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Hello, everyone. Welcome to Palatin's third quarter fiscal year 2026 operating results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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 risks and uncertainties discussed in the company's recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements by Palatin 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. Welcome to the Palatin third quarter fiscal year 2026 call. I'm Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Stephen Wills, Palatin's Chief Financial Officer and Chief Operating Officer. Earlier today, we issued a press release reporting Palatin's financial results for the third quarter of fiscal year 2026 and are now providing a corporate update.

Today, we will highlight our progress advancing our melanocortin-4 receptor-based obesity pipeline, review recent strategic and financial milestones, and outline our priorities as we move through 2026, followed by a question-and-answer session. First, I will turn the call over to Stephen for the financial and operating results. Stephen.

Thank you, Carl, and hello, everyone. I will briefly review our financial results for the fiscal third quarter ended March 31st, 2026. Beginning with revenue. For the third quarter, we recognized $3.9 million in collaboration and license revenue compared to no revenue in the prior year period. The increase was primarily related to the revenue recognition of the upfront consideration under the Altanispac agreement.

Turning to operating expenses. Total operating expenses for the quarter were $5.5 million compared to $4.8 million in the prior year period, which included a $0.4 million gain on purchase commitment. The increase was primarily attributable to higher compensation costs and professional fees. Net cash used in operations for the quarter was $4.4 million, compared to $5.4 million in the prior year period. The reduction in cash used in operations was primarily driven by collaboration and license revenue recognized during the quarter.

Net loss for the third quarter of fiscal 2026 was $1.4 million or $0.37 per basic and diluted common share, compared to a net loss of $4.8 million or $9.13 per basic and diluted common share for the prior year period. The improvement in net loss was primarily related to collaboration and license revenue recognized during the quarter. Turning to our balance sheet and liquidity position. As of March 31st, 2026, Palatin had cash and cash equivalents of $10.2 million, in addition to approximately $2.2 million of other receivables, which are expected to be collected during the quarter ending June 30th, 2026.

Based on our current operating and development plans and our ability to manage the timing of certain operating expenses, we believe our existing cash resources and expected receivables will be sufficient to fund operations through June 30th, 2027. With that, I will turn the call back to Carl. Carl.

Thank you, Steph. This quarter, Palatin continued to execute on its strategy of advancing our melanocortin-4 receptor agonist therapies for rare obesity disorders with a focus on improving tolerability, usability, and long-term outcomes in chronic treatment settings. The melanocortin-4 receptor pathway is a clinically and commercially validated target. We strongly believe the next phase of innovation will be defined not just by efficacy, but by improvements in overall treatment profile, particularly tolerability and patient-friendly delivery to support long-term patient adherence.

In this context, our goal is very straightforward, is to develop best-in-class melanocortin-4 receptor agonists for the treatment of rare syndromic and genetic obesity disorders. We are uniquely positioned to achieve this with our extensive experience in the design of melanocortin-4 receptor selective agonists, along with our recent advances in the understanding of receptor ligand interactions. In rare obesity disorders such as hypothalamic obesity, Prader-Willi syndrome, and Bardet-Biedl syndrome, patients face severe hyperphagia, rapid weight gain, and significant metabolic complications.

These are chronic conditions that require lifelong treatment, and current therapeutic options often present challenges for long-term use. As a result, improving tolerability and usability is critical to achieving meaningful, sustained outcomes for patients. Updating our obesity pipeline. Our melanocortin-4 receptor agonist peptide program is designed to achieve sustained efficacy with a treatment profile optimized for high selectivity for the melanocortin-4 receptor in once-weekly delivery.

Our once-weekly melanocortin-4 receptor selective peptide agonist remains on track for an initial new drug application submission in the fourth quarter of calendar 2026 and represents our lead clinical asset. In our oral small molecule program, we are advancing next-generation oral melanocortin-4 receptor selective agonist candidates based on data and learnings from earlier compounds, including PL7737.

Recent data from our research work in medicinal chemistry and our advancements in understanding detailed receptor ligand interactions in internal preclinical studies, our candidates demonstrate significantly improved melanocortin-4 receptor selectivity with minimal melanocortin 1 receptor activity and increased potency at melanocortin-4 receptor compared to earlier compounds. We believe this improved selectivity and potency will result in lower dosing requirements and a meaningful reduction in the potential elimination of hyperpigmentation.

I want to emphasize the importance of the last point. Hyperpigmentation is a known class effect associated with melanocortin 1 receptor activity and remains a limitation of current therapies. Our approach is specifically designed to minimize melanocortin 1 receptor off target interactions and selectivity data we have supports this conclusion. Our goal is to develop best-in-class therapies with superior efficacy and long-term patient compliance.

In addition to advancing our obesity programs, we continue to leverage the broader potential of our melanocortin receptor platform through strategic partnerships and business development activities. Our partnership with Boehringer Ingelheim for retinal diseases continues to provide non-dilutive capital, milestone opportunities, and potential long-term royalty participation. During the second half of calendar 2025, we received upfront and milestone payments totaling EUR 7.5 million, or approximately $8.8 million.

We also completed the sub-licensing of PL9643 for dry eye disease to Altanispac Labs in January of 2026, receiving $3.8 million in upfront consideration while retaining the potential for future payments and royalties. In addition, our PL8177 ulcerative colitis program remains positioned for potential partnering following positive phase II proof of concept results.

These transactions reflect our strategy of leveraging the breadth of our melanocortin receptor platform to generate non-dilutive capital and support our pipeline advancements and create multiple potential long-term value drivers for shareholders. In summary, our peptide program remains on track for an IND submission in the fourth quarter of calendar 2026. Our oral small molecule program is advancing next generation candidates with improved selectivity and potency toward an IND in the first half of calendar 2027.

We have developed new intellectual property around melanocortin-4 receptor selectivity, and we are continuing to leverage both our vast experience and new data to design melanocortin-4 receptor therapies with improved selectivity and overall better treatment profiles. We believe this strategy positions Palatin to deliver differentiated best-in-class melanocortin-4 receptor agonist therapies for patients with significant unmet medical need. With that, we will now open the call to questions.

Certainly. The floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold for just a few moments while we poll for questions. Your first question is coming from Scott Henry with AGP. Please pose your question, your line is live.

Thank you and good morning. Just re-recapping on PL7737. Is that molecule now discontinued? If so, was it due to an issue with PL7737, or did some of the backup compounds present a better profile to take going forward? Thank you.

Sure. Thanks for the question, Scott. You know, we're not gonna be first to market in this space, we really wanna make sure we have best-in-class compounds. Our, you know, selectivity, you know, our parameters for selecting a compound or continuing a compound to go through development into the clinic is pretty stringent. The decision was really multifactorial.

As we were running through the PL7737 development, we came to a point where we felt that, you know, the selectivity and the dosing that we wanted to achieve to be best-in-class, we didn't necessarily think that the compound would meet that. In addition to that, we were seeing, you know, since we were funded in November of last year, we were able to really push some of these backup compounds forward, and we started to see compounds that really are verging on almost the elimination of MC1R one activity.

Their profiles are just coming out just better than where PL7737 is. We had to make, you know, a decision on, you know, do we continue to put resources into a compound that, you know, may not be best in class? Do we, you know, divert those to the peptide, which is, you know, really highly selective and, you know, once a week and has a really excellent profile, and then bring along a second generation compound that really has got a much better profile.

It was a combination of a number of factors that went in. We also, we have to consider that, you know, this is a, this is a target that is, you know, growing in interest and there's potential competition. You know, when we are making final decisions to go in the clinic and start spending lots of investor money, we really wanna make sure that it's a very stringent decision and that the compounds that we take forward really meet, you know, high degree of selectivity for MC4R, have excellent drug-like characteristics, are, you know, easier for the patients to use, whether it be oral or once weekly.

Those are all, there were a lot of factors that went into it, to the decision. You know, PL7737 is still extremely valuable to the company. You know, we've learned a tremendous amount from it. We're still evaluating it. And, you know, we'll continue to, you know, be supportive of everything that we're doing.

Okay. In the next generation oral small molecule compound, would you expect to have a similar clinical game plan as you did for PL7737 as far as looking at hypothalamic obesity patients, as well as Prader-Willi?

Absolutely. It'll follow a similar path. I think that, you know, the peptides and the oral small molecules will each have their place in treating these patients based on, you know, patient preferences, efficacy, side effect profiles. You know, the next generation compounds, really we're seeing, you know, I expect that these compounds really won't have any MC1R activity at all. They're gonna be quite clean. I think that's gonna be a major advancement.

