Carl Spana - President and Chief Executive Officer Stephen Wills - Chief Financial Officer and Chief Operating Officer

Charles Duncan - Piper Jaffray Joe Pantginis - ROTH Capital Partners Rahul Jasuja - Noble Life Science Partners John Newman - Canaccord

Good morning, ladies and gentlemen, and welcome to the Palatin Technologies third quarter fiscal year 2015 conference call. As a reminder, this conference is being recorded. Before we begin our remarks, I would like to remind you that statements made by Palatin that 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 actual results could differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company's most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements and Palatin's prospects. Now, I'd like to introduce you to our host for today, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Thank you, and good morning, everyone. I'm Carl Spana, President and Chief Executive Officer of Palatin Technologies. With me on the call today is Steve Wills, our Chief Financial and Operating Officer and Executive Vice President. On today's call, we will provide updates on our development programs and our third quarter fiscal year 2015 financial results. To begin, Steve will provide the financial update.

Thank you, Carl, and good morning, everyone. Regarding operations, Palatin's primary activity is the ongoing Phase 3 reconnect study with bremelanotide for the treatment of female sexual dysfunction. Carl will provide additional detail on our female sexual dysfunction program during his presentation. Regarding financial highlights, Palatin reported a net loss of $9.2 million or $0.07 per basic and diluted share for the quarter ended March 31, 2015, compared to a net loss of $1.5 million or $0.01 per basic and diluted share for the same period in 2014. The increase in net loss for the quarter ended March 31, 2015, compared to the same period last fiscal year was primarily an increase in development expenses related to our Phase 3 reconnect study with bremelanotide for the treatment of female sexual dysfunction. Regarding revenue, there were no revenues recognized in the quarters ended March 31, 2015 and 2014. Regarding cost and expenses, total operating expenses for the quarter ended March 31, 2015, were $8.7 million compared to $3.4 million for the comparable quarter of 2014. The increase in operating expenses for the quarter ended March 31, 2015, was the result of an increase in expenses related to our Phase 3 reconnect study with bremelanotide for the treatment of female sexual dysfunction. Regarding Palatin's cash position, our cash and cash equivalents were $36.7 million as of March 31, 2015, compared to net cash and cash equivalents of $12.2 million at June 30, 2014. Current liabilities were $5.2 million as of March 31, 2015, compared to $1.8 million net of $1 million deferred revenue as of June 30, 2014. We believe that existing capital resources will be adequate to fund our planned operations through at least the quarter ending June 30, 2016. As we advance our programs we will continue to review and assess various funding avenues, including business collaborations and the equity and debt markets. Carl?

