Q4 2026 Palatin Technologies Inc Earnings Call

September 28, 2026

Operator: Greetings. Welcome to Palatin's Q4 and fiscal year-end 2026 operating results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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.

Speaker #1: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad.

Speaker #1: 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.

Speaker #1: 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.

Operator: 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.

Speaker #1: 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.

Operator: 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.

Speaker #1: Please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining us. I'm Carl Spana, President and Chief Executive Officer of Palatin Technologies. Today, I will discuss our strategic priorities and progress across our development programs.

Carl Spana: Good morning, everyone, and thank you for joining us. I'm Carl Spana, President and Chief Executive Officer of Palatin Technologies. Today, I will discuss our strategic priorities and progress across our development programs. Steve Wills, our Chief Operating Officer and Chief Financial Officer, will then review our fiscal 2026 financial results and liquidity position. We will then conclude with questions. Our principal strategic focus is the development of next-generation, best-in-class melanocortin-4 receptor, or MC4R, agonists for treating syndromic and rare obesity disorders. We are initially targeting hypothalamic obesity, Prader-Willi syndrome, and Bardet-Biedl syndrome, with potential applicability to other disorders involving the MC4R pathway. MC4R agonism is now clinically and commercially validated in multiple rare and syndromic obesity disorders, establishing a strong foundation for the development of next-generation therapies.

Speaker #2: Steve Wills, our Chief Operating Officer and Chief Financial Officer, will then review our fiscal 2026 financial results and liquidity position. We will then conclude with questions.

Speaker #2: Our principal strategic focus is the development of next-generation best-in-class melanocortin IV receptor, or MC4R. Agonist for treating syndromic and rare obesity disorders, we are initially targeting hypothalamic obesity, prader-willis syndrome, and Bardet-Bydell syndrome with potential applicability to other disorders involving the MC4R pathway.

Carl Spana: Our principal strategic focus is the development of next-generation, best-in-class melanocortin-4 receptor, or MC4R, agonists for treating syndromic and rare obesity disorders. We are initially targeting hypothalamic obesity, Prader-Willi syndrome, and Bardet-Biedl syndrome, with potential applicability to other disorders involving the MC4R pathway. MC4R agonism is now clinically and commercially validated in multiple rare and syndromic obesity disorders, establishing a strong foundation for the development of next-generation therapies.

Speaker #2: MC4R agonism is now clinically and commercially validated in multiple rare and syndromic obesity disorders. Establishing a strong foundation for the development of next-generation therapies.

Speaker #2: Palatin brings more than 25 years of melanocortin research and drug development experience to this opportunity, including the development of FDA-approved remelanotide, or Vyleesi. While currently available and emerging therapies have demonstrated meaningful efficacy, gastrointestinal adverse events and hyperpigmentation remain important challenges for patients requiring long-term treatment.

Carl Spana: Palatin brings more than 25 years of melanocortin research and drug development experience to this opportunity, including the development of FDA-approved bremelanotide, or Vyleesi. While currently available and emerging therapies have demonstrated meaningful efficacy, gastrointestinal adverse events and hyperpigmentation remain important challenges for patients requiring long-term treatment. Clinical studies of the approved MC4R agonist in the rare obesity space and the next generation investigational MC4R therapies under development have continued to report high levels of nausea and vomiting, as well as incidence of hyperpigmentation. Our objective is to develop best-in-class melanocortin-4 receptor therapies that deliver comparable or greater efficacy with improved tolerability, little to no hyperpigmentation, and product profiles suitable for lifelong use. We are advancing two complementary peptide series, non-lipidated PL1000 and lipidated PL2000 series. Tested compounds from both series have demonstrated potent MC4R agonism activity without MC1R agonism.

Speaker #2: Clinical studies of the approved MC4R agonist in the rare obesity space, and the next-generation investigational MC4R therapies under development, have continued to report high levels of nausea and vomiting, as well as incidence of hyperpigmentation.

Speaker #2: Our objective is to develop best-in-class melanocortin IV receptor therapies that deliver comparable or greater efficacy with improved tolerability, little to no hyperpigmentation, and product profiles suitable for lifelong use.

Speaker #2: We are advancing two complementary peptide series: the non-lipidated PO-1000, and the lipidated PO-2000 series. Tested compounds from both series have demonstrated potent MC4R agonism, with activity but without MC1R agonism.

Speaker #2: Because MC1R agonism activation contributes to pigmentation, these findings support our strategy to minimize or potentially eliminate hyperpigmentation. Both peptide series contribute to our effort to develop a long-acting once-weekly subcutaneous therapy.

Carl Spana: Because MC1R agonism activation contributes to pigmentation, these findings support our strategy to minimize or potentially eliminate hyperpigmentation. Both peptide series contribute to our effort to develop a long-acting, once-weekly subcutaneous therapy. In preclinical studies, compounds from both the PL1000 and PL2000 series have produced significant dose-dependent reductions in body weight and food intake in diet-induced obese mice. For our PL1000 lead development candidate, we have established feasibility of once-weekly subcutaneous dosing and are working to optimize a controlled-release formulation. Our lead MC4R lipidated peptide development candidate has demonstrated significant reductions in food intake and weight loss with once-weekly subcutaneous dosing in a diet-induced obese mouse model. Preclinical pharmacokinetic data supports the potential for longer than once-weekly or less frequent dosing in humans. We are currently conducting the activities required to file an IND and begin human clinical studies.

Speaker #2: In preclinical studies, compounds from both the PO-1000 and PO-2000 series have produced significant dose-dependent reductions in body weight and food intake and diet-induced obese mice.

Speaker #2: For our PO-1000 lead development candidate, we have established feasibility of once-weekly subcutaneous dosing in our working to optimize a controlled-release formulation. Our lead MC4R lipidated peptide development candidate has demonstrated significant reductions in food intake and weight loss with once-weekly subcutaneous dosing and a diet-induced obese mouse model, preclinical pharmacogenetic data supports the potential for longer-than-once-weekly or less frequent dosing in humans.

Speaker #2: We are currently conducting the activities required to file an IND and begin human clinical studies. Our oral small molecule MC4R program provides a third treatment approach, building on learnings from an earlier drug candidate, PL-7737. Utilizing multiple approaches, including artificial intelligence and machine learning tools, we have identified potential drug candidates with improved potency and MC4R selectivity.

Carl Spana: Our oral small molecule MC4R program provides a third treatment approach, building on learnings from an earlier drug candidate, PL7737, and utilizing multiple approaches, including artificial intelligence and machine learning tools. We have identified potential drug candidates with improved potency and MC4R selectivity. Our objective is to develop an oral MC4R agonist capable of delivering comparable or greater efficacy than emerging oral MC4R therapies with improved gastrointestinal tolerability. We are also designing our oral candidates to have limited or avoid MC1R-mediated off-target activity to minimize or eliminate hyperpigmentation.

