Carl Spana - President and Chief Executive Officer Steve Wills - Chief Financial Officer, Chief Operating Officer and Executive Vice President Jeffrey Edelson - Chief Medical Officer

Charles Duncan - Piper Jaffray Joe Pantginis - Roth Capital Partners

Good morning, ladies and gentlemen, and welcome to the Palatin Technologies First Quarter Fiscal Year 2015 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 are not historical facts and 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'd like to introduce to you 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 provide updates on our development programs and our first quarter fiscal year 2015 financial results. To begin, Steve will provide the financial updates. Steve?

Thank you, Carl and good morning everyone. Starting with operational highlights, regarding our bremelanotide development program for female sexual dysfunction. On August 29, 2014, we executed a license, co-development and commercialization agreement with Gedeon Richter on our bremelanotide development program for the treatment of female sexual dysfunction in the European Union, and other European countries. On September 4, 2014, we received €6.7 million, approximately $8.8 million, in addition to the $1 million we received back in August of 2013. One-half of the approximately $10 million in total upfront payments is non-refundable and is recognized as revenue in the quarter ended September 30, 2014. The remaining half of the total upfront payment will be recognized as revenue in the quarter we initiate our U.S. Phase 3 clinical trial program which is expected to be prior to December 31, 2014. The initiation of the Phase 3 clinical trial program in the US will trigger a milestone payment from Gedeon Richter of €2.5 million or approximately $3.2 million. We expect to trigger this milestone payment before year-end and receive payment early in the first quarter of calendar year 2015. We have the potential to receive up to €20 million, approximately $25 million in regulatory related milestones and up to €60 million, approximately $75 million in sales related milestones. We also have the potential to receive low double-digit royalties on net sales in the licensed territory. Palatin will contribute, along with Gedeon Richter, to the costs of the co-development activities for obtaining regulatory approval in Europe, Gedeon Richter will exclusively market bremelanotide for FSD in the licensed territory, and will be responsible for all sales, marketing and commercial activities, including associated costs, in the licensed territory. Regarding our intellectual property portfolio, we obtained several patents, which include broad families of cyclic melanocortin receptor 1 specific peptides with potential utility for treatment of inflammatory diseases and disorders, melanocortin receptor 4 specific peptides with potential utility for treatment of obesity, metabolic syndrome, diabetes and sexual dysfunction, use of Palatin's PL-3994 natriuretic peptide receptor product candidate for the treatment of acute asthma and chronic obstructive pulmonary disease and also claims on linear melanocortin receptor 1 specific peptides. Switching over to our financial highlights, Palatin reported net income of $0.8 million, or $0.01 per basic and diluted share for the quarter ended September 30, 2014, compared to a net loss of $4.5 million, or $0.04 per basic and diluted share for the same period in 2013. The increase in net income for the quarter ended September 30, 2014 compared to the same period last fiscal year was mainly the results of the recognition of $4.9 million in revenue pursuant to our collaboration agreement with Gedeon Richter. Revenue consisted entirely of the portion of the license payment that was non-contingent and non-refundable. There were no revenues recorded in the quarter ended September 30, 2013. Regarding cost and expenses, total operating expenses for the quarter ended September 30, 2014 were $4 million compared to $4.5 million for the comparable quarter of 2013. The decrease in operating expenses for the quarter ended September 30, 2014 was the result of a decrease in costs primarily relating to our bremelanotide program for the treatment of female sexual dysfunction. Regarding Palatin’s cash position, our cash and cash equivalents were $17.8 million as of September 30, 2014, compared to cash and cash equivalents $12.2 million at June 30, 2014. Current liabilities were $2.8 million, net of $4.9 million of deferred revenue, as of September 30, 2014, compared to $1.8 million, net of $1 million of deferred revenue, as of June 30, 2014. We believe that existing capital resources will be adequate to fund our planned operations through the quarter ending December 31, 2015, not including initiating our pivotal Phase 3 clinical trials for bremelanotide for female sexual dysfunction or other planned clinical trials. We expect to initiate enrolment in our Phase 3 clinical trial program for bremelanotide for female sexual dysfunction prior to December 31, 2014. We are currently in a process of reviewing and assessing several funding avenues, both dilutive and non-dilutive and expect to have some form of new funding in place prior to calendar year end. Carl?