Thank you, Steve. Our third quarter fiscal year 2015 operation update will focus on our bremelanotide Phase 3 female sexual dysfunction program. The North American bremelanotide reconnect study Phase 3 pivotal registration program protocols 301, 302, a multicenter, randomized, placebo-controlled parallel group clinical studies with a six month randomized treatment phase and an open label extension phase. The reconnect study is designed to randomize approximately 1,100 women or 550 for each trail, to evaluate the efficacy and safety of subcutaneous bremelanotide in premenopausal women with hypoactive sexual desire disorder. As an on-demand as-needed treatment, the reconnect study is anticipated to involve approximately 160 clinical sites, which is 80 per protocol in U.S. and Canada. We initiated screening in both pivotal studies at the end of calendar 2014. We are pleased to report that enrollment in the two Phase 3 studies is meeting target objectives and we are on track to complete patient enrollment in the second half of calendar 2015, and test topline data by mid-2016. In February 2015, we launched the reconnectstudy.com website in support of the reconnect study Phase 3 program. The website provide a wealth in information for women, including frequently asked questions on study design, qualification, participation, and how to start the enrollment process. Also additional information about the Phase 3 protocols can be found at clinicaltrials.gov. The FDA has clearly stated that female sexual dysfunction is an unmet medical condition that impacts the quality-of-life of patients, as they are committed to working with sponsors to develop treatment options for patients. A recent scientific workshop provided clear guidance to the FDA on key aspects of female sexual dysfunction, drug development and clinical trials. The outcomes of these meetings provide regulatory clarity and confirm our confidence in the design of our bremelanotide Phase 3 pivotal registration program. Concerning bremelanotide actions in the European Union, we are working with our partner Gedeon Richter on activities required to begin enrollment in the European Phase 3 pivotal trial. It is anticipated that the Phase 3 European clinical trial will begin in the second half of calendar 2015. We believe that there is a substantial global market for bremelanotide with United States being the largest potential market, followed by the European Union. Concerning potential of a licensing agreement for bremelanotide for North America, development of commercialization rights, we continue to make progress with these activities working with potential partners, as they conduct their due diligence. At this time, we cannot predict when or if such an agreement will be entered into. Now, we move on to our natriuretic peptide program and our clinical development candidate PL-3994. Natriuretic peptide system is an endogenous neuropeptide hormone system involved in regulation of cardiovascular function. Natriuretic peptide system includes peptide hormones ANP, BNP, CNP and their associated receptors. Natriuretic peptide system is upregulated during heart failure and functions to lower blood pressure, suppress the renin angiotensin aldosterone system, inhibit cardiac hypertrophy and fibrosis, increase natriuresis and protect cardiac and kidney function. The high value of a targeting natriuretic peptide system for heart failure treatment is demonstrated by recent Phase 3 clinical trial results with a compound LCZ696, under development by Novartis. LCZ696 is a mixture of the angiotensin receptive blocker valsartan and the neutral endopeptidase inhibitor AHU-377. Neutral endopeptidase inhibitor component upregulates the endogenous natriuretic peptide system by blocking the enzymatic degradation of ANP and BNP. The detailed results of the LCZ696 Phase 3 trials were recently published in New England Journal of Medicine and clearly established the natriuretic peptide system as a validated target for heart failure therapy, and it's highly likely that upregulation of the natriuretic peptide system will become part of the standard of care for heart failure patients. Our natriuretic peptide system program with multiple approaches to upregulating the system is uniquely positioned to take advantage of this potential paradigm shift in the treatment of heart failure. PL-3994, our lead drug development candidate, is a numeric of ANP and an agonist of the NPR-A receptor. PL-3994 has completed Phase 1 clinical studies and is ready for Phase 2 clinical trials. Our pre-clinical and clinical studies show that PL-3994 increases circulating cyclic GMP levels, diuresis, natriuresis, inhibits the renin angiotensin aldosterone system, decreases systolic and diastolic blood pressure and inhibits cardiac remodeling. PL-3994 has potential applications in heart failure, and is ideally suited for replacement therapy in patients with core and other pro-hormone processing deficiencies. We currently plant to initiate enrollment in PL-3994 Phase 2 ascending multiple dose study in heart failure patients in the second half of calendar 2015. We were also currently working with potential partners, as they conduct due diligence on our program. Regarding our melanocortin receptor-1 program PL-8177, our lead candidate, has completed pre-clinical activities required to file an IND with the FDA and conduct Phase 1 human studies. We will also continue to make good progress with potential corporate partners. Regarding our internal melanocortin-4 receptor obesity diabetes program, we have made excellent progress with multiple potential lead clinical candidates identified. Business development efforts in this area are advancing. And regarding our collaboration with AstraZeneca in this area, we continue to work with them to determine the best path forward. In summary, we continue to make significant progress in meeting our operational objectives. With bremelanotide reconnect Phase 3 pivotal registration program is on target regarding screening and enrolling patients, and we are on track to complete enrollment in second half of calendar 2015, with data anticipated in mid-calendar 2016. We have designed a comprehensive Phase 3 program, that if successful, we'll provide the safety and efficacy data to support regulatory submission for approval of bremelanotide as a treatment for premenopausal women with female sexual dysfunction. Our collaboration with Gedeon Richter is going well, and we remain on track to begin patient enrollment in the European Union pivotal program in the second half of 2015. Recent clinical data indicates that the natriuretic peptide system has a potential to play a key role in the treatment of heart failure. Our pre-clinical and clinical work with lead candidate PL-3994 puts us in a good position to take advantage of this potential paradigm shift in the treatment of heart failure. Our MCR1 receptor anti-inflammatory and our MCR4 obesity diabetes pre-clinical programs continue to make substantial progress, both the operational and business development areas. We plan to provide more details on these two exciting programs later this year. I would like to thank everyone for participating in Palatin's third quarter fiscal year 2015 conference call. And we will now open the call to questions.