Speaker #2: Our objective is to develop an oral MC4R agonist capable of delivering comparable or greater efficacy than emerging oral MC4R therapies, with improved gastrointestinal tolerability. We are also designing our oral candidates to have limited or to avoid MCR1-mediated off-target activity, in order to minimize or eliminate hyperpigmentation.

Speaker #2: Subject to appropriate funding, we are targeting initiation of Phase 1 single ascending dose and multiple ascending dose studies for our lipidated peptide candidate in the first half of calendar 2027, with data targeted for the second half of 2027.

Carl Spana: Subject to appropriate funding, we are targeting initiation of a phase I single ascending dose and multiple ascending dose studies for our lipidated peptide candidate in the H1 of calendar 2027, with data targeted for the H2 of 2027, and are targeting initiation of the oral phase I single ascending dose and multiple ascending dose studies in the H2 of calendar 2027, with initial data expected in the H1 of 2028. These studies will evaluate human safety, tolerability, pharmacokinetics, and clinical efficacy. Taken together, our non-lipidated peptide, lipidated peptide, and oral small molecule programs provide three distinct approaches to developing differentiated, selective MC4R agonists for the long-term treatment of patients with syndromic and rare obesity disorders. Each approach is being designed around the same core best-in-class objective: meaningful efficacy, improved tolerability, little to no hyperpigmentation, and a dosing profile suitable for lifelong treatment.

Speaker #2: And our targeting initiation of the oral phase one single ascending dose and multiple ascending dose studies in the second half of calendar 2027, with initial data expected in the first half of 2028.

Speaker #2: These studies will evaluate human safety, tolerability, pharmacogenetics, and clinical efficacy. Taken together, our non-lipidated peptide, lipidated peptide, and oral small molecule programs provide three distinct approaches to developing differentiated, selective, MC4R agonists for the long-term treatment of patients with syndromic and rare obesity disorders.

Speaker #2: Each approach is being designed around the same core best-in-class objective, meaningful efficacy, improved tolerability, little to no hyperpigmentation, and a dosing profile suitable for lifelong treatment.

Speaker #2: Beyond our obesity programs, our broader melanocortin platform has already generated meaningful strategic collaborations. Under our August 2025 retinal disease research collaboration and licensing agreement, Boehringer Ingelheim paid an aggregate of $7.5 million upfront and initial milestone amounts.

Carl Spana: Beyond our obesity programs, our broader melanocortin platform has already generated meaningful strategic collaborations. Under our August 2025 retinal disease research collaboration and license agreement, Boehringer Ingelheim paid an aggregate of EUR 7.5 million up front and initial milestone amounts. The agreement provides for up to EUR 280 million in additional success-based milestones and tiered royalties. We continue to perform reimbursed research under the collaboration. We also sub-licensed our PL9643 dry eye program to Altana SPAC labs earlier this year. Beyond those partnered assets, our PL8177 ulcerative colitis program has positive phase II proof of principle findings, and our diabetic nephropathy program has encouraging open label phase II data as well. We are pursuing partnerships for these non-core assets so our internal development effort can remain focused on rare obesity MC4R therapies. Our priorities are clear.

Speaker #2: The agreement provides for up to $280 million in additional success-based milestones and tiered royalties. We continue to perform reimbursed research under the collaboration. We also sublicense our PL-9643 dry eye program to EnhanceBio Labs earlier this year.

Speaker #2: Beyond those partnered assets, our PL-8177 ulcerative colitis program has positive Phase 2 proof-of-principle findings, and our diabetic nephropathy program has encouraging open-label Phase 2 data as well.

Speaker #2: We are pursuing partnerships with these non-core assets so our internal development effort can remain focused on rare obesity MC4R therapies. Our priorities are clear.

Speaker #2: Advance our complementary non-lipidated and lipidated selective MC4R agonist drug candidates in oral program toward clinical development, translate preclinical differentiating findings into human clinical evidence, and continue creating value through our strategic collaborations and partnerships.

Carl Spana: Advance our complementary non-lipidated and lipidated selective MC4R agonist drug candidates and oral program toward clinical development. Translate preclinical differentiating findings into human clinical evidence and continue creating value through our strategic collaborations and partnerships. Steve will now review our financial results. Steve, over to you.

Speaker #2: Steve will now review our financial results. Steve, over to you.

Speaker #3: Thank you, Carl. And good morning, everyone. I will review our fiscal fourth quarter and full year 2026 results, followed by our cash position and liquidity outlook.

Stephen T. Wills: Thank you, Carl, and good morning, everyone. I will review our fiscal Q4 and full year 2026 results, followed by our cash position and liquidity outlook. Unless otherwise noted, comparisons are with the corresponding fiscal year 2025 periods. For the Q4 ended 30 June 2026, Palatin recognized EUR 300,000 in collaboration and licensed revenue, compared with no revenue in the prior year quarter. For the full fiscal year, collaboration and license revenue totaled EUR 13.2 million, compared with no revenue in fiscal 2025. This included EUR 9.4 million related to our Boehringer Ingelheim collaboration and EUR 3.8 million related to the ALTANA SPAC subsurface license. The ALTANA SPAC revenue was recognized in the form of non-cash debt cancellation. Q4 operating expenses were $4.7 million, compared with $2.3 million in the prior year quarter. The prior year quarter included gains associated with Vyleesi and purchase commitments affecting comparability.

Steve Wills: Thank you, Carl, and good morning, everyone. I will review our fiscal Q4 and full year 2026 results, followed by our cash position and liquidity outlook. Unless otherwise noted, comparisons are with the corresponding fiscal year 2025 periods. For the Q4 ended 30 June 2026, Palatin recognized EUR 300,000 in collaboration and licensed revenue, compared with no revenue in the prior year quarter. For the full fiscal year, collaboration and license revenue totaled EUR 13.2 million, compared with no revenue in fiscal 2025. This included EUR 9.4 million related to our Boehringer Ingelheim collaboration and EUR 3.8 million related to the ALTANA SPAC subsurface license. The ALTANA SPAC revenue was recognized in the form of non-cash debt cancellation. Q4 operating expenses were $4.7 million, compared with $2.3 million in the prior year quarter. The prior year quarter included gains associated with Vyleesi and purchase commitments affecting comparability.

Speaker #3: Unless otherwise noted, comparisons are with the corresponding fiscal year 2025 periods. For the fourth quarter ended June 30th, 2026, Palatin recognized $300,000 in collaboration and licensed revenue compared with no revenue in the prior year quarter.

Speaker #3: For the full fiscal year, collaboration and licensed revenue totaled $13.2 million, compared with no revenue in fiscal 2025. This included $9.4 million related to our Barunkel Engelheim collaboration and $3.8 million related to the AltanaSpac sub-license.

