PALATIN TECHNOLOGIES INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10 - Q
☑
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the
quarterly period ended September 30, 2019
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)
Securities
registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol
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Name of Each Exchange
on Which Registered
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Common
Stock, par value $.01 per share
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PTN
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NYSE
American
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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, as amended 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,
every Interactive Data File required to be submitted 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 such files).
Yes ☑ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth 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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Emerging
growth company
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☐
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 7(a)(2)(B) of the Exchange Act.
☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐ No
☑
Indicate
the number of shares outstanding of each of the registrant’s
classes of common stock, as of the latest practicable date
(November 8, 2019):
229,116,104
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i
Special Note Regarding Forward-Looking Statements
In this
Quarterly Report on Form 10-Q (this “Quarterly Report”)
references to “we,” “our,”
“us,” the “Company” or
“Palatin” means Palatin Technologies, Inc. and its
subsidiary.
Statements
in this Quarterly Report, 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 (the “Exchange Act”). The
forward-looking statements in this Quarterly Report do not
constitute guarantees of future performance. Investors are
cautioned that statements that are not strictly historical facts
contained in this Quarterly Report, including, without limitation,
the following are forward looking statements:
●
our ability, and
the ability of our licensees, to successfully commercialize
Vyleesi™ (the trade name for bremelanotide) for the treatment
of premenopausal women with acquired, generalized hypoactive sexual
desire disorder (“HSDD”) or obtain approvals in
countries other than the United States;
●
estimates of our
expenses, future revenue and capital requirements;
●
our ability to
achieve revenues from the sale of our product candidates, and to
achieve and maintain profitability;
●
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;
●
our expectations
regarding performance of our exclusive licensees of Vyleesi™
for the treatment of premenopausal women with HSDD, which is a type
of female sexual dysfunction (“FSD”),
including:
o
AMAG
Pharmaceuticals, Inc. (“AMAG”) for North
America,
o
Shanghai Fosun
Pharmaceutical Industrial Development Co. Ltd.
(“Fosun”), a subsidiary of Shanghai Fosun
Pharmaceutical (Group) Co., Ltd., for the territories of the
People’s Republic of China, Taiwan, Hong Kong S.A.R. and
Macau S.A.R. (collectively, “China”), and
o
Kwangdong
Pharmaceutical Co., Ltd. (“Kwangdong”) for the Republic
of Korea (“Korea”);
●
our expectation
regarding the timing of regulatory submissions and approvals of
Vyleesi for HSDD in jurisdictions outside the United
States;
●
our expectations
regarding the potential market size and market acceptance for
Vyleesi for HSDD and our other product candidates, if approved for
commercial use;
●
our expectations
regarding the clinical efficacy and utility of our melanocortin
agonist product candidates for treatment of inflammatory and
autoimmune related diseases and disorders, including ocular
indications;
●
our ability to
compete with other products and technologies treating the same or
similar indications as 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;
●
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 performance and
retention of our management team, senior staff professionals, and
third-party contractors and consultants;
●
the scope of
protection we are able to establish and maintain for intellectual
property rights covering our product candidates and technology in
the United States and throughout the world;
●
our compliance with
federal and state laws and regulations;
●
the timing and
costs associated with obtaining regulatory approval for our product
candidates;
●
our ability to
obtain additional financing on terms acceptable to us, or to
all;
●
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 as well as competing
products and technologies; and
●
our ability to
remain listed on the NYSE American stock exchange.
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 under the caption “Risk Factors” and
elsewhere in this Quarterly Report, and any of those made in our
other reports filed with the U.S. Securities and Exchange
Commission (the “SEC”). Except as required by law, we
do not intend, and undertake no obligation, to publicly update
forward-looking statements to reflect events or circumstances after
the date of this document or to reflect the occurrence of
unanticipated events.
Palatin
Technologies® is a registered trademark of Palatin
Technologies, Inc. Vyleesi™ is a trademark of AMAG
Pharmaceuticals, Inc. in North America and of Palatin Technologies,
Inc. elsewhere in the world.
ii
PART I
– FINANCIAL
INFORMATION
Item 1. Financial State
m
ents.
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PALATIN TECHNOLOGIES, INC
.
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and
Subsidiary
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Consolidated
Balance Sheets
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(unaudited)
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September
30,
2019
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June
30,
2019
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ASSETS
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Current
assets:
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Cash and cash
equivalents
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$
96,698,232
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$
43,510,422
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Accounts
receivable
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97,379
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60,265,970
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Prepaid expenses
and other current assets
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597,853
|
637,289
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Total current
assets
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97,393,464
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104,413,681
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Property and
equipment, net
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186,166
|
141,539
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Right-of-use
assets
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213,065
|
-
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Other
assets
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179,916
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179,916
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Total
assets
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$
97,972,611
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$
104,735,136
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
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Current
liabilities:
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Accounts
payable
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$
57,823
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$
504,787
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Accrued
expenses
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1,579,460
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2,848,692
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Notes payable, net
of discount
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-
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332,896
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Other current
liabilities
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213,065
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499,517
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Total
liabilities
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1,850,348
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4,185,892
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Stockholders’
equity:
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Preferred stock of
$0.01 par value – authorized 10,000,000 shares; shares issued
and outstanding designated as follows:
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Series A
Convertible: authorized 264,000 shares: issued and outstanding
4,030 shares as of September 30, 2019 and June 30,
2019
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40
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40
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Common stock of
$0.01 par value – authorized 300,000,000 shares:
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issued and
outstanding 227,697,257 shares as of September 30, 2019 and
226,815,363 shares as of June 30, 2019
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2,276,973
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2,268,154
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Additional paid-in
capital
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394,119,078
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394,053,929
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Accumulated
deficit
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(300,273,828
)
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(295,772,879
)
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Total
stockholders’ equity
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96,122,263
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100,549,244
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Total liabilities
and stockholders’ equity
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$
97,972,611
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$
104,735,136
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The
accompanying notes are an integral part of these consolidated
financial statements.
1
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P
ALATIN TECHNOLOGIES, INC.
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||
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and
Subsidiary
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||
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Consolidated
Statements of Operations
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(unaudited)
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Three Months
Ended September 30
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2019
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2018
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REVENUES
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License and
contract
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$
97,379
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$
34,505
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OPERATING
EXPENSES
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Research and
development
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3,127,489
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3,622,691
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General and
administrative
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1,832,442
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2,040,582
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Total operating
expenses
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4,959,931
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5,663,273
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Loss from
operations
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(4,862,552
)
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(5,628,768
)
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OTHER INCOME
(EXPENSE)
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Investment
income
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370,654
|
153,583
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Interest
expense
|
(9,051
)
|
(206,871
)
|
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Total other income
(expense), net
|
361,603
|
(53,288
)
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NET
LOSS
|
$
(4,500,949
)
|
$
(5,682,056
)
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Basic net loss per
common share
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$
(0.02
)
|
$
(0.03
)
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Diluted net loss
per common share
|
$
(0.02
)
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$
(0.03
)
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Weighted average
number of common shares outstanding used in computing basic net
loss per common share
|
233,113,241
|
205,009,278
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Weighted average
number of common shares outstanding used in computing diluted net
loss per common share
|
233,113,241
|
205,009,278
|
The
accompanying notes are an integral part of these consolidated
financial statements.
