Palatin Technologies, Inc. Reports Fourth Quarter And Fiscal Year 2016 Results

CRANBURY, N.J., Sept. 20, 2016

Significant Highlights

• Bremelanotide - Under development for Hypoactive Sexual Desire Disorder (HSDD):
  • Palatin's two Phase 3 clinical trials for the treatment of HSDD randomized a total of approximately 1,250 women to evaluate efficacy and safety of subcutaneous bremelanotide in premenopausal women with HSDD as an on-demand, as-needed treatment.
  • Patient enrollment was completed in the fourth quarter of calendar year 2015.
  • Last patient visits for the efficacy portion of the trials were completed in the third quarter of calendar year 2016.
  • Topline results are projected to be released early fourth quarter calendar year 2016.
  • Issued a key U.S. Patent on May 31, 2016 for methods of treating female sexual dysfunction using the dose and formulation utilized in the Phase 3 trials. The patent expires no earlier than November 2033.
• Financial Transactions:
  • August 2016, Palatin closed on an underwritten offering of units with gross proceeds of $9.25 million, with net proceeds, after deducting offering expenses, of approximately $8.5 million. Palatin issued:
    • 11,481,481 shares of common stock and ten-year prefunded Series I warrants to purchase 2,218,045 shares of common stock at an exercise price of $0.01 per share
    • Series H warrants to purchase 10,274,646 shares of common stock at an exercise price of $0.70 per share
  • July 2015, Palatin closed on a debt and equity financing with gross proceeds of $30 million, with net proceeds, after deducting offering expenses, of $29.7 million, consisting of:
    • $10 million venture loan, which includes an interest-only payment period for the first eighteen months of a four year secured term loan, and Series G warrants to purchase 549,450 shares of common stock at an exercise price of $0.91 per share
    • $20 million private placement of Series E warrants to purchase 21,917,808 shares of common stock at an exercise price of $0.01 per share and Series F warrants to purchase 2,191,781 shares of common stock at an exercise price of $0.91 per share
• Intellectual Property:
  • Issue Notification for U.S. Patent to issue October 4, 2016, with composition of matter claims for a broad group of melanocortin peptides.
  • U.S. Patent issued September 20, 2016 with composition of matter claims for a broad family of melanocortin receptor-1 peptides with potential application in inflammatory disease-related and autoimmune indications.

Fourth Quarter and Fiscal Year Ended 2016 Financial Results
Palatin reported a net loss of $(13.4) million, or $(0.09) per basic and diluted share, for the quarter ended June 30, 2016, compared to a net loss of $(12.1) million, or $(0.09) per basic and diluted share, for the same period in 2015.  The difference between the three months ended June 30, 2016 and 2015 was primarily attributable to the increase in expenses relating to the Phase 3 clinical trial and development program with bremelanotide for HSDD in the quarter ended June 30, 2016.

For the year ended June 30, 2016, Palatin reported a net loss of $(51.7) million, or $(0.33) per basic and diluted share compared to a net loss of $(17.7) million, or $(0.15) per basic and diluted share for the year ended June 30, 2015.  The increase in net loss for the year ended June 30, 2016, compared to the net loss for the year ended June 30, 2015 was primarily attributable to the increase in development costs for the progression of the Phase 3 clinical trials and development of bremelanotide for HSDD and secondarily related to the license and contract revenue recognized in the year ended June 30, 2015.

Revenue
There were no revenues recorded in the quarter or year ended June 30, 2016 or in the quarter ended June 30, 2015.  For the year ended June 30, 2015, Palatin recognized $12.9 million of license and contract revenue under the agreement with Gedeon Richter.

Operating Expenses
Operating expenses for the quarter ended June 30, 2016 were $12.7 million, compared to $11.8 million for the comparable quarter of 2015.  For the year ended June 30, 2016, Palatin incurred $49.3 million of operating expenses, compared to $30.2 million for the year ended June 30, 2015.  The increase in operating expenses for the quarter and the year ended June 30, 2016 was the result of an increase in expenses primarily relating to the Phase 3 clinical trial and development program with bremelanotide for HSDD.

Other Income/Expense
Total other income (expense), net, was $(0.6) million for the quarter ended June 30, 2016, compared to $(0.3) million for the quarter ended June 30, 2015.  For the year ended June 30, 2016, total other income (expense), net, was $(2.5) million, compared to $(0.9) million for the year ended June 30, 2015.  Total other income (expense) for both fiscal years ended June 30, 2016 and June 30, 2015 primarily consists of interest expense related to the venture debt.  The increase in total other income (expense), net, for the year ended June 30, 2016 is due to the additional July 2015 venture debt.