Speaker #3: The AltanaSpac revenue was recognized in the form of non-cash debt cancellation. Fourth quarter operating expenses were $4.7 million, compared with $2.3 million in the prior year quarter.

Speaker #3: The prior year quarter included gains associated with Lyleesi and purchase commitments affecting comparability. Research and development expense was $2.0 million in each fourth quarter, while general and administrative expense was $2.7 million, compared with $2.6 million a year earlier.

Stephen T. Wills: Research and development expense was $2.0 million in each Q4, while general and administrative expense was $2.7 million, as compared with $2.6 million a year earlier. For fiscal 2026, total operating expenses were $21.9 million, compared with $17.5 million in fiscal 2025. Research and development expenses decreased to $12.4 million from $14.9 million, primarily attributable to lower expenses related to the timing of certain activities on our MC4R programs. General and administrative expenses increased to $9.5 million from $7.8 million, primarily due to higher professional fees. Fiscal 2025 operating expenses included a $3.1 million gain on the sale of Vyleesi and a $2.1 million gain on purchase commitments. We reported a Q4 net loss of $4.4 million, compared with $2.2 million in the prior year quarter.

Steve Wills: Research and development expense was $2.0 million in each Q4, while general and administrative expense was $2.7 million, as compared with $2.6 million a year earlier. For fiscal 2026, total operating expenses were $21.9 million, compared with $17.5 million in fiscal 2025. Research and development expenses decreased to $12.4 million from $14.9 million, primarily attributable to lower expenses related to the timing of certain activities on our MC4R programs. General and administrative expenses increased to $9.5 million from $7.8 million, primarily due to higher professional fees. Fiscal 2025 operating expenses included a $3.1 million gain on the sale of Vyleesi and a $2.1 million gain on purchase commitments. We reported a Q4 net loss of $4.4 million, compared with $2.2 million in the prior year quarter.

Speaker #3: For fiscal 2026, total operating expenses were $21.9 million, compared with $17.5 million in fiscal 2025. Research and development expenses decreased to $12.4 million from $14.9 million, primarily attributable to lower expenses related to the timing of certain activities on our MC4R programs.

Speaker #3: General and administrative expenses increased to $9.5 million from $7.8 million, primarily due to higher professional fees. Fiscal 2025 operating expenses included a $3.1 million gain on the sale of Lyaleesi and a $2.1 million gain on purchase commitments.

Speaker #3: We reported a fourth quarter net loss of $4.4 million, compared with $2.2 million in the prior year quarter. For the full fiscal year, net loss decreased to $8.4 million, or a loss of $2.96 per basic and diluted common share, compared with a net loss of $17.3 million, or a loss of $32.15 per basic and diluted common share in fiscal 2025.

Stephen T. Wills: For the full fiscal year, net loss decreased to $8.4 million, or a loss of $2.96 per basic and diluted common share, compared with a net loss of $17.3 million, or a loss of $32.15 per basic and diluted common share in fiscal 2025. The year-over-year improvement in net loss was primarily attributable to collaboration and license revenue and gains related to Vyleesi and purchase commitments. Net cash used in operating activities was $13.5 million in fiscal 2026, compared with $21.3 million in fiscal 2025. Net cash provided by financing activities was $18.5 million, consisting primarily of $16.9 million in net proceeds from common stock and warrant sales and $1.6 million from warrant exercises. Turning to liquidity, we ended 30 June 2026, with $7.5 million in cash and cash equivalents, compared with $2.6 million at 30 June 2025. Current liabilities were $1.8 million at fiscal year-end.

Steve Wills: For the full fiscal year, net loss decreased to $8.4 million, or a loss of $2.96 per basic and diluted common share, compared with a net loss of $17.3 million, or a loss of $32.15 per basic and diluted common share in fiscal 2025. The year-over-year improvement in net loss was primarily attributable to collaboration and license revenue and gains related to Vyleesi and purchase commitments. Net cash used in operating activities was $13.5 million in fiscal 2026, compared with $21.3 million in fiscal 2025. Net cash provided by financing activities was $18.5 million, consisting primarily of $16.9 million in net proceeds from common stock and warrant sales and $1.6 million from warrant exercises. Turning to liquidity, we ended 30 June 2026, with $7.5 million in cash and cash equivalents, compared with $2.6 million at 30 June 2025. Current liabilities were $1.8 million at fiscal year-end.

Speaker #3: The year-over-year improvement in net loss was primarily attributable to collaboration and licensed revenue and gains related to Lyleesi and purchase commitments. Net cash used in operating activities was $13.5 million, in fiscal 2026, compared with $21.3 million in fiscal 2025.

Speaker #3: Net cash provided by financing activities was $18.5 million, consisting primarily of $16.9 million in net proceeds from common stock and warrant sales and $1.6 million from warrant exercises.

Speaker #3: Turning to liquidity, we ended June 30th, 2026, with $7.5 million in cash and cash equivalents, compared with $2.6 million at June 30th, 2025. Current liabilities were $1.8 million at fiscal year-end.

Speaker #3: Based on that cash balance and our current operating and development plans, including our ability to reduce or delay certain expenditures within management's control, we do not expect existing cash to be sufficient to fund operations for at least 12 months following issuance of our financial statements.

Stephen T. Wills: Based on that cash balance and our current operating and development plans, including our ability to reduce or delay certain expenditures within management's control, we do not expect existing cash to be sufficient to fund operations for at least 12 months following issuance of our financial statements. Accordingly, substantial doubt exists about our ability to continue as a going concern. We will require additional financing to continue advancing our development programs and fund operations. We intend to pursue equity financings, collaboration arrangements, and other potential sources of capital, but there can be no assurance that funding will be available when needed or on acceptable terms. The timing of planned development milestones remains subject to appropriate funding. Operationally, we are prioritizing our peptide and oral MC4R obesity programs, executing our collaboration obligations, and pursuing opportunities to realize value from our partnered and partnering assets. That concludes my financial review.

Steve Wills: Based on that cash balance and our current operating and development plans, including our ability to reduce or delay certain expenditures within management's control, we do not expect existing cash to be sufficient to fund operations for at least 12 months following issuance of our financial statements. Accordingly, substantial doubt exists about our ability to continue as a going concern. We will require additional financing to continue advancing our development programs and fund operations. We intend to pursue equity financings, collaboration arrangements, and other potential sources of capital, but there can be no assurance that funding will be available when needed or on acceptable terms. The timing of planned development milestones remains subject to appropriate funding. Operationally, we are prioritizing our peptide and oral MC4R obesity programs, executing our collaboration obligations, and pursuing opportunities to realize value from our partnered and partnering assets. That concludes my financial review.

Speaker #3: Accordingly, substantial doubt exists about our ability to continue as a going concern. We will require additional financing to continue advancing our development programs and fund operations.

Speaker #3: We intend to pursue equity financings, collaboration arrangements, and other potential sources of capital but there can be no assurance that funding will be available when needed or on accessible terms.

