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

Good morning, ladies and gentlemen, and welcome to Palatin Technologies’ first quarter fiscal year 2010 conference call. (Operator Instructions) 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. Carl Spana, Ph.D.: Thank you. Good morning, ladies and gentlemen and welcome to the Palatin conference call. I am Carl Spana, President and CEO of Palatin Technologies. With me today is 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 off, let me say a few words that serve to outline our three main programs. Palatin is focusing on three exciting programs that we believe will create significant shareholder value. These are: 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 our Melanocortin targeted sexual dysfunction program. Our lead compound in this program is bremelanotide which has been extensively studied in clinical studies as a treatment for both erectile dysfunction as well as female sexual dysfunction. A potential safety concern with intranasal bremelanotide is its ability to significantly raise systolic 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 intranasally administered bremelanotide. The results demonstrate that with subcutaneous administration, consistent therapeutic blood plasma levels can be obtained without blood pressure side effects. Palatin has been in discussions with the FDA concerning the clinical development of bremelanotide for men with erectile dysfunction and who do not respond to current PD5 inhibitive therapy. We anticipate beginning enrolment of patients in the bremelanotide erectile dysfunction program later this calendar year. In addition, we intend to develop bremelanotide as a treatment for women with female with female sexual dysfunction and will discuss our bremelanotide female sexual dysfunction clinical development program with the FDA in early 2010 with the goal of beginning patient enrolment by mid 2010. 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 the Melanocortin-4 receptor have tremendous potential in treating obesity and diabetes. Based on the success of the joint research program and results of a proof of principle clinical study, AstraZeneca agreed to an amendment of our agreement resulting in Palatin receiving additional funds. Mr. Wills will go over the details of the amendment shortly. PL-3994 is a novel, natriuretic peptide agonist for treating heart failure patients. PL-3994 clinical results and the commercial potential of this program have generated significant interest in 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 three to six month period after their release from the hospital. We have met with the FDA to discuss PL-3994 as a sub-chronic treatment. The outcomes from this meeting have provided guidance towards a novel [inaudible] indication and has clearly defined our PL-3994 clinical development plan with agreement on the next study. Now I 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. Steve.

Thank you, Carl. Good morning, everyone. For the quarter ended September 30, 2009 which is the first quarter of our fiscal year, Palatin reported a net loss of $37,000 or $0.00 per share compared to a net loss of $4.3 million or $0.5 per share for the same period in 2008. The decrease in net loss for the quarter ended September 30, 2009 compared to the same period last fiscal year was primarily due to an increase in revenue recognized under Palatin's license and clinical trail agreements with AstraZeneca and a net decrease in operating expenses resulting from strategic restructuring and refocusing of Palatin's clinical stage development programs in 2008. As of September 30, 2009, Palatin's cash, cash equivalents and investments totaled $7.7 million compared to $7.8 million at June 30, 2009. During August, we raised $2.8 million in net proceeds from a registered direct offering of 9.5 million units at a price of $0.33 per unit. Each unit consisted of one share of common stock and one warrant exercisable at any time on or before the five-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. In September 2009, we signed an amendment to our exclusive research collaboration and license agreement with AstraZeneca to discover development and commercialized compounds that target Melanocortin receptors for the treatment of obesity and related indications. Under the terms of the amendment, AstraZeneca has agreed to make a $2.5 million payment and that payment was received in October 2009 and subject to completion of certain tasks relating to the program, an additional $2.5 million in the first quarter of calendar year 2010. Under the amendment, the terms of the original collaboration and license agreement signed originally in January of 2007 relating to milestone payments and royalty rates were restructured. Regarding licensing and contract revenue for the quarter ended September 30th, 2009, Palatin recognized $3.7 million of contract revenue under its collaboration agreement with AstraZeneca compared to $746,000 for the same period in 2008. Based on the September 2009 amendment, Palatin will provide research services to AstraZeneca through January of 2010. Accordingly, contract revenue is being recognized over the estimated remaining performance period. Regarding costs and expenses, total operating expenses for the quarter ended September 30, 2009 were $3.8 million compared to $5.1 million for the comparable quarter of 2008, primarily due to a strategic restructuring and refocusing of Palatin's clinical stage development programs. Carl Spana, Ph.D.: Thank you, Steve. Now I will hand the call over to Trevor for the latest on our research and development programs. Trevor. Trevor Hallam, Ph.D.: Thanks, Carl. Good morning. Let me start out with the sexual dysfunction program. So going back a couple of years, previous Phase II data with intranasally administered bremelanotide 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 small increases in blood pressure. Of most concern, however, a few individuals in the study seemed to show larger blood pressure increases. So Palatin has addressed a major objective to further understand the mechanism responsible for these underlying cardiovascular effects. We have redefined the bremelanotide ED program to optimize the benefit to risk. First we aim to target the identification of second line therapy for those with ED who are non-responsive to PD-5 inhibitors. Secondly, we will switch to subcutaneous routes of administration and lastly, we will evaluate BMT for use both as adjunct to PD-5 inhibitors and as potential mono-therapy. Over the last 18 months, Palatin has performed a number of pre-clinical studies and as Carl mentioned previously, an additional clinical study with bremelanotide to further elucidate the mechanism of blood pressure increase and its relationship to bremelanotide plasma levels. Our data had suggested that by changing the routes of administration of bremelanotide from intranasal to subcutaneous, there is much less variability in plasma exposure. The additional clinical data generated in the first half of this year confirmed that subcutaneous administration of bremelanotide with its predictable plasma exposure levels reduces or eliminates the blood pressure response when dosed at efficacious levels. In addition, those side effects that were most likely associated with intranasal administration were absent and the incidents of gastrointestinal side effects, such as nausea and vomiting, were also much better controlled. Palatin have had a guidance meeting with the FDA to discuss the development program for bremelanotide as a second line therapy for ED patients that are non-responsive to PD-5 inhibitors. The meeting was very constructive and we have a clear and agreed plan to proceed forward cautiously to establish that subcutaneous administration will assure safe execution of [Phase II] home studies in the target population of PD-5 inhibitor non-responders. The clinical program is in the process of being initiated. In addition, we will aim to seek further guidance from the FDA with regard to restarting bremelanotide development for female sexual dysfunction. In terms of new and improved molecules, our follow-up program has defined PL-6983 as a new and novel second generation peptide Melanocortin-4 receptor agonist for sexual dysfunction. It has shown strong 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 mechanical means do so with an even greater separation from those that elevate blood pressure. Our intention is to hold PL-6983 as a potential back-up and not proceed with the Phase I trail at this time due to the very promising data we have received this year with bremelanotide. In addition to the cyclic peptide therapies, we also have novel potent and selective orally viable small molecule Melanocortin-4 receptor agonists that will be ready to begin pre-clinical safety testing towards the end 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 let me move to the obesity program, which is collaboration with AstraZeneca. Our collaborative research and development program with AstraZeneca for the discovery and development of anti-obesity agents continues 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 new therapists for obesity and associated metabolic disorders. Together with AstraZeneca, Palatin has a proof of principle clinical study on the Melanocortin-5 receptor agonist. The data from this proof of principle study has formed the basis for translation analysis to confirm selection of commercially viable clinical candidates expected to enter clinical studies in 2010. Development of orally by availably clinical candidates is also on track with the timeline defined by our collaborators. Now to our heart failure program and PL-3994 -- Palatin and its scientific advisors believe that chronic stimulation of natriuretic peptide receptors as an approach to treating heart failure patients may decreased 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 drug-like attributes for use as potential therapeutics. One such molecule is PL-3994. This is a long-acting agonist that has been designed to be suitable for daily subcutaneous self-administration. 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 the chronic underlying pathophysiologies that ultimately lead to progressive worsening of the heart failure patient until re-hospitalization will be decreased or prevented by a three to six month course of treatment with PL-3994. PL-3994, which will be administered daily as an adjunct to other medications such as beta blockers, ACE inhibitors and angiotensin-receptor blockers, is expected to prevent re-hospitalization by a combination of decreased cardiac remodeling and improved kidney function. As earlier described, 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 more recently in this year’s Heart Failure Society of America meeting in Boston this last September, we presented the results of a Phase II A study in controlled hypertensives. Going forward, the plan is to evaluate PL-3994 in additional Phase II studies to characterize the safety, pharmacokinetics and pharmacodynamics in the target 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 the development plans for PL-3994 in heart failure and the outcomes were as follows: PL-3994 could be developed for a novel and registerable indication to reduce re-hospitalization. FDA guidance clarified the clinical development plan and as part of this process, the design of the next clinical study was conceptually agreed to. 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. We continue to evaluate the potential for other key indications with an unmet need in addition to heart failure. Of particular additional relevance to PL-3994 and of interest to potential partners are resistant hyper-tension and pulmonary arterial hypertension. Finally, a word on our late stage discovery research work -- we’ve succeeded in identifying extremely potent and selective Melanocortin [ligins] that will be progressed to pre-clinical disease models of airways inflammation. If successful, we aim to progress to clinical development in the smoking asthmatic population that account for about 20% of asthmatics, and are poorly responsive to [glutecordicord] treatment. And the other large opportunity is in patients with chronic arthritic pulmonary disease. In addition, we are in the late stage discovery process to identify potent Melanocortin antagonist as the Melanocortin-4 receptor for [kokackzia] associated with chronic arthritic pulmonary disease or with tumor growth. And that’s it for me, so now I’m going to hand it back to Carl. Carl Spana, Ph.D.: Thank you, Trevor. Before we move on to the question and answer session, I have a few additional comments. I remain very excited about the Palatin product pipeline. The depth and potential of our programs has allowed us to access needed resources during a very difficult economic period. However, we realize that 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 programs for sexual dysfunction and our Melanocortin programs for obesity and diabetes. Because of our strength in Melanocortin research, our partnership with AstraZeneca and the size of commercial opportunities, we believe that these programs represent the best risk return for our shareholders. The sexual dysfunction space is an area where there is clinical need with very few products in development. 35% of the patients with erectile dysfunction do not respond to current PD-5 inhibitor therapy and an additional 20% are only marginally satisfied. We believe this non-responsive population is an excellent commercial opportunity for bremelanotide. Based on our clinical experience with bremelanotide, we believe that bremelanotide will have significant benefit in this patient population. Our recent work to address the potential safety concerns of bremelanotide has increased our confidence that bremelanotide can be commercialized with an acceptable risk to benefit ratio. In the female sexual dysfunction space, patients and their doctors have very limited treatment options. Based on our clinical data, we believe that Melanocortin-4 targeted therapy holds great potential for treating these patients. We are fortunate to have two potential drug candidates, bremelanotide and PL-6983, for this indication. As previously mentioned, we met with the FDA and we plan to begin the bremelanotide erectile dysfunction clinical program later this calendar year. Regarding PL-3994 and our other early stage Melanocortin programs, we intend to enter into corporate partnerships to access the resources to move these exciting opportunities forward. In closing, through 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 programs. Now I would like to open the call to questions.

(Operator Instructions) The first question comes from the line of Matt Kaplan of Ladenburg. Matt Kaplan – Ladenburg Thalmann: So talk a little bit about how will I guess the subcu bremelanotide, your vision in terms of it being incorporated into the current treatment paradigm for both ED and FSD. And then talk a little bit more about the timeline for FSD as well. Carl Spana, Ph.D.: With regard to erectile dysfunction, when we think about the patient population that is not responding well to PD-5 inhibitor therapy, which we mean Viagra sales and Lavitra, they really don’t have a lot of treatment options. Today the only other approved therapies are either direct injectable [inaudible], which is a needle that you directly inject into the penile tissue, or a muse, which is a inter-urethral pellet that you have to add into the urethra. So those generally tend to be a little bit -- much more invasive and because they are not so widely used. The other alternative is surgical, in which case they can get an implant put in. So when we think about that non-responsive patient population, a very simple, relatively painless small subcu injection that can be given in the upper arm or the upper leg or the abdomen stacks up quite well. So we think that with the efficacy that we will see in the profile of the drug, that the second line population is one where we will get pretty rapid adoption and good adoption of the use. Switching to the female front, there really to date aren’t any options available so again, although one might like to have an oral medication for that indication and we are indeed working on that and believe that we will get that, we do think that there’s a good -- still a very good commercial opportunity for bremelanotide in light of the fact that there are no treatment options and the few treatments that are in development tend to be chronic, meaning that they have to be taken every day, whereas bremelanotide is an on-demand. So I think that’s a much more convenient profile for the patient, even though it would be subcu versus non. I hope that answers it. Matt Kaplan – Ladenburg Thalmann: And then in terms of when you think you’d get the FSD program up and going? Carl Spana, Ph.D.: We’ve been having meetings with the AC to discuss the male program and we are going back to request our meetings with the female reviewers. I would expect we will get that meeting early in 2010 and based on the outcome from that, we should be able to start in the first half of next year. Matt Kaplan – Ladenburg Thalmann: And then one other question in terms of Trevor mentioned in his prepared remarks, or perhaps you did, that with the natriuretic peptide you are looking at potentially partnering that. Are there any next steps you have to do internally to make that a partnerable package or is it pretty much set to be partnered as is? Trevor Hallam, Ph.D.: I think it is at a stage where it is pretty well set to be partnered. I mean, we have a clear expectation of what the compound is capable of doing pre-clinically and it all comes down to choosing the right patient population and looking then to see whether you are going to see the expected benefit in terms of renal and cardiac function. So we’ve defined our dose range and where we should be able to go in there. We need to reconfirm that with the right population of folk, heart failure patients, and then extend that through into a longer treatment paradigm. But I don’t think there is much else we can do pre-clinically now to really de-risk it or we’ve defined the opportunity and I think it just needs to be executed in that. Matt Kaplan – Ladenburg Thalmann: But in terms of the next steps, that would probably be done with a partner and not -- Trevor Hallam, Ph.D.: Yes, we anticipate so. Matt Kaplan – Ladenburg Thalmann: Thanks for taking my questions.

That does conclude today’s question-and-answer session for today. At this time, I will turn the call back over to Dr. Spana for any additional or closing remarks. Carl Spana, Ph.D.: I would like to thank all of you for participating in the first quarter calendar year 2010 Palatin conference call. With that, we look forward to updating you as we continue to make progress with the development of our exciting programs next quarter. Have a good day and we will talk to you soon. Bye-bye.

That concludes today’s conference call. Thank you for your participation.