What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-09-30 compared with 2023-09-28 · 75 added, 89 removed, 532 unchanged (24% of the section changed)

12 unchanged sentences

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.

We may not achieve or sustain profitability in future years, depending on numerous factors, including profitability of Vyleesi, whether and when development and sales milestones are met, whether and when we enter into license agreements for any of our products under development, regulatory actions by the FDA and other regulatory bodies, the performance of our licensees, and market acceptance of our products.

We may not achieve or sustain profitability in future years, depending on numerous factors, including 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.

We expect to incur significant expenses as we continue our development of MC1r and MCr products.

These expenses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity, total assets and working capital.

Until we commenced selling Vyleesi in July 2020 upon termination of our license agreement with AMAG, we had not had any product available for commercial sale since 2005 and we have not received any revenues from the sale of our product candidates.

Because our marketing program for Vyleesi is limited and relatively new we cannot accurately forecast sales of Vyleesi.

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.

However, we do not anticipate receiving significant milestone payments for at least the next year from the issuance of this Annual Report and may never receive significant milestone payments.

For the foreseeable future, we will have to fund our operations and capital expenditures from license, royalty and contract revenue under license agreements, existing cash balances and outside sources of financing, which may not be available on acceptable terms, if at all.

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 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.

1 unchanged sentence

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 intend to focus future efforts on our bremelanotide combination products MC1r product candidates, primarily for ocular indications.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $9.5 million, with current liabilities of $9.7 million.

Based on our available cash, cash equivalents and marketable securities, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued and we are seeking additional funding to complete development activities and required clinical trials for our MC1r product candidates and, if those clinical trials are successful (which we cannot predict), to complete submission of required regulatory applications to the FDA.

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.

5 unchanged sentences

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;

47 unchanged sentences

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.

We invested most of our efforts and financial resources in the research and development of Vyleesi for HSDD until it was approved by the FDA in June 2019.

Since July 24, 2020, the effective date of the termination of our license agreement with AMAG for Vyleesi, we have been responsible for manufacturing, marketing, and distribution of Vyleesi in the United States.

We licensed all rights to commercialize Vyleesi in China to Fosun and in Korea to Kwangdong.

We have not yet received regulatory approval to commercialize Vyleesi in China or Korea, and regulatory approval in these countries cannot be assured.

Our near-term prospects, including our ability to finance our company and generate revenue, will be impacted by the successful commercialization of Vyleesi for HSDD, as well as preclinical and clinical results with our future product candidates.

The clinical and commercial success of Vyleesi and our product candidates will depend on a number of factors, including the following:

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.

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.

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;

1 unchanged sentence

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;

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;

the prevalence and severity of adverse events experienced with Vyleesi for HSDD or any future product candidates or approved products;

6 unchanged sentences

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;

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 in and to Vyleesi for HSDD or any future product candidates;

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;

2 unchanged sentences

If we fail to satisfy any one of these prerequisites to our commercial success, many of which are beyond our control, in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates.

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.

In addition to preventing us from executing our current business plan, any delays in our clinical trials, or inability to successfully commercialize our products could impair our reputation in the industry and the investment community and could hinder our ability to fulfill our existing contractual commitments.

As a result, our share price would likely decline significantly, and we would have difficulty raising necessary capital for future projects.

Production and supply of Vyleesi depend on contract manufacturers over whom we do not have any control, and there may not be adequate supplies of Vyleesi .

We do not have the facilities to manufacture the Vyleesi active drug ingredient or the autoinjector pen component of the Vyleesi combination product, or to fill, assemble and package the Vyleesi combination product.

We have contracts with third parties to make the Vyleesi combination product.

The contract manufacturers must perform these manufacturing activities in a manner that complies with FDA regulations.

Our ability to control third-party compliance with FDA requirements is limited to contractual remedies and rights of inspection.

The manufacturers of approved products and their manufacturing facilities will be subject to ongoing review and periodic inspections by the FDA and other authorities where applicable, and must comply with regulatory requirements, including FDA regulations concerning GMP.

Failure of third-party manufacturers to comply with GMP, medical device quality system regulations, or other FDA requirements may result in enforcement action by the FDA.

Failure to conduct their activities in compliance with FDA regulations could delay or negatively impact our ability to market Vyleesi.

Establishing relationships with new suppliers, who must be FDA-approved, is a time-consuming and costly process.

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.

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.

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.

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.

Related sanctions, export controls or other actions that have already been initiated or may in the future be initiated by nations including the U.S., the European Union or Russia (e.g., potential cyberattacks, disruption of energy flows, etc.) can adversely affect our business, our contract research organizations, and other third parties with which we conduct business.

2 unchanged sentences

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.

Our product candidates other than Vyleesi, including 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.

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.

If we are unable to successfully develop and test our product candidates, we will not be successful.

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, 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.

Our product candidates will require significant further research, development and testing before we can seek regulatory approval to market and sell them.

51 unchanged sentences

advantages over alternative treatment methods.

There is one other FDA approved product for treatment of HSDD, flibanserin, which is sold under the trade name Addyi, and started marketing in October 2015.

While we believe that an on-demand drug for HSDD has competitive advantages compared to chronic or daily use drugs, we may not be able to realize this perceived advantage in the market.

Vyleesi is administered by subcutaneous injection.

While the single-use, disposable autoinjector pen format is designed to maximize market acceptability, Vyleesi as a subcutaneous injectable drug for HSDD may never achieve significant market acceptance.

In addition, we believe reimbursement of Vyleesi from third-party payers such as health insurers, HMOs or other third-party payers of healthcare costs will be similar to reimbursement for flibanserin and erectile dysfunction drugs, and that the ultimate user may pay a substantial part of the cost of Vyleesi for HSDD.

If the market opportunity for Vyleesi is smaller than we anticipate, it may also be difficult for us to find marketing partners and, as a result, we may be unable to generate revenue and business from Vyleesi.

If Vyleesi for HSDD does not achieve adequate market acceptance at an acceptable price point, our business, financial condition, and results of operations will be materially adversely affected.

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.

5 unchanged sentences

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.

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.

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.

If we identify side effects or other problems occur in future clinical trials, we may be required to terminate or delay clinical development of the product candidate.

11 unchanged sentences

Competing products and technologies may make our proposed products noncompetitive.

Flibanserin, a daily-use oral drug sold under the trade name Addyi, has been approved by the FDA for HSDD in premenopausal women.

There are other products reported as being developed for HSDD and other FSD indications, including oral combination drugs, some of which incorporate testosterone, antidepressants, or PDE-5 inhibitors.

There is competition to develop drugs for treatment of HSDD and FSD in both premenopausal and postmenopausal patients.

Our Vyleesi drug product is administered by subcutaneous injection, and an on-demand drug product for the same indication which utilizes another route of administration, such as a conventional oral drug product, may make subcutaneous Vyleesi noncompetitive.

There are a number of products approved for use in treating inflammatory diseases and indications, and other products are being developed, including products in clinical trials.

2 unchanged sentences

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.

We are likely to encounter significant competition with respect to MC1r product candidates and MCr product candidates.

Most of our competitors have substantially greater financial and technological resources than we do.

12 unchanged sentences

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.

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.

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.

4 unchanged sentences

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.

We have limited experience in sales, marketing, and distribution of pharmaceutical products.

We are currently working to establish sales and marketing capabilities for Vyleesi in the United States, including through establishing agreements with third parties to market and sell Vyleesi.

We may not be able to enter into suitable agreements on acceptable terms, if at all, with third parties to market and sell Vyleesi.

Engaging a third party to perform these services could impede sales of Vyleesi.

If we are unable to establish adequate sales, marketing, and distribution capabilities for Vyleesi, whether independently or with third parties, we may not be able to generate sufficient product revenue to support Vyleesi-associated costs and expenses, and our business would suffer.

In addition, if we enter into arrangements with third parties to perform sales, marketing and distribution services, we will be dependent on the performance of third parties over whom we have limited control.

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.

