Good day, ladies and gentlemen, and welcome to the Palatin Technologies Fourth Quarter and Fiscal Year-end 2020 Operating Results Conference Call. As a reminder, this conference is being recorded. Before we begin our remarks, I'd like to remind you that statements made by Palatin that are not historical facts may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results may differ materially from those anticipated due to a variety of risks and uncertainties discussed in the Company's most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements and Palatin's prospects. Now, I'd like to turn the call over to today's host, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Thank you. Good morning and welcome to the Palatin Technologies fourth quarter and fiscal year-end 2020 Call. I'm Dr. Carl Spana, CEO and President of Palatin's. With me on the call today is Steve Wills, Palatin's Executive Vice President, Chief Financial Officer and Chief Operating Officer. On today's call, we will provide financial and operating updates including the impact of the COVID-19 pandemic. We sincerely hope that you and your families are safe and healthy as you deal with life-altering changes brought about by the COVID-19 pandemic. Today's Steve will provide financial update, as well as the update on our reacquisition of Vyleesi from AMAG Pharmaceuticals. I will focus my update on the progress of our development programs specifically PL-9643 for dry eye disease, Phase 2 and PL-8177 COVID-19 program. Steve?

Thank you, Carl, and good morning everyone. Starting with the financial update, regarding fourth quarter and fiscal year 2020 financial highlights, net loss for the fourth quarter ended June 30, 2020 was $7.3 million or $0.03 per basic and diluted share compared to net income of $52.2 million or $0.25 per basic and $0.23 per diluted share for the comparable quarter of 2019. Net loss for the year-ended June 30, 2020 was $22.4 million or $0.10 per basic and diluted share, compared to net income of $35.8 million or $0.17 per basic and $0.16 per diluted share for the year-ended June 30, 2019. The difference in net loss and net income between the quarter and year-ended June 30, 2020 compared to the quarter and year-ended June 30, 2019 was due to the recognition of license and contracts revenue pursuant to our license agreement with AMAG of $60.3 million for the quarter and year-ended June 30, 2019. As of June 30, 2020, Palatin had $82.9 million in cash and cash equivalents compared to $43.5 million as of June 30, 2019 and no debt. We believe that existing capital resources will be sufficient to fund planned operations through at least September 30, 2021. Our strong cash position of approximately $83 million at June 30, 2020 and no debt, coupled with the $12 million we received in July 2020 from AMAG, plus an additional $4.3 million due from AMAG March 31, '21 provides us the financial resources to significantly advance our Anti-Inflammatory and Autoimmune programs and make complimentary targeted investments to our Vyleesi program. Moving over to Vyleesi, Vyleesi is FDA approved for premenopausal women with hypoactive sexual desire disorder or HSDD. Vyleesi is the first and only FDA approved product for the as needed treatment for premenopausal women who experience distress or…

Thank you, Steve. In the past year, we reacquired Vyleesi [and] [ph] faced the global COVID-19 pandemic, two major challenges that were unforeseen and that have changed the way we operate our company. Having a well-financed and managed company has allowed us to address these challenges effectively and with minimal impact on our operations. I'll start the operational update with the impact of the COVID-19 pandemic. Our primary concerns have been the safety of our employees, patients and healthcare partners. We instituted a work from home policy in early March that remains in effect for our office staff. In the past quarter, we have reopened our research laboratory. Fortunately, most of our key research and development partners continue to remain in operation. By using teleconferences in various online meeting platforms, we have been effective in continuing to advance our programs. However, we understand, even with resumption of activities, there can be further disruptions to business activity based on resurgence of the virus, and we will be prepared for this potential outcome. In July 2020, we required Vyleesi from AMAG Pharmaceuticals. As a reminder, AMAG divesture of Vyleesi was based on strategic and operational changes at AMAG and not the potential value of Vyleesi. We've covered the details of the reacquisition and the strategy and operational objectives for Vyleesi. Under this direction, we have assembled an excellent and motivated commercial team that is dedicated to demonstrating the value of Vyleesi. We believe our strategy will allow us to demonstrate the potential value of Vyleesi in a cost effective manner. Our ultimate objective is to relicense Vyleesi through a committed partner, ensuring the continued availability as a treatment option for premenopausal women with HSDD and a financial return on our investment. Palatin has a primary scientific focus on a melanocortin system, which…

Thank you very much. Ladies and gentlemen, at this time, we would like to open the floor for questions. [Operator Instructions] Our first question will come from John Newman, Canaccord.

I just wondered, if you could talk a little bit more about the transitional service agreements that's in place for Vyleesi and just how that's going to allow you to continue to support commercialization of the product kind of in the interim here? And also just how that's happening really at very low cost to you?

