EPS of $-0.53 increased by 13.1% from previous year
Net income of -8.44M
""we'd like to do two more studies MELODY-2 and MELODY-3 to provide the remaining data that we need. And that way it'll give us three large phase three clinical trials to really support the profile of the drug, the safety, and the overall efficacy."" - Carl Spana
Palatin Technologies reported a Q3 FY2024 period with no recorded product sales tied to Vyleesi after the sale of worldwide rights to Cosette Pharmaceuticals in December 2023. The quarter shows a pronounced burn driven by R&D and Melanocortin program activity, offset modestly by gains from warrant fair value movements. Management stressed progress across the Melanocortin portfolio, highlighted by the positive MELODY-1 data for PL9643 in dry eye disease and a plan to advance two new Phase 2 programs this year, alongside ongoing plans to initiate two additional Phase 2 studies and to pursue three large Phase 3 trials for MELODY-2 and MELODY-3. Despite a cash burn of approximately $8.6 million for the quarter, Palatin maintains a cash position of about $10.0 million as of 3/31/2024, with management signaling sufficient liquidity to fund anticipated operating expenses into late 2024. The company remains non-revenue generating in the near term and faces execution risks surrounding regulatory milestones, manufacturing questions, and potential dilutive financing needs to advance its pipeline. Investors should monitor NDA timing for PL9643, the Type C FDA discussions, and the progression of obesity and ED combination programs as potential catalysts for value realization.
Key Performance Indicators
Operating Income
-9.19M
QoQ: -38.24% | YoY:-25.91%
Net Income
-8.44M
QoQ: -7.54% | YoY:-20.54%
EPS
-0.53
QoQ: 5.36% | YoY:13.11%
Revenue Trend
Margin Analysis
Key Insights
Revenue: No product sales recorded in QQ3 2024 due to Cosette rights sale; prior-year quarter (3/31/2023) recorded $3.4m gross product sales with $1.2m net product revenue.
Gross profit: negative $171,789 (no revenue in QQ3 2024).
Operating expenses: $9.21m for QQ3 2024 vs. $8.50m prior year; primary driver = increased Melanocortin program spend.
Net income: negative $8.436m, EPS -0.53; weighted average shares ~15.792m.
Financial Highlights
- Revenue: No product sales recorded in QQ3 2024 due to Cosette rights sale; prior-year quarter (3/31/2023) recorded $3.4m gross product sales with $1.2m net product revenue.
- Gross profit: negative $171,789 (no revenue in QQ3 2024).
- Operating expenses: $9.21m for QQ3 2024 vs. $8.50m prior year; primary driver = increased Melanocortin program spend.
- EBITDA: negative $8.262m; Operating loss: $-9.193m.
- Net income: negative $8.436m, EPS -0.53; weighted average shares ~15.792m.
- Cash flow: net cash used in operating activities of $8.607m; free cash flow approx. −$8.607m; cash and equivalents near $10.0m at 3/31/2024; net debt remains strongly negative (net cash position).
- Balance sheet: total assets $11.406m; total liabilities $9.828m; total stockholders’ equity $1.579m; cash at period-end $10.014m; short-term debt $888.8k; long-term debt $262.2k; cash conversion indicators show modest liquidity but limited runway given ongoing burn.
- Key liquidity narrative: Management projects liquidity to fund operating expenses well into H2 2024; no near-term debt maturities disclosed; warrant liability issues fully cleaned up.
Income Statement
Metric
Value
YoY Change
QoQ Change
Gross Profit
-171.79K
-116.11%
-109.73%
Operating Income
-9.19M
-25.91%
-38.24%
Net Income
-8.44M
-20.54%
-7.54%
EPS
-0.53
13.11%
5.36%
Key Financial Ratios
currentRatio
1.2
returnOnAssets
-74%
returnOnEquity
-534%
debtEquityRatio
0.45
operatingCashFlowPerShare
$-0.55
freeCashFlowPerShare
$-0.55
priceToBookRatio
17.6
priceEarningsRatio
-0.82
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategic portfolio emphasis: Management underscored a multi-program Melanocortin strategy, including PL9643 for dry eye disease (MELODY-1 Phase 3 results) and the advancement of oral PL8177 (UC/IBD) with interim data anticipated in mid-2024, plus new obesity and ED co-formulation programs.
- MELODY-1 outcomes and path forward: Palatin described PL9643 as differentiating with rapid onset and broad symptom relief; MELODY-1 supports pursuing three large Phase 3 trials (MELODY-2 and MELODY-3) to strengthen regulatory submission, signaling a conservative but pragmatic path to NDA.
- FDA dialogue: The Type C meeting is expected to produce guidance on data packages and manufacturing questions; management framed the data design as ITT and endpoint choices (pain vs. dryness) with potential label enhancements if symptom endpoints are replicated in MELODY-2/3.
- Financial and operating stance: Given the sale of Vyleesi’s rights (to Cosette) and non-recording of product sales in QQ3 2024, Palatin remains in a cash-burn phase tied to pipeline development; the company expects cash runway into late 2024 and will need to monitor potential financing needs to sustain long-run development.
"we'd like to do two more studies MELODY-2 and MELODY-3 to provide the remaining data that we need. And that way it'll give us three large phase three clinical trials to really support the profile of the drug, the safety, and the overall efficacy."
— Carl Spana
"PL9643 is emerging as a highly differentiated treatment for dry eye disease with excellent ocular tolerability, rapid onset of efficacy and broad relief from multiple symptoms of dry eye disease."
