Dr. Carl Spana, Ph.D. – President and Chief Executive Officer Steve Wills –Executive Vice President, Chief Financial Officer and Chief Operating Officer Dr. Jeffrey Edelson, M.D. – Chief Medical Officer

David Moskowitz - Roth Capital Rahul Jasuja - Noble Financial

Good morning, ladies and gentlemen and welcome to the Palatin Technologies Fiscal First Quarter 2012 Conference Call. As a reminder, this call is being recorded. Before we begin our remarks, I would like to remind you that statements from 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 may differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company’s most recent filings from 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. Dr. Carl Spana: Thank you. Good morning. I’m Carl Spana, President and CEO of Palatin Technologies. With me on the call today is Steve Wills, our Chief Financial and Operating Officer and Executive Vice President and Dr. Jeffrey Edelson, our Chief Medical Officer. On today’s call we will be providing on our product programs and financial results. To begin, Steve Wills will provide an update on our fiscal first quarter 2012 financial results. Steve.

Thank you, Carl. Good morning, everyone. Regarding the financial update; Palatin’s net loss for the quarter ended September 30, 2011 was $3.4 million or $0.10 per basic and diluted share compared to a net loss of $4.6 million or $0.39 per basic and diluted share for the quarter ended September 30, 2010. The decrease in net loss for the quarter ended September 30, 2011 compared to the same period last fiscal year is the result of Palatin’s previously announced strategic decision to reduce staffing levels and to focus resources and efforts on clinical trials of bremelanotide for female sexual dysfunction, the pre-clinical development of an inhaled formula of PL-3994 and a new peptide drug candidate for sexual dysfunction. The decrease in net loss per share was also significantly impacted by the higher number of shares outstanding in the quarter ended September 30, 2011, compared to the same period last fiscal year due to the sale of shares of stock in March of 2011. Regarding revenue; total revenue for the quarter ended September 30, 2011 was $27,000 compared to $216,000 for the same period in 2010. Revenue for these periods consisted entirely of amounts recognized under our agreements with AstraZeneca. Regarding costs and expenses for the quarter ended September 30, 2011, total operating expenses were $3.4 million compared to $4.8 million for the same period in 2010. The decrease in operating expenses for the quarter ended September 30, 2011 compared to the comparable quarter in 2010 is the result of our strategic decision to reduce infrastructure costs referenced prior. Regarding our cash position, our cash and cash equivalents were $14.9 million, as of September 30, 2011, compared to $18.9 million, at June 30, 2011. Our current liabilities were $1.7 million, as of September 30, 2011, and $2.8 million, as of June 30, 2011, a reduction of $1.1 million. We believe, based on our current operating plan, that our cash and cash equivalents will be sufficient to fund our operations for at least calendar year 2012. Dr. Carl Spana: Thank you, Steve. Now for an update on our plans. Before I give the update, I would just like to draw your attention that earlier in November the company held an Analyst Day in New York City in which we had two invited guest speakers who are experts in the field of female sexual dysfunction. The presentations from that Analyst Day is on the website. For those who would like a little more information, a more detail on FSD and our programs in that area, please go to the website. You might find that those presentations are quite informative. So to start out the programs, I'll cover obesity and diabetes at melancortin-4 receptor program, which is partnered with AstraZeneca. AstraZeneca continues to progress AZD2820 through a Phase I clinical study. We expect initial data by the end of this calendar year. The commercial drug candidate AZD2820 is a melancortin receptor for partial agonist, developed by Palatin as part of its collaborative research program with AstraZeneca. The decision to move this program into clinical development was, in part, based on exciting clinical data generated by Palatin as part of our collaboration with AstraZeneca. Results improved principal clinical trials in obese patients with non-commercial compounds that target the melancortin receptor show significant reduction in food intake and weight loss. We believe that this clinical data, along with earlier work with animal models of obesity, demonstrates the significant role that melancortin pathway plays in regulating food intake and weight in validates melanocortin-4 receptor, as a major target for obesity therapeutics. We believe that therapies that target the melanocortin-4 receptor have potential to demonstrate the safety of ethics we require for approval and dramatically impact the treatment of obesity. As you can imagine, this program has huge commercial potential and we believe that our partner, AstraZeneca, has the resources and commitment to realize this potential. We are eligible for milestone payment totaling up to $145 million, with up to $85 million, contingent upon development and regulatory milestones and the balance on achievement of sales targets plus mid-single to high-single digit royalties on sales of approved products. AstraZeneca has responsibility for product commercialization, by discovery and all development costs. Moving on to PL-3994, our next program. These are the natriuretic peptide receptor agonists in development as a treatment for acute exacerbation of asthma, which is defined as an ongoing, asthmatic episode, in which asthma symptoms do not adequately respond to initial broncho-dilator or corticosteroid therapy. As we have previously stated, the key near-term objective for PL-3994 program, is to identify development and marketing partners, and once we do that, to initiate clinical studies. 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.

David Moskowitz - Roth Capital:

OK. Thanks, David. This is Steve Wills. The 95% of what counts as spending money on is the bremelanotide trial for female sexual dysfunction. The overall budget, and the budget being defined as through the period June 30th, calendar year 2012, when we anticipate the trial being completed, we are on target for that budget for both costs and, as Carl mentioned, enrollment target dates. The quarters will fluctuate between a little bit high, a little bit low based on the budget, but frankly that's just a timing difference on when certain expenses based on the projected trial costs. I'm comfortable that if we're a little over in the September 30th quarter, it'll be adjusted in the 12/31 first quarter of calendar 2012. I think the take home here is that the trial is on track from an enrollment standpoint, projected data points and projected costs say through June 30th, calendar 2012. David Moskowitz - Roth Capital: So no unusual uses of cash in the quarter?

Everything was expected, just a little bit of a timing difference when some of the accrued expenses hit. September 30th quarter, again, could be a little bit high or low and more than likely that will take care of itself in the subsequent two quarters. David Moskowitz - Roth Capital: Can you talk about how the cash is going to work through 2012, specifically, as it relates to obtaining the results from the phase II BMT trial?

The cost for the bremelanotide female sexual dysfunction trial should be completed by June 30th of calendar 2012. At that time our operating cash burn will be reduced to approximately $1.3 million per quarter. So when we talk about how the $15 million September 30th, 2011, I make the statement that based on our current operating plan that we have sufficient cash to fund operations through calendar 2012, the reason being the significant burn related to the bremelanotide female sexual dysfunction trial will be completed on June 30th, 2012. At that point we're projected to have between $6 and $7 million of cash, and our burn, again, will be reduced to approximately $1.3 million per quarter. David Moskowitz - Roth Capital: Steve, is that including things from AstraZeneca or the natriuretic peptide program?

No, those are conservative figures. It does not include any potential milestone that we may receive from AstraZeneca in calendar year 2012, or any potential collaboration type funds related to our collaboration efforts on PL-3994. David Moskowitz - Roth Capital: Excellent and, Carl, with regards to the AstraZeneca partnership, when are we expected to get the next data? I think, Steve, you might have said in your prepared remarks we could see data in the first quarter. Can you just clarify what that data would be? What kind of trial results? Dr. Carl Spana: Sure. Two things in this program; one, AstraZeneca is currently conducting a Phase I dose escalation study in normal, healthy humans for first demand with a commercial compound. That study should be close to being concluded and we would expect the data either late this year or early next year. David Moskowitz - Roth Capital: Dr. Carl Spana: David Moskowitz - Roth Capital: Dr. Carl Spana: David Moskowitz - Roth Capital:

David Moskowitz - Roth Capital:

Rahul Jasuja - Noble Financial:

Rahul Jasuja - Noble Financial: Dr. Carl Spana: Rahul Jasuja - Noble Financial: Dr. Carl Spana: Dr. Jeffrey Edelson: Rahul Jasuja - Noble Financial: Dr. Carl Spana: Dr. Jeffrey Edelson: Well, no. But these are people who have agreed to participate in a four-month period of subcutaneous self administration. I think Carl has mentioned the data we have. There are some women who will not voluntarily (inaudible) subcutaneous product. But there are a lot of precedence for PTH and TNF products and a range of products that are routinely self administered. Rahul Jasuja - Noble Financial: OK, good. One final question that seems to be a question on many investors and (inaudible) when looking at FSD is, number one, the fact that there is no drug approved in the U.S. so far. There's LibiGel coming up for post-menopausal women. How should we be looking at the FDS stance on FSD given the fact that there's nothing approved. It's a big market. There seems to be strong demand and now you have potentially a post-menopausal approval. Could you just comment on those factors? Dr. Carl Spana: Sure, my viewpoint is in experience dealing with the FDA in particular in this indication is that I think there is a desire to have a safe, effective treatment option for these patient. It's evidenced by the fact that there are Phase III programs, the LibiGel program has gone forward, (inaudible) before that. We had a very constructive and substantial meeting with them concerning the study that we're currently conducting and I think we've found them to be very helpful. They're doing their job obviously, but very helpful in giving us a number of items that we need to keep in mind as we progress our program forward. So I think it's a good regulatory environment, but let's be clear, people don't die from this indication. So we do have to make sure that our products are safe and effective and give a true benefit to the patients. So I don't think that's going to change. Obviously we're hopeful that LibiGel will have positive data and continue to go forward and we'll have an ability to look at that regulatory process as it unfolds and certainly we will take as much of it as we possibly can.

We'll now go to David Moskowitz with Roth Capital David Moskowitz - Roth Capital: Thanks for the follow-up. I wanted to just focus a little bit on enrollment. Ca you guys talk a little bit anecdotally about the enthusiasm that you're seeing with regard to enrollments, I guess, as it pertains to you being on track. Specifically the trial design as I understand it is pretty burdensome with some of the monitoring that's going on, so can you also speak to how you're getting over those hurdles with regard to enrollment. Dr. Jeffrey Edelson: Yes, thanks, David. This is Jeff speaking. Your comments are correct. This is a fairly complex study given the number of safety and efficacy parameters that we're examining. The trial population is actually one of the first to examine patients with HSDD and FSAD, Hypo-Sexual Desire Disorder and Female Sexual Arousal Disorder. The two components of FSD. We have a series of end points that are unique to each sub group as well as a mixed population. So it's a fairly complex trial that being said, the uptake from the site has been excellent. We really appreciate the dedication and courage of the patients who participate in such a trial and appreciate the burden that they are bearing on this. David Moskowitz - Roth Capital: Can you just quickly touch on some of the monitoring that takes place and what is the most burdensome within the trial? Dr. Jeffrey Edelson: Well, there is a fair survey burden given that most of the diagnostic and efficacy tools here are patient reported outcomes. I would say the survey burden is significant. We also have three 24-hour monitored ambulatory blood pressure assessments that allow us to examine any possible hemo-dynmaic signal that emerges over the program. David Moskowitz - Roth Capital: So in other words, the patient has to come in and be monitored for 24-hours? Dr. Jeffrey Edelson: No. These are ambulatory blood pressure measurements following in-clinic dosing. David Moskowitz - Roth Capital: OK. How long do they have to remain, when you do in-clinic dosing, how long do they have to remain on site for that? Dr. Jeffrey Edelson: They stay in-clinic for a period of four hours and they're discharged home with the APM device. David Moskowitz - Roth Capital: Got it. OK. Just with regard to safety, is there anything that you guys can comment on at this point? I imagine there is a DSMB that's monitoring the trial and there's obviously key parameters, blood pressure and some of the other adverse events that we're seeing with the nasally delivered formulation, anything you guys can say with regard to that and any comments or anything out of that at all? Dr. Carl Spana: I think you hit it. We have a DSMB and obviously we would take any news from them quite seriously and that would be obviously discloseable and you can take the fact that we haven't disclosed anything as a, for what it is. If there was an issue, they'd know it, we'd know it, and I'm pretty sure you'd know it. David Moskowitz - Roth Capital: Got it. You have a fair amount of patients that have been dosed thus far? Dr. Carl Spana: We have retained some of you guys, enrollment is going fine, we're on tract. We put our data out. You do the math any way you want. David Moskowitz - Roth Capital: OK. Excellent. Thanks so much, guys for the update, appreciate it.

That concludes today's Question-and-Answer Session. Dr. Spana, at this time I'll turn the conference back to you for any additional or closing remarks. Dr. Carl Spana: Thank you all for participating in the Palatin first quarter conference call. I've certainly enjoyed seeing you guys when I'm out on the road, meeting investors and the analysts. We love keeping you guys informed. We feel that the program is progressing quite nicely. We're very excited about what's going on at Palatin. I think we're very well positioned. As I said, we're financed through some major milestones. Programs are progressing quite well. Just a reminder, if you want a little more information on FSD, please see the website. The presentations are quite informative that are on there. With that being said, enjoy your day, enjoy your holiday season and I look forward to seeing you when I'm out on the road. Thank you. Bye-bye.

Ladies and gentlemen, this does conclude today's conference call and we thank you for your participation.