Speaker #3: The timing of planned development milestones remains subject to appropriate funding. Operationally, we are prioritizing our peptide and oral MC4R obesity programs, executing our collaboration obligations, and pursuing opportunities to realize value from our partnered and partnering assets.

Speaker #3: That concludes my financial review. Carl, I will turn the call back to you for closing comments and questions.

Stephen T. Wills: Carl, I will turn the call back to you for closing comments and questions.

Steve Wills: Carl, I will turn the call back to you for closing comments and questions.

Speaker #2: Thank you, Steve. Our focus is on translating the promising preclinical findings from both non-lipidated and lipidated peptides, together with our oral small molecule program, into clinical evidence.

Carl Spana: Thank you, Steve. Our focus is on translating the promising preclinical findings from both non-lipidated and lipidated peptides, together with our oral small molecule program into clinical evidence. We are pursuing melanocortin 4 receptor agonist therapies designed for meaningful efficacy, improved tolerability, and little to no hyperpigmentation for patients with rare obesity disorders. Thank you for joining us. We are ready to now take your questions.

Speaker #2: We are pursuing melanocortin-4 receptor agonist therapies, designed for meaningful efficacy and proven tolerability, with little to no hyperpigmentation for patients with rare obesity disorders.

Speaker #2: Thank you for joining us. We are now ready to take your questions.

Speaker #1: Thank you. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star 1 on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone this morning that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time if you wish to join queue to ask a question. Please hold a moment while we poll for questions. Your first question this morning is coming from Scott Henry from AGP. Scott, your line is live. Please go ahead.

Speaker #1: We do ask, if listening on speakerphone this morning, that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star 1 on your telephone keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we poll for questions.

Speaker #1: And your first question this morning is coming from Scott Henry from AGP. Scott, your line is live. Please go ahead.

Speaker #4: Thank you. And good morning, Carlo. I'll start with you. You mentioned the lipidated and non-lipidated peptide approaches. Could you talk a little bit about the advantages and the differences between those two approaches, and eventually, would you narrow it down to one, or would you keep both going all the way?

Scott Henry: Thank you. Good morning. Carl, I will start with you. You mentioned the lipidated and non-lipidated peptide approaches. Could you talk a little about the advantages and the differences between those two approaches? Eventually, would you narrow it down to one, or would you keep both going all the way? Thank you.

Speaker #4: Thank you.

Speaker #3: Thanks, Scott. So there are main differences that in the case of a lipidated peptide, it has an aliphatic part of it that actually binds to plasma proteins.

Carl Spana: Thanks, Scott. Their main difference is that in the case of a lipidated peptide, it has an aliphatic part of it that actually binds to plasma proteins, so its longevity is built into the molecule, so you do not have to have a pharma formulation. It is very similar to what you would see with the GLP-1s. When you go to the non-lipidated, that means you are now formulating in erodible polymers that essentially are ejected, and then they erode over a certain period of time, and they would slowly release your drug. Both can accomplish long-term delivery. Our preference would be for a lipidated approach in that it gives a little more flexibility. You are not dependent on the release characteristics of the polymer. Essentially, it is a single API that is being made. It is not being formulated. It is not as bulky on the injection side.

Speaker #3: So its longevity is built into the molecule, so you don't have to have a polymer formulation. It's very similar to what you would see with the GLP-1s.

Speaker #3: When you go to the non-lipidated, that means you're now formulating an erodible polymers. That essentially are ejected, and then they erode over a certain period of time, and they slowly release your drug.

Speaker #3: Both can accomplish long-term delivery. Our preference would be for a lipidated approach, in that it gives a little more flexibility. You're not dependent on the release characteristics of the polymer.

Speaker #3: You're essentially only making a single API. It's not being formulated, and it's not as bulky on the injection side. We believe it's also going to give maximum flexibility for dose titration.

Carl Spana: We believe it is also going to give maximum flexibility for dose titration, so you will be able to have multiple doses or more easily have multiple doses that can be used in a more titrating fashion, very similar to what is done with the GLP-1s today. So it gives the clinician and the patient the most flexibility over the polymer approach. We will run both of those in parallel. Our goal is really to deliver, as we said, a weekly product that has really good efficacy. So, those high MC4R selectivity and potency and limited to no hyperpigmentation. Our preference, of course, would be to just follow through on the lipidated, and certainly as that goes into the clinic and begins to show efficacy, then we would probably slow down the polymer part. We would most likely advance both of them all the way through into phase II clinical development.

Speaker #3: So you'll be able to have multiple doses or more easily have multiple doses that can be used at a more titrating fashion. Very similar to which done with the GLP-1s today.

Speaker #3: So I think it gives the clinician and the patient the most flexibility over the polymer approach. We will run both of those in parallel.

Speaker #3: Our goal is really to deliver as we said, a weekly product that has really good efficacy. So in other words, high MCL4 selectivity and potency, and limited to no hyperpigmentation.

Speaker #3: Our preference, of course, would be to just follow through on the lipidated and certainly as that goes into the clinic and begins to show efficacy, and then we would probably slow down the polymer.

Speaker #3: We probably wouldn't advance both of them all the way through into Phase 2 clinical development. We'd make a decision.

Carl Spana: We would make a decision.

Speaker #4: Okay, great. Thank you for that color. And I know you've spoken a lot about hyperpigmentation. I did hear a little bit more about improving gastrointestinal tolerability.

Scott Henry: Okay, great. Thank you for that color. I know you've spoken a lot about hyperpigmentation. I did hear a little bit more about improving gastrointestinal tolerability. What are you doing specifically to address that with the MC4R agonist?

Speaker #4: What are you doing specifically to address that with the MC4R agonist?

Speaker #3: Sure. So there are two approaches. So one, there's going to be there's the GI side effects are indeed driven by MCR4 agonism. One way of reducing that is to essentially not overdose patients.

Carl Spana: Sure. There are two approaches. One, the GI side effects are indeed driven by MC4R agonism. One way of reducing that is to essentially not overdose patients. When you're going with, for example, the lipidated peptide, it's a lot easier to keep the patient in the intended therapeutic range without going over. One of the problems you have with these simpler peptides that aren't formulated is that you're injecting a big bolus dose, right? Because it's a short-acting drug, so you go way above the therapeutic window for the drug, and then you get yourself into higher levels of AE. One approach is simply by flattening out the absorption of the drug and keeping it in a defined therapeutic window. You'll limit some of the GI side effects, and you'll be left with some of the inherent effects that occur by just activating the receptor.

Speaker #3: So when you're going with, for example, the lipidated peptide, it's a lot easier to keep the patient in a and the intended therapeutic range without going over.

Speaker #3: So, one of the problems you have with these simpler peptides that aren't formulated is that you're injecting a big bolus dose, right, because it's a short-acting drug.