2
|
P
A
LATIN TECHNOLOGIES, INC.
|
||||||||
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and Subsidiary
|
||||||||
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Consolidated Statements of Stockholders’ Equity
|
||||||||
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(unaudited)
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Additional
|
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Preferred
Stock
|
Common
Stock
|
Paid-in
|
Accumulated
|
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|
Balance, June 30,
2019
|
4,030
|
$
40
|
226,815,363
|
$
2,268,154
|
$
394,053,929
|
$
(295,772,879
)
|
$
100,549,244
|
|
Stock-based
compensation
|
-
|
-
|
224,000
|
2,240
|
825,495
|
-
|
827,735
|
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Sale of common stock , net of
costs
|
-
|
-
|
657,894
|
6,579
|
573,151
|
-
|
579,730
|
|
Warrant
repurchase
|
-
|
-
|
-
|
-
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(1,333,497
)
|
-
|
(1,333,497
)
|
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
(4,500,949
)
|
(4,500,949
)
|
|
Balance, September 30,
2019
|
4,030
|
$
40
|
227,697,257
|
$
2,276,973
|
$
394,119,078
|
$
(300,273,828
)
|
$
96,122,263
|
|
|
|
|
Additional
|
|
|
||
|
|
Preferred
Stock
|
Common
Stock
|
Paid-in
|
Accumulated
|
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|
Balance, June 30,
2018
|
4,030
|
$
40
|
200,554,205
|
$
2,005,542
|
$
357,005,233
|
$
(332,045,906
)
|
$
26,964,909
|
|
Cumulative effect of accounting
change
|
-
|
-
|
-
|
-
|
-
|
500,000
|
500,000
|
|
Stock-based
compensation
|
-
|
-
|
319,817
|
3,198
|
1,230,387
|
-
|
1,233,585
|
|
Sale of common stock , net of
costs
|
-
|
-
|
2,225,145
|
22,251
|
2,200,196
|
-
|
2,222,447
|
|
Withholding taxes related to
restricted stock units
|
-
|
-
|
(67,038
)
|
(670
)
|
(65,322
)
|
-
|
(65,992
)
|
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
(5,682,056
)
|
(5,682,056
)
|
|
Balance, September 30,
2018
|
4,030
|
$
40
|
203,032,129
|
$
2,030,321
|
$
360,370,494
|
$
(337,227,962
)
|
$
25,172,893
|
The
accompanying notes are an integral part of these consolidated
financial statements.
3
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PALATIN
TECHNOLOGIES, INC.
|
||
|
and
Subsidiary
|
||
|
C
onsolidated Statements of Cash Flows
|
||
|
(unaudited)
|
||
|
|
|
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|
|
Three Months
Ended September 30,
|
|
|
|
2019
|
2018
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Net
loss
|
$
(4,500,949
)
|
$
(5,682,056
)
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
provided
by (used in) operating activities:
|
|
|
|
Depreciation and
amortization
|
18,253
|
14,045
|
|
Non-cash interest
expense
|
438
|
23,581
|
|
Decrease in
right-of-use asset
|
72,113
|
-
|
|
Stock-based
compensation
|
827,735
|
1,233,585
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
60,168,591
|
(104,189
)
|
|
Prepaid expenses
and other assets
|
39,436
|
93,049
|
|
Accounts
payable
|
(446,964
)
|
(1,058,542
)
|
|
Accrued
expenses
|
(1,269,232
)
|
(82,688
)
|
|
Operating lease
liability
|
(72,113
)
|
-
|
|
Other non-current
liabilities
|
-
|
25,653
|
|
Net cash provided
by (used in) operating activities
|
54,837,308
|
(5,537,562
)
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Purchases of
property and equipment
|
(62,880
)
|
-
|
|
Net cash used in
investing activities
|
(62,880
)
|
-
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Payment of
withholding taxes related to restricted
|
|
|
|
stock
units
|
-
|
(65,992
)
|
|
Payment on notes
payable obligations
|
(832,851
)
|
(2,000,000
)
|
|
Warrant
repurchase
|
(1,333,497
)
|
-
|
|
Proceeds from the
sale of common stock,
|
|
|
|
net of
costs
|
579,730
|
2,222,447
|
|
Net cash (used in)
provided by financing activities
|
(1,586,618
)
|
156,455
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
53,187,810
|
(5,381,107
)
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
43,510,422
|
38,000,171
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
96,698,232
|
$
32,619,064
|
|
|
|
|
|
SUPPLEMENTAL CASH
FLOW INFORMATION:
|
|
|
|
Cash paid for
interest
|
$
8,132
|
$
157,636
|
|
Cash paid for
income taxes
|
-
|
-
|
The
accompanying notes are an integral part of these consolidated
financial statements.
4
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(1)
O
R
GANIZATION
Nature of Business
- Palatin Technologies, Inc.
(“Palatin” or the “Company”) is a
specialized biopharmaceutical company developing first-in-class
medicines based on molecules that modulate the activity of the
melanocortin and natriuretic peptide receptor systems. The
Company’s product candidates are targeted, receptor-specific
therapeutics for the treatment of diseases with significant unmet
medical need and commercial potential.
Melanocortin Receptor System.
The melanocortin receptor
(“MCr”) system is hormone driven, with effects on food
intake, metabolism, sexual function, inflammation and immune system
responses. There are five melanocortin receptors, MC1r through
MC5r. Modulation of these receptors, through use of
receptor-specific agonists, which activate receptor function, or
receptor-specific antagonists, which block receptor function, can
have significant pharmacological effects.
The
Company’s lead product, Vyleesi™, was approved by the
U.S. Food and Drug Administration (“FDA”) in June 2019
and is being marketed in North America by AMAG Pharmaceuticals,
Inc. (“AMAG”) for the treatment of hypoactive sexual
desire disorder (“HSDD”) in premenopausal
women.
The
Company’s new product development activities focus primarily
on MC1r agonists, with potential to treat inflammatory and
autoimmune diseases such as dry eye disease, which is also known as
keratoconjunctivitis sicca, uveitis, diabetic retinopathy and
inflammatory bowel disease. The Company believes that the MC1r
agonist peptides in development have broad anti-inflammatory
effects and appear to utilize mechanisms engaged by the endogenous
melanocortin system in regulation of the immune system and
resolution of inflammatory responses. The Company is also
developing peptides that are active at more than one melanocortin
receptor, and MC4r peptide and small molecule agonists with
potential utility in obesity and metabolic-related disorders,
including rare disease and orphan indications.
Natriuretic Peptide Receptor System
. The natriuretic peptide
receptor (“NPR”) system regulates cardiovascular
functions, and therapeutic agents modulating this system have
potential to treat cardiovascular and fibrotic diseases. The
Company has designed and is developing potential NPR candidate
drugs selective for one or more different natriuretic peptide
receptors, including natriuretic peptide receptor-A
(“NPR-A”), natriuretic peptide receptor B
(“NPR-B”), and natriuretic peptide receptor C
(“NPR-C”).
Business Risk and Liquidity –
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, 2019 of $300,273,828 and a
net loss for the three months ended September 30, 2019 of
$4,500,949, and the Company anticipates incurring significant
expenses in the future as a result of spending on its development
programs and will require substantial additional financing or
revenues to continue to fund its planned developmental activities.
To achieve sustained 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 sustained
profitability is highly uncertain, and the Company may never be
able to achieve profitability on a sustained basis, if at
all.
