Palatin Technologies(PTN) - 2025 Q4 - Annual Report

PART I This part provides an overview of the company's business, including its strategy, pipeline, competition, regulatory environment, and financial risks Item 1. Business Palatin Technologies, Inc. is a biopharmaceutical company focused on developing first-in-class medicines that modulate the melanocortin receptor (MCR) system. The company's strategy involves developing products and then forming marketing collaborations. Key development areas include MC4R agonists for obesity and MC1R agonists for inflammatory and autoimmune diseases. The company sold its Vyleesi product in December 2023 and entered into a collaboration with Boehringer Ingelheim in August 2025 for retinal diseases 1.1 Our Business Overview Palatin Technologies, Inc. develops first-in-class medicines modulating the melanocortin receptor system for unmet medical needs - Palatin Technologies, Inc. is a biopharmaceutical company focused on developing first-in-class medicines that modulate the melanocortin receptor (MCR) system for diseases with significant unmet medical need[22] - The MCR system influences inflammation, immune response, food intake, metabolism, and sexual function, with five melanocortin receptors (MC1R-MC5R) that can be modulated by agonists or antagonists[23] - Current development focuses on MC4R agonists for obesity and metabolic disorders, and MC1R agonists for inflammatory and autoimmune diseases like dry eye disease, uveitis, diabetic retinopathy, and inflammatory bowel disease[24][25] - Positive topline data was reported in Q1 2025 for a Phase 2 clinical study of bremelanotide co-administered with tirzepatide for obesity[26] - Vyleesi, an FDA-approved MCRA for HSDD, was acquired by Cosette in December 2023[29] - Boehringer Ingelheim acquired certain patent applications for MCR-targeted peptides for retinal diseases in August 2025, while Palatin retains rights to PL9643 for dry eye disease[30] 1.2 Our Business Strategy The business strategy focuses on MCR product development, strategic alliances, partial funding from Vyleesi milestones, and regulatory approval for product candidates - Key elements of the business strategy include maintaining a team for MCR product development, entering strategic alliances, partially funding programs with Vyleesi milestone payments and future agreements, and completing development and seeking regulatory approval for other product candidates[33] 1.3 Pipeline Overview The company's pipeline includes MC4R agonists for obesity and MC1R agonists for ocular, gastroenterology, and renal diseases Pipeline Development Programs | Pipeline Development Programs | Preclinical Phase 1 NDA Status/Next Steps | Phase 2 | Phase 3 | | :---------------------------- | :--------------------------------------- | :------ | :------ | | Obesity | | | | | Bremelanotide | | | | | Obesity - GLP-1 adjunct therapy | Positive topline data reported 1Q25 | MC4R agonist + GLP-1 in obese patients initiated | | | Novel Once-Weekly Peptide MC4R Agonist | IND filing 1Q26, IND enabling - CMC activities 1Q25 - 4Q25, Phase 1 SAD/MAD data 1H26 | | | | PL7737 Oral Small Molecule MC4R Agonist | IND enabling - CMC activities 1Q25 - 4Q25, IND filing 1Q26, Phase 1 SAD/MAD data 1H26 | | | | Spin-Out / Out-License Product Candidates - Seeking Development & Commercial Partnerships | | | | | Ocular | | | | | PL9643 MCR Agonist (Dry eye disease) | FDA confirmation on protocols and endpoints, Phase 3 Melody-2 & -3 start targeted for 1H26 | | MELODY-1 completed, positive data | | PL9588 MCR Agonist (Glaucoma) | Research Collaboration / License Agreement with Boehringer Ingelheim August 2025 | | | | PL9654 MCR Agonist (Retinal diseases) | Research Collaboration / License Agreement with Boehringer Ingelheim August 2025 | | | | Gastroenterology, Renal | | | | | PL8177 Oral MC1R Agonist (Ulcerative colitis) | | Proof-of-Concept, Positive topline data reported 1Q25 | | | MCR Agonist (Diabetic nephropathy) | | Open Label Trial, Positive topline data reported 4Q24 | | 1.4 Melanocortin Receptor Programs Product development focuses on MC4R agonists for obesity and MC1R agonists for inflammatory and autoimmune diseases, with several programs in clinical trials - The current product development strategy focuses on MC4R agonists for obesity and metabolic disorders, including novel peptides and small molecule agonists[35] - Development also includes MC1R agonist products for inflammatory and autoimmune diseases like dry eye disease, uveitis, diabetic retinopathy, and inflammatory bowel disease, leveraging broad anti-inflammatory effects[36][37] - IND-enabling activities are advancing for a novel MC4R selective long-acting agonist (PL7737 oral small molecule and a peptide), with IND filings projected for Q1 2026[38][40] - A Phase 2 clinical trial for co-administration of bremelanotide with tirzepatide (GLP-1 agonist) for obesity reported positive topline data in Q1 2025[41] - PL9643 for dry eye disease successfully completed a Phase 3 clinical trial (MELODY-1) with positive symptom endpoints, and two additional Phase 3 studies (MELODY-2 and MELODY-3) are targeted for H1 2026[43][44] - Oral PL8177 for inflammatory bowel diseases, including ulcerative colitis, reported positive topline data in a Phase 2 proof-of-concept study in Q1 2025[45][46] - A Phase 2 proof-of-concept study for diabetic nephropathy using a melanocortin pan agonist reported positive topline results in Q4 2024[47] 1.5 Technologies We Use The company uses rational drug design to develop proprietary peptide, mimetic, and small molecule compounds targeting the melanocortin receptor system - The company employs a rational drug design approach to discover and develop proprietary peptide, peptide mimetic, and small molecule agonist compounds, focusing on the melanocortin receptor system[48] 1.6 Competition The company faces intense competition from established pharmaceutical and biotechnology companies across its therapeutic areas, including obesity and