Thank you, Steve. Our first quarter fiscal year 2015 operational programs update will start with an overview of our Bremelanotide Phase 3 female sexual dysfunction programs. Our activities are focused on the operations required to start and conduct a bremelanotide Phase 3 pivotal registration studies in North America and the European Union and ongoing corporate partnering activities. Before beginning with bremelanotide update, I'd like to make a few comments on the recent FDA two day public meeting on female sexual dysfunction. The meetings were held on October 27 and 28 at the FDA, White Oak Campus in Silver Spring, Maryland. The first day was a public meeting on female sexual dysfunction patient focused drug development in which a number of invited patients and key opinion leaders expressed how female sexual dysfunction impacts their lives and their desire for treatment options. The second day was a scientific workshop on female sexual dysfunction, where an FDA selected panels of experts, provided the FDA with guidance on various aspects of female sexual dysfunction clinical trials, including end points, patient’s populations and determination of treatment benefit. We believe these meetings were a significant positive for female sexual dysfunction patients and companies developing novel treatments for female sexual dysfunction. The FDA clearly stated that female sexual dysfunction is an unmet medical condition that impacts the quality of life of patients and that they are committed to working with sponsors to develop treatment options for patients. The scientific workshop provided clear guidance to the FDA on key aspects of female sexual dysfunction for development and for the process. We believe the outcomes of these meetings will provide greater regulatory clarity and confirm our confidence in the design of our bremelanotide Phase 3 pivotal registration program. Now moving on to the bremelanotide update, the operational regulatory activities required to open enrollment in the bremelanotide North American pivotal registration program are in place and we are schedule to begin patient screening before calendar year end 2014. We anticipate the initial clinical data will be available in the second quarter of calendar year 2016. Concerning bremelanotide activities in the European Union, we previously announced a license and co-development with Gedeon Richter, a European based specialty pharmaceutical company. Gedeon Richter with support from Palatin will conduct the European Phase 3 clinical trials. Currently we are working with Gedeon Richter on the activities required to begin enrolment in the European Phase 3 trial, it is anticipated that Phase 3 trial will start in the second half of 2015. We believe that there is a substantial global market for bremelanotide with United States being the largest potential market followed by the European Union. We believe the most effective strategy is to have distinct partners each of the United States, the European Union and other territories of the world. Our license and co-development agreement with Gedeon Richter is an initial step in carrying out the strategy. Concerning the potential of licensing agreement for the bremelanotide in North America, we continue to make progress with these activities, working with potential partners as they conduct their due diligence. At this time we cannot predict when or such an agreement will be entered into. Now move on to our natriuretic peptide program and clinical development candidate PL-3994. Natriuretic peptide system is the largest neuropeptide hormone system involved in the regulation of cardiovascular function. Natriuretic peptide system includes the peptide hormones ANP and BNP and their associated receptors. Natriuretic peptide system functions the lower blood pressure, suppress the renin angiotensin aldosterone system, inhibit cardiac hypertrophy and fibrosis, increase in atrial lysis and protect cardiac and kidney function. The high value of targeted natriuretic peptide system for treating heart failure is demonstrated by recent Phase 3 clinical trial results with a compound LCZ696, a compound under development by Novartis. LCZ696 is a one-to-one mixture of the angiotensin receptive block of Valsartan and the neutral endopeptidase inhibitor AHU 377. The neutral endopeptidase inhibitor component of LCZ696 upregulates the endogenous natriuretic peptide system by blocking the enzymatic degradation of natural ANP and BNP. The detailed results of the LCZ696 Phase 3 trials was recently published in New England Journal of Medicine and clearly established natriuretic peptide system as a valid target for heart failure therapy. It is highly likely that upregulation of the natriuretic peptide system will become part of the standard of care for heart failure patients. Our natriuretic peptide program and with multiple approaches to upregulate the natriuretic peptide system is uniquely positioned to take advantage of this potential paradigm shift in the treatment of heart failure. PL-3994, our lead drug and development candidate is a numeric ANP and an agonist of the natriuretic peptide receptor-A. PL-3994 has completed Phase 1 clinical studies and is ready for Phase 2 clinical trials. Our pre-clinical and clinical studies show that PL-3994 increases circulating cyclic GMP levels, dialysis and natural lysis, inhibits the renin angiotensin aldosterone system, decreases systolic and diastolic blood pressure and inhibits cardiac remodeling. PL-3994 has potential applications in heart failure with preserved or reduced ejection fraction and is ideally suited for replacement therapy in patients with core or other pro-hormone processing deficiencies. In addition to PL-3994 via pre-clinical development drug candidates that fine tune and block the natriuretic peptide c-receptor thus increasing endogenous ANP and BNP levels by decreasing their clearance to this receptor. The recent publication of LCZ696 data has increased interest among potential partners in our natriuretic peptide system program and we are currently working with potential partners as they conduct due diligence on our program. We are preparing to initiate the PL-3994 Phase 2 clinical development program and given appropriate financial and development support, we could initiate the PL-3994 study in the first half 2015. Our next update covers on melanocortin receptor-1 base therapeutic program. We are very excited by the potential of the melanocortin receptor-1 base therapeutic for the treatment of a variety of inflammatory and immunological indications, such as inflammatory bowel disease, kidney disease and uveitis. Our lead compound PL- 8177 has completed the pre-clinical activities required to begin human clinical trials and we are targeting to file an IND with the FDA in the fourth quarter of calendar 2014. In parallel with these development activities, we have begun discussions with potential corporate licensing partners. Our melanocortin one day’s program has generated significant interest among potential partners and we continue to work with multiple parties as they evaluate this exciting opportunity. Our final update before we begin the question and session is on our melanocortin 4-receptor obesity program. The scientists at Palatin have made substantial progress in our research into melanocortin 4-receptor biology and we believe we have identified multiple potential lead clinical candidates. We have been in discussions with our partner AstraZeneca concerning how best to driving and move this program forward. We expect the timeline to potential clinical trials to be clarified as we continue to work with AstraZeneca. The melanocortin 4-receptor is a well validated target for obesity therapeutics. Human, genetic and preclinical experimental evidence indicates a key role for this receptor and associated signaling pathways in the regulation of food intake and weight. Our results from earlier clinical trials of these patients with compounds that target the melanocortin 4-receptor, show significant reductions in food intake and weight loss. We believe this program has significant clinical and commercial potential and we believe that our partner AstraZeneca has the resources to progress development of the program and realize its potential. I'll give you a brief summary before we open the call to questions. We have designed a 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 pre-menopausal women with female sexual dysfunction. We anticipate beginning patient screening in the bremelanotide pivotal program before calendar year end 2014. Our collaboration with Gedeon Richter is going well and we remain on-track to begin patient enrollment in the European Union pivotal program in the second half of 2015. The FDAs recent two day public meeting on female sexual dysfunction, supports female sexual dysfunction as an unmet medical condition in need of drug treatment and provides additional regulatory clarity on the female sexual dysfunction indication. We continue to present and publish the data from our bremelanotide Phase 2B study and you can find these presentations on our corporate website. Recent clinical data indicates that the natriuretic peptide system has a potential to play a key role in the treatment of heart failure. Our pre-clinical and clinical work with our lead candidate PL-3994 puts us in a good position to take advantage of this potential paradigm shift in the treatment of heart failure. Regarding melanocortin-1 receptor program, PL-8177, our lead candidate has completed pre-clinical activities required to file an IND with the FDA and conduct human studies. We are also continuing to make progress in identifying potential corporate partners. And finally we have made excellent progress with melanocortin-4 receptor in obesity and diabetes program with multi-potential lead clinical candidates identified. And we continue to work with AstraZeneca to determine the best path forward. I would like to thank everyone for participating in Palatin’s first quarter fiscal year 2015 conference call and we will now open the call to questions.

Thank you. [Operator Instructions] We'll take our first question from Charles Duncan with Piper Jaffray. Charles Duncan - Piper Jaffray: Hi, guys. Thanks, for taking the question. Just a couple of questions on the bremelanotide FSD program. First in the State, I believe that you said that you were going to be enrolling for at least screening the first patient by the end of the year. Does that fully satisfy the requirement of the Gedeon Richter program first of all or collaboration first of all. And then, thank you for the timeline, walking through the timelines. But, can you help us understand some of your assumption in terms of the enrollment rate and perhaps the screen to enrollment or enrollment to screen failure kind of ratio that you're assuming?

Sure. To answer your question, the first patient screen triggers a milestone payment from Gedeon Richter. So, we would meet that obligation. Yes, the assumptions are you know, we conducted a very large Phase 2 study. We screened over thousand patients, enrolled approximately 400 plus patients into the Phase 2B. So we have a pretty good understanding of what it takes to get the right patients enrolled into these types of studies. We're targeting approximately nