Palatin Technologies, Inc. (PTN) CEO Carl Spana on Q4 2020 Results – Earnings Call Transcript


Palatin Technologies, Inc. (NYSEMKT:PTN) Q4 2020 Results Conference Call September 28, 2020 11:00 AM ET

Company Participants

Carl Spana – President & CEO

Steve Wills – EVP, CFO, & COO

Conference Call Participants

John Newman – Canaccord

Joseph Pantginis – H.C. Wainwright & Co

Edward Marks – Ladenburg Thalmann

Operator

Good day, ladies and gentlemen, and welcome to the Palatin Technologies Fourth Quarter and Fiscal Year-end 2020 Operating Results Conference Call. As a reminder, this conference is being recorded.

Before we begin our remarks, I’d like to remind you that statements made by Palatin that 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 may 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’d like to turn the call over to today’s host, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Carl Spana

Thank you. Good morning and welcome to the Palatin Technologies fourth quarter and fiscal year-end 2020 Call. I’m Dr. Carl Spana, CEO and President of Palatin’s. With me on the call today is Steve Wills, Palatin’s Executive Vice President, Chief Financial Officer and Chief Operating Officer.

On today’s call, we will provide financial and operating updates including the impact of the COVID-19 pandemic. We sincerely hope that you and your families are safe and healthy as you deal with life-altering changes brought about by the COVID-19 pandemic.

Today’s Steve will provide financial update, as well as the update on our reacquisition of Vyleesi from AMAG Pharmaceuticals. I will focus my update on the progress of our development programs specifically PL-9643 for dry eye disease, Phase 2 and PL-8177 COVID-19 program.

Steve?

Steve Wills

Thank you, Carl, and good morning everyone. Starting with the financial update, regarding fourth quarter and fiscal year 2020 financial highlights, net loss for the fourth quarter ended June 30, 2020 was $7.3 million or $0.03 per basic and diluted share compared to net income of $52.2 million or $0.25 per basic and $0.23 per diluted share for the comparable quarter of 2019.

Net loss for the year-ended June 30, 2020 was $22.4 million or $0.10 per basic and diluted share, compared to net income of $35.8 million or $0.17 per basic and $0.16 per diluted share for the year-ended June 30, 2019.

The difference in net loss and net income between the quarter and year-ended June 30, 2020 compared to the quarter and year-ended June 30, 2019 was due to the recognition of license and contracts revenue pursuant to our license agreement with AMAG of $60.3 million for the quarter and year-ended June 30, 2019.

As of June 30, 2020, Palatin had $82.9 million in cash and cash equivalents compared to $43.5 million as of June 30, 2019 and no debt. We believe that existing capital resources will be sufficient to fund planned operations through at least September 30, 2021.

Our strong cash position of approximately $83 million at June 30, 2020 and no debt, coupled with the $12 million we received in July 2020 from AMAG, plus an additional $4.3 million due from AMAG March 31, ’21 provides us the financial resources to significantly advance our Anti-Inflammatory and Autoimmune programs and make complimentary targeted investments to our Vyleesi program.

Moving over to Vyleesi, Vyleesi is FDA approved for premenopausal women with hypoactive sexual desire disorder or HSDD. Vyleesi is the first and only FDA approved product for the as needed treatment for premenopausal women who experience distress or interpersonal difficulty due to low sexual desire. This treatment is available as a subcutaneous self-injection in a prefilled disposable autoinjector pen for use in anticipation of a sexual encounter. It is estimated that HSDD affects one in ten premenopausal women.

As an historical recap, Palatin licensed in North American rights of Vyleesi to AMAG in the first quarter of 2017, we received $60 million as an upfront payment. During the period of the second quarter of 2017 through the first quarter of 2018, Palatin received $25 million as cost reimbursement and a $20 million regulatory milestone for the NDA acceptance by the FDA. Vyleesi was approved by the FDA in June of 2019. Palatin received a $60 million regulatory milestone at that time. In the aggregate, we’ve received approximately $165 million since the first quarter of 2017.

