Good morning ladies and gentlemen and welcome to the Palatin Technology’s 2011 fiscal year end conference call. As a reminder today’s conference is being recorded.
Before we begin our remarks, I would like to remind you that statements made by Palatin are not historical facts may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results could differ materially from those anticipated due to a 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 and Palatin's prospects.
Now, I would like to introduce your host for today's call, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead sir.
Thank you. Good morning I’m Carl Spana, President and CEO of Palatin Technologies. With me on the phone today is Steve Wills, our Chief Financial and Operating Officer and Executive Vice President and Dr. Jeffrey Edelson, our Chief Medical Officer.
On today’s call we will be providing updates on our product programs and financial results. To begin Steve Wills will provide an update on our fiscal yearend financial results. Steve?
Thank you, Carl. Good morning everyone. Regarding the financial update Palatin’s net loss for the quarter ended June 30, 2011 was $3.3 million or $0.09 per basic and diluted share compared to a net loss of $4.2 million or $0.40 per basic and diluted share for the same period in 2010. The change in net loss for the quarter ended June 30, 2011 compared to the net loss for the quarter ended June 30, 2010 was primarily attributable to $1.3 million of non-cash non-operating income, which represents the decrease in estimated fair value of the warrant liability from March 31, 2011 through May 11, 2011, which is the date the warrant seized to be classified as a liability on stock holder approval of the increase in authorized common stock.
For the year ended June 30, 2011 we reported a net loss of $12.8 million or $0.64 per basic and diluted share, compared to a net loss of $1.8 million or $0.18 per basic and diluted share for the year ended June 30, 2010. The change in net loss for the year ended June 30, 2011 compared to the net loss for the year ended June 30, 2010 was primarily attributable to a decrease in revenue recognized under Palatin’s research, license and clinical trial collaboration agreements with AstraZeneca as a result of the successful completion of the research collaboration portion of the agreements.
Regarding revenue, total revenues for the quarter as of June 30, 2011 were $0.2 million mainly consisting of grant revenue pursuing to the Patient Protection and Affordable Care Act of 2010 commonly referred to as Section 48D, compared to $0.7 million for the same period in 2010 consisting entirely of amounts recognized under our license and collaboration agreements with AstraZeneca.
Total revenues for the year ended June 30, 2011 were $1.5 million consisting of $1 million of grant revenue pursuant to Section 48D and remainder from our collaboration with AstraZeneca. For the year ended June 30, 2010 total revenues were $14.2 million consisting entirely of amounts recognized from our collaboration with AstraZeneca.
Regarding cost and expenses for the quarter ended June 30, 2011 total operating expenses were $4.7 million versus $4.9 million for the comparable quarter 2010. For the year ended June 30, 2011 total operating expenses were $15.1 million compared to $17.2 million for the year ended June 30, 2010. The decreases in operating expenses for the respective periods is a result of reducing staffing levels pursuant to Palatin’s strategic decision to concentrate on our clinical programs announced in September of 2010.
Regarding our cash position, our cash and cash equivalents were $18.9 million as of June 30, 2011 compared to cash, cash equivalents and investments of $8.9 million at June 30, 2010 with current liabilities of $2.8 million as of June 30, 2011, compared to $2.4 million as June 30, 2010. In March 2011, Palatin closed on a $23 million firm commitment public offering consisting of 23 million units at a price to the public $1. Net proceeds to us after deducting underwriting discounts and other offering expenses were $21 million.
We believe based on our current operating plan that our cash, cash equivalents will be sufficient to fund our operations through at least calendar year 2012.
Thank you, Steve. Now we will update on our programs. First I will cover our obesity and diabetes melanocortin receptor 4 program which is partner with AstraZeneca. Over the past year this program has made excellent progress. Earlier this year under the direction of AstraZeneca with assistance by the team at Palatin our melanocortin receptor 4 obesity program took a major step forward when AstraZeneca initiated Phase I clinical studies with a compound they call AZD2820. AZD2820 is a clinical candidate selected by AstraZeneca from its collaborative research program with Palatin.
The decision to move this program to clinical development was in part based on exciting clinical data generated by Palatin as part of our collaboration with AstraZeneca. Results from (Inaudible) clinical trials of these patients with non-commercial compounds had target melanocortin 4 receptor showed significant reduction in food intake and weight loss. We believe this clinical data along with earlier work animal [ph] models of obesity demonstrates the significant role that the melanocortin pathway placed in regulating food intake and weight and validates that melanocortin receptor as a major target for obesity therapeutics.
AstraZeneca continues to move this program forward and we expect initial clinical data in this program later this calendar year. We believe that therapeutics that target melanocortin 4 receptor has a potential to demonstrate safety and efficacy required for approval and to dramatically impact the treatment of obesity.
