By Frances Bishopp

With its eye on a listing on the NASDAQ Small Cap Market, Palatin Technologies Inc.'s board of directors has approved a 1:4 reverse split of the company's common stock, which closed Thursday on the Electronic Bulletin Board at $1.75, up $0.1875.

The company has applied for a listing of its common stock on the NASDAQ Small Cap Market, which requires a minimum bid price of stock at $4 per share.

John McDonough, chief financial officer, told BioWorld Today that after the reverse split is finished, Palatin believes it will meet all the requirements to get listed on the NASDAQ Small Cap.

Located in Princeton, N.J., Palatin develops products and technologies for diagnostic imaging, cancer therapy and drug development based on its monoclonal antibody radiolabeling and enabling peptide platform technologies.

The reverse split, McDonough said, would take effect at the opening of the Electronic Bulletin Board market on Sept. 8, 1997. After the split becomes effective, the total shares of Palatin common stock will be approximately 3 million. Palatin has approximately 7.3 million shares of fully diluted stock, which includes common stock, preferred stock, stock warrants and stock options.

One of the company's first two products is LeuTech, a radiolabeled monoclonal antibody for infectious imaging. A physician-sponsored clinical trial was completed at University of California Harbor Medical Center, of Los Angeles, for diagnosing appendicitis. The company's other product, PT-2, is a radiolabeled somatostatin analogue for the treatment of cancer by direct injection into solid tumors.

Palatin's LeuTech yields clear, bright, fast images pinpointing areas of infection in the body (appendicitis, osteomyelitis). The current infection imaging methods are based on the injection of autologous white blood cells, Palatin said, which are radiolabeled ex vivo. Requiring no blood handling, LeuTech allows for emergency room diagnosis.

LeuTech results, the company said, are available in less than an hour, compared to 12 to 24 hours on average for currently used methods. Palatin is seeking FDA approval to conduct LeuTech clinical trials and expects to file an initial new drug application for the product early this fall.

Palatin's PT-2 is a receptor-targeted agent with a highly selective cancer-cell killing capability. PT-2 binds with high affinity to somatostatin-positive tumors, and delivers highly localized and intense radiation.

Palatin's platform technology, MIDAS (Metal Ion-induced Distinctive Array of Structures), uses metal ions to stabilize and enhance the pharmacological activity of peptides, with the potential for development of orally administered peptide-based drugs.

In January 1997, Palatin entered into an alliance with Tokyo-based Nihon Medi-Physics Co. Ltd., a developer and manufacturer of radiopharmaceuticals. The alliance involves an exclusive license option agreement that provides for the future licensing to Nihon of jointly developed diagnostic imaging products based on MIDAS.

Under terms of the agreement, Palatin received an initial payment of $1 million and could receive additional milestone payments plus royalties on net sales of products developed from MIDAS.

In May 1997, Palatin raised approximately $13.8 million through a private placement. On a pro forma basis, the balance sheet for the third quarter ending March 31, 1997, showed the company with cash of approximately $14 million, total debt of approximately $2 million and shareholders' equity of $11.4 million*. Excluding capital expenditures, the company's burn rate is approximately $550,000 per month.