In January of 2020, AMAG announce that after a strategic review of its assets and business model, it decided to commence a process to divest Vyleesi and another female healthcare product. In July of 2020, Palatin announced the mutual termination of its license agreement with AMAG for Vyleesi. Under the terms of determination agreement, Palatin regained all North American development commercialization rights for Vyleesi. AMAG made a $12 million payment to Palatin at closing and will make a $4.3 million payment to Palatin on March 31, 2021.

Palatin assumed all Vyleesi manufacturing agreements, and AMAG will transfer all the information, data and assets related exclusively to Vyleesi including but not limited to existing inventory valued at cost of approximately $15 million. AMAG will provide certain transitional services to Palatin for a period of time to ensure continued patient access to Vyleesi and regulatory compliance during the transition period back to Palatin. Palatin will reimburse AMAG for the agreed upon costs of the transition services.

We believe that Vyleesi is an important treatment for the millions of premenopausal women suffering from HSDD. Our goal with the Vyleesi program is to demonstrate value in the marketplace by increasing patient demand and access. Our objective is to relicense the U.S. rights to a committed women’s healthcare company. Having taken steps to ensure no disruption for patient access to Vyleesi, we are working to expand awareness of the condition and treatment in a highly targeted and informed manner, enhance and streamline patient access and increase insurance coverage.

Palatin is exploring its options pertaining to enhancing the commercialization of Vyleesi, including but not limited to discussions with potential collaboration partners that currently market female healthcare products. Palatin continues collaboration discussions for territories outside the currently licensed territories of China and Korea, and anticipates executing multiple agreements through calendar 2021.

In the interim, Palatin strategy implements an informed and highly targeted approach to marketing, focusing on telemedicine, social media, and digital advertising. We are committed to working with payers and healthcare professionals to ensure women with HSDD have continued and affordable access to Vyleesi. Vyleesi remains commercially available through specialty pharmacies Avella and BioPlus, and patients also have the ability to connect with a healthcare provider through telemedicine.

I’ll now turn the call back over to Carl.

Carl Spana

Thank you, Steve. In the past year, we reacquired Vyleesi in a face to global COVID-19 pandemic, two major challenges that were unforeseen and that have changed the way we operate our company, having a well-financed and managed companies has allowed us to address these challenges effectively and with minimal impact on our operations. I’ll start the operational update with the impact of the COVID-19 pandemic.

Our primary concerns have been the safety of our employees, patients and healthcare partners. We instituted a work from home policy in early March that remains in effect for our office staff. In the past quarter, we have reopened our research laboratory. Fortunately, most of our key research and development partners continue to remain in operation. By using teleconferences in various online meeting platforms, we have been effective and continuing to advance our programs. However, we understand, even with resumption of activities, there can be further disruptions to business activity based on a resurgence of the virus, and we will be prepared for this potential outcome.

In July 2020, we required Vyleesi from AMAG Pharmaceuticals. As a reminder, AMAG divesture of Vyleesi was based on strategic and operational changes at AMAG and not the potential value of Vyleesi. We’ve covered the details of the reacquisition and the strategy and operational objectives for Vyleesi. Under this direction, we have assembled an excellent and motivated commercial team that is dedicated to demonstrating the value of Vyleesi. We believe our strategy will allow us to demonstrate the potential value of Vyleesi in a cost effective manner.

Our ultimate objective is to relicense Vyleesi through a committed partner, ensuring the continued availability as a treatment option for premenopausal women with HSDD and a financial return on our investment. Palatin has a primary scientific focus on melanocortin system, which is involved in regulation of energy balance, including food intake, sexual function and resolution of inflammatory responses.

Our first successful melanocortin system program was based on the role of melanocortin system in regulating sexual function. This research work resulted in the discovery of Vyleesi and its eventual approval by the FDA as the first as needed treatment for premenopausal women with HSDD. Our current research is focused on developing drugs that target the ability of the melanocortin system to resolve or turn down inflammation. We have developed multiple drug candidates that in preclinical models have demonstrated the potential to resolve a variety of inflammatory disease conditions.

Research conducted by us and others have shown that targeting immune cells with melanocortin drugs results in the resolution of pro-inflammatory processes. These pro-resolution activities include mediating conversion of immune cells from an inflammatory to a regulatory state, the inhibition of the production of pro inflammatory cytokines such as TNF-alpha, interleukin-6 and others, and the upregulation of anti-inflammatory cytokines such as interleukin-10.

