Palatin Technologies Inc. (PTN) Q4 2020 Earnings Call Transcript

Palatin Technologies Inc  (NYSEAMERICAN : PTN) Q4 2020 earnings call dated Sep. 28, 2020

Corporate Participants:

Carl Spana — President and Chief Executive Officer

Stephen T. Wills — Executive Vice President, Chief Financial Officer and Chief Operating Officer

Analysts:

John Newman — Canaccord Genuity — Analyst

Joseph Pantginis — H.C. Wainwright & Co. — Analyst

Michael Higgins — Ladenburg Thalmann — Analyst

Presentation:

Operator

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

Before we begin our remarks, I would like to remind you that the statements made by Palatin that are not historical facts may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results may differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company’s most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements and Palatin’s prospects.

Now I would like to turn the call over to today’s host, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Carl Spana — President and Chief Executive Officer

Thank you. Good morning and welcome to the Palatin Technologies Fourth Quarter and Fiscal Year-End 2020 Call. I’m Dr. Carl Spana, CEO and President of Palatin. With me on the call today is Steve Wills, Palatin’s Executive Vice President, Chief Financial Officer and Chief Operating Officer.

On today’s call, we will provide financial and operating updates, including the impact of the COVID-19 pandemic. We sincerely hope that you and your families are safe and healthy as you deal with the life-altering changes brought about by the COVID-19 pandemic. Today Steve will provide the financial update as well as the update on our reacquisition of Vyleesi from AMAG Pharmaceuticals. I will focus my update on the progress of our development programs, specifically PL9643 for dry eye disease Phase II and our PL8177 COVID-19 program. Steve?

Stephen T. Wills — Executive Vice President, Chief Financial Officer and Chief Operating Officer

Thank you, Carl. Good morning, everyone. Starting with the financial update. Regarding fourth quarter and fiscal year 2020 financial highlights. Net loss for the fourth quarter ended June 30th, 2020 was $7.3 million or $0.03 per basic and diluted share compared to net income of $52.2 million or $0.25 per basic and $0.23 per diluted share for the comparable quarter of 2019. Net loss for the year ended June 30th, 2020 was $22.4 million or $0.10 per basic and diluted share compared to net income of $35.8 million or $0.17 per basic and $0.16 per diluted share for the year ended June 30th, 2019.

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

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

Our strong cash position of approximately $83 million at June 30th, 2020 and no debt coupled with the $12 million we received in July 2020 from AMAG plus an additional $4.3 million due from AMAG March 31st, 2021 provides us the financial resources to significantly advance our anti-inflammatory and autoimmune programs and make complementary targeted investments to our Vyleesi program.

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

It is estimated that HSDD affects one in 10 premenopausal women. As an historical recap, Palatin license and North American rights to Vyleesi to AMAG in the first quarter of 2017 we received $60 million as an upfront payment. During the period of the second quarter of 2017 through the first quarter of 2018 Palatin received $25 million as cost reimbursements and a $20 million regulatory milestone for the NDA acceptance by the FDA.

Vyleesi was approved by the FDA in June of 2019 Palatin received a $60 million regulatory milestone at that time.In the aggregate, we received approximately $165 million since the first quarter of 2017.

In January of 2020, AMAG announced that after a strategic review of its assets and business model, it decided to commence a process to divest Vyleesi and another female healthcare product. In July of 2020, Palatin announced the mutual termination of its license agreement with AMAG for Vyleesi.

Under the terms of the termination agreement, Palatin regained all North American development commercialization rights for Vyleesi. AMAG made a $12 million payment to Palatin at closing and will make a $4.3 million payment to Palatin on March 31st, 2021. Palatin assumed all Vyleesi manufacturing agreements and AMAG will transfer all information, data, and assets related exclusively to Vyleesi including but not limited to existing inventory valued at cost of approximately $15 million.

AMAG will provide certain transitional services to Palatin for a period of time to ensure continued patient access to Vyleesi and regulatory compliance during the transition period back to Palatin. Palatin will reimburse AMAG for the agreed upon costs of the transition services.

