Palatin Technologies stock analysis: Palatin, one of the best biotech stock after expansion to Asian market

 

This article was written by David Borenstein, a Financial Analyst at I Know First, enrolled in the double major in Economics and Business undergraduate program at the Interdisciplinary Centre, Herzliya.

 

“Risk comes from not knowing what you’re doing.”

-Warren Buffet
 

Summary:

  • First Quarter Fiscal Year 2018 financial results
  • The market of palatin
  • Licensing Agreement with Kwangdong Pharmaceutical
  • Leading in production of bremelanotide for female sexual dysfunction (FSD)
  • PTN is one of best biotech stock to Buy in pharmaceutical sector
  • Bullish trend for PTN predicted by I Know First Algorithm

Background:

Palatin Technologies, Inc. (PTN) is a biopharmaceutical firm based out of Cranbury Township, New Jersey. Founded in 1986 by Dr. Carl Spana and since then developing targeted receptor specific peptide therapeutics for the treatment of disease. A leading drug that is currently undergoing Phase 3 clinical trials and is awaiting approval by the FDA is bremelanotide. Bremelanotide counteracts female sexual dysfunction (FSD) and is currently only in production by PTN thus making it eligible for patent after FDA approval. PTN also focuses on creation of drugs counteracting heart failure, inflammatory disease, obesity and diabetes.

 

 

First Quarter Fiscal Year 2018 financial results:

Palatin reported net income of $10.6 million, or $0.05 per share, for the quarter ending on September 30th, 2017, compared to a net loss of $13.1 million, or $0.08 per share, for the same period in 2016.

 The licence agreements with both AMAG and Fosun have led to the difference in financial results since the start of the first quarter until September 30th, 2017. This was due to $26.9 million of licence and contract revenue during the 2017 period. Other revenues where not recorded.

The cash equivalents, accounts receivable and investments lie at around $49.3 million as of September 30th, compared to $55.6 million in the previous quarter. Palatin still believes that existing capital will be sufficient to last for at least the 2018 calendar year.

 The Market of Palatin:

 Palatin current main focus is on creating a drug that counteracts Hypoactive Sexual Desire Disorder (HSDD). The current drug undergoing Phase 3 clinical trials is Rekynda™ (bremelanotide) and close to FDA approval. The mechanism of action of bremelanotide involves helping to activate internal pathways in the brain involved in the body’s normal sexual responses.

Bremelanotide has been studied in more than 30 clinical trials with over 2,500 people. The Phase 3 Reconnect Studies were designed to confirm the effectiveness of bremelanotide as an treatment for premenopausal women with HSDD. The side effects that where monitored were nausea, flushing, and headache (generally mild in nature).

 

Licence agreement with Kwangdong Pharmaceutical:

 Palatin has been extremely active in expanding its future retail of the bremelanotide drug, by signing contracts and bargaining licencing deals with leading firms around the globe. We recall earlier this year, on September 6th, when Palatin announced its Licensing agreement with Fosun Pharma Rights to distribute bremelanotide in china and other selected territories. Palatin has also bargained an exclusive licensing agreement with AMAG for the North American Rights for bremelanotide. On top of this Palatin has now announced the signing for bremelanotide with Kwangdong Pharmaceutical for the Republic of Korea, and is heading towards a wider and broader spectrum of potential future customers.

 

 

The terms of the agreement allow Kwangdong to develop and commercialize bremelanotide in the Republic of Korea for treating FSD or HSDD. Kwangdong will be responsible for all regulatory and development crucial for commercialization. An $500,000 upfront payment was made to Palatin in exchange for the licence as well as a $3 million payment on the first sale of bremelanotide in Korea. Palatin can expect up to $37.5 million in milestones and royalties in the licensed territory

 

I Know First Bullish Forecast:

 Although Palatin has no current sales, it is still a very promising investment opportunity. Due to its leading product bremelanotide, vast licencing contracts, and possible FDA approval in the near future, Palatin has created a lot of speculation causing a bullish trend which is also seen by our I Know First algorithm.

 

This chart shows a bullish trend as predicted by the I Know First algorithm in the next segement.

 

Success of algorithm of previous PTN Forecast:

Forecast Length: 3 Months (08/21/2017 – 11/21/2017)

In this 3 month algorithmic forecast, the algorithm predicted bullish returns with high predictability, and the actual results, 135.64%, reflect the algorithms predictions. The same accuracy was seen in 7 out 10  predictions, with an I Know first average of 37.38%.

Conclusion:

I would rate this share as a Buy, due to its bullish trend and due to the fact that the demand for bremelanotide is very high. Also, it may be wise to purchase the share soon due to the current expansion and FDA approval of the drug in early 2018. Below is the I Know First forecast for PTN, updated yesterday. As seen by the prediction, it shows a bullish trend with high predictability in the short and long run.

How to read the I Know First Forecasts: Link