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

Charles Duncan - Piper Jaffray Joe Pantginis - Roth Capital Partners Rahul Jasuja - Noble Capital Markets

Good morning, ladies and gentlemen, and welcome to the Palatin Technologies fourth quarter fiscal year 2013 conference call. As a reminder, this conference call is being recorded. Before we begin our remarks, I would like to remind you that statements made by Palatin that are not historical facts may be forward-looking statements. These statements are based on assumptions that may or may not prove to be accurate and actual results could differ materially from those anticipated due to a variety of risks and uncertainties discussed in the company’s most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements and Palatin’s prospects. Now I would like to introduce 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 am 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 our fiscal year end 2013 financial results. To begin, Steve Wills will provide the update.

Thank you, Carl, and good morning, everyone. I will be presenting the financial operating results update for Palatin Technologies. Regarding Palatin’s fourth quarter fiscal year 2013 financial results, our net loss for the quarter ended June 30, 2013 was $4.7 million or $0.04 per basic and diluted share, compared to a net loss of $5.3 million or $0.14 per basic and diluted share for the same period in 2012. The decrease in net loss for the quarter ended June 30, 2013 compared to the net loss for the quarter ended June 30, 2012 was mainly the result of a decrease in costs related to our bremelanotide for female sexual dysfunction program. For the year ended June 30, 2013 we reported a net loss of $20.9 million or $0.21 per basic and diluted share, compared to a net loss of $17.3 million or $0.49 per basic and diluted share for the fiscal year ended June 30, 2012. The increase in net loss for the year ended June 30, 2013 compared to the net loss for the year ended June 30, 2012 was mainly attributable to the recognition of a $7.1 million non-cash charge to expense related to our July 3, 2012 private placement offering, which was partially offset by the decrease in costs related to our bremelanotide for FSD program. Regarding revenue, there were no revenues reported in the quarter ended June 30, 2013 compared to $11,000 for the same period in 2012. For the year ended June 30, 2013 revenues were 10,000 compared to 74,000 for the period in 2012. For the year ended June 30, 2013 revenues were 10,000 compared to 74,000 for the year ended June 30, 2012. Revenue consisted entirely of reimbursement of development costs and per-employee compensation earned at the contractual rate pursuant to our agreement with AstraZeneca. Regarding cost and expenses, total operating expenses for the quarter ended June 30, 2013 were $4.7 million compared to $5.7 million for the comparable quarter of 2012. Total operating expenses for the year ended June 30, 2013 were $15.6 million, compared to $18.9 million for the year ended June 30, 2012. The decrease in operating expenses for the respective periods was primarily the result of a decrease in costs related to our bremelanotide for FSD program, and secondarily as a result of closing our research laboratory operations in connection with our lease expiration of July 2012. Regarding cash position, our cash, cash equivalents and short-term investments were $24.4 million as of June 30, 2013 compared to a $3.8 million at June 30, 2012. Current liabilities, accounts payable, accrued expenses amounted to $2.1 million as of June 30, 2013 compared to $3.5 million as of June 30, 2012. We believe that existing capital resources will be adequate to fund our currently planned operations, including submitting complete protocols for pivotal Phase 3 studies to the U.S. Food and Drug Administration but not initiating patient enrolment through at least calendar year 2014. We do not intend to initiate patient enrollment in the Phase 3 program unless we have adequate funds or commitments for adequate funds to complete our Phase 3 program for bremelanotide for FSD. Carl?