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

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

In the interim, Palatin’s strategy implements an informed and highly targeted approach to marketing, focusing on telemedicine, social media, and digital advertising we are committed to working with payers and healthcare professionals to ensure women with HSDD have continued and affordable access to Vyleesi.

Vyleesi remains commercially available through specialty pharmacies Avella and BioPlus and patients also have the ability to connect with a healthcare provider through telemedicine.

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

Carl Spana — President and Chief Executive Officer

Thank you, Steve. In the past year, we have reacquired Vyleesi and have faced the global COVID-19 pandemic, two major challenges that were unforeseen, and that have changed the way we operate our company. Having a well financed and managed company has allowed us to address these challenges effectively and with minimal impact on our operations.

I’ll start the operational update with the impact of the COVID-19 pandemic. Our primary concerns have been the safety of our employees, patients, and healthcare partners. We instituted a work from home policy in early March that remains in effect for our office staff.

In the past quarter, we have reopened our research laboratory. Fortunately, most of our key research and development partners continue to remain in operation using teleconferences and various online meeting platforms, we have been effective in continuing to advance our programs.

However, we understand even with resumption of activities there can be further disruptions to business activity based on a resurgence of the virus and we will be prepared for this potential outcome. In July 2020, we reacquired Vyleesi from AMAG Pharmaceuticals. As a reminder AMAG’s divestiture of Vyleesi was based on strategic and operational changes at AMAG and not the potential value of Vyleesi.

We’ve covered the details of the reacquisition and the strategy and operational objectives for Vyleesi. Under his direction, we have assembled an excellent and motivated commercial team that is dedicated demonstrating the value of Vyleesi. We believe our strategy will allow us to demonstrate the potential value of Vyleesi in a cost effective manner.

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

Our first successful melanocortin system program was based on the role of melanocortin system in regulating sexual function. This research work resulted in the discovery of Vyleesi and its eventual approval by the FDA as the first as needed treatment for premenopausal women with HSDD. Our current research is focused on developing drugs that target the ability of the melanocortin system to resolve or turndown inflammation.

We have developed multiple drug candidates that in preclinical models have demonstrated the potential to resolve a variety of inflammatory disease conditions. Research conducted by us and others have shown that targeting immune cells with melanocortin drugs results in the resolution of pro-inflammatory processes.

These pro-resolution activities include mediating conversion of immune cells from an inflammatory to a regulatory state, the inhibition of the production of pro-inflammatory cytokines such as TNF-alpha, interleukin-6 and others and the upregulation of anti-inflammatory cytokines such as interleukin-10. In addition, the melanocortin system plays a role in reducing the fibrotic response that occurs as part of many inflammatory diseases.

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

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

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

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

The PL9643 Phase II dry eye disease study is a multicenter randomized controlled study comparing PL9643 to placebo with a 12-week treatment period. The co-primary endpoints are a sign of dry eye disease which in this case is inferior, corneal fluorescein staining and a symptom which is ocular discomfort.

We have also included multiple secondary endpoints that measure PL9463 effects on signs and symptoms of dry eye disease. It is typical to use only a single primary endpoint in a Phase II study with multiple secondary endpoints.

After discussions with the FDA, we chose to use co-primary endpoint with the strategy that the current Phase II study could potentially be used as one of the two required Phase III pivotal studies if both co-primary endpoints are statistically significant. We have designed the study, so that multiple outcomes successful transition in the Phase III pivotal studies.

These potential outcomes include statistical significance for both co-primary endpoints, statistical significance for inferior fluorescein — corneal fluorescein staining and a secondary symptom endpoint or statistical significance for ocular discomfort and a secondary site endpoint.

Following this strategy reduces Phase II risk and allows for the potential of the current Phase II study to count as one of the two required Phase III pivotal studies reducing cost in time to a new drug application. The market for dry eye disease treatments represents a substantial commercial opportunity with over $2 billion in annual sales and continued growth based on patient demographics.

