What changed in this filing

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Item 1. Business

2024-09-30 compared with 2023-09-28 · 50 added, 76 removed, 312 unchanged (29% of the section changed)

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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.

Utilizing peptides which are agonists at MC1r, and in some instances agonists at additional melanocortin receptors, we are developing products to treat inflammatory and autoimmune diseases such as dry eye disease (also known as keratoconjunctivitis sicca), uveitis, diabetic retinopathy, and inflammatory bowel disease.

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.

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”).

Our primary focus is on the development of melanocortin receptor system treatments for obesity and for male sexual dysfunction.

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.

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.

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.

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.

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.

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.

Vyleesi is the first FDA-approved melanocortin agent and the first and only FDA-approved as-needed treatment for premenopausal women with HSDD.

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Key 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;

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;

Completing development and seeking regulatory approval of certain of our other product candidates.

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.

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.

Melanocortin Receptor Programs

Our Current Product Development Strategy.

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.

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 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 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.

Evaluation of MCr agonists in rodent animal models have demonstrated therapeutic responses that are statistically significant compared to placebo, and that are equal to or superior to established positive controls.

However, success in animal models does not necessarily mean that any of our drug candidates will be able to successfully treat diseases in human patients.

Bremelanotide Co-administration with Tirzepatide (a GLP-1 agonist) to Treat Obesity .

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.

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.

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.

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.

Prior clinical studies by Palatin have demonstrated the synergistic effects of combining bremelanotide with a PDE5i drug as a treatment for ED.

PL9643 for Dry Eye Disease and Anti-Inflammatory Ocular Indications.

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It is estimated to affect over 30 million people in the United States.

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.

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.

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.

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.

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<0.025) and multiple other symptom endpoints.

PL9643 treatment for the co-primary sign endpoint and secondary sign endpoints demonstrated positive treatment effects over vehicle in the ITT population but did not achieve statistical significance.

We concluded a positive Type C meeting with the FDA, confirming the acceptability of protocols and endpoints for signs and symptoms of PL9643 Phase 3 pivotal clinical trials for DED.

The remaining Phase 3 clinical trial program consists of two Phase 3 studies, MELODY-2 and MELODY-3, and include sign and symptom endpoints in each study.

Oral PL8177 for Inflammatory Bowel Diseases.

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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.

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.

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.

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.

A Phase 2 proof-of-concept study is currently enrolling patients in a study for diabetic nephropathy.

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.

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We are working on a formulation for intravitreal and subcutaneous administration.

If results support advancing the program, we will conduct required safety studies and manufacture drug product under Good Manufacturing Practices (“GMP”) regulations needed to file an Investigational New Drug application (“IND”) and initiating clinical studies.

Ocular Research Programs.

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.

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.

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.

Palatin assumed Vyleesi manufacturing agreements, and AMAG transferred information, data and assets related exclusively to Vyleesi, including existing inventory.

Vyleesi faces competition primarily from Addyi® (flibanserin), which was introduced into the market in October 2015 for the treatment of HSDD in pre-menopausal women and is marketed by Sprout Pharmaceuticals, Inc.

We are not aware of any company actively developing another melanocortin receptor agonist drug for the treatment of HSDD.

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.

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.

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.

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.

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.

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.

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.

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.

Upon the first commercial sale of Vyleesi in Korea we will receive a $3.0 million milestone payment and will receive mid-single digit to low double-digit royalties on all net sales and may receive up to $37.5 million in sales related milestones.

We retain worldwide rights for Vyleesi for HSDD and all other indications outside Korea and China.

We are actively seeking potential partners for marketing and commercialization rights for Vyleesi for HSDD outside the licensed territories, including entering into a license agreement for marketing and commercialization rights for Vyleesi in the United States.

However, we may not be able to enter into suitable agreements with potential partners on acceptable terms, if at all.

The most common adverse events which may occur with first-time use of Vyleesi are nausea, flushing, injection site reactions, headache, and vomiting.

Vyleesi is contraindicated in women with uncontrolled hypertension or known cardiovascular disease.

In addition, the Vyleesi label includes precautions that it may cause (i) small, transient increases in blood pressure with a corresponding decrease in heart rate;

(ii) focal hyperpigmentation (darkening of the skin on certain parts of the body), including the face, gums (gingiva) and breasts;

and (iii) nausea.

Technologies We Use

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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.

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 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.

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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.

There is competition and financial incentive to develop, market and sell drugs for the treatment of HSDD and other forms of FSD.

Flibanserin, sold under the trade name Addyi, is the only drug other than Vyleesi currently approved in the United States for treatment of HSDD.

Flibanserin, a non-hormonal oral serotonin 5-HT1A agonist, 5-HT2A antagonist, which requires chronic dosing, was approved by the FDA on August 18, 2015 for treatment of premenopausal women with HSDD.