As of
September 30, 2019, the Company’s cash and cash equivalents
were $96,698,232 and current liabilities were $1,850,348.
Management intends to utilize existing capital resources for
general corporate purposes and working capital, including
preclinical and clinical development of the Company’s MC1r
and MC4r peptide programs and natriuretic peptide program, and
development of other portfolio products.
Management
believes that the Company’s existing capital resources will
be adequate to fund the Company’s planned operations through
at least calendar year 2021. The Company will 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 could be
materially adversely affected.
5
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
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.
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. 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, 2019, the
Company reported $97,379 in revenue related to a license agreement
with AMAG for Vyleesi for North America (“AMAG License
Agreement”) (Note 5). For the three months ended September
30, 2018, the Company reported $34,505 in revenue related to the
AMAG License Agreement.
(2)
BASIS
OF PRESENTATION
The
accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”)
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, 2019 may not necessarily be indicative
of the results of operations expected for the full
year.
The
accompanying unaudited 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, 2019, filed with
the Securities and Exchange Commission (“SEC”), which
includes consolidated financial statements as of June 30, 2019 and
2018 and for each of the fiscal years in the three-year period
ended June 30, 2019.
(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 U.S. GAAP requires
management to make estimates and assumptions that affect the
reported amounts 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 $96,520,597 and $43,381,556 in a money
market account at September 30, 2019 and June 30, 2019,
respectively.
Fair Value of Financial Instruments
– The
Company’s financial instruments consist primarily of cash
equivalents, accounts receivable and accounts payable. Management
believes that the carrying values of cash equivalents, accounts
receivable and accounts payable are representative of their
respective fair values based on the short-term nature of these
instruments.
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 balances insured 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.
Accumulated depreciation and amortization was $2,406,896 and
$2,388,644 as of September 30, 2019 and June 30, 2019,
respectively.
6
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
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
–
In
May 2014, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) No. 2014-09,
Revenue from Contracts with
Customers
(“ASC Topic
606”), which, along with amendments from 2015 and 2016
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. ASC Topic 606 replaced most existing revenue
recognition guidance in U.S. GAAP when it became
effective.
On July 1, 2018, the Company adopted ASC Topic 606 using the
modified retrospective approach, a practical expedient permitted
under ASC Topic 606, and applied this approach only to contracts
that were not completed as of July 1, 2018.
For
licenses of intellectual property, the Company assesses, at
contract inception, whether the intellectual property is distinct
from other performance obligations identified in the arrangement.
If the licensing of intellectual property is determined to be
distinct, revenue is recognized for nonrefundable, upfront license
fees when the license is transferred to the customer and the
customer can use and benefit from the license. If the licensing of
intellectual property is determined not to be distinct, then the
license will be bundled with other promises in the arrangement into
one performance obligation. The Company needs to determine if the
bundled performance obligation is satisfied over time or at a point
in time. If the Company concludes that the nonrefundable, upfront
license fees will be recognized over time, the Company will need to
assess the appropriate method of measuring proportional
performance.
Regulatory
milestone payments are excluded from the transaction price due to
the inability to estimate the probability of reversal. Revenue
relating to achievement of these milestones is recognized in the
period in which the milestone is achieved.
Sales-based
royalty and milestone payments resulting from customer contracts
solely or predominately for the license of intellectual property
will only be recognized upon occurrence of the underlying sale or
achievement of the sales milestone and such sales-based royalties
and milestone payments are recognized in the same period
earned.
The Company recognizes revenue for reimbursements of research and
development costs under collaboration agreements as the services
are performed. The Company records these reimbursements as revenue
and not as a reduction of research and development expenses as the
Company is the principal in the research and development activities
based upon its control of such activities, which is considered part
of its ordinary activities.
Development milestone payments are generally due 30 business days
after the milestone is achieved. Sales milestone payments are
generally due 45 business days after the calendar year in which the
sales milestone is achieved. Royalty payments are generally due on
a quarterly basis 20 business days after being
invoiced.
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 the Company’s development activities. The Company
reviews the activities performed under all contracts each quarter
and accrues expenses and the amount of any reimbursement to be
received from its 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 the Company does not identify services performed for it but not
billed by the service-provider, or if it underestimates or
overestimates the value of services performed as of a given date,
reported expenses will be understated or overstated.
7
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
Stock-Based Compensation –
The Company charges to
expense the fair value of stock options and other equity awards
granted. Compensation costs for stock-based awards with time-based
vesting are determined using the quoted market price of the
Company’s common stock on the date of grant or for stock
options, the value determined utilizing the Black-Scholes option
pricing model, and are recognized on a straight-line basis, while
awards containing a market condition are valued using multifactor
Monte Carlo simulations. Compensation costs for awards containing a
performance condition are determined using the quoted price of the
Company’s common stock on the date of grant or for stock
options, the value is determined utilizing the Black Scholes option
pricing model, and are recognized based on the probability of
achievement of the performance condition over the service period.
Forfeitures are recognized as they occur.
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 and continues to maintain a full
valuation allowance against its deferred tax assets based on the
history of losses incurred and lack of experience projecting future
sales-based royalty and milestone payments.
Net Loss per Common Share -
Basic and diluted earnings per
common share (“EPS”) are calculated in accordance with
the provisions of FASB Accounting Standards Codification
(“ASC”) Topic 260,
Earnings per Share
.
For the
three months ended September 30, 2019 and 2018, no additional
common shares were added to the computation of diluted EPS because
to do so would have been anti-dilutive. The potential number of
common shares excluded from diluted EPS during the three months
ended September 30, 2019 and 2018 was 37,497,717 and 41,454,308
respectively.
Included
in the weighted average common shares used in computing basic and
diluted net loss per common share are 5,978,150 and 3,347,999
vested restricted stock units that had not been issued as of
September 30, 2019 and 2018, respectively, due to a provision in
the restricted stock unit agreements to delay
delivery.
(4)
NEW
AND RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In November 2018, the FASB issued ASU No. 2018-18,
Collaborative
Arrangements (Topic 808): Clarifying the Interaction between Topic
808 and Topic 606.
This
update provides clarification on the interaction between Revenue
Recognition (Topic 606) and Collaborative Arrangements (Topic 808),
including the alignment of unit of account guidance between the two
topics
. The
guidance is effective for public entities for fiscal years
beginning after December 15, 2019, and for interim periods within
those fiscal years, with early adoption permitted. The
guidance is applicable to the Company beginning July 1, 2020. The
Company is currently evaluating the potential effects of this
guidance on its consolidated financial
statements.
In June
2016, the FASB issued ASU No. 2016-13,
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. The
Company is currently evaluating the effect that ASU No. 2016-13
will have on its consolidated financial statements and related
disclosures.
