PALATIN TECHNOLOGIES INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark
One)
☑
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the
quarterly period ended September 30, 2016
or
☐
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the
transition period from ___________ to __________
Commission
file number: 001-15543
________________________
PALATIN TECHNOLOGIES,
INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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95-4078884
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(State
or other jurisdiction of
incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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4B Cedar Brook Drive
Cranbury, New Jersey
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08512
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(Address
of principal executive offices)
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(Zip
Code)
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(609) 495-2200
(Registrant's
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes
☑ No ☐
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes
☑ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
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Large accelerated
filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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Smaller reporting
company
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☑
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(Do not check if a
smaller reporting
company)
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Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐ No
☑
As of
November 10, 2016, 108,039,221
shares of the registrant's common
stock, par value $0.01 per share, were outstanding.
PALATIN TECHNOLOGIES, INC
.
Table of Contents
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Page
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PART I – FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
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4
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Consolidated
Balance Sheets as of September 30, 2016 and June 30,
2016
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4
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Consolidated
Statements of Operations for the Three Months Ended
September 30, 2016
and 2015
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5
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Consolidated
Statements of Comprehensive Loss for the Three Months Ended
September 30, 2016
and 2015
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6
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Consolidated
Statements of Cash Flows for the Three Months Ended
September 30, 2016
and 2015
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7
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Notes
to Consolidated Financial Statements
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8
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Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
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17
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Item 3. Quantitative and Qualitative Disclosures About Market
Risk
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20
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Item 4. Controls and Procedures
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20
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PART
II – OTHER INFORMATION
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Item 1. Legal Proceedings
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21
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Item 1A. Risk Factors
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21
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Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
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23
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Item 3. Defaults Upon Senior Securities
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23
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Item 4. Mine Safety Disclosures
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23
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Item 5. Other Information
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23
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Item 6. Exhibits
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23
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Signatures
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24
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2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this
Quarterly Report on Form 10-Q, as well as oral statements that may
be made by us or by our officers, directors, or employees acting on
our behalf, that are not historical facts constitute
“forward-looking statements”, which are made pursuant
to the safe harbor provisions of Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act). The
forward-looking statements in this Quarterly Report on Form 10-Q do
not constitute guarantees of future performance. Investors are
cautioned that statements that are not strictly historical
statements contained in this Quarterly Report on Form 10-Q,
including, without limitation, the following are forward looking
statements:
●
estimates of our
expenses, future revenue, capital requirements;
●
our ability to
obtain additional financing on terms acceptable to us, or at
all;
●
our ability to
advance product candidates into, and successfully complete,
clinical trials;
●
the initiation,
timing, progress and results of future preclinical studies and
clinical trials, and our research and development
programs;
●
the timing or
likelihood of regulatory filings and approvals;
●
our expectations
regarding the results and the timing of results in our Phase 3
clinical trials of bremelanotide for the treatment of premenopausal
women with hypoactive sexual desire disorder (HSDD), which is a
type of female sexual dysfunction, or FSD;
●
our expectation
regarding the timing of our regulatory submissions for approval of
bremelanotide for HSDD in the United States and
Europe;
●
the potential for
commercialization of bremelanotide for HSDD and other product
candidates, if approved, by us;
●
our expectations
regarding the potential market size and market acceptance for
bremelanotide for HSDD and our other product candidates, if
approved for commercial use;
●
our ability to
compete with other products and technologies similar to our product
candidates;
●
the ability of our
third-party collaborators to timely carry out their duties under
their agreements with us;
●
the ability of our
contract manufacturers to perform their manufacturing activities
for us in compliance with applicable regulations;
●
our ability to
recognize the potential value of our licensing arrangements with
third parties;
●
the potential to
achieve revenues from the sale of our product
candidates;
●
our ability to
obtain adequate reimbursement from Medicare, Medicaid, private
insurers and other healthcare payers;
●
our ability to
maintain product liability insurance at a reasonable cost or in
sufficient amounts, if at all;
●
the retention of
key management, employees and third-party contractors;
●
the scope of
protection we are able to establish and maintain for intellectual
property rights covering our product candidates and
technology;
●
our compliance with
federal and state laws and regulations;
●
the timing and
costs associated with obtaining regulatory approval for our product
candidates;
●
the impact of
fluctuations in foreign exchange rates;
●
the impact of
legislative or regulatory healthcare reforms in the United
States;
●
our ability to
adapt to changes in global economic conditions; and
●
our ability to
remain listed on the NYSE MKT.
Such
forward-looking statements involve risks, uncertainties and other
factors that could cause our actual results to be materially
different from historical results or from any results expressed or
implied by such forward-looking statements. Our future operating
results are subject to risks and uncertainties and are dependent
upon many factors, including, without limitation, the risks
identified in this report, in our Annual Report on Form 10-K for
the year ended June 30, 2016, and in our other Securities and
Exchange Commission (SEC) filings.
We
expect to incur losses in the future as a result of spending on our
planned development programs and results may fluctuate
significantly from quarter to quarter.
3
PALATIN TECHNOLOGIES,
INC.
and Subsidiary
(unaudited)
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September 30, 2016
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June 30, 2016
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ASSETS
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Current
assets:
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Cash
and cash equivalents
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$
8,867,930
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$
8,002,668
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Available-for-sale
investments
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1,377,714
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1,380,556
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Prepaid
expenses and other current assets
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1,007,978
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1,313,841
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Total
current assets
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11,253,622
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10,697,065
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Property
and equipment, net
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90,171
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97,801
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Other
assets
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56,916
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63,213
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Total
assets
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$
11,400,709
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$
10,858,079
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
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Current
liabilities:
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Accounts
payable
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$
1,159,427
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$
713,890
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Accrued
expenses
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12,884,590
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7,767,733
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Notes
payable, net of discount and debt issuance costs
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6,399,075
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5,374,951
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Capital
lease obligations
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27,827
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27,424
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Total
current liabilities
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20,470,919
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13,883,998
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Notes
payable, net of discount and debt issuance costs
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12,162,471
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14,106,594
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Capital
lease obligations
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7,214
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14,324
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Other
non-current liabilities
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525,314
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439,130
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Total
liabilities
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33,165,918
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28,444,046
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Stockholders’
deficiency:
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Preferred
stock of $0.01 par value – authorized 10,000,000
shares:
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Series
A Convertible: issued and outstanding 4,030 shares as of September
30, 2016 and June 30, 2016
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40
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40
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Common
stock of $0.01 par value – authorized 300,000,000
shares:
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issued
and outstanding 92,806,710 shares as of September 30, 2016 and
68,568,055 shares as of June 30, 2016, respectively
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928,067
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685,680
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Additional
paid-in capital
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333,774,227
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325,142,509
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Accumulated
other comprehensive loss
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(2,521
)
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(1,944
)
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Accumulated
deficit
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(356,465,022
)
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(343,412,252
)
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Total
stockholders’ deficiency
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(21,765,209
)
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(17,585,967
)
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Total
liabilities and stockholders’ deficiency
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$
11,400,709
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$
10,858,079
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The
accompanying notes are an integral part of these consolidated
financial statements.
4
PALATIN TECHNOLOGIES,
INC.
and Subsidiary
(unaudited)
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Three Months Ended September 30,
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2016
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2015
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REVENUES:
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License
revenue
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$
-
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$
-
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OPERATING
EXPENSES:
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Research
and development
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11,226,084
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10,597,714
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General
and administrative
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1,209,346
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1,199,937
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Total
operating expenses
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12,435,430
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11,797,651
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Loss
from operations
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(12,435,430
)
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(11,797,651
)
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OTHER
INCOME (EXPENSE):
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Interest
income
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6,645
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15,740
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Interest
expense
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(623,985
)
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(628,008
)
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Total
other income (expense), net
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(617,340
)
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(612,268
)
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NET
LOSS
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$
(13,052,770
)
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$
(12,409,919
)
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Basic
and diluted net loss per common share
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$
(0.08
)
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$
(0.08
)
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Weighted
average number of common shares outstanding used in computing basic
and diluted net loss per common share
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165,848,269
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156,176,618
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The
accompanying notes are an integral part of these consolidated
financial statements.
5
PALATIN TECHNOLOGIES,
INC.
and Subsidiary
Consolidated Statements of Comprehensive Loss
(unaudited)
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Three Months Ended September 30,
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2016
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2015
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Net
loss
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$
(13,052,770
)
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$
(12,409,919
)
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Other
comprehensive loss:
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Unrealized
loss on available-for-sale investments
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(577
)
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-
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Total
comprehensive loss
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$
(13,053,347
)
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$
(12,409,919
)
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The
accompanying notes are an integral part of these consolidated
financial statements.
