Carl Spana, Ph.D. - President and Chief Executive Officer Stephen T. Wills - Chief Financial Officer Trevor Hallam, Ph.D. - Executive Vice President of R&D

Matt Kaplan – Ladenburg Thalmann

Welcome to the Palatin Technologies’ fourth quarter fiscal year 2009 conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions for the question-and-answer session will be given at the end of the Company's remarks. As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that 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 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 would like to introduce your host for today’s call, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, Sir. Carl Spana, Ph.D.: Thank you. Good morning, ladies and gentlemen and welcome to the Palatine conference call. I am Carl Spana, President and CEO of Palatin Technologies. With me, Steve Wills, Palatin's Executive Vice President of Operations and Chief Financial Officer and Dr. Trevor Hallam, Palatin's Executive Vice President of Research and Development. To start our conference call let me say a few words that will serve to outline our three main programs. Palatin is focusing on three exciting programs that we believe will create significant shareholder value in our sexual dysfunction program aimed at both male and female sexual dysfunction, our obesity and diabetes program which is partnered with AstraZeneca and lastly our heart failure program with our lead development compound PL-3994. All our programs target patient populations where the medical need is high and with tremendous commercial potential. We are quite excited by the potential of the melanocortin-receptor target sexual dysfunction program. Our lead compound in this program is bremalanotide which has been extensively evaluated in clinical studies for treatment of Erectile Dysfunction as well as female sexual dysfunction. A potential safety concern with intranasal bremalanotide is its ability to significantly raise solid blood pressure in a small number of patients. To address this potential concern we conducted a repeat dose, Phase I safety study using subcutaneous instead of intranasal administration of bremalanotide. The results demonstrate that with subcutaneous administration consistent therapeutic blood plasma levels can be obtained without blood pressure side effects. Based on the positive results of this study, Palatin has scheduled a meeting with the U.S. Food and Drug Administration to discuss initiation of a Phase II study of subcutaneously administered bremalanotide. Dr. Hallam will be covering the new bremalanotide data in detail later in the presentation. Pending discussions with the FDA we intend to move bremalanotide forward to female sexual dysfunction as well as a treatment for men with erectile dysfunction that are nonresponsive to current PD-5 inhibitor therapy. Obesity and diabetes are two diseases where there remains a strong need for pharmacological interventions. The costs associated with treating these patients is enormous. We, along with our partner AstraZeneca believe that pharmaceutical agents targeting melanacortin-4 receptor have tremendous potential in treating obesity and diabetes. Over the past year the research teams of Palatin and AstraZeneca have made significant progress on our melanacortin-4 obesity and diabetes program resulting in the extension and expansion of our joint research and development collaboration. Additionally, we reached a clinical trial agreement earlier this year with AstraZeneca to conduct improved concept clinical trials in obese patients. This study has been completed successfully and the program is continuing to move forward. PL-3994 is a novel, natriuretic peptide agonist for treating heart failure patients. PL-3994 clinical results and the commercial potential of this program generates significant interest from the medical community and from potential pharmaceutical partners. PL-3994 is a first in class molecule we are developing for sub-chronic treatment of heart failure patients after an acutely decompensating event. We expect that PL-3994 will be effective in reducing the high re-hospitalization rate in this patient population in the 3-6 month period after their release from the hospital. We met with the FDA in the second quarter of 2009 to discuss PL-3994 as a sub-chronic treatment. The outcomes of this meeting have provided guidance to us as a novel and registerable indication and has clearly defined our PL-3994 clinical development plan with agreement on the next study. I now want to hand the call over to Steve to provide a financial update before Trevor goes through our plans for our research and development program.

