Hello, ladies and gentlemen. Welcome to Palatin's Q1 fiscal year 2021 operating results Conference Call. As a reminder, this conference is being recorded. Before we begin our remarks, I'd like to remind you that the 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 and Palatin's prospects. Now I'd like to turn today's call over to our host, Dr. Carl Spana, President and Chief Executive Officer of Palatin.
Thank you. Good morning, and welcome to the Palatin Technologies Q1 2022 call. I'm Dr. Carl Spana, CEO and President of Palatin. 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. I will now turn the call over to Steve, and he'll provide the financial updates. Steve.
Thank you, Carl, and good morning, everyone. Regarding our research and development infrastructure, we have strengthened our R&D department with key appointments who have demonstrated a high- level of expertise in their field to support the advancement of our development programs.
Regarding Vyleesi, which is FDA approved for the treatment of hypoactive sexual desire disorder or HSDD in perimenopausal women, our goal with this program is to demonstrate product value in the marketplace with an objective of relicensing the U.S. rights to a committed woman's healthcare company or entity. Our measured plan is showing positive trends for the targeted value metrics. For the quarter ended September 30, 2021, Vyleesi gross product sales increased 18%. Net revenue increased 98%. Net revenue per prescription dispensed increased 45% despite a 13% decrease in total prescriptions dispensed over the prior- quarter ended June 30, 2021. Market access, reimbursement coverage, and refill rates have all increased over the prior- quarter ended June 30, 2021, and also over the successive quarters ended December 31, 2020, and March 31, 2021.
Regarding our overall operating results, specifically revenue, total net revenues consist of gross product sales of Vyleesi, net of allowances and accruals. Vyleesi gross product sales for the quarter ended September 30, 2021, amounted to $1.4 million, with net product revenue of $159,482, compared to gross product sales for the period July 25, which was the date Palatin regained North American rights to Vyleesi from AMAG, to September 30, 2020, of $809,100, with negative product revenue for the September 30, 2020 period of $288,560. Regarding operating expenses, total operating expenses for the quarter ended September 30, 2021, were $7.4 million, compared to $3.7 million for the comparable quarter of 2020.
Regarding cash flows, Palatin's net cash used in operations for the quarter ended September 30, 2021, was $6.4 million, compared to net cash provided by operations of $3.8 million for the same period in 2020. Regarding net loss, Palatin's net loss for the quarter ended September 30, 2021, was $7.1 million or $0.03 per basic and diluted common share, compared to a net loss of $3.9 million or $0.02 per basic and diluted common share for the same period in 2020.
The differences to the operating expenses, the cash flows, and the net loss for the quarters ended September 30, 2021, and 2020 were primarily due to the gain of $1.6 million in the September 30, 2020 quarter, which reduced expenses during that quarter recorded, and specifically due to the Vyleesi termination agreement with AMAG. Secondarily, to increase commercial expenses- related to Vyleesi. Regarding cash position, as of September 30, 2021, Palatin's cash and cash equivalents were $53.4 million, with approximately $900,000 of accounts receivable, compared to cash and cash equivalents of approximately $60.1 million, with $1.6 million of accounts receivable as of June 30, 2021. Based on our current operating plan, we believe that existing cash and cash equivalents will be sufficient to fund currently anticipated operating expenses through calendar year 2022.
To be clear, the operating plan does include the comprehensive expenses covering Palatin's significant inflection points of data readout for our phase III dry eye disease trial and also data readout for our planned ulcerative colitis phase II trial, both in the second half of c alendar 2022. At this time, I'll turn the call back over to Carl.
Thank you, Steve. Just a few words on Vyleesi. Under Steve's leadership, we continue to make strong progress in the core value metrics that support the commercial value of Vyleesi, with net revenue up 98% and net revenue per prescription up 45% over the June quarter. Our objective is to relicense Vyleesi to a committed partner, ensuring the continued availability of Vyleesi as a treatment option for premenopausal women with hypoactive sexual desire disorder. We continue to engage with potential partners and in the U.S. and other territories, and the timing of a potential license is actually dependent on us reaching acceptable terms with the right partner.
Now we'll move on. Across a multitude of inflammatory and autoimmune diseases, there remains a vital medical need for new treatments to provide patients and clinicians with safe and effective options. Our research and development operations are focused on advancing a new treatment modality for patients suffering from pathological inflammation, with a primary focus on ophthalmic diseases such as diabetic retinopathy, dry eye and uveitis, using our unique understanding and expertise in developing drugs that modulate the melanocortin system. Many of the current treatments for inflammatory and autoimmune conditions work by blocking one or more pro-inflammatory pathways, which can cause immune suppression and major safety concerns. In addition, many patients efficacy fades over time. To advance the treatment of patients with inflammatory and autoimmune diseases, there is a strong need for new mechanisms of actions that can result in efficacious treatments with better safety.