You know, we have to again, we have to keep in mind that, you know, this is gonna be a competitive field, and we really wanna make sure we're bringing, you know, the best that we can deliver, you know, based on the experience that we have.

Okay. When you think about the differentiation of your pipeline with compounds on the market and under development, what do you think are the key attributes that separate your pipeline? I mean, obviously, you've mentioned selectivity and hyperpigmentation. Are there any other aspects that you would highlight?

Sure. That's a key aspect. I think the technologies that we use for potentially delivering once-a-week injections for peptides can be differentiating as well. I think the understanding that, you know, the PK parameters, these compounds have to put them in a range where we don't need to go to, you know, levels of drug exposure that exceed the therapeutic window so that we can eliminate or drastically reduce the potential side effects that you can see outside of hyperpigmentation.

In addition to that, in the small molecule program, you know, we're looking for compounds that really limit the brain penetrance so that they don't get into the CNS. There are a number of things that are built into these things that overall will make them better drugs. This is not atypical. You know, as indications, you know, move from first approved drugs, you know, it's generally when you get to that second or third one where you get the better compounds coming through, better drug-like characteristics, better PK parameters, you know, more usability for the patient, and that's what we're aiming for.

Okay, great. Kind of a final question. Obviously, your game plan has followed a lot of what we've seen with Rhythm and what they've done. How would you compare your products to those of Rhythm, and how far behind do you consider yourself at this point?

Sure. You know, currently, you know, currently from an approved standpoint, setmelanotide or IMCIVREE, Rhythm Pharmaceuticals' product, and I find, you know, they've done a tremendous job, you know, bringing that product forward, expanding its indications and actually beginning to build new markets, you know, for MC4R agonists. That's a first-generation peptide that's got limitations with regards to MC1R activity, and it's a daily injectable. I know that they have a weekly injectable that's coming behind that. There's very little data. I can't comment on that.

There's no data available. I think there will be data later in the quarter, but I can't comment on that. They have a small molecule in bremelanotide. Again, it's a first-generation compound. Again, we see hyperpigmentation in the clinic. It's going through some reformulation work, and I don't know where that's gonna lead. They, they're gonna hopefully get that back in the clinic later in the year. I think, you know, from my perspective, I think that we're gonna deliver better compounds. I think they're gonna be cleaner. I think they're gonna have better drug-like characteristics and have better PK parameters.

You know, and a chance to be highly competitive, and expand and take market share. That's the goal in bringing best in class forward, right, is to have the better compounds. From how far behind are you? You know, you, depending on the indication. Obviously, you know, setmelanotide is approved. It's approved for HO. It's approved for a number of indications. You can look at our plan to get there. You know, in that case, we're several years behind. With regards to compounds coming through, I don't Is it a year, a year and a half? I mean, I'm not clear. I know it's a question that investors always ask, and it is relative there.

We're not all that far behind, and you're coming, and you're trying to come in with a better candidate and a better product. I think that's the more important part. You know, who's gonna have the compounds that really, you know, help to solve this issue with better patient compliance and, you know, better patient usability, maintaining good efficacy. That's really what you're trying to drive forward. That's really, at the end of the day, what's gonna probably determine this market.

Okay, great. Thank you for taking the questions.

Your next question is coming from Yale Jen with Laidlaw & Company. Please put your question. Your line is live.

Good morning. Thanks for taking the question. Your oral compound now it's pushed out probably roughly a year compared to PL7737. My question to you is that, do you see any challenges to have that become R&D ready next year? Any specific you can mention without, you know, reveal too much in on the competitive side?

Sure, look, you know, whenever you're dealing with orally active small molecules, you know, we run, as we did with PL7737, a tremendous amount of preclinical studies on these compounds to evaluate their, you know, not only their efficacy and their selectivity, and what have you, but really their drug ability, you know, side effect profiles, metabolism, all sorts of other things. At any point, you know, you know, the predictability, even though we use, you know, state-of-the-art software and what have you to help predict and obviously wet chemistry to go through all this stuff. ] You know, until you get into animals, until you get through that process, you know, you're not gonna really know what you have. And, you know, how high you can dose, and so on and so forth. I would characterize it as we have a very good handle on what's required. I think we understand the pharmacophores that we're dealing with very well. They are very druggable, and, you know, with regards to their interactions with CYPs and their metabolism and so on and so forth. We have a high degree of confidence that we can deliver a compound.

Until we get through the work, you know, I can't tell you know, what the actual outcome was gonna be. I mean, I mean, we will, I'm confident that we will do the work. We will get the candidate forward. We'll go through the process with the candidate. I'm, you know, highly confident that it will pass and we'll have a great profile. Until it's done, I can't, you know, I can't comment. I don't know.

Okay. Fair enough. That's very helpful. Without revealing too much, should I think about this as it's heading to animal study or it's already in, you know, animal study and then-

It depends on the can, I mean, we haven't made a final selection, so it depends on the candidate. Some are in animal studies, some are a little further back. We'll make a little bit later in the year, we'll make a final selection on the actual candidate that we wanna go forward with. It varies depending on the candidate.

Still. Okay, great. Maybe a last question here is that, for the sub Q, weekly, peptides that, you are slightly ahead. I mean, I saw the last time we, that you may start it in the third quarter, but I guess it's slightly more pushed out to a fourth. Was there any issues or you want to resolve? Since this will, like you said, will be the end product.

No, there's.

going forward.

No, there's no issues. I mean, listen, we're, you know, we're not manufacturing screws here. We're, you know, we're doing very complex things. You know, we wanna make sure that, again, that we have the, you know, the right compound. You know, one of the things that we're seeing is, you know, with the funding that we did in the third or fourth quarter of last year, that really allowed us to really accelerate a lot of the work we were doing on the medicinal chemistry side with both the peptides and the small molecules.

What we're trying to make sure is we are, particularly on the peptide side, you know, in the candidate we selected, we wanna make sure it was the, you know, the best we have, right? Not something, you know, not, you know, not something that's really good, but when we find out a month later, we've got something better. It's really an issue of making sure we've got the right candidate. In a nice way, we are very productive in our understanding of this and of the receptor and the receptor ligand interactions.

You know, we've been really pushing the boundaries in understanding how to eliminate the MC1R activity and building that into these compounds. We really wanna make sure we pick the best one. I don't really see, you know, much difference. That peptide program to me is moving along quite nicely. I think we have an excellent candidate and, you know, we'll be running through, I mean, we're actually now entering in the IND-enabling studies. I see that moving along and staying on track quite nicely.

Okay, great. Maybe the last question, just squeeze in, which is that you mentioned about, also you're contemplating the PWS, Prader-Willi syndrome. At this point, would that be second priority to HO, or you feel that you may jump the gun into the PWS even faster or earlier? Thank you.

You Yale Jen, everything is based on resources. I think that they're equal. I mean, they're both excellent commercial activities. They're both ones where there's an extremely high medical need for innovative treatments. Given resources, we'd like to move them, you know, in parallel.

Okay, great. Thanks a lot and good luck for everything.

Thank you.

Your next question is coming from Dev Prasad with Loop Capital. Please pose your question. Your line is live.

Hi, team. Thanks for taking our question. I have a few. One is the goal with the new oral compound, is the goal is to eliminate hyperpigmentation entirely, or you're trying to reduce the frequency and severity? A follow-up is that what preclinical species or model is the most predictive for these MC1R-mediated hyperpigmentation? Then on once weekly injectable, just wondering what are the key IND-enabling studies still remaining before the planned 4Q IND submission? Thank you.

Sure. All right. A lot there. Let's go through. For the small molecule, I mean, what we're seeing is the potential to eliminate activity. That doesn't mean that when you go in and you start treating chronically that you won't see some small amount, but that's really what the goal is, and that's what we're seeing preclinically, really. A very significant separation between one and four. You know, until, you know, you get into the clinic, you're not gonna know. You're not gonna know. The animal models that we use, you know, animals, if you look at a rat, a dog, or a mouse, their skin is not really pigmented. You have to look at fur.

You look at fur darkening, and there are a number of models that we use for that. When you're seeing, you know, if your compounds have good MC1R activity and they work in these models, you're gonna see that translate to humans. We think there's a high degree of predictability that if you're showing, you know, lack of efficacy or very large separations between where you see weight loss and then where you see potential for even a small change in pigmentation, that that's gonna translate to the human condition as well.

With regards to where we are in development, you know, there's Right now, we're beginning the IND-enabling studies. That's gonna include a whole bunch of in vitro assays that we're required to do with regards to CYP binding, metabolism, and so on and so forth, as well as getting into the animal work that will start as well. We have everything, we have everything moving and coming together so that we'll have the documentation we need to file with the FDA and open up an IND in the fourth quarter of the year.