Thank you Carl and good morning everyone. For the quarter ended June 30, 2009 which is the fourth quarter of our fiscal year, Palatin reported a net loss of $0.2 million or $0.00 per basic and diluted share compared to a net loss of $5.2 million or $0.6 per share for the same period in 2008. For the year ended June 30, 2009 we reported a net loss of $4.8 million or $0.6 per basic and diluted share compared to a net loss of $14.4 million or $0.17 per basic and diluted share for the previous fiscal year. The decreases in net loss for the year and quarter ended June 30, 2009 versus the year and quarter ended June 30, 2008 were primarily due to a net decrease in operating expenses resulting from strategic restructuring and refocusing of Palatin’s clinical stage development programs and for the quarter ended June 30, 2009 an increase in revenue earned under Palatin’s license and clinical trial collaboration agreements with AstraZeneca. Regarding revenue, for the quarter ended June 30, 2009 Palatin recognized $4.2 million of revenue under its agreements with AstraZeneca. In the comparable quarter of 2008 Palatin recognized $0.8 million of revenue from AstraZeneca and revenue for the year ended June 30, 2009 amounted to $11.4 million compared to $11.5 million for the prior year. Regarding costs and expenses, total operating expenses for the quarter ended June 30, 2009 were $4.5 million compared to $6.4 million for the comparable quarter of 2008. For the year-ended June 30, 2009 total operating expenses amounted to $18.7 million compared to $28.1 million for the prior year. The net decreases in operating expenses for the quarter and year just ended were primarily due to the strategic restructuring and refocusing of Palatin’s clinical stage development programs partially offset by increases for clinical costs associated with Palatin’s agreements with AstraZeneca. Regarding AstraZeneca, during the year we amended and extended agreements with AstraZeneca including entering into a clinical trial sponsored research agreement. In addition to reimbursement of Palatin’s activities at an agreed full-time equivalent rate during the fiscal year ended June 30, 2009 Palatin received payments of $6.6 million from AstraZeneca, $5.7 million of which was recognized as revenue during the fiscal year. In August 2009, we announced a raise of approximately $3.1 million in gross proceeds before deducting placement agent fees and other offering expenses in a registered direct offering of 9.5 million units at a price of $0.33 per unit. Each unit consisted of one unit share of common stock and one warrant exercisable at any time on or after issuance and on or before the 5-year anniversary date of the issuance to purchase 0.35 of one share of common stock at an exercise price of $0.33 per share of the common stock. Regarding cash position, Palatin’s cash, cash equivalents and investments totaled $7.8 million as of June 30, 2009 compared to $12.8 million at June 30, 2008. Again, subsequent to the fiscal year end Palatin received $2.8 million in net proceeds from the August 2009 equity offering referenced above. Carl Spana, Ph.D.: Thank you Steve. Now Trevor will take us through our research and development programs. Trevor Hallam, Ph.D.: Thanks Carl. Good morning. Let me start with the sexual dysfunction programs. In the fall of 2007 our end of Phase II data with intranasally administered bremalanotide revealed a couple of key concerns; a wide variation in plasma exposure for a given intranasal dose across the ED population and secondly a propensity to cause a small increase in blood pressure. Of most concern to the program, a few individuals in the study showed larger blood pressure increases. Palatin’s [molecule] receptor sexual dysfunction program set a major objective to further understand the mechanism or mechanisms underlying the cardiovascular effects of bremalanotide. Palatin had two major goals for the program. First, to redefine the bremalanotide development program to optimize the benefit to risk by reassessing the target population by considering agent use of PD-5 inhibitors and to reanalyze the risk of administration and secondly to design criteria for subsequent second generation melanocortin agonists. We made substantial progress on both fronts. Since early 2008 Palatin has performed a number of pre-clinical studies and an additional clinical study with bremalanotide to further elucidate the mechanism of blood pressure increase and its relationship to bremalanotide plasma levels. Our data has suggested that by changing the route of administration of bremalanotide from intranasal administration to subcutaneous there is much less variability in plasma exposure. Additional clinical data generated in the first half of this calendar year has allowed us to determine that subcutaneous administration of bremalanotide with its predictable plasma exposure levels reduces or even eliminates the blood pressure response when dosed at efficacious levels. This 15-day randomized, double-blind, placebo controlled study in 54 subjects, 27 on placebo and 27 administered bremalanotide, measured blood pressure at baseline and before and after each of 45 doses of bremalanotide or placebo administered subcutaneously. The dose administered was selected to result in a plasma concentration known from previous studies to be efficacious for improving erectile function. Continuous ambulatory blood pressure measurements were also collected during the 48-hour period after the first dose on every