inflammatory diseases - The pharmaceutical and biotechnology industries are highly competitive, with numerous established products and companies possessing significantly greater resources[49][50][51] - For obesity, competitors include major pharmaceutical companies and GLP-1 receptor agonists (e.g., Wegovy, Ozempic), as well as other melanocortin agonists like Imcivree®[52][53] - For erectile dysfunction (ED), PDE5i drugs (e.g., Viagra, Cialis) are widely used, but no disclosed co-formulations of an MC4R agonist and a PDE5i exist[54] - For anti-inflammatory ocular indications like dry eye disease, treatments include artificial tears, topical immunosuppressants (e.g., Restasis), and drugs inhibiting inflammatory cell binding (e.g., Xiidra); no reported MC1R agonist drugs are in clinical trials by third parties for DED[56] - For inflammatory bowel diseases/ulcerative colitis, approved drugs include aminosalicylates, immunosuppressants, corticosteroids, and biologics; no reported MC1R agonist drugs are in clinical trials for IBD[57] 1.7 Patents and Proprietary Information Success relies on obtaining and defending patents, maintaining trade secrets, and avoiding infringement, with risks of litigation and unauthorized disclosure - The company's success depends on obtaining, defending, and enforcing patents, maintaining trade secrets, and avoiding infringement of others' rights[59] - Patent applications for PL9643 and other peptides for ocular/inflammatory diseases have a presumptive term until 2041, with an irrevocable, royalty-free license for PL9643 assigned to Boehringer Ingelheim[60] - Issued patents for highly selective MC1R agonist peptides for inflammation-related diseases have a presumptive term until 2030[61] - Risks include costly and time-consuming patent litigation, potential invalidation or narrowing of claims, and the possibility of infringing third-party patents[63][64] - The company relies on unpatented trade secrets and know-how, protected by confidentiality agreements, but faces risks of unauthorized use or disclosure[65][66] 1.8 U.S. Governmental Regulation of Pharmaceutical Products Pharmaceutical products are subject to extensive FDA regulation covering development, testing, manufacturing, and marketing, with complex approval processes and post-marketing compliance - Pharmaceutical products are subject to extensive regulation by governmental authorities, primarily the FDA in the U.S., covering research, development, testing, manufacturing, safety, efficacy, labeling, and marketing[67] - The FDA approval process involves preclinical testing, submission of an Investigational New Drug (IND) application, multi-phase human clinical trials (Phase 1, 2, 3), and submission of a New Drug Application (NDA)[68][71][73][74] - Post-marketing regulation includes ongoing compliance with GMP, adverse event reporting, and restrictions on advertising and promotion, with potential sanctions for non-compliance[79][80][82][83][84] - Generic competition is influenced by patent listings in the FDA's Orange Book and regulatory exclusivities (e.g., 5-year NCE exclusivity, 3-year exclusivity for new indications)[92][93][99][100] - The company is also subject to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws, with potential for substantial penalties for non-compliance[86][89][90][95] 1.9 Third-Party Reimbursements Product sales depend on adequate and timely reimbursement from third-party payers, a costly and time-consuming process often involving coverage limitations and price pressure - Successful sales of proposed products depend on adequate reimbursement from third-party payers (governmental entities, managed care organizations, private insurance plans)[105] - Reimbursement is a time-consuming and costly process, with payers often limiting coverage and pressuring for lower prices[106] 1.10 Manufacturing and Marketing The company relies on third-party contractors for commercial manufacturing under GMP, facing challenges in scaling production and ensuring regulatory compliance - The company relies on collaborators, licensees, or contract manufacturers for commercial manufacturing of its proposed products under GMP[107] - Challenges include scaling up peptide production to commercial quantities under GMP, which involves production, purification, and formulation problems[108] - Failure of manufacturers or suppliers to comply with FDA regulations or supply agreements could disrupt product delivery and necessitate seeking alternative, FDA-approved sources, which is costly and time-consuming[109] 1.11 Product Liability and Insurance Product development and use entail inherent liability risks, with current insurance coverage of $10 million, but future availability and sufficiency are uncertain - The testing, manufacturing, marketing, and use of products entail inherent product liability risks[110] - The company carries $10 million in liability insurance for product liability and clinical trial risks, but there is no assurance that future insurance will be available at reasonable cost or in sufficient amounts[110] 1.12 Compliance with Environmental Laws The company complies with environmental laws, with no material impact expected on capital expenditures, earnings, or competitive position in the foreseeable future - The company is subject to federal, state, and local environmental laws and regulations, but compliance is not expected to have a material effect on capital expenditures, earnings, or competitive position in the foreseeable future[111][112] 1.13 Employees As of September 19, 2025, the company employed 29 full-time staff, with 20 in R&D, and relies on contractors for specific programs and services - As of September 19, 2025, the company employed 29 full-time people: 20 in research and development and 9 in administration and management[113] - The company relies on contractors and scientific consultants for specific R&D programs and independent organizations for services like manufacturing, testing, and clinical management[114] 1.14 