8
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
On July
1, 2019, the Company adopted the requirements of ASU No.2016-02,
Leases
(“Topic
842”). The objective of this ASU, along with several related
ASUs issued subsequently, is to increase transparency and
comparability between organizations that enter into lease
agreements. For lessees, the key difference of the new standard
from the previous guidance (“Topic 840”) is the
recognition of a right-of-use (“ROU”) asset and lease
liability on the balance sheet. The most significant change is the
requirement to recognize ROU assets and lease liabilities for
leases classified as operating leases. The standard requires
disclosures to meet the objective of enabling users of financial
statements to assess the amount, timing, and uncertainty of cash
flows arising from leases. As part of the transition to the new
standard, the Company elected to measure and recognize leases that
existed at July 1, 2019 using a modified retrospective approach,
including the option to not restate comparative periods. For leases
existing at the effective date, the Company elected the package of
three transition practical expedients and therefore did not
reassess whether an arrangement is or contains a lease, did not
reassess lease classification, and did not reassess what qualifies
as an initial direct cost. Additionally, the Company elected, as
practical expedients, not separating lease and non-lease components
for all of its leases and the short-term lease recognition
exemption for all of its leases that qualify. The Company did not
elect the use of the hindsight practical expedient. The adoption of
Topic 842 resulted in the recognition of an operating ROU asset and
operating lease liability of $225,134 as of July 1, 2019. The
adoption did not have a material impact on the consolidated
statements of operations, stockholder’s equity and cash flows
for the three months ended September 30, 2019.
At
lease inception, the Company determines whether an arrangement is
or contains a lease. Operating leases are included in operating
lease ROU assets, current operating lease liabilities, and
noncurrent operating lease liabilities in the consolidated
financial statements. ROU assets represent the Company’s
right to use leased assets over the term of the lease. Lease
liabilities represent the Company’s contractual obligation to
make lease payments over the lease term. For operating leases, ROU
assets and lease liabilities are recognized at the commencement
date. The lease liability is measured as the present value of the
lease payments over the lease term. The Company uses the rate
implicit in the lease if it is determinable. When the rate implicit
in the lease is not determinable, the Company uses an estimate
based on a hypothetical rate provided by a third party as the
Company currently does not have issued debt. Operating ROU assets
are calculated as the present value of the remaining lease payments
plus unamortized initial direct costs plus any prepayments less any
unamortized lease incentives received. Lease terms may include
renewal or extension options to the extent they are reasonably
certain to be exercised. The assessment of whether renewal or
extension options are reasonably certain to be exercised is made at
lease commencement. Factors considered in determining whether an
option is reasonably certain of exercise include, but are not
limited to, the value of any leasehold improvements, the value of
renewal rates compared to market rates, and the presence of factors
that would cause incremental costs to the Company if the option
were not exercised. Lease expense is recognized on a straight-line
basis over the lease term. The Company has elected not to recognize
an ROU asset and obligation for leases with an initial term of
twelve months or less. The expense associated with short term
leases is included in general and administrative expense in the
statement of operations. To the extent a lease arrangement includes
both lease and non-lease components, the Company has elected to
account for the components as a single lease
component.
(5)
AGREEMENT
WITH AMAG
On
January 8, 2017, the Company entered into the AMAG License
Agreement. Under the terms of the AMAG License Agreement, the
Company granted to AMAG (i) an exclusive license in all countries
of North America (the “Territory”), with the right to
grant sub-licenses, to research, develop and commercialize products
containing Vyleesi (each a “Product”, and collectively,
“Products”), (ii) a non-exclusive license in the
Territory, with the right to grant sub-licenses, to manufacture the
Products, and (iii) a non-exclusive license in all countries
outside the Territory, with the right to grant sub-licenses, to
research, develop and manufacture (but not commercialize) the
Products.
Following
the satisfaction of certain conditions to closing, the license
agreement became effective on February 2, 2017. On that date, AMAG
paid the Company $60,000,000 as a one-time initial payment.
Pursuant to the terms of and subject to the conditions in the AMAG
License Agreement, AMAG was required to reimburse the Company up to
an aggregate amount of $25,000,000 for reasonable, documented,
direct out-of-pocket expenses incurred by the Company following
February 2, 2017, in connection with the development and regulatory
activities necessary to file a New Drug Application
(“NDA”) for Vyleesi for HSDD in the United States
related to Palatin’s development obligations.
The
Company determined there was no stand-alone value for the license,
and that the license and the reimbursable direct out-of-pocket
expenses, pursuant to the terms of the License Agreement,
represented a combined unit of accounting which totaled
$85,000,000. The Company recognized revenue of the combined unit of
accounting over the arrangement using the input-based proportional
method as the Company completed its development obligations. During
the three months ended September 30, 2019 and 2018, license and
contract revenue included additional billings for AMAG related
Vyleesi costs of $97,379 and $34,505.
9
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
On June
4, 2018, the FDA accepted the Vyleesi NDA for filing. The
FDA’s acceptance triggered a $20,000,000 milestone payment to
Palatin from AMAG. As a result, the Company recognized $20,000,000
in revenue related to regulatory milestones in fiscal 2018. On June
21, 2019, the FDA granted approval of Vyleesi for use in the United
States. The FDA’s approval triggered a $60,000,000 milestone
payment to Palatin from AMAG. As a result, the Company recognized
$60,000,000 in revenue related to regulatory milestones in fiscal
2019. In addition, pursuant to the terms of and subject to the
conditions in the AMAG License Agreement, the Company is eligible
to receive from AMAG up to $300,000,000 in sales milestone payments
based on achievement of certain annual net sales for all Products
in the Territory.
AMAG is
also obligated to pay the Company tiered royalties on annual net
sales of Products, on a product-by-product basis, in the Territory
ranging from the high single-digits to the low double-digits. The
royalties will expire on a product-by-product and
country-by-country basis upon the latest to occur of (i) the
earliest date on which there are no valid claims of the
Company’s patent rights covering such Product in such
country, (ii) the expiration of the regulatory exclusivity period
for such Product in such country and (iii) ten years following the
first commercial sale of such Product in such country. Such
royalties are subject to reductions in the event that:
(a) AMAG must license additional third-party intellectual
property in order to develop, manufacture or commercialize a
Product, or (b) generic competition occurs with respect to a
Product in a given country, subject to an aggregate cap on such
deductions of royalties otherwise payable to the Company. After the
expiration of the applicable royalties for any Product in a given
country, the license for such Product in such country will become a
fully paid-up, royalty-free, perpetual and irrevocable
license.
The
Company engaged Greenhill & Co. LLC (“Greenhill”)
as the Company’s sole financial advisor in connection with a
potential transaction with respect to Vyleesi. Under the
engagement agreement with Greenhill, the Company is obligated to
pay Greenhill a fee equal to 2% of all proceeds and consideration,
as defined, paid or to be paid to the Company by AMAG in connection
with the AMAG License Agreement, subject to a minimum fee of
$2,500,000. The minimum fee of $2,500,000, less a credit of $50,000
for an advisory fee previously paid by the Company, was paid to
Greenhill and recorded as an expense upon the closing of the
licensing transaction. This amount is credited toward amounts that
were and will become due to Greenhill in the future, provided that
the aggregate fee payable to Greenhill will not be less than 2% of
all proceeds and consideration, as defined, paid or to be paid to
the Company by AMAG in connection with the AMAG License Agreement.
The Company will generally pay Greenhill 2% of all future proceeds
and consideration paid to the Company by AMAG in connection with
the AMAG License Agreement, including milestone and royalty
payments. The Company also reimbursed Greenhill $7,263 for certain
expenses incurred in connection with its advisory
services.
Pursuant
to the AMAG License Agreement, the Company has assigned to AMAG the
Company’s manufacturing and supply agreements with Catalent
Belgium S.A. to perform fill, finish and packaging of
Vyleesi.