In addition, the melanocortin system plays a role in reducing the fibrotic response that occurs as part of many inflammatory diseases. The fibrosis resulting from inflammatory disease has long-term negative consequences for the health of patients. Therefore, we believe that a melanocortin drugs targeting the immune system will have broad utility in treating inflammatory diseases. We have developed clinical stage drug candidates for ocular diseases such as dry eye disease, non-infectious uveitis and retinal diseases. We also have a clinical stage drug cabinet for gastrointestinal diseases such as ulcerative colitis.

Our melanocortin drugs targeting immune system PL-9643 and a Phase 2 study in dry eye disease using eye drop formulation in January, 2020. Dry eye disease also known as keratoconjunctivitis sicca affects the cornea and the conjunctiva of the eye resulting in irritation, redness, pain and blurred vision. Causes are varied, and we believe that by activating the melanocortin system locally, PL-9643 will reduce the inflammation that underlies many negative aspects of dry eye disease.

In July of 2020, the study was fully enrolled with 160 dry eye disease patients and we are on track for data in the fourth quarter of calendar 2020. A successful study will provide the data required to advance PL-9643 ophthalmic solution in the pivotal Phase 3 studies, which will start in the first half of 2021. With data coming later this year, I would like to review the trial design, our regulatory strategy and what a successful trial may look like.

Endpoints to dry eye disease clinical studies are divided into two categories, signs and symptoms. It sign is direct evidence of disease. Examples are corneal lesions and tear production. Symptoms that patients experience aspects of disease and examples are blurry vision and itchy eyes, Phase 3 pivotal studies will need to achieve statistical significance on the co-primary endpoints of a sign and a symptom of dry eye disease.

PL-9643 Phase 2 dry eye disease study is a multicenter randomized control study comparing PL-9643 to placebo with a 12-week treatment period. The co-primary endpoints are a sign of dry eye disease, which in this case is inferior corneal fluorescein staining and a secondary symptom which is ocular discomfort. We have also included multiple secondary endpoints that measure PL-9643 effects on signs and symptoms of dry eye disease.

It is typical to use only a single primary endpoint in Phase 2 study with multiple secondary endpoints. After discussions with the FDA, we chose to use co-primary endpoints with the strategy for the current Phase 2 study could potentially be used as one of the two required Phase 3 pivotal studies, if both co-primary endpoints are statistically significant.

We’ve designed the study so that multiple outcomes support successful transition into Phase 3 pivotal study. The potential outcomes include statistical significance for both co-primary endpoints, statistical significance for inferior corneal fluorescein staining, and secondary symptom endpoints for statistical significance for ocular discomfort a secondary signed endpoint.

Following the strategy reduces Phase 2 risk and allows for the potential of the current Phase 2 study to cap as one of the two required Phase 3 pivotal studies, reducing cost and time to a new drug application. The market dry eye disease treatment represents a substantial commercial opportunity with over $2 billion in annual sales and continued to grow based on patient demographics. We believe the potential efficacy and stable tolerability and safety profile of PL-9643 will allow for substantial market penetration of the dry eye market.

Now moving onto our PL-8177, a pulmonary disease in COVID-19 program. In preclinical disease models, PL-8177 has demonstrated anti-inflammatory activity and the ability to protect lung tissue from damage due to fibrosis. As a potential treatment for patients with COVID-19 infection PL-8177 may reduce the inflammation and lung fibrosis associated with progressive disease.

In the second quarter of calendar 2020, we held a discussion with BARDA concerning PL-8177 as a potential treatment for patients with COVID-19 infections. One of the outcomes of this discussion was the advice that we moved PL-8177 forward and begin discussions with the FDA concerning a potential PL-8177 clinical study in COVID-19 patients.

In the second quarter of calendar 2020, we submitted a pre-investigational new drug application data packaged to the FDA and received detailed advice on the requirements to progress PL-8177 into clinical studies.

Following our current PL-8177 COVID-19 plan, we are conducting all required activities needed to file an IND and begin clinical studies with PL-8177 in COVID-19 patients. These include such activities as clinical protocol development, production of the contract research organization, clinical trial site identification and manufacture of PL-8177, and placebo doses.

