Palatin Technologies Inc: Form 10-Q for the period ended Mar 31, 2026

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, 2025.

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, 2025, 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

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, 2025, have not changed during the three and nine months ended March 31, 2026. We believe that our accounting policies and estimates relating to revenue recognition, accrued expenses, purchase commitment liabilities, warrants and stock-based compensation are the most critical.

Our Business

We are a biopharmaceutical company developing first-in-class medicines based on molecules that modulate the activity of the melanocortin receptor systems. Our product candidates are targeted, receptor-specific therapeutics for the treatment of diseases with significant unmet medical need and commercial potential. Our primary focus is the development of novel ‘next generation’ melanocortin-4 receptor (“MC4R”) agonists for treatment of rare neuroendocrine diseases. We are developing MC4R selective long-acting peptide agonists and small molecule agonists with potential utility in obesity and metabolic-related disorders, rare MC4R pathway diseases, such as hypothalamic obesity, Prader-Willi syndrome, Bardet-Biedl syndrome, and other orphan indications.

Melanocortin Receptor System. The melanocortin receptor (“MCR”) system has 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 prior commercial product, Vyleesi®, was approved by the U.S. Food and Drug Administration (“FDA”) in June 2019 and was initially marketed in the United States by AMAG Pharmaceuticals, Inc. (“AMAG”) for the treatment of hypoactive sexual desire disorder (“HSDD”) in premenopausal women pursuant to a license agreement for Vyleesi for North America, which was entered into on January 8, 2017 (the “AMAG License Agreement”). The AMAG License Agreement was terminated effective July 24, 2020, and we commenced marketing Vyleesi in North America. Effective December 19, 2023, Cosette Pharmaceuticals, Inc. (“Cosette”) acquired all rights to Vyleesi. As disclosed in Note 6 to the Consolidated Financial Statements, effective June 5, 2025, we entered into a Release and Settlement Agreement with Cosette.

In August 2025, as disclosed in Note 5 to the Consolidated Financial Statements, we entered into a Research Collaboration, License and Patent Assignment Agreement (the “BI Agreement”) with Boehringer-Ingelheim International GmbH (“Boehringer Ingelheim” or “BI”) to research, develop and commercialize first-in-class melanocortin receptor-targeted compounds we developed for the treatment of retinal diseases.

In January 2026, as disclosed in Note 6 to the Consolidated Financial Statements, we entered into a sublicense agreement (the “Altanispac Agreement”) with Altanispac Labs, LLC to exclusively license PL9643, a clinical development MC1R agonist for the treatment of dry eye disease.

Our non-obesity development activities focus on ocular, gastroenterology, and renal indications. We are actively engaged in discussions with potential partners and licensees that have the financial and operational resources to progress non-obesity products through development, approval and commercialization.

Pipeline Overview

The following chart illustrates the status of our drug development programs for treatment of rare MC4R pathway diseases and next steps, dependent on resources:

The following programs have been out-licensed, or are available to out-license or otherwise transfer:

Our Strategy

Our strategy is focused on advancing a differentiated portfolio of melanocortin receptor-targeted therapeutics, with an emphasis on MC4R agonists for rare neuroendocrine obesity disorders and other indications with significant unmet medical need. Key elements include:

• Advancing a focused MC4R pipeline: Maintain a lean, execution-oriented organization to discover, develop, and advance MC4R selective agonists for rare MC4R pathway diseases, including hypothalamic obesity, Prader-Willi syndrome, and Bardet-Biedl syndrome;
• Leveraging strategic partnerships: Establish and expand collaborations with pharmaceutical and biotechnology partners to support the development, manufacturing, and commercialization of our product candidates, including applications beyond;
• Disciplined capital strategy: Fund operations through a combination of non-dilutive sources— including cash flows from the licensing and sale of Vyleesi, our collaboration with Boehringer Ingelheim, and other licensing arrangements, supplemented by prudent, opportunistic equity financings, with a focus on capital efficiency and minimizing stockholder dilution; and
• Driving clinical and regulatory execution: Advance selected product candidates through clinical development and pursue regulatory approvals in targeted indications.

Corporate Information

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 301 Carnegie Center Drive, Suite 304 Princeton, New Jersey 08540, and our telephone number is (609) 495-2200. We maintain an Internet site, 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 (http://www.sec.gov)).

Results of Operations

As we continue to advance our development programs and explore commercial opportunities and partners in both U.S. and international markets, we remain attentive to evolving global economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics. Although these factors have not had a material impact on our operations to date, future changes in trade regulations, tariff structures, or logistical constraints could influence the cost, availability, or timing of materials, services and other components associated with the development of our product candidates and manufacturing capabilities. We continue to monitor these developments closely to maintain operational efficiency and help mitigate potential future impacts.

Three and Nine months ended March 31, 2026, Compared to the Three and Nine months ended March 31, 2025:

Revenues – For the three and nine months ended March 31, 2026, we recognized $3,920,675 and $12,884,261 in collaboration and license revenue compared to $0 for the three and nine months ended March 31, 2025. The primary increase in collaboration and license revenue consists of $3,751,122 related to the Altanispac Agreement during the three months ended March 31, 2026, and $3,751,122 related to the Altanispac Agreement and $9,133,139 related to the BI Agreement during the nine months ended March 31, 2026.