6
PALATIN TECHNOLOGIES, INC.
and Subsidiary
(unaudited)
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Three
Months Ended September 30,
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2016
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2015
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$
(13,052,770
)
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$
(12,409,919
)
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Adjustments to reconcile net loss to net cash
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used in operating activities:
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Depreciation
and amortization
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7,630
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10,654
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Non-cash
interest expense
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82,266
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80,739
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Stock-based
compensation
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403,208
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300,394
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Changes
in operating assets and liabilities:
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Prepaid
expenses and other assets
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312,160
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137,095
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Accounts
payable
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445,537
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2,239,604
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Accrued
expenses
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5,116,857
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156,062
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Other
non-current liabilities
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86,184
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86,957
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Net
cash used in operating activities
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(6,598,928
)
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(9,398,414
)
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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Purchases
of property and equipment
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-
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(17,695
)
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Net
cash used in investing activities
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-
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(17,695
)
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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Payments
on capital lease obligations
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(6,707
)
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(6,328
)
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Payment
of withholding taxes reltaed to restricted
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stock
units
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-
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(131,959
)
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Payment
on notes payable obligations
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(1,000,000
)
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-
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Proceeds
from the sale of common stock and
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warrants,
net of costs
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8,470,897
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19,919,883
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Proceeds
from the issuance of notes payable and warrants
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-
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10,000,000
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Payment
of debt issuance costs
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-
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(140,964
)
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Net
cash provided by financing activities
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7,464,190
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29,640,632
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NET
INCREASE IN CASH
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AND CASH EQUIVALENTS
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865,262
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20,224,523
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CASH
AND CASH EQUIVALENTS, beginning of period
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8,002,668
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27,299,268
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CASH
AND CASH EQUIVALENTS, end of period
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$
8,867,930
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$
47,523,791
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SUPPLEMENTAL
CASH FLOW INFORMATION:
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Cash
paid for interest
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$
457,800
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$
460,313
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|
Issuance
of warrants in connection with debt financing
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-
|
305,196
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|
Unrealized
loss on available-for-sale investments
|
577
|
-
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|
Non-cash
equity financing costs in accounts payable
|
21,029
|
85,605
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|
Non-cash
equity financing costs in accrued expenses
|
65,000
|
-
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Non-cash
debt financing costs in accounts payable
|
-
|
5,151
|
The
accompanying notes are an integral part of these consolidated
financial statements.
7
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(1)
ORGANIZATION:
Nature of Business
– Palatin
Technologies, Inc. (Palatin or the Company) is a biopharmaceutical
company developing targeted, receptor-specific peptide therapeutics
for the treatment of diseases with significant unmet medical need
and commercial potential. Palatin’s programs are based on
molecules that modulate the activity of the melanocortin and
natriuretic peptide receptor systems. The melanocortin system is
involved in a large and diverse number of physiologic functions,
and therapeutic agents modulating this system may have the
potential to treat a variety of conditions and diseases, including
sexual dysfunction, obesity and related disorders, cachexia
(wasting syndrome) and inflammation-related diseases. The
natriuretic peptide receptor system has numerous cardiovascular
functions, and therapeutic agents modulating this system may be
useful in treatment of acute asthma, heart failure, hypertension
and other cardiovascular diseases.
The
Company’s primary product in development is bremelanotide for
the treatment of hypoactive sexual desire disorder (HSDD), which is
a type of female sexual dysfunction (FSD). The Company also has
drug candidates or development programs for obesity, erectile
dysfunction, cardiovascular diseases, pulmonary diseases,
inflammatory diseases and dermatologic diseases.
Key
elements of the Company’s business strategy include using its
technology and expertise to develop and commercialize therapeutic
products; entering into alliances and partnerships with
pharmaceutical companies to facilitate the development,
manufacture, marketing, sale and distribution of product candidates
that the Company is developing; and partially funding its product
candidate development programs with the cash flow generated from
third parties.
Going Concern –
There is
substantial doubt about the Company’s ability to continue as
a going concern. Since inception, the Company has incurred negative
cash flows from operations, and has expended, and expects to
continue to expend, substantial funds to complete its planned
product development efforts. As shown in the accompanying
consolidated financial statements, the Company had an accumulated
deficit as of September 30, 2016 of $356,465,022 and incurred a net
loss for the three months ended September 30, 2016 of $13,052,770.
The Company anticipates incurring additional losses in the future
as a result of spending on its development programs and will
require substantial additional financing to continue to fund its
planned developmental activities. To achieve profitability, if
ever, the Company, alone or with others, must successfully develop
and commercialize its technologies and proposed products, conduct
successful preclinical studies and clinical trials, obtain required
regulatory approvals and successfully manufacture and market such
technologies and proposed products. The time required to reach
profitability is highly uncertain, and the Company may never be
able to achieve profitability on a sustained basis, if at all. The
accompanying consolidated financial statements have been prepared
assuming that the Company continues as a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the
amount or classification of liabilities that might result from the
outcome of this uncertainty.
As
discussed in Note 11, on August 4, 2016, the Company closed on an
underwritten offering of units resulting in gross proceeds of
$9,225,000, with net proceeds, after deducting estimated offering
expenses, of $8,470,897.
As of
September 30, 2016, the Company’s cash, cash equivalents and
investments were $10,245,644 and current liabilities were
$20,470,919. The Company intends to utilize existing capital
resources for general corporate purposes and working capital,
including the Phase 3 clinical trial program with bremelanotide for
HSDD and preclinical and clinical development of our other product
candidates and programs, including PL3994 and melanocortin
receptor1 and melanocortin receptor4 programs.
Management believes that the Phase 3 clinical trial program with
bremelanotide for HSDD, including regulatory filings for product
approval, but excluding required ancillary studies and clinical
trials and launch readiness commercialization efforts, will cost at
least $87,000,000.
Management believes
that the Company’s existing capital resources will be
adequate to fund its planned operations through the quarter ending
December 31, 2016. The Company will need additional funding to
complete required ancillary studies and clinical trials of
bremelanotide for HSDD, prepare and submit regulatory filings for
product approval, and establish commercial scale manufacturing
capability. The Company will also need additional funding to
complete required clinical trials for its other product candidates
and, assuming those clinical trials are successful, as to which
there can be no assurance, to complete submission of required
applications to the FDA. If the Company is unable to obtain
approval or otherwise advance in the FDA approval process, the
Company’s ability to sustain its operations would be
materially adversely affected.
The
Company may seek the additional capital necessary to fund its
operations through public or private equity offerings,
collaboration agreements, debt financings or licensing
arrangements. Additional capital that is required by the Company
may not be available on reasonable terms, or at all.
8
Concentrations –
Concentrations
in the Company’s assets and operations subject it to certain
related risks. Financial instruments that subject the Company to
concentrations of credit risk primarily consist of cash and cash
equivalents and availableforsale investments. The
Company’s cash and cash equivalents are primarily invested in
one money market account sponsored by a large financial
institution. For the three months ended September 30, 2016, and
2015, the Company had no revenues reported.
(2)
BASIS
OF PRESENTATION:
The
accompanying unaudited consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do not include all of
the information and footnote disclosures required to be presented
for complete financial statements. In the opinion of management,
these consolidated financial statements contain all adjustments
(consisting of normal recurring adjustments) considered necessary
for fair presentation. The results of operations for the three
months ended September 30, 2016 may not necessarily be indicative
of the results of operations expected for the full year, except
that the Company expects to incur a significant loss for the fiscal
year ending June 30, 2017.
The
accompanying consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the Company’s Annual Report on Form
10-K for the year ended June 30, 2016, filed with the Securities
and Exchange Commission (SEC), which includes consolidated
financial statements as of June 30, 2016 and 2015 and for each of
the fiscal years in the three-year period ended June 30,
2016.
(3)
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
– The
consolidated financial statements include the accounts of Palatin
and its wholly-owned inactive subsidiary. All intercompany accounts
and transactions have been eliminated in
consolidation.
Use of Estimates
– The
preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of
America (U.S. GAAP) requires management to make estimates and
assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
– Cash
and cash equivalents include cash on hand, cash in banks and all
highly liquid investments with a purchased maturity of less than
three months. Cash equivalents consist of $8,687,904 and $7,782,243
in a money market account at September 30, 2016 and June 30, 2016,
respectively.
Investments
– The Company
determines the appropriate classification of its investments in
debt and equity securities at the time of purchase and reevaluates
such determinations at each balance sheet date. Debt securities are
classified as heldtomaturity when the Company has the
intent and ability to hold the securities to maturity. Debt
securities for which the Company does not have the intent or
ability to hold to maturity are classified as
availableforsale. Heldtomaturity securities
are recorded as either shortterm or longterm on the
balance sheet, based on the contractual maturity date and are
stated at amortized cost. Marketable securities that are bought and
held principally for the purpose of selling them in the near term
are classified as trading securities and are reported at fair
value, with unrealized gains and losses recognized in earnings.
Debt and marketable equity securities not classified as
heldtomaturity or as trading are classified as
availableforsale and are carried at fair market value,
with the unrealized gains and losses, net of tax, included in the
determination of other comprehensive (loss) income.
The
fair value of substantially all securities is determined by quoted
market prices. The estimated fair value of securities for which
there are no quoted market prices is based on similar types of
securities that are traded in the market.