The melanocortin system is one of the body's natural mechanisms for resolving inflammation and restoring the immune system to a normal state and to promote tissue healing. We believe that therapeutics that activate the melanocortin system will be highly differentiated, delivering efficacy with a superior safety profile. We have a multilayered plan that is designed to advance our understanding of how the melanocortin system works at a molecular level and to provide the clinical validation of melanocortin-based therapeutics. If successful, we will have developed a new class of therapeutics for the treatment of inflammatory and autoimmune diseases. Our research scientists are using the latest in genomic, proteomic, and cell biological technologies to advance our fundamental understanding of how the melanocortin system resolves inflammation and promotes tissue healing.
The results of these activities are already helping to guide our clinical development programs, and we look forward to communicating them through scientific publications and presentations in 2022. Our clinical development programs are primarily focused on developing melanocortin-based treatments for ocular indications. However, we are also conducting small proof of concept studies for non-ocular indications. These studies are designed to promote the broad utility of the melanocortin system as a new target for drug development and to support our technology licensing efforts. Of course, our ultimate goal is the development of new and differentiated therapeutics that provide efficacy and superior safety treatment options for patients. The melanocortin system plays a critical role in protecting the eye from harmful inflammation, and we are developing multiple melanocortin-based products for ocular diseases.
Topically delivered PL9643 is our most advanced melanocortin agonist for treating ocular diseases that affect the tissues that comprise the anterior segment or the front of the eye. The first indication for PL9643 is dry eye disease, and we had, as we have previously reported, positive data from a phase II dry eye disease clinical study. We had a successful end-of-phase II meeting with the FDA, where we reached agreement on the key aspects of the PL9643 phase III clinical development program. These include patient population, endpoints, and clinical trial design for the first of two phase III pivotal registration studies.
The first PL9643 phase III dry eye disease study is called MELODY-1, and it will evaluate the safety and efficacy of PL9643 versus vehicle control in patients with moderate to severe dry eye disease over a 12-week treatment period. The study is targeted to enroll 240 patients, but includes an interim data assessment to be conducted by an independent data monitoring committee that will allow us to increase the number of subjects if needed, reducing the risk of an underpowered study. The three co-primary and three key secondary endpoints will be comprised of signs and symptoms of dry eye disease and were determined based on a detailed analysis of the phase II data.
MELODY will initiate in Q4 of calendar 2021, with an interim data assessment in the first half of calendar 2022, and preliminary data is anticipated in the second half of calendar 2022. If successful, we will initiate the second phase III study in dry eye disease, called MELODY-2, and an open-label safety study called MELODY-3. If successful, the three MELODY PL9643 dry eye disease studies will provide the safety and efficacy data required to file a New Drug Application with the FDA. The emerging profile of PL9643, with its rapid therapeutic onset, excellent ocular tolerability, and safety, is a potential distinct advance in dry eye therapy.
If the two phase II results are confirmed in the upcoming phase III clinical study, we believe that PL9643 has the potential for substantial penetration into the multibillion-dollar dry eye disease market. We also believe that PL9643 and other melanocortin agonists will have utility in treating multiple front of the eye diseases, and we are planning to initiate a clinical study in a second front of the eye indication in calendar 2022. The indication for this study has not yet been finalized, but will be based on our data and research. Over the past year, we have also made significant advancement in the understanding of the potential of targeting the melanocortin system for treating back of the eye diseases, such as diabetic retinopathy and macular edema.
In preclinical models of retinal injury and diabetic retinopathy, treatment with our peptide PL9654, a melanocortin agonist, improved retinal morphology, protected against photoreceptor cell loss, and importantly, maintained vision. The PL9654 data supports advancement into clinical development, and we are currently working on developing a formulation for sustained release of PL9654 that would be administered by intravitreal injection, a common technique used to deliver drugs for treating retinopathies. The current drug market for the various retinopathy drugs was approximately $20 billion in 2021 and is projected to be $27 billion by the end of 2025.
There remains a large need for new innovative treatments for retinal diseases, and we believe PL9654, although early in its development, has a tremendous potential to positively impact patients with retinal disease and grow on our significant part of this very large market. In parallel with our ocular research and clinical development activities, we have been conducting an extensive communication effort targeting ophthalmologists and optometrists. Palatin scientists and collaborators have made presentations at most of the major medical meetings. We have been actively publishing our research. Our presentation describing the protective effects of PL8331 and PL9654 in mouse models of retinopathy, presented at the 2021 annual meeting of the American Society of Retina Specialists, was awarded a top 10 poster designation. Our communication efforts are establishing Palatin as a community company developing exciting new treatments for ocular diseases.