[Operator Instructions] And we'll take our first question from Charles Duncan with Piper Jaffray.

Thanks for taking the question and congrats on the progress in the bremelanotide program thus far. My questions are primarily on that program. I wanted to ask you regarding the enrollment thus far. I'm wondering if at this stage you've seen anything surprising regarding the types of patients or the number of sites interested. And then can you provide additional color on the safety study if you've had any patients actually enrolling that and what numbers?

No surprises. The study is going as we expected, which is good. The site interest is very high. We actually, since we have opened up screening and enrollment, we have a large number of sites, new sites, potentially contacting us to come into the studies, so there is a very high demand from potential clinical trial site to participate. We're very close to having almost all of our sites opened already. So that's gone very well. With regards to the safety component, not yet, the program has only been enrolled for about four months. So the first patients won't come off until six month into the study and enter the phase of safety extension, so that hasn't occurred yet, but certainly as we pass the next two months, patients will enter into that phase of the study as well. I think I covered the --

Yes, you answered the questions. So regarding the patients that you're enrolling in this study, is that the limit of your vision with regard to where this drug could be used or might you consider other target populations to study the drug in?

There are certainly a decent number of additional patients I think will benefit from bremelanotide. Certainly, these patients that we're studying in the reconnect program have predominantly low desire. And they may have some arousal issues as well. There are certainly patients that have the reverse diagnosis, which is a primary deficit in arousal with the little bit of desire. That's another indication that certainly -- we know from our other Phase 2 work, certainly showed good efficacy. These women were also premenopausal, we would certainly expect a drug. And we know from our, again, early clinical work that it works in postmenopausal women. So that's another logical extension for the drug as well. Also, because there are many women that have depression taking antidepressants that also experience low desire. Those women are not in this particular study, but we certainly think that they represent a very nice patient population. And in fact, we'll be doing as part of Phase 3 reconnect program. We'll be doing drug interaction studies with the various classes of antidepressants, because we expect in the commercial setting that many of these women will come in to see their doctors looking for treatment for their low desire, to get the drug as well. And then third or final one, I think is a very interesting population on women with gynecological cancers. Many of these women are premenopausal. They have very high rates of sexual dysfunction post this therapy and post their treatment. And there certainly are area where there is also a lot of need. So really the FSD population is a path to approval and certainly a very large and legitimate marketplace, but certainly there will be many, many other populations that will benefit from the drug post-approval and as we work with our partner to eventually expand the indications.

And then, Carl, if I may, just one more question regarding that past two approvals. There has been an adcom that has been announced for a potential competitor coming up here in June. And I am just wondering you mentioned at recent scientific meeting that the FDA conducted and advice they got, but what your sense of the issues that could come out of the flibanserin adcom? And how would you interpret relative to, say, the endpoints that you're studying in your trial, and the path to approval for these kinds of drugs?

Certainly, it has been publicly announced at FDA conference for flibanserin on the June 4. Based on the public record that's been developing from the FDA, I think we've narrowed on a consensus of satisfying sexual events and an improvement in desire as measured by the Female Sexual Dysfunction Index as the constructive benefit for the effective trials. I expected that, it's our understanding that one of the studies that is going to be discussed at that adcom use those endpoints for measuring benefit, and certainly what was recommended by the panel, that the FDA convened late last year. I think that, again, I can only give you an opinion as to what I think would happen on the June 4 meeting certainly, and its only an educated guess, so I'll caveat my answer in that regard. I expect that it will be a very objective discussion about the risks and benefits of flibanserin. And it is our hope that that drug would get a positive nod for approval. I think that this is going to be a very broad and deep marketplace and there will be multiple competitors. I certainly think it will help to answer any regulatory uncertainties that certain potential partners may have or investors may have about the indication. We can all agree that it's had a little bit of a regulatory check in past, particularly in the U.S. I think. What we're seeing is the FDA making a legitimate effort to essentially address the unmet medical need, by seeking scientific advice, and then holding what we anticipate will be an objective and hopefully constructive adcom for flibanserin.

So it sounds like then, a positive vote would address the regulatory risk for the class. I think you've kind of alluded to this, but what about the commercial risk? Should that drug be approved, do you see there being an opportunity to differentiate and meaningfully penetrate the market with bremelanotide?

Absolutely, flibanserin is a chronic medication, it's a serotonergic agent, so a different vectors of actions. You take it everyday. I have no doubt that some women will certainly find that attractive. We know that from our work that bremelanotide, which is only taken on demand or as needed appeals to many, many women. They don't necessarily want be on a chronic serotonergic agent for their sexual dysfunction, they only to take something when they needed. I think we can look to the p5 inhibitor class for erectile dysfunction, as I think a very analogous marketplace, where Viagra came in first, but a differentiated product in the case of Cialis, which had a longer half-life of activity was able to come in and compete quite successfully and both of those are now multi-billion dollar drugs. So I absolutely think that there is a very clear place for both of these medicines, and that should they both be approved, will do potentially quite well in the marketplace.

Our next question comes from Joe Pantginis with ROTH Capital Partners.

Maybe first just, I have a quick follow-up with regard to BMT and the flibanserin adcom, and maybe link how might gauge the importance of that adcom to your ongoing partnering discussions for BMT. And then with that said, as those discussions are ongoing, how would you describe the positive types of discussions you're having or any potential concerns that are being cited by these potential collaborators?

We've had, as we reported, a fairly decent number of ongoing discussions with the types of partners that you would like to see for bremelanotide. I think and what I can summarize is we really haven't seen any negatives about bremelanotide itself. I think most of the partners we've talked to believe there is a very substantial market for FSD products. The bremelanotide certainly is appeared to be efficacious and with an acceptable profile to do well in that potential marketplace. I think the main question is really the regulatory uncertainty, and that has been changing. And so I think as the regulatory uncertainty hopefully gets clarified coming out of the June 4 meeting, and then I guess, a little later in the year, should the panel recommend approval, hopefully that drug getting approved, I think that really helps to remove one of the remaining obstacles that we see to finalizing a substantial transaction for bremelanotide. There are only two of us in the marketplace, I mean there is flibanserin and there's bremelanotide, so there are lot of companies that sell into the OB/GYN space, so if one gets one, somebody is going to need another one. So I think we'd be well-positioned.

My next question just to shift gears, it's really focused on 3994. Obviously, the Novartis drug has really significantly increased the visibility and exposure on this pathway. So I guess from your standpoint, how is that going to help you in the value continuum, if you will. First, can you give a little sense of how big the Phase 2 will be in the type of population you will be looking at? And to the point with the value continuum, you have ongoing discussions and there is a lot of exposure here. At what point you feel, you're going to be able to garner the most value from this before Phase 2, having more Phase 2, obviously you could garner more value, but this is obviously a hot pathway.

Let me answer it in this way. The next study that we're contemplating is a study that is a required study to continue to progress the program forward. Meaning that it is our first time that we'll be dosing patients with heart failure and we'll be doing in a multiple dose-ascending format. You will generate a tremendous amount of information with regards to the safety, how you effectively dose PL-3994. We will look at certain biomarkers and get additional information. Behind that we also have our longer-term toxicities going. So we're doing the things that anybody coming in, and from partnership standpoint, would have to have done to really progress to the study that you're probably alluding to, which is a real Phase 2, at-home dosing, with real measurable outcome benefit. I think that what we're seeing is good interest from the players you would expect are large pharma who runs the gamut from -- we're interested and potentially doing something soon too we haven't really been in the heart failure space for a while, and we are looking at what's out there based on obviously the Novartis showing good efficacy. And so we're seeing really the gamut between those two types of approaches. Those that have been active and can be remained active in -- of a heart failure space and those that's kind of stepped aside more recently and then with the new data from Novartis are reevaluating, do they want to get back in. When we'll get a deal done, I mean, as I said, we're going to progress the program forward. Our expectation is some time between now and the next two or three quarters, as we get the study going and completed, we will most likely see a transaction done.

And we'll take our next question from Rahul Jasuja with Noble Life Science Partners.

So few questions on the remaining pipelines, and I may have one more on the BMT for FSD. So talking about the MCR1 pathway, in that program you have a lead now. The Phase 1, I assume would be in healthy volunteers. And then what do you think would be the most apt clinical trial that would a placebo partnership here on the Phase 1. Have you guys decided on that yet?

Yes, certainly. I mean, again, just as a quick reminder, this program is ready to go forward depending on resources, as you might imagine we've characterized bremelanotide being our primary focus and making sure we deliver on all the endpoints and milestones, we have to put that followed by 3994, and then MCR1 after that. Not that we don't believe it's very exciting, we do, because it's great and very exciting compound and a very interesting mechanism. Yes, at first, it would be in normal, which is very typical for a novel treatment with a novel mechanism. After that, we would most likely move into the IBD space, where we can give the drug topically to the colon. We've got a lot of preclinical work in various IBD models and we'll report these out little later in the year, but we've seen some very exciting results in stopping the progression of ulcerative colitis or Crohn's disease depending on the model, and then reversing that as well. So we're quite excited and that we think would be a very good area to go into for first indication. However, with that being said, we've generated a very good data with this mechanism in nephritis models as well as uveitis model. So we do think its relatively broad mechanism. But for us, we probably would put a stake in the ground and go on in IBD indication for first indication.

So is that correct in assuming that, because you said this is dependent on resources, that you're not spending money toward IND-enabling studies now, but you will only, if resources become available?

Well, the answer is yes. In the near term, we feel we've got good corporate and potential business development interest, so we're letting that play out. We are continuing to advance the preclinical studies and mechanistic studies that help to support those types of activities. The IND enabling studies have may completed. We've had discussions with the FDA. We certainly know, we certainly could, if we want to either release the internal resources or acquire them from the third party, we could certainly move this program very quickly into Phase 1. So we are ready. We've had our discussions with the FDA. We have a very good idea what the protocol is and how to go forward. It's more on a resource constraint, not just financial, but also time. We really, as I said, want to remain focused on delivering bremelanotide. I think that's a very key thing for us. And as a small company, we really want to make sure we are not shorting the resources required to be successful there.

And on the MCR4 program, just curiosity, I mean what is AstraZeneca thinking, any insight there? Is there really organizational changes that have sort of slowed down their thinking on that? And obviously, you've got your own program out there, so any comments on that beyond what you already said.

There is no question there have been a number of organizational changes and a bit of strategic review at AstraZeneca. We're now to the point where we're frankly just accelerating some pressure. Within the next quarter we're going to know exactly what the next steps are going to be with the AstraZeneca collaborating. So there has been enough time, back and forth discussions, looking at different approaches and assessing where we've been, where we're at and where we're going. So we would expect that on the next conference call, we'll have a lot more specificity regarding the AstraZeneca collaboration. And I'll let Carl talk about our internal obesity and diabetes program.

You guys probably don't remember, but always as part of the AstraZeneca collaboration, we maintained a Palatin's specific research presence in the MCR4 area, and we have developed a lead compound that we think is quite interesting as well as a lot of additional preclinical research. We were always free to re-license that to other third parties and we made a decision about a month or so ago to -- AstraZeneca's had sufficient time, we feel maybe if a third party was interested, that'd put more pressure on them, so we reached out and as we might have expected, it was tremendous interest, and so we actually do now have some pretty good discussions going on with other third parties on our internal program. So I think that MCR4, our expectation, whether it's AstraZeneca or another third party, we will be taking care of them and we'll move forward quite nicely. We're quite pleased with the progress we've made in a very short period of time on the business development front with our internal program.

And following question, and this is sort of harping on what Charles and Joe was asking, little bit redundant, I guess, but investors have been asking a lot why no partnership interest in the FSD space. And you talked about the fact that there has been regulatory uncertainty. And your endpoints are effectively designed in conjunction with what the FDA has been probably working with, but flibanserin had had almost, sort of, not as prospectively designed in their endpoints. Could you comment on that and then really the regulatory risk going beyond Q4, is what big pharmas are looking for, correct?