Fair Value of Financial Instruments
– The Company’s financial instruments consist primarily
of cash equivalents, available-for-sale investments, accounts
payable and notes payable. Management believes that the carrying
values of cash equivalents, available-for-sale investments and
accounts payable are representative of their respective fair values
based on the short-term nature of these instruments. Management
believes that the carrying amount of its notes payable approximates
fair value based on the terms of the notes.
Credit Risk
– Financial
instruments which potentially subject the Company to concentrations
of credit risk consist principally of cash and cash equivalents.
Total cash and cash equivalent balances have exceeded insured
balances by the Federal Depository Insurance Company
(FDIC).
Property and Equipment
– Property
and equipment consists of office and laboratory equipment, office
furniture and leasehold improvements and includes assets acquired
under capital leases. Property and equipment are recorded at cost.
Depreciation is recognized using the straight-line method over the
estimated useful lives of the related assets, generally five years
for laboratory and computer equipment, seven years for office
furniture and equipment and the lesser of the term of the lease or
the useful life for leasehold improvements. Amortization of assets
acquired under capital leases is included in depreciation expense.
Maintenance and repairs are expensed as incurred while expenditures
that extend the useful life of an asset are
capitalized.
9
Impairment of Long-Lived Assets
–
The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of the assets may not be fully recoverable. To determine
recoverability of a long-lived asset, management evaluates whether
the estimated future undiscounted net cash flows from the asset are
less than its carrying amount. If impairment is indicated, the
long-lived asset would be written down to fair value. Fair value is
determined by an evaluation of available price information at which
assets could be bought or sold, including quoted market prices, if
available, or the present value of the estimated future cash flows
based on reasonable and supportable assumptions.
Revenue Recognition
– Under our
license, co-development and commercialization agreement with Gedeon
Richter (Note 5), we received consideration in the form of a
license fee and development milestone payment.
Revenue
resulting from license fees is recognized upon delivery of the
license for the portion of the license fee payment that is
non-contingent and non-refundable, if the license has standalone
value. Revenue resulting from the achievement of development
milestones is recorded in accordance with the accounting guidance
for the milestone method of revenue recognition.
Research and Development Costs
–
The costs of research and development activities are charged to
expense as incurred, including the cost of equipment for which
there is no alternative future use.
Accrued Expenses –
Third parties
perform a significant portion of our development activities. We
review the activities performed under significant contracts each
quarter and accrue expenses and the amount of any reimbursement to
be received from our collaborators based upon the estimated amount
of work completed. Estimating the value or stage of completion of
certain services requires judgment based on available information.
If we do not identify services performed for us but not billed by
the service-provider, or if we underestimate or overestimate the
value of services performed as of a given date, reported expenses
will be understated or overstated.
Stock-Based Compensation –
The
Company charges to expense the fair value of stock options and
other equity awards granted. The Company determines the value of
stock options utilizing the Black-Scholes option pricing model.
Compensation costs for share-based awards with pro-rata vesting are
determined using the quoted market price of the Company’s
common stock on the date of grant and allocated to periods on a
straightline basis, while awards containing a market
condition are valued using multifactor Monte Carlo
simulations.
Income Taxes
– The Company and
its subsidiary file consolidated federal and separate-company state
income tax returns. Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
assets and liabilities and their respective tax basis and operating
loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
or operating loss and tax credit carryforwards are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the period
that includes the enactment date. The Company has recorded a
valuation allowance against its deferred tax assets based on the
history of losses incurred.
Net Loss per Common Share
– Basic
and diluted earnings per common share (EPS) are calculated in
accordance with the provisions of Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 260,
“Earnings per Share,” which includes guidance
pertaining to the warrants, issued in connection with the July 3,
2012, December 23, 2014, and July 2, 2015 private placement
offerings and the August 4, 2016 underwritten offering, that are
exercisable for nominal consideration and, therefore, are to be
considered in the computation of basic and diluted net loss per
common share. The Series A 2012 warrants issued on July 3, 2012 to
purchase up to 31,988,151 shares of common stock are included in
the weighted average number of common shares outstanding used in
computing basic and diluted net loss per common share for all
periods presented in the consolidated statements of
operations.
The
Series B 2012 warrants issued on July 3, 2012 to purchase up to
35,488,380 shares of common stock are included in the weighted
average number of common shares outstanding used in computing basic
and diluted net loss per common share for all periods presented in
the consolidated statements of operations.
The
Series C 2014 warrants to purchase up to 24,949,325 shares of
common stock were exercisable starting at December 23, 2014 and,
therefore are included in the weighted average number of common
shares outstanding used in computing basic and diluted net loss per
common share starting on December 23, 2014.
10
The
Series E 2015 warrants to purchase up to 21,917,808 shares of
common stock were exercisable starting at July 2, 2015 and,
therefore are included in the weighted average number of common
shares outstanding used in computing basic and diluted net loss per
common share starting on July 2, 2015.
The
Series I 2016 warrants to purchase up to 2,218,045 shares of common
stock were exercisable starting at August 4, 2016 and, therefore
are included in the weighted average number of common shares
outstanding used in computing basic and diluted net loss per common
share starting on August 4, 2016 (Note 11).
As of
September 30, 2016 and 2015, common shares issuable upon conversion
of Series A Convertible Preferred Stock, the exercise of
outstanding options and warrants (excluding the Series A 2012,
Series B 2012, Series C 2014, Series E 2015 and Series I 2016
warrants issued in connection with the July 3, 2012, December 23,
2014, and July 2, 2015 private placement offerings and the August
4, 2016 underwritten offering), and the vesting of restricted stock
units amounted to an aggregate of 44,479,663, and 32,908,798
shares, respectively. These share amounts have been excluded from
the calculation of net loss per share as the impact would be
antidilutive.
(4)
NEW
AND RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS:
In June
2016, the FASB issued ASU No. 201613,
Financial Instruments Credit Losses:
Measurement of Credit Losses on Financial Instruments,
which
requires measurement and recognition of expected credit losses for
financial assets held at the reporting date based on historical
experience, current conditions, and reasonable and supportable
forecasts. This is different from the current guidance as this will
require immediate recognition of estimated credit losses expected
to occur over the remaining life of many financial assets. The new
guidance will be effective for the Company on July 1, 2020. Early
adoption will be available on July 1, 2019. The Company is
currently evaluating the effect that the updated standard will have
on its consolidated financial statements and related
disclosures.
In
March 2016, the FASB issued ASU No. 201609,
Compensation – Improvement to Employee
ShareBased Payment Accounting
, which amends the
current guidance related to stock compensation. The updated
guidance changes how companies account for certain aspects of
sharebased payment awards to employees, including the
accounting for income taxes, forfeitures, and statutory tax
withholding requirements, as well as classification in the
statement of cash flows. The update to the standard is effective
for the Company on July 1, 2017, with early application permitted.
The Company is evaluating the effect that the new guidance will
have on its consolidated financial statements and related
disclosures.
In
February 2016, the FASB issued ASU No. 201602,
Leases, Related to the Recognition of Lease
Assets and Lease Liabilities
. The new guidance requires
lessees to recognize almost all leases on their balance sheet as a
rightofuse asset and a lease liability, other than
leases that meet the definition of a short term lease, and
requires expanded disclosures about leasing arrangements. The
recognition, measurement, and presentation of expenses and cash
flows arising from a lease by a lessee have not significantly
changed from the current guidance. Lessor accounting is similar to
the current guidance, but updated to align with certain changes to
the lessee model and the new revenue recognition standard. The new
guidance is effective for the Company on July 1, 2019, with early
adoption permitted. The Company is evaluating the impact that the
new guidance will have on its consolidated financial statements and
related disclosures.
In
January 2016, the FASB issued ASU No. 201601,
Financial Instruments: Recognition and
Measurement of Financial Assets and Financial Liabilities
.
The new guidance relates to the recognition and measurement of
financial assets and liabilities. The new guidance makes targeted
improvements to GAAP impacting equity investments (other than those
accounted for under the equity method or consolidated), financial
liabilities accounted for under the fair value election, and
presentation and disclosure requirements for financial instruments,
among other changes. The new guidance is effective for the Company
on July 1, 2018, with early adoption prohibited other than for
certain provisions. The Company is evaluating the impact that the
new guidance will have on its consolidated financial statements and
related disclosures.
In
November 2015, the FASB issued ASU No. 201517,
Income Taxes: Balance Sheet Classification of
Deferred Taxes,
which simplifies the balance sheet
classification of deferred taxes. The new guidance requires that
deferred tax liabilities and assets be classified as noncurrent in
a classified statement of financial position. The current
requirement that deferred tax liabilities and assets of a
taxpaying component of an entity be offset and presented as a
single amount is not affected by the new guidance. The new guidance
is effective for the Company on July 1, 2017, with early adoption
permitted as of the beginning of an interim or annual reporting
period. The new guidance may be applied either prospectively to all
deferred tax liabilities and assets or retrospectively to all
periods presented. The Company is evaluating the impact that the
new guidance will have on its consolidated financial statements and
related disclosures. however, at the present time the Company has
recorded a valuation allowance against its deferred tax assets
based on the history of losses incurred.