Moving on to our PL8177 oral formulation for ulcerative colitis, we are conducting the activities required to initiate a phase II proof of concept study, which is targeting to start patient enrollment in the first half of 2022, with initial data readout in the second half of 2022. This will be our first clinical study designed to evaluate the potential of a selective melanocortin 1 receptor agonist as a treatment for ulcerative colitis. The study will evaluate the safety and potential efficacy of oral PL8177. If the positive results of the study will add to the validation of the melanocortin system as a target for innovative drugs, as well as support our licensing efforts for PL8177.
The market for drugs that target or treat various inflammatory bowel diseases is a $ multi-billion-dollar market, and there remains a large need for new safe and effective treatment options to expand and advance the treatment of these patients. The emerging safety profile and efficacy profile of oral PL8177, if confirmed, would be a potential major advance in the treatment of inflammatory bowel disease, particularly in the pediatric population. Our natriuretic peptide program continues to advance our drug candidate, PL3994, which is a selective natriuretic peptide receptor-A agonist and is being evaluated in a phase IIa clinical study in heart disease patients with preserved ejection fraction. The clinical study is being conducted in cooperation with a major academic center and is supported by a grant from the American Heart Association.
The study continues to enroll patients, and we anticipate preliminary data in early 2022. You can find additional information on our research and development programs on our website, palatin.com. In closing, a little over a year ago, with return of Vyleesi, we were a company with a single female health product and early but very interesting preclinical programs. As we begin calendar 2022, we are a different company, advancing a new mechanism for treating a variety of inflammatory and autoimmune diseases based on drugs that modulate the melanocortin system with a focus on ocular diseases. Our first ocular melanocortin-based drug, PL9643, will start phase III dry eye disease study before calendar year end, and we are advancing PL9654 into the drug development process as a treatment for retinal diseases.
Both of these innovative drugs have the potential to be significant players in growing multi-billion-dollar markets. We are also planning to move a second front of the eye program into clinical studies in 2022. The foundation for this transformation is a unique understanding of the melanocortin system and experience in developing and the approval of drugs that modulate the system. Over the past year, we have put in place the infrastructure, scientists, and research activities that are advancing our understanding of how the melanocortin system works, and the results are already beginning to help guide our clinical programs. We remain on track to start a phase II proof of concept clinical study with an oral formulation of PL8177 in ulcerative colitis patients in the first half of 2022, with readout in the second half of 2022.
Under Steve's direction, our Vyleesi commercial activities have made significant progress, and these changes are beginning to have a positive impact on increasing Vyleesi prescriptions and revenue, and we are actively engaged in licensing Vyleesi to a committed partner. In closing, we look forward to 2022. Steve and I are excited by the tremendous opportunity that we have to advance a portfolio of highly differentiated innovative drugs that will positively impact patients and build shareholder value. We'd like to thank you for listening to our call and your continued support. We'll now open the call to questions.
Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. Now our first question comes from Joe Pantginis from H.C. Wainwright. Please go ahead.
Hey, guys. Good morning. Thanks for taking the question. A couple, if you don't mind. First, I know it's hard to predict, but, you know, with regard to Vyleesi, can you at least describe, I guess, the maturity of these discussions and the tenor of the discussions?
Yeah. Hey, Joe, it's Steve. We're not gonna go, you know, if you will, that specific regarding the discussions. We are chatting with multiple companies, and there are different levels of those discussions. I will tell you the progress we've made over the last few quarters has been significant and it's frankly made for better discussions. It's really no different than when you're doing drug development there. You go through phase I, phase II, you get your safety, the proof of concept, and then you move forward. We're showing those metrics. What we highlighted today, we're quite pleased with, based on our limited investment, that we've been able to make this type of progress.
To frame that a little bit, Joe, you know, when we took over in late July of 2020, there was less than 5% of the scripts running through with insured being reimbursed. We're now over 40% at this point. We actually had negative, I'm not stuttering, negative net product revenue. We now have positive net product revenue. Very importantly, the revenue per dispensed script has gone up significantly. That's really the holy grail, which is to get your...
You know, if you have a model where insurance reimbursement is very significant, which ours is, because we have a very good WAC, the higher amounts you get in that area, frankly, you know, obviously the higher amounts you're gonna get for the net revenue. We've been concentrating on those areas, and those areas are absolutely bearing fruit. Again, it's the discussions are frankly better just because we're able to show that type of activity. Our metric is not to increase the scripts. Are we okay if the scripts increase? Absolutely. We're not—we don't have a sales force.
