STOCKHOLDERS' EQUITY

6 Months Ended

Dec. 31, 2014

Equity [Abstract]

STOCKHOLDERS' EQUITY

 Common Stock Transactions – On December 23, 2014, the Company closed on a private placement offering in which the Company sold, for aggregate proceeds of $20.0 million, 2,050,000 shares of its common stock and Series C 2014 warrants to purchase up to 24,949,325 shares of common stock. Funds under the management of QVT Financial LP (QVT) invested $10 million and an unrelated accredited investment fund invested $10 million. The funds paid $0.75 for each share of common stock and $0.74 for each Series C 2014 warrant, resulting in gross proceeds to Palatin of $20 million, with net proceeds, after deducting estimated offering expenses, of approximately $18.6 million. The Series C 2014 warrants, which may be exercised on a cashless basis, are exercisable immediately upon issuance at an initial exercise price of $0.01 per share and expire on the tenth anniversary of the date of issuance.  The Series C 2014 warrants are subject to limitation on exercise if QVT and its affiliates would beneficially own more than 9.99% (4.99% for the other accredited investment fund holder) of the total number of Palatin’s shares of common stock following such exercise.

 The purchase agreement for the private placement provides that the purchasers have certain rights until the earlier of approval of bremelanotide for FSD by the U.S. Food and Drug Administration and December 23, 2018, including rights of first refusal and participation in any subsequent equity or debt financing. The purchase agreement also contains certain restrictive covenants so long as the funds continue to hold specified amounts of warrants or beneficially own specified amounts of the outstanding shares of common stock.

 Stock Options – In June 2014, the Company granted 325,000 options to its executive officers, 143,400 options to its employees and 135,000 options to its non-employee directors under the Company’s 2011 Stock Incentive Plan. The Company is amortizing the fair value of these options of $265,726, $117,247 and $97,530, respectively, over the vesting period. The Company recognized $46,523 and $93,046 of stock-based compensation expense related to these options during the three and six months ended December 31, 2014, respectively.

 In June 2013, the Company granted 525,000 options to its executive officers, 394,300 options to its employees and 270,000 options to its non-employee directors under the Company’s 2011 Stock Incentive Plan. The Company is amortizing the fair value of these options of $287,000, $204,000 and $148,000, respectively, over the vesting period. The Company recognized $23,882 and $47,763 of stock-based compensation expense related to these options during the three and six months ended December 31, 2014, respectively, and $67,155 and $133,353 during the three and six months ended December 31, 2013, respectively.

 In July 2012, the Company granted 285,000 options to its executive officers, 182,500 options to its employees and 112,500 options to its non-employee directors under the Company’s 2011 Stock Incentive Plan. The Company is amortizing the fair value of these options of $182,000, $108,000 and $72,000, respectively, over the vesting period. The Company recognized $14,096 and $28,192 of stock-based compensation expense related to these options during the three and six months ended December 31, 2014, respectively, and $17,638 and $34,778 for the three and six months ended December 31, 2013, respectively.

 Stock options granted to the Company’s executive officers and employees vest over a 48 month period, while stock options granted to its non-employee directors vest over a 12 month period.

 Restricted Stock Units – In June 2014, the Company granted 325,000 restricted stock units to its executive officers, 143,400 restricted stock units to its employees and 135,000 restricted stock units to its non-employee directors under the Company’s 2011 Stock Incentive Plan. The Company is amortizing the fair value of these restricted stock units of $331,500, $146,268 and $137,700, respectively, over the vesting period. Restricted stock units granted to the Company’s executive officers, employees and non-employee directors in 2014 vest over 24 months, 48 months and 12 months, respectively. The Company recognized $115,627 and $231,253 of stock-based compensation expense related to these restricted stock units during the three and six months ended December 31, 2014, respectively.

 In June 2013, the Company granted 420,000 restricted stock units to its executive officers and 115,000 restricted stock units to its employees under the Company’s 2011 Stock Incentive Plan. The Company is amortizing the fair value of these restricted stock units of $260,000 and $71,000, respectively, over the 24 month vesting period ending June 2015.  The Company recognized $18,794 and $37,587 of stock-based compensation expense related to these restricted stock units during the three and six months ended December 31, 2014, respectively, and $62,194 and $124,388 during the three and six months ended December 31, 2013, respectively.

 In July 2012, the Company granted 222,500 restricted stock units to its executive officers under the Company’s 2011 Stock Incentive Plan. The Company has amortized the fair value of these restricted stock units of $160,000 over the 24 months ended July 2014. The Company recognized $10,012 and $23,685 for the three and six months ended December 31, 2013, respectively.

            Stock-based compensation cost for the three and six months ended December 31, 2014 for stock options and equity-based instruments issued other than the stock options and restricted stock units described above was $40,997 and $74,549, respectively, and $44,994 and $89,425 for the three and six months ended December 31, 2013, respectively.