We target completing these activities in the third quarter of calendar 2020. However, COVID-19 related scheduling at our contract manufacture has resulted in clinical study doses, not being ready until the fourth quarter of calendar 2020. So, these activities will now be completed in the fourth quarter of this calendar year, allowing us to file an IND with the FDA and began to clinical study of PL-8177.

As we have discussed on previous calls, press releases and in our 10-K, the landscape for treating and conducting clinical studies in COVID-19 patients is rapidly evolving, which impacts the design, risk and ability to conduct clinical studies in COVID-19 patients. As we have considered the risk and uncertainty of conducting COVID-19 clinical studies, the start of the PL-8177 clinical study is subject to receiving external funding and operational support, and we are in the process of applying multiple government programs that provide such support.

Our clinical trial for retinal disease indications is now scheduled to begin in the second half of calendar 2021. This represents an approximately two quarter delay, which is due to the impact of the COVID-19 pandemic. We are using this additional time to extend our clinical and scientific understanding in melanocortin system and ocular inflammatory disease.

Updating our oral disease formulations for PL-8177 and a treatment for ulcerative colitis to other inflammatory bowel diseases, we have conducting all the required preclinical activities and drug product manufacturing to begin a Phase 2 proof of mechanism study which is targeted to start patient enrollment in the first half of calendar 2021.

Now finally, based on our research work on the natriuretic peptide system, our drug candidate PL-3994, and naturally peptide receptor A agonists will be evaluated as Phase 2A clinical study in heart failure patients with preserved ejection fraction. The clinical study is a collaboration with two major academic medical centers and is being supported by an American Heart Association Grant. All required approvals are in place, and drug has to provide it to the clinical trial site. And we expect the first patient in the study from the fourth quarter of calendar 2020. You can find additional information on our programs on our website, www. peletin.com.

Past year has certainly had its challenges with multiple external events impacting our operations. In response, our executive management, employees and board of directors had to quickly adjust our business operations we have been able to continue to advance our programs. In addressing the COVID-19 pandemic, we took immediate actions to ensure the safety of our employees, patients and healthcare partners. We put in place operational processes that have allowed our employees remain highly productive.

Our abilities continue to advance our development programs and our healthy cash position will allow Palatin to emerge from this pandemic in a strong position. However, we will also remain diligent putting plans in place should the virus makes resurgence. The major development was our reacquisition from the North American Rights for Vyleesi from AMAG Pharmaceuticals. We believe the potential of Vyleesi as a treatment for premenopausal women with HSDD, and view this as an opportunity to increase the value of our company.

Under Steve Wills’ direction, we have put in place an excellent commercial team and they plan to demonstrate the commercial value of Vyleesi to support our objective of licensing Vyleesi, a partner committed to realizing its value.

Our Chinese and Korean partners with our support are now advancing Vyleesi in the clinical studies to support their regulatory submissions for ultimate approval and sale of Vyleesi in those territories. For our dry eye disease program, we initiated and completed enrollment in a Phase 2 clinical study and we are on track with data by year-end calendar 2020. If the study is positive, we are positioned to move into Phase 3 pivotal studies in the first half of calendar 2021.

As we look forward to 2021, we will continue to deal with the operational challenges posed by the COVID-19 pandemic. We have a strong pipeline of novel clinical drug candidates and we will remain focused on their advancement. Based on the research we’re completed in the past year, we are positioned to start clinical studies in COVID-19 patients ulcerative colitis and retinal disease in 2021.

In closing, I would like to thank the Palatin team and all our development partners for their rapid adjustment to a new working environment and their continued dedication to the advancement from Vyleesi, commercial activities and our novel drug candidates.

Thank you, and will now open the call for questions.

Question-and-Answer Session

Operator

Thank you very much. Ladies and gentlemen, at this time, we would like to open the floor for questions. [Operator Instructions] Our first question will come from John Newman, Canaccord.

John Newman

I just wondered, if you could talk a little bit more about the transitional service agreements that’s in place for Vyleesi and just how that’s going to allow you to continue support commercialization of the product kind of in the interim here? And also just how that’s happening really at very low cost you?

Steve Wills

Hi, John, it’s Steve. To be forthright, Palatin when we were — once we got to the position that we knew we were going to be taking the product back and shaking hands with AMAG notwithstanding the payments and the releases. We knew we had to get any commercial and regulatory functions that we didn’t have in place entered into a transitional services agreement with AMAG and we get that. The one item we’ve always been very strong, as you recall, we’ve entered the product. We talked to CMC right away, but things regarding the pharmacovigilance, the quality, the government reporting, the market access oversight. So, those are some of the specific functions that we engaged with AMAG.

So over the next several months were in the process of transitioning all those functional areas to Palatin, and that would include both internal or outside third-party resources. So we’re comfortable that we have sufficient time to do this in an orderly informed fashion. And what was most important was to make sure that we had all the functional areas in place with agreements, so there was no patient access disruption, and also to ensure all the regulatory compliance aspects were taken care of.

John Newman

Okay, great. Thanks. And then I just wondered in terms of the dry eyes that are coming up in the fourth quarter. I know that you’re looking at fluorescein staining. Just curious as to what we should focus on there if it’s mainly just kind of a read on the primary endpoint, if we should also be considering the signs and symptoms and things like that?

Carl Spana

Well, as I mentioned in the call, John, signs and symptoms are the two requirements. Fluorescein staining is a measure of inflammatory lesions in the eye. Inferior just means it’s the bottom part of the eye and part of that just due to the way the study’s been run. On the bottom of eye, it can be a little bit drier many times. So, the way I think about it is this was a first attempt. We took a little bit of risk by doing co-primary endpoints. But I think the risk is worth it, because if we do get them both, we believe this will count as one of the Phase 3 pivotal studies.

But there is a whole host of — from an FDA perspective, they’re fairly agnostic, there are a variety of signs that one can use, and simple as that one can use. Requirements or ultimate approval is that you hit one time and one symptom in two Phase 3 registration study. So from us, as you said, there are multiple outcomes. As long as we hit one of the two co-primaries and show very strong evidence of effect from something on the opposite side, we will go forward and we’ll go forward to progressing to Phase 3. So, that’s the way I think about it.

With regards to some of the other things I would focus on are ocular comfort is important. Current therapies that are out there Restasis, Xiidra, topical steroids been generally all have tolerability issues, stinging off case dumping this type of thing. So, I think ocular health tolerability is a key commercial attributes and comprehensive key commercial attributes that we think feel like one as field nicely for Phase 3 is going to have.

Operator

Thank you very much. Our next question will come from Joseph Pantginis with H.C. Wainwright & Co.

Joseph Pantginis

Carl, I’m actually going to segue way off of one of your wrapping up comments in your prepared script when you reference Steve and the commercial efforts ongoing right now for Vyleesi. So, I wanted to see, if there’s any particular detail you can share with us about A: how you’re really keeping the profile high? I know you did touch on some things in your prepared comments, but more specifically, can you give any level with regard to how scripts are going in the type of coverage that current that Vyleesi currently has? Thanks.

Carl Spana

I’m going to second pass that off to see Steve. I do want to just comment, one thing that we didn’t have in the prepared scripts. The process of distribution for Vyleesi was put in place by a AMAG through two specialty pharmacy that Steve has relayed to you. Unfortunately, due to the relatively rapid withdrawal of support for the product by AMAG in the fourth quarter of last year, that process of distribution.

So, when I was getting the product in the manufacturer to the pharmacy and from the pharmacy to the patient needed some attention, and so we say tender loving care, before we would be in a position to really start evaluating the marketing or the targeted marketing of Vyleesi, and we’re now at the coming to that. I mean, so it’s been very quiet from our perspective. And I know investors keep contacting us saying what’s going on.

It’s been a very, very busy period of time, particularly we receive in the commercial group making sure that the patient access so in other words, feel the product coming through the system and the patient experience is really optimized. And he’s done a great job with that. And now these pharmacies are really performing at a much higher level, really the level that they need to be performing at, and we’re now in a position to really begin to look at the marketing aspects of the program.

And with that, I’ll turnover to Steve and maybe he can articulate on where he wants to go where we’re going to take this program.

Steve Wills

As Carl mentioned, this is, I think it may help us, if I frame going back to the national launch by AMAG for Vyleesi was September. Within a few months, they were averaging 2,500 scripts per month and that figure was ahead of their base projections. So frankly, things were going well. But in January 2020, as we mentioned, post the strategic review of AMAG’s business model, they decided to divest to their assets specifically Vyleesi and Intrarosa.