Speaker #3: So, you go way above the therapeutic window for the drug, and then you get yourself into higher levels of adverse events. So one approach is simply to flatten out the absorption of the drug and keep it in a defined therapeutic window.

Speaker #3: You'll limit some of the GI side effects, and you'll be left with, say, some of the inherent effects that occur by just activating the receptor.

Speaker #3: The second way of doing it, which is a little more complicated, is to try to develop compounds that inherently don't have any ability to cause nausea or emesis. There are structural elements that we're working on that can lead to that.

Carl Spana: Second way of doing it, which is a little more complicated, is to try to develop compounds that inherently don't have any ability to cause nausea, emesis, and then there are structural elements that we're working on that can lead to that. But we're not quite there yet. Right now, the primary way you're going to do it is really by limiting that, essentially, that bolus dosing, keeping it in that flat therapeutic window. That's ideally done with these lipidated peptides.

Speaker #3: But we're not quite there yet. So right now, the primary way you're going to do it is really by limiting that, essentially, that bolus dosing—keeping it in that flat therapeutic window.

Speaker #3: And that's ideally done with these lipidated peptides.

Speaker #4: Okay, great. Final question for you, Carl. Have you given thought to what rare obesity indication you would likely pursue first?

Scott Henry: Okay, great. Final question for you, Carl. Have you given thought to what rare obesity indication you would likely pursue first?

Speaker #3: Sure. I think the first one will be the hypothalamic obesity indication. There are certain advantages there: the patients are relatively easy to identify. They have had a type of cancer that causes damage to the hypothalamus when it's treated.

Carl Spana: I think the first one will be the hypothalamic obesity indication. There are certain advantages there that patients are relatively easy to identify. They have had a type of cancer that causes damage to the hypothalamus when it is treated. They are relatively healthy patients that essentially have had a damage to the hypothalamus that can be corrected with an MC4R agonist. That would be the first indication. Prader-Willi syndrome would also probably be done pretty closely, if not in parallel. There it is a little bit different. You are working on the hyperphagia and trying to reduce some of the obesity as well. The third would be the Bardet-Biedl syndrome. Those are the three pretty much in order. I think the first two, depending on resources, we try to run in parallel, as close to parallel as we can.

Speaker #3: And they're relatively healthy patients that have essentially had damage to the hypothalamus, which can be corrected with an MCR4 agonist. So, that would be the first indication.

Speaker #3: Prader-Willi syndrome would also probably be done pretty closely, if not in parallel. There is a little bit of difference. You're working on the hyperphagia and trying to reduce some of the obesity as well.

Speaker #3: Then the third would be the body of Bartle syndrome. So those are the three pretty much in order. But I think the first two we would depending on resources, we'd try to run in parallel.

Speaker #3: As close to parallel as we can.

Speaker #4: Okay, great. Thank you, Carl. A couple of questions for Steve. Steve, how should we think about collaboration license revenue in fiscal year 2027? Should it be material, significant—just trying to get a sense relative to what we saw in fiscal 2026?

Scott Henry: Okay, great. Thank you, Carl. A couple questions for Steve. Steve, how should we think about collaboration license revenue in fiscal year 2027? Should it be material, significant? Just trying to get a thought relative to what we saw in fiscal 2026.

Speaker #3: Well, thanks, Scott. In our mind, achieving any milestone with these collaborations is significant. We do anticipate—just to back up—we have two ongoing collaborations: one in the I&O with Boehringer Ingelheim, another in the ocular with Altonanisbek.

Stephen T. Wills: Well, thanks, Scott. In our mind, achieving any milestone with these collaborations is significant. Just to back up, we have two ongoing collaborations, one in the ocular with Boehringer Ingelheim, another in the ocular with ALTANA. We anticipate and expect to receive an achieved milestone from Boehringer Ingelheim sometime within the next two to three quarters. ALTANA is a little further out. Also, notwithstanding the existing ongoing collaborations, we do have interest. We have very good interest in some of our other programs, the non-obesity, specifically around our ulcerative colitis, and also some other ocular indications and MC1R autoimmune anti-inflammatory. We are not to the point where I could say we expect to get something within the next several quarters, but we would not be surprised if someone does pull the trigger on a research or an early-stage collaboration in that regard.

Steve Wills: Well, thanks, Scott. In our mind, achieving any milestone with these collaborations is significant. Just to back up, we have two ongoing collaborations, one in the ocular with Boehringer Ingelheim, another in the ocular with ALTANA. We anticipate and expect to receive an achieved milestone from Boehringer Ingelheim sometime within the next two to three quarters. ALTANA is a little further out. Also, notwithstanding the existing ongoing collaborations, we do have interest. We have very good interest in some of our other programs, the non-obesity, specifically around our ulcerative colitis, and also some other ocular indications and MC1R autoimmune anti-inflammatory. We are not to the point where I could say we expect to get something within the next several quarters, but we would not be surprised if someone does pull the trigger on a research or an early-stage collaboration in that regard.

Speaker #3: We anticipate and expect to receive a milestone achievement from Boehringer Ingelheim sometime within the next two to three quarters. Altanisbek is a little further out.

Speaker #3: But also, notwithstanding the existing ongoing collaborations, we do have interest. We have very good interest in some of our other programs—the non-obesity, specifically around our ulcerative colitis.

Speaker #3: And also some other ocular indications and MC1R autoimmune and anti-inflammatory. We're not at the point where I could say we expect to get something within the next several quarters, but we wouldn't be surprised if someone does pull the trigger on a research or an early-stage collaboration in that regard.

Speaker #4: Okay, great. Thank you. And then OPEX trends, certainly lower in Q4. As you prepare to move things along more aggressively, should we expect OPEX to sequentially increase throughout 2027?

Scott Henry: Okay, great. Thank you. OpEx trends, certainly lower in Q4. As you prepare to move things along more aggressively, should we expect OpEx to sequentially increase throughout 2027?

Speaker #3: Well, initially, yes. For the quarter ended June 30th, and the same thing with the quarter prior to that, certain activities are done sequentially.

Stephen T. Wills: Well, initially, yes. For the quarter ended 30 June and the same thing with the quarter prior to that, certain activities are done sequential. Based on timing, you are going to fluctuate a bit. We do anticipate the next several quarters, say the quarter ended 31 December and the Q1, or frankly even, excuse me, the H1 of 2027, to increase. It is not going to double, if you will. It is going to be more than likely around what we have done in the first few quarters of calendar 2026. But again, we are advancing the program and I know people are like, "Oh, well you are spending money." We are investing the money. We could not be more pleased with where we are from a differentiating standpoint in the obesity space where we are moving forward with.