11
In
April 2015, the FASB issued ASU No. 2015-03,
Simplifying the Presentation of Debt Issuance
Costs
, which requires debt issuance costs related to a
recognized debt liability to be presented on the balance sheet as a
direct deduction from the debt liability, similar to the
presentation of debt discounts. In August 2015, the FASB issued a
clarification that debt issuance costs related to line-of-credit
arrangements were not within the scope of the new guidance and
therefore should continue to be accounted for as deferred assets in
the balance sheet, consistent with existing GAAP. The Company
adopted the retrospective guidance as of July 1, 2016. As a result
of the adoption of ASU No. 2015-03, we made the following
adjustments to the June 30, 2016 consolidated balance sheet: a
$110,441 decrease to prepaid expenses and other current assets, a
$83,215 decrease to other assets, a $110,441 decrease to the
current portion of notes payable, net of discounts and debt
issuance costs, and a $83,215 decrease to the long-term portion of
notes payable, net of discounts and debt issuance
costs.
In
August 2014, the FASB issued ASU No. 2014-15,
Presentation of Financial Statements-Going
Concern: Disclosures of Uncertainties about an Entity’s
Ability to Continue as a Going Concern
. The amendments in
this update provide guidance in U.S. GAAP about management's
responsibility to evaluate whether there is substantial doubt about
an entity's ability to continue as a going concern and to provide
related footnote disclosures. In doing so, the amendments should
reduce diversity in the timing and content of footnote disclosures.
The new standard is effective for the Company for its fiscal year
ending June 30, 2017. The Company is evaluating the effect of the
standard, if any, on its consolidated financial
statements.
In May 2014, the FASB issued ASU No.
2014-09,
Revenue from Contracts with
Customers
, which requires an
entity to recognize the amount of revenue to which it expects to be
entitled for the transfer of promised goods or services to
customers. The ASU will replace most existing revenue recognition
guidance in U.S. GAAP when it becomes effective. In July 2015, the
FASB voted to defer the effective date of the new standard until
fiscal years beginning after December 15, 2017 with early
application permitted for fiscal years beginning after December 15,
2016. With the deferral, the new standard is effective for the
Company on July 1, 2018, with early adoption permitted one year
prior. The standard permits the use of either the retrospective or
cumulative effect transition method. The Company is evaluating the
effect that ASU 2014-09 will have on its consolidated financial
statements and related disclosures. The Company has not yet
selected a transition method nor has it determined the effect of
the standard on its ongoing financial
reporting.
(5)
AGREEMENT
WITH GEDEON RICHTER:
In
August 2014, the Company entered into a license, co-development and
commercialization agreement with Gedeon Richter on bremelanotide
for FSD in Europe and selected countries. On September 16, 2015,
the Company and Gedeon Richter mutually and amicably agreed to
terminate the license, co-development and commercialization
agreement. In connection with the termination of the license
agreement, all rights and licenses to co-develop and commercialize
bremelanotide for FSD indications granted by the Company under the
license agreement to Gedeon Richter terminated and reverted to the
Company, and neither party is expected to have any future material
obligations under the license agreement. Neither the Company nor
Gedeon Richter incurred any early termination penalties or other
payment or reimbursement obligations as a result of the termination
of the license agreement.
The
Company viewed the delivery of the license for bremelanotide as a
revenue generating activity that is part of its ongoing and central
operations. The other elements of the agreement with Gedeon Richter
were considered non-revenue activities associated with the
collaborative arrangement. The Company believes the license had
standalone value from the other elements of the collaborative
arrangement because it conveyed all of the rights necessary to
develop and commercialize bremelanotide in the licensed territory.
For the three months ended September 30, 2016, and 2015, the
Company had no revenues reported.
(6)
PREPAID EXPENSES AND OTHER CURRENT
ASSETS:
Prepaid
expenses and other current assets consist of the
following:
|
|
September 30, 2016
|
June 30, 2016
|
|
Clinical
study costs
|
$
860,440
|
$
1,146,975
|
|
Insurance
premiums
|
25,764
|
23,010
|
|
Other
|
121,774
|
143,856
|
|
|
$
1,007,978
|
$
1,313,841
|
(7)
INVESTMENTS:
The
following summarizes the carrying value of our
availableforsale investments, which consist of
corporate debt securities:
|
|
September 30, 2016
|
June 30, 2016
|
|
Cost
|
$
1,387,022
|
$
1,387,022
|
|
Amortization
of premium
|
(6,787
)
|
(4,522
)
|
|
Gross
unrealized loss
|
(2,521
)
|
(1,944
)
|
|
Fair
value
|
$
1,377,714
|
$
1,380,556
|
12
(8)
FAIR
VALUE MEASUREMENTS:
The
fair value of cash equivalents is classified using a hierarchy
prioritized based on inputs. Level 1 inputs are quoted prices
(unadjusted) in active markets for identical assets or liabilities.
Level 2 inputs are quoted prices for similar assets and liabilities
in active markets or inputs that are observable for the asset or
liability, either directly or indirectly through market
corroboration, for substantially the full term of the financial
instrument. Level 3 inputs are unobservable inputs based on
management’s own assumptions used to measure assets and
liabilities at fair value. A financial asset or liability’s
classification within the hierarchy is determined based on the
lowest level input that is significant to the fair value
measurement.
The
following table provides the assets carried at fair
value:
|
|
Carrying Value
|
Quoted prices in
active markets
(Level 1)
|
Other quoted/observable inputs (Level 2)
|
Significant unobservable inputs
(Level 3)
|
|
September
30, 2016:
|
|
|
|
|
|
Money
market account
|
8,687,904
|
8,687,904
|
-
|
-
|
|
TOTAL
|
$
8,687,904
|
$
8,687,904
|
$
-
|
$
-
|
|
June
30, 2016:
|
|
|
|
|
|
Money
market account
|
7,782,243
|
7,782,243
|
-
|
-
|
|
TOTAL
|
$
7,782,243
|
$
7,782,243
|
$
-
|
$
-
|
(9)
ACCRUED EXPENSES:
Accrued
expenses consist of the following:
|
|
September 30, 2016
|
June 30, 2016
|
|
Bremelanotide
program costs
|
$
12,379,580
|
$
6,983,581
|
|
Other
research related expenses
|
311,178
|
69,609
|
|
Professional
services
|
40,235
|
231,482
|
|
Other
|
153,597
|
483,061
|
|
|
$
12,884,590
|
$
7,767,733
|
(10)
NOTES PAYABLE:
Notes
payable consist of the following:
|
|
September 30, 2016
|
June 30, 2016
|
|
Notes
payable under venture loan
|
$
19,000,000
|
$
20,000,000
|
|
Unamortized
related debt discount
|
$
(275,386
)
|
$
(324,800
)
|
|
Unamortized
debt issuance costs
|
(163,068
)
|
(193,655
)
|
|
Notes
payable
|
$
18,561,546
|
$
19,481,545
|
|
|
|
|
|
Less:
current portion
|
6,399,075
|
5,374,951
|
|
|
|
|
|
Long-term
portion
|
$
12,162,471
|
$
14,106,594
|
13
On July
2, 2015, the Company closed on a $10,000,000 venture loan led by
Horizon Technology Finance Corporation (Horizon). The debt facility
is a four-year senior secured term loan that bears interest at a
floating coupon rate of one-month LIBOR (floor of 0.50%) plus 8.50%
and provides for interest-only payments for the first eighteen
months followed by monthly payments of principal payments of
$333,333 plus accrued interest through August 1, 2019. The lenders
also received five-year immediately exercisable Series G warrants
to purchase 549,450 shares of Palatin common stock exercisable at
an exercise price of $0.91 per share. The Company has recorded a
debt discount of $305,196 equal to the fair value of these warrants
at issuance, which is being amortized to interest expense over the
term of the related debt. This debt discount will offset against
the note payable balance and is included in additional paid-in
capital on the Company’s balance sheet at September 30, 2016
and June 30, 2016. In addition, a final incremental payment of
$500,000 is due on August 1, 2019, or upon early repayment of the
loan. This final incremental payment is being accreted to interest
expense over the term of the related debt. The Company incurred
approximately $146,000 of costs in connection with the loan
agreement. These costs were capitalized as deferred financing costs
and are offset against the note payable balance. These debt
issuance costs are being amortized to interest expense over the
term of the related debt. In addition, if the Company repays all or
a portion of the loan prior to the applicable maturity date, it
will pay the lenders a prepayment penalty fee, based on a
percentage of the then outstanding principal balance, equal to 3%
if the prepayment occurs on or before 18 months after the funding
date thereof or 1% if the prepayment occurs more than 18 months
after, but on or before 30 months after, the funding
date.
