,912,243 of selling expenses related to Vyleesi in fiscal 2024 compared to $4,621,001 of selling expenses related to Vyleesi in fiscal 2023.
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.
During fiscal 2024, net cash provided by financing activities was $20,548,891 which consisted of proceeds from the sale of common stock and warrants, net of issuance costs of $14,693,779 and the exercise of outstanding warrants of $6,045,642 offset by payment of withholding taxes related to restricted stock units of $56,401, and payment of finance lease obligations of $106,392.
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.
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. The decrease in net revenue is a result of the sale of Vyleesi’s worldwide rights to Cosette during fiscal 2024.
Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 2 to the consolidated financial statements included in this Annual Report. We believe that our accounting policies and estimates relating to revenue recognition, the carrying value of inventory, purchase commitment liabilities, accrued expenses, and stock-based compensation are the most critical .
We believe that our accounting policies and estimates relating to revenue recognition, the carrying value of inventory, purchase commitment liabilities, accrued expenses, and stock-based compensation are the most critical . Revenue Recognition (Prior to the sale of Vyleesi) We recognize product revenues in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers .
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.
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 complete our planned product development efforts. Continued operations are dependent upon existing licenses, including royalties and milestones, to complete equity or debt financing activities and enter into additional licensing or collaboration arrangements.
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.
The increase in cash used in operations in fiscal 2024 compared with fiscal 2023 was a result of a higher net loss in fiscal 2023 due to a change in fair value off warrant liabilities, offset by the gain on the sale of Vyleesi and working capital changes.
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.
For fiscal 2023, we recognized a decrease in the fair value of warrant liabilities of $4,620,911 and investment income of $691,981 offset by $1,115,765 of offering expenses, $429,971 of unrealized foreign currency loss and $20,013 of interest expense.
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.
As of June 30, 2024, our cash, cash equivalents and marketable securities were $9,527,396 with current liabilities of $9,657,681. 44 Table of Contents Our obligations include aggregate lease obligations of $426,556 for the year ending June 30, 2025 and $163,782 for the years ending June 30, 2026 and 2027, and aggregate inventory purchase commitments of $1,976,450 which include $944,150 in current liabilities as of June 30, 2024 and $1,032,300 included in other long-term liabilities.
If any of our judgments made during a reporting period are not indicative or accurate estimates of our future experience, our results could be materially affected. Product sales are also subject to return rights, which have not been significant to date.
Certain of these allowances represent estimates of the related obligations and, as such, knowledge and judgement are required when estimating the impact of these allowances on gross product sales for a reporting period. If any of our judgments made during a reporting period are not indicative or accurate estimates of our future experience, our results could be materially affected.
We sell Vyleesi to a specialty pharmacy at the wholesale acquisition cost and payment is currently made within approximately 30 days. In addition to distribution agreements with customers, we enter into arrangements with healthcare payers that provide for privately negotiated rebates, chargebacks, and discounts with respect to the purchase of our products.
In addition to distribution agreements with customers, we had entered into arrangements with healthcare payers that provide for privately negotiated rebates, chargebacks, and discounts with respect to the purchase of our products. We recorded product revenues net of allowances for direct and indirect fees, discounts, co-pay assistance programs, estimated chargebacks, and rebates.
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.
Cost of Products Sold – Cost of products sold was $97,637 for fiscal 2024 compared to $418,470 for fiscal 2023. The decrease in cost of products sold is a result of the sale of Vyleesi’s worldwide rights to Cosette during fiscal 2024.
Effects 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.
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.
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.
Results of Operations Year Ended June 30, 2024 Compared to the Year Ended June 30, 2023: Revenue – For the fiscal year ended June 30, 2024 (“fiscal 2024”) we recognized $4,490,090 of product revenue, net of allowances.
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Revenue Recognition We recognize product revenues in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers .
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Introduction Palatin Technologies, Inc. is a biopharmaceutical company developing first-in-class medicines based on molecules that modulate the activity of the melanocortin receptor system. The Company’s product candidates are targeted, receptor-specific therapeutics for the treatment of diseases with significant unmet medical need and commercial potential. Our prior commercial product, Vyleesi®, was approved by the U.S.
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We record product revenues net of allowances for direct and indirect fees, discounts, co-pay assistance programs, estimated chargebacks, and rebates. Certain of these allowances represent estimates of the related obligations and, as such, knowledge and judgement are required when estimating the impact of these allowances on gross product sales for a reporting period.
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Food and Drug Administration (“FDA”) in June 2019 for the treatment of hypoactive sexual desire disorder (“HSDD”) in premenopausal women. This product was acquired by Cosette Pharmaceuticals, Inc. (“Cosette”) on December 19, 2023.
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Inventories Inventory is stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis. Our inventory, consisting of Vyleesi, has a shelf-life of three years from the date of manufacture. On a quarterly basis, we review inventory levels to determine whether any obsolete, expired, or excess inventory exists.
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Our new product development activities focus primarily on use of bremelanotide, or other MC4r agonists, with tirzepatide, a GLP-1 agonist for treatment of obesity, which entered Phase 2 in the second quarter of calendar year 2024, and a co-formulation of bremelanotide with a PDE5i for treatment of erectile dysfunction in patients that do not respond to PDE5i monotherapy.
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If any inventory is expected to expire prior to being sold, has a cost basis in excess of its net realizable value, is in excess of expected sales requirements as determined by internal sales forecasts, or fails to meet commercial sale specifications, the inventory is written down through a charge to operating expense.
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We are also developing MC1r agonists, with potential to treat inflammatory and autoimmune diseases, such as dry eye disease, uveitis, diabetic retinopathy, and inflammatory bowel disease. 41 Table of Contents Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 2 to the consolidated financial statements included in this Annual Report.
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This analysis requires us to make estimates of forecasted future sales, which are inherently uncertain, and changes in demand, insurance coverages, economic conditions, and other factors could have a significant impact on our forecasts and therefore the estimated net realizable value of our inventory.
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Product revenues consisted of sales of Vyleesi in the United States prior to the sale of the Vyleesi product line to Cosette Pharmaceuticals, Inc. (“Cosette”) in December 2023. Prior to the sale of Vyleesi product line, we sold Vyleesi to a specialty pharmacy at the wholesale acquisition cost with payment made within approximately 30 days.
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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.
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Stock-Based Compensation We expense the fair value of stock options and other equity awards granted to employees and nonemployees for services.
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As the amount and timing of compensation expense to be recorded in future periods may be affected by the achievement of performance conditions and employee terminations, stock-based compensation may vary significantly period to period. 42 Table of Contents See Note 3 to the consolidated financial statements included in this Annual Report for a description of recent accounting pronouncements that affect us.
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Gain on Sale of Vyleesi – On December 19, 2023, the Company entered into an asset purchase agreement (the “Cosette Purchase Agreement”) with Cosette pursuant to which Cosette acquired from the Company worldwide rights to Vyleesi.
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As a result of the transaction, the Company recorded a gain of $7,781,844 on the sale of Vyleesi for the year ended June 30, 2024. The gain represents the upfront purchase price of $9,500,000 less the cost of net assets transferred to the purchaser.
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Other Income (Expense) – Total other income (expense), net was ($7,239,992) for fiscal 2024 compared to $3,747,143 for fiscal 2023. For fiscal 2024, we recognized an increase in the fair value of warrant liabilities of $6,962,562, offering expense of $696,912 and interest expense of $17,114 offset by investment income of $376,843 and unrealized foreign currency gain of $59,753.
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During fiscal 2024, net cash provided by investing activities was $12,450,364 which consisted of $9,500,000 related to proceeds from the sale of Vyleesi and $2,992,890 for the maturity of marketable securities offset by $42,526 used for the purchases of property and equipment.

Other PTN 10-K year-over-year comparisons