Hi, John, it's Steve. To be forthright, Palatin when we were -- once we got to the position that we knew we were going to be taking the product back and shaking hands with AMAG notwithstanding the payments and the releases we knew we had to get any commercial and regulatory functions that we didn't have in place entered into a transitional services agreement with AMAG and we did that. The one item we've always been very strong, as you recall, we invented the product we talked to CMC right away, but things regarding the pharmacovigilance, the quality, the government reporting, the market access oversight. So, those are some of the specific functions that we engaged with AMAG. So over the next several months we’re in the process of transitioning all those functional areas to Palatin, and that would include both internal or outside third-party resources. So we're comfortable that we have sufficient time to do this in an orderly informed fashion. And what was most important was to make sure that we had all the functional areas in place with agreements, so there was no patient access disruption, and also to ensure all the regulatory compliance aspects were taken care of.

Okay, great. Thanks. And then I just wondered in terms of the dry eye data that are coming up in the fourth quarter. I know that you're looking at fluorescein staining. Just curious as to what we should focus on there if it's mainly just kind of a read on the primary endpoint, if we should also be considering the signs and symptoms and things like that?

Well, as I mentioned in the call, John, signs and symptoms are the two requirements. Fluorescein staining is a measure of inflammatory lesions in the eye. Inferior just means it's the bottom part of the eye and part of that just due to the way the study's been run. The bottom of eye can be a little bit drier many times. So, the way I think about it is this was a first attempt. We took a little bit of risk by doing co-primary endpoints. But I think the risk is worth it, because if we do hit them both, we believe this will count as one of the Phase 3 pivotal studies. But there is a whole host of -- from an FDA perspective, they're fairly agnostic, there are a variety of signs that one can use, and simple as that one can use. Requirements or ultimate approval is that you hit one time and one symptom in two Phase 3 registration study. So from us, as you said, there are multiple outcomes. As long as we hit one of the two co-primaries and show very strong evidence of effect from something on the opposite side, we will go forward and we'll go forward and progress into Phase 3. So, that's the way I think about it. With regards to some of the other things I would focus on are ocular comfort is important. Current therapies that are out there Restasis, Xiidra, topical steroids they generally all have tolerability issues, stinging, off case [dumpiness] [ph] type of thing. So, I think ocular [indiscernible] tolerability is a key commercial attribute - and comfort is key commercial attribute that we think PL [81] [ph] - PL [9-43] [ph] is going to have.

Thank you very much. Our next question will come from Joseph Pantginis with H.C. Wainwright & Co.

Carl, I'm actually going to segue way off of one of your wrapping up comments in your prepared script when you referenced Steve and the commercial efforts ongoing right now for Vyleesi. So, I wanted to see, if there's any particular detail you can share with us about (a) how you're really keeping the profile high? I know you did touch on some things in your prepared comments, but more specifically, can you give any level with regard to how scripts are going and the type of coverage that current - that Vyleesi currently has? Thanks.

I'm going to in a second pass that off to see Steve. I do want to just comment, one thing that we didn't have in the prepared scripts. The process of distribution for Vyleesi was put in place by a AMAG through two specialty pharmacy that Steve has relayed to you. Unfortunately, due to the relatively rapid withdrawal of support for the product by AMAG in the fourth quarter of last year, that process of distribution - so, and that was getting the product from the manufacturer to the pharmacy and from the pharmacy to the patient, needed some attention, and so we say tender loving care, before we would be in a position to really start evaluating the marketing or the targeted marketing of Vyleesi, and we're now at the coming to that. I mean, so although it's been very quiet from our perspective, and I know investors keep contacting us saying what's going on, it's been a very, very busy period of time, particularly with Steve and the commercial group making sure that the patient access, so in other words, feel the product coming through the system and the patient experience is really optimized. And he's done a great job with that. And now these pharmacies are really performing at a much higher level, really the level that they need to be performing at, and we're now in a position to really begin to look at the marketing aspects of the program. And with that, I'll turnover to Steve and maybe he can articulate on where he wants to go where we're going to take this program.

As Carl mentioned, this is, I think it may help us, if I frame going back to the national launch by AMAG for Vyleesi was September. Within a few months, they were averaging 2,500 scripts per month and that figure was ahead of their base projections. So frankly, things were going well. But in January 2020, as we mentioned, post the strategic review of AMAG's business model, they decided to divest two of their assets specifically, Vyleesi and Intrarosa. And notwithstanding the divestiture process the investment, the marketing was turned off. They started going through reductions in force regarding the sales force. So no question and in no way trying to be defensive, the scripts were impacted. Last month, we averaged less than 40% of that 2,500, which I'll do the math for everybody quickly, that's less than 1,000 scripts per month. That is not a surprise to us at all. It's - you have to make an investment with products when you're launching them and our investment and AMAG's investment was initially around the education and awareness. As Carl mentioned, and I want to be very clear on this point, it's not, I mean, could we have turned on the faucet and started investing some marketing dollars right away? The short answer is, yes. But we weren't prepared, not so much Palatin. But if you will the Vyleesi, the way we want the experience to be the way we want be whether its the HCPs or the consumers for the access it wasn't in place the way we thought it should be in place, and that started with the pharmacies. So we've made some modifications to the pharmacies that will actually increase and streamline the patient access and patient experience. And we also, we attack the distribution and the…

That was fantastic. Thank you very much for that and I guess another segue. Well, first, I don't want to put words in your mouth. But it certainly seems like you're not just sitting around waiting to find who you're going to out license the drug to or partner with. So this sounds fantastic. So thanks for that. So with regards to out licensing or partnering, I guess what kind of partner are you really looking for? And I don't want to put you on the spot here, but do you have any timing updates?

Well, I'll take it. I'll give a little preamble, and then turn it back over to Steve. What we're looking for someone who sees the value in Vyleesi, and feels that it fits their female health franchise and positioning and is complimentary to their current portfolio and is willing to commit to really moving forward in a way that we think as we move forward and will give us a return and certainly investment. I want to point out one thing, there were some complications in the way AMAG went to try to out license or sell or dispose of Vyleesi, however you'd like to put it. In that one, this was bundled with another product. And they also really looking for someone that we just step in the license agreement that existed between AMAG and Palatin. So now that -- and that posed some complications with your apartments, they didn't want the two products. There are companies that want a slightly different, it didn't fit -- the licensing fit the way they were viewing it, so not too surprising to us. So since the acquisition, we've had actually pretty good interest. And I'll turn over to Steve now and he can kind of fill in some of the details on that and the timing.

Thanks, Carl. As always, we're going to be data-driven. I mean, we have some flexibility notwithstanding the cash that we have on our balance sheet as of June 30. We did receive $12 million from AMAG in combination with the transfer and the release. And we have another $4.3 million due March 31. It's going to take some time to show the value. And I think that's the better way to go. We're making -- we've made modifications, made corrections, whatever you want to classify them as to put us in a position to show value of Vyleesi in the marketplace. But notwithstanding that, we have started the process, we do I have an outside banker that we work with. I wouldn't call it a process, why it was similar to what AMAG did where they made their plans known, they wanted divest the product. We're looking to see what type of interest is out there. At this stage maybe a few quarters down the line. And as Carl mentioned, we can be flexible we have a lot of expertise around all the areas other than, if you will the commercial. So a traditional relicense, absolutely, we can consider that sort of a baton pass, if the Company can handle all the various functions. But we also have some flexibility whereby a company that may be just more commercial and they want Palatin to handle the CMC and maybe some of the lifestyle, not the lifestyle, the additional indications, clinical or that type of work. We could also consider that, because of the flexibility we have and the expertise we have. So, Nostradamus still does not call me back, Joe. So I can't give you a date. But, we feel very comfortable that we put the right items in place. So as we progress, if something does start getting more advanced, we absolutely, we consider it. But the takeaway here is we've already started some discussions now just to see what could take place now or at some point in the future. Hopefully that's helpful to you.

Our last question will come from Michael Higgins, Ladenburg Thalmann.

This is Edward on for Michael. I appreciate you guys taking their questions. Just a few more to wrap up here. For the Phase 3 trial for the dry eye, I'm just wondering how many sites you are expecting to enroll for that one.

So the Phase 2 obviously has much less sites and we have good sites in the Northeast and the Southeast. For Phase 3 pivotal study, the requirement is that you have, it's really has to represent more real life situation. So you would be looking to at a multiple clinical trial sites across the country. These cases are very easy to find. So I would -- an exact number, I don't have it off the top of my head. But generally, it would be in the 50 plus range. You want to have enough so that you're spread out across the country and it is truly representative of the practice of healthcare in the United States. So, these generally tend to be between 50 to 100, depending on the size of the study, and these studies aren't particularly large, they're not multiple thousands of patients where you need quite a few sites. So, you will be in that 50 to 100 throughout the countries.

And then for PL-9643, I'm wondering if you have any partnership plans for this asset? And then if we zoom out a little bit. I'm wondering if there are any other pipeline assets you would partner and then what timeframe would you be thinking about for some this partnership?