subject. The key findings were as follows: All subjects administered with subcutaneous bremalanotide resulted in consistent and predictable plasma concentrations in the target range, i.e. known to be erectogenic. No statistically significant difference in mean changes in blood pressure were seen in subjects receiving bremalanotide compared to placebo. No clinically significant difference in the range of blood pressure changes were seen in subjects receiving bremalanotide compared with placebo. No subjects discontinued participation in the study due to protocol stopping rules based on blood pressure. No subjects discontinued participation in the study due to nausea and no difference was observed in the rate of vomiting between subjects receiving bremalanotide compared to placebo. There was one incident in each group; one in placebo and one in bremalanotide. Our next step is to meet with the FDA to discuss the development plans for bremalanotide as a second line therapy for ED patients that are non-responsive to PD-5 inhibitors. This meeting has been scheduled. Given the exciting data from the clinical study and providing the outcomes from the FDA meeting are favorable concerning the ED development program we would also aim to restart bremalanotide development for female sexual dysfunction. In terms of new and improved molecules, our follow-up program of defined PL-6983 as a new and novel second generation peptide melanocortin-4 receptor agonist for sexual dysfunction has shown efficacy in animals with greater separation still over cardiovascular effects. A Phase I trial has been planned with PL-6983 to see if this also holds true in man by seeking to evaluate whether doses that produce erectogenic activity measured by RigiScan, a mechanic measure of erectile response, do so with an even greater separation from those [with] high blood pressure. Given the exciting new data on subcutaneously administered bremalanotide our intention is to hold PL-6983 as a potential back up and not proceed with a Phase I trial at this time. In addition to the [inaudible] peptide therapies, we also have novel potent and selective orally viable small molecule melanocortin-4 receptor agonists. We will be ready to begin pre-clinical safety testing in the second half of this year with the ultimate aim of having a drug useful as an on-demand simple tablet for use in both female and male erectile dysfunction. Now moving to our obesity program with AstraZeneca. Our collaborative research and development program with AstraZeneca for the discovery and development of anti-obesity agents continue to show great progress. Accumulating data from genetic pharmacological and physiological studies continue to identify the central melanocortin system as an important regulator of energy homeostasis and potentially a key pharmacological target for treatment of obesity. Palatin’s melanocortin receptor obesity program combines our core technologies for lead generation chemistry with our pre-clinical and clinical experience with the melanocortin system to develop novel therapeutics for treating obesity and related diseases. In studies using animal models of obesity, melanocortin-4 receptor selected compounds reduced food intake and body mass as well as decreasing plasma glucose and insulin levels. As previously mentioned the research agreement with AstraZeneca was extended and expanded earlier this year and a separate clinical study agreement was also reached specifically to take a proof of principle melanocortin agonist to the clinic. This study has been completed successfully and the data now is available to the teams. The data from this proof of principle study forms a basis for translation of pre-clinical data to confirm selection of commercially viable clinical candidates expected to enter clinical studies in 2010. Developments of already viable clinical candidates is on track with a timeline defined by our collaborative agreement with AstraZeneca. Now to our heart failure program and our compound PL-3994. The American Recovery and Reinvestment Act of 2009 called on the Institutes of Medicine to recommend a list of priority topics to be the initial focus for investment in comparative effectiveness research. Amongst the top 100 was a call for comparing innovative treatment strategies for congestive heart failure. Heart failure readmissions have not improved from 1995 through 2004 and in fact have increased slightly based on Veterans Administration data. Since heart failure admissions account for 80% of the cost of heart failure, the VA health system included in the May 2009 issue of Forum that any treatment that reduces heart failure hospitalizations is cost effective. Palatin and its scientific advisors believe that chronic stimulation of the natriuretic peptide receptors as an approach to treating heart failure patients may decrease re-hospitalization rates and improve survival rates. Clinical and pre-clinical data from studies with natriuretic peptide agonists clearly demonstrate that stimulation of natriuretic peptide receptors is an important mechanism to rectify the underlying pathophysiology in heart failure and proper exploitation of this approach has the potential to deliver improved therapeutic agents. Palatin has developed novel natriuretic peptide agonists that have natriuretic receptor selectivity and desirable pharmacological and [inaudible] attributes for use as potential therapeutics. We received this summer a Notice of Allowance from the U.S. Patent and Trademark Office the allowed claims cover a family of cited compounds that bind to natriuretic peptide receptor A including PL-3994. Palatin expects the patent will issue in the second half of this year. The patent’s 20 year term would expire in 2027. PL-3994 is a long acting agonist that has been designed to be suitable for daily subcutaneous, self-administration by heart failure patients. Clinical studies have shown that PL-3994 has a half life and duration of effect on the cardiovascular system that is suitable for daily administration. The expectation is that chronic underlying pathophysiology that ultimately leads to progressive worsening of the heart failure patient until they decompensate and then re-hospitalize will be decreased or prevented by a 3-6 month course of treatment with PL-3994. It is expected it will do this through a combination of decreased cardiac remodeling and improved kidney function. PL-3994 will be administered as a daily subcutaneous injection as adjunct to other medications such as beta blockers, ACE inhibitors and angiotensin-receptor blockers. Two early phase clinical studies have been completed, a Phase I study in healthy volunteers which was presented at the Heart Failure Society of America meeting in Toronto in September 2008 and a Phase IIA study in controlled hypertensives that will be presented at the Heart Failure Society of America meeting in Boston next week. Going forward PL-3994 will be evaluated in additional Phase II studies. These studies will be designed to characterize the safety, pharmacokinetics and pharmacodynamics in heart failure patients. A key objective of the Phase II program will be to demonstrate the ability of PL-3994 treatment to reduce the re-hospitalization rate in heart failure patients after an acutely decompensating event. Palatin met with the FDA earlier this year to discuss PL-3994 as a sub-chronic treatment in heart failure patients. The meeting was very constructive and useful to define our PL-3994 development plans. The highlights were as follows: PL-3994 could be developed for a novel and registerable indication to reduce re-hospitalization. This is consistent with the comparative effect and research emphasis on heart failure readmission and cost effectiveness. FDA guidance clarify the clinical development plan and as part of this process the design of the next clinical study was conceptually agreed. Additionally, we received guidance as to the likely requirements for adequate safety and tolerability data that would be both appropriate from a patient safety perspective and manageable from a clinical development perspective. Thanks, now I’m going to hand the call back to Carl. Carl Spana, Ph.D.: Thank you Trevor. Before we move onto the question and answer period I have a few additional comments. I remain very excited about the Palatin product pipeline and the potential to substantially increase shareholder value. The depth and potential of our programs has allowed us to access immediate resources during this very difficult economic period. However, we realize we will not be able to pursue all of our opportunities and we will have to prioritize. In the near-term we will focus on our melanocortin receptor programs for sexual dysfunction and our melanocortin receptor program for obesity and diabetes. Because of our strength in melanocortin receptor research, the partnership with AstraZeneca and the size of the commercial opportunities we believe that these programs represent the best risk and return for our shareholders. The sexual dysfunction space is an area where there is clinical need and very few products in development. 35% of patients with erectile dysfunction do not respond to current PD-5 inhibitor therapy such as Viagra. An additional 20% are only marginally satisfied. We believe this non-responsive population is an excellent commercial opportunity for bremalanotide. Based on our clinical experience with bremalanotide we believe that bremalanotide will have significant benefit in this patient population. Our recent clinical results indicate we have addressed the potential safety concerns of bremalanotide which has increased our confidence that bremalanotide can be commercialized with an acceptable benefit to risk ratio. In the female sexual dysfunction space patients and their doctors have very limited treatment options. Based on our clinical and pre-clinical data we believe that MCR4 targeted therapy such as bremalanotide holds great potential for treating these patients. As previously mentioned, we are scheduled to meet with the FDA later this year to discuss the bremalanotide development plans. The results of this meeting will guide our final development program and at that time we will be able to provide you with the details. Regarding PL-3994 and our early melanocortin receptor programs, we intend to enter into corporate partnerships to access the resources to move these exciting opportunities forward. In closing, with tight control of our expenses and increasing our projected cash flow by expanding our obesity and diabetes collaboration with AstraZeneca, we are confident we can move Palatin forward and secure significant value for our shareholders. Now I would like to open the call to questions. :

(Operator Instructions) The first question comes from the line of Matt Kaplan – Ladenburg Thalmann. Matt Kaplan – Ladenburg Thalmann: Starting off with the AstraZeneca agreement you mentioned that you amended and extended that agreement. What does that mean for Palatin going forward?