We believe the potential efficacy and favorable tolerability and safety profile of PL9643 will allow for substantial market penetration of the dry eye market. Now moving onto our PL8177 pulmonary disease and COVID-19 program. In preclinical disease models, PL8177 has demonstrated anti-inflammatory activity and the ability to protect lung tissue from damage due to fibrosis.

As a potential treatment for patients with COVID-19 infection PL8177 may reduce the inflammation and lung fibrosis associated with progressive disease. In the second quarter of calendar 2020, we held a discussion with BARDA concerning PL8177 as a potential treatment for patients with COVID-19 infections. One of the outcomes of the discussion was the advice that we moved PL8177 forward and begin discussions with the FDA concerning a potential PL8177 clinical study in COVID-19 patients.

In the second quarter of calendar 2020, we submitted a pre-investigational new drug application data package to the FDA and we see detailed advice on requirements to progress PL8177 into clinical studies. Following our current PL8177 COVID-19 plan we are conducting all the required activities needed to file an IND and begin clinical studies with PL8177 in COVID-19 patients.

These include such activities as clinical protocol development, selection of the contract research organization, clinical trial site identification and manufacturer of PL8177 and placebo doses. We target completing these activities in the third quarter of calendar 2020. However COVID-19 related scheduling at our contract manufacturer has resulted in clinical study doses not being ready until the fourth quarter of calendar 2020.

So these activities will now be completed in the fourth quarter of this calendar year allowing us to file an IND with the FDA and begin a clinical study of PL8177. As we have discussed on previous calls, press releases and in our 10K landscape for treating and conducting clinical studies in COVID-19 patients is rapidly evolving, which impacts the design, risk and ability to conduct clinical studies in COVID-19 patients. As we have considered the risk and uncertainty of conducting COVID-19 clinical studies, the start of the PL8177 clinical study is subject to receiving external funding and operational support and we are in the process of applying multiple government programs that provide such support. Our clinical trial for retinal disease indications is now scheduled to begin in the second half of calendar 2021. This represents an approximately two quarter delay, which is due to the impact of the COVID-19 pandemic

We are using this additional time to expand our clinical and scientific understanding melanocortin system and ocular inflammatory disease. Updating our oral controlled release formulation for PL8177 as a treatment for ulcerative colitis and other inflammatory bowel diseases. We are conducting all the required preclinical activities and drug product manufacturing to begin a Phase II proof-of-mechanism study which is targeted to start patient enrollment in the first half of calendar 2021.

Now finally based on our research work on the natriuretic peptide system, our drug candidate PL3994, a natriuretic peptide receptor-A agonist will be evaluated in a Phase IIa clinical study in heart failure patients with preserved ejection fraction. The clinical study is a collaboration with two major academic medical centers and is being supported by an American Heart Association grant.

All required approvals are in place and drug has to be provided to the clinical trial site and we expect the first patient in the study in the fourth quarter of calendar 2020. You can find additional information on our programs on our website www.palatin.com. has certainly had its challenges with multiple external events impacting our operations.

In response, our executive management, employees, and board of directors acted quickly to adjust our business operations we have been able to continue to advance our programs. In addressing the COVID-19 pandemic, we took immediate actions to ensure the safety of our employees, patients and healthcare partners.

We put in place operational processes that have allowed our employees remain highly productive. Our ability to continue to advance our development programs and our healthy cash position will allow Palatin to emerge from this pandemic in a strong position. However we will also remain diligent putting plans in place should the virus make resurgence and major development was our reacquisition of the North American rights for Vyleesi from AMAG Pharmaceuticals.

We believe in the potential of Vyleesi as a treatment for premenopausal women with HSDD and view this as an opportunity to increase the value of our company. Under Steve Wills direction, we have put in place excellent commercial team and a plan to demonstrate the commercial value of Vyleesi to support our objective of licensing Vyleesi through a mid partner committed to realizing its value.