If any of our products candidates are approved by the FDA or other regulatory authorities, we must enter into agreements with third parties to market these product candidates or develop marketing, distribution and selling capacity and expertise, which will be costly and time consuming, or enter into agreements with other companies to provide these capabilities.

3 unchanged sentences

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.

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.

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.

We may need to hire additional employees in order to commercialize our product candidates in the future.

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.

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.

2 unchanged sentences

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 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.

Obtaining reimbursement from governmental payers, insurance companies, HMOs and other third-party payers of healthcare costs is a time-consuming and expensive process.

Vyleesi for HSDD is classified as a Tier 3 drug, so reimbursement for Vyleesi is limited for treatment of premenopausal women with HSDD.

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.

22 unchanged sentences

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.

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.

We incorporate AI solutions into our platform, and these applications may become important in our operations over time.

There are significant risks involved in utilizing AI and no assurance can be provided that the usage of such AI will enhance our business or assist our business in being more efficient or profitable.

Known risks of AI currently include inaccuracy, bias, toxicity, intellectual property infringement or misappropriation, data privacy and cybersecurity and data provenance.

In addition, AI may have errors or inadequacies that are not easily detectable.

AI may also be subject to data herding and interconnectedness (i.e., multiple market participants utilizing the same data), which may adversely impact our business.

If the data used to train AI or the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, incomplete, overbroad or biased, our business, financial condition, and results of operations may be adversely affected.

The legal landscape and subsequent legal protection for the use of AI remains uncertain, and development of the law in this area could impact our ability to enforce our proprietary rights or protect against infringing uses.

If we do not have sufficient rights to use the data on which AI relies or to the outputs produced by AI applications, we may incur liability through the violation of certain laws, third-party privacy or other rights or contracts to which we are a party.

Our use of AI applications may also, in the future, result in cybersecurity incidents that implicate the personal data of customers or patients.

Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.

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.

27 unchanged sentences

We rely on our relatively small management team and staff as well as various contractors and consultants to provide critical services.

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.

If we lose the services of existing key personnel, our development programs could be adversely affected if suitable replacement personnel are not recruited quickly.

2 unchanged sentences

Our failure to attract and retain such personnel, contractors and consultants could have a material adverse effect on our business, results of operations and financial condition.

Existing coverage for Vyleesi for the treatment of HSDD is classified as a Tier 3 drug by third-party payers, so that demand for Vyleesi is tied to discretionary spending levels of our targeted patient population and particularly affected by unfavorable economic conditions.

The market for HSDD may be particularly vulnerable to unfavorable economic conditions.

Vyleesi for the treatment of HSDD has significant copay or deductible requirements and is frequently only partially reimbursed by third-party payers and, as a result, demand for this product may be tied to discretionary spending levels of our targeted patient population.

A severe or prolonged economic downturn or period of inflation could result in a variety of risks to our business, including weakened demand for Vyleesi for HSDD due to a decrease in discretionary spending.

Risks Related to Government Regulation

48 unchanged sentences

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.

Medical products containing a combination of new drugs, biological products or medical devices are regulated as “combination products” in the United States.

21 unchanged sentences

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.

In its approval of Vyleesi, under the FFDCA the FDA imposed certain postmarketing requirements, consisting of two studies, one a prospective, registry-base, observational cohort study that compares obstetrical, maternal, fetal/neonatal, and infant outcomes in women exposed to Vyleesi during pregnancy to an internal, unexposed cohort of pregnant women, and the other a retrospective cohort study using electronic claims data that compares maternal, fetal/neonatal, and infant outcomes in women exposed to Vyleesi during pregnancy to an internal, unexposed cohort of pregnant women, and one clinical trial in lactating women who have received Vyleesi to assess potential adverse effects in the breastfed infant and measure bremelanotide concentrations in breast milk using a validated assay.

We are evaluating requirements, timelines and costs for these studies and the clinical trial, and seeking further guidance from the FDA.

We do not know the outcomes of the studies or the clinical trial, and do not know whether the outcomes would adversely affect approvals of Vyleesi.

Legislative or regulatory healthcare reforms in the United States may make it more difficult and costly for us to obtain regulatory clearance or approval of any future product candidates and to produce, market and distribute our products after clearance or approval is obtained.

30 unchanged sentences

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.

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.

105 unchanged sentences

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.

Our internal control over financial reporting was not effective as of June 30, 2024, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of Sarbanes-Oxley could have a material adverse effect on our business and share price.

Companies that file reports with the SEC, including us, are subject to the requirements of Section 404 of Sarbanes-Oxley.

1 unchanged sentence

Ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently.

Failure on our part to have effective internal financial and accounting controls would cause our financial reporting to be unreliable, could have a material adverse effect on our business, operating results, and financial condition, and could cause the trading price of our common stock to fall dramatically.

Our management’s assessment of internal control over financial reporting and concluded that, as of June 30, 2024, our internal control over financial reporting was ineffective due to a material weakness in our controls over the accounting for complex financial instruments.

While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to better evaluate our research and understanding of the nuances of the complex accounting standards that apply to our financial statements.

Any failure to maintain such internal control could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis.

If our financial statements are not accurate, investors may not have a complete understanding of our operations.

Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares are listed, the SEC or other regulatory authorities.

In either case, there could result a material adverse effect on our business.

Failure to timely file will cause us to be ineligible to utilize short-form registration statements, which may impair our ability to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition.

Ineffective internal control could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities.

We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls.

In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.

If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

37 unchanged sentences

5,333 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;

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 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;

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;

223,538 shares of common stock available for future issuance under our 2011 Stock Incentive Plan.

3 unchanged sentences

Holders of registered underlying shares could resell the shares immediately upon issuance, which could result in significant downward pressure on our stock price.

Our failure to meet the continued listing requirements of the NYSE American could result in a de-listing of our common stock.

Our common shares are listed on the NYSE American, a national securities exchange, under the symbol “PTN”.

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.

If we fail to satisfy the continued listing requirements of the NYSE American, such as the corporate governance requirements or the minimum closing bid price requirement, the NYSE American may take steps to de-list our common stock.

If the NYSE American delists our securities for trading on its exchange, we could face significant material adverse consequences, including:

We are currently not in compliance with the continued listing standards of the NYSE American.

If we fail to regain compliance with the NYSE American listing standards, our common stock could be de-listed from the NYSE American.

Our common stock is listed on the NYSE American, a national securities exchange, under the symbol “PTN”.

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.

On October 10, 2023, Palatin received a notice from the staff of NYSE American LLC (the “NYSE American”) that Palatin was not in compliance with the Exchange’s continued listing standards under Section 1003(a)(i) and (ii) of the NYSE American Company Guide.

Section 1003(a)(i) requires a listed company to have stockholders’ equity $2 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years, and Section 1003(a)(ii) requires a listed company to have stockholders’ equity of $4 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years.

Palatin is now subject to the procedures and requirements of Section 1009 of the NYSE American Company Guide.

Palatin had until November 9, 2023, to submit a plan (the “Plan”) of actions it has taken or will take to regain compliance with the continued listing standards by April 10, 2025.

Palatin has timely delivered a Plan to the Exchange.

The Exchange has accepted the Plan, and Palatin will be able to continue its listing during the Plan period and will be subject to periodic reviews including quarterly monitoring for compliance with the Plan until it has regained compliance.

There can be no assurance that Palatin will be able to meet milestones set forth in the Plan between now and April 10, 2025.

If we fail to regain compliance with the continued listing requirements of the NYSE American, the NYSE American may take steps to de-list our common stock.

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;

4 unchanged sentences

Such a de-listing would likely have a negative effect on the price of our common stock and would impair our investors’ ability to sell or purchase our common stock when investors wish to do so.

In the event of a de-listing, we may take actions to restore our compliance with the NYSE American’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the NYSE American minimum bid price requirement or prevent future non-compliance with the NYSE American’s listing requirements.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Our common shares are considered to be covered securities because they are listed on the NYSE American.

Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.

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.

Unresolved Staff Comments

Cybersecurity

Not applicable.

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.

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 1A. Risk Factors