We amended the agreement and during the fiscal year we actually received $5 million of milestones related to the progress we made with the obesity program including the recent trial that we completed. The actual research collaboration part of the support whereby AstraZeneca reimburses us for an agreed upon FTE rate, full time equivalent rate, initially would have expired January 31 of 2009. That was extended for another year to January 31, 2010. The additional amendments to the agreement included a clinical trial for the obesity program that Trevor and Carl just discussed. Matt Kaplan – Ladenburg Thalmann: The next steps for this program are to move the selected molecules into development in 2010? Trevor Hallam, Ph.D.: Yes and the selection will be this year. Of course we aim to get into the clinical studies next year. As I mentioned, the proof of concept clinical study we did earlier this year on behalf of AstraZeneca has been tremendously useful and will really allow us to make the translation to the clinic with commercial candidates. Matt Kaplan – Ladenburg Thalmann: In terms of bremalanotide can you give us a sense from your prior studies in the PD non-responders what you saw in those patients in terms of efficacy and then secondarily, what you saw in the subcutaneous trial, give us some more detail in terms of the side effect profile compared to the intranasal. Trevor Hallam, Ph.D.: Previous and earlier clinical studies have included small populations of non-responders. That data together with some studies that an Iranian group in Tehran actually did with bremalanotide which wasn’t sponsored by Palatin look very consistent and very intriguing. In fact the Iranian studies show the monotherapy with bremalanotide were very good. Those PD5 non-responders were running properly along the lines that we would be recruiting selecting and then randomizing. In other words, you take all the subjects that are candidates for the study through a running period with the PD-5 inhibitor to really show they are not effective before you then randomize to bremalanotide as a monotherapy or as adjunct. The second part of the question? Matt Kaplan – Ladenburg Thalmann: In terms of what you are seeing as a side effect profile with the subcutaneous dosing regimen rather than the intranasal? Trevor Hallam, Ph.D.: We actually didn’t see a number of the AE’s that we saw that were due to the intranasal route of administration of course. It is always nice to establish that to flush in a bit of the early headache and so on. What we were also very excited about and as we hoped that we could really separate and lose the changes in blood pressure but also the GI side effects; nausea and vomiting, at plasma concentrations we know are going to be very robust and erectogenic. So that was the really exciting outcome from the study. Matt Kaplan – Ladenburg Thalmann: You said in your prepared remarks you were going to have some data at the HFSA conference upcoming. What should we expect to see there? Trevor Hallam, Ph.D.: That is really a small study with PL-3994 which was run through controlled hypertensives. Basically it was a PK and safety study but we will be able to show some cardiovascular effect and dose ranging which will guide the dosages we will use in future heart failure patient studies. Matt Kaplan – Ladenburg Thalmann: Can you give us a sense in terms of where you are in the partnering discussions for 3994? Carl Spana, Ph.D.: We have targeted most of the major pharmas from that and we have interest from multiple partners in the program. When it would conclude I don’t have an exact idea if or when it would conclude but certainly there is good interest and we are confident we should be able to conclude a transaction that allows PL-3994 to move forward and for us to realize value there.

Due to no further questions in the queue I would like to turn the conference back over to Dr. Carl Spana. Carl Spana, Ph.D.: Thank you. I want to thank everyone for participating in our year-end conference call. As always we remain very excited about the potential at Palatin. We have done tremendous work in the last year in moving the company forward under some very difficult conditions. I think we are well positioned for a great year this year and we are really looking forward to it. As always I look forward to meeting various investors and analysts and so on and so forth as I get out and make the rounds particularly in the fall. With that said we will talk to you next quarter. Steve and Trevor thank you.

That does conclude today’s conference. Thank you for your participation.