Great. Thank you.

There are no more questions in queue at this time. I would now like to turn the call back over to Carl Spana for any closing remarks.

I'd like to thank everyone for your participation on the call. You know, there's an opportunity for us to give you updates, and we're quite excited about where we are, where we're going. I thank the analysts for their questions that allow us opportunities to speak a little beyond what we have in the script and maybe give a little more color and context to what we're doing. I think that the advances that we're making are quite significant. We're generating some very good IP that I think is going to not only support the work that we're doing but make it a little more difficult for those that are following behind as well.

I think we're very well-positioned and feel pretty confident about what we're doing and going forward, that we're gonna deliver some really phenomenal compounds into the clinic. With that, thank you guys. Have a great day, and we look forward to keeping everybody updated as we continue to make progress on our programs. Steph?

Thanks also. Have a great rest of the day. Take care.

Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

Greetings. Welcome to Palatin's Second Quarter Fiscal Year 2026 Operating Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that 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 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 by Palatin's prospects. Now I would like to turn the call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatin. Please go ahead.

Thank you, and good morning, everyone. Earlier today, we reported Palatin's financial results for the second quarter of fiscal year 2026 and provided a corporate update. With me on the call today is Steve Wills, Palatin's Chief Financial Officer; and Chief Operating Officer. Today, we will highlight our progress advancing our melanocortin-4 receptor based obesity pipeline, review strategic -- recent strategic and financial milestones and outline our priorities as we move through 2026 before opening the call for questions. First, I will turn the call over to Steve for the financial and operating results. Steve?

Thank you, Carl. Hello, and welcome, everyone. I'll walk through our second quarter fiscal 2026 operations and financial results. Starting with our recent public offering on November 12, 2025, we closed an upsized $18.2 million underwritten public offering, including the full exercise of the overallotment option. The offering consisted of approximately 2.8 million shares of common stock or prefunded warrants in lieu thereof, along with Series J and Series K warrants at a combined public offering price of $6.50 per share and accompanying warrants. Each Series J warrant has exercise price of $6.50 per share and expires on the earlier of 18 months from issuance or 31 days following FDA acceptance of an IND for an in-house obesity treatment compound. Each Series K warrant has an exercise price of $8.125 per share and a 5-year term, subject to automatic termination if the associated Series J warrants are not exercised within the FDA exercise period. Gross proceeds from the offering were approximately $18.2 million with net proceeds of approximately $16.9 million after underwriting discounts and offering expenses. While the company may receive up to an additional $18.2 million upon the exercise of the Series J warrants, there is no assurance that these warrants will be exercised. The net proceeds from the offering are being used to support the advancement of our obesity programs as well as for working capital and general corporate purposes. As a result of the closing of this financing, Palatin regained compliance with NYSE American continued listing standards, and effective November 12, 2025, our common stock resumed trading on the NYSE American under the symbol PTN. Turning now to the financial results for the second quarter ended December 31, 2025. Regarding revenue for the quarter was $116,000 compared to 0 revenue in the comparable period last year. This revenue relates to cost reimbursements under our collaboration agreement with Boehringer Ingelheim. Total operating expenses were $7.4 million for the quarter compared to $2.6 million in the prior year period. The year-over-year comparison is primarily impacted by the gain on the sale of Vyleesi recorded in the December 31, 2024 quarter, which reduced net operating expenses in that period. In the current quarter, operating expenses increased due to higher investment in our melanocortin-based obesity development programs as well as increased compensation costs and professional fees. Other income net was approximately $65,000 for the quarter compared to approximately $169,000 in the prior year period. The decrease reflects lower investment income and foreign currency translation gains, partially offset by lower interest expense. Net cash used in operations was $4.8 million for the quarter, consistent with the same quarter last year. Net loss for the second quarter was $7.3 million or $2.86 per share compared to a net loss of $2.4 million or $5.92 per share in the comparable period last year. This change reflects higher operating expenses associated with advancing our pipeline programs as well as the absence of the Vyleesi divestiture gain recorded in the prior year. Turning to our cash position. As of December 31, 2025, we had $14.5 million in cash and cash equivalents compared to $1.3 million at September 30, 2025, and $2.6 million at June 30, 2025. Based on our current operating plans, we expect our cash runway to extend beyond the quarter ending March 31, 2027. Finally, with respect to our PL9643 sublicensing transaction, in January 2026, we received approximately $3.8 million of upfront consideration in the form of noncash debt cancellation. This amount is reflected in the current liabilities as of December 31, 2025, and will be recognized as license revenue in the quarter ending March 31, 2026. In summary, the successful completion of our public offering significantly strengthened our balance sheet, restored our NYSE American listing and provides the capital needed to advance our obesity pipeline while maintaining operational flexibility. With that, I'll turn the call back to Carl for program updates. Carl?

Thank you, Steve. Palatin continues to execute on its strategy to advance differentiated melanocortin-4 receptor based therapeutics with a primary focus on rare syndromic and genetic obesity disorders. During the quarter, we made meaningful progress advancing our lead obesity programs towards the clinic, strengthening our balance sheet and sharpening our strategic focus, as Steve mentioned, through the sublicensing of our dry eye disease clinical candidate, PL9643. Turning to the obesity pipeline. We are advancing a portfolio of proprietary melanocortin-4 receptor agonist initially targeted to rare neuroendocrine obesity disorders, including hypothalamic obesity and Prader-Willi syndrome, areas of significant unmet medical need. Our lead oral small molecule MCR4 agonist, PL-7737 continues to progress through IND-enabling toxicology studies, and we remain on track to submit an IND and initiate a Phase I single and multiple ascending dose clinical trial in the first half of calendar year 2026. In parallel, we are advancing our next-generation selective melanocortin-4 receptor peptide agonist which are designed for once weekly subcutaneous dosing. For this program, we are planning an IND submission in the second half of calendar 2026. As we move these programs forward, our development focus is on delivering differentiated product profiles. Specifically, we are designing our compounds to enhance patient tolerability, including the potential for reduced gastrointestinal side effects while minimizing off-target effects such as hyperpigmentation, factors we believe are important for success in the long-term treatment of chronic obesity indications. Our preclinical data supports the potential of targeting melanocortin-4 receptor across both rare and select broader obesity indications. However, our focus will be on rare neuroendocrine disorders, planned registration clinical studies will enroll patients with hypothalamic obesity and Prader-Willi syndrome. In addition, preclinical and early clinical data support the potential for co-administration of melanocortin-4 receptor agonist with the GLP-1-based therapeutics such as tirzepatide, providing optionality as the obesity treatment paradigms continue to evolve. A couple of other things that occurred during the quarter, as Steve had mentioned, in January 2026, we executed the sublicensing of PL9643, a selective melanocortin-1 receptor agonist with positive Phase III clinical data in dry eye disease to Altanispac Labs. This transaction provided approximately $3.8 million in upfront consideration and allows us to sharpen our focus on our core obesity programs while retaining potential future financial participation through milestones and royalties. We also significantly strengthened our balance sheet with the completion of an $18.2 million public offering in November, which included the full exercise of the overallotment. In addition, we successfully regained compliance with the New York Stock Exchange American listing standards and our common stock resumed trading under the symbol PTN, restoring market visibility and liquidity. In summary, Palatin enters 2026 with a strengthened financial position, multiple partnerships with near-term milestones and a focused differentiated obesity pipeline. We believe this positions the company to pursue substantial long-term value creation. With that, I'll turn the call back over to the operator, and we will open the call to questions.

[Operator Instructions] Your first question for today is from Scott Henry with Alliance Global Partners.

If we could start with PL7737, as we get ready for the IND, what preclinical or translational signals give you the greatest confidence in differentiation versus current or emerging MC4R agonists, particularly around the tolerability angle?

Scott, well, the compound is designed -- first of all, we'll talk about hyperpigmentation. It's designed to be more selective for the melanocortin-4 receptor than the melanocortin-1 receptor, which should lead to a reduction or substantial reduction in the hyperpigmentation. Leading to the second part or the first part of your question. Listen, we control potential GI side effects through a variety of mechanisms, not the least of which is the way the product is administered and absorbed. So we slow down the absorption so that we don't get relatively large spikes in the absorption, which can lead to an increase or enhanced GI side effects.

Okay. Great. And as we get into the Phase I SAD/MAD trial, how are you thinking about patient selection? And what endpoints should we be thinking about as far as what we can get out of the clinical -- early clinical data? As well, I noticed Prader-Willi, is that an increased focus in addition to HO or it just seems like I'm seeing that a little more front and center than in the past?

