Palatin Technologies, Inc.

Please stand by. We're about to begin. Hello, ladies and gentlemen, and welcome to Palatin's fourth quarter and fiscal year-end 2022 operating results conference call. As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that the statements made by Palatin are not historical facts and may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate. and that the actual results may differ materially from those anticipated due to the variety of risk and uncertainties discussed in the company's recent filings with the Security and Exchange Commission. Please consider such risk and uncertainties carefully in evaluating these forward-looking statements by Palatin's prospects. Now I would like to turn the call over to your host, Dr. Carl Spana, President and Chief Executive Officer of Palatin. Please go ahead.

Thank you. Good morning, and welcome to the Palatin fourth quarter and fiscal year end 2022 call. I'm Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Executive Vice President, Chief Financial Officer, and Chief Operating Officer. I'm going to turn the call over to Steve, and he'll give the financial and operating update.

Steve. Thank you, Carl, and good morning, everyone. Starting with Vileci, some highlights, and Vileci is our commercial product, FDA-approved for hypoactive sexual desire disorder. The goal of the ViLisi program is to demonstrate commercial product value in the marketplace with an objective of relicensing the U.S. rights to a committed women's healthcare company. And we believe the last two quarters are absolutely showing that brand value and the scalability of the program in the right hands. Specifically, for the fiscal fourth quarter ended June 30th, 22, gross product sales increased 79% over the prior quarter, and increased 91% over the comparable quarter in 2021. Net product revenue increased 257% over the prior quarter and increased 857% over the comparable quarter in 2021. Total prescriptions dispensed increased 49% over the prior quarter and increased 54% compared to the comparable quarter in 2021. Refill rates, commercial insurance reimbursement, and net revenue per prescription dispensed all increased over the prior quarter and comparable quarter in 2021. Patients and healthcare providers can learn more about HSDD and Vilisi at vilisi.com and vilisipro.com. Touching base on a few other somewhat non-financial items, regarding redeemable convertible preferred stock, on May 11, 2022, Palatin entered into a securities purchase agreement with institutional investors Total gross proceeds from the offering before deducting offering expenses was $15 million. This money was deposited in and is being held in an escrow account pending the investor's election to redeem the shares for cash or notes or convert the shares to common stock. Regarding our recent reverse stock split, at Palatine's annual meeting of stockholders held on June 24, 2022, the company's stockholders agreed overwhelmingly approved the amendment to the company's amended and restated certificate of incorporation to affect a reverse stock split of the company's common stock. The board of directors approved the implementation of a one for 25 reverse stock split effective as of 5 p.m. Eastern time on August 30th, 2022. The reverse stock split reduced the number of shares of Palatine's common stock outstanding from approximately 232 million shares to a little over 9 million shares. but did not change the authorized number of shares of common stock, which remains at 300 million shares. Palatin's common stock continued its trade on the NYSE American stock market under the symbol PTN. Getting into some of the specific financial highlights, for the fourth quarter and fiscal year ended, June 30th, 2022, revenue, total revenue consists of gross product sales of Vilesi, net of allowances and accruals, and license and contract revenue. The Vileci gross product sales to pharmacy distributors for the quarter ended June 30, 2022, were 2.3 million, with net product revenue of approximately 771,000, compared to gross product sales of 1.2 million, with net product revenue of approximately $81,000 for the comparable quarter of 2021. Gross product sales increased 91% and net product revenue increased 857% over the comparable quarter of 2021. By leasing gross product sales to pharmacy distributors for the fiscal year ended June 30, 2022, were $5.8 million with net product revenue of $1.2 million. This was compared to gross product sales of $4.7 million with a negative, yes, a negative net product revenue of $238,000 for the fiscal year ended 6-30, 2021. Gross product sales increased 23% and net product revenue increased 530% over the fiscal year ended June 30th, 2021. Palatine recognized $250,000 in license and contract revenue for the fiscal year ended June 30th, 2022 related to our license agreement with FOSUN compared to approximately $95,000 of recognized revenue for the quarter and the fiscal year ended June 30th, 2021, all related to our license agreement with Quandon. Regarding operating expenses, total operating expenses were $13.9 million for the quarter ended June 30, 2022 and 2021. Total operating expenses for the fiscal year ended June 30, 2022 were $38.1 million compared to $33.2 million for the fiscal year ended June 30, 2021. The increase in the operating expenses was the result of increased research and development expenses primarily related to our ongoing pivotal Phase III clinical trials of PL9643 and dry eye disease, offset by decreased commercial expenses related to Vileci. The net loss for the quarter at fiscal year-end of June 30, 2022, was $12.8 million and $36.2 million, respectively, compared to a net loss of $13.9 million and $33.6 million, respectively, for the same periods in 2021. The decrease in net loss for the quarter ended June 30th, 22, over the quarter ended June 30th, 21, was mainly due to our increase of net product revenue of Vileci. The increase in net loss for the fiscal year ended June 30th, 22, over the fiscal year June 30th, 21, was mainly due to increased operating expenses, primarily related to our PL 9643 dry eye disease program, which was also offset by increased Vileci total revenues. Regarding our cash position, as of June 30, 2022, Palatine's cash and cash equivalents were $29.9 million with approximately $1.8 million of accounts receivable. And this was compared to cash and cash equivalents of $37.7 million with a little under $1 million of accounts receivable as of March 31, 2022, and $60.1 million of cash and cash equivalents with approximately $1.6 million of accounts receivable as of June 30, 2021. This $29.9 million of cash and cash equivalents at June 30, 2022 does not include the $15 million private placement of redeemable convertible preferred stock. These funds are being held in an escrow account, pending the investor's election to redeem the shares for cash or in notes or convert the shares to common stock. Palatine's audit of the financial statements for the fiscal year end of June 30, 2022 does include in the audit report by the independent registered public accounting firm a going concern explanatory paragraph. We'll talk more during the Q&A, but the going concern is really a math calculation where you look at over the next four quarters based on your operating plan, do you have sufficient cash in place? And this is in the normal ordinary course, so i.e. the conversion of the debt does not, we cannot take that into account at this point If we're bringing in collaborations in the future, again, we can't take that into account at this time. We feel very confident that Peloton is in a position to pursue a number of different funding avenues, and as we move forward, we will keep the shareholders apprised accordingly. Now at this time, we'll turn the call back over to Carl.