Corporate Information Palatin Technologies, Inc. was incorporated in Delaware in 1986, commenced biopharmaceutical operations in 1996, with executive offices and research labs in New Jersey - Palatin Technologies, Inc. was incorporated in Delaware on November 21, 1986, and commenced biopharmaceutical operations in 1996[115] - The company's executive offices are in Princeton, New Jersey, and its research laboratory is in Monmouth Junction, New Jersey[115] Item 1A. Risk Factors The company faces significant risks, including substantial doubt about its ability to continue as a going concern due to historical operating losses and the need for additional financing. Product development is in early stages, subject to clinical trial delays, regulatory hurdles, and intense competition. Commercial success of licensed products (Vyleesi, Boehringer Ingelheim peptides) is uncertain. The company also faces risks related to intellectual property, cybersecurity, and stock price volatility, exacerbated by its delisting from NYSE American 1A.1 Risks Related to Our Financial Results and Need for Financing Substantial doubt exists about the company's going concern ability due to historical losses and the critical need for additional financing, which may dilute existing stockholders - Management has determined there is substantial doubt about the company's ability to continue as a going concern due to the need for significant additional financing to complete clinical trials and product development[117] Financial Metric (Year Ended June 30) | Financial Metric (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :------------------------------------ | :--------- | :--------- | | Net Loss | $(17.3M) | $(29.7M) | | Accumulated Deficit | $(459.1M) | $(441.8M) | | Cash and Cash Equivalents | $2.6M | $9.5M | | Current Liabilities | $8.0M | $9.7M | - The company expects to incur substantial net losses for the foreseeable future and may never achieve or maintain profitability[119][124] - Additional funding is required to complete clinical trials and development programs, which may not be available on acceptable terms, if at all, and could lead to dilution of existing stockholders' ownership interests[125][126][134] - The company has a limited operating history for commercializing current product candidates, making investment decisions difficult[129][130] 1A.2 Risks Related to Our Business, Strategy, and Industry Commercial success of licensed products is uncertain, product candidates face early-stage development risks, and reliance on third-party contractors and key personnel poses operational challenges - The commercial success of Vyleesi and the potential for significant milestone payments from Cosette are uncertain and depend on Cosette's sales and other factors[135][140] - The company may not receive significant milestone payments under its agreement with Boehringer Ingelheim, as clinical and commercial success depends on various factors[138][141][142] - Ongoing military conflicts (e.g., Russia-Ukraine, Israel-Hamas) could cause geopolitical instability, economic uncertainty, and financial market volatility, adversely affecting operations and financing[144] - Product candidates are in early development stages and require significant research, development, and testing, with risks of prolonged or delayed clinical trials due to various factors like side effects, recruitment rates, and manufacturing issues[145][146][147] - Even with regulatory approval, product candidates may not achieve market acceptance due to perceptions of safety/effectiveness, cost-effectiveness, reimbursement availability, or competition[150][155] - The company relies heavily on third-party contractors for preclinical studies, clinical trials, and manufacturing, over whom it has limited control, posing risks to product development and supply[160][161] - The use of artificial intelligence (AI) in business carries risks such as inaccuracy, bias, intellectual property infringement, data privacy issues, and cybersecurity threats[172] - The company is highly dependent on its management team, senior staff, and third-party contractors, and the loss of their services could materially adversely affect the business[180][181] 1A.3 Risks Related to Government Regulation Product candidates face extensive and uncertain regulatory approval processes, with non-compliance leading to sanctions and healthcare reforms potentially increasing costs and restrictions - Product candidates are subject to extensive and ongoing regulatory requirements both before and after marketing approval, with non-compliance leading to sanctions such as restrictions, fines, or withdrawal of approval[182][183][184] - The regulatory approval process is lengthy, expensive, and uncertain, with no guarantee of approval, and may be delayed by FDA requests for additional information or differing interpretations of data[188][191] - Products used in combination with drug delivery devices (combination products) face increased regulatory complexity and dependence on third-party device suppliers for approvals and compliance[192] - Legislative or regulatory healthcare reforms in the U.S., such as the PPACA, may increase costs, lengthen review times, and impose price controls or other restrictions, adversely affecting the business[196][198][201][203] 1A.4 Risks Related to Our Intellectual Property Success depends on protecting patents and trade secrets, but risks include costly litigation, patent invalidation, infringement claims, and challenges in global enforcement - The company's success depends on its ability to obtain, defend, and enforce patents and maintain trade secrets, and to operate without infringing on the proprietary rights of others[205] - Risks include costly and time-consuming lawsuits to protect or enforce patents, potential invalidation or narrow interpretation of patents, and the possibility of infringing third-party intellectual property rights, which could lead to substantial damages or licensing