So for the single-ascending and the multi-ascending dose, those are primarily safety studies. So certainly, for the single ascending dose, what we're looking for is just to confirm oral bioavailability that the product is safe and to really define a dosing window for 7737 and will be the same will be for the long-acting peptide when that goes forward as well. In the multiple ascending dose study, those will be carried out for a longer term. So there again, these will be in healthy obese patients. And there, again, of course, safety is always a paramount primary efficacy or primary results that you're looking for in these types of studies. But with that being said, because these will be healthy obese patients in the MAD part, we'll be looking for a reduction in their body weight. We'll be looking for reductions in control of hyperphagia and other parameters that go along with the obesity indication or controlling the obesity indication. So we do expect that we will get at least from the MAD part a pretty clear signal on how well these compounds can work. What's nice about that is we've seen in our hands that there's very good translatability from smaller studies, smaller efficacy studies to larger studies with this mechanism.

Okay, great. And with regards to Prader-Willi syndrome, is there an increased emphasis there? Or has that always just been in the background?

It's always been in the background, we've been -- we're looking for indications where there are, of course, meet the rare and orphan designation, but in which there are were substantial patients. If we think about some of the more micro-orphan indications that are genetically based and they left the melanocortin pathway, there are a relatively small number of patients there. So of course, they do represent valid markets and valid opportunities for development. However, we are still looking at some of the larger indications like HO and Prader-Willi where there are substantially more patients.

Okay. Great. And then final question on the clinical side, with the oral small molecule and the once-weekly injection. How do you anticipate positioning those 2 products between having an oral and an injectable? Do you view it as complementary? Just trying to get an idea of where we should think about each one of those.

I certainly think they're complementary. Each will have their patient populations that they're better suited for. One would expect that certainly for the weekly injectable peptide, one might expect to see a higher level of efficacy for patients on those. In general, we generally tend to see across the board that we can drive better efficacy with peptides than we can with the small molecules. However, of course, we do need to see final decisions on that will be predicated on what we see in the early studies. But there will be patient populations for each. And patients -- in these indications, these are long term -- they're not like generalized obesity where patients can reach a target goal, in other words, where they can come down a certain amount of weight, and come into a more healthy standpoint and then want to move on to lower dosing or maintenance. Here, these patients are probably going to be on long term, pretty aggressive therapy because essentially, their conditions are chronic and they don't go away in that essence. So you'll need both kinds of options to really manage these patients.

Okay. I guess I'll just give Steve a chance to say something. Steve, with regards to OpEx in Q2, fiscal Q2, it looks at about $7.4 million. Was there any kind of onetime noise from the transaction in there? And just -- I'm just trying to get a sense of how we should think about that OpEx number in the March quarter, the fiscal third quarter?

Thanks, Scott. Yes, the fourth quarter of '26 had a number of extraordinary or onetime, I think, is the best descriptions. And that amounted to over $2 million just in that quarter that we do not expect going forward. Onetime related to -- we cleaned up some -- we cleaned up a number of things that we weren't able to clean up with prior to the raise. And we did mention that in the Q that was filed earlier today that there was a number of, if you will, onetime extraordinary type expenses that will not -- we're not going to see going forward. So I would target approximately $2.5 million less in the first quarter of '26 -- second quarter of '26 versus the fourth quarter of 2025, which was a little over 7 -- I think, or approximately $7.4 million.

Your next question for today is from Yale Jen with Laidlaw & Company.

Just going to follow up a little bit on Henry's questions first on the safety side. As we know that in the Prader-Willi syndrome, the current approved drug has some issue on the safety side, and there has 15% to 20% of discontinuation of patients being treated. So how would you guys assess that issue and when you're starting your Phase I study and then maybe further down the pike?

Well, as a Phase I study, we'll get a very good look at what the tolerability and the safety profile for both of the approaches are. And based on our experience with the melanocortin-4 receptor system, we have a pretty good understanding of what we expect to see. In general, you will see some GI side effects. We think that those are controllable through the way these things can be administered, so that those are at lower rates. We don't generally see -- those types of discontinuations with this mechanism. They generally tend to be fairly low with regards to the GI side effects. In addition, we know we want to avoid the MCR1 as much as possible so that we can reduce that potential for hyperpigmentation, which many patients don't like. So overall, I think this mechanistically, this approach probably will result in lower numbers of discontinuations in these patient populations along with delivering really good efficacy. However, with that being said, you have to get in the clinic and we have to show that.

Sure. And maybe 2 quick questions here. The first one will be that in terms of PWS, you were looking for the hyperphagia. And in your Phase I study, maybe probably more likely in Phase II study, how you assess the 2 sort of metrics, one for hyperphagia or the other is for weight reduction in your study design to see clear -- hopefully to see a clear sign that both have -- it will show an impact in both sides, both aspects.

Sure. So I think the way we think about it, when you're dealing with -- we talk about Phase I, we're really talking about the multiple ascending dose study. Obviously, we're not going to expect to see very much in healthy normals from a single dose other than safety. When we're dealing with a 4-week study, so a 20-day study in healthy obese patients, what you're looking for there is, are we seeing consistent target engagement over the full 4 weeks of dosing? Are we seeing consistent PK parameters and consistent exposure of the drug? We expect to see that there should be -- we know that from other studies we've done that we would expect to see a reduction in food intake and a reduction in body mass in these patients. With you go more mechanistically, one of the ways that this product melanocortin-4 receptor works on downstream effect of that is, of course, the control of hyperphagia that can occur in patients and obese patients, whether they be normal or they have a syndromic disease such as PWS. Until you get into PWS patients, I mean, you're not going to really know how much you control the hyperphagia, right? However, you'll get a very strong signal from the Phase I that you're working on target how much efficacy you can drive and that should translate into a strong signal in the PWS patients as well. But until you get there, you're not going to know. I mean you do have to get into the actual intended patient population itself.

Okay. Maybe actually, just continuing with this one is that based on the resources or anticipated resources going forward, PWS will be something that you may contemplate more aggressively next year? I mean, in later this year or really in the next year?

So I'm going to -- the answer is you're correct, but more in the next year, but I'll let Steve kind of walk through how the cash flow plays out over the next 18 months.

Thanks, Carl. So we're -- the initial -- as Carl mentioned, the SAD/MAD Phase I studies are the initial. And we're targeting and we have sufficient cash on hand right now to move forward with both the oral small molecule and the long-acting peptide, again, in the Phase I SAD/MAD. That data will read out for the oral small molecule by year-end and in the first half of next year on the long-acting peptide. Thereafter, we're going to be moving forward into whether you want to call it a Phase II or Phase II/III in specifically just HO patients and PW Prader-Willi syndrome patients in both the oral small molecule and the long-acting peptide, but they will not start before mid of 2027. Is that helpful?

Yes, absolutely. That's actually great color. Maybe the last question here is the -- you guys have a study with the combination of GLP-1 beforehand, I understand that, obviously, that's a very, very crowded space or very highly competitive space. But certainly, you have some positive data. So how would you position or in what context do you anticipate that GLP-1 may play a role in your product development or clinical study going forward?

So again, I think this has been a long thing that we've been doing work in combination of these 2 mechanisms for quite a bit of time. And as you said, we've done clinical trials specifically looking at the interaction. As you see more and more incretin-based therapies coming into the marketplace, now they're moving from just injectables to oral, you're likely to see clinicians wanting to combine these mechanisms, particularly for patients for PWS, for example, that may have really very severe hyperphagia, where they need additional -- something additionally more than, let's say, any one mechanism can combine. So that's why we began to think about how you combine these mechanisms to make sure that every patient that comes through can really get an optimized therapy. So I think it'd be a little naive to think that although during the clinical development program, you'll focus on a monotherapy approach Certainly, some of the patients coming into these studies will be on GLP-1s. But I think longer term, it's likely that you're going to see combination therapy. So it's just really positioning ourselves for, you can call it life cycle management or the reality of what's going to occur in the marketplace when these products get approved.

Okay. Great. Again, congrats with sufficient resources to move forward. Certainly, this is a great space to be in and congrats on all the progress.

We have reached the end of the question-and-answer session. And I will now turn the call over to Dr. Carl Spana for closing remarks.

Thank you. I'd like to thank everyone for participating in the Palatin Second Quarter Fiscal 2026 Conference Call. We're excited to what we're doing here. I think we're in a very good place with really good assets, and we'll continue to be excited in moving these products forward and really updating you as we continue to make progress in our development. That being said, have a great day, and we look forward to continue to update you on our progress. Thank you.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to Palatin's First Quarter Fiscal Year 2026 Operating Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Before we begin our remarks, I'd like to remind you that 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 accurate and that the actual results may differ materially from those anticipated due to the 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 by Palatin's prospects. Now I'd 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's First Quarter Fiscal Year 2026 Call. I'm Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Chief Financial Officer and Chief Operating Officer. I'll now turn the call over to Steve, and he'll give the financial update and also include several corporate items as well. Steve?