Steve Wills: Well, initially, yes. For the quarter ended 30 June and the same thing with the quarter prior to that, certain activities are done sequential. Based on timing, you are going to fluctuate a bit. We do anticipate the next several quarters, say the quarter ended 31 December and the Q1, or frankly even, excuse me, the H1 of 2027, to increase. It is not going to double, if you will. It is going to be more than likely around what we have done in the first few quarters of calendar 2026. But again, we are advancing the program and I know people are like, "Oh, well you are spending money." We are investing the money. We could not be more pleased with where we are from a differentiating standpoint in the obesity space where we are moving forward with.

Speaker #3: So based on time, you're going to fluctuate a bit, but we do anticipate the next several quarters—say, the quarter ended 12/31 and the first quarter, or frankly, even, excuse me, the first half of '27—to move, to increase.

Speaker #3: Nothing; it's not going to double, if you will. It's more than likely going to be around what we've done in the first few quarters of calendar '26.

Speaker #3: But again, we're advancing the program, and I know people are like, "Oh, we are spending, we're investing the money." We couldn't be more pleased with where we are from a differentiating standpoint in the obesity space where we're moving forward with.

Speaker #4: Okay, great. And final question: when we think about the balance sheet and funding development, are we still thinking about those—I believe they were the Series J warrants?

Scott Henry: Okay, great. Final question, when we think about the balance sheet in funding development, are we still thinking about those, I believe they were the Series J warrants that were activated, I believe, by an IND acceptance. Is that still part of the financing picture? Thank you.

Speaker #4: They were activated, I believe, by an IND acceptance. Is that still part of the financing picture? Thank you.

Speaker #3: 100%. It's part of the funding picture, and that's why we set it up. The November 2025 financing included what we called a short-term warrant; the Series J warrant is correct.

Stephen T. Wills: 100% it is part of the funding picture, and that is why we set it up. The November 2025 financing included a, we call it, a short-term warrant. The Series J warrant is correct. It is triggered on either 18 months, the lesser of 18 months or the IND filing of one of our internal obesity MC4R compounds. If that was exercised at 100%, that would yield approximately $18.5 million. So 100%, that is part of the future funding, and if we hit that trigger, things are going well.

Steve Wills: 100% it is part of the funding picture, and that is why we set it up. The November 2025 financing included a, we call it, a short-term warrant. The Series J warrant is correct. It is triggered on either 18 months, the lesser of 18 months or the IND filing of one of our internal obesity MC4R compounds. If that was exercised at 100%, that would yield approximately $18.5 million. So 100%, that is part of the future funding, and if we hit that trigger, things are going well.

Speaker #3: And that actually triggers, and it's triggered on either 18 months, the lesser of 18 months, or the IND filing of one of our internal obesity MC4R compounds.

Speaker #3: And if that was exercised at 100%, that would yield approximately $18.5 million. So 100% is part of the future funding, and if we hit that trigger, things are going well.

Speaker #4: Okay, great. Thank you for the clarity, and thank you, gentlemen, for taking all the questions.

Scott Henry: Okay, great. Thank you for the clarity, and thank you, gentlemen, for taking all the questions.

Speaker #1: Thank you. Your next question is coming from Yale Jen, from Laidlaw & Company. Yale, your line is live. Please go ahead.

Operator: Thank you. Your next question is coming from Yale Jen from Laidlaw & Company. Yale, your line is live. Please go ahead.

Speaker #5: Good morning, and thanks for taking the questions. My first question is about the 2000. This is the lipidated one that you anticipate starting the trial in the first half of the calendar year, next year.

Yale Jen: Good morning, and thanks for taking the questions. My first question is about the PL2000. This is the lipidated ones that you anticipate to start trial in H1 of next year, calendar next year. What are the remaining IND enabling works remain before you can start the filing and phase I studies? Then I have a follow-up.

Speaker #5: So, what remaining IND-enabling work is left before you can start it? Filing and Phase One studies, and then I have a follow-up.

Speaker #3: Sure. So the main thing remaining, really, is just getting the initial animal tox work done. We’re in scale-up now, and those studies are scheduled and getting ready to start.

Carl Spana: Sure. The main thing remaining is really just getting the initial animal tox work done. We're in scale-up now, and those studies are scheduled and getting ready to start. That's really the main largest bulk of what we need to get done. There's always a bunch of other earlier studies or in vitro studies, but a lot of those have been done already. It's really the getting the animal work done and the reports in.

Speaker #3: But that's really the main, largest bulk of what we need to get done. There's always a bunch of other earlier studies or in vitro studies, but a lot of those have been done already.

Speaker #3: So it's really about getting the animal work done and the reports in.

Speaker #5: Was there any manufacturing work that needed to be done, or would that be?

Yale Jen: Was there any manufacture work that need to be done, or would that be-

Speaker #3: There's always manufacturing. Once you start designing the compound, manufacturing work never stops. So that's ongoing. I mean, we can manufacture them under cGMP conditions.

Carl Spana: There's always more manufacturing. Once you start designing the compound, manufacturing work never stops. I mean, we can manufacture them under cGMP conditions now, and we'll be continuing to work on that to improving efficiencies in scale, formulation, so on and so forth. I mean, that never really ever stops. From now on, there's always some type of level of manufacturing work that's going to be ongoing. That's pretty typical for most programs.

Speaker #3: Now, and we'll be continuing to continue to work on that improving efficiencies and scale, formulation, so on and so forth. I mean, that never really ever stops.

Speaker #3: There's always from now on, you're always there's always some type of level of manufacturing work that's going to be ongoing. That's pretty typical for most programs.

Speaker #5: Sure. And in terms of a lipidated versus a non-lipidated, lipidated generally will maybe have a longer half-life, maybe more potent biological activities.

Yale Jen: Sure. In terms of lipidated versus non-lipidated, lipidated generally will maybe have a longer half-life, maybe a more potent activity, biological activities. When you compare your lipidated versus the earlier non-lipidated, was there any meaningful difference in some of these metrics?

Speaker #5: When you compare your lipidated versus the earlier non-lipidated, was there any meaningful difference in some of these metrics?

Speaker #3: Sure. One of the things that we're seeing is—let me back up, and I want to take a second and kind of talk about lipidated peptides, at least when it comes to melanocortins.

Carl Spana: Sure. One of the things that we're seeing is, let me back up, and I'd take a second and talk about lipidated peptides, at least when it comes to melanocortins. The ability to get one of these peptides lipidated and maintain good MC4R selectivity and potency was not a trivial undertaking. That took quite a lot of work on, you can't just stick any type of aliphatic tail on one of these peptides and expect it to work. That's not the case. Some of that's going to be the nature of patents that have been filed and are continuing to be filed. So it took a technological breakthrough to really get good lipidated peptides. One of the things that we're seeing is, as we look at the pharmacokinetics across multiple species, both rodent and non-rodent, we're seeing very long half-lives.

Speaker #3: The ability to get one of these peptides lipidated and maintain good MC4R selectivity and potency was not a trivial undertaking. That took quite a lot of work; you can't just stick any type of aliphatic tail on one of these peptides and expect it to work.