And not within the divestiture process being the investment, the marketing was turned off. They started going through reductions in force regarding the sales force. So no question and in no way trying to be defensive, these scripts were impacted. Last month, we average less than 40% of that 2,500, which I’ll do the math for everybody quickly, that’s less than 1,000 scripts per month. That is not a surprise to us at all. It’s you have to make an investment with products when you’re launching them and our investment as AMAG’s investment was initially around the education and awareness.

As Carl mentioned, and I want to be very clear on this point. It’s not, I mean, could we have turned on the faucet and started investing some marketing dollars right away? The short answer is, yes. But we weren’t prepared, not so much Palatin. But if you will the Vyleesi the way we want the experience to be the way we want the whether its the HCPs or the consumers for the access. It wasn’t in place the way we thought it should be in place, and that started with the pharmacies.

So we’ve made some modifications to the pharmacies that will actually increase and streamline the patient access and patient experience. And we also, we attack the distribution and the coverage. As of right now we’re up to approximately 60% of how they calculate the covered lives. We have engaged some excellent third parties to assist us with this. We’re not territorial, we’ll get the best people we can to move forward and give us advice. Our target is to get 75%, if not 80%, of covered lives, which is a very good number to shoot for. Whether we can accomplish that by the end of the year or the first quarter, we’re working on it.

But we’re now — we’ve now made the steps whereby we can now consider if you will to re-launch from a marketing standpoint. So that’s going to take place in the fourth quarter could be within the next 30 days, no more than 60 days. We now have the let’s just call it the machine in a much better position from a pharmacy standpoint, from a coverage standpoint, from an access and distribution standpoint. And so, it’s when we’re going to be investing these marketing dollars in the fourth quarter, we’re going to have a much higher probability of success.

And the other thing I’d like to just expand on is we’re not going to be doing what you call a, I mean if this was one of the large companies they would be doing even with the COVID-19 that may be somewhat impacted, but they’d be going after a national, a national launch from a marketing promotion standpoint. That’s not what we’re going to be doing, we’re going to be doing what we call a it’s used for the term, geo target is highly informed marketing approach. What that means is we’re going to be more snipers than shotgun approach. We have a lot of data. AMAG spent significant dollars on the launch. There’s a lot of data and some good data that they came back in the first three or four months.

We engage with third-party group that specializes in the digital marketing approach and the social media, and we’re very close to turning on that switch. So we’re going to be targeting multiple regions throughout the United States, a significant number of regions. But the regions we put metrics together, and metrics being as always be try to be data-driven, where the high prescribers, where are the consumers that have already been engaged to certain extent from the digital work that AMAG is done and the Palatin has continue? And the nice way where do you want to fishing? Carl, you want to fishing where the fish are.

So, with that, we had the whole map of United States on where we thought where the hotspots. Carl, I then decided to let’s over light the insurance coverage in those hotspots, and that made some of the hotspots even more attractive. Certain areas we don’t have as go to coverage yet and we’re working on that. But those are the areas that from the self understanding point we’re now prepared to go forward.

So in summation, we believe we’ve made modifications that needed to be made to the Vyleesi process and the program. And we are prepared, again within the next 30 day if not 60 days of turning on that highly informed geo-targeted marketing approach. Now that was probably longer than you anticipated, Joe. So I’d probably need a little sip of water there. But let me pause here to see if Carl and I were responsive.

Joseph Pantginis

That was fantastic. Thank you very much for that and I guess another segue. Well, first, I don’t want to put words in your mouth. But it certainly seems like you’re not just sitting around waiting to find who you’re going to out license the drug to or partner with. So this sounds fantastic. So thanks for that. So with regards to out licensing or partnering, I guess what kind of partner are you really looking for? And I don’t want to put you on the spot here, but do you have any timing updates?

Carl Spana

Well, I’ll take it. I’ll give a little preamble, and then turn it back over to Steve. What we’re looking for someone who sees the value in Vyleesi, and feels that it fits their female health franchise and positioning and is complimentary to their current portfolio and is willing to commit to really moving forward in a way that we think as we move forward and will give us a return and certainly investment.