Thank you, Carl. Good morning, good afternoon, and good evening, everyone. Regarding out-licensing programs update, in August 2025, we executed a research collaboration, license and patent assignment agreement with Boehringer Ingelheim for the treatment of retinal diseases, wherein we received an upfront payment of EUR 2 million or approximately $2.3 million in August of 2025, and we achieved a EUR 5.5 million, approximately $6.5 million research milestone in September 2025. In addition, we are eligible to receive up to EUR 12.5 million or approximately $14.5 million in additional near-term research milestones and up to EUR 260 million or approximately EUR 307 million in development, regulatory and commercial milestones, plus tiered royalties on future net sales. Regarding corporate update, public offering and NYSE American, on November 12, 2025, Palatin announced the closing of its upsized $18.2 million underwritten public offering, including the full exercise of the overallotment option consisting of approximately 2.8 million shares of common stock or prefunded warrants, together with Series J warrants to purchase up to approximately 2.8 million shares of common stock or prefunded warrants and Series K warrants to purchase up to approximately 2.8 million shares of common stock or prefunded warrants at a combined public offering price of $6.50 per share of common stock and accompanying Series J and Series K warrants. Each Series J warrant will have an exercise price of $6.50 per share and will be immediately exercisable. The Series J warrants will expire on the earlier of the 18-month anniversary of the original issuance date or the 31st calendar day following the date that Palatin receives FDA acceptance of an investigational new drug for an in-house obesity treatment compound, albeit a long-acting peptide or oral small molecule. Each Series K warrant will have an exercise price of $8.125 per share and be immediately exercisable. The Series K warrants will expire on the 5-year anniversary of the original issuance date. However, and importantly, if a holder of Series J warrants have not been terminated in accordance with their terms prior to the expiration of the FDA exercise period, such holders Series K warrants will terminate automatically upon the earlier of the 18-month anniversary of the original issuance date of the Series J warrant or the expiration of the FDA exercise period and prior to the 5-year anniversary of the issuance of the Series K warrant. In nonlegal speak, that means if Palatin hits the IND acceptance in, say, the first half of 2026, which is what we're anticipating, if the warrants are not exercised by the holder, the Series J warrant expires and the Series K warrant expires. Our expectation is that we would receive full exercise of the Series A warrants at that performance criteria. Moving over to the actual offering. The gross proceeds from the offering before deducting the underwriting discounts, commissions and offering expenses are expected to be approximately $16.9 million. Plus Palatin may receive additional proceeds of up to $18.2 million upon the cash exercise of the milestone-related Series J warrants that I just referenced. However, there is no guarantee that such warrants will be exercised and accordingly, Palatin will receive any proceeds from such exercise. Palatin intends to use the net proceeds from the offering to support the development of its obesity program and for working capital and general corporate purposes. Regarding NYSE American, we are very pleased with the result here of the offering and some of the other operating activities. But specifically, as a result of the closing of the offering, Palatin regained compliance with NYSE American continued listing standards. So effective November 12, yesterday, 2025, Palatin's common stock resumed trading on the NYSE American under the symbol PTN, which was our old symbol when we were on the NYSE American Exchange. Moving over to the financial results for the quarter ended September 30, 2025. Regarding revenue, for the quarter ended September 30, 2025, Palatin recognized approximately $8.8 million in collaboration license revenue compared to 0 for the comparable quarter last year. The increase in collaboration license revenue is all related to the Boehringer Ingelheim, the BI agreement, which consisted of the upfront payment and the achievement of a research milestone and certain cost-related reimbursements. Regarding operating expenses, total operating expenses were $4.2 million for the first quarter ended September 30, 2025, compared to $7.8 million for the comparable quarter last year. The decrease was mainly related to a decrease in spending on our MCR development programs, melanocortin receptor system related development programs. Cash flows. Palatin's net cash used in operations for the quarter ended September 30, 2025, was $1.6 million compared to net cash used in operations of $7 million for the comparable quarter last year. The decrease in net cash used in operations was mainly due to the recognition of license and contract revenue related to our BI agreement recognized during the quarter. Now moving over to net income and loss. Palatin reported net income for the quarter ended September 30, 2025, of $4.7 million compared to a net loss of $7.8 million for the comparable quarter last year. The increase in net income for the quarter ended September 30, 2025, was, again, mainly due to the revenue recognized pursuant to the BI agreement and partially for the decrease in operating expenses. Regarding cash position. As of September 30, 2025, Palatin's cash and cash equivalents were $1.3 million, a bit low compared to cash and cash equivalents of $2.6 million as of June 30, 2025. The $1.3 million of cash and cash equivalents as of September 30, 2025, does not include approximately $6.5 million milestone payment pursuant to our BI agreement for retinal diseases, which was received in October 2025 and importantly, the net proceeds from our underwritten public offering, again, the net proceeds of $16.9 million, which closed on November 12, 2025. As a result of the offering, net proceeds of $16.9 million and projected operating expenses, the going concern provision has been removed. Palatin currently expects a cash runway beyond the quarter ending December 31, 2026. Now I'll turn it back over to Dr. Spana. Carl?

Thank you, Steve. As we move forward into 2026, our research and development efforts will be focused on the development of highly selective melanocortin-4 receptor agents for the treatment of various forms of syndromic and genetic obesity, such as hypothalamic obesity. Melanocortin receptor system, especially the melanocortin-4 receptor, is essential in regulating energy balance and food intake and is a well-validated target for obesity treatment. Using our technology and extensive experience in the design and development of melanocortin agonist, we have developed a proprietary portfolio of highly selective melanocortin-4 receptor agonist that includes both orally active small molecules and long-acting peptides. Our novel selective melanocortin 4 receptor compounds have reduced activity at the melanocortin-1 receptor and therefore, reduced potential to cause skin darkening. The lack of activity at the melanocortin-1 receptor and the once-weekly oral dosing are significant improvements over current FDA-approved melanocortin treatments for obesity. PL-7737 is our melanocortin-4 receptor selective orally active small molecule. In multiple preclinical obesity models, PL-7737 has demonstrated significant reductions in food intake and weight loss. PL-7737 is currently undergoing the various activities required to open up an investigational new drug application with the FDA, such as animal toxicity testing and cGMP manufacturing. PL-7737 is on track for an IND filing in the first half of calendar 2026. And the initial PL-7737 clinical studies will include single ascending and multiple ascending studies in healthy obese and hypothalamic patients. Data is expected in the second half of 2026. Melanocortin-4 receptor extended duration peptides are highly selective for the melanocortin-4 receptor and have demonstrated pharmacokinetic properties consistent with either once a week or once every 2-week dosing. We expect to initiate IND-enabling studies in the first half of calendar '26 and first-in-human studies are anticipated in the second half of calendar 2026 as well. In addition to our melanocortin-4 receptor obesity programs, we have multiple programs designed to take advantage of the role that the melanocortin system plays in regulating stress responses and resolution of inflammation. Based on this approach, we have development candidates for multiple ocular indications, inflammatory bowel diseases and kidney diseases that we are expecting to out-license. We recently entered into a collaboration agreement with Boehringer Ingelheim for the development of candidates for the treatment of various types of retinal diseases such as diabetic retinopathy or diabetic macular edema. As part of the collaboration agreement, we received an upfront payment and are entitled to receive additional development, clinical and regulatory milestones as well as royalties on net sales. Our agreement with Boehringer Ingelheim validates the potential of targeting melanocortin system, and we believe we will be focusing our business development efforts on licensing our other melanocortin receptor system programs. These include PL-9643, a Phase III development candidate for dry eye disease; PL-8177, a clinical stage development candidate for ulcerative colitis and our preclinical candidates for kidney disease. Additional highlights for the quarter include the execution of an $18.2 million equity offering, which Steve talked about, and the resumption of our stock trading on the NYSE American under the PTN ticker symbol. Thank you for participating in the Palatin First Quarter Fiscal Year 2026 Conference Call. As a reminder, you can find additional information on our programs on our website. We will now open the call to questions.

[Operator Instructions] Your first question is coming from Scott Henry from AGP.

Congratulations on the considerable progress. If I could just talk a little bit about the pipeline. Could you highlight the ideal target profile for use to treat HO patients for PL-7737 as well as the long-acting peptides?

