Greetings. Welcome to Palatin's third-quarter fiscal year 2025 operating results conference call. (Operator Instructions) As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that statements made by Palatin are not historical facts and may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and that the actual results may differ materially from those anticipated due to the variety of risks and uncertainties discussed in the company's most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements by Palatin's prospects. Now, I would like to turn the call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatin. Please go ahead.
Carl Spana
Thank you. Good morning and welcome to the Palatin third-quarter fiscal year 2025 call. I'm Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin's Chief Financial Officer and Chief Operating Officer. I'll now turn the call over to Steve and he'll give the financial update.
Stephen Wills
Thank you, Carl. Good morning. Good afternoon, everyone. Regarding non-programmed corporate update, on May 7, 2025, Palatin received notice from NYSE regulation that it had suspended trading of the company's common stock on the NYSE American Stock Exchange and determined to commence proceedings to de-list Palatin's common stock as a result of its determination that the company is no longer suitable for listing pursuant to Section 1003(f)(v) of the NYSE American Company Guide due to the low selling price of the company's common stock. Trading of the company's common stock on the NYSE American was suspended on May 7, 2025, and began trading on the OTC Pink Market on May 8, 2025. Palatin exercise our right to review of NYSE regulation's determination to de-list Palatin's common stock. We are disappointed and do not agree with the NYSE's decision and are assessing all available options. Moving over to our fiscal third quarter ending March 31, 2025, financial results. Regarding revenue, pursuant to the completion of the sale of Vyleesi's worldwide rights for female sexual dysfunction to Cosette Pharmaceuticals for up to $171 million in December 2023, Palatin did not record any product sales to pharmacy distributors for the quarter ended March 31, 2025, and March 31, 2024. Regarding operating expenses, total operating expenses were $4.8 million net of $0.4 million gain on a purchase commitment for the quarter ended March 31, 2025, compared to $9.2 million for the comparable quarter last year. The decrease was mainly the result of the decrease lower spending related to our MCR programs for the quarter ended March 31, 2025. Regarding cash flows, Palatin's net cash used in operations for the quarter ended March 31, 2025, was $5.4 million compared to net cash used in operations of $8.6 million for the same period in 2024. The decrease in net cash used in operations is mainly due to the decrease in net loss during the period and, secondarily, to working capital changes. Regarding net loss, Palatin's net loss for the quarter ended March 31, 2025, was $4.8 million compared to a net loss of $8.4 million for the same period in 2024. As referenced above, the decrease in the net loss for the quarter ended March 31, 2025, over the quarter ended March 31, 2024, was driven primarily by the decrease in operating expenses for the quarter ended March 31, 2025. Regarding cash position, as of March 31, 2025, Palatin's cash and cash equivalents were $2.5 million compared to cash and cash equivalents of $9.5 million at June 30, 2024. The $2.5 million of cash and cash equivalents as of March 31, 2025, does not include approximately $3.5 million of net proceeds received in April and May 2025 from Palatin's ATM facility and the recent equity offering. We are actively engaged with multiple potential funding sources, including business development initiatives for future operating cash requirements. Let me turn the call back over to Carl.
Carl Spana
Thank you, Steve. I'll now go over the operating update for the quarter. Updates for melanocortin 4 receptor VC programs are as follows. For our Phase 2 study, BMT 801, evaluating the safety and efficacy of the co-administration of the melanocortin 4 receptor agonist bremelanotide with tirzepatide GLP-1/GIP dual agonist in patients with generalized obesity, we reported positive top line data for the study. The study successfully answered the research questions, does co-administration result in increased weight loss? And can treatment within melanocortin 4 receptor agonist be used as a treatment for weight loss maintenance by blunting the weight regain seen post-treatment therapy? The primary efficacy end point was weight loss of the combined treatment compared to placebo control at the end of eight weeks of treatment. Patients on the combined therapy had a weight reduction of 4.4% versus 1.6% for the placebo arm. The p-value here was highly significant. Importantly, 19% of patients on the combined treatment had a weight reduction of greater than 7% compared to 0% for patients on placebo and the tirzepatide alone arms. Concerning a weight loss maintenance effect, low dose of bremelanotide prevented the rapid weight regain following tirzepatide treatment. So a very positive study for us. As we move forward, our obesity and weight loss management portfolio includes both novel long-acting melanocortin 4 selective peptide agonist and the orally active melanocortin 4 receptor selective small molecule agonist PL7737. During the quarter, we were notified by the FDA that they granted orphan drug status to PL7737 for treating patients with obesity due to leptin receptor deficiency. Pending financing, PL7737 is on track for an initial new drug application submission in Phase 1 Single Ascending Dose and Multiple Ascending Dose studies in the first quarter of 2026. Our novel next-generation selective melanocortin 4 receptor compounds have reduced activity at melanocortin 1 receptor and, therefore, reduced potential to cause skin darkening. The lack of MCR1 activity, once weekly or oral dosing, represents significant improvements over current FDA approved melanocortin treatments. You can find additional information on our clinical trial at clinicaltrials.gov and on our website. During the quarter, we also reported positive top line data for a Phase 2 study evaluating our oral PL8177, a selective melanocortin 1 receptor agonists for treating ulcerative colitis. The study evaluated PL8177 versus placebo for eight weeks in moderate ulcerative colitis patients. Clinical remission was achieved for 33% of PL8177 treated patients versus 0% for