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Year Ended June 30, 2023 Compared to the Year Ended June 30, 2022:
−Removed: Revenue – For the fiscal year ended June 30, 2022 (“fiscal 2022”) we recognized $1,218,457 of product revenue, net of allowances, as the result of our regaining all North American development and commercialization rights to Vyleesi in July 2020 and $250,000 in license and contract revenue pursuant to our license agreement with Fosun.
−Removed: For the fiscal year ended June 30, 2021 (“fiscal 2021”) we recognized $283,286 of negative product revenue, net of allowances and $94,689 in license and contract revenue pursuant to our license agreement with Kwangdong.
−Removed: The increase in net revenue is a result of increased sales volume of 22% and reduced product sales allowances during fiscal 2022.
+Added: 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.
+Added: 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.
+Added: The increase in net revenue is a result of increased sales volume of 114% and reduced product sales allowances as a percentage of gross sales during fiscal 2023.
Cost of Products Sold – Cost of products sold was $418,470 for fiscal 2023 compared to $217,529 for fiscal 2022.
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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.
−Removed: The increase in general research and development spending is primarily attributable to increased compensation costs due to an increase in the number of employees in fiscal 2022.
+Added: The increase in general research and development spending is primarily attributable to increased compensation costs.
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).
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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.
−Removed: The decrease is primarily attributable to $4,737,426 of selling expenses related to Vyleesi in fiscal 2022 compared to $6,605,901 of selling expenses related to Vyleesi in fiscal 2021 partially offset by $1,135,438 of expenses incurred in fiscal 2022 related to the issuance of redeemable convertible preferred stock and warrants.
−Removed: Loss on License Termination Agreement – On July 27, 2020, Palatin and AMAG announced that they had mutually terminated the license agreement for Vyleesi effective July 24, 2020 pursuant to a termination agreement (the “Vyleesi Termination Agreement”).
−Removed: Under the terms of the Vyleesi Termination Agreement, we regained all North American development and commercialization rights for Vyleesi.
−Removed: AMAG made a $12,000,000 payment to us at closing and a $4,300,000 payment on March 31, 2021.
−Removed: We assumed all Vyleesi manufacturing agreements, for which we initially recorded a liability related to estimated losses of $18,194,000, as well as accrued expenses for an inventory production run, and AMAG transferred information, data, and assets related exclusively to Vyleesi, including, but not limited to, existing inventory.
−Removed: AMAG provided certain transitional services to us for a period of time to ensure continued patient access to Vyleesi during the transition back to us.
−Removed: We reimbursed AMAG for the costs of the transition services.
−Removed: During fiscal 2021, we recorded a loss of $2,784,192 as a result of the Vyleesi Termination Agreement.
−Removed: (See Note 4 of the accompanying consolidated financial statements).
−Removed: Other Income (Expense) – Total other income, net was $390,149 for fiscal 2022 compared to total other expense, net of $212,394 for fiscal 2021.
−Removed: For fiscal 2022, we recognized unrealized foreign currency gain of $389,868 and investment income of $29,963 offset by $29,682 of income expense.
−Removed: For fiscal 2021, we recognized $212,526 of unrealized foreign currency loss and $23,440 of interest expense offset by $23,572 of investment income.
−Removed: The increase in unrealized foreign currency gain is a result of increased unrealized foreign currency gains on our inventory purchase commitments.
−Removed: Income Taxes – For fiscal 2022 and fiscal 2021, the Company recorded no income tax benefit or expense as a result of the generation of and utilization of net operating losses that were subject to a full valuation allowance.
−Removed: Effects of Inflation
−Removed: We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.
+Added: 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.
+Added: Gain on Purchase Commitment - Gain on purchase commitments was $1,027,322 for fiscal 2023 as a result of the Company amending the minimum purchase commitment that was previously reserved under the Lonza Agreement.
+Added: Other Income (Expense) – Total other income, net was $241,997 for fiscal 2023 compared to $390,149 for fiscal 2022.
+Added: 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.
+Added: 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.
+Added: The increase in investment income is a result of increased interest rates.
+Added: The increase in unrealized foreign currency loss is a result of increased unrealized foreign currency losses on our inventory purchase commitments.
+Added: 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 .
+Added: 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
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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.
−Removed: The difference in cash used in operations in fiscal 2022 compared with fiscal 2021 was primarily related to cash received related to the termination agreement for Vyleesi in fiscal 2021, partially offset by lower payments made related to inventory purchase commitments, an increase in accounts payable and accrued expenses, and other working capital changes.
−Removed: During fiscal 2022, net cash used in investing activities was $261,374 compared to $5,722 during fiscal 2021, which consisted of leasehold improvements and the acquisition of equipment.
−Removed: During fiscal 2022, net cash provided by financing activities was $18,358 which consisted of proceeds from the exercise of outstanding warrants of $280,000 and proceeds from exercise of stock options of $16,132 offset by payment of withholding taxes related to restricted stock units of $221,311, and payment of finance lease obligations of $56,463.
−Removed: During fiscal 2021, net cash used in financing activities was $93,638 which consisted of payment of withholding taxes related to restricted stock units.
+Added: 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.
+Added: 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.
+Added: During fiscal 2022, net cash used in investing activities was $261,374 which consisted of leasehold improvements.
+Added: During fiscal 2023, net cash provided by financing activities was $9,896,246 which consisted of proceeds from the sale of common stock and warrants, net of issuance costs of $10,143,152 and the exercise of outstanding warrants of $78 offset by payment of withholding taxes related to restricted stock units of $146,062, and payment of finance lease obligations of $100,922.
+Added: 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.
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.
−Removed: We expect to incur significant expenses as we continue to develop marketing and distribution capability for Vyleesi in the United States and continue to develop our MC1r MCr product candidates.
+Added: 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.
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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.
−Removed: As of June 30, 2022, our cash and cash equivalents were $29,939,154 with current liabilities of $16,259,864.
−Removed: Our long-term obligations include aggregate lease obligations of $521,337 for the year ending June 30, 2023, and $746,564 for the years ending June 30, 2024 and 2025, and aggregate inventory purchase commitments of $6,174,986 for the year ending June 30, 2023, of which $5,754,986 is included in current liabilities as of June 30, 2022 and $3,349,500 for the years ending June 30, 2024 through June 30, 2026.
+Added: As of June 30, 2023, our cash, cash equivalents and marketable securities were $10,982,472 with current liabilities of $15,131,830.
+Added: 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.
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.
−Removed: Based on our available cash and cash equivalents, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued.
+Added: 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.
We are evaluating strategies to obtain additional funding for future operations which include but are not limited to obtaining equity financing, issuing debt, or reducing planned expenses.
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If we are unable to raise capital when needed or enter into a strategic transaction, then we may be required to cease operations, which could cause our stockholders to lose all or part of their investment.
−Removed: Assuming no additional funding and based on our current operating and development plans, we expect that our existing cash and cash equivalents as of the date of this filing will be sufficient to enable the company to fund its operations into the second half of its fiscal year ending June 30, 2023.
+Added: 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.
We will need additional funding to complete required clinical trials for our product candidates and development programs and, if those clinical trials are successful (which we cannot predict), to complete submission of required regulatory applications to the FDA.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.