On
December 23, 2014, the Company closed on a $10,000,000 venture loan
which was led by Horizon. The debt facility is a four year senior
secured term loan that bears interest at a floating coupon rate of
one-month LIBOR (floor of 0.50%) plus 8.50%, and provides for
interest-only payments for the first eighteen months followed by
monthly payments of principal payments of $333,333 plus accrued
interest through January 1, 2019. The lenders also received
five-year immediately exercisable Series D 2014 warrants to
purchase 666,666 shares of common stock exercisable at an exercise
price of $0.75 per share. The Company recorded a debt discount of
$267,820 equal to the fair value of these warrants at issuance,
which is being amortized to interest expense over the term of the
related debt. This debt discount is offset against the note payable
balance and included in additional paid-in capital on the
Company’s balance sheet at September 30, 2016, and June 30,
2016. In addition, a final incremental payment of $500,000 is due
on January 1, 2019, or upon early repayment of the loan. This final
incremental payment is being accreted to interest expense over the
term of the related debt. The Company incurred $209,000 of costs in
connection with the loan agreement These costs were capitalized as
deferred financing costs and are offset against the note payable
balance. These debt issuance costs are being amortized to interest
expense over the term of the related debt. In addition, if the
Company repays all or a portion of the loan prior to the applicable
maturity date, it will pay the lenders a prepayment penalty fee,
based on a percentage of the then outstanding principal balance,
equal to 3% if the prepayment occurs on or before 18 months after
the funding date thereof or 1% if the prepayment occurs more than
18 months after, but on or before 30 months after, the funding
date.
The
Company’s obligations under the 2015 amended and restated
loan agreement, which includes the 2014 venture loan, are secured
by a first priority security interest in substantially all of its
assets other than its intellectual property. The Company also has
agreed to specified limitations on pledging or otherwise
encumbering its intellectual property assets.
The
2015 amended and restated loan agreement include customary
affirmative and restrictive covenants, but does not include any
covenants to attain or maintain specified financial metrics. The
loan agreement includes customary events of default, including
payment defaults, breaches of covenants, change of control and a
material adverse change default. Upon the occurrence of an event of
default and following any applicable cure periods, a default
interest rate of an additional 5% may be applied to the outstanding
loan balances, and the lenders may declare all outstanding
obligations immediately due and payable and take such other actions
as set forth in the loan agreement. As of September 30, 2016, the
Company was in compliance with all of its loan
covenants.
(11)
STOCKHOLDERS’
DEFICIENCY:
Financing Transactions –
On August 4, 2016, the
Company closed on an underwritten offering of units, with each unit
consisting of a share of common stock and a Series H warrant to
purchase 0.75 of a share of common stock. Investors whose purchase
of units in the offering would result in them beneficially owning
more than 9.99% of the Company’s outstanding common stock
following the completion of the offering had the opportunity to
acquire units with Series I prefunded warrants substituted for any
common stock they would have otherwise acquired. Gross proceeds
were $9,225,000, with net proceeds to the Company, after deducting
offering expenses, of $8,470,897. The Company issued 11,481,481
shares of common stock and ten year prefunded Series I warrants to
purchase 2,218,045 shares of common stock at an exercise price of
$0.01, together with Series H warrants to purchase 10,274,646
shares of common stock at an exercise price of $0.70 per
share.
The
Series I warrants are exercisable at an initial exercise price of
$0.01 per share, exercisable immediately upon issuance and expire
on the tenth anniversary of the date of issuance. The Series I
warrants are subject to limitation on exercise if the holder and
its affiliates would beneficially own more than 9.99% of the total
number of the Company’s shares of common stock following such
exercise. The Series H warrants are exercisable at an initial
exercise price of $0.70 per share, are exercisable commencing six
months following the date of issuance and expire on the fifth
anniversary of the date of issuance. The Series H warrants are
subject to the same beneficial ownership limitation as the Series I
warrants.
14
On July
2, 2015, the Company closed on a private placement of Series E
warrants to purchase 21,917,808 shares of Palatin common stock and
Series F warrants to purchase 2,191,781 shares of the
Company’s common stock. Certain funds managed by QVT
Financial LP (QVT) invested $5,000,000 and another accredited
investment fund invested $15,000,000. The funds paid $0.90 for each
Series E warrant and $0.125 for each Series F warrant, resulting in
gross proceeds to the Company of $20,000,000, with net proceeds,
after deducting estimated offering expenses, of
$19,834,278.
The
Series E warrants, which may be exercised on a cashless basis, are
exercisable immediately upon issuance at an initial exercise price
of $0.01 per share and expire on the tenth anniversary of the date
of issuance. The Series E warrants are subject to limitation
on exercise if QVT and its affiliates would beneficially own more
than 9.99% (4.99% for the other accredited investment fund holder)
of the total number of the Company's shares of common stock
following such exercise. The Series F warrants are exercisable at
an initial exercise price of $0.91 per share, exercisable
immediately upon issuance and expire on the fifth anniversary of
the date of issuance. The Series F warrants are subject to the same
beneficial ownership limitation as the Series E
warrants.
The
purchase agreement for the private placement provides that the
purchasers have certain rights until the earlier of approval of
bremelanotide for FSD by the U.S. Food and Drug Administration and
July 3, 2018, including rights of first refusal and participation
in any subsequent equity or debt financing. The purchase agreement
also contains certain restrictive covenants so long as the funds
continue to hold specified amounts of warrants or beneficially own
specified amounts of the outstanding shares of common
stock.
During
the three months ended September 30, 2016, and 2015 the Company
issued 12,757,174 shares and 10,890,889 shares, respectively, of
common stock pursuant to the cashless exercise provisions of
warrants at an exercise price of $0.01 per share. As of September
30, 2016, there were 77,546,764 warrants outstanding at an exercise
price of $0.01 per share.
Stock Options
– In September
2016, the Company granted 828,000 options to its executive officers
and 336,000 options to its employees under the Company’s 2011
Stock Incentive Plan. The Company is amortizing the fair value of
the options vesting over a 48 month period, consisting of 595,000
options granted to its executive officers and all options granted
to its employees, of $188,245 and $106,303, respectively, over the
vesting period. The Company recognized $5,216 of stock-based
compensation expense related to these options during the three
months ended September 30, 2016. 233,000 options granted to its
executive officers vest 12 months from the date of grant, and the
Company is amortizing the fair value of these options of $67,160
over this vesting period. The Company recognized $4,757 of
stock-based compensation expense related to these options during
the three months ended September 30, 2016.
In June
2016, the Company granted 262,500 options to its nonemployee
directors under the Company’s 2011 Stock Incentive Plan. The
Company is amortizing the fair value of these options of $81,435
over the vesting period. The Company recognized $20,359 of
stock-based compensation expense related to these options during
the three months ended September 30, 2016.
In June
2015, the Company granted 570,000 options to its executive
officers, 185,800 options to its employees and 160,000 options to
its non-employee directors under the Company’s 2011 Stock
Incentive Plan. The Company is amortizing the fair value of these
options of $446,748, $145,439 and $111,876, respectively, over the
vesting period. The Company recognized $32,293, and $57,577,
respectively, of stock-based compensation expense related to these
options during the three months ended September 30, 2016 and
2015.
Unless
otherwise stated, stock options granted to the Company’s
executive officers and employees vest over a 48 month period, while
stock options granted to its non-employee directors vest over a 12
month period.
Restricted Stock Units
– In
September 2016, the Company granted 558,000 restricted stock units
to its executive officers, 415,000 of which vest over 24 months and
143,000 of which vest at 12 months, and 336,000 restricted stock
units to its employees under the Company’s 2011 Stock
Incentive Plan. The Company is amortizing the fair value of the
restricted stock units of $284,580, and $171,360, respectively,
over the vesting periods. The Company recognized $20,504 of
stock-based compensation expense related to these restricted stock
units during the three months ended September 30,
2016.
In June
2016, the Company granted 262,500 restricted stock units to its
nonemployee directors under the Company’s 2011 Stock
Incentive Plan. The Company is amortizing the fair value of these
restricted stock units of $131,250 over the vesting period. The
Company recognized $32,812 of stock-based compensation expense
related to these restricted stock units during the three months
ended September 30, 2016.
15
In
December 2015, the Company granted 625,000 performance-based
restricted stock units to its executive officers and 200,000
performance-based restricted stock units to its employees under the
Company’s 2011 Stock Incentive Plan, which vest during the
performance period, ending December 31, 2017, if and upon the
earlier of: i) achievement of a closing price for the
Company’s common stock equal to or greater than $1.20 per
share for 20 consecutive trading days, which is considered a market
condition, or ii) entering into a collaboration agreement (U.S. or
global) of bremelanotide for FSD, which is considered a performance
condition. The Company determined that the performance condition
was not probable of achievement on the date of grant since such
condition is outside the control of the Company. The
fair value of these awards, as calculated under a multifactor Monte
Carlo simulation, was $338,250. The Company is amortizing the fair
value over the derived service period of 0.96 years. The Company
recognized $86,879 of stock-based compensation expense related to
these restricted stock units during the three ended September 30,
2016.
Also,
in December 2015, the Company granted 625,000 restricted stock
units to its executive officers, 340,000 restricted stock units to
its non-employee directors and 200,000 restricted stock units to
its employees under the Company’s 2011 Stock Incentive Plan.