I want to point out one thing, there were some complications in the way AMAG went to try to out license or sell or dispose of Vyleesi, however you’d like to put it. In that one, this was bundled with another product. And they also really looking for someone that we just step in the license agreement that existed between AMAG and Palatin.

So now that — and that posed some complications with your apartments, they didn’t want the two products. There are companies that want a slightly different, it didn’t fit — the licensing fit the way they were viewing it, so not too surprising to us. So since the acquisition, we’ve had actually pretty good interest.

And I’ll turn over to Steve now and he can kind of fill in some of the details on that and the timing.

Steve Wills

Thanks, Carl. As always, we’re going to be data-driven. I mean, we have some flexibility notwithstanding the cash that we have on our balance sheet as of June 30. We did receive $12 million from AMAG in combination with the transfer and the release. And we have another $4.3 million due March 31. It’s going to take some time to show the value. And I think that’s the better way to go. We’re making — we’ve made modifications, made corrections, whatever you want to classify them as to put us in a position to show value of Vyleesi in the marketplace.

But notwithstanding that, we have started the process, we do I have an outside banker that we work with. I wouldn’t call it a process, why it was similar to what AMAG did where they made their plans known, they wanted divest the product. We’re looking to see what type of interest is out there. At this stage maybe a few quarters down the line. And as Carl mentioned, we can be flexible we have a lot of expertise around all the areas other than, if you will the commercial.

So a traditional relicense, absolutely, we can consider that sort of a baton pass, if the Company can handle all the various functions. But we also have some flexibility whereby a company that may be just more commercial and they want Palatin to handle the CMC and maybe some of the lifestyle, not the lifestyle, the additional indications, clinical or that type of work. We could also consider that, because of the flexibility we have and the expertise we have.

So, Nostradamus still does not call me back, Joe. So I can’t give you a date. But, we feel very comfortable that we put the right items in place. So as we progress, if something does start getting more advanced, we absolutely, we consider it. But the takeaway here is we’ve already started some discussions now just to see what could take place now or at some point in the future. Hopefully that’s helpful to you.

Operator

Our last question will come from Michael Higgins, Ladenburg Thalmann.

Edward Marks

This is Edward on for Michael. I appreciate you guys taking their questions. Just a few more to wrap up here. For the Phase 3 trial for the dry eye, I’m just wondering how many sites you are expecting to enroll for that one.

Carl Spana

So the Phase 2 obviously has much less sites and we have good sites in the Northeast and the Southeast. For Phase 3 pivotal study, the requirement is that you have, it’s really has to represent more real life situation. So you would be looking to at a multiple clinical trial sites across the country. These cases are very easy to find. So I would — an exact number, I don’t have it off the top of my head.

But generally, it would be in the 50 plus range. You want to have enough so that you’re spread out across the country and it is truly representative of the practice of healthcare in the United States. So, these generally tend to be between 50 to 100, depending on the size of the study, and these studies aren’t particularly large, they’re not multiple thousands of patients where you need quite a few sites. So, you will be in that 50 to 100 throughout the countries.

Edward Marks

And then for PL-9643, I’m wondering if you have any partnership plans for this asset? And then if we zoom out a little bit. I’m wondering if there are any other pipeline assets you would partner and then what timeframe would you be thinking about for some this partnership?

Carl Spana

Sure. So in the ocular space, we have not yet been aggressive and thinking about or looking or seeking partnership. In part from the standpoint off, we have potential multiple opportunities there. And with the cash position that we have, we’d like to potentially consider maybe holding some of these assets a little bit longer, maybe even thinking about a potential commercial transition. There are a lot of smaller ocular companies that have single products that may fit with some types of opportunities that we have. So, we haven’t looked at it from that perspective yet.

Obviously, that we wouldn’t do it and obviously certainly great strong positive data for PL-9643 in the interest coming in that we wouldn’t partner. But at the moment, we haven’t been aggressive, because of more looking at a longer term strategy in the ocular space. Certainly, for ulcerative colitis, that’s one where we actually do have earlier interest and have some ongoing discussions, particularly ex-U.S.