Sure. So in the ocular space, we have not yet been aggressive and thinking about or looking or seeking partnership. In part from the standpoint off, we have potential multiple opportunities there. And with the cash position that we have, we'd like to potentially consider maybe holding some of these assets a little bit longer, maybe even thinking about a potential commercial transition. There are a lot of smaller ocular companies that have single products that may fit with some types of opportunities that we have. So, we haven't looked at it from that perspective yet. Obviously, that we wouldn't do it and obviously certainly great strong positive data for PL-9643 in the interest coming in that we wouldn't partner. But at the moment, we haven't been aggressive, because of more looking at a longer term strategy in the ocular space. Certainly, for ulcerative colitis, that's one where we actually do have earlier interest and have some ongoing discussions, particularly ex-U.S. And certainly, it's not one you ask for proof-of-concept, we would -- we really would have partnered or want to partner, not that it's a lack of belief in the product. I think it just going to be great mechanism for a variety of gastrointestinal diseases, but just because of the nature of that indication, demand for getting patients, the treatment options that are out there, you really make sense we partnered with a company that has multiple assets in ulcerative colitis or another GI indications where they can position it appropriately and it really fits in their portfolio. So, it's not really one that we would do on our own. And certainly, anything in the heart failure space, pending data coming out in that program that would be a partnership we wouldn't go forward there on our own we would partner. So I hope that's helpful?

Yes, absolutely. I appreciate all those details. And speaking apart heart failure, really quickly, just wondering, if you could provide any details on when that data might be available? Or if that's not necessarily up to you guys?

Well, in essence, I'm sure we'll see it in real time. This is a Phase 2a study. Patients are in hospital and they're having what is known as a right heart workup because they have preserved ejection fraction many times that's due to issues on the right side of the heart as opposed to the left. So data will come in real time. I think you'll have to have a number of patients and I would think the middle of 2021 will be the first time you have enough patients through to get a good sense. This is truly a basis of the study is the fact that heart failure with preserved ejection fraction, predominantly it many times occurs in females and women. And there are no effective treatments yet. And they represent 50%, almost 50% of the heart failure case happens of ejection fraction. So, through the strong clinical need here particularly in women and the American Heart Association Go Red program is a funding mechanism or looks to fund opportunities that are particularly suited towards female patients. So, this study is really a proof of mechanism study, and there's a very -- the academic groups are highly interested in this natriuretic peptide mechanism in this indication. And it's really determined to see if this mechanism -- before you go into larger patient numbers, well this mechanism have a really good chance of working or not. So, it is an important study in one where positive outcome would really have the potential transform treatment of patients with the ejection fraction and certainly one where the critical need is very high between these patients, but I would say middle of next year probably the earliest and again because of the academic nature and the granting of it, will have a relatively little impact on that.

Got it. Appreciate all the details too. And then just finally in your prepared remarks, you mentioned that you had applied for funding from a few different organizations for the COVID project they were working on. I'm just wondering, if you could talk about who those organizations are that you're reaching out to?

Sure, I mean the other -- we'll stay on the one that we're most interested in is called ACTIV and that's a collaborative between BARDA, and I think NIH and a few other organizations and reason why we're most interested in that one is because it's more of a handoff. So, in that process if we get selected as part of the active program, they really would take the compound over and really conducted trials. And I think that would be get the compound is best chance of success there are a couple out -- there are couple of other programs sponsored by NIH, FDA that we're looking at and getting applications ready for, but I think ACTIVE is the one that we're currently we have already have the application and we're waiting for initial feedback on it because that would be the one that's most suited for the compound. One of these that we would like to avoid is in the current situation we're starting to get advice that doing studies in the U.S. would be difficult that we may need to go to South America to get studies done. And so, that's one of the reasons why when we consider how we go forward with the program, we really would like support in the U.S. from ACTIV for example would be very helpful because you get it into the U.S. clinical trial sites much easier and much faster.

Thank you very much. At this time, I would like to turn this conference back over to our speakers for any closing remarks.

This is Carl speaking again. And on behalf of myself and Steve and the Board of Directors and all employees of Palatin, we certainly like to thank all of you for the time you've taken on the call today. Obviously, being an annual call was a little bit longer than normal. Hopefully, we've been able to convey the assessment and enthusiasm that we have for the acquisition of Vyleesi and the continued effort that we have on building out an ocular franchise and other melanocortin system based anti-inflammatory drugs. We are quite excited here, I mean, the crews working very hard. We are really looking forward to 2021, hopefully a little more normalization of operational activities and general life. And we look forward to really the success that we will have in moving our progress forward. So I'd like to thank all of you again, once again for being on the call. Please stay safe. Wear mass, social distance like a broken record, but it works. And hopefully, we'll have some vaccines and newer treatments maybe even PL-8177. So, thank you all, and have a great day.

Thank you very much. Ladies and gentlemen, this now concludes our conference. You may disconnect your phone lines and have a great rest of the week. Thank you.