Sure, Scott. Thanks for the question. So we'll focus first on 7737, which is an oral compound. What we'd like to see in that comp is one, we really want to see a significant diminishment of activity at the melanocortin 1 receptor, which we actually -- we know we have accomplished that. And we also like to see in dealing with obesity, we want to avoid our spikes in exposure and rapid drops in exposure. So we want compounds that have essentially a very slow absorption and a very flat pharmacokinetic curve. So one that will be indicative of once-a-day dosing and one that would allow us to essentially keep the patients for a prolonged period of time in the therapeutic window of where the drug is active. So we don't see dips. We want that drug to stay for as long as possible where it's active because we know that once we can fall out of that range, we see that with other obesity treatments, patients start to eat again. So you really want to keep them up there. And that's really what we've accomplished with 7737. It has a very long half-life in both rats, mouse and dogs, and we suspect that will be the same in humans as well. And we can -- therefore, you'll keep it dosing to a steady state and allow these patients for a prolonged period of time to stay in that therapeutic window and really maximize efficacy. And that's very similar to what we're trying to accomplish with the long-acting peptides as well. Again, these are absorbed. They very quickly bind to plasma proteins, and they have a very flat, long extended pharmacokinetic profile. And these are the profiles that are ideal for treating obesity patients. We avoid spikes. We don't want a rapid spike, a very high C Max, for example, because that can lead to side effects such as GI side effects. I don't want to avoid those. You want to keep it essentially steady absorption, slow, steady and flat. Those really, I think, are the ideal parameters. And we see that for both our peptides and we see that for the oral active small molecule. So we think we really have a very nice profile that's going to play very well, both from a reduction of side effects and increased efficacy.

Okay. And these are next-generation compounds. So I know one of the issues was hyperpigmentation. Can you talk about how these next-generation compounds address some of those side effects in that adverse profile?

Sure. So the pigmentation or hyperpigmentation is driven through activity at the melanocortin-1 receptor. So we spent a lot of time -- we've been in this field for a long time, and we've been able to develop selective agonists for the various receptors and we really understand the structure function relationships that have allowed us to really drop down that MCR1 receptor activity. So we're talking about hundreds of thousand fold selectivity for 4 over 1 that will really allow us to either dramatically reduce or potentially eliminate the potential for skin darkening. So that's how we accomplished it.

Okay. Great. Final question on the HO program. There's a big player out there that you will be competing with. How do you see yourself positioned in that landscape?

Well in any drug market, we believe there's going to be a multibillion-dollar market, and there's going to be room for multiple players. I think it's all going to come down to the quality of the compounds that you bring forward. And I'm not going to comment on the compounds that they have and -- clearly, their first compound that should be approved will be first generation. We know that it has MCR1 activity, and it has once-a-day dosing. We have some other compounds that are further back in development. I don't -- there's not a lot of information on those, so I won't comment on them. What I will say is the way to be a player in that marketplace is to have the type of compounds that we have in both our long-acting peptide and early active small molecule, which are reduction of MCR1, so the elimination of potential hyperpigmentation and really an efficacy profile that -- an exposure profile that limits the potential for GI side effects and maximize the potential for activity. So speaking of where we are, we're very confident and very comfortable with our compounds. We think they have really excellent properties to be successful. And as we get to the clinic, we're going to prove that.

Okay. Great. Final question. The BI collaboration brought in a considerable amount of nondilutive capital. Do you have any guidance when we may see the next collaboration from some of the other pipeline compounds?

Scott, this is Steve. Yes, we were extremely pleased with not just the execution of the BI, Boehringer Ingelheim collaboration but the actual partnership. We -- the dating was quite significant before we executed with BI. And since we've executed, it's been fabulous, really great group to work with. So notwithstanding the initial upfront payment of $2.3 million and the $6.5 million for the milestone achievement, we have stated that we anticipate near-term resource development milestones of approximately $15 million. And the guidance I can give you that my definition of near term is within the next 12 months. So hopefully, that's helpful.

That concludes our Q&A session. I'll now hand the conference back to Dr. Spana for closing remarks. Please go ahead.

Thank you. It's been a really tremendous quarter for us with the Boehringer Ingelheim collaboration, which took quite an extensive period of time to accomplish but we're very proud of that and very happy to be working with them. We think they're going to be a phenomenal partner for our retinal program. The execution of the financing with some very excellent investors and really the hard work that was done by Steve and others to really get us relisted on the NYSE Amex and get off the pink sheets was really another great accomplishment. So really very pleased with where we are and the opportunity in front of us and have the capital to really execute. So we really look forward to keeping you guys informed on our progress and getting out there and meeting with various investors inter-quarter period. So with that being said, really the rest of 2020 -- or as we look at 2026 from a calendar perspective, we expect a lot of great things to be going on at Palatin and really excited here and working hard and look forward to keeping you updated. So have a great day, be safe. Enjoy the holidays. Thanks.

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Greetings. Welcome to Palatin's Third Quarter Fiscal Year 2025 Operating Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that 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 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 by Palatin's prospects. Now I would like to turn the call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatin.

Thank you. Good morning, and welcome to the Palatin third quarter fiscal year 2025 call. I'm Dr. Carl Spana, CEO and president of Palatin. With me on the call today is Steve Wills, Palatin's Chief Financial Officer and Chief Operating Officer. I'll now turn the call over to Steve, and he'll give the financial update.

Thank you, Carl. Good morning. Good afternoon, everyone. Regarding nonprogram corporate update, on May 7, 2025, Palatin received notice from NYSE regulation that it had suspended trading of the company's common stock on the NYSE American Stock Exchange and determined to commence proceedings to delist Palatin's common stock as a result of its determination that the company is no longer suitable for listing pursuant to Section 1003 F5 of the NYSE American Company Guide due to the low selling price of the company's common stock. Trading of the company's common stock on the NYSE American was suspended on May 7, 2025, and began trading on the OTC Pink market on May 8, 2025. Palatin exercised our right to review of NYSE regulations' determination to delist Palatin's common stock. We are disappointed and do not agree with the NYSE's decision and are assessing all available options. Moving over to our fiscal third quarter ended March 31, 2025 financial results. Regarding revenue, pursuant to the completion of the sale of Vyleesi's worldwide rights for female sexual dysfunction to Cosette Pharmaceuticals for up to $171 million in December 2023, Palatin did not record any product sales to pharmacy distributors for the quarter ended March 31, 2025 and March 31, 2024. Regarding operating expenses, total operating expenses were $4.8 million net of $0.4 million gain on a purchase commitment for the quarter ended March 31, 2025, compared to $9.2 million for the comparable quarter last year. The decrease was mainly the result of the decreased lower spending related to our MCR programs for the quarter ended March 31, 2025. Regarding cash flows, Palatin's net cash used in operations for the quarter ended March 31, 2025, was $5.4 million compared to net cash used in operations of $8.6 million for the same period in 2024. The decrease in net cash used in operations is mainly due to the decrease in net loss during the period and secondarily to working capital changes. Regarding net loss, Palatin's net loss for the quarter ended March 31, 2025 was $4.8 million compared to a net loss of $8.4 million for the same period in 2024. As referenced above, the decrease in the net loss for the quarter ended March 31, 2025 over the quarter ended March 31, 2024 was driven primarily by the decrease in operating expenses for the quarter ended March 31, 2025. Regarding cash position, as of March 31, 2025, Palatin's cash and cash equivalents were $2.5 million compared to cash and cash equivalents of $9.5 million at June 30, 2024. The $2.5 million of cash and cash equivalents as of March 31, 2025 does not include approximately $3.5 million of net proceeds received in April and May 2025 from Palatin's ATM facility and the recent equity offering. We are actively engaged with multiple potential funding sources, including business development initiatives for future operating cash requirements. Let me turn the call back over to Carl.