costs[206][207][210][211] - Changes in U.S. and foreign patent standards, such as the Leahy-Smith America Invents Act, can impact the grant, validity, enforceability, or term of patents, increasing prosecution costs and competitive risks[215][216] - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less protection, potentially allowing competitors to use technologies or export infringing products[217][218] - Inability to keep trade secrets confidential could allow competitors to use proprietary information, materially affecting the company's competitive position[220] 1A.5 Risks Related to the Ownership of Our Common Stock Stock price volatility, delisting from NYSE American, potential dilution from equity instruments, and anti-takeover provisions pose significant risks to common stockholders - The company's stock price is volatile and may fluctuate disproportionately to operating performance, influenced by clinical results, regulatory decisions, competition, and economic factors[221][222][223][224] - As of June 30, 2024, the company's internal control over financial reporting was ineffective due to a material weakness in accounting for complex financial instruments, though it was remediated by June 30, 2025[225][226][453][454] - The company's common stock was suspended from trading on the NYSE American on May 7, 2025, and now trades on the OTCQB® Venture Market, leading to reduced liquidity and market quotations[241][243] - Stockholders may experience dilution from the conversion of preferred stock and the exercise of outstanding options, restricted stock units, and warrants, totaling 838,142 shares as of September 19, 2025[238][240][242] - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gains for stockholders[231] - Anti-takeover provisions in Delaware law and the company's charter documents may make potential acquisitions more difficult and could entrench management[232][233][234][236] Item 1B. Unresolved Staff Comments The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[244] Item 1C. Cybersecurity The company has established processes for identifying, evaluating, and managing material risks from cybersecurity threats, including engaging third parties for assessment and providing employee training. The audit committee oversees the technology management strategy. No material cybersecurity threats have been identified in the last two fiscal years - The company has established processes for identifying, evaluating, and managing material risks from cybersecurity threats as part of its overall technology management strategy[245] - Third parties are engaged to assess cybersecurity effectiveness, and ongoing security training is provided to employees[246][247] - No cybersecurity threats that have materially affected the business, results of operations, or financial condition have been identified in the last two fiscal years[248] - The board's audit committee provides oversight of the technology management strategy to ensure cybersecurity threats and risks are identified, evaluated, and managed[248] Item 2. Properties The company leases its corporate offices in Princeton, New Jersey, with an agreement expiring in January 2026, and laboratory space in Monmouth Junction, New Jersey, with a lease expiring in October 2026. The current facilities are considered adequate for its needs - The company leases corporate offices in Princeton, New Jersey, under an agreement expiring in January 2026[249] - Approximately 3,600 square feet of laboratory space is leased in Monmouth Junction, New Jersey, with the lease expiring in October 2026[249] - The company believes its present facilities are adequate for its current needs and does not own any real property[249] Item 3. Legal Proceedings The company is currently involved in a breach of contract lawsuit filed by H.C. Wainwright & Co., LLC, seeking monetary damages and warrants. The company denies liability and plans to vigorously defend the action. No other pending or threatened legal proceedings are known - The company is a defendant in a breach of contract lawsuit filed by H.C. Wainwright & Co., LLC, seeking monetary damages and warrants allegedly due under an engagement agreement[251] - The company denies all liability and plans to vigorously defend against the lawsuit[251] - As of the filing date, the company is not aware of any other pending or threatened legal proceedings or governmental actions[252] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[253] PART II This part covers the market for the registrant's common equity, management's discussion and analysis of financial condition, and financial statements Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock was delisted from the NYSE American on May 8, 2025, and now trades on the OTCQB® Venture Market. The company has never paid dividends and does not anticipate doing so in the foreseeable future, with Series A Preferred Stock having a dividend preference. No issuer purchases of equity securities were made in Q4 FY2025 - The company's common stock traded on NYSE American until May 8, 2025, and has since traded on the OTCQB® Venture Market under the symbol 'PTNT' (later 'PTNTD' after a reverse stock split)[254] Metric (as of Sep 19, 2025) | Metric (as of Sep 19, 2025) | Value | | :-------------------------- | :------------- | | Closing Sales Price (OTCQB) | $8.64 per share | | Market Value (Non-affiliates) | $8,346,059 | - The company has never declared or paid any dividends and intends to retain future earnings for business development, not anticipating dividends in the foreseeable future[257] - The outstanding Series A Preferred Stock (4,030 shares) has a provision requiring a special dividend of $100 per share to its holders before any dividend or distribution to other stock classes[258] - No shares were withheld by the company to satisfy tax withholding amounts for employees upon vesting of restricted stock units and stock options during the quarter ended June 30, 2025[256] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Palatin