Of course, we stated, we've had a very good interest from a large number of companies, and really what it comes down to is who is going to jump in the absence of clarity from the FDA on, are they going to approve something or potentially approve something for FSD, do they want to take that risk. And keep in mind, this was not a Phase 1 program where they would be able to work with it for a number of years and work with the FDA. They were buying into a Phase 3 program, which is quite expensive. So I think that what I can see is just what everybody else can see, which is the FDA failed to approve flibanserin. They went to an appeal and the outcome of that was a reassessment of the indication, a recommitment to the indication with a very large very public meeting where they asked the right questions and they got very good feedback. And now, they get a panel meeting where I expect that they will discuss the risk benefit effects of flibanserin and go forward and hopefully get a positive nod and approve that product. So as that clarifies, I expect that the companies that we have been discussing with will reaccelerate their discussions with us as well as with the people that own flibanserin. I would be very surprised if we have a positive outcome on June 4, and an approval of flibanserin that we don't see large pharma to come back into the indication.

We'll take our next question from John Newman with Canaccord.

I just had a question on how your program is differentiated from flibanserin just because regardless of the outcome of the FDA panel, it just feel like that's an important point. And also I wondered if you believe the FDA will take into consideration the fact that there really isn't anything approved to treat FSD and that some of the agents that are used off-label really aren't too safe when it comes to cardiovascular risk?

Certainly, I can't speak to what the FDA is thinking, but I would assume in their risk benefit assessment that I know that it goes beyond -- the risk benefit assessment does go beyond the division. And there are specific groups at the FDA that weigh-in and they're certainly are aware that many women are given off-label prescriptions of things that have no proven efficacy for the FSD indication, so I will assume that that would be part of their thinking in evaluation of risk benefit. Comparing and contrasting, I think the FSD studies really have converged on a very similar approach, which is a general screening in baseline period followed by randomization and then treatment with either active or placebo. And the measure of benefit for most of the studies that I'm aware of, and ones that what was recommended to the FDA really is to look at the behavioral change, which is satisfying sexual events, and then a more longitudinal change in a parameter that's important, so the patient i.e. desire or arousal, depending on what troubles the patient. In our case, in the case of flibanserin, it was low desire. Because the indication requires that the patient be distressed about their low desire, you also need as a secondary endpoint to show that distress has improved. So it appears that the paradigm that's being emerging, and what was absolutely we agreed with the FDA, and then also recommend by the panel is really satisfying sexual events, and an improvement in desire measured with the Female Sexual Function Index desire sub-domain with a 20-day recall as a measure of primary benefit, and the improvement in distress being the Female Sexual Distress Scale, which is another validated scale as a secondary endpoint. So it looks like as if we're converging on your consensus look for measuring benefit. Clearly, in the risk benefit analysis of the two drugs, one is chronic and we're obviously on demand, so clearly, I think from a risk standpoint you're only taking bremelanotide when you need it, which is prior to a sexual event versus something like flibanserin or testosterone or other things that are taken, which are chronic medications that the patient is on all the time. So I think that we have a very differentiated and a very potentially different risk benefit profile than chronic medication would have.

And if I could just ask one additional follow up question. If the flibanserin panel does happen to be successful and you are garnering substantial interest in the bremelanotide program, if you were able to secure, say, a large partnership for bremelanotide or you got a lot more confident in terms of the outside interest there. I'm just curious would that affect the decision as to whether or not you would like to push the PL-3994 compound forward on your own or would you still sort of look for a partner there. I'm just curious if whether the two are related or if they are independent?

Well, they're related to the extent that, obviously a transaction around bremelanotide, we would expect we'd have a substantial upfront payment. So it would free you up a lot more resources to think about how you go forward with additional things. 3994 is interesting. I guess, I think about it from -- which you might expect this more on a company perspective. And the next two studies, which is a one that we have untapped, and one after that are probably within the wheelhouse of Palatin to do, and do expeditiously and well. After that I think you really do want a partnership. The heart failure space and the cardiovascular space in general has a lot of potential indications and uses and things that you'd like to study and they can get quite large and quite expensive very quickly. And I think not just the financial value, but the strategic thinking and strategic placement that a large company or larger company that sells and markets multiple therapies in that space brings to how you get the best out of 3994, probably is what you want. So I think our goal here would really be to partner it, obviously relative to quickly meaning within the next one to two studies. I don't think we want to be sitting here having to contemplate Phase 3 or large really large Phase 2 programs for 3994.

We'll take a follow up question from Charles Duncan with Piper Jaffray.

Just a couple of questions regarding, first of all, that bremelanotide partnering strategy, I'm kind of wondering if it really is a -- well, I'm sure it's a focus, but does it make strategic sense to partner that before the Phase 3s readout or is there kind of an interim result or something that makes sense in terms of not only the flibanserin regulatory kind of risk, but clinical data execution or Phase 3 execution that makes more sense to partner it. It seems like you've got enough cash to get that over the goal line at least with regard to the Phase 3s?

Charles, you are correct, we have the cash to get it to the data point, which is in mid-2016. And we're quite grateful for the institutions that have supported us with that cash and believed in us that we can deliver it. What that has done for us is it gives us the flexibility. If we have the right transaction with the right company, I think you do it. There are ways of hedging the Phase 3. If we felt that we would get more, we can put a continuously right value in there, if we had to. So I think it really depends on what we see and what the outcome is, and what's available. But we don't have to take a deal that we don't like or we don't think reflects a value of the product to the Palatin shareholders. And if we get a deal that we think does, then I think we would be foolish not to take it.

And then with regard to safety study, it seems to me that that's voluntary. And so patients desire to go into the safety study is going to be reflection on either their satisfaction driven by efficacy or tolerability. What's your sense of that? And when can we get some updates on that?

As I said, the first patients won't be coming off the primary study until another, I think, two months from now. So that's when we'll get our first look, but you are correct. Keep in mind also, though that we do offer, there are patients -- there are two answers, that is placebo and active. So placebo patients do have an opportunity, although they don't know they're on placebo. So we'll assume that they have an opportunity to roll over too. So I expect that we won't have any problem getting that open label study filled. Based on, on what we saw in Study 54, which was present in Phase 2b study, lot of these women, as we interviewed them when they came off to study, were like, right now we really wish we could still have the drugs. So I expect that we won't have any problems getting it done. But as we do get numbers in, we'll certainly take a look at that. And if we feel that it's an issue then we'll address it, but I don't think that it will be.

And then just one quick question on MCR4 program. Your internal candidate that you mentioned, is that a small molecule or a peptide, and if the latter -- does the recent Saxenda approval for not only diabetes, but also obesity enhance your conviction or the interest level that you're seeing in that program?

No, it's not. It's a peptide. With that being said, we actually believe that we actually do have small molecules that hit the target that are selective and maybe potentially very good leads. Based on our internal resources, we haven't had the ability to push them forward as much as possible, but certainly they are of interest to potential partners. And then thinking about the extension of the aquaporin agonists in the obesity space, for the diabetes base, we are seeing -- the mechanism and the compound that we have 8905 actually has shown some very nice interactions on reducing glucose and insulin levels, and does have anti-diabetic effects. And there are certainly companies that are interested not only in the obesity aspects of MCR4 agonists, but in the anti-diabetic effects as well. And we have done preclinical studies looking at that aspect and have been quantitating it as well. And again, little later this year we'll talk about those a little bit more publicly, but they are quite exciting.

This does conclude our question-and-answer session for today. So I will now turn the call back over to Dr. Carl Spana for any additional or closing remarks. End of Q&A

Well, thank you everyone for participating in our fiscal third quarter 2015 quarterly conference call. Thanks to all the great questions. It clearly shows you guys are paying attention to what we're doing, and it's always nice. We look forward to continue to update you as we make progress. As I said, we're quite excited about where we're going with all of our programs and in particular bremelanotide, which is really moving nicely through the screening and enrollment process. And we're looking forward to the next several quarters and wrapping up our enrollment in expanding our data next year. So with that being said, we look forward to seeing some of you as we do our investor rounds during the quarter, and then updating all of you for the next quarter as well. Have a good day. Thanks

Thank you for your participation. This does conclude today's call.