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

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

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

Thank you and we’ll now open the call to questions.

Questions and Answers:

 

Operator

Thank you very much. [Operator Instructions] Our first question will come from John Newman, Canaccord.

John Newman — Canaccord Genuity — Analyst

Thanks for taking my question. I just wondered if you could talk a little bit more about the transitional service agreement that’s in place for Vyleesi and just how that’s going to allow you to continue to support commercialization of the products kind of in the interim here and also just how that’s happening really at a very little cost to you? Thanks.

Stephen T. Wills — Executive Vice President, Chief Financial Officer and Chief Operating Officer

Hey, John, it’s Steve. Thanks for the question. To be forthright Palatin when we were — once we got to the position that we knew we are going to be taking the product back and shaking hands with AMAG notwithstanding the payments and the releases.

We knew we had to get any commercial and regulatory functions that we didn’t have in place entered into a transitional services agreement with AMAG and we did that. The one item we’ve always been very strong, as you recall, we invented the product. We took to CMC right away, but things regarding say the pharmacovigilance, the quality, the government reporting, the market access, oversight those are some of the specific functions that we engaged with AMAG.

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

John Newman — Canaccord Genuity — Analyst

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

Stephen T. Wills — Executive Vice President, Chief Financial Officer and Chief Operating Officer

Well, as I mentioned on the call, John, the signs and symptoms are the two requirement. Fluorescein staining is a measure of inflammatory lesions in the eye inferior just means is the bottom part of the eye and part of that’s just due to the way the study is being run, the bottom of the eye can be a little bit drier many times.

So the way I think about it is this was a first attempt. We took a little bit of risk by doing co-primary endpoints, but I think the risk is worth it because if we do hit them both, we believe this will count as one of the big Phase III pivotal studies, but there is a whole host of from an FDA perspective they’re fairly agnostic.

There are a variety of signs that one can use and symptoms that one can use. Requirement for ultimate approval is that you hit one sign and one symptoms into Phase III registration study. So from us, as you said, there are multiple outcomes.

As long as we hit one of the two co-primaries and show very strong evidence of the effect on something on the opposite side. We will go forward and say we will go forward and progress in the Phase III. So that’s the way I think about it.

With regard to some of the other things I would focus on are ocular comfort is important. Current therapies that are out there. Restasis, Xiidra, Topical Steroids, I think, generally all have tolerability issues stinging, off-taste, grumpiness types of things. So I think ocular tolerability is a key commercial attribute that and comfort is a key commercial attribute that we think — PL9643 is going to have.

John Newman — Canaccord Genuity — Analyst

Okay, great. Thank you.

Operator

Thank you very much. Our next question will come from Joe Pantginis, H.C. Wainwright.

Joseph Pantginis — H.C. Wainwright & Co. — Analyst

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

Carl Spana — President and Chief Executive Officer

I’m going to second pass that off to Steve, but I do want to just comment one thing that we didn’t have in the prepared script. The process of distribution for Vyleesi was put in place by AMAG through two specialty pharmacies that Steve has relate to you.

Unfortunately due to the relatively rapid withdrawal of support for the product by AMAG in the fourth quarter of last year, that process of distributions, so that was getting the product from the manufacturer to the pharmacy and from the pharmacy to the patient needed some attention and so we say tender loving care before we would be in a position to really start evaluating the marketing of or the targeted marketing of Vyleesi.

And we’re now at the coming to the, I mean, so although it’s been very quiet from our perspective and I know investors keep contacting us saying what’s going on. It’s been a very, very busy period of time particularly with Steve and the commercial group making sure that the patient access. So in another words the product coming through the system and the patient experience is really optimized.

And he’s done a great job with that and now these pharmacies are really performing at a much higher level, really at a level that they need to be performing at, and we’re now in a position to really begin to look at the marketing aspects of the program. And at that juncture, I’ll turn it over to Steve and maybe he can articulate on where he wants to go where we’re going to take this program.