— Carl Spana
Forward Guidance
Palatin’s forward trajectory hinges on regulatory milestones and clinical readouts. Near-term catalysts include: (1) Type C FDA meeting outcomes for MELODY-2/MELODY-3 and any preferred endpoints/regulatory considerations, (2) top-line data from interim analyses of PL8177 in ulcerative colitis and the ongoing Phase 2 diabetic kidney disease/open-label study with BMI implications, (3) two new Phase 2 trials launching in 2024 focused on obesity and combination Bremelanotide with PDE5 inhibitors for ED, and (4) the timing and design of additional Phase 3 trials for MELODY-2/3 to support a three-study NDA package. Our assessment: If FDA aligns on the MELODY-2/3 design and if MELODY-2/3 demonstrate robust, consistent symptom improvement with acceptable safety, the probability of an NDA submission increases, potentially in 2025. Risks include potential delays in study enrollment, manufacturing data requests, and the need for additional capital to fund expanded Phase 3 programs. Investors should watch: 1) NDA timeline and FDA feedback from Type C meeting, 2) regulatory milestones and manufacturing readiness for PL9643, 3) progression and readouts of PL8177 and new Melanocortin-4 obesity/ED programs, and 4) Palatin’s ability to secure non-dilutive or dilutive financing to sustain the pipeline.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PTN Focus
0.00%
0.00%
-5.34%
-82.40%
FBIO
63.90%
-1.51%
-60.80%
-55.50%
CKPT
-176.29%
-248.42%
30.10%
-1.48%
ATXI
0.00%
0.00%
-14.40%
204.51%
PIRS
0.00%
0.00%
-17.70%
-1.90%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
PTN presents a high-risk, high-upside profile typical of a biotech with a portfolio-stage pipeline and no current revenue. The near-term catalysts are regulatory and clinical: MELODY-2/MELODY-3 design alignment with FDA, NDA timing for PL9643, and the execution of two new Phase 2 programs (obesity and erectile dysfunction co-formulations). The company has signaled liquidity to fund operations into late 2024, but the absence of near-term product sales and reliance on additional funding create substantial dilution and financing risk. If Palatin can convert MELODY-2/MELODY-3 readouts into a robust NDA and secure strategic partnerships or licensing for PL9643, the stock could re-rate higher on pipeline-driven value. Conversely, failure to obtain timely regulatory milestones or to extend the cash runway could pressure the stock as the cash burn persists. Investors should assign appropriate risk premia given the binary nature of clinical-stage biotechs and monitor for meaningful strategic partnerships, FDA feedback from Type C discussions, and the progression of the obesity/ED programs as potential value inflectors.
Key Investment Factors
Growth Potential
Catalysts center on (a) MELODY-2/MELODY-3 progression to three essential Phase 3 trials for PL9643 to support NDA readiness; (b) expansion of Melanocortin portfolio into obesity and ED combination therapies, with potential co-formulations leveraging Bremelanotide and tirzepatide or PDE5 inhibitors; (c) potential licensing partnerships for PL9643 with dry eye market opportunities; (d) ongoing advancement of PL8177 in ulcerative colitis and related inflammatory bowel diseases.
Profitability Risk
Key risks include failure to secure FDA alignment on trial designs or endpoints, delays in enrolling MELODY-2/MELODY-3, manufacturing/commercialization hurdles, reliance on a single lead program (PL9643) for near-term value, and need for additional financing given persistent negative earnings and cash burn; competitive landscape in dry eye and obesity therapeutics intensifies execution risk.
Financial Position
The balance sheet shows a lean asset base with cash/equivalents around $10.0m and modest debt; net cash position implied by negative net debt (-$9.31m). The company demonstrated a cash burn of approximately $8.6m in QQ3 2024, suggesting limited runway without additional financing or licensing/partnerships. Management emphasized liquidity into late 2024, but longer-term funding remains a critical consideration to sustain pipeline investments.
SWOT Analysis
Strengths
differentiated Melanocortin portfolio with PL9643 showing rapid onset and broad symptom relief in MELODY-1
three Melanocortin programs in the clinic (PL9643, PL8177, and others) with additional Phase 2 studies planned
clear NDA-readiness pathway for PL9643 via MELODY-2/MELODY-3 and Type C FDA discussions
strong science foundation around MC receptor biology that could enable additional indications or co-therapies
cash runway supported by reported liquidity and absence of near-term debt maturities (as of 3/31/2024)
Weaknesses
no revenue in QQ3 2024; dependence on successful regulatory approvals for value creation
significant ongoing R&D burn with limited near-term revenue visibility
tight liquidity runway into late 2024 requiring potential financing or strategic partnerships
prior warrant liability exposure cleaned up but historical dilution risk remains a consideration
Opportunities
MELODY-2/MELODY-3 data readouts driving NDA timing; potential three-Phase 3 program package for PL9643
obesity and ED co-therapy trials could broaden the Melanocortin franchise
potential licensing deals or collaborations for PL9643 in dry eye and related ocular conditions
development of oral PL8177 for ulcerative colitis and other IBD indications expands addressable markets
Threats
competitive landscape in dry eye therapies and obesity treatments; FDA scrutiny on endpoints and regulatory pathways for ophthalmic products
clinical risks with large Phase 3 studies (MELODY-2/3) and potential delays; manufacturing and supply chain risks
financing risk given ongoing losses and burn; need for capital to sustain multi-program pipeline