And certainly, it’s not one you ask for proof-of-concept, we would — we really would have partnered or want to partner, not that it’s a lack of belief in the product. I think it just going to be great mechanism for a variety of gastrointestinal diseases, but just because of the nature of that indication, demand for getting patients, the treatment options that are out there, you really make sense we partnered with a company that has multiple assets in ulcerative colitis or another GI indications where they can position it appropriately and it really fits in their portfolio.

So, it’s not really one that we would do on our own. And certainly, anything in the heart failure space, pending data coming out in that program that would be a partnership we wouldn’t go forward there on our own we would partner. So I hope that’s helpful?

Edward Marks

Yes, absolutely. I appreciate all those details. And speaking apart heart failure, really quickly, just wondering, if you could provide any details on when that data might be available? Or if that’s not necessarily up to you guys?

Carl Spana

Well, in essence, I’m sure we’ll see it in real time. This is a Phase 2a study. Patients are in hospital and they’re having what is known as a right heart workup because they have preserved ejection fraction many times that’s due to issues on the right side of the heart as opposed to the left. So data will come in real time. I think you’ll have to have a number of patients and I would think the middle of 2021 will be the first time you have enough patients through to get a good sense.

This is truly a basis of the study is the fact that heart failure with preserved ejection fraction, predominantly it many times occurs in females and women. And there are no effective treatments yet. And they represent 50%, almost 50% of the heart failure case happens of ejection fraction. So, through the strong clinical need here particularly in women and the American Heart Association Go Red program is a funding mechanism or looks to fund opportunities that are particularly suited towards female patients.

So, this study is really a proof of mechanism study, and there’s a very — the academic groups are highly interested in this natriuretic peptide mechanism in this indication. And it’s really determined to see if this mechanism — before you go into larger patient numbers, well this mechanism have a really good chance of working or not. So, it is an important study in one where positive outcome would really have the potential transform treatment of patients with the ejection fraction and certainly one where the critical need is very high between these patients, but I would say middle of next year probably the earliest and again because of the academic nature and the granting of it, will have a relatively little impact on that.

Edward Marks

Got it. Appreciate all the details too. And then just finally in your prepared remarks, you mentioned that you had applied for funding from a few different organizations for the COVID project they were working on. I’m just wondering, if you could talk about who those organizations are that you’re reaching out to?

Carl Spana

Sure, I mean the other — we’ll stay on the one that we’re most interested in is called ACTIV and that’s a collaborative between BARDA, and I think NIH and a few other organizations and reason why we’re most interested in that one is because it’s more of a handoff. So, in that process if we get selected as part of the active program, they really would take the compound over and really conducted trials.

And I think that would be get the compound is best chance of success there are a couple out — there are couple of other programs sponsored by NIH, FDA that we’re looking at and getting applications ready for, but I think ACTIVE is the one that we’re currently we have already have the application and we’re waiting for initial feedback on it because that would be the one that’s most suited for the compound.

One of these that we would like to avoid is in the current situation we’re starting to get advice that doing studies in the U.S. would be difficult that we may need to go to South America to get studies done. And so, that’s one of the reasons why when we consider how we go forward with the program, we really would like support in the U.S. from ACTIV for example would be very helpful because you get it into the U.S. clinical trial sites much easier and much faster.

Operator

Thank you very much. At this time, I would like to turn this conference back over to our speakers for any closing remarks.

Carl Spana

This is Carl speaking again. And on behalf of myself and Steve and the Board of Directors and all employees of Palatin, we certainly like to thank all of you for the time you’ve taken on the call today. Obviously, being an annual call was a little bit longer than normal.

Hopefully, we’ve been able to convey the assessment and enthusiasm that we have for the acquisition of Vyleesi and the continued effort that we have on building out an ocular franchise and other melanocortin system based anti-inflammatory drugs.

We are quite excited here, I mean, the crews working very hard. We are really looking forward to 2021, hopefully a little more normalization of operational activities and general life. And we look forward to really the success that we will have in moving our progress forward.

So I’d like to thank all of you again, once again for being on the call. Please stay safe. Wear mass, social distance like a broken record, but it works. And hopefully, we’ll have some vaccines and newer treatments maybe even PL-8177.

So, thank you all, and have a great day.

Operator

Thank you very much. Ladies and gentlemen, this now concludes our conference. You may disconnect your phone lines and have a great rest of the week. Thank you.

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