We're not spending the types of monies that other companies that you're very aware of, say, in the female healthcare space are spending, you know, whether it's DTC, digital, social media, whatever. We're pleased that the metrics that we targeted with our limited investment are starting to show very positive trends. You know, from a timing standpoint, we've talked about it being done by the end of the year. You know, we've adjusted a little bit of that guidance in that we think it could very well roll into the first half of 2022. That's our objective, and it's a timing difference. We're always data-driven, we're not date-driven.
We wanna make sure we have the right partner, and frankly, give Vyleesi the attention it needs. Let me pause there. Is that responsive enough, Joe?
Oh, it certainly is. I appreciate the color, Steve. I guess my next two questions are somewhat related, you know, but it really focuses on your, I guess, call it, really broadening activities for your melanocortin platforms, and you guys are quite busy. I guess with regard to all of your efforts, either for nine six four three or your additional assets, how are you with regard to, say, formulation work for assets and development and manufacturing readiness?
Sure. Obviously for PL9643, actually we're just getting ready to release drug product to clinical trial sites. The format there is very simple. It's a little single-use plastic blow-fill-seal dispenser to send the single dose of the drug. That technology is very well- established and certainly we're on track to have validated manufacturing that supports phase III. Then as we're doing the phase III, we'll be working to put in place the final commercial for that. More importantly, probably more where you were going with 9643. 9654, sorry, for retinopathies, which we really are.
I can't tell you how excited we're about that product. I mean, what it's doing and the way it's performing is preclinically. I mean, if we can do that in the clinic, it's gonna be great. We're pretty lucky there. We should be getting the first formulation data coming in soon to take a look at. Because the drug is an agonist and we're giving relatively low dosing, so we don't have to load the eye up with drug, the expectation and what we're seeing so far is that it's gonna behave pretty much like the vehicle carriers. We're pretty bullish that, as we get into the beginning of the year, we'll have a formulation that will begin animal testing.
Pretty much by mid-year, we hope to have that really moving into the preclinical activities, safety and so on and so forth to getting to patients. We think that's a pretty low risk, but you know, one that we're really pushing on. Then finally, oral again, that for PL8177, again, a peptide, and we're there you know, delivering it to the colon and the gastrointestinal tract. We're treating the lumen through oral delivery of that formulation. I would characterize it as appropriate for its stage of development. The CMO, our manufacturing team is working with vendors to you know, move past the phase II formulation and to have in place a much better you know, more robust manufacturing process to support licensing when that data comes in.
We're in good shape there, I think overall, and the team's working pretty hard on that. As you know, we've, you know, we're experienced, you know, setting up manufacturing for commercialization with our experience with Vyleesi.
Yep. You know what, I'm just gonna use one of your comments, you know, with PL9654 and what you're doing there as a little bit of a segue, you know, for my last point. It's like, you know, with regard to being so busy, you know, once you develop the formulation for PL9654, how quickly do you think you could really move into or want to move into back of the eye disorders, you know, based on your current punch list?
Well, I mean, I think it's gonna certainly move into early 2023. If we're... Let's put it this way. If we are well- situated by mid-year, mid-2022, which I think we will be, we'll have. You know, it'll take about nine months to file an IND. Of course, you know, because of the retinopathy space is very large and it's dominated by large players, we will be actively looking to have partnership discussions throughout the development process of PL9654. Of course, you're never sure when you'll get a deal done, but we certainly wanna. You know, we will continue to move that forward because, you know, the patients with the various retinopathies really, they have current treatment options with, predominantly with anti-VEGFs.
They certainly do work in some patients, but they, you know, they don't treat all patients, and there remains a very, very strong need. These patients will eventually go blind if they don't get treatment. Even those that are on current treatment, you know, over time, the efficacy does wane. There is a very, very strong need, and it's just astounding how large that market is. You know, $27 billion by 2025. I mean, that's a large market that we're going for. I'm sure at some point we're gonna need some help, and we wanna make sure that, you know, we get it in place.
Got it. Thanks for the color, guys.
Yep. Thanks, Joe.
Thank you. Is there any other questions? Nikhil would like to hand the call back over to Dr. Carl Spana for any additional or closing remarks.
Great. Listen, I'd like to thank all of you for participating in our fiscal Q1 2022 call. Calendar 2022 is a big year for us. We've got a lot of clinical readouts. There are a number of things that we haven't yet disclosed to you that we will be disclosing to you probably on our next phone call that are quite exciting developments. We really couldn't be more excited here. Teams are really you know, cranking out, and we're gonna have a lot of milestones and accomplishments next year. With that being said, enjoy your day, your end of the year festivities and holidays, and we'll talk to you soon.
Thank you. This concludes today's Conference Call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.