(6)
AGREEMENT
WITH FOSUN:
On
September 6, 2017, the Company entered into a license agreement
with Fosun (“Fosun License Agreement”) for exclusive
rights to commercialize Vyleesi in China. Under the terms of the
agreement, the Company received $4,500,000 in October 2017, which
consisted of an upfront payment of $5,000,000 less $500,000 that
was withheld in accordance with tax withholding requirements in the
Chinese Territories and recorded as an expense during the year
ended June 30, 2018. The Company will receive a $7,500,000
milestone payment when regulatory approval in China is obtained,
provided that a commercial supply agreement for Vyleesi has been
entered into. Palatin has the potential to receive up to
$92,500,000 in additional sales related milestone payments and high
single-digit to low double-digit royalties on net sales in the
licensed territory. All development, regulatory, sales, marketing,
and commercial activities and associated costs in the licensed
territory will be the sole responsibility of Fosun.
(7)
AGREEMENT
WITH KWANGDONG:
On
November 21, 2017, the Company entered into a
license agreement with Kwangdong
(
“Kwangdong License Agreement”) for exclusive
rights to commercialize Vyleesi in Korea.
10
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
Under
the terms of the agreement, the Company received $417,500 in
December 2017, consisting of an upfront payment of $500,000, less
$82,500, which was withheld in accordance with tax withholding
requirements in Korea and recorded as an expense during the year
ended June 30, 2018. Based upon certain refund provisions, the
upfront payment was recorded as non-current deferred revenue at
December 31, 2017. O
n July 1, 2018, in
conjunction with the adoption of ASC Topic 606, a one-time
transition of adjustment of $500,000 was recorded to the opening
balance of accumulated deficit as the Company determined a
significant revenue reversal would not occur in a future
period.
The Company will receive a $3,000,000 milestone
payment based on the first commercial sale in Korea. Palatin has
the potential to receive up to $37,500,000 in additional sales
related milestone payments and mid-single-digit to low double-digit
royalties on net sales in the licensed territory. All development,
regulatory, sales, marketing, and commercial activities and
associated costs in the licensed territory will be the sole
responsibility of Kwangdong.
(8)
PREPAID
EXPENSES AND OTHER CURRENT ASSETS
Prepaid
expenses
and other
current assets consist of the following:
|
|
September
30,
|
June
30,
|
|
|
2019
|
2019
|
|
Clinical study
costs
|
$
49,079
|
$
61,798
|
|
Insurance
premiums
|
77,856
|
87,937
|
|
Other
|
470,918
|
487,554
|
|
|
$
597,853
|
$
637,289
|
(9)
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’s 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,
2019:
|
|
|
|
|
|
Money Market
Account
|
$
96,520,597
|
$
96,520,597
|
$
-
|
$
-
|
|
June 30,
2019:
|
|
|
|
|
|
Money Market
Account
|
$
43,381,556
|
$
43,831,556
|
$
-
|
$
-
|
(10)
LEASES
The
Company has operating leases of office and laboratory space, each
of which expires on June 30, 2020.
11
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
The
components of lease expense are as follows:
|
Lease
cost
|
Three months
ended
September 30,
2019
|
|
Operating lease
cost
|
$
72,113
|
|
Short-term lease
cost
|
8,520
|
|
Total lease
cost
|
$
80,633
|
Supplemental
balance sheet information related to leases was as
follows:
|
|
September
30, 2019
|
|
Operating lease ROU
asset and liability
|
$
213,065
|
Supplemental
lease term and discount rate information related to leases was as
follows:
|
Weighted -average
remaining lease term (years)
|
0.75
|
|
Weighted -average
discount rate
|
6.25
%
|
Supplemental
cash flow information related to leases was as
follows:
|
|
Three months
ended
September 30,
2019
|
|
Cash paid for the
amounts included in the measurement of lease
liabilities:
|
|
|
Operating
cash flows for operating leases
|
$
71,838
|
|
Supplemental
non-cash information on lease liabilities arisng from obtaining
right-of-use assets
|
|
|
Right-of-use
assets obtained in exchange for new lease obligation
|
$
56,715
|
The
following table summarizes the maturity of the Company’s
operating lease liability as of September 30, 2019:
|
|
September
30,
2019
|
|
Year Ending June
30, 2020
|
$
217,519
|
|
Less imputed
interest
|
(4,454
)
|
|
Total
|
$
213,065
|
As of
June 30, 2019, the Company had $225,120 in future lease payments
for the year ending June 30, 2020 under ASC Topic 840.
12
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(11)
ACCRUED
EXPENSES
Accrued
expenses
consist of the
following:
|
|
September
30,
|
June
30,
|
|
|
2019
|
2019
|
|
Clinical study
costs
|
$
171,878
|
$
943,721
|
|
Other research
related expenses
|
1,114,475
|
1,361,414
|
|
Professional
services
|
89,138
|
317,500
|
|
Other
|
203,969
|
226,057
|
|
|
$
1,579,460
|
$
2,848,692
|
(12)
NOTES PAYABLE:
Notes
payable consist of the following:
|
|
June
30,
|
|
|
2019
|
|
Notes payable under
venture loan
|
$
333,333
|
|
Unamortized related
debt discount
|
(295
)
|
|
Unamortized debt
issuance costs
|
(142
)
|
|
Notes
payable
|
332,896
|
|
|
|
|
Less: current
portion
|
332,896
|
|
|
|
|
Long-term
portion
|
$
-
|
On
December 23, 2014, the Company closed on a $10,000,000 venture loan
which was led by Horizon Technology Finance Corporation
(“Horizon”). The debt facility was a four-year senior
secured term loan that bore interest at a floating coupon rate of
one-month LIBOR (floor of 0.50%) plus 8.50%, and provided for
interest-only payments for the first eighteen months followed by
monthly payments of principal 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 was
amortized to interest expense over the term of the related debt.
This debt discount was offset against the note payable balance and
included in additional paid-in capital on the Company’s
balance sheet. In addition, a final incremental payment of $500,000
was due on January 1, 2019, or upon early repayment of the loan.
This final incremental payment was accreted to interest expense
over the term of the related debt and included in other liabilities
on the consolidated balance sheet. The Company incurred $209,367 of
costs in connection with the loan. These costs were capitalized as
deferred financing costs and were offset against the note payable
balance. These debt issuance costs were amortized to interest
expense over the term of the related debt. During the three months
ended December 31, 2018, the loan matured, and on December 31,
2018, the Company made the final incremental payment of
$500,000.
On July
2, 2015, the Company closed on a $10,000,000 venture loan led by
Horizon. The debt facility was a four-year senior secured term loan
that bore interest at a floating coupon rate of one-month LIBOR
(floor of 0.50%) plus 8.50% and provided for interest-only payments
for the first eighteen months followed by monthly payments of
principal 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 the Company’s common
stock exercisable at an exercise price of $0.91 per share. The
Company recorded a debt discount of $305,196 equal to the fair
value of these warrants at issuance, which were amortized to
interest expense over the term of the related debt. This debt
discount was offset against the note payable balance and was
included in additional paid-in capital on the Company’s
balance sheet. In addition, a final incremental payment of $500,000
was due on August 1, 2019. This final incremental payment was
accreted to interest expense over the term of the related debt and
was included in other current liabilities on the consolidated
balance sheet. The Company incurred $146,115 of costs in connection
with the loan agreement. These costs were capitalized as deferred
financing costs and were offset against the note payable balance.