As you can imagine this program has huge commercial potential and we believe our partner AstraZeneca has the resources and commitment to realize this potential. We are eligible for milestone payments totaling up to $145 million up to $85 million contingent up on development and regulatory milestones and the balance on treatment of sales. Plus mid to high single digit royalties on sales of approved products. AstraZeneca has responsibilities for product commercialization, product discovery and all associated costs.
Next program I would like to talk about is our PL3994 our natriuretic peptide receptor agonist in development as a treatment for acute exastribations [ph] of asthma, which is defined as an ongoing asthma episode in which asthma symptoms do not adequately respond to initial bronchodilator or (Inaudible) steroid therapy.
This fiscal year our PL3994 program has achieved several key development milestones. PL3994 asthma program includes both subcutaneous formulations and inhalation formulations. This year we opened up a new IND with the update to envision the pulmonary products to begin clinical studies in asthma patients. Protocol for PL3994 subcutaneous group of principle asthma clinical trial was probably designed to that asthma clinical trial and the trail a formulation work and design a frequently toxicality studies to support the use of inhaled PL3994.
A key near term objective for our PL3994 program is to identify development and marketing partner and once we do that to initiate clinical studies. We are in discussions with multiple potential partners that we believe has a developmental, regulatory and commercial resources to assist us in advancing our PL3994 program forward.
Finally let’s say a little bit about bremelanotide, which is our melanocortin 4 receptor agonist in development as a treatment for female sexual dysfunction and is our lead clinical development program. Over the past fiscal year this program has made tremendous strides forward. We completed the second of two Phase I pharmacokinetic and safety studies with the subcutaneous bremelanotide formulation demonstrating that our subcutaneous bremelanotide formulation provides consistent and reproducible exposure to bremelanotide.
We also concluded meetings and discussions with the FDAs division of reproductive and neurological products and reached agreement on a Phase II B protocol. We initiated a major Phase II B clinical trial in premenopausal women with female sexual dysfunction results to the study if positive will support transition of this program into Phase III clinical trials. We also made substantial progress in the number of non-clinical product development activities that required sports based studies and commercial development of bremelanotide.
And I will provide a brief overview of the bremelanotide Phase II B female sexual dysfunction study. The main objective of this trial are to generate the safety and efficacy data to support the transition of this program into Phase III registration trials. The trial was designed as a foreseeable controlled double blind study but you will have four parallel arms one placebo and three bremelanotide doses you are talking to involve 100 premenopausal, female sexual dysfunction patients per arm for a total of 400 patients.
The primary efficacy measure for the study will be the improvement in the number of satisfying sexual events. This will be measured using a validated event log or diary. Additional efficacy evaluations will include changes in arousal, desire and dysfunction associated distressed as measured using validated patient self assessment questioners. We will also evaluate the (Inaudible) bremelanotide in this target population.
Bremelanotide Phase II B study and female sexual dysfunctions initiated patient recruitment in June of this calendar year. I’m very pleased to report that enrollment is proceeding on schedule. Enrollment is targeted for a completion by the end of this calendar year and we anticipate delivering the result to this study early in the second half of 2012.
We have designed a comprehensive program to evaluate safety and efficacy of bremelanotide and the results of this study are positive they will support the transition into Phase III registration trials. We believe that bremelanotide female sexual dysfunction program has tremendous potential. There are no FDA approved treatments for female sexual dysfunction and these patients have limited treatment options. We believe that female sexual dysfunction represent a significant area of medical need and a substantial commercial opportunity.
Just a little bit more before we open up to questions. Over the past fiscal year we have made significant progress in positioning Palatin into advancing number of exciting programs and to build value for our shareholders. On the corporate front, we completed the reorganization started last year in which we significantly reduced our basic research activities. We now have an organization and resources focused on supporting and driving our clinical development programs forward.
In addition, we also conducted an underwritten public offering to obtain the funding required to take us through significant program data points. We have sufficient cash on hand today to fund our planned operations to at least calendar year 2012. Our bremelanotide female sexual dysfunction program is enrolling patients in a major Phase II B clinical trial designed to provide the safety and efficacy data to move into Phase III registration trials. This program is on schedule to deliver data in the second half of 2012.
Our PL3994 program for severe asthma is ready to begin approved principle clinical trial and we are in discussions with potential partners. And finally our melanocortin 4 receptor obesity program, which is partner with AstraZeneca is enrolling patients into Phase I study and it’s on track to deliver data later this calendar year. We believe that these accomplishments have put the company in a strong position to generate substantial value for shareholders.
I would like to thank you for participating in the Palatin 2011 fiscal year end conference call. And we will now open the call for questions. Thank you.