The FDA approval included a risk evaluation and mitigation strategy (“REMS”) because of the increased risk of severe hypotension and syncope due to the interaction between flibanserin and alcohol, and a Boxed Warning to highlight the risks of severe hypotension and syncope in patients who drink alcohol during treatment with flibanserin, in those who also use moderate or strong CYP3A4 inhibitors, and in those who have liver impairment.

The Boxed Warning was modified by FDA in April 2019 to clarify that there remains a concern about consuming alcohol close in time to taking flibanserin, but that alcohol does not have to be avoided completely.

Specifically, the Boxed Warning reflects women should discontinue drinking alcohol at least two hours before taking flibanserin at bedtime, or to skip the flibanserin dose that evening.

We are aware of several other drugs at various stages of development, most of which are taken on a chronic, typically once-daily, basis.

There are other companies reported to be developing new drugs for FSD indications, some of which may be in clinical trials in the United States or elsewhere.

We are not aware of any other company actively developing a melanocortin receptor agonist drug for HSDD.

Bremelanotide Co-administration with Tirzepatide (a GLP-1 agonist) to Treat Obesity.

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.

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.

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.

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.

Bremelanotide Co-formulated with a PDE5i for the Treatment of Erectile Dysfunction (“ED”) in Patients Not Adequately Responsive to PDE5i Monotherapy.

PDE5i drugs, including sildenafil (Viagra®), tadalafil (Cialis®), vardenafil (Levitra®), and avanafil (Stendra®), are clinically indicated for the treatment of erectile dysfunction and are widely used throughout the world.

Other therapies, including various devices and drugs, are in development.

There are other melanocortin agonists marketed in the United States, including Imcivree®, the melanocortin agonist setmelanotide, marketed by Rhythm Pharmaceutical for chronic weight management.

While competitors and potential competitors in treatment of refractory erectile dysfunction have substantially greater financial, technological, research and development, marketing and personnel resources than we do, there are no disclosed co-formulations of a melanocortin receptor 4 agonist and a PDE5i drug.

PL9643 for Anti-Inflammatory Ocular Indications.

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We seek patent protection for our technologies and products in the United States and those foreign countries where we believe patent protection is commercially important.

We own four issued United States patents and pending patent applications in the United States for methods of treating FSD with Vyleesi, with related patents issued or pending in selected countries in Europe and Asia and in Australia and New Zealand.

We do not know the full scope of patent coverage we will obtain, or whether any patents will issue other than the patents already issued.

Issued patents and pending applications in the United States and elsewhere in the world have a presumptive term, if a patent is issued, until 2033.

We own two issued United States patents claiming the Vyleesi drug substance.

One patent has expired, and the other patent, which would have otherwise expired in 2020, has been granted a five-year extension, the maximum period as compensation for patent term lost during drug development and the FDA regulatory review process, pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments.

This patent now expires on June 28, 2025.

In addition, the claims of the outstanding patent covering Vyleesi may not provide meaningful protection.

Further, third parties may challenge the validity or scope of any issued patent, and under the Hatch-Waxman Amendments, potentially receive approval of a competing generic version of our product or products even before a court rules on the validity or infringement of our patents.

We have filed patent applications under the Patent Cooperation Treaty claiming PL9643 and other peptides in development for ocular and inflammatory disease indications and have entered national stage prosecution in the United States, European Patent Office, Eurasian Patent Office, and broadly throughout the world.

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We do not know for certain that our commercial activities will not infringe upon patents or patent applications of third parties, some of which may not even have been issued.

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.

We may be unable to avoid infringement of any such patents and may have to seek a license, defend an infringement action, or challenge the validity of such patents in court.

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Postmarketing Regulation.

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:

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;

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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.

Pursuant to the termination of the license agreement with AMAG, we have assumed contracts relating to manufacturing, and manufacture Vyleesi for sales in the United States and to our licensees.

Our MC1r and MCr agonist product candidates are synthetic peptides.

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We have liability insurance providing $10 million coverage in the aggregate as to certain product liability and commercialization risks and certain clinical trial risks.

Climate Change Related Regulation

Our operations are focused on research and development of pharmaceutical products, and a significant portion of this research and development is conducted outside our facilities, including by outsourced contract research organizations or universities conduct research and studies at multiple sites.

We do not anticipate any regulation regarding climate change to impact our operations.

There is the potential for more frequent and severe weather events that may impact the facilities of our contractors and suppliers.

We cannot provide assurance that physical risks to the facilities of our contractors, suppliers and supply chain due to climate change will not occur in the future, but do not believe these potential risks are material to our operations at this time.

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.

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We rely on contractors and scientific consultants to work on specific research and development programs.

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.

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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.

What changed 10-K

Item 1. Business