These debt issuance costs were amortized to interest expense over
the term of the related debt. During the three months ended
September 30, 2019, the loan matured, and on July 31, 2019, the
Company made the final incremental payment of
$500,000.
13
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(13)
STOCKHOLDERS’
EQUITY
Financing Transactions –
On June 21, 2019 and April 20, 2018, the Company
entered into equity distribution agreements with Canaccord Genuity
LLC (“Canaccord”) (the “2019 Equity Distribution
Agreement” and the “2018 Equity Distribution
Agreement”, respectively), pursuant to which the Company may,
from time to time, sell shares of the Company’s common
stock
at market prices by
methods deemed to be an “at-the-market offering” as
defined in Rule 415 promulgated under the Securities Act of 1933,
as amended. The 2018 Equity Distribution Agreement and related
prospectus was limited to sales of up to an aggregate maximum $25.0
million of shares of the Company’s common stock, and the 2019
Equity Distribution Agreement and related prospectus is limited to
sales of up to an aggregate maximum $40.0 million of shares of the
Company’s common stock. The Company pays Canaccord 3.0% of
the gross proceeds as a commission.
For the three months ended September 30, 2019, 657,894 shares of
common stock were sold through Canaccord under the 2019 Equity
Distribution Agreement for net proceeds of $579,730 after payment
of commission fees of $19,940 and other related expenses of
$65,000. From inception of the 2019 Equity Distribution Agreement
through September 30, 2019, a total of 8,222,469 shares of common
Stock were sold for net proceeds of $10,868,566 after payment of
commission fees of $338,152 and other related expenses of $65,000.
For the three months ended September 30, 2018, 2,225,145 shares of
common stock were sold through Canaccord under the 2018 Equity
Distribution Agreement for net proceeds of $2,222,447 after payment
of commission fees of $68,735. From inception of the 2018 Equity
Distribution Agreement through September 30, 2019, a total of
18,504,993 shares of common Stock were sold for net proceeds of
$24,249,997 after payment of commission fees of $750,000, and the
2018 Equity Distribution Agreement is deemed
completed.
Stock Purchase Warrants
– On September 13, 2019, the
Company’s Board of Directors approved a plan to offer to
purchase and terminate certain outstanding common stock purchase
warrants through privately negotiated transactions. The purchase
and termination program has no time limit and may be suspended for
periods or discontinued at any time.
During
the three months ended September 30, 2019, the Company entered into
several warrant termination agreements to repurchase and cancel
previously issued Series H and Series J warrants. The Company
repurchased and cancelled 474,045 and 2,866,809 Series H and Series
J warrants, respectively, at an aggregate buyback price of $186,773
and $1,146,724, respectively, plus additional consideration upon
any sale of the Company within six months of the respective
agreement.
Stock Options –
For the three months ended September
30, 2019 and 2018, the Company recorded stock-based compensation
related to stock options of $344,160 and $323,703,
respectively.
In July
2018, the terms of certain options were modified to accelerate
vesting and extend the option exercise period. As a result, the
Company recorded additional stock-based compensation of $109,004
during the three months ended September 30, 2018.
14
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
A
summary of stock option activity is as follows:
|
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Weighted Average
Remaining
Term in
Years
|
Aggregate
Intrinsic
Value
|
|
Outstanding - June
30, 2019
|
14,435,650
|
0.85
|
7.3
|
|
|
|
|
|
|
|
|
Granted
|
-
|
-
|
|
|
|
Forfeited
|
-
|
-
|
|
|
|
Exercised
|
-
|
-
|
|
|
|
Expired
|
(77,100
)
|
2.72
|
|
|
|
Outstanding -
September 30, 2019
|
14,358,550
|
$
0.84
|
7.1
|
$
2,402,286
|
|
|
|
|
|
|
|
Exercisable at
September 30, 2019
|
8,461,000
|
$
0.76
|
5.9
|
$
1,627,979
|
|
|
|
|
|
|
|
Expected to vest at
September 30, 2019
|
5,897,550
|
$
0.96
|
8.7
|
$
774,907
|
Stock
options granted to the Company’s executive officers and
employees generally vest over a 48-month period, while stock
options granted to its non-employee directors vest over a 12-month
period.
Included
in the options outstanding above are 1,075,000 and 117,500
performance-based options granted in December 2017 to executive
officers and employees, respectively, which vest during a
performance period ending on December 31, 2020, if and upon either
i) as to 100% of the target number of shares upon achievement of a
closing price for the Company’s common stock equal to or
greater than $1.50 per share for 20 consecutive trading days, which
is considered a market condition; or ii) as to thirty percent (30%)
of the target number of shares, upon the acceptance for filing by
the FDA of an NDA for Vyleesi for HSDD in premenopausal women
during the performance period, which is considered a performance
condition; iii) as to fifty percent (50%) of the target number of
shares, upon the approval by the FDA of an NDA for Vyleesi for HSDD
in premenopausal women during the performance period, which is also
considered a performance condition; iv) as to twenty percent (20%)
of the target number of shares, upon entry into a licensing
agreement during the performance period for the commercialization
of Vyleesi for FSD in at least two of the following geographic
areas (a) four or more countries in Europe, (b) Japan, (c) two or
more countries in Central and/or South America, (d) two or more
countries in Asia, excluding Japan and China, and (e) Australia,
which is also considered a performance condition. The fair value of
these options was $602,760. The Company amortized the fair value
over the derived service period of 1.1 years or upon the attainment
of the performance condition. Pursuant to the FDA acceptance of the
NDA filing of Vyleesi, 30% of the target number of options vested
in June 2018 and 50% of the target number of options vested in June
2019 upon FDA approval of Vyleesi.
Restricted Stock Units
–
For the three months ended
September 30, 2019 and 2018, the Company recorded stock-based
compensation related to restricted stock units of $483,575 and
$800,878, respectively.
A
summary of restricted stock unit activity is as
follows:
|
|
RSU's
|
|
Outstanding at July
1, 2019
|
10,327,833
|
|
Granted
|
-
|
|
Forfeited
|
-
|
|
Vested
|
(224,000
)
|
|
Outstanding at
September 30, 2019
|
10,103,833
|
15
PALATIN TECHNOLOGIES, INC.
and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
Included
in outstanding restricted stock units in the table above are
5,978,150 vested shares that have not been issued as of September
30, 2019 due to a provision in the restricted stock unit agreements
to delay delivery.
Time-based
restricted stock units granted to the Company’s executive
officers, employees and non-employee directors generally vest over
24 months, 48 months and 12 months, respectively.
In June
2019, the Company granted 438,000 performance-based restricted
stock units to its executive officers and 182,725 performance-based
restricted stock units to other employees which vest during a
performance period ending June 24, 2023. The performance-based
restricted stock units vest on performance criteria relating to
advancement of MC1r programs, including initiation of clinical
trials and licensing of Vyleesi in additional countries or
regions.