Thank you, Steve. I'll now go over the operating update for the quarter. Updates for melanocortin-4 receptor obesity programs are as follows. For our Phase 2 study, BMT-801, evaluating the safety and efficacy of the co administration of the melanocortin-4 receptor agonist, Bremelanotide, with Tirzepatide, a GLP-1/GIP dual agonist in patients with generalized obesity, we reported positive top line data for the study. The study successfully answered the research questions, does co administration result in increased weight loss, can treatment with melanocortin-4 receptor agonist be used as a treatment for weight loss maintenance by blunting the weight regain seen post in treatment therapy? The primary efficacy endpoint was weight loss of the combined treatment compared to placebo control at the end of eight weeks of treatment. Patients on the combined therapy had a weight reduction of 4.4% versus 1.6% for the placebo arm. The P value here was highly significant. Importantly, 19% of patients on the combined treatment had a weight reduction of greater than 7% compared to 0% for patients on placebo and the Tirzepatide alone arms. Concerning a weight loss maintenance effect, low dose of Bremelanotide prevented the rapid weight regain following Tirzepatide treatment. So a very positive study for us. As we move forward, our obesity and weight loss management portfolio includes both novel long acting melanocortin-4 selective peptide agonist and the orally active melanocortin-4 receptor selective small molecule agonist PL7737. During the quarter, we were notified by the FDA that they granted orphan drug status to PL7737 for treating patients with obesity due to leptin receptor deficiency. Pending financing, PL7737 is on track for an initial new drug application submission in Phase 1 single ascending dose and multiple ascending dose studies in the first quarter of 2026. Our novel next generation selective melanocortin-4 receptor compounds have reduced activity at the melanocortin-1 receptor and therefore reduced potential to cause skin darkening. The lack of MCR-1 activity once weekly or oral dosing represents significant improvements over current FDA approved melanocortin treatments. You can find additional information on our clinical trial at clinicaltrials.gov and on our website. During the quarter, we also reported positive top line data for a Phase 2 study evaluating our oral PL-8177, a selective melanocortin-1 receptor agonist for treating ulcerative colitis. The study evaluated PL-8177 versus placebo for eight weeks in moderate ulcerative colitis patients. Clinical remission was achieved for 33% of PL-8177 treated patients versus 0% for placebo. Clinical response was achieved for 78% of PL-8177 patients, compared to 33% for placebo again, highly significant. The symptomatic remission was achieved for 56% percent of patients on PL-8177 versus 33% for placebo. This exciting data has resulted in a significant increase in business development discussions with potential partners, which is in line with our current strategy to out license this program. During the quarter, we also reported additional data for the PL-9643 MELLODY-1 Phase 3 study in dry eye disease patients. The data from a responder analysis that compared placebo to PL9643 demonstrated that for 6 of the 13 symptom endpoints, a significantly higher percentage of patients had a complete symptom clearing, i.e., they were cured. This, again, was highly significant. This level of symptom clearing has not been achieved by any FDA approved treatment for dry eye disease. Clearing was seen as early as two weeks and continued to improve over the 12 weeks of the study. We are actively engaged in potential corporate partners with this program as one of our earlier ocular programs, and we anticipate one or more transactions closing in the second half of calendar '25. Before moving on to take questions, I would like to comment on our strategy. We are focused on our research and development efforts on our melanocortin-4 receptor obesity assets. We believe the pharmacological treatment of obesity is in the early stages of a multiyear cycle of innovation and will have a market value in excess of $100 billion per year. Melanocortin system plays a critically important role in regulating stored energy and food intake, and we strongly believe that the melanocortin-4 receptor agonist will be an important part of the future of obesity treatment and weight loss management. Thank you for participation, and we'll now open the line to questions.

We have a question from Scott Henry from Alliance Global Partners. Scott, your line is live. Please go ahead.

A couple of questions on the obesity program. First, I know that a low dose of Bremelanotide or BMT was used in this study. The question is, do you believe a higher dose would increase the weight loss, putting it in the ranges of Wegovy or Zepbound?

Yes, we actually have a publication out on that. We actually looked at higher doses of Bremelanotide in a progress study, and where we were looking to optimize, it's a short acting compound, so they were on multiple doses per day so that patients would be in optimal dose range while they had access to food. And the weight loss there really is comparable to what you would see with the single agent Wegovy. Tirzepatide is a multiple mechanism drug, and it's a little bit better than Wegovy. But with regards to these single mechanism drugs like Wegovy, a good MCR4 agonist like Bremelanotide or the ones that we're working on, they will have highly competitive weight loss.

And then with the GLPs, the rebound weight regain is kind of a common issue. Do you think we may see this idea of weight maintenance in the future, even potentially getting into the label? Could that be more of a focus, in these next generations?

Absolutely. The new compounds coming through, are going to be evaluated as weight loss maintenance. There are studies that are going on right now doing that with the GLP1. But you're going to need newer mechanisms to really address that on a long term basis. Right now, we don't have any evidence that patients that have, once they've lost weight, can effectively come off of treatment and maintain that weight. Right now, strategy is they're going need to be on long term weight loss maintenance, you know, how the dosing works out, what agents are going to be used, know, that's going to be worked out in clinical trials. Melanocortin-4 agonists are really ideally suited for that. It's probably dysfunctions in the hypothalamic MCR leptin pathways that actually are leading to that weight regain, and this really begins to address that directly.

And the final question, just on the next generation of MC4Rs, if you could just talk about the benefits that will separate them from the first generation. Pigmentation was an issue. I don't know if that's going to be one of the things that may be different. But if you could just talk about what your expectations are for that next generation?

Sure, thanks. Both Bremelanotide, and there's another one approved Setmelanotide, what I would consider first generation compounds. They are good, they work well, but they are short term dosing, so you need one or more doses per day. They do have the pigmentation that you pointed out. They're not ideal treatments or as competitive in say a general market as current treatment. So what we're looking to do here is really eliminate that MCR-1 activity so we don't get the skin darkening. I think we've been able to do that quite successfully. In addition to that, if we're dealing with a peptide, which wouldn't be orally active, we certainly want that to be once a week, which is very patient friendly, or with 7737 which is a small molecule, we want that, it's a once a day oral, has a very nice extended half-life, so we can really get to steady state. And that's really a goal with these things. Compared to what's out there on the melanocortin side, when you deal with short acting, compounds, you know, it's very hard to maintain a steady state. And in obesity, you really want to get that steady state, and we can achieve that with both the long acting peptide or the oral small molecule that we're bringing forward. So they really are improvements over what's out there today.

Thank you. This does conclude our question and answer session for today. I would now like to pass the floor back to management for closing remarks.

Steve and I would like to thank everyone for participating in our third quarter fiscal year 2025 call. We look forward to keeping you updated on our progress. I think from an operating standpoint, it was a phenomenal quarter for us. We did have a little difficulty with the MISC, but I think that's going to be transitory. We're going to work to address that as quickly as we can. So thank you, and, please have a great day.

Thank you. This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Greetings. Welcome to Palatin Technologies, Inc.'s Second Quarter Fiscal Year 2025 Operating Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that statements made by Palatin Technologies, Inc. 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 the 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 by Palatin Technologies, Inc.'s prospects. Now I would like to turn the call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies, Inc. Please go ahead.

Thank you. Good morning, and welcome to the Palatin Technologies, Inc. second quarter fiscal year 2025 call. I am Dr. Carl Spana, CEO and President of Palatin Technologies, Inc. With me on the call today is Steve Wills, Palatin Technologies, Inc.'s Chief Financial Officer and Chief Operating Officer. I'll now turn the call over to Steve, and he'll give the financial update.

Thank you, Carl. And welcome, everyone. Regarding our financial results, starting with revenue, pursuant to the completion of the sale by leases worldwide rights for female sexual dysfunction to CoSette Pharmaceuticals, for up to $171 million in December of 2023, Palatin Technologies, Inc. did not record any product sales to pharmacy distributors for the second quarter ended December 31, 2024. For the second quarter ended December 31, 2023, gross product sales were $4.3 million and net product revenue was $2 million. Regarding operating expenses, total operating expenses were $2.6 million net of a $2.5 million gain on the sale by lessee for the second quarter ended December 31, 2024, compared to $0.9 million net of a $7.8 million gain on the sale by lessee for the comparable quarter in 2023. The increase was mainly the result of the decrease in gain on the sale by lessee to CoSette for the second quarter ended December 31, 2024. Regarding other income and expense, total other income expense net consists mainly of foreign currency transaction gains and losses, and the change in fair value of warrant liabilities, which Palatin Technologies, Inc. had recorded as a liability on the consolidated financial statement. For the quarter ended December 31, 2023, Palatin Technologies, Inc. recorded a fair value adjustment loss of $8.1 million and offering expenses of $0.7 million. Regarding cash flows, Palatin Technologies, Inc.'s net cash used in operations for the quarter ended December 31, 2024, was $4.8 million compared to net cash used in operations of $10.5 million for the same period in 2023. The decrease in net cash used in operations is mainly due to the decrease on the gain on the sale by lessee during the period and secondarily to working capital changes. Regarding net loss, Palatin Technologies, Inc.'s net loss for the quarter ended December 31, 2024, was $2.4 million compared to a net loss of $7.8 million for the same period in 2023. The decrease in net loss for the 2024 quarter over the quarter ended in 2023 was driven primarily by the change in fair values of the warrant liability and the elimination of our leasing net product revenue and selling expenses offset by the decrease on the gain of the sale by lessee. Regarding cash position, as of December 31, 2024, Palatin Technologies, Inc.'s cash and cash equivalents were $3.4 million compared to $2.4 million at September 30, 2024, and $9.5 million as of June 30, 2024. This $3.4 million of cash and cash equivalents as of December 31, 2024, does not include the $4.3 million of net proceeds that we raised in an equity offering which closed in February of 2025. We are actively engaged with multiple potential funding sources for future operating cash requirements. I'll now turn the call back over to Carl.