Thank you, Steve. For fiscal year 2013, our operational focus was on the continued progression of our bremelanotide female sexual dysfunction program and our preclinical melanocortin receptor-1 and PL-3994 programs. Female sexual dysfunction is a disorder that affects approximately 20% of women at some point during their adult life. Currently, there are no FDA-approved treatments and this represents a significant unmet medical need and a large potential market opportunity. Regarding our bremelanotide female sexual dysfunction program, over the last fiscal year we have made substantial progress in moving this program towards the start of Phase 3 clinical trials and potential corporate partnerships. In the fourth quarter of calendar 2012, we announced the positive top line results of our bremelanotide Phase 2B female sexual dysfunction study which evaluated bremelanotide versus placebo in approximately 400 premenopausal women with female sexual dysfunction. Analysis of the Phase 2B data clearly demonstrated that treatment with bremelanotide resulted in clinically meaningful effects and statistical significance versus placebo on improving the number of satisfying sexual events, overall sexual function and personal distress associated with the patient’s 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 in New Orleans, Louisiana in March. In the second quarter of calendar 2013, we had end of Phase 2 meetings with the FDA where we presented and discussed the safety, Phase 2B efficacy data, preclinical, toxicological and manufacturing data. We also presented our plans for the bremelanotide Phase 3 female sexual dysfunction pivotal registration program. 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 presented details on our last quarterly conference call in May of this calendar year. As a reminder, we plan to conduct two confirmatory Phase 3 clinical studies evaluating the safety and efficacy of a 1.75 milligrams subcutaneous dose of bremelanotide versus placebo as a treatment for female sexual dysfunction patients that have hypoactive sexual desire disorder with or without arousal symptoms. The co-primary endpoints will be change from baseline in a number of satisfying sexual events and the patient’s desire. Key secondary endpoint will be improvement in the patient’s sexual dysfunction associated distress. The randomized, controlled Phase 3 trials will have a design very similar to those used in the Phase 2B study. Two additional important points included FDA agreement with Palatin’s position that the Phase 2 data has adequately characterized the blood pressure and heart rate signals of bremelanotide and FDA agreement with Palatin’s position than earlier definitive QTc cardiac safety study using intranasally administered bremelanotide was sufficient to support a new drug application filing. Currently we are actively engaged in the activities required to start and run a major Phase 3 program. These include finalizing the Phase 3 protocols with the FDA, identifying, screening and hiring multiple contract research organizations and related vendors, manufacturing of Phase 3 clinical trial doses and identification and screening of clinical trial sites. Our goal is to be in position to begin patient screening late this calendar year. The final decision on when we will start patient enrollment in the Phase 3 Female Sexual Dysfunction program is dependent on a number of factors including the status of our corporate partnering discussions. We are currently in active discussions with a number of pharmaceutical companies around the world concerning the potential partnering of bremelanotide for the treatment of Female Sexual Dysfunction. Discussions are continuing to proceed well and we anticipate being in position by the end of this calendar year to select a potential partner or partners. Now we'll move on to our obesity and diabetes program which is under the direction of our partner AstraZeneca. After running into an issue with the first clinical candidates a subcutaneous injected peptide AZD2820, AstraZeneca has been focused on preclinical research to identify potential new melanocortin-4 receptor clinical lead compounds. Melanocortin-4 receptor is a well validated target for obesity therapeutics. Human genetic and preclinical evidence indicates a key role for this receptor and attended 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 to realize this potential. Pursuant to the terms of the research collaboration and licensing agreements with AstraZeneca, Palatin is eligible for milestone payments upon achieving development and regulatory milestones as further payments on achievement our sales targets in addition to royalties on sales of approved products. AstraZeneca has the responsibility for product commercialization, discovery and development cost. Moving on to our PL-3994 natriuretic peptide receptor agonist program, the key objective for fiscal year 2013 was to conduct a variety of preclinical activities to better define the role of natriuretic pathways in pulmonary and cardiovascular diseases. This was being done to support our objective of finding a potential licensing partner for one or more of these programs. We believe that the preclinical data we have generated along with our earlier clinical work now puts us in a stronger position to move the development of PL-3994 forward, as well as track potential licensing partners. Our final update on this call is on melanocortin-1 receptor based therapeutic program. We believe that melanocortin receptor 1 based therapeutic will have the potential to a variety of inflammatory immunological indications such as inflammatory bowel disease, kidney disease and uveitis. This past fiscal year, we've been focused on evaluating MCR receptor 1 targeted compounds in a variety of preclinical animal models. Positive and exciting data from these studies will allow us to select potential lead compounds this calendar year and supports our efforts to find potential licensing partners. Before we open the call to questions, I'd like to make a few concluding remarks. We are extremely pleased with our opportunity to move bremelanotide forward into Phase 3 pivotal registration study for Female Sexual Dysfunction. This is supported by strength of our bremelanotide Phase 2B efficacy and safety data and the regulatory guidance received from FDA. We have designed the comprehensive Phase 3 program that if successful will provide the safety and efficacy data to support regulatory submission for approval of bremelanotide as a treatment for premenopausal women with Female Sexual Dysfunction. We are actively engaged in the activities require to begin patient enrollment in the bremelanotide Phase 3 pivotal registration studies which may occur as early as the end of this calendar year. We have an active program to continue to present data from the bremelanotide Phase 2B study at additional medical meetings and to prepare and submit reports of the Phase 2B data for publication in peer-reviewed journals. We are also working diligently on establishing one or more corporate collaborations to facilitate the events of our bremelanotide Phase 3 Female Sexual Dysfunction program. For PL-3994 we have generated substantial of preclinical data to support our corporate licensing efforts. And finally regarding our melanocortin receptor 1 program we anticipate selecting the first lead clinical candidate by calendar year-end progressing towards Phase 1 clinical studies. We also continued to make progress in identifying potential corporate partners. I'd like to thank you for participating in Palatin's fiscal year-end 2013 conference call. And we will now open the call up for questions.

(Operator Instructions). And we will take our first question from Charles Duncan with Piper Jaffray. Charles Duncan – Piper Jaffray: Hi guys. Thanks for taking the question and congratulation on a good year of progress. I did want to ask you for a little bit more color. Carl, you mentioned that you’re getting prepared to start the Phase 3 including finalizing the protocol with the FDA for bremelanotide. I am wondering if you could give us a little more color on that. How do you think they are going to really compare in terms of endpoint et cetera, key considerations relative to your Phase 2B?

I'll give my brief answer and then Jeff can jump in as well. Just as a compare and contrast the Phase 2B study was a Phase 2B study and was only powered to reach significance for a single primary endpoint which was the change in satisfying sexual events, the change in desire as measured by the female sexual function index and then the decrease in distress were secondary endpoints in that study. In the Phase 3 we reached an agreement with the FDA that the Phase 3 program as is typical for FSD programs will have two co-primary endpoints. One being the change of satisfying sexual events and the second being the change in desire both of those measured from baseline. And then the key secondary endpoint will be the improvement in sexual dysfunction associated distress. So, there will be slight differences in just the way we order these and then how we power the study, but in essence the instruments used, the measurements dynamics will be very similar between the Phase 2 and the Phase 3. I don’t know if Jeff wants to add more color or not.

Yeah, Charles I mean it's a good question the Phase 2 study, it was quite robust in almost every second every endpoint which were all really aspects of behavior, desire, arousal and distress. And the discussions that are ongoing are really an effort to refine precisely what aspects, what domains and what specific aspects of these domains will be used for the demonstration of clinical benefit in the pivotals. Charles Duncan – Piper Jaffray: And I guess as a follow on. Surely you've been interacting with the agency and getting prepared for the start of this. I am wondering if you have any perspectives on the agency's continued interest in this indication and whether or not you've heard anything about the competitive environment?

Certainly, what we know is that certainly we've been actively engaged with the FDA as we send in protocols we do get feedback from them, they've granted us obviously a Phase 2 meeting to discuss our program in detail. So certainly they are engaged from that perspective. We know that other sponsors are clearly also pursuing the indication, you have Apricus with their topical, we know that they recently had meetings with the agency. And then we also know that Sprout which is the current owner of Flibanserin has responded to a Complete Response Letter. And they anticipate on their website as of June of this year they expected to have feedback on that filing by the end of the year. We assume that they are in active discussions with the FDA moving towards what we hope will be final approval of that product. So I think there is a good engagement of the agency and they certainly are reviewing filings that are coming from us as well as others and we do expect that as Sprout has said there will be a regulatory action probably by the end of this year. Charles Duncan – Piper Jaffray: And then Carl my final question regarding timelines for the Phase 3 is really related to the interest of investigators. Our diligence has suggested there being a real differentiation for bremelanotide with regard to its on-demand characteristics. Do you, does it seem like there is going to be a good list of sites that would be interested in that type of product and have you received any feedback on the on-demand versus chronic approach to the indication?

Sure, I mean I'll answer some of it a little bit, Jeff will jump in as well. We have tremendous interest from potential sites, I mean, I get emails, several emails a week from potential new sites. And I think you’ve hit on a key differentiating factor, our work on marketing side has shown that patients would prefer an on-demand product versus chronic for the indication. In part, they are looking for an aid, I don’t think they believe that they are sick per se and take something every day, make some think that they have a more chronic or serious condition, whereas they really I think are looking for an aid and that's what [inaudible] or on-demand type of product provides. In addition, just anecdotally, I mean, as we talk to the clinical trial sites, and Jeff maybe comment on some of these, we get very strong feedback from the sites that patients respond well to bremelanotide, they get good responses. And even though it’s SubQ they do continue to take the drug and want to take the drug.

Yeah. Consistent with the Phase 2 the data showing really consistent and congruent affects on most aspects of female sexual function in this population the anecdotal data is really quite compelling and very positive. The interest from the investigator community is very enthusiastic as Carl said. Charles Duncan – Piper Jaffray: Thanks Carl, Jeff for the added info.

We’ll take our next question from Joe Pantginis with Roth Capital Partners. Joe Pantginis - Roth Capital Partners: Couple of questions. So let’s look at it from the standpoint of, we’re going to obtain visibility either way, either it’s from partnering which is your stated goal or how you’re going to fund the study to go forward. So I guess my question would be based on, Carl, what you described as your ongoing activities right now finalizing the protocol, the vendors having the doses ready clinical sites. So I will just pick a random data, if you were to have this visibility in place say November 1, what kind of lag time could be expected once we have this visibility to actually start enrolling patients?

It goes, you can start it pretty quick, I mean activities after that would be really, you’d have your investigator meeting, but you can also start sites prior to that. So, I mean, I think our stated goal is to be in a position to pull the trigger before year end to begin to start real operationalization of the Phase 3. And I think that based on where we sit today is that that’s more than achievable. We’re trying to really make this a turnkey program. So when the partners steps into door they have got essentially a full program that can just take off and go or some reason we do a mixture of partnership or raise capital that an investor looking at is really looking at a fully developed program with all of the risk known and timelines that are very defined. But we should be in a -- our goal is to be in that position by the year end and I think that’s fine. And Jeff, do you want to comment?

Yeah, Joe, I mean, kind of a industry benchmark for trigger pull, green light to first patient in would be about six months. Given our experience in the Phase 2 program and the amount of work that’s being done now, we think we can substantially beat that. I would just challenge that first patient in isn’t really the meaningful metric, it’s really a 50th percentile -- 50th meeting patient in to really optimize the enrollment curve. So these are things that we are actively trying to balance at present time.

Joe, we are not just waiting final agreement with the FDA on the Phase 3, we are moving forward with the number of the other activities, i.e., we are in the process of completing the dose manufacturing for the Phase 3. The CROs and the other related vendors were in the process of finalizing the contracts. So we will be ready to go and move very quickly as Carl and Jeff mentioned to initiate the dosing in the first quarter of next year. Joe Pantginis - Roth Capital Partners: That’s great. And I guess, I think the key comment there was also just having a turnkey program, so I think that’s really important. And I guess my second question is also related to the competitive landscape, Carl you just mentioned also that you are obviously getting a lot of interest from clinical sites wanted to be involved with the program. When you look at the broader, I guess, potential, I guess from a commercial standpoint, how do you think the let’s call it anticipated approval of (inaudible) might help open the market for you?

I think it would be great to have them out there, I mean we like that product proves and then the marketplace starting the educational process. I will let Steve comment and he’s run lean on putting the commercial assessments together.

I mean frankly our models are greater and we reach a peak sooner with the (inaudible) product on the market. As Carl mentioned there is going to be a very significant process to educate the market. There is a lot of groups, albeit the consumers, the HCPs, the reimbursement folk. This is a new indication and is going to warrant a lot of effort. We believe we have enough differentiating factors that we will be more than competitive with that product. And as Carl and Jeff answered earlier the on-demand appears to be the most differentiating factors preferred by both consumers and even the HCPs, the healthcare providers that will be writing the scripts. Joe Pantginis - Roth Capital Partners: Great. Guys, thanks a lot.

We'll take our next question from Rahul Jasuja. Rahul Jasuja - Noble Capital Markets: Just a few questions, kind of relevant to the ones that have been asked, but just a little bit more of those. So this question is really for Carl and Jeff. Now besides the difference in the 5HT modulator which is the sprout drug under review. And then bremelanotide which is the targets melanocortin receptors, but you have got on-demand versus chronic. Did you guys have any discussions with your KOLs or experts in how the different mechanism relate to different patient populations preferring one over the other or some sort of difference in experience in taking these two drugs?

I mean, I think that certainly the patients will experience in somewhat differently in a sense that you are taking bremelanotide in response to an anticipated sexual encounter. So the patient is receiving sexual fuse and is taking the drug and experiencing a very strong association of the drug with their effect because [they take it] on-demand. Whereas for flibanserin it's a more chronic, you take it associated from the sexual encounter, though the association with the treatment maybe slightly different. Just overall what we hear back from clinicians that are treating these patients is that the patients have a fairly, these patients have a robust response on bremelanotide and they appear to be very happy with the change that they're experiencing in their sexual life in total not only their desire and their arousal per say and orgasm, but the way that's affecting their relationship and the approach to their partners. I don't know how different that is from a positive experience with flibanserin, but I know that for bremelanotide it appears to be quite robust.

Well it's interesting question. I mean just looking over our data which is a fairly large Phase 2 program I am not convinced personally that we have any specific markers or predictors of response at this point. And even though the efficacy signals are quite robust and statistically clinically meaningful, I can't tell you which individuals are most likely to benefit from that. And I don't believe that data exists with the flibanserin program at this point either. So for the clarity for both products going forward, identification of response, predictors, markers, phenotype, genotype et cetera will be essential. On the point of how the two therapies may work together, a priority given that the pathways are different once we do some drug interaction studies to show that the drugs can be safely co-administered, I think it will be very interesting to see if there are patients who have incremental responses in a combination regimen and clearly there will be individuals who are not adequately improved on a single agent who might then be suitable for combination therapies. So I think it is going to be very interesting to sort this out as we go forward. Rahul Jasuja - Noble Capital Markets: So a combination approach is not out of the question in the future though or to discuss right now, but it is possible?

Oh absolutely I mean clearly we would have to demonstrate the safety of co-administration in this population and then attempt to determine how best such a measurement would be presented. Rahul Jasuja - Noble Capital Markets: Okay great. And then on the timeline just a little bit more. Here now there is going to be two studies about 600 patients each I presume. Assuming you start early in 2014 with patient enrollment. When would one expect top-line data?

As things go, as we anticipate with recruitment we will be submitting the NDA by the end of calendar 2015 so we would anticipate top-line data about a quarter before that. Rahul Jasuja - Noble Financial Capital Markets: Okay.

And I think we're talking about a 9 to 10 months recouping period for the study. Rahul Jasuja - Noble Financial Capital Markets: Okay. For each study, correct. Okay.

I mean we are quite focused on that aspect. I mean we are building into the program, the resources and expert help to make sure that we get our sites up and running and the right patients into the sites to fill recruitment. Rahul Jasuja - Noble Financial Capital Markets: Okay. And then finally, sorry go ahead.

We have a lot of experience from the Phase 2 program on how to actively run these studies and make sure you get the right patients in the door. And what types of advertising work, which type advertising has drove the patient in. And so I think we've got a pretty good handle on how to run a high quality Phase 3 program and maintain appropriate recruitment at recruitment timelines. Rahul Jasuja - Noble Financial Capital Markets: Sure. Okay, so the final question I have is on the MCR-1 program. That's very promising program given the potential of your melanocortin receptor 1 IP and so on. Could you talk about not just the various I guess disease areas you want to focus on, but also in terms of timelines when can we begin to see some movement there in terms of early data?

Sure. I'll suggest I'll spend trying to give quick overview of just a little bit of science. What's intriguing about melanocortin-1 receptor is that it appears to be a target that is up regulated and inflammatory, in many inflammatory and immune compromised situations. And the natural process the normal is made locally and it hit the receptor and you have the potential for an acute anti-inflammatory response and in some indications a more durable affect by affecting regulatory cells. So it represents a kind of a very nice approach to We are treating a number of diseases such as inflammatory bowel disease or certain kinds of kidney disease, as well as things like uveities. Just as a background historical point, this is part of a pathway that is used by the body of ACTH, which activates steroid release, the first part of that peptide is actually alpha MSH, which is processed out. So this is part of the body’s basic key system for finding information. So we are very excited what the mechanism represents. From a timeline standpoint we are, as you stated we have been selected and it’s really the timeline can be accelerated or slowed down depending on the resources that we put in. We will start as we end the year against putting out the preclinical data at the beginning to incorporate that into our corporate presentation, because it’s quite exciting. And we already are starting scale up of potential lead compounds under GCNT so we can start the program and move that forward. So you'll hear a lot about the program as next year unfolds with a variety of things and activities happening. Rahul Jasuja - Noble Financial Capital Markets: All right, great. Thanks.

And that does conclude today's question-and-answer session. I'd like to turn the conference back over to Dr. Carl Spana for any closing or additional remarks.

Thank you guys for participating on the call tonight. I'd like to thank Steve and Jeff for their hard work, as well as rest of the team's hard work over the last year. We are very excited about this company and what we can do, bremelanotide is moving forward nicely. This program is a strong program and I think it's got a very good risk profile. I think just personally that the field of Female Sexual Dysfunction is going to open up that there will be positive action of flibanserin which I think will begin to bring a lot more interest into the sector from both patient healthcare provider and investor standpoint. And the programs that we have behind bremelanotide earlier quite exciting and ones that I think we can make a lot of substantial progress with over the next year. So, with that I would like to thank you all for participating on the call. Have a great day. And look forward to meeting with the individual investors as we get out and start doing some road shows. Thanks a lot guys. Bye.

And that does conclude today's conference. Thank you for your participation.