Stephen T. Wills — Executive Vice President, Chief Financial Officer and Chief Operating Officer

So as Carl mentioned this is — I think it may help if I frame going back to the national launch by AMAG for Vyleesi was September. Within a few months they were averaging 2500 scripts per month and that figure was ahead of their base projections.

So frankly things were going well, but in January of 2020 as we mentioned post the strategic review of AMAG’s business model. They decided to divest two other assets specifically Vyleesi and Intrarosa and notwithstanding the divestiture process, the investment, the marketing was turned off. They started going through reductions in force regarding the sales force.

So no question and in no way trying to be defensive, the scripts were impacted. Last month we averaged less than 40% of that 2500, which I’ll do the math for everybody quickly that’s less than 1,000 scripts per month. That is not a surprise to us at all. You have to make an investment with products when you’re launching them and our investment and AMAG’s investment was initially around the education and awareness. As Carl mentioned and I want to be very clear on this point. It’s not a — I mean could we have turned on the faucet and started investing some of the — some marketing dollars right away, the short answer is yes, but we weren’t prepared not so much Palatin, but if you will the Vyleesi the way we want the experience to be, the way we want the whether it’s the HCPs or the consumers for the access.

It wasn’t in place the way we thought it should be in place and that started with the pharmacies. So we’ve made some modifications to the pharmacies that we’ll absolutely increase and streamline the patient access and the patient experience. And we also — we attack the distribution and the coverage. As of right now we’re up to approximately 60% of what they of how they calculate the covered lives we engaged some excellent third parties to assist us with this. We’re not territorial, we’ll get the best people we can to move forward and give us advice.

Our target is to get 75% if not 80% of covered lives, which is a very good number to shoot for, whether we can accomplish that by the end of the year or the first quarter, we’re working on it, but we are now — we’ve now made the steps whereby we can now consider, if you will, to re-launch from a marketing standpoint.

So that’s going to take place in the fourth quarter. It could be within the next 30 days no more than 60 days. We now have the, let’s just call, the machine in a much better position from a pharmacy standpoint, from a corporate standpoint, from an access and distribution standpoint, and so it’s — when we’re going to be investing these marketing dollars in the fourth quarter, we’re going to have a much higher probability of success.

And the other thing I’d like to just expand on is we’re not going to be doing what you call a — I mean if this was one of the large companies, they would be doing even with the COVID-19, that maybe somewhat impacted, but they’d be going after a national launch from a marketing promotion standpoint. That’s not what we’re going to be doing, we’re going to be doing what we call a — it’s we use the term geo-targeted highly informed marketing approach, what that means is, we’re going to be more snipers than shotgun approach.

We have a lot of data. AMAG spent significant dollars on the launch. There is a lot of data and some good data that came back in the first three or four months. We’ve engaged a third-party group that specializes in the digital marketing approach and the social media.

And we’re very close to turning on — the turning on that switch so we’re going to be targeting multiple regions throughout the United States, a significant number of reasons, but the regions we put metrics together and metrics being, as always, we try to be data driven where the high prescribers where the consumers that have already Been engaged to a certain extent from the digital work that that AMAG has done in the Palatin has continue in a nice way where do you want to go efficient you want to fishing where the fish are so with that, we had whole map of the United States on where we thought, where the hotspots current

Hen decided to let’s overlay the insurance coverage and those hotspots and that made some of the hotspots even more attractive certain areas we don’t have as good a coverage yet and we’re working on that, but those are the areas that from the filtering standpoint, we’re now prepared to go forward so in summation, we believe we’ve made modifications that needed to be made to the Vyleesi process and the program and we are prepared, again, within the next 30, if not 60 days, I’ve turning on that highly informed geo-targeted marketing approach.

Now, that was probably longer than you anticipated, Joe. So I probably need a little sip award of there but let me let me pause there to see if we’re responsive.

Joseph Pantginis — H.C. Wainwright & Co. — Analyst

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

Carl Spana — President and Chief Executive Officer

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

I want to point one thing there were some complications in the way AMAG went to try to out-license or sell or dispose of Vyleesi however you’d like to put it. And that one this was bundled with another product and they also really looking for someone that would just step in the license agreement that existed between AMAG and Palatin so now that — and that poses some complications with your partners who didn’t want the two products there are companies that wanted slightly different it didn’t fit the license in fit the way they we’re viewing it.

So not too surprising to us since the acquisition, we’ve had actually pretty good interest and I will turn it over to Steve now and he can kind of fill in some of the details on that in the timing.

Stephen T. Wills — Executive Vice President, Chief Financial Officer and Chief Operating Officer

Thanks, Carl the — as always, we’re going to be data driven I mean we have some flexibility notwithstanding the cash that we have on our balance sheet as of June 30, we did receive 12 million from AMAG in combination with the transfer and the release and we have another 4.3 million March the 31st It’s going to take, it’s going to take some time to show the value and I think that’s the better way to go, where we’ve — we’re making we’ve made modifications corrections, whatever you want to classify them as to put us in a position to show value of Vyleesi in the marketplace but notwithstanding that, we have started the process we do have an outside banker that we work with I wouldn’t call it a process why similar to what AMAG did where they made their plans now and they want to divest the product we’re looking to see what type of interest is out there at this stage maybe a few quarters down the line and as Carl mentioned, we can be flexible. We have, a lot of expertise around all the areas, other than if you will, the commercial, so a tradition to re-license absolutely, we can consider that sort of a if the company can handle all the various functions but what we also have a flexibility whereby a company that may be just more commercial and they want Palatin to handle the CMC and maybe some of the lifestyle nonetheless the additional indications clinical or that type of work we could also consider that because of flexibility that we have in the expertise we have so not to damage still does not call me back to, so I can’t give you a date, but we’re, we feel very comfortable that we’ve put the right items in place so as we progress if something does start getting more advanced we absolutely would consider it, but the takeaway there is where we’ve already started some discussions now just to see what could take place now or at some point in the future. Hopefully that’s helpful to you.

Joseph Pantginis — H.C. Wainwright & Co. — Analyst

Yeah it certainly yes. Thanks a lot guys. Appreciate all the extra details.

Operator

Thank you very much. Our last question will come from Michael Higgins Ladenburg Thalmann.

Michael Higgins — Ladenburg Thalmann — Analyst

Good morning. This is for Michael I appreciate you guys taking our questions. Just a few more to wrap up here for that Phase III trial for the dry eye I’m just wondering how many sites your expecting to enroll for that one.

Carl Spana — President and Chief Executive Officer

Sure so the Phase II obviously had have much less sites and we have had sites in the Northeast and the Southeast where Phase III pivotal study requirement is that you have it really has to represent more real life situation so you would be looking to at a multiple clinical trial sites across the country these patients are very easy to find so I would an exact number, I don’t have it off the top of my head, but generally it would be in the end of 50 plus range you want to have enough that you spread out across the country and it is truly representative of the practice of healthcare in the United States. So these generally tend to be 5200 depending on the size of the study and these studies aren’t particularly large they’re not multiple thousands of patients where you need quite a few sites so you’ll be in that 5200 throughout the country.

Michael Higgins — Ladenburg Thalmann — Analyst

Okay, thanks. On the contents. And then I’m wondering if you have any partnerships plans for this asset and then if we zoom out a little bit I’m wondering if there are any other pipeline assets you would partner and then what timeframe would you be thinking about for some of these partnerships.