In
December 2017, the Company granted 1,075,000 performance-based
restricted stock units to its executive officers and 670,000
performance-based restricted stock units to other employees which
vest during a performance period, ending on December 31, 2020, if
and upon either i) as to 100% of the target number of shares upon
achievement of a closing price for the Company’s common stock
equal to or greater than $1.50 per share for 20 consecutive trading
days, which is considered a market condition; or ii) as to thirty
percent (30%) of the target number of shares, upon the acceptance
for filing by the FDA of an NDA for Vyleesi for HSDD in
premenopausal women during the performance period, which is
considered a performance condition; iii) as to fifty percent (50%)
of the target number of shares, upon the approval by the FDA of an
NDA for Vyleesi for HSDD in premenopausal women during the
performance period, which is also considered a performance
condition; iv) as to twenty percent (20%) of the target number of
shares, upon entry into a licensing agreement during the
performance period for the commercialization of Vyleesi for FSD in
at least two of the following geographic areas (a) four or more
countries in Europe, (b) Japan, (c) two or more countries in
Central and/or South America, (d) two or more countries in Asia,
excluding Japan and China, and (e) Australia, which is also
considered a performance condition. The fair value of these awards
was $913,750 and $569,500, respectively. The Company amortized the
fair value over the derived service period of 1.1 years or upon the
attainment of the performance condition. Pursuant to the FDA
acceptance of the NDA filing for Vyleesi, 30% of the target number
of shares vested in June 2018. Pursuant to the FDA approval of
Vyleesi, 50% of the target number of shares vested in June
2019.
(14)
SUBSEQUENT
EVENTS
Between October 1, 2019 and November 8, 2019, a total of 1,238,040
shares of the Company’s common stock were sold through
Canaccord under the 2019 Equity Distribution Agreement for net
proceeds of $1,026,768 after payment of commission fees of
$31,756.
Between October 1, 2019 and November 8, 2019,
the Company entered into warrant
termination agreements to repurchase and cancel previously issued
Series F, Series H and Series J warrants. The Company repurchased
and cancelled 297,352, 992,387 and 1,908,234 Series F, Series H and
Series J warrants, respectively, at an aggregate buyback price of
$62,712, $390,600, and $760,658, respectively, plus additional
consideration upon any sale of the Company within six months of the
respective agreement.
16
Item 2.
M
anagement’s
Discussion and Analysis of Financial Condition and Results of
Operations.
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, 2019.
The following discussion and analysis contain forward-looking
statements within the meaning of the federal securities laws. You
are urged to carefully review our description and examples of
forward-looking statements included earlier in this Quarterly
Report immediately prior to Part I, under the heading
“Special Note Regarding Forward-Looking Statements.”
Forward-looking statements are subject to risk that could cause
actual results to differ materially from those expressed in the
forward-looking statements. You are urged to carefully review the
disclosures we make concerning risks and other factors that may
affect our business and operating results, including those made in
this Quarterly Report and our Annual Report on Form 10-K for the
year ended June 30, 2019, as well as any of those made in our other
reports filed with the SEC. You are cautioned not to place undue
reliance on the forward-looking statements included herein, which
speak only as of the date of this document. We do not intend, and
undertake no obligation, to publish revised forward-looking
statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated
events.
Critical Accounting Policies and Estimates
Except
for the adoption of Accounting Standards Codification
(“ASC”) Topic 842, 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, 2019, have not changed during the
three months ended September 30, 2019. 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 specialized biopharmaceutical company developing first-in-class
medicines based on molecules that modulate the activity of the
melanocortin and natriuretic peptide receptor systems. Our product
candidates are targeted, receptor-specific therapeutics for the
treatment of diseases with significant unmet medical need and
commercial potential.
Melanocortin Receptor System.
The melanocortin receptor
(“MCr”) system is hormone driven, with effects on food
intake, metabolism, sexual function, inflammation and immune system
responses. There are five melanocortin receptors, MC1r through
MC5r. Modulation of these receptors, through use of
receptor-specific agonists, which activate receptor function, or
receptor-specific antagonists, which block receptor function, can
have significant pharmacological effects.
Our
lead product, Vyleesi™, was approved by the U.S. Food and
Drug Administration (“FDA”) on June 21, 2019, and is
being marketed in North America by AMAG, with product availability
in the United States starting in August 2019. Vyleesi is indicated
for the treatment of premenopausal women with acquired, generalized
HSDD, characterized by low sexual desire that causes marked
distress or interpersonal difficulty not due to a co-existing
medical or psychiatric condition, relationship problems, or effects
of a medication or drug substance.
Our new
product development activities focus primarily on MC1r agonists,
with potential to treat inflammatory and autoimmune diseases such
as dry eye disease, which is also known as keratoconjunctivitis
sicca, uveitis, diabetic retinopathy and inflammatory bowel
disease. We believe that the MC1r agonist peptides we are
developing have broad anti-inflammatory effects and appear to
utilize mechanisms engaged by the endogenous melanocortin system in
regulation of the immune system and resolution of inflammatory
responses. We are also developing peptides that are active at more
than one melanocortin receptor, and MC4r peptide and small molecule
agonists with potential utility in obesity and metabolic-related
disorders, including rare disease and orphan
indications.
Natriuretic Peptide Receptor System
. The natriuretic peptide
receptor (“NPR”) system regulates cardiovascular
functions, and therapeutic agents modulating this system have
potential to treat fibrotic diseases, cardiovascular diseases,
including reducing cardiac hypertrophy and fibrosis, heart failure,
acute asthma, pulmonary diseases and hypertension. We have designed
and are developing potential NPR candidate drugs selective for one
or more different natriuretic peptide receptors, including
natriuretic peptide receptor-A (“NPR-A”), natriuretic
peptide receptor B (“NPR-B”), and natriuretic peptide
receptor C (“NPR-C”).
17
The following chart illustrates the status of our drug development
programs and Vyleesi, which has been approved by the FDA for the
treatment of premenopausal women with acquired, generalized
HSDD.
Our Strategy
Key
elements of our business strategy include:
●
Maximizing revenue
from Vyleesi by supporting our existing licensees and licensing
Vyleesi for global areas outside of North America, China and South
Korea;
●
Assembling and
maintaining a team to create, develop and commercialize MCr and NPR
products addressing unmet medical needs;
●
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
existing license agreements, as well as any future research,
collaboration or license agreements; and
●
Completing
development and seeking regulatory approval of certain of our other
product candidates.
We were
incorporated under the laws of the State of Delaware on November
21, 1986 and commenced operations in the biopharmaceutical area in
1996. Our corporate offices are located at 4B Cedar Brook Drive,
Cedar Brook Corporate Center, Cranbury, New Jersey 08512 and our
telephone number is (609) 495-2200. We maintain an Internet site at
www.palatin.com
, where
among other things, we make available free of charge on and through
this website our Forms 3, 4 and 5, 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) 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. The reference to our website is an
inactive textual reference only.
The SEC
maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically with the SEC (
www.sec.gov
).
Results of Operations
Three Months Ended September 30, 2019 Compared to the Three Months
Ended September 30, 2018:
18
Revenue –
For the three months ended September 30,
2019, we recognized $97,379 in license and contract revenue
compared to $34,505 in license and contract revenue for the three
months ended September 30, 2018, both pursuant to our license
agreement with AMAG.
Research and Development
– Research and development
expenses were $3,127,489 for the three months ended September 30,
2019 compared to $3,622,691 for the three months ended September
30, 2018. The decrease is primarily related to a decrease in
salaries and stock-based compensation offset by an increase in
spending on our PL-8177 program.