Technologies, Inc. is a biopharmaceutical company focused on melanocortin receptor system modulation, with a primary focus on MC4R agonists for obesity and MC1R agonists for inflammatory/autoimmune diseases. The company sold its Vyleesi product line in December 2023, leading to no product revenue in fiscal 2025. Net loss decreased significantly in fiscal 2025 due to lower R&D and SG&A expenses, and gains from the Vyleesi sale settlement and purchase commitment amendment. The company continues to face substantial doubt about its ability to continue as a going concern, with limited cash reserves and a reliance on future financing and milestone payments, including a recent collaboration with Boehringer Ingelheim 7.1 Introduction Palatin Technologies, Inc. develops first-in-class medicines modulating the melanocortin receptor system, focusing on MC4R agonists for obesity and MC1R agonists for inflammatory diseases - Palatin Technologies, Inc. is a biopharmaceutical company developing first-in-class medicines based on molecules that modulate the activity of the melanocortin receptor system[262] - Product development focuses primarily on MC4R agonists for obesity and metabolic-related disorders, and MC1R agonist products for inflammatory and autoimmune diseases[263][265] - The company's prior commercial product, Vyleesi®, was acquired by Cosette Pharmaceuticals, Inc. in December 2023[266] 7.2 Critical Accounting Policies and Estimates Key accounting policies include revenue recognition, inventory valuation, purchase commitment liabilities, accrued expenses, and stock-based compensation, requiring significant management judgment - Critical accounting policies and estimates include revenue recognition, the carrying value of inventory, purchase commitment liabilities, accrued expenses, and stock-based compensation[266] - Revenue recognition for product sales (prior to Vyleesi sale) followed ASC Topic 606, recognizing revenue when control of the product is transferred, net of allowances for fees, discounts, and rebates[267][268][269][270] - Losses on firm commitment contractual obligations are recognized based on agreement terms and expected sales requirements[271] - Accrued expenses for third-party development activities are estimated based on work completed and milestones achieved[272] - Stock-based compensation is expensed at fair value, using the Black-Scholes model for stock options and Monte Carlo simulations for market conditions, recognized over the service period[273] 7.3 Results of Operations (Year Ended June 30, 2025 Compared to the Year Ended June 30, 2024) Fiscal 2025 saw no product revenue due to the Vyleesi sale, with decreased R&D and SG&A expenses, and a lower net loss compared to fiscal 2024 Metric (Year Ended June 30) | Metric (Year Ended June 30) | 2025 (USD) | 2024 (USD) | Change (YoY) (USD) | | :-------------------------- | :--------- | :--------- | :----------------- | | Product Revenue, net | $0 | $4,490,090 | $(4,490,090) | | Cost of Products Sold | $0 | $97,637 | $(97,637) | | Research and Development | $14,898,494| $22,400,372| $(7,501,878) | | Selling, General and Administrative | $7,809,345 | $12,270,046| $(4,460,701) | | Gain on Purchase Commitment | $(2,117,900)| $0 | $(2,117,900) | | Gain on Sale of Vyleesi | $(3,130,000)| $(7,781,844)| $4,651,844 | | Net Loss | $(17,307,349)| $(29,736,113)| $12,428,764 | | Basic and Diluted Net Loss Per Common Share | $(32.15) | $(101.16) | $69.01 | - The decrease in net revenue and cost of products sold in fiscal 2025 is a direct result of the sale of Vyleesi's worldwide rights to Cosette during fiscal 2024[275][276] - Research and development expenses decreased primarily due to lower spending on MCR programs, while selling, general and administrative expenses decreased due to the absence of Vyleesi selling expenses and reduced compensation costs[277][278][280] - A gain on purchase commitments was recognized in fiscal 2025 due to amending minimum purchase commitments under the Catalent and Ypsomed agreements[281] - Other income (expense) improved significantly in fiscal 2025, primarily due to the absence of a large increase in the fair value of warrant liabilities recognized in fiscal 2024[284] 7.4 Liquidity and Capital Resources The company faces substantial doubt about its going concern ability due to historical losses and limited cash, relying on future financing and milestone payments, including a recent Boehringer Ingelheim collaboration - The company has historically incurred net operating losses and negative cash flows, relying on debt, equity financings, and collaborative agreements for funding[286] Cash Flow Activity (Year Ended June 30) | Cash Flow Activity (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :-------------------------------------- | :--------- | :--------- | | Net Cash Used in Operating Activities | $(21,306,637)| $(31,461,441)| | Net Cash Provided by Investing Activities | $3,130,000 | $12,450,364| | Net Cash Provided by Financing Activities | $11,213,506| $20,548,891| | Cash and Cash Equivalents, End of Period | $2,564,265 | $9,527,396 | - As of June 30, 2025, cash and cash equivalents were $2.6 million, with current liabilities of $8.0 million, leading management to conclude that substantial doubt exists about the company's ability to continue as a going concern for one year[294][296] - The company expects existing cash and cash equivalents to fund anticipated operating expenses through the second half of calendar year 2025[296] - A Research Collaboration, License and Patent Assignment Agreement with Boehringer Ingelheim in August 2025 provided an upfront payment of $2.3 million (received Sep 2025) and potential milestone payments up to $307 million, with a $6.5 million research milestone achieved in September 2025[297][298] Item 7A. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to the company - Quantitative and Qualitative Disclosures About Market Risk are not applicable[299] Item 8. Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for Palatin Technologies, Inc. for the fiscal years ended June 30, 2025, and 2024, including the balance sheets, statements of operations, changes in stockholders' deficiency, and cash flows. The independent auditor, KPMG LLP, issued a fair opinion but noted substantial doubt about the company's going concern ability. The notes detail significant accounting policies, recent accounting pronouncements, the Vyleesi sale, lease information, and equity-related transactions, including a reverse stock split and various warrant and stock offerings 8.1 Report of Independent Registered Public Accounting Firm KPMG LLP issued a fair opinion on the consolidated financial statements for FY2025 and FY2024, noting substantial doubt about the company's going concern ability - KPMG LLP audited the consolidated financial statements for Palatin Technologies, Inc. for the fiscal years ended June 30, 2025, and 2024, expressing a fair opinion[304] - The report includes an explanatory paragraph highlighting substantial doubt about the company's ability to continue as a going concern[305] - No critical audit matters were identified during the audit[309] 8.2 Consolidated Balance Sheets The consolidated balance sheets as of June 30, 2025, and 2024, present the company's assets, liabilities, and stockholders' deficiency ASSETS (as of June 30) | ASSETS (as of June 30) | 2025 (USD) | 2024 (USD) | | :--------------------- | :--------- | :--------- | | Cash and cash equivalents | $2,564,265 | $9,527,396 | | Other receivables | $29,468 | $0 | | Prepaid expenses and other current assets | $325,695 | $242,272 | | Total current assets | $2,919,428 | $9,769,668 | | Property and equipment, net | $129,444 | $388,361 | | Right-of-use assets - operating leases | $161,166 | $527,321 | | Other assets | $56,916 | $56,916 | | Total assets | $3,266,954 | $10,742,266| LIABILITIES AND STOCKHOLDERS DEFICIENCY (as of June 30) | LIABILITIES AND STOCKHOLDERS DEFICIENCY (as of June 30) | 2025 (USD) | 2024 (USD) | | :---------------------------------------------------- | :--------- | :--------- | | Accounts payable | $6,998,806 | $4,101,929 | | Accrued expenses | $881,412 | $4,185,046 | | Short-term operating lease liabilities | $129,812 | $380,542 | | Short-term finance lease liabilities | $0 | $46,014 | | Other current liabilities | $0 | $944,150 | | Total current liabilities | $8,010,030 | $9,657,681 | | Long-term operating lease liabilities | $33,969 | $163,782 | | Other long-term liabilities | $0 | $1,032,300 | | Total liabilities | $8,043,999 | $10,853,763| | Stockholders deficiency: | | | | Series A Convertible Preferred Stock | $40 | $40 | | Series D Convertible Preferred Stock | $34 | $0 | | Common stock | $9,296 | $3,585 | | Additional paid-in capital | $454,287,484| $441,651,428| | Accumulated deficit | $(459,073,899)| $(441,766,550)| | Total stockholders deficiency | $(4,777,045)| $(111,497) | 8.3 Consolidated Statements of Operations The consolidated statements of operations for fiscal years 2025 and 2024 detail revenues, operating expenses, and net loss, reflecting the Vyleesi sale impact REVENUES (Year Ended June 30) | REVENUES (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :---------------------------- | :--------- | :--------- | | Product revenue, net | $0 | $4,490,090 | OPERATING EXPENSES (Year Ended June 30) | OPERATING EXPENSES (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :------------------------------------ | :--------- | :--------- | | Cost of products sold | $0 | $97,637 | | Research and development | $14,898,494| $22,400,372| | Selling, general and administrative | $7,809,345 | $12,270,046| | Loss (Gain) on sale of Vyleesi | $(3,130,000)| $(7,781,844)| | Gain on purchase commitment | $(2,117,900)| $0 | | Total operating expenses | $17,459,939| $26,986,211| | Loss from operations | $(17,459,939)| $(22,496,121)| OTHER INCOME (EXPENSE) (Year Ended June 30) | OTHER INCOME (EXPENSE) (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :---------------------------------------- | :--------- | :--------- | | Investment income | $167,665 | $376,843 | | Foreign currency transaction (loss) gain | $(50) | $59,753 | | Interest expense | $(15,025) | $(17,114) | | Offering expenses | $0 | $(696,912) | | Change in fair value of warrant liabilities | $0 | $(6,962,562)| | Total other income (expense), net | $152,590 | $(7,239,992)| | NET LOSS | $(17,307,349)| $(29,736,113)| | Basic and diluted net loss per common share | $(32.15) | $(101.16) | | Weighted average number of common shares outstanding | 538,348 | 293,951 | 8.4 Consolidated Statements of Changes in Stockholders' Deficiency The consolidated statements of changes in stockholders' deficiency for fiscal years 2025 and 2024 show changes in equity components, including accumulated deficit and common stock Stockholders' Deficiency (as of June 30) | Stockholders' Deficiency (as of June 30) | 2025 (USD) | 2024 (USD) | | :--------------------------------------- | :--------- | :--------- | | Series A Convertible Preferred Stock | $40 | $40 | | Series D Convertible Preferred Stock | $34 | $0 | | Common Stock | $9,296 | $3,585 | | Additional Paid-in Capital | $454,287,484| $441,651,428| | Accumulated Deficit | $(459,073,899)| $(441,766,550)| | Total Stockholders Deficiency | $(4,777,045)| $(111,497) | - The accumulated deficit increased from $(441.8) million in FY2024 to $(459.1) million in FY2025[312][316] - Common stock shares outstanding increased from 358,532 in FY2024 to 929,597 in FY2025[312][316] - The company issued 3,400 shares of Series D Convertible Preferred Stock in FY2025[312][316] 8.5 Consolidated Statements of Cash Flows The consolidated statements of cash flows for fiscal years 2025 and 2024 detail operating, investing, and financing activities, showing a net decrease in cash for FY2025 Cash Flow Activity (Year Ended June 30) | Cash Flow Activity (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :-------------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(21,306,637)| $(31,461,441)| | Net