Thank you, Steve. I'll now go over some of the operating highlights for the quarter. Starting with our phase two signal detection study, BMP 801, evaluating the safety and efficacy of the coadministration of the melanocortin 4 receptor agonist brimonidine with risapatide, a GLP-1, GIP-1 dual agonist. This is being done in patients with generalized obesity. This study has been completed and the database has been locked. Top line data from the study will be available later this month. The study was designed to evaluate two primary research questions: Does coadministration result in increased weight loss, and can treatment with amyloidone 4 receptor agonist be used for weight loss maintenance by blunting the weight regain seen post-incretin treatment? In addition to safety, the study's primary endpoint is percent weight loss of the combined treatment compared to placebo control at the end of the treatment. A variety of secondary endpoints such as satiety and preservation of lean body mass were also evaluated. Our obesity and weight loss management portfolio includes both long-acting monoclonal 4 receptive selective peptide agonist and the orally active monoclonal 4 receptor selective small molecule PL 7737. We are on track to move both programs into IND enabling activities in clinical studies in calendar 2025. Our novel next-generation selective melanocortin-4 receptor compounds have reduced activity at the monoclonal 1 receptor, therefore have reduced potential to cause skin darkening. Lack of MCR 1 activity, once-weekly dosing, or oral dosing represents significant improvements over current FDA-approved melanocortin treatments. You can find additional information on our clinical trial at clinicaltrials.gov, and our website has recent presentations on our novel next-generation melanocortin-4 receptor selective compounds. For OPL 8177, our selective monoclonal 1 receptor treatment for Phase two study remains on track for release of top line data in the first quarter of calendar 2025. In anticipation of the data, there has been a significant increase in business development discussions with potential partners, which is in line with our current strategy to outlicense this exciting program. In December of 2024, we released the top line data from our Phase two breakout study evaluating brimonidine as a treatment for patients with diabetic kidney disease. Key results from the study showed that 71% of the patients in the study achieved a greater than 30% reduction in their urinary protein to creatinine ratio, and 71% of the patients had an improved or stabilized estimated pulmonary filtration rate. Results validate the modulated line of cortin system could potentially be a new therapeutic strategy and possibly a disease-modifying treatment option for people living with progressive kidney disease. The detailed results of the breakout study have been accepted for presentation at a medical meeting. Based on the successful outcome of the study, we have initiated discussions with potential partners for out licensing this program, which is in line with our current strategy. Previously announced that we are taking a multi-pronged approach to realizing the value of our ocular melanocortin program. In support of this, we are actively engaged in discussions with larger potential strategic partners for out licensing, investors interested in funding further development, and with peer companies concerning potential business combinations. Before moving on to take questions, I would like to comment on our strategy. We are focusing our research and development efforts on the line of Cortisol four receptor BC assets. We believe that the pharmacological treatment of obesity in the early stages of a multiyear cycle of innovation will have a market value in excess of $100 billion per year. The Laticore system plays a critical role in regulating stored energy and food intake. We strongly believe that amyloidin four receptor agonists will be an important part of the future of obesity treatment and weight loss management. Palatin Technologies, Inc. has a long-standing research effort to develop monoclonalcortin therapeutics that selectively activate the line of cortin four receptor as treatments for obesity and weight loss maintenance. With our extensive experience in the design and development of Latticorn Agnes for treating obesity, including two clinical studies previously completed and published, we are well-positioned to be a leader in the development of Lidocort-based therapeutics for weight loss and, importantly, weight loss maintenance. Thank you for your time. We will now open the call to questions.

Thank you. At this time, we will be conducting a question and answer session. Our first question today is coming from Joe Pantginis from H.C. Wainwright. Joe, your line is live.

Hey, guys. Good morning. Good afternoon. I wanted to focus on the upcoming obesity data. I know you cannot say much right now after the database locks, but first, I wanted to just discuss the benchmark, and you can correct me if my numbers are wrong. So if you look at the tirzepatide data alone, after eight weeks, we are looking at about a 6% weight loss, maybe around 4% for placebo adjusted. So with that benchmark in mind, what would you consider a win for your study with regard to weight loss at eight weeks and whether it is the same or not, what would you consider to be enough percentage weight loss to move the program forward?

Well, that is a good question, but maybe we think about it slightly differently. So the answer to your question is, you know, this is a signal detection study. So we do not a priori or not a priori going in with, you know, some frequency number. Right? What we are really looking for is a very clear signal. So what we would like to see in the study is that the combined arm is a high percentage of weight loss. And then in addition to that, we are looking at some, you know, other key metrics. For example, you know, the percentage of patients that are achieving either 4, 5, 6, 7, or 8% weight loss in that eight-week period, you know, combined versus, you know, combined versus tirzepatide alone. Because that is a little bit more important. It is more important a clinical question. Right? You know, if you put somebody on this, how many of them are going to get, you know, 5% weight loss, which is really clinically meaningful and the FDA level of approvals. So that is one message we are looking at. The second way of looking at it also is, you know, tirzepatide is going as if you think about things in four-week increments. Right? Tirzepatide monotherapy is going to, you know, probably have its maximal effect in the first four weeks. It is going to start to slow down. Yep. And as you go forward from there. So can we reverse that slowdown? Right? Can we see more patients losing more weight, you know, the second four weeks, say, versus the first four weeks when we compare the coadministration versus the monotherapy arm. So those are all those are the three things that we are looking for. We are looking for an increase in the absolute weight on a percentage basis. There is no number, there is no magical number. And what I mean by that is this is not an optimized study. You know, this is a very low dose of brimonidine. So, you know, we are not optimized for, you know, necessarily to see some big jump. But I think we are certainly, you know, dosing high enough to get a nice clear signal. The other point that I do want to bring up though is really we talk about, you know, combination versus the monotherapy arm. Let us think about the brimonidine alone arm versus the placebo arm. I expect, yep, you know, after placebo patients that are going on to placebo, you know, they will have weight loss in their first treatment period on tirzepatide. They should regain weight. And we would really like to see if this low dose can blunt that weight regain. Really speaking to the concept of a weight loss maintenance. So those are kind of the three major concepts that we are looking for a signal on.

No. I understand totally about how you are looking at it, and it makes sense. I guess, the reason for my question is, when you look at, I guess, the analyst's viewpoint and investment community viewpoint, I think they are going to be, you know, automatically comparing, you know, right or wrong, you know, having, you know, comparing against the benchmark. So I think that is what is driving the, you know, what would be expected to be a win from a percentage standpoint, but I understand your, you know, your approaches here and it makes sense. I guess when you look forward for the program, are there additional indications you might consider beyond sort of the broader weight loss community? Any sort of orphan indications that you might consider from MCR four standpoint?

Sure. Certainly. You know, listen, there is a, I think, a growing opportunity to think about the use of Melanocortin four receptor agonists in, you know, in rare and orphan syndromic diseases. There are a number of mutations in the leptin and the right quadrant system. There is Prader Willi syndrome. There is Bardet Biedl. These are things that this is not unknown. I mean, Rhythm is out there. They have their products and a lot of typos in there. But hypothalamic obesity is a very key one because that is probably the largest market opportunity. And it is one where we think we, you know, our new compounds coming through will be very competitive. And, you know, that gives us a, you know, in a nice way, you know, there are two of us in that in monoclonal four receptor agonists in looking at that orphan rare space. When you go to the general obesity side, you will, although I believe this is the best mechanism, we will, you know, we are going to get moved into a bunch of other mechanisms that are out there. So I think it is so I think we will be focusing likely be focusing in that rare space.

No. It makes sense, and good luck for the upcoming data. Thanks a lot for the details.

Sure.

Thank you. And there were no other questions at this time. I would now like to hand the call back to Dr. Carl Spana for closing remarks.

So thank you, Joe. Thank you for your questions. And everybody, thank you for your time. Steve and I are always grateful that you give us your time and you take meetings with us, talking about the company. Like you have a great day. It is going to be an exciting quarter for us. And we are really looking forward to it is actually going to be exciting 2025 for us. So we really cannot be more excited in what we are doing here and look forward to reporting our results out. So from Steve and I, thank you everybody. And have a great day and a great quarter. Thank you.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.