Speaker #3: That's not the case. And some of that is going to be due to the nature of patents that have been filed and are continuing to be filed.

Speaker #3: So it was really a it took a technological breakthrough to really get good lipidated peptides. One of the things that we're seeing is as we look at the pharmacokinetics across multiple species, both rodent and non-rodent, we're seeing very long half-lives.

Speaker #3: And one of the things that we're optimistic about is that there's a very good probability that these peptides will be less than once a week.

Carl Spana: One of the things that we're optimistic about is that there's a very good probability that these peptides will be less than once a week, meaning that we might be able to dose these things once every 2 weeks. So that's something that we're really excited about, and it's something we didn't expect as we went in. But as we're now looking at it and modeling it looks like we're going to have really potential for longer-term dosing windows, which is quite nice.

Speaker #3: Meaning that we might be able to go through these things once every two weeks. So that's something that we're really excited about, and it's something we didn't expect as we went in.

Speaker #3: But as we're now looking at it and modeling it, it looks like we're going to have real potential for longer-term dosing windows. This is quite nice.

Speaker #5: Okay, great. That's very helpful. Maybe just one question along this line, which is that if you compare your—I'm sorry, your lipidated 2000 versus, for example, Rhythm's next-gen sort of weekly administered drug, do you know whether their compound is lipidated or non-lipidated?

Yale Jen: Okay, great. That's very helpful. Maybe just one question along this line, which is that if you compare your non- I'm sorry, your lipidated PL2000 versus, for example, Rhythm Pharmaceuticals' next gen sort of weekly administrated drug, do you know whether their compound is lipidated or non-lipidated?

Speaker #3: They're using my understanding of what I can tell is that they're using a polymer approach. So they have a potent MCR4 agonist that they've put in a polymer that erodes over would indicate that based on what little bit of information that's available, I would presume erodes over about a week and releases the drug.

Carl Spana: My understanding of what I've been told is that they're using a polymer approach. So they have a potent MC4R agonist that they've put in a polymer that erodes over about. Would indicate that based on what little bit of information that's available, I would presume, erodes over about a week and releases the drug. So it's a different approach. They're not using the lipidated approach. They're using the polymer approach.

Speaker #3: So it's a different approach. They're not using the lipidated approach; they're using the polymer approach.

Speaker #5: Okay, great. Maybe just two quick questions here. Talk about the oral drugs in terms of what, I guess, what lesson you have learned from the prior 7737, and what sort of improvement you feel that you want to add to it before you feel comfortable to move the program into the clinical stage.

Yale Jen: Okay, great. Maybe just two quick questions here. Talk about the oral drugs in terms of what lesson you have learned from the prior PL7737 and what sort of improvement you feel that you want to add to it before you feel comfortable to move the program into clinical studies stage.

Speaker #3: Sure. Listen, certainly we would have preferred that compound move forward. We did pick up and talk issue at the end of the talk studies.

Carl Spana: Sure. Listen, certainly, we would've preferred that compound move forward. We did pick up a tox issue at the end of the tox studies. We have a good understanding of what that was. So we've now taken multiple approaches. So we had behind PL7737, we had multiple scaffolds that were moving forward that had better selectivity, really good potency and better selectivity. Those are being optimized now, multiple and parallel. And then with the PL7737 series, understanding what about that was potentially problematic. From a drug standpoint, we've been able to fix that. And those analogs are also now being optimized and will be fully evaluated and go forward. So on that front, we did learn a lot and understanding what it takes to get one of these things optimized and go forward. And we now have multiple scaffolds, including the PL7737 scaffold, to go forward.

Speaker #3: We have a good understanding of what that was. So we've now taken multiple approaches. Behind 7737, we had multiple scaffolds that were moving forward, that had better selectivity—really, displaying better selectivity.

Speaker #3: Those are being optimized now, multiple in parallel. And then with the 7737, there was understanding what was potentially problematic about that. From a drug standpoint, we've been able to fix that.

Speaker #3: And those analogs are also now being optimized and will be fully evaluated and go forward. So, on that front, we did learn a lot.

Speaker #3: And understanding what it takes to get one of these things optimized and move forward. And we now have multiple scaffolds, including the 7737 scaffold, to go forward.

Speaker #3: But what we also learned is that these can be quite potent. In multiple animal species, we did see really excellent weight loss. What's nice is it's very clear that if you get it right, you should be able to drive really good efficacy with an MCR4 small molecule.

Carl Spana: What we also learned is that these can be quite potent. In multiple animal species, we did see really excellent weight loss. So what is nice is it is very clear that if you get it right, you should be able to drive a really good efficacy with an MC4 small molecule.

Speaker #5: Do you anticipate getting into the R&D enabling study again toward the end of the year, or will that be in 2027?

Yale Jen: Do you anticipate to get into the, again, IND enabling study toward end of the year, or that will be in 2027?

Speaker #3: I mean, look, we're pushing really hard to make a selection of the compound by the end of the year, and begin the R&D-enabling studies that will put us, in the second half of the year, in the clinic.

Carl Spana: We are pushing real hard to make a selection of the compound by the end of the year and begin the IND enabling studies. That will put us in the second half of the year in the clinic.

Speaker #5: Okay. And maybe the last question here. Is that just curious, in terms of PWS, obviously, a drug already approved, in current days, so do you feel that ultimately you will use the whichever compound you would for the PWS as a modal therapy, or you think that may potentially be a combination because of different mechanism of actions?

Yale Jen: Okay, then maybe the last question here is just curious, in terms of Prader-Willi syndrome, there obviously is a drug already approved in current days. So do you feel that ultimately you will use whichever compound you would for the Prader-Willi syndrome as a monotherapy, or you think that may potentially be a combination because of different mechanism actions? And thanks for taking the questions.

Speaker #5: And thanks for taking the questions.

Speaker #3: Sure. Yeah, I think ultimately, over time, for a lot of these rare syndromic things, particularly HO and Prader-Willi, it's likely that you'll find a number of patients will move on to combination therapy.

Carl Spana: Sure. I think ultimately over time, for a lot of these rare syndromic, particularly HO and Prader-Willi, it's likely that you'll find a number of patients who will move on to combination therapy. I don't believe that it necessarily will be with the currently approved drug, Vykat. That drug, it works and is the first approved, and I'll leave it at that. I think MC4 agonists can provide probably better tolerability, better safety, better efficacy, than what's out there today. When you combine that with, say, the GLP-1s, there's a potential to drive even better efficacy. I think a combination of polypharmacy for these patients is going to be certainly very dependent on the initial response that the patient has to MC4 agonism and if it's needed to move there.

Speaker #3: I don't believe that it necessarily will be with the currently approved drug, Vicat. I mean, that drug is it works and is the first approved, and I'll leave it at that and I'll leave it at that.