Research and Development – Research and development expenses were $3,517,223 and $10,362,756 for the three and nine months ended March 31, 2026, respectively, compared to $3,755,158 and $12,928,391 for the three and nine months ended March 31, 2025, respectively. The decrease for the three and nine months ended March 31, 2026, compared to the three and nine months ended March 31, 2025, was primarily related to a decrease in spending on our MCR programs.

Research and development expenses related to our MCR programs were $2,012,143 and $5,272,845 for the three and nine months ended March 31, 2026, respectively, compared to $1,853,851 and $7,822,953 for the three and nine months ended March 31, 2025, respectively. The increase for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily related to an increase in spending on our MCR programs. The decrease for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025, was primarily related to a decrease in spending on our MCR programs.

The amounts of project spending above exclude general research and development spending which was $1,505,080 and 5,089,911 for the three and nine months ended March 31, 2026, respectively, compared to $1,901,307 and $5,105,438 for the three and nine months ended March 31, 2025, respectively. The decrease is primarily attributable to a decrease in compensation-related expenses.

Cumulative spending from inception to March 31, 2026, was approximately $311,900,000 on our Vyleesi program and approximately $257,900,000 on all our other programs (which include 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, 2025, 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 $1,984,446 and $6,769,994 for the three and nine months ended March 31, 2026, respectively, compared to $1,474,019 and $5,176,794 for the three and nine months ended March 31, 2025, respectively. The increase is a result of increased compensation costs and professional fees.

Other Income (Expense) – For the three and nine months ended, March 31, 2026 total other income (expense), net was $148,007 and $229,175, respectively. For the three and nine months ended March 31, 2025, total other income (expense), net was $1,757 and $111,634, respectively. The increase was a result of an increase in investment income, offset by a decrease in interest expense and foreign currency translation losses.

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.

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 generate 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 nine months ended March 31, 2026, net cash used in operating activities was $10,843,290 compared to $17,217,595 for the nine months ended March 31, 2025. The decrease was primarily related to collaboration and license revenue recognized during the nine months ended March 31, 2026.

During the nine months ended March 31, 2026, net cash used in investing activities was $51,299 which consisted of cash used for the purchase of property and equipment. During the nine months ended March 31, 2025, net cash provided by investing activities was $2,500,000, which consisted of proceeds from the sale of Vyleesi.

During the nine months ended March 31, 2026, net cash provided by financing activities was $18,489,818 which consisted of net proceeds $16,910,891 from an equity financing and $1,598,441 of net proceeds from the exercise of warrants, offset by $19,514 for payment of withholding taxes related to restricted stock units. During the nine months ended March 31, 2025, net cash provided by financing activities was $7,710,261, which consisted of $3,398,237 of net proceeds from the exercise of warrants and 4,457,520 from the sale of common stock, offset by $99,482 for payment of withholding taxes related to restricted stock units and $46,014 for payment of finance lease obligations.

We have incurred cumulative negative cash flows from operations since our inception and have expended substantial funds to advance our product development efforts. Continued operations are dependent upon our ability to complete equity or debt financing activities and to enter into additional licensing or collaboration arrangements. As of March 31, 2026, our cash and cash equivalents were $10,159,494, other receivables were $2,167,215 and our current liabilities were $2,536,002.

There have been no material changes outside the ordinary course of business to our contractual obligations and commitments, as disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025.

We intend to utilize existing capital resources for general corporate purposes and working capital requirements, including preclinical and clinical development of our MC4R programs for the treatment of rare MC4R pathway diseases.

Based on our current operating and development plans, including the ability to reduce or delay operating expenses that are within management’s control, we expect that existing cash and cash equivalents as of the date of this filing will be sufficient to enable us to fund operations through the next twelve months following the issuance of the financial statements.

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. However, current economic conditions (including current economic uncertainty, high interest rates, rising inflation, tariffs, trade restrictions, and the potential for local and/or global economic recession) may negatively impact our operations, including possible effects on our financial condition, ability to access the capital markets on attractive terms or at all, liquidity, operations, suppliers, industry, and workforce. We will continue to evaluate the impact that these events could have on the operations, financial position, and the results of operations and cash flows during fiscal year 2026 and beyond.

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 March 31, 2026.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2026, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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.

Other than set forth below, 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, 2025.

Inadequate funding for the FDA, the SEC and other U.S. government agencies leading to government shut downs or other disruptions to these agencies’ staffing and operations could prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our operations.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government funding, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC, and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, in recent years, the U.S. government shut down and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities. If a prolonged government shutdown continues to occur, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Separately, the risk factor from our Annual Report on Form 10-K for the year ended June 30, 2025, titled “Our common stock has been suspended from trading on the NYSE American. If we fail to regain compliance with the NYSE American listing standards, our common stock may be delisted from the NYSE American”, is no longer a material risk to the Company, as the Company resumed trading on the NYSE American effective November 12, 2025.