For executive officers and employees, the restricted stock units
vest 25% on the date of grant and 25% on the first, second and
third anniversary dates from the date of grant. For non-employee
directors, the restricted stock units vest 50% on the first and
second anniversary dates from the date of grant. The fair value of
these restricted stock units is $425,000, $231,200 and $136,000,
respectively. The Company recognized $101,256 of stock-based
compensation expense related to these restricted stock units during
the three months ended September 30, 2016.
In June
2015, the Company granted 400,000 restricted stock units to its
executive officers, 185,800 restricted stock units to its employees
and 160,000 restricted stock units to its non-employee directors
under the Company’s 2011 Stock Incentive Plan. The Company is
amortizing the fair value of these restricted stock units of
$432,000, $200,664, and $172,800, respectively, over the vesting
period. The Company recognized $40,429 and $150,328, respectively,
of stock-based compensation expense related to these restricted
stock units during the three months ended September 30, 2016 and
2015.
Unless
otherwise stated, restricted stock units granted to the
Company’s executive officers, employees and non-employee
directors vest over 24 months, 48 months and 12 months,
respectively.
Stock-based
compensation cost for the three months ended September 30, 2016 for
stock options and equity-based instruments issued other than the
stock options and restricted stock units described above was
$58,703, and $92,489 for the three months ended September 30,
2015.
(12)
SUBSEQUENT
EVENTS:
Bremelanotide Phase 3 HSDD Topline Results
–
On November 1, 2016, we announced positive top-line
results in our Phase 3 clinical trial program of bremelanotide as
an on-demand treatment for premenopausal women diagnosed with HSDD.
Bremelanotide 1.75 mg met the pre-specified co-primary efficacy
endpoints of improvement in desire and decrease in distress
associated with low sexual desire as measured using validated
patient-reported outcome instruments.
Outstanding Common Stock –
Between September 30, 2016 and November 10, 2016, the Company
issued 15,232,511 shares of common stock pursuant to the cashless
exercise provisions of warrants at an exercise price of $0.01 per
share. As of November 10, 2016, there are 62,046,764 outstanding
warrants with an exercise price of $0.01 per share, all of which
include cashless exercise provisions.
16
The
following discussion and analysis should be read in conjunction
with the consolidated financial statements and notes to the
consolidated financial statements filed as part of this report and
the audited consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended June
30, 2016.
In this
Quarterly Report on Form 10-Q, references to “we”,
“our”, “us” or “Palatin” means
Palatin Technologies, Inc. and its subsidiary.
Critical
Accounting Policies and Estimates
Our
significant accounting policies, which are described in the notes
to our consolidated financial statements included in this report
and in our Annual Report on Form 10-K for the year ended June 30,
2016, have not changed as of September 30, 2016. We believe that
our accounting policies and estimates relating to revenue
recognition, accrued expenses and stock-based compensation are the
most critical.
Overview
We are
a biopharmaceutical company developing targeted,
receptorspecific peptide therapeutics for the treatment of
diseases with significant unmet medical need and commercial
potential. Our programs are based on molecules that modulate the
activity of the melanocortin and natriuretic peptide receptor
systems. Our primary product in clinical development is
bremelanotide for the treatment of premenopausal women with
hypoactive sexual desire disorder, or HSDD, which is a type of
female sexual dysfunction, or FSD, defined as low desire with
associated distress. In addition, we have drug candidates or
development programs for obesity, erectile dysfunction,
cardiovascular diseases, pulmonary diseases, inflammatory diseases
and dermatologic diseases.
The
following drug development programs are actively under
development:
●
Bremelanotide,
an-as needed subcutaneous injectable peptide melanocortin receptor
agonist, for treatment of HSDD in premenopausal women.
Bremelanotide, which is a melanocortin agonist, is a synthetic
peptide analog of the naturally occurring hormone alphaMSH
(melanocytestimulating hormone). In two primary Phase 3
clinical studies of bremelanotide for HSDD in premenopausal women,
bremelanotide met the pre-specified co-primary efficacy endpoints
of improvement in desire and decrease in distress associated with
low sexual desire as measured using validated patient-reported
outcome instruments.
●
Melanocortin
receptor4, or MC4r, compounds for treatment of obesity and
diabetes. Results of our studies involving MC4r peptides suggest
that certain of these peptides may have significant commercial
potential for treatment of conditions responsive to MC4r
activation, including FSD, HSDD, erectile dysfunction or ED,
obesity and diabetes.
●
PL3994, a
natriuretic peptide receptorA, or NPRA, agonist, for
treatment of cardiovascular and pulmonary indications. PL3994
is our lead natriuretic peptide receptor product candidate, and is
a synthetic mimetic of the neuropeptide hormone atrial natriuretic
peptide, or ANP. PL3994 is in development for treatment of
heart failure, acute exacerbations of asthma and refractory
hypertension. and
●
Melanocortin
receptor1, or MC1r, agonist peptides for treatment of
inflammatory and dermatologic disease indications. Our MC1r peptide
drug candidates are highly specific, with substantially greater
binding and efficacy at MC1r than at other melanocortin receptors.
We have selected one of our MC1r peptide drug candidates,
designated PL8177, as a clinical trial
candidate.
17
The
following chart illustrates the status of our drug development
programs.
We are
developing subcutaneously administered bremelanotide for the
treatment of HSDD in premenopausal women. HSDD is characterized by
a decrease in sexual desire with significant personal distress or
interpersonal difficulty as a result of the lack of desire.
Bremelanotide is a melanocortin agonist with a mechanism of action
involving activation of endogenous neuronal pathways regulating
sexual arousal and desire responses.
We
initiated patient screening in our Phase 3 clinical study program
of bremelanotide for the treatment of HSDD in premenopausal women,
called the RECONNECT STUDY, in the fourth quarter of calendar 2014,
completed patient enrollment in the fourth quarter of calendar
2015, and completed the last patient visits in the double blind, or
efficacy, portion of the studies in the third quarter of calendar
2016. There are two Phase 3 clinical trials, Study 301 and Study
302, in the RECONNECT STUDY. The co-primary endpoints for the Phase
3 clinical trials were the Female Sexual Function Index: Desire
Domain (FSFI-D) and Female Sexual Distress
Scale-Desires/Arousal/Orgasm (FSDS-DAO) Item 13. For women taking
bremelanotide compared to placebo, the FSFI-D showed statistically
significant improvement in measures of desire in the context of
overall sexual functioning in both Phase 3 studies, Study 301:
(mean change of 0.54 vs. 0.24, median change of 0.60 vs. 0.00,
p=0.0002) and Study 302: (mean change of 0.63 vs. 0.21, median
change of 0.60 vs. 0.00, p<0.0001). The FSDS-DAO Item 13 showed
statistically significant decreases in measures of distress related
to low sexual desire both Phase 3 studies, Study 301: (mean change
of -0.74 vs. -0.35, median change of -1.0 vs. 0.0, p<0.0001) and
Study 302: (mean change of -0.71 vs. -0.41, median change of -1.0
vs. 0.0, p=0.0057). The openlabel safety extension portion of
the RECONNECT STUDY is continuing. We cannot assure you that a
complete review of the Phase 3 efficacy data will support approval
of bremelanotide for HSDD or that the U.S. Food and Drug
Administration, or FDA, will approve a new drug application, or
NDA, for bremelanotide.
Key
elements of our business strategy include:
●
Using our
technology and expertise to develop and commercialize products in
our active drug development programs;
●
Entering into
strategic alliances and partnerships with pharmaceutical companies
to facilitate the development, manufacture, marketing, sale and
distribution of product candidates that we are
developing;
●
Partially funding
our product development programs with the cash flow generated from
research collaboration and license agreements and any potential
future agreements with third parties; and
●
Completing
development and seeking regulatory approval of bremelanotide for
HSDD and our other product candidates.
We
incorporated in Delaware in 1986 and commenced operations in the
biopharmaceutical area in 1996. Our corporate offices are located
at 4B Cedar Brook Drive, Cranbury, New Jersey 08512 and our
telephone number is (609) 495-2200. We maintain an Internet site at
http://www.palatin.com, where among other things, we make available
free of charge on and through this website our Forms 3, 4 and 5,
proxy statements, Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d),
Section 14A and Section 16 of the Exchange Act as soon as
reasonably practicable after we electronically file such material
with, or furnish it to, the SEC. Our website and the information
contained in it or connected to it are not incorporated into this
Quarterly Report on Form 10-Q.
18
Results
of Operations
Three Months Ended September 30, 2016 Compared to the Three Months
Ended September 30, 2015
Revenue –
We recognized no
revenue for the three months ended September 30, 2016 and
2015.
Research and Development
–
Research and development expenses were $11,226,084 for the three
months ended September 30, 2016 compared to $10,597,714 for the
three months ended September 30, 2015.
Research and
development expenses related to our bremelanotide, PL-3994, MC1r,
MC4r and other preclinical programs were $10,098,974 for the three
months ended September 30, 2016 compared to $9,887,540 for the
three months ended September 30, 2015. Spending to date has been
primarily related to our bremelanotide for the treatment of HSDD
program. The increase in research and development expenses is
mainly attributable to the continued progress of our bremelanotide
program for HSDD. The amount of such spending and the nature of
future development activities are dependent on a number of factors,
including primarily the availability of funds to support future
development activities, success of our clinical trials and
preclinical and discovery programs, and our ability to progress
compounds in addition to bremelanotide and PL-3994 into human
clinical trials.