Speaker #3: I think MC4R agonists can provide probably better tolerability, better safety, and better efficacy than what's out there today. And when you combine that with, say, the GLP-1s, there's a potential to drive even better efficacy.

Speaker #3: So, I think it's going to be a combination of polypharmacy for these patients. It's going to be certainly very dependent on the initial response that the patient has to MC4R agonism.

Speaker #3: And if it's needed to move there. But what's nice is, there is an opportunity to continue to push the therapy envelope by including an additional drug.

Carl Spana: What's nice is there is an opportunity to continue to push the therapy envelope by including an additional drug.

Speaker #5: Great, and thanks for the update. Best of luck going forward.

Yale Jen: Great, and thanks for the update and best luck forward.

Speaker #3: Thank you.

Carl Spana: Thank you.

Speaker #2: Thank you. Your next question is coming from Dev Prasad from Lucid Capital Markets. Dev, your line is live. Please go ahead.

Operator: Thank you. Your next question is coming from Dev Prasad from Lucid Capital Markets. Dev, your line is live. Please go ahead.

Speaker #5: Hi, congrats on the progress, and thanks for taking our question. A couple of questions. One is, you mentioned that tested compounds from both peptide series are not agonists at MC1R.

Dev Prasad: Hi. Congrats on the progress and thanks for taking our questions. Couple of questions. One is you mentioned that tested compound from both peptide series are not agonist at MC1R. Can you provide a little bit color on quantification MC4R versus MC1R selectivity margin compared to previous Palatin compound? The next question is on the clinical trial. How are you planning those trials in terms of design? What do you want to learn from phase I for both peptide and oral? Thank you.

Speaker #5: Can you provide a little bit of color on quantification of MC4R versus MC1R selectivity margin, compared to the previous Palatin compound? And the next question is on the clinical trial.

Speaker #5: How are you planning those trials in terms of design? What do you want to learn from Phase One for both peptide and oral? Thank you.

Speaker #3: Sure. So, in general, I'm not going to really enter into, ultimately, a lot of detail on how we characterize the agonism, in part because this has become a pretty competitive field.

Carl Spana: Sure. In general, I am not going to really enter into ultimately a lot of detail on how we characterize the agonism. In part, this has become a pretty competitive field. There is not just Rhythm and Palatin. There are other companies that are looking at this. One of the reasons why we use PL1000 and PL2000 and others is that we are trying to maintain as much competitive advantage for as long as possible, and so that people cannot just troll through patents and start to immediately see what the lead compound looks like. To answer your question is, we are pretty confident that we know how to characterize an agonist and that these have de minimis MC1R agonism, and that should relate clinically to a good improvement in hyperpigmentation. On the second part, if I remember, you were asking about what clinical trial design?

Speaker #3: There's not just Rhythm and Palatin. There are other companies that are looking at this. One of the reasons why we use 1,000 and 2,000 others is that we're trying to maintain as much competitive advantage for as long as possible.

Speaker #3: And so that people can't just troll through patents and start to immediately see what the lead compound looks like. So to answer your question, we're pretty confident that they are—we know how to characterize an agonist, and that these have the de minimis MC1R agonism.

Speaker #3: And that should relate clinically to a good improvement in the hyperpigmentation. And then, on the second part, if I remember, you were asking about what clinical trial design?

Speaker #5: Yes, I mean, what are you planning to learn from Phase One?

Dev Prasad: Yes. What are you planning to learn from phase I?

Speaker #3: So, obviously, in the single ascending dose part of Phase One, that's a single dose. Really, what you're looking for is whether there is any overt acute toxicity.

Carl Spana: Obviously in the single ascending dose part of phase I, that is a single dose. Really what you are looking for is there any acute toxicity? Then what your tolerability window is and what your dosing window is. When we move into the multiple ascending dose part, these will now move to what are called healthy obese patients. They will be treated for 28 days, and we intend to learn a tremendous amount from that. We should be able to see efficacy data, so we want to see, the compounds can indeed cause reductions in food intake and weight loss. We will be looking for long-term tolerability, longer-term safety signals.

Speaker #3: And then what your tolerability window is, and what your dosing window is. When we move into the multiple ascending dose part, these will now move to what are called healthy obese patients.

Speaker #3: They'll be treated for 28 days, and we intend to learn a tremendous amount from that. We should be able to see efficacy data, so we want to see if the compounds can indeed cause reductions in food intake and weight loss.

Speaker #3: We'll be looking for long-term tolerability and longer-term safety signals. So, when we come out of that MAD study, we'll have a pretty good idea of how well these compounds are going to work when we move into the intended patient populations, such as hypothalamic, Prader-Willi, or the BBE.

Carl Spana: When we come out of that MAD study, we will have a pretty good idea on how well the compounds are going to work and when we move into the intended patient population, such as the hypothalamic or Prader-Willi or the OB/OB as patients. One thing about the mechanism is it has very, very good translatability across patient populations with regards to efficacy as well as tolerability and safety.

Speaker #3: As patients, one thing about the mechanism is it has very, very good translatability across patient populations, with regards to efficacy as well as tolerability and safety.

Speaker #5: Great. Thank you so much.

Dev Prasad: Great. Thank you so much.

Speaker #2: Thank you. This does conclude today's question-and-answer session. I would now like to pass the floor back to Dr. Carl Spana for closing remarks.

Operator: Thank you. This does conclude today's question and answer session. I would now like to pass the floor back to Dr. Carl Spana for closing remarks.

Speaker #3: Great. Listen, thank you everyone for your participation in our year-end and first fiscal quarter. We here are extremely excited about the accomplishments that we've had.

Carl Spana: Great. I'd like to thank everyone for your participation in our year-end and first fiscal quarter. We here are extremely excited about the accomplishments that we've had. We've made, I think, some tremendous technical breakthroughs that are leading into, I think, some really best-in-class compounds with strong intellectual property supporting them. We're excited about where we are and where we're going. This is really a very exciting time for Palatin, where we've been able to essentially use accumulated experience in this target, really to develop some excellent compounds that we believe are going to be best in class. We look forward to continuing to update you on our progress. Steve and I obviously will talk to some of you guys throughout the quarter. With that being said, enjoy your day, and we look forward to keeping you updated. Thank you.

Speaker #3: We've made, I think, some tremendous technical—some really best-in-class compounds with strong intellectual property supporting them. We're excited about where we are and where we're going.

Speaker #3: I mean, this is really a very exciting time for Palatin, where we've been able to essentially use our accumulated experience in this target to develop some excellent compounds that we believe are going to be best-in-class.

Speaker #3: So we look forward to continuing to update you on our progress. Steve and I obviously will talk to some of you, I guess, throughout the quarter.

Speaker #3: And with that being said, enjoy your day and we look forward to keeping you updated. Thank you.

Speaker #2: Thank you. This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you once again for your participation.

Operator: Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.