Carl Spana — President and Chief Executive Officer

Sure so in the ocular space, we have not yet been aggressive in thinking about or poor looking are seeking partnership in part from the standpoint of we have potential multiple opportunities there and with the cash position that we have we’d like to potentially consider maybe holding some of these assets, a little bit longer maybe thinking about the potential of commercial transition there are a lot of smaller ocular companies that have single products that may fit with some of the types of opportunities that we have so we haven’t looked at it from that perspective yet. That said, we wouldn’t do it and not to say certainly on great strong positive data for 9643 an interest coming in that we wouldn’t partner, but at the moment, we haven’t been aggressive because of more looking at a longer-term strategy in the space, certainly for ulcerative colitis that’s one where we actually do have earlier interest and have some ongoing discussions particularly ex-US and certainly it’s not one year after proof of concept, we really, we have the partner who want to partner, not that it’s a lack of belief in the product, we think it’s going to be a great mechanism for variety of gastrointestinal diseases, but just because of the nature of that indication demand for getting patients the treatment options that are out there you really make sense to be partnered with a company that has multiple assets in ulcerative colitis, or in other GI indications where they can position it appropriately and it really fits in their portfolio.

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

Michael Higgins — Ladenburg Thalmann — Analyst

Yeah, yeah, absolutely. I appreciate all the details. And speaking of heart failure really quickly, just wondering if you could provide any details on when that data might be available or if that’s not in necessarily up to you guys.

Carl Spana — President and Chief Executive Officer

Well, in essence, I’m sure we’ll see it in real time. This is Phase 2a study, patients are in-hospital and they are having what is known as a REIT heart work up because they have preserved the jet they have preserved ejection fraction in many times that’s due to issues with the right side heart as opposed to let so data will come in, real time. I think that you’d have to have a real number of patients, and I would think the middle of 2021 would be the first time we’d have enough patients through to get a good sense this is truly a — the basis of this study is the fact that heart failure with preserved ejection fraction, predominantly in many times occurs in females and women and there are no effective treatments yet and they represent 50%, almost 50% of the heart failure case happens objection fraction so there is a strong clinical need here particularly in women and the American Heart Association Association go Red program is a funding mechanism what looks to fund opportunities that are particularly suited towards female patients.

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

Michael Higgins — Ladenburg Thalmann — Analyst

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

Carl Spana — President and Chief Executive Officer

Sure I mean if other growth there was the one that we’re most interested in is called active and that’s a collaborative between BARDA and I think NIH and a few other organizations and reason why we’re most interested in that one is because it’s more of a handoff so in that process if we get selected as part of the active program they really we take the compound over and really conductor trials and I think that would be get the compound is best chance of success there are a couple out — there are couple of other programs smart in my NIH FDA that we’re looking at and getting applications ready for but I think active is the one that we’re currently we have already have the application and we’re waiting for initial feedback on it because that would be the one that’s most suited for the compound only think that we would like to avoid is in the current situation we’re starting to get the advice that doing studies in the US would be difficult that we may need to go to South America to get studies done and so that’s one of the reasons why when we consider how we go forward the program we really would like support in the US of the Promacta for example would be very helpful because you get it into the US clinical trial sites, much easier and much faster.

Michael Higgins — Ladenburg Thalmann — Analyst

Got it makes lot of sense well, good luck certainly with active and I appreciate you guys taking the questions.

Carl Spana — President and Chief Executive Officer

Great, thank you.

Operator

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

Carl Spana — President and Chief Executive Officer

So this is Carl speaking again on behalf of myself and Steve and of Board of Directors and then all our employees of Palatin we certainly like to thank all of you for the time you’ve taken on the call today obviously being an annual call was a little bit longer than normal. Hopefully, we’ve been able to convey the assets and enthusiasm that we have for the acquisition of Vyleesi and the continued efforts that we have on building out in ocular franchise and other melanocortin system based anti-inflammatory drugs. We are quite excited here. I mean the crew is working very hard we are really looking forward to 2021 hopefully, a little more normalization of operational activities and general life and we look forward to really the success that we will have in moving our programs forward. So I’d like to thank all of you again once again for being on the call please stay safe wear mask social distance like a broken record, but it works and hopefully we’ll have some vaccines and newer treatments. Maybe in PL8177. So thank you all and have a great day.

Operator

[Operator Closing Remarks]