cash provided by investing activities | $3,130,000 | $12,450,364| | Net cash provided by financing activities | $11,213,506| $20,548,891| | Net (decrease) increase in cash and cash equivalents | $(6,963,131)| $1,537,814 | | Cash and cash equivalents, beginning of period | $9,527,396 | $7,989,582 | | Cash and cash equivalents, end of period | $2,564,265 | $9,527,396 | - Net cash used in operating activities decreased by $10.15 million in FY2025 compared to FY2024, primarily due to a lower net loss and gains on the sale of Vyleesi and purchase commitments[289][318] - Net cash provided by investing activities decreased in FY2025, consisting solely of proceeds from the sale of Vyleesi, compared to proceeds from Vyleesi and marketable securities maturity in FY2024[290][318] - Net cash provided by financing activities decreased in FY2025, with proceeds from common stock and warrant sales and exercises being lower than in FY2024[291][318] 8.6 Notes to Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, explaining significant accounting policies, transactions, and financial disclosures Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - There have been no changes in and disagreements with accountants on accounting and financial disclosure[448] Item 9A. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with a previously identified material weakness in internal control over financial reporting now remediated - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[449] - A material weakness in internal control over financial reporting, identified as of June 30, 2024, concerning the accounting for complex financial instruments, has been remediated as of June 30, 2025[453][454][455] Item 9B. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[456] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Disclosure Regarding Foreign Jurisdictions that Prevent Inspections is not applicable[457] PART III This part details the company's directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, and principal accountant fees Item 10. Directors, Executive Officers and Corporate Governance This section identifies the company's directors and executive officers, providing their ages, positions, and qualifications. It details the structure and responsibilities of the Board and its committees (Audit, Compensation, Nominating and Corporate Governance), emphasizing director independence and risk oversight. The company maintains a separate Chairperson and CEO, and has adopted a Code of Corporate Conduct and Ethics - The board of directors consists of Carl Spana (CEO, President, Director), John K.A. Prendergast (Director, Chairperson), Alan W. Dunton (Director), and Arlene M. Morris (Director)[459][460] - The board has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, all composed of independent directors[470][471][472][474] - The roles of Chairperson of the board (John K.A. Prendergast) and Chief Executive Officer (Carl Spana) are held by separate persons, a structure believed to enhance accountability and board independence[480] - The board oversees risk management through regular reports from officers and committee assistance, with the Audit Committee overseeing financial reporting and compliance, and the Compensation Committee overseeing compensation-related risks[478][479] - The executive officers are Carl Spana (CEO, President, Director) and Stephen T. Wills (CFO, COO, Executive Vice President, Secretary and Treasurer)[483] Item 11. Executive Compensation This section details the compensation for the company's principal executive and financial officers for fiscal years 2025 and 2024, showing a significant decrease in total compensation for FY2025 due to no annual salary increases or bonuses. The compensation program emphasizes long-term incentives and pay-for-performance, with policies like stock ownership, clawbacks, and 'double trigger' equity acceleration. Director compensation includes annual equity grants and cash retainers, with no additional compensation for employee directors Fiscal 2025 Summary Compensation Table | Name and Principal Position | Fiscal Year | Salary ($) | Stock awards ($) | Option awards ($) | Nonequity incentive plan compensation ($) | All other compensation ($) | Total ($) | | :-------------------------- | :---------- | :--------- | :--------------- | :---------------- | :--------------------------------------- | :------------------------- | :-------- | | Carl Spana, Ph.D., CEO and President | 2025 | 721,000 | - | - | - | 17,500 | 738,500 | | | 2024 | 700,000 | 195,400 | 178,700 | 357,000 | 17,250 | 1,448,350 | | Stephen T. Wills, MST, CPA, CFO, COO, EVP | 2025 | 670,000 | - | - | - | 17,960 | 687,960 | | | 2024 | 650,000 | 170,700 | 155,800 | 431,500 | 16,644 | 1,424,644 | - No annual salary increases or bonuses (cash or equity) were granted or approved for the fiscal year ended June 30, 2025, due to the company's financial status[491] - The executive compensation program is heavily weighted to long-term incentive opportunities (stock options and restricted stock units) to align executives' interests with stockholders and enhance retention[492][493][503] - New employment agreements effective July 1, 2025, for Dr. Spana and Mr. Wills include base salaries of $721,000 and $670,000, respectively, with provisions for annual bonus compensation and participation in benefit programs[497][498] - Key compensation policies include retaining an independent compensation advisor, emphasizing 'compensation at risk' and 'pay-for-performance,' maintaining a stock ownership policy, a clawback policy, and 'double trigger' acceleration for CEO and CFO/COO equity awards[499][503] Non-Employee Director Compensation (Fiscal 2025) | Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Total ($) | | :------------------------ | :------------------------------ | :--------------- | :---------------- | :-------- | | John K.A. Prendergast, Ph.D. | 119,500 | 29,280 | 28,975 | 177,755 | | Robert K. deVeer, Jr. | 80,000 | 21,960 | 21,416 | 123,376 | | J. Stanley Hull | 70,000 | 21,960 | 21,416 | 113,376 | | Alan W. Dunton, M.D. | 80,000 | 21,960 | 21,416 | 123,376 | | Arlene Morris | 65,000 | 21,960 | 21,416 | 108,376 | | Anthony Manning, Ph.D. | 65,000 | 21,960 | 21,416 | 108,376 | - Non-employee directors receive an annual equity grant and cash retainers for board and committee service, with the Chairperson receiving a higher retainer[521][522][524] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section provides information on equity compensation plans and beneficial ownership of the company's securities. As of June 30, 2025, 66,783 securities were issuable under equity compensation plans, with 65,433 shares remaining available for future issuance. As of September 19, 2025, the total voting power is calculated based on common stock, Series A, and Series D preferred stock, with management and directors holding 9.2% of common stock and 6.7% of total voting power. Several individuals are identified as beneficial owners of more than 5% of Series A or Series D Preferred Stock Equity Compensation Plan Information (as of June 30, 2025) | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------------ | :-------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------------------------------------------------------ | | Equity compensation plans approved by security holders | 66,783 | $305.92 | 65,433 | | Equity compensation plans not approved by security holders | - | - | - | | Total | 66,783 | | 65,433 | - As of September 19, 2025, 973,291 shares of common stock, 4,030 shares of Series A preferred stock (convertible into 278 common shares), and 3,400 shares of Series D preferred stock (convertible into 61,816 common shares) were outstanding[528] - The common stock has one vote per share, Series A preferred stock has approximately 0.07 votes per share, and Series D Convertible Preferred Stock has approximately 18.18 votes per share[528] Management and Directors Beneficial Ownership (as of Sep 19, 2025) | Name | Amount and nature of beneficial ownership (Common Stock) | Percent of class | Percent of total voting power | | :------------------------ | :--------------------------------------- | :--------------- | :---------------------------- | | Carl Spana, Ph.D. | 40,125 | 4.0% | 2.9% | | Stephen T. Wills | 38,624 | 3.8% | 2.9% | | John K.A. Prendergast, Ph.D. | 6,511 | * | * | | Alan W. Dunton, M.D. | 5,608 | * | * | | Arlene M. Morris | 1,958 | * | * | | All current directors and executive officers as a group (eight persons) | 92,826 | 9.2% | 6.7% | *Less than one percent. More Than 5% Beneficial Owners (as of Sep 19, 2025) | Class | Name and address of beneficial owner | Amount and nature of beneficial ownership | Percent of class | Percent of total voting power | | :-------- | :----------------------------------- | :---------------------------------------- | :--------------- | :---------------------------- | | Series A Preferred | Steven N. Ostrovsky, 43 Nikki Ct., Morganville, NJ 07751 | 500 | 12.4% | * | | Series A Preferred | Thomas L. Cassidy IRA Rollover, 38 Canaan Close, New Canaan, CT 06840 | 500 | 12.4% | * | | Series A Preferred | Jonathan E. Rothschild, 300 Mercer St., 28F, New York, NY 10003 | 500 | 12.4% | * | | Series A Preferred | Arthur J. Nagle | 250 | 6.2% | * | | Series A Preferred | Thomas P. and Mary E. Heiser, JTWROS, 10 Ridge Road, Hopkinton, MA 01748 | 250 | 6.2% | * | | Series A Preferred | Carl F. Schwartz, 31 West 87th St., New York, NY 10016 | 250 | 6.2% | * | | Series A Preferred | Michael J. Wrubel, 3650 N. 36 Avenue, 39, Hollywood, FL 33021 | 250 | 6.2% | * | | Series A Preferred | Myron M. Teitelbaum, M.D., 175 Burton Lane, Lawrence, NY 11559 | 250 | 6.2% | * | | Series A Preferred | Laura Gold Galleries Ltd. Profit Sharing Trust Park South Gallery at Carnegie Hall, 154 West 57th Street, Suite 114, New York, NY 10019 | 250 | 6.2% | * | | Series A Preferred | Laura Gold, 180 W. 58th Street, New York, NY 10019 | 250 | 6.2% | * | | Series A Preferred | Nadji T. Richmond, 20 E. Wedgewood Glen, The Woodlands, TX 77381 | 230 | 5.7% | * | | Series D Preferred | Carl Spana | 1,500 | 44.1% | 2.9% | | Series D Preferred | Stephen T. Wills | 1,500 | 44.1% | 2.9% | | Series D Preferred | John K.A. Prendergast, Ph.D. | 200 | 5.9% | * | | Series D Preferred | Alan W. Dunton, M.D. | 200 | 5.9% | * | *Less than one percent. Item 13. Certain Relationships and Related Transactions, and Director Independence All directors, except for the CEO, Dr. Spana, are considered independent. The company's code of corporate conduct and ethics requires the audit committee to review and approve related party transactions. There have been no related party transactions since July 1, 2022 - All directors, except Dr. Spana (CEO and President), are independent as defined by NYSE American listing standards[538] - The company's code of corporate conduct and ethics requires the audit committee to review and approve related party transactions[539] - There have been no transactions or proposed transactions with related persons having a direct or indirect material interest since July 1, 2022[539] Item 14. Principal Accountant Fees and Services KPMG LLP served as the independent registered public accounting firm for fiscal years 2025 and 2024. Audit fees were $670,000 in FY2025 and $504,000 in FY2024. Tax fees were $62,702 in FY2025 and $70,662 in FY2024. No audit-related or other fees were incurred. The audit committee has a policy to pre-approve all audit and permissible non-audit services - KPMG LLP served as the independent registered public accounting firm for fiscal 2025 and fiscal 2024[540] Fee Type | Fee Type | Fiscal Year 2025 (USD) | Fiscal Year 2024 (USD) | | :---------- | :--------------------- | :--------------------- | | Audit Fees | $670,000 | $504,000 | | Tax Fees | $62,702 | $70,662 | | Audit-Related Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The audit committee has a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm[544](inde