placebo. Clinical response was achieved for 78% of PL8177 patients compared to 33% for a placebo, again, highly significant. The systematic remission was achieved for 56% of patients on PL8177 versus 33% for placebo. This exciting data has resulted in a significant increase in business development discussions with potential partners, which is in line with our current strategy to outline this program. During the quarter, we also reported additional data for the PL9643 MELODY-1 Phase 3 study in dry eye disease patients. The data from a responder analysis that compared placebo to PL9643 demonstrated that for 6 of the 13 symptom endpoints, a significantly higher percentage of patients had a complete symptom clearing, i.e., they were cured. This again was highly significant. This level of symptom clearing has not been achieved by any FDA-approved treatment for dry eye disease. Clearing was seen as early as two weeks and continued to improve over the 12 weeks of the study. We are actively engaged in potential corporate partners with this program as one of our earlier ocular programs, and we anticipate one or more transactions closing in the second half of calendar '25. Before moving on to take questions, I would like to comment on our strategy. We are focused on our research and development efforts on our melanocortin 4 receptor obesity assets. We believe the pharmacological treatment of obesity is in the early stages of a multi-year cycle of innovation and will have a market value in excess of $100 billion per year. Melanocortin system plays a critically important role in regulating stored energy and food intake, and we strongly believe that melanocortin 4 receptor agonist will be an important part of the future of obesity treatment and weight loss management. We'll now take the -- thank you for participation and we'll now open the line to questions.
Question and Answer Session
Operator
(Operator Instructions) Scott Henry, Alliance Global Partners.
Scott Henry
A couple of questions on the obesity program. First, I know that a low dose of bremelanotide or BMT was used in the study. The question is, do you believe a higher dose would increase the weight loss, putting it in the ranges of Wegovy or Zepbound?
Carl Spana
Yes, we actually have a publication out on that. We actually looked at higher doses of bremelanotide in an earlier study and where we were looking to optimize -- it's a short acting compound, so they were on multiple doses per day so that patients would be in optimal dose range while they had access to food. And the weight loss there really is comparable to what you would see with the single agent Wegovy. Tirzepatide is a multiple mechanism drug and it's a little bit better than Wegovy. But with regards to these single mechanism drugs like Wegovy, good MC4R agonists like bremelanotide or the ones that we're working on, they will have highly competitive weight loss.
Scott Henry
Okay, great. Thank you for that color. And then with the GLPs, the rebound weight regain is a common issue. Do you think we may see this idea of weight maintenance in the future, even potentially getting into the label, could that be more of a focus in the next generations?
Carl Spana
Absolutely. The new compounds coming through are going to be evaluated as weight loss maintenance. There are studies that are going on right now doing that with the GLP-1s, but you're going to need new mechanisms to really address that on a long-term basis. Right now, we don't have any evidence that patients that, once they've lost weight, can effectively come off of treatment and maintain that weight. Right now, the strategies they're going to need to be on long-term weight loss maintenance. How the dosing works out with agents are going to be used, that's going to be worked out in clinical trials. But melanocortin 4 agonists are really ideally suited for that. It's probably dysfunctions in that hypothalamic MCR leptin pathways that actually are leading to that weight regain and this really begins to address that directly.
Scott Henry
Okay, great. And the final question, just on the next-generation of MC4Rs, if you could just talk about the benefits that will separate them from the first generation. I know pigmentation was an issue. I don't know if that's going to be one of the things that that may be different, but if you could just talk about what your expectations are for that next generation. Thank you.
Carl Spana
Both bremelanotide, and there's another one, [proselanotide], they're what I would consider first-generation compounds. They are good. They work well. But they are short-term dosing, so you need one or more doses per day. They do have the pigmentation that you pointed out. They're not ideal treatments or as competitive in, say, a general market as current treatments. So what we're looking to do here is really eliminate that MCR1 activity so we don't get the skin darkening. I think we've been able to do that quite successfully. In addition to that, if we're dealing with a peptide which wouldn't be orally active, we certainly want that to be once a week, which is very patient friendly. Or with 7737, which is a small molecule, it's a once a day oral, has a very nice extended half-life so we can really get to steady state. And that's really a goal with these things. Compared to what's out there, on the line of court and side, and when you deal with short acting compounds, it's very hard to maintain a steady state. And in obesity, you really want to get that steady state and we can achieve that with both the long-acting peptide or the oral small molecule that we're bringing forward. So they really are improvements over what's out there today.
Scott Henry
Okay, thank you for that color and thank you for taking the question.
Operator
Thank you. This does conclude our question-and-answer session for today. I would now like to pass the floor back to management for closing remarks.
Carl Spana
Steve and I would like to thank everyone for participating in our third-quarter fiscal year 2025 call. We look forward to keeping you updated on our progress. I think it was, from an operating standpoint, it was a phenomenal quarter for us. We did have a little difficulty with the NYSE, but I think that's going to be transitory. We're going to work to address that as quickly as we can. So thank you and have a great day.
Operator
Thank you. This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you for your participation. Thank you, Carl, Steve. Have a good day. I'm going to disconnect lines at this time.