Research
and development expenses related to our Vyleesi, PL3994, PL8177,
MC1r, MC4r and other preclinical programs were $2,297,542 for the
three months ended September 30, 2019 compared to $1,944,240 for
the three months ended September 30, 2018. The increase is
primarily related to an increase in spending on our PL8177
program.
The
amounts of project spending above exclude general research and
development spending, which was $829,947 for the three months ended
September 30, 2019 compared to $1,678,451 for the three months
ended September 30, 2018. The decrease in general research and
development spending is primarily attributable to a decrease in
stock-based compensation and salaries.
Cumulative
spending from inception to September 30, 2019 was approximately
$310,400,000 on our Vyleesi program and approximately $144,900,000
on all our other programs (which include PL3994, PL8177, other
melanocortin receptor agonists, other discovery programs and
terminated programs). Due to various risk factors described in our
Annual Report on Form 10-K for the year ended June 30, 2019, under
“Risk Factors,” including the difficulty in currently
estimating the costs and timing of future Phase 1 clinical trials
and larger-scale 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 or be successfully completed, or when, if ever,
related net cash inflows will be generated.
General and Administrative
– General and
administrative expenses, which consist mainly of compensation and
related costs, were $1,832,442 for the three months ended September
30, 2019 compared to $2,040,582 for the three months ended
September 30, 2018. The decrease in general and administrative
expenses for the three months ended September 30, 2019 is primarily
attributable to a decrease in stock-based
compensation.
Other Income (Expense)
– Total other income (expense),
net was $361,603 for the three months ended September 30, 2019
compared with $(53,288) for the three months ended September 30,
2018. For the three months ended September 30, 2019, we recognized
$370,654 of investment income offset by $(9,051) of interest
expense primarily related to our venture debt. For the three months
ended September 30, 2018 we recognized $(206,871) of interest
expense primarily related to our venture debt offset by $153,583 of
investment income. Interest expense has decreased as we have repaid
our venture debt as of July 2019.
Liquidity and Capital Resources
Since
inception, we have generally 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 and license 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.
19
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.
During
the three months ended September 30, 2019, net cash provided by
operating activities was $54,837,308 compared to cash used in
operations of $5,537,562 for the three months ended September 30,
2018. The difference in cash provided by operations for the three
months ended September 30, 2019 compared with cash used in
operating activities for the three months ended September 30, 2018
was primarily related to the timing of the receipt of payments
related to revenue recorded for our license agreement with AMAG,
including payments related to the FDA’s approval of
Vylessi.
During
the three months ended September 30, 2019, net cash used in
investing activities was $62,880 compared to $0 for the three
months ended September 30, 2018. The change in cash used by
investing activities is a result of the purchase of property and
equipment during the three months ended September 30,
2019.
During
the three months ended September 30, 2019, net cash used in
financing activities was $1,586,618, which consisted of payment on
notes payable obligations of $832,851 and repurchase and
cancellation of outstanding warrants of $1,333,497 offset by
proceeds from the sale of common stock of $579,730 in our
“at-the-market” offering program. During the three
months ended September 30, 2018, net cash provided by financing
activities was $156,455, which consisted of proceeds from the sale
of common stock of $2,222,247 in our “at-the-market”
offering program, offset by payment on notes payable obligations of
$2,000,000 and withholding taxes related to restricted stock units
of $65,992.
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. Continued operations are dependent upon our
ability to generate future income from existing licenses, to
complete equity or debt financing activities and to enter into
additional licensing or collaboration arrangements. As of September
30, 2019, our cash and cash equivalents were $96,698,232 and our
current liabilities were $1,850,348.
We
intend to utilize existing capital resources for general corporate
purposes and working capital, including Vyleesi, preclinical and
clinical development of our MC1r and MC4r peptide programs and
natriuretic peptide program, and development of other portfolio
products.
We
believe that our existing capital resources will be adequate to
fund our planned operations through at least calendar year 2021. We
will need additional funding to complete required clinical trials
for our product candidates and development programs and, if those
clinical trials are successful (which we cannot predict), to
complete submission of required regulatory applications to the
FDA.
We
expect to incur significant expenses as we continue our development
of natriuretic peptide and MC1r products. These expenses, among
other things, have had and will continue to have an adverse effect
on our stockholders’ equity, total assets and working
capital.
Off-Balance Sheet Arrangements
None.
Item 3.
Q
uantitative and Qualitative
Disclosures About Market Risk.
Not
required to be provided by smaller reporting
companies.
Item 4.
C
ontrols and
Procedures.
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, 2019.
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
P
ART II – OTHER
INFORMATION
Item 1. L
e
gal Proceedings.
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.
Item 1A. R
i
sk Factors.
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.
There
have been no material changes to our risk factors disclosed in Part
I, Item 1A, of our Annual Report on Form 10-K for the year ended
June 30, 2019.
Item 2.
U
nregistered Sales of
Equity Securities and Use of Proceeds.
(c) Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers.
On
September 13, 2019, our Board of Directors approved a plan to offer
to purchase and terminate outstanding Series F, Series H and Series
J common stock purchase warrants through privately negotiated
transactions. The purchase and termination program has no time
limit and may be suspended for periods or discontinued at any
time.
The
following table provides information with respect to purchase and
termination of common stock purchase warrants by the Company during
the fiscal quarter ended September 30, 2019.
|
Fiscal Month
Period
|
Total Number of
Warrant Shares Purchased
(1)
|
Average Price
per Warrant Share
|
Total Number of
Warrant Shares Purchased as Part of Publicly Announced Plans or
Programs
(2)
|
Maximum Number
of Warrant Shares that May Yet be Purchased Under Announced Plans
or Programs
|
|
July 1, 2019
through July 31, 2019
|
-
|
-
|
-
|
-
|
|
August 1, 2019
through August 31, 2019
|
-
|
-
|
-
|
-
|
|
September 1, 2019
through September 30, 2019
|
3,340,854
|
$
0.40
|
-
|
17,706,743
|
|
Total
|
3,340,854
|
$
0.40
|
-
|
17,706,743
|
|
(1)
|
During
the fiscal quarter ended September 30, 2019, we purchased common
stock purchase warrants exercisable for an aggregate of 3,340,854
shares of our common stock consisting of 474,045 Series H warrants
and 2,866,809 Series J warrants in privately negotiated
transactions.
|
|
(2)
|
None.
|
|
(3)
|
As of
September 30, 2019, the maximum number of common stock purchase
warrants that may yet be purchased under the plan is 17,706,743.
Between October 1, 2019 and November 8, 2019, an additional
3,197,973 warrant shares, consisting of 297,352 Series F warrant
shares, 992,387 Series H warrant shares and 1,908,234 Series J
warrant shares were purchased at an average price per warrant share
of $0.38.
|
Item 3.
D
efaults Upon Senior
Securities.
None.
Item 4.
M
ine Safety
Disclosures.
Not
applicable.
Item 5.
O
ther
Information.
None.
21
Item 6.
E
xhibits.
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
|
|
|
|
22
S
IGNATURES
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 12, 2019
|
|
Carl
Spana, Ph.D.
President
and
Chief
Executive Officer (Principal
Executive
Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Stephen T. Wills
|
|
|
Date:
November 12, 2019
|
|
Stephen
T. Wills, CPA, MST
Executive
Vice President, Chief Financial Officer and Chief Operating
Officer
(Principal
Financial and Accounting Officer)
|
|
23
TABLE OF CONTENTS
Part IItem 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