The
amounts of project spending above exclude general research and
development spending, which were $1,127,110 for the three months
ended September 30, 2016 compared to $710,174 for the three months
ended September 30, 2015. The increase in general research and
development spending is primarily attributable to additional
staffing and secondarily to the recognition of stockbased
compensation.
Cumulative spending
from inception to September 30, 2016 is approximately $245,600,000
on our bremelanotide program and approximately $124,300,000 on all
our other programs (which include PL3994, PL8177, other
melanocortin receptor agonists, obesity, other discovery programs
and terminated programs). Due to various risk factors described
herein and in our Annual Report on Form 10-K for the year ended
June 30, 2016, under “Risk Factors,” including the
difficulty in estimating the costs and timing of future Phase 1
clinical trials and largerscale Phase 2 and Phase 3 clinical
trials for any product under development, we cannot predict with
reasonable certainty when, if ever, a program will advance to the
next stage of development, be successfully completed, or generate
net cash inflows.
General and Administrative
–
General and administrative expenses, which consist mainly of
compensation and related costs, were $1,209,346 for the three
months ended September 30, 2016 compared to $1,199,937 for the
three months ended September 30, 2015. The increase in general and
administrative expenses is primarily attributable to the
recognition of stockbased compensation.
Other Income (Expense)
– Other
income (expense) was $(617,340), and $(612,268), respectively, for
the three months ended September 30, 2016 and 2015. For the three
months ended September 30, 2016, we recognized $6,645 of investment
income offset by $(623,985) of interest expense primarily related
to our venture debt. For the three months ended September 30, 2015,
we recognized $15,740 of investment income offset by $(628,008) of
interest expense primarily related to our venture
debt.
Liquidity
and Capital Resources
Since
inception, we have incurred net operating losses, primarily related
to spending on our research and development programs. We have
financed our net operating losses primarily through debt and equity
financings and amounts received under collaborative
agreements.
Our
product candidates are at various stages of development and will
require significant further research, development and testing and
some may never be successfully developed or commercialized. We may
experience uncertainties, delays, difficulties and expenses
commonly experienced by early stage biopharmaceutical companies,
which may include unanticipated problems and additional costs
relating to:
●
the development and
testing of products in animals and humans;
●
product approval or
clearance;
●
regulatory
compliance;
●
good manufacturing
practices (GMP) compliance;
●
intellectual
property rights;
●
product
introduction;
●
marketing, sales
and competition; and
●
obtaining
sufficient capital.
Failure
to enter into or successfully perform under collaboration
agreements and obtain timely regulatory approval for our product
candidates and indications would impact our ability to increase
revenues and could make it more difficult to attract investment
capital for funding our operations. Any of these possibilities
could materially and adversely affect our operations and require us
to curtail or cease certain programs.
19
During
the three months ended September 30, 2016, cash used for operating
activities was $6,598,928, compared to $9,398,414 for the three
months ended September 30, 2015. Lower net cash outflows from
operations in the three months ended September 30, 2016 compared to
the three months ended September 30, 2015 were primarily the result
of an increase in accrued expenses and an increase in accounts
payable. Our periodic prepaid expenses, accounts payable and
accrued expenses balances will continue to be highly dependent on
the timing of our operating costs.
During
the three months ended September 30, 2016 there were no investing
activities. During the three months ended September 30, 2015, net
cash used for investing activities was $17,695 for capital
expenditures.
During
the three months ended September 30, 2016, net cash provided by
financing activities was $7,464,190, which consisted of an
underwritten offering with net proceeds of $8,470,897, offset by
$1,006,707 for the payment on notes payable and capital lease
payments. During the three months ended September 30, 2015, net
cash provided by financing activities of $29,640,632 consisted of
net proceeds of $19,919,883 from a private placement, a loan of
$9,859,036, net of related debt issuance costs, offset by
approximately $138,287 for the payment of withholding taxes related
to restricted stock units and capital lease payments.
We have
incurred cumulative negative cash flows from operations since our
inception, and have expended, and expect to continue to expend in
the future, substantial funds to complete our planned product
development efforts. As a result, there is substantial doubt about
our ability to continue as a going concern. Continued operations
are dependent upon our ability to complete equity or debt financing
activities or collaboration arrangements. We believe that if we do
not have sufficient funding, we may have to curtail or cease
certain programs or operations within twelve months. As of
September 30, 2016, our cash, cash equivalents and investments were
$10,245,644 and our current liabilities were
$20,470,919.
We
intend to utilize existing capital resources for general corporate
purposes and working capital, including our bremelanotide program
for HSDD, preclinical and clinical development of our MC1r and MC4r
peptide programs and PL3994 natriuretic peptide, and
development of other portfolio products. Based on our current plan,
we believe that the Phase 3 clinical trial program with
bremelanotide for HSDD, including regulatory filings for product
approval, but excluding required ancillary studies and clinical
trials and launch readiness commercialization efforts, will cost at
least $87,000,000. We intend to seek additional capital to support
the Phase 3 program through collaborative arrangements on
bremelanotide, public or private equity or debt financings, or
other sources.
We
believe that our existing capital resources will be adequate to
fund our planned operations through the quarter ending December 31,
2016. To submit an NDA to FDA for bremelanotide for HSDD, we will
need additional funding to complete required ancillary studies and
clinical trials, prepare and submit regulatory filings for product
approval, and establish commercial scale manufacturing capability.
We will also need additional funding to complete required clinical
trials for our other product candidates and, if those clinical
trials are successful (which we cannot predict), to complete
submission of required regulatory applications to the
FDA.
We
anticipate incurring additional losses over at least the next few
years. To achieve profitability, if ever, we, alone or with others,
must successfully develop and commercialize our technologies and
proposed products, conduct preclinical studies and clinical trials,
obtain required regulatory approvals and successfully manufacture
and market such technologies and proposed products. The time
required to reach profitability is highly uncertain, and we do not
know whether we will be able to achieve profitability on a
sustained basis, if at all.
Not
required to be provided by smaller reporting
companies.
Our
management, with the participation of our Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of our
disclosure controls and procedures, as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e), as of the end of the period covered
by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of September 30, 2016.
There were no changes in our internal control over financial
reporting that occurred during our most recent fiscal quarter that
materially affected, or that are reasonably likely to materially
affect, our internal control over financial reporting.
20
We may
be involved, from time to time, in various claims and legal
proceedings arising in the ordinary course of our business. We are
not currently a party to any claim or legal
proceeding.
This
report and other documents we file with the SEC contain
forward-looking statements that are based on current expectations,
estimates, forecasts and projections about us, our future
performance, our business, our beliefs and our management’s
assumptions. These statements are not guarantees of future
performance, and they involve certain risks, uncertainties and
assumptions that are difficult to predict. You should carefully
consider the risks and uncertainties facing our business. We have
described in our Annual Report on Form 10-K for the fiscal year
ended June 30, 2016, the primary risks related to our business, and
we periodically update those risks for material developments. Those
risks are not the only ones facing us. Our business is also subject
to the risks that affect many other companies, such as employment
relations, general economic conditions and
geopolitical events. Further,
additional risks that materially and adversely affect our business,
operations, liquidity and stock price may materialize in the
future.
Below,
we are providing, in supplemental form, the material changes to our
risk factors that occurred during the past quarter. Our risk
factors disclosed in Part I, Item 1A, of our Annual Report, on Form
10-K for the year ended June 30, 2016, provide additional
disclosure for these supplemental risks and are incorporated herein
by reference.
We will need additional financing, including financing to submit
required regulatory applications to the FDA for bremelanotide for
HSDD and to complete clinical trials for our other product
candidates, which may not be available on acceptable terms, if at
all.
As of
September 30, 2016, we had cash, cash equivalents and investments
of $10,245,644, with current liabilities of $20,470,919. We believe
we currently have sufficient existing capital resources to fund our
planned operations through the quarter ending December 31, 2016. We
will need additional funding to complete development of our
bremelanotide for HSDD program, including completing ancillary
studies and clinical trials, completing certain chemistry,
manufacturing and controls activities, preparing and submitting
regulatory filings for product approval, and launch readiness
commercialization efforts. We will also need additional funding to
conduct and complete required clinical trials for our other product
candidates and, if those clinical trials are successful (which we
cannot predict), to complete submission of required regulatory
applications to the FDA.
We have
completed the last patient visits in the double blind portion of
our Phase 3 clinical trial of bremelanotide for HSDD, and
subsequent to the end of the quarter we released top-line results.
We believe we have adequate funds to complete analysis of efficacy
and safety data. However, we do not have adequate funds to complete
the open-label safety extension study, all ancillary studies and
clinical trials required for submission of an NDA to FDA for
approval of bremelanotide for HSDD, or to prepare and submit the
NDA to FDA. We may be required to curtail or delay our
bremelanotide for HSDD program unless we have adequate funds to
complete the program. We estimate that the Phase 3 clinical trial
program with bremelanotide for HSDD, including regulatory filings
for product approval, but excluding required ancillary studies and
clinical trials and launch readiness commercialization efforts,
will cost at least $87,000,000, of which approximately $63,800,000
has been expensed through September 30, 2016. We will seek funds to
support the program through collaborative arrangements on
bremelanotide, including marketing and distribution partnering
agreements, public or private equity or debt financings, and other
sources, but such additional funding may not be available on
acceptable terms, or at all.
We do
not have any source of significant recurring revenue and must
depend on financing or partnering to sustain our operations. We may
raise additional funds through public or private equity or debt
financings, collaborative arrangements on our product candidates,
or other sources. However, such financing arrangements may not be
available on acceptable terms, or at all. To obtain additional
funding, we may need to enter into arrangements that require us to
develop only certain of our product candidates or relinquish rights
to certain technologies, product candidates and/or potential
markets.
If we
are unable to raise sufficient additional funds when needed, we may
be required to curtail operations significantly, cease clinical
trials and decrease staffing levels. We may seek to license, sell
or otherwise dispose of our product candidates, technologies and
contractual rights on the best possible terms available. Even if we
are able to license, sell or otherwise dispose of our product
candidates, technologies and contractual rights, it is likely to be
on unfavorable terms and for less value than if we had the
financial resources to develop or otherwise advance our product
candidates, technologies and contractual rights
ourselves.
Our
future capital requirements depend on many factors,
including:
●
the interpretation
and acceptance of the results of our Phase 3 clinical trials for
bremelanotide for HSDD;
●
the complete
results of our Phase 3 clinical trials for bremelanotide for
HSDD;
●
the timing of, and
the costs involved in, obtaining regulatory approvals for
bremelanotide for HSDD and our other product
candidates;
●
the number and
characteristics of any additional product candidates we develop or
acquire;
21
●
the scope,
progress, results and costs of researching and developing
bremelanotide for HSDD, PL-3994 or any future product candidates,
and conducting preclinical and clinical trials;
●
the cost of
commercialization activities if bremelanotide for HSDD, PL-3994 or
any future product candidates are approved for sale, including
marketing, sales and distribution costs;
●
the cost of
manufacturing bremelanotide for HSDD, PL-3994 or any future product
candidates and any products we successfully
commercialize;
●
our ability to
establish and maintain strategic collaborations, licensing or other
arrangements and the terms and timing of such
arrangements;
●
the degree and rate
of market acceptance of any future approved products;
●
the emergence,
approval, availability, perceived advantages, relative cost,
relative safety and relative efficacy of alternative and competing
products or treatments;
●
any product
liability or other lawsuits related to our products;
●
the expenses needed
to attract and retain skilled personnel;
●
the costs involved
in preparing, filing, prosecuting, maintaining, defending and
enforcing patent claims, including litigation costs and the outcome
of such litigation; and
●
the timing, receipt
and amount of sales of, or royalties on, future approved products,
if any.
We are substantially dependent on the clinical and commercial
success of our product candidates, primarily our lead product
candidate, bremelanotide for HSDD, but we may never obtain
regulatory approval for or successfully commercialize bremelanotide
for HSDD or any of our product candidates.
To
date, we have invested most of our efforts and financial resources
in the research and development of bremelanotide for HSDD, which is
currently our lead product candidate. We completed the last patient
visit in the double blind efficacy portion of our Phase 3 RECONNECT
STUDY for bremelanotide for HSDD and subsequent to the end of the
quarter released top-line results. The top-line results show that
both Phase 3 trials in the RECONNECT STUDY of bremelanotide for
HSDD in premenopausal women met the pre-specified co-primary
efficacy endpoints of improvement in desire and decrease in
distress associated with low sexual desire as measured using
validated patient-reported outcome instruments. Our near-term
prospects, including our ability to finance our company and
generate revenue, will depend heavily on the successful
development, regulatory approval and commercialization of
bremelanotide for HSDD, as well as any future product candidates.
The clinical and commercial success of our product candidates will
depend on a number of factors, including the
following:
●
timely completion
of, or need to conduct additional, clinical trials, including for
bremelanotide for HSDD, which may be significantly slower or cost
more than we currently anticipate and will depend substantially
upon the accurate and satisfactory performance of third-party
contractors;
●
our ability to
demonstrate to the satisfaction of the FDA the safety and efficacy
of bremelanotide for HSDD or any future product candidates through
clinical trials;
●
whether we are
required by the FDA or other similar foreign regulatory agencies to
conduct additional clinical trials to support the approval of
bremelanotide for HSDD or any future product
candidates;
●
the acceptance of
parameters for regulatory approval, including our proposed
indication, primary endpoint assessment and primary endpoint
measurement, relating to our lead indications of bremelanotide for
HSDD;
●
our success in
educating physicians and patients about the benefits,
administration and use of bremelanotide for HSDD or any future
product candidates, if approved;
●
the prevalence and
severity of adverse events experienced with bremelanotide for HSDD
or any future product candidates or approved products;
●
the adequacy and
regulatory compliance of the autoinjector device, supplied by an
unaffiliated third party, to be used as part of our bremelanotide
combination product;
●
the timely receipt
of necessary marketing approvals from the FDA and similar foreign
regulatory authorities;
●
our ability to
raise additional capital on acceptable terms to achieve our
goals;
●
achieving and
maintaining compliance with all regulatory requirements applicable
to bremelanotide for HSDD or any future product candidates or
approved products;
●
the availability,
perceived advantages, relative cost, relative safety and relative
efficacy of alternative and competing treatments;
22
●
the effectiveness
of our own or our future potential strategic collaborators’
marketing, sales and distribution strategy and
operations;
●
our ability to
manufacture clinical trial supplies of bremelanotide for HSDD or
any future product candidates and to develop, validate and maintain
a commercially viable manufacturing process that is compliant with
current GMP;
●
our ability to
successfully commercialize bremelanotide for HSDD or any future
product candidates, if approved for marketing and sale, whether
alone or in collaboration with others;
●
our ability to
enforce our intellectual property rights in and to bremelanotide
for HSDD or any future product candidates;
●
our ability to
avoid third-party patent interference or intellectual property
infringement claims;
●
acceptance of
bremelanotide for HSDD or any future product candidates, if
approved, as safe and effective by patients and the medical
community; and
●
a continued
acceptable safety profile and efficacy of bremelanotide for HSDD or
any future product candidates following approval.
If we
do not achieve one or more of these factors, many of which are
beyond our control, in a timely manner or at all, we could
experience significant delays or an inability to successfully
commercialize our product candidates. Accordingly, we cannot assure
you that we will be able to generate sufficient revenue through the
sale of bremelanotide for HSDD or any future product candidate to
continue our business. In addition to preventing us from executing
our current business plan, any delays in our clinical trials, or
inability to successfully commercialize our products could impair
our reputation in the industry and the investment community, and
could hinder our ability to fulfill our existing contractual
commitments. As a result, our share price would likely decline
significantly, and we would have difficulty raising necessary
capital for future projects.
None.
None.
Not
applicable.
None.
Exhibits filed or
furnished with this report:
|
Exhibit Number
|
Description
|
Filed Herewith
|
Form
|
Filing Date
|
SEC File No.
|
|
Certification
of Chief Executive Officer.
|
X
|
|
|
|
|
|
Certification
of Chief Financial Officer.
|
X
|
|
|
|
|
|
Certification
of principal executive officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
X
|
|
|
|
|
|
Certification
of principal financial officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
X
|
|
|
|
|
|
101.INS
|
XBRL
Instance Document.
|
X
|
|
|
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document.
|
X
|
|
|
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase Document.
|
X
|
|
|
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase Document.
|
X
|
|
|
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase Document.
|
X
|
|
|
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase Document.
|
X
|
|
|
|
23
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
|
|
Palatin Technologies, Inc.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|||
|
|
|||
|
|
|
/s/
Carl Spana
|
|
|
Date:
November 14, 2016
|
|
Carl
Spana, Ph.D.
President
and
Chief
Executive Officer (Principal
Executive
Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Stephen T. Wills
|
|
|
Date:
November 14, 2016
|
|
Stephen
T. Wills, CPA, MST
Executive
Vice President, Chief Financial Officer and Chief Operating
Officer
(Principal
Financial and Accounting Officer)
|
|
24
EXHIBIT INDEX
|
Exhibit Number
|
Description
|
Filed Herewith
|
Form
|
Filing Date
|
SEC File No.
|
|
Certification
of Chief Executive Officer.
|
X
|
|
|
|
|
|
Certification
of Chief Financial Officer.
|
X
|
|
|
|
|
|
Certification
of principal executive officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
X
|
|
|
|
|
|
Certification
of principal financial officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
X
|
|
|
|
|
|
101.INS
|
XBRL
Instance Document.
|
X
|
|
|
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document.
|
X
|
|
|
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase Document.
|
X
|
|
|
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase Document.
|
X
|
|
|
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase Document.
|
X
|
|
|
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase Document.
|
X
|
|
|
|
25
TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial StatementsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits