Carl Spana - President and CEO Steve Wills – CFO and COO Jeffrey Edelson - CMO

Joe Pantginis - ROTH Capital Partners Rahul Jasuja - Noble Capital Markets

Please standby, we are about to begin. Good morning, ladies and gentlemen. And welcome to the Palatin Technologies Third Quarter Fiscal Year 2013 Conference Call. As a reminder, this conference is being recorded. Before we begin our remarks, I would like to remind you that statements made by Palatin that are not historical facts maybe 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 you to your host for today, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Thank you and good morning, everyone. I’m Carl Spana, President and Chief Executive Officer 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 updates on our product programs and on our most recent quarterly financial results. To begin, Steve Wills will provide an update on our third quarter ended March 31, 2013 results. Steve?

Thank you, Carl, and good morning, everyone. Regarding Palatin’s third quarter fiscal year 2013 financial results, we reported a net loss of $4 million or $0.04 per basic and diluted share for the quarter ended March 31, 2013, compared to a net loss of $6 million or $0.17 per basic and diluted share for the same period in 2012. The decrease in net loss for the quarter ended March 31, 2013, compared to the same period last fiscal year is attributable to a decrease in operating expenses primarily related to our Phase 2B clinical trial evaluating the safety and efficacy of bremelanotide for the treatment of female sexual dysfunction. Regarding cost and expenses, total operating expenses for the quarter ended March 31, 2013 were $4 million, compared to $6.1 million for the comparable quarter of 2012. The decrease in operating expenses for the March 31, 2013 quarter was again primarily due to Palatin's Phase 2B clinical trial with bremelanotide for FSD and secondarily, as a result of closing our research laboratory operations in July 2012. Regarding cash position, our cash and cash equivalents and investments were $29.5 million as of March 31, 2013, compared to $3.8 million at June 30th our fiscal 2012 year end. Current liabilities were $2.7 million as of March 31, 2013, compared to $3.5 million as of June 30, 2012. Going forward, we believe that existing capital resources will be adequate to fund our currently planned operations, including advancing Phase 3 activities with bremelanotide for female sexual dysfunction to at least calendar year 2013. Carl?

Thank you, Steve. Now for an update on our programs under development starting with our female sexual dysfunction program. In the fourth quarter of calendar 2012, we announced the positive topline results of our bremelanotide Phase 2B female sexual dysfunction study, which evaluated bremelanotide versus placebo in approximately 400 pre-menopausal women with female sexual dysfunction. Detailed analysis of the bremelanotide Phase 2B data clearly demonstrated that treatment with bremelanotide resulted in clinically meaningful and statistical significance versus placebo on improving the number of satisfying sexual events, overall sexual function and personal distress associated with their sexual dysfunction, as well as a broad range of secondary endpoints that were used in the study. The detailed data for this study was presented and well received at the 2013 Annual Meeting of the International Society for the Study of Women's Sexual Health on the afternoon of Friday March 1st in New Orleans, Louisiana. Recently we also had an end-of Phase 2 meeting with the FDA where we presented and discussed the safety and efficacy data from the Phase 2B bremelanotide study and our plans for the bremelanotide Phase 3 pivotal registration program. The result of this meeting is that we reached preliminary agreement with the FDA on the key aspects of the Phase 3 study plan, including patient population, primary and key secondary endpoints, doses, study design and safety monitoring. I would now like to take a moment to provide some additional details concerning the Phase 3 pivotal registration program. As is usual for pivotal registration programs we plan to conduct two confirmatory Phase 3 clinical studies starting each day to enroll approximately 600 subjects. Female sexual dysfunction patient population that we will enroll will have hypoactive sexual desire disorder with or without arousal issues. Similar to other Phase 3 clinical programs in the female sexual dysfunction indication, the co-primary endpoints will be changed from baseline, the number of satisfying sexual events and patient desire as measured by the Female Sexual Function Index desire sub-domain. Key secondary endpoint will be improvement in the patient sexual dysfunction associated distress as measured by the Female Sexual Distress scale. The doses of 1.75 milligrams of bremelanotide or lower are also acceptable and the study design will be randomized double blind placebo controlled design, which will be identical to the one we used in our Phase 2B study. Moving on the FDA also agreed with Palatin’s position that the Phase 2 data has adequately characterized the blood pressure and heart rate signals of bremelanotide, the standardized methods for in clinic assessment of blood pressure can be used for the Phase 3 clinical studies. In addition, the FDA also agreed with Palatin’s position an earlier definitive QTc cardiac safety study using intranasally administered bremelanotide was sufficient to support a new drug application filing. Based on the strength of the Phase 2B data of bremelanotide and guidance received from Food and Drug Administration as part of the end-of Phase 2 meeting we are excited to moving bremelanotide forward into Phase 3 pivotal registration studies as a treatment for female sexual dysfunction. We are now actively engaged in a variety of activities that are required to begin patient enrollment in the Phase 3 pivotal registration study and we plan to begin screening patients by the end of calendar 2013. Bremelanotide has potential to address substantial need for novel pharmaceutical treatments for female sexual dysfunction. Female sexual dysfunction is a disorder that affects approximately 20% in women at some point during their adult life. And currently, there are no FDA approved treatments and this represents a large potential market opportunity. We’re also in discussions with a number of pharmaceutical companies from around the world considering the potential partnering of bremelanotide for the treatment of female sexual dysfunction. Discussions continue to proceed well. We anticipate being able to announce transactions later this calendar year. Now we move on to our obesity and diabetes orogram, which is under the direction of our partner AstraZeneca. Although the program ran into an issue with the first clinical candidate a subcutaneous injected peptide AZD2820, AstraZeneca remains committed to the program and continues to make substantial progress. AstraZeneca and Palatin remain committed to this collaborative program and to the continued advancement of melanocortin agonist for the treatment of obesity. Melanocortin 4 receptor is a well validated target for obesity therapeutics; [hemogenic] [ph] evidence indicates a key role for this receptor and intended pathways in the regulation of food intake and weight. Our results from earlier clinical trials in obese patients with compounds that target the melanocortin-4 receptor showed significant reductions in food intake and weight loss. This program has significant commercial potential and we believe that our partner AstraZeneca has the resources and commitment to realize this potential. Pursuant to the terms of the research collaboration and license agreements with AstraZeneca Palatin is eligible for milestone payments upon achieving development and regulatory milestones, and further payments on achievement of sales targets in addition to royalties on sales of approved products. AstraZeneca has responsibility for product commercialization, product discovery and development costs. Moving on PL-3994 is our natriuretic peptide receptor agonist in development for the treatment of acute severe asthma, which is defined as an ongoing asthma episode in which asthma symptoms do not adequately respond to initial bronchodilator or corticosteroid therapy. As we’ve previously stated, a key objective of the PL-3994 program is to identify a development and marketing partner. In support of this effort, we are conducting a variety of preclinical activities to better define the role of natriuretic pathways in pulmonary and cardiovascular diseases. In addition, we are also engaged in formulation and manufacturing activities needed to support clinical advancement of PL-3994 by both inhaled and subcutaneous delivery. Our final update is on our melanocortin receptor-1 based therapeutics program. We have generated positive data in a number of animal models of inflammatory and immune system based diseases, supporting the potential of melanocortin receptor-1 based compounds as therapeutics. Our activities in targeting melanocortin-1 receptor have generated a substantial interest from potential partners and we are in a position to designate a first clinical lead candidate in the calendar 2013. Before we open the call to take questions, I’d like to make a few conclusion remarks. We are extremely pleased with our opportunity to move bremelanotide forward into Phase 3 pivotal registration studies for female sexual dysfunction. This is supported by the strength of the bremelanotide Phase 2b efficacy and safety data and a regulatory guidance received from the FDA. We’ve designed a comprehensive Phase 3 program very successful we’ll provide the safety and efficacy data to support regulatory submission for approval of bremelanotide as a treatment for pre-menopausal women with female sexual dysfunction. In summary, we are now actively engaged in activities required to begin patient enrollment in bremelanotide Phase 3 pivotal registration studies and we anticipate beginning patients screening later this year. We’ll continue to present data from the bremelanotide Phase 2b study at additional medical meetings and are prepared to send the reports of the data for publication and peer review medical journals. We’re also working diligently on establishing a corporate collaboration to have advanced bremelanotide Phase 3 female sexual dys program forward. Regarding the obesity and diabetes program, AstraZeneca continuously work to identify an advanced novel compounds through preclinical activities towards first-in-man clinical studies. With regards to 3994, we expect some very exciting data to come out on the preclinical front and we’ll also continue to target corporate collaborations. And finally, on the melanocortin receptor-1 program, we are progressing towards selecting the first lead clinical candidate to move forward into Phase 1 clinical studies and continue to make progress and identify potential corporate partners. I’d like to thank you for participating in Palatin’s fiscal third quarter 2013 conference call and we’ll now open the call to questions.

Thank you. (Operator Instructions) We’ll take our first question from Joe Pantginis from ROTH Capital Partners. Joe Pantginis - ROTH Capital Partners: Hey guys. Good afternoon. Thanks for taking the question and congratulations on the positive FDA meeting outcome. Couple of questions if you don’t mind Carl and Steve. First, coming off, I think one of the encouraging things here first is the fact that your Phase 2 study and your Phase 3 program are really going to have the same endpoints and in the Phase 2 you really hit clinical significance on these endpoints. So maybe just a quick question on the fact that you’re looking to have co-primary endpoints SSEs and also the FSFI as co-primary endpoints, are you looking at these as an either or clinical endpoint, are they independent, do you have to hit them both, can either one be sufficient for filing?

I’m going to let Jeff answer the question.

Hi Joe. Thanks for the question. It’s the way we’re defining clinical benefit in the proposed pivotal program would be demonstration of improvement both in SSEs and the desired domain of the FSFI. Joe Pantginis - ROTH Capital Partners: Okay. So…

And this is construct -- this is a regulatory construct that is really interpreted to be a robust definition of clinical benefit. Joe Pantginis - ROTH Capital Partners: Okay. Understood. Thanks. And then I guess I don’t think I can understate this. I mean, it was pretty important I think with regard to the outcome and I believe the cardiorenal division looked at this aspect here based on the FDA minutes regarding the removal of the potential cardiovascular signals and how you are going to be looking at that. It seem like they were okay with not monitoring any QTc going forward and looking at standard blood pressure monitoring, how important was that or weight off your chest in having these answers from them?

Again, certainly it was weight off our chest. I will let -- let me let Jeff answer the -- give you little more detail and color on what happened there.

As you’ve stated and based on its on target pharmacology, melanocortin-4 agonists do modulate cardiovascular tone. So our question in the Phase 2 program was to characterize the signal at the doses studied in this population. So as you know, the Phase 2 study included a fairly comprehensive patient as (inaudible) control with two supervised doses each of which was followed by a 24-hour period of ambulatory blood pressure and with a 15 minute interrogation interval. So we really did have adequate data to characterize the signal. We also had a predefined withdrawal criterion and the entire study was overseen by our own safety officers and a Data Safety Monitoring Board. What happened in Phase 2 was we did characterize the signal. The change in blood pressure is really quite small and very short duration. In fact, in terms of the predefined withdrawal criterion, there was no access signal of events on drug compared to patients on placebo. So the FDA has agreed with our position that going forward into Phase 3, routine clinic based measurements of blood pressure are an appropriate way to monitor patient safety going forward. Joe Pantginis - ROTH Capital Partners: Okay. That’s helpful. Yeah.

And also from our standpoint, certainly it was an issue that we were concerned with, as has been characterized as Jeff led to it. And also from a clinical operation standpoint, it makes it a lot easier to enroll and recruit patients to studies where they don’t have that long clinic stays. Joe Pantginis - ROTH Capital Partners: Sure. And then maybe just on the BP aspect. Will that include -- I mean, will that drive any of your inclusion or exclusion criteria for the Phase 3 program?

Yeah. I mean, there were a few things that we discussed with the Agency and it was routine, I mean, let Jeff add a little color.

One of the things that did emerge from our data in Phase 2 is that many of the blood pressure outlier events that were identified were actually individuals with previously diagnosed uncontrolled hypertension. And so we are going forward into Phase 3. We are advising the patients with uncontrolled blood pressure, not be enrolled in the study. Joe Pantginis - ROTH Capital Partners: Okay. That's helpful. And then I guess, Carl, this is a bit forward looking here, but maybe can you provide some details around the Phase 3 program itself with regard to enrollment timelines and obviously this is a broad program, what the potential costs are for the study? Studies I should say.

Yeah. Certainly, we have certain internal projections. Just based on the size of the studies that we like to run, they should take between 9 to 10 months to enroll and that's our target. And then after that, you have to run the full time on the trial. They are not long duration. I mean, this is something where 18 to 20 months after we start, we should be done. From a cost standpoint, obviously I will let Steve answer that.

From a timeline perspective, we are targeting to commence the Phase 3 clinical trials by the end of this calendar year in 2013. And if things progress as we are anticipating, we would be able to file the NDA, the new drug application with the FDA in the second half of calendar 2014. And again if things proceed well, we would have an approval in the second half of calendar to 2015. I'm sorry, 2016, move 12 months on that. From a costing standpoint, we have agreement with the FDA on the design of the trial. So right now from a clinical perspective, if you take the two and this is just the U.S. This does not include a European trial at this point. But the two Phase 3 pivotal trials plus a long-term safety trial, plus several drug-drug interaction trials we have cost that out to be in the $55 million to $60 million range. So that's what it would cost us if you will from going forward now until the filing of the NDA. Again, just to be clear, would be in the second half of 2015 with a anticipated approval, if things go well in the second half of 2016. Joe Pantginis - ROTH Capital Partners: Right. That’s helpful. And then maybe my last question. Obviously, you mentioned about the goal of having a potential partner in place this year to look to assist with these programs and have someone in place to like I said, to partner with in bringing this program forward. So, I don’t know how much you can say here. Basically, how are these discussions going if you can add any more color?

But you certainly -- as you might imagine this is a large opportunity, so we’ve had very good corporate interests and we have a number of company's both worldwide as well as regional that are progressing through the process, are going through diligence and moving forward. So we are very pleased with where we are and the number of companies that we have. And I expect after today’s announcement that that list will even grow larger than it currently is. So I think -- it’s something we should be able to accomplish.

And just to add a little bit, I agree with Carl we do have a lot of interest. We have multiple companies under [CDA] [ph] in advanced discussions and that covers from the big pharma to the specialty pharma to a potential global deal from a right standpoint to a territory specific. We’re reasonably flexible regarding the program. And if things keep proceeding as they are, we would anticipate a collaboration before the end of calendar 2013. Joe Pantginis - ROTH Capital Partners: Okay. Great. Thanks a lot guys and congrats again.

Thanks.

We’ll take our next question from Rahul Jasuja from Noble Capital Market. Rahul Jasuja - Noble Capital Market: Hi. Good morning, Carl, Steve and team and congratulations. Very nice to see a Phase 3 plan on its way. So few questions that I want to add on to what Joe already asked. Let’s stick with the licensing and the partnership. In your thinking, what makes sense going forward, assuming there is going to be a partner? Would you want to do sort of a co-marketing in the U.S. and then license for royalties in Europe. How does that look for you or is it clearly a typical partnership where you’re just getting royalties and then partners takes on commercialization. What are your thoughts there?

I think, just taking a couple of pieces, certainly we think we have a very valuable assets. So we are not so interested in just giving away the rights for free. So we want a substantial deal and a substantial upside in the success of this project as we think it’s going to be a successful project. So standard type of some money upfront and a small royalty, it’s not the kind of deal that we’re looking for. Co-promotional rights, I’m not so sure to space on the indication that we would do much with them. So I don’t think that’s quite as important but it maybe -- this maybe a process where we partner the U.S., European rights first then bring on partner for one of the other areas. And then based on what we’re seeing, I think the team here has done a very good job, moving this program forward and our expectation is that we probably would be involved at some level in helping to run the Phase 3 and moving forward. Rahul Jasuja - Noble Capital Market: Right. And so yeah, I think, in my mind, it seems like other than a couple of big pharma, Palatin really knows how to run this trial better than anybody else. What you really need help is probably a launch and marketing and medical education and that’s really where you’ll get more support from big pharma. Is that right?

Certainly, those are the key attributes that we are looking for, commitment to the indication and this product as a -- and a commitment to this product has a potential to be a blockbuster in the indication and a company commitment to the sales and marketing of latter type when approved, so that certainly keep with us. Yeah, we’d agree that we’re a little less concerned about the development aspects because we think we have a lot to contribute there but certainly those sales marketing launch, education as required are once that we’re really looking for.

The only other thing I would add Rahul is the -- I can appreciate your comment with the big pharma capabilities but I would tell you that the some of the specialty pharma companies that we are talking to do have significant capabilities in the women’s health field. Rahul Jasuja - Noble Capital Market: Sure. Sure. Understood. All right. So let me navigate towards some other questions here. Now, dose and one of the questions I had here was in the real world, now you’ve got, at 1.75 mg, you’ve got all your endpoints that were significantly statistically, the primary and two secondary and then the pool was also significant on those three fronts. Going forward in the real world, there maybe a potential that they need titration of dose given the nature of this disease. What is the thinking of that? Will the Phase 3 have any sort of design that could account for that?

No. Phase 3 will be a parallel design. So we will not be doing titration directly in any of the pivotals. We are so under discussions internally whether or not we would like to do a titration, smaller titration study to see what the effects are of titration, if you can get better efficacy and better tolerability to the titration design. So but if that study is done, it would be an ancillary or support study. It wouldn’t be -- it would not be directly done in the pivotals. Rahul Jasuja - Noble Capital Market: Okay. So should we assume that the 1.75 mg dose is the dose going to be tested in the two trials?

Clearly, that is the dose stat that carried bulk of the efficacy in the Phase 2 study. Phase 2B study. It certainly will be, I think, workforce dose in the Phase 3 program where we may or may not have a lower dose in the study and that really -- well, that’s really a decision that we’re under discussion. On the regulatory standpoint, that would be -- its fine. Rahul Jasuja - Noble Capital Market: Okay. And then one question, there maybe some redundancy here, in this question here, in looking at the Phase 3 study compared to the Phase 2 study. There really are not -- no major differences. I noticed that certainly the FSFI index which is really a great quality of the measures the sexual responder on the overall quality is now co-primary. But in term of the patient population, is it the same FSAD and HSDD population, that’s one question. The second question is that, is there any difference between the Phase 2B and Phase 3 in the way you measure blood pressure or cardiovascular and select for patients going forward?

Well, I’ll answer first part and I’ll let Jeff work on the second-- the second part. The patient populations in this study, the Phase 2B had a broader patient population and that we had HSDD patients or hypoactive sexual desire disorder patients, patients that had female sexual arousal disorder and then patients that could has either one -- I mean both. In Phase 3, from (inaudible) standpoint, we’re looking for a more refined population and we select with agency the hypoactive sexual desire patient population either pure or with arousal disorder. That really encompasses about 85% of the patients that we will see in commercialization. So we’ll poll for that patient population. So we won’t have any of other pure female sexual arousal disorder patients in the study. But overall in Phase 2, I think we screened somewhere over 12,000 patients, I got about five or six FSAD patients. So there have not been many of them. So we’re really going to be focused on the key patient population that we expect to see in commercialization and on the [patient] screening.

Yeah. Just amplify on the female sexual arousal disorder patients, it was less than 3% of the patients who were randomized in our trial. And so we just don’t have it updated to really address the efficacy and safety in that smaller population. On the cardiovascular side, the entry criteria will be similar to those used in the Phase 2B study, a clinical based automated blood pressure and measurements on multiple occasions. Rahul Jasuja - Noble Capital Market: Okay. That’s all good. And then one final question, these are all premenopausal women. Any thoughts on post-premenopausal, or that’s not even an consideration at this time?

Yeah. There is certainly -- we would like to attack that population as well and part of the 2 -- Phase 3 program will be to the initial studies looking at our safety and preliminary efficacy, so that we can move forward in that patient population. Jeff, do you have anymore?

Yeah. We will do likely a safety and preliminary efficacy study in that population. We need to understand things like, if the doses are same, or different as in the premenopausal population, is there a requirement for concomitant estrogen or testosterone and supplementation et cetera. Rahul Jasuja - Noble Capital Market: Okay. Very good and that’s was great and congratulations.

Thanks.

Thank you.

We have no further questions. I would now like to turn the conference back over to Dr. Carl Spana.

Thank you. I’d like to thank everyone for participating on the quarterly conference call. It is certainly exciting time at Palatin. We are quite excited about the progress that’s been made with Bremelanotide in particular and our transaction in the Phase 3 with that program. And we are excited to come out and talk to guys in a more detail, as we get out on the road and look forward to updating you on our progress. So, thanks, have a great day. Talk to you next quarter.

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