Good morning, ladies and gentlemen, and welcome to the Palatin Technologies third quarter fiscal year 2011 conference call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions for the question-and-answer session will be given at that end of the company’s remarks. As a reminder, this conference is being recorded. Before we begin our remarks, I would like to remind you that statements 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.

Thank you. Good morning. I’m Carl Spana, President and Chief Executive Officer of Palatin Technologies. With me on the phone today is, Steve Wills, Our Executive Vice President of Operations and Chief Financial Officer; and Dr. Jeffrey Edelson, our Chief Medical Officer. On today’s call, we’ll be providing updates on product programs and financial results. Again, Steve Wills will provide an update on the fiscal third quarter financial results. Steve?

Thank you, Carl, and good morning, everyone. Regarding the financial update, Palatin’s net loss for the quarter ended March 31, 2011, was $3.8 million or $0.17 per basic and diluted share, compared to a net loss of $2 million or $0.20 per basic and diluted share for the quarter ended March 31, 2010. The increase in net loss for the quarter ended March 31, 2011, compared to the net loss for the same period last fiscal year was primarily due to a decrease in revenue recognized under our collaboration agreements with AstraZeneca as a result of the successful completion of the research collaboration portion of the agreements in January 2010 and secondarily, to a non-cash non-operating expense of $1.3 million, which represents the increase in the estimated fair value of a warrant liability recorded on the balance sheet in connection with our previously announced underwritten public offering, which resulted in net proceeds of $21.1 million. In connection with this underwritten public offering, a portion of the warrants issued in March, 2011 require that the company seek stockholder authorization to increase Palatin’s authorized common stock and are therefore, classified as a liability at their estimated current fair value on our balance sheet as of March 31, 2011. Warrants that are classified as a liability are revalued at each reporting date until the classification as a liability changes. On May 11, 2011, at our Annual Meeting, the stockholders approved an increase in authorized common stock from 40 million shares to 100 million shares, providing sufficient available and authorized common stock to permit exercise of all Series B warrants. Accordingly, these warrants seek to be classified as a liability and will not be reported or revalued at any subsequent reporting date after May 11, 2011. In essence, the amount classified as liability will be reclassified to the equity section of our balance sheet during the quarter ended June 30, 2011. In addition to the approval to increase Palatin’s authorized common stock, the following proposals were submitted to and approved at our Annual Stockholders Meeting on May 11. The election of seven directors to Palatin’s Board of Directors, the appointment of KPMG LLP as Palatin’s independent registered public accounting firm for fiscal year ending June 30, 2011 and the ratification of Palatin’s 2011 Stock Incentive Plan. Regarding revenues, for the quarter ended March 31, 2011, we had $0.1 million of contract revenue recognized under agreement with AstraZeneca compared to $2.6 million for the same period in 2010. For the quarter ended March 31, 2011, total operating expenses were $2.7 million compared to $4.6 million for the comparable quarter of 2010. The decrease in operating expenses for the quarter was primarily related to our previously disclosed realignment of resources. At March 31, 2011, Palatin’s cash and cash equivalents were $22 million, compared to cash and cash equivalents of $8.9 million at June 30, 2010. We anticipate, based on our current operating plan, being able to fund our operations through calendar year 2012. Having strong position on our balance sheet eliminates the need and distraction of quarterly or semi-annual fund raising and allows us to focus our efforts on the advancement of our programs.

Thank you, Steve. An update on our programs. First up is our obesity and diabetes in melanocortin-4 receptor program which is partnered with AstraZeneca. As I’m sure, you are all aware obesity is a major health issue. A recent report by Thomson Reuters noted the following. Obesity is the global epidemic of the 21 century. The Center for Disease Control h as declared it to be the number one health threat in the United States. At the present time, worldwide, there are over 1 billion adults overweight, with 300 million classified as clinically obese. By 2015, the world’s organization predicts these figures to rise to 2.3 billion overweight and 700 million clinically obese adults. We believe the therapeutics that target receptor have the potential to demonstrate safety and efficacy required for approval and dramatically impact the treatment of obesity. As you can imagine, this program has huge commercial potential and we believe our partner, AstraZeneca, brings the resources and commitment to realize this potential. Through our collaboration with AstraZeneca we have conducted proof-of-principle clinical trials in obese patients with small commercial compounds that target the melanocortin-4 receptor which have shown significant reductions in food intake and weight loss. We are pleased to report that this program has made excellent progress and has now entered into the clinical stage of development. This Palatin-Astrazeneca initiated clinical studies with a commercial lead compound which was generated as part of our collaboration. As a reminder, AstraZeneca is responsible for clinical and commercial activities and their associated costs. On the next program, I would like to talk about is PL-3994, our natriuretic peptide receptor agonist in development as a treatment for acute exacerbations of asthma. Acute exacerbations of asthma, also called acute severe asthma, is an ongoing asthma episode in which asthma symptoms do not adequately respond to initial bronchodilator or corticosteroid therapy. Inhaled beta-2 adrenergic receptor agonists, such as albuterol, and inhaled corticosteroids are primary treatments for asthma episodes. Some patients with acute exacerbation of asthma become unresponsive to beta-2 adrenergic receptor agonists, significantly limiting treatment options and increasing their risk. In many cases, these patients are admitted (inaudible) with high doses of beta-2 adrenergic receptor agonist, oxygen to (inaudible) melanocortinergic agents. A major limitation of this standard of care treatment is that it typically takes several hours before the patient sees significant improvement, a period during which they remain at risk for adverse outcomes. We are targeting PL-3994 as a treatment to bride this at risk period. PL-3994 development program includes both subcutaneous formulations and inhalation formulations. We recently received FDA review of the protocol for the PL-3994 subcutaneous proof of principle asthma clinical trial and this trial may proceed at any time. We have also begun the preclinical toxicology studies to support the use of inhaled PL-3994. A key near-term objective for our PL-3994 program is to identify development and marketing partner. We are in discussions with multiple potential partners that we believe have the developmental, regulatory and commercial resources to assist us in advancing our PL-3994 program. Moving on to bremelanotide and melanocortin-4 receptor agonist in development as a treatment for female sexual dysfunction is our lead clinical program. Female sexual dysfunction is a persistent or recurrent problem in terms of one or more of the stages of the female sexual response cycle with associated distress. The symptoms of female sexual dysfunction are quite prevalent affecting 43% of women at some point during their adult life, and is estimated that approximately 20% of these women concurrently experience dysfunction associated distress. There are no FDA approved treatments for female sexual dysfunction and these patients have limited treatment options. We believe that female sexual dysfunction represents a significant area of medical need and a substantial commercial opportunity. Earlier this year, we met with the FDA to discuss our bremelanotide female sexual dysfunction program. At that meeting, we reached agreement with the FDA on the protocol and clinical trial design for a Phase IIb study. Subsequently, we submitted a revised protocol to the FDA, reflecting that agreement and we are on track to start this Phase 2b at-home clinical trial for pre-menopausal women with sexual dysfunction in the second quarter of calendar 2011. So, let’s take a few more moments to review the protocol and objectives for this Phase 2b trial. The key objectives of this trial are to generate the safety and efficacy data to support the transition of this program into Phase 3 registration trials. The trial is designed as a placebo controlled double-blind study. The study will have four parallel arms, one placebo and three bremelanotide doses. We’re targeting to enroll 100 premenopausal female sexual dysfunction patients for arm for a total of 400 patients. The primary efficacy measure for this study will be the improvement and the number of satisfying sexual events. This will be measured using a validated event log or diary. Additionally, efficacy evaluations will include changes in arousal, desire, and dysfunction associated distress as measured using validated patient self assessment questionnaires. We’ll also evaluate the blood pressure effects on subcutaneous administered bremelanotide in this patient population. We believe that we have designed the program to evaluate the safety and efficacy of bremelanotide. If results of this study are positive, they will support the transition into Phase 3 registration trials. I want to stop here and open the call to questions.

Thank you. (Operator instructions) We take our first question from David Moskowitz with Roth Capital.

Excellent. Thanks, good morning, gentlemen.

Good morning, David.

On the BMT compound, premenopausal female sexual dysfunction, could you give us some – a little bit of color in terms of how the trials are going thus far? When you expect them to be fully enrolled and what are you seeing so far with regard to the enthusiasm for the product or any issues you might be having with regard to enrollment? Thanks.

Sure, well, we haven’t – just starting on the enrollments, we’ll start a little bit later this quarter. So, we’re on track to do that. We’re projected to complete enrollment in the study around the end of the year, and we would expect the data to be released or have the first data coming in around at the end of the second quarter of 2012. With regards to – if start enrolling, we have not seen any trouble getting sites, we’ve got plenty of excellent sites that are lining up to enroll patients. So we feel pretty confident that we’ll be able to get this trial enrolling and on track as I’ve just said.

And, any – again back to the sort of the uptick for the product. What sort of feedback, early feedback that you’re getting ahead of actually flipping the switch for enrolment. Do you feel like – you say things are on track. So, can you give us some indication of how –

Sure. I mean, the clinical trial sites are enthusiastic. They’re very happy to see this product moving forward. Jeff – I don’t know, you’ve been dealing with some of these clinical trial sites, and if you have any color you want to add to that?

Yes. Thank you, Carl. Really, good uptick from sites. We’re essentially finished our initial round of site identification. We’re now in the process of negotiating contracts, IRB submissions etcetera. I would say compared to other studies, this study appears to be gaining traction quite rapidly.

Okay. Excellent. And just moving on to PL-3994 for now, firstly, you talked about cash lasting through 2012, and if I look at your current run rate, it looks to be like 1.5 million a quarter, the potential for a warrant conversions, but also the fact that you might partner out the PL-3994, can you give us a little bit better characterization of how good the cash is for a period of time?

Sure, I’ll let Steve handle it.

As I mentioned, at March 31, we finished with $22 million of cash and cash equivalents. You’re correct, our inside burn – cash burn is a little than $1.5 million per quarter. We have projected and budgeted a very comprehensive Phase 2 trial that Carl and Jeff have referenced. And, some of the budget and costing also includes us getting ready for the Phase 3, some device work and some additional CMC work. So, those moneys are in the – for the FSD trial at all, are in the $7 million to $8 million range. So, if you just do the math quickly with the $22 million at the end of March, a little bit less than $1.5 million per quarter and target, say, on a conservative side, $8 million for the FSD trial, you’ll see that we still have several quarters of potential burn. As of calendar year 2012 and that does not take into account any type of collaboration revenue from PL-3994 or any warrant conversion or an exercise. And frankly, lastly, would be any potential milestones from the advancement of our obesity collaboration compounds with AstraZeneca. As Carl mentioned, we now have a collaboration compound in Phase 1.

That’s a good point. So, I guess, two questions then and I’ll get back in queue. One is, can you characterize a little bit more of the discussion with potential interested parties, perhaps how many companies are you discussing PL-3994 with? And, you bring up the AZN program, it’s a good point. When would you expect another milestone from that program?

Why don’t I jump in on just the milestone (inaudible). Just like most big pharma collaborations, there’s a lot of items that are confidential for a variety of reasons, most notably the competitive. We are able to disclose that we would receive our – again, if everything progresses in a positive mode, sometime mid to the second half of calendar 2012, we’d have a milestone. And it’s going to be – the best I can give you is a range because the milestone is based on a number of different criteria and without Nostradamus calling me back, I can’t really predict whether the criteria will be met. But, it should be in the $5 million to $7.5 million range.

Okay.

Just I’ll move on and add just a little bit on the partnering discussions. There are multiple ones ongoing. They are with all the large companies that you would expect with wanted products in the respiratory and asthma area. We’ve been very pleased with the response we’ve gotten to the program. And, Jeff may want to give a little color on that. He is, actually, just as our background, he is a critical care pulmonologist with lots of industry experience in this space. So he’s really helping to lead those discussions and really get these guys – just be on the program. So, Jeff, I don’t know if you have any colors you want to add or not but –

Sure, thanks. David, in fact, I’m in Denver at the American Thoracic Society meeting as we speak. Several of our partnering discussions are ongoing here and obviously not for public disclosure at this point. As had been said, although we’re funded through an extent of milestones and in fact through 2012, there’s a couple of elements of partnering that are important to us. One of them is that the product has the potential for both parenteral and inhalational delivery. And, as you may know, the optimization of a product for inhalational delivery either as a mono component therapy or potentially in combination therapy is quite large, but also complex. And, one of the goals that we have is such as a potential collaboration would be to be working with a partner with experience in this specific challenge, that’s developing multi-dose chronic formulations that are appropriate for chronic use which may help us to find a best – ultimate best use of the compound. We hope to initiate trials in the acute severe segment that Carl identified which is an area of exquisite high unmet need either with a parenteral and/or a nebulized formulation as it was laid out.

Okay. Thanks, I appreciate it and when those (inaudible) you back. I have other questions – asking some. Thank you.

Okay.

We’ll go next to Leland Gershell [ph] with Madison Williams and Company.

Hi, thanks for taking the question. Carl, first a question on the BMT program, I want to ask, are you able to disclose the time? What the doses you’ll be testing in the Phase 2 and if so, how those compare to what dose probably you tested in the Phase 1 subcutaneous? Thanks.

Sure. We’re testing across a dosing range, so we should have three doses. One, low dose, would be considered a minimally effective dose, and then we’re looking to cover two other doses that would be middle-low and middle-high of the dosing range. The highest dose here is actually substantially less than the doses that we tested in the Phase 1. So, we’re giving ourselves a very nice cushion, so to speak. The Phase 1 in this patient population was quite clean and we’re dosing even below the top dose we did in the Phase 1. So, just for a competitive reason, I want to grab the actual doses, but we’ve got everything on the low, top dose in Phase 1.

Okay, great. And then just one question, the asthma program. If you could just clarify, I know you are in discussions with multiple potential partners, but you are heading towards starting the next trial there fairly soon. Should we think about the partnership as a gating factor, or you are prepared to proceed with that next trial with or without a partner, I think, signed on? A Ideally, we’d like to really let the partnership discussions play out before we pull the trigger on that study. So, right now, we want the discussions to play out to the feedback before we make any final decisions and we’ll pull the trigger and do on our own or we’ll wait to conclude a partnership before we do it.

Great, thanks for taking the question.

Sure.

Sure, thanks.

Next Adam Selkin with Chardan Capital Markets.

Hi, guys. Congratulations on getting of cash in the bank this quarter.

We’re quite pleased with that.

Yes, that’s great. I’m interested in hearing a little bit more about your collaboration with AstraZeneca with regards to obesity. You say that you’ve advanced to the clinical stage there, can you provide a little more detail, exactly where you are with them and what we can expect this year, over the next year or so?

Sure, what we’ve done is, these are compounds that were developed at Palatin as part of the collaboration with AstraZeneca and they were passed over to AstraZeneca to qualify them as actual leads, meaning that they may add all characteristics from a efficacy and safety, preclinical safety standpoint that AstraZeneca passed with their hurdle rates and they have been entered into a clinical trial this quarter, that would be a standard dose escalation study looking for first in man with novel compounds, that would soon be followed up with additional, probably multidosing Phase 1 studies and then Phase 2 efficacy studies. So, with that, we don’t control the developments or the timing, how long can they – Phase I studies they may do, that is a little bit out of our control. So really this program is in the hands of AstraZeneca and we know they quite committed. They’ve got one compound in. We expect the second one probably entering the clinical trials shortly as well. So they like this target and they’re going to push to get one of these things through.

Great. Thank you, guys. Good luck moving forward.

Thank you.

Alright thank you.

We’ll go once again to David Moskowitz with Roth Capital.

Hi, guys. In terms of the first patient to be dosed on BMT, are you guys – first of all, when should we expect it to happen and will you guys notify us that you have begun dosing of the first patient?

Sure. Obviously, as we said, we expect to have it in the first quarter of this – second quarter of this calendar year and when we open up and begin enrolling patients, we certainly will let everyone know that that process has started.

Okay. Just over to 3994 one more time, so you guys have, I guess, completed Phase I with the product, how are the larger companies viewing this compound? I know when you deal with the big pharma companies, they may want to take it back a little bit and do more work on Phase I or so; are they seeing this as a Phase 1 or Phase 2 compound at this point?

It would really depend how you get it. The subcutaneous is certainly considered it would be considered – the subcutaneous formulation would be considered a Phase 2 compound. The inhalation formulation would be, I guess, you consider Phase 1, 2. I mean, we certainly what the systemic effects of the drug are, but we would have to complete our inhale talks and then do first in male with inhaled. Now, Jeff being here, we are – that is being contemplated as being done in asthmatic patients where we would be able to collect potentially efficacy data, but would have start with a traditional two set of dosing in any clinic setting. Now Jeff, if you want to–

Yes, I think that – I mean, David, different people assign these drugs in direct ways, but essentially the compound has been in – is fitted two human clinical studies, one in healthy volunteers and controlled hypertensives which gives us a sense of the dose limiting effect which in fact are on target of vessel dilation when administered parenterally. The inhaled program remains to complete, it’s pre-clinical talks and then we’ll go into a dose finding paradigm by inhalation. The feedback we’ve had from potential partners is quite interesting. Clearly, there is great interest in a bronchodilator that is not acting through the beta receptor, cyclique [ph] and pathway as available products. There is a lot of published data with the naturally occurring peptides that show this material can be an effective bronchodilator either administered parenterally or by inhalation. And there’s appreciation of the fact that 3994 by virtue of its resistance to proteolytic degradation and it’s relatively low affinity for the scavenger receptor has an extended (inaudible) which we’ve shown in our human – our clinical studies with PK and reasonably PK-PD relationships and effects lasting out towards eight hours in terms of blood pressure effects. So, I think it’s an interesting and reasonably compelling program; each partner has their own criterion for assessment and sort of wish list in terms of evidentiary base and we’re working with them to better understand this.

Okay, thanks. I’ll say the rest of my questions offline. Thanks.

Okay.

No other questions in queue at this time, I’ll turn the call back over to Dr. Carl Spana for closing remarks.

Great. Thank you. I thank all of you. In closing, I think over the last two quarters you’ve really been able to move forward quite a lot with this company and we’ve been very happy that we’re able accomplish some of the things to note as we’ve had on the call here. We obtained the regulatory guidance to move our programs forward. We were able to do underwritten public offering that really brought the funding in, and really alleviates the – any type of financing overhang so we can really run our programs to make a milestone, so without having to think about going to the equity markets, BMT, as we noted, is on track to enrolling this quarter. 3994, say, the subcutaneous formulation is ready to go, we’re working on the inhaled and we’re making a good progress with potential partners. And finally, we were happy that the obesity program has moved into the clinic and we’re really looking forward to seeing that data come out later this year. So, we’ve got a very nice company, we’ve got really good accomplishments and very strong programs, these are programs that are clinical ready, or in the clinic and we think we can really find a value with this company. And so, we’re quite excited about it here at Palatin. So, we would like to thank you again for your time and obviously, look forward to seeing some of the investors go around and we do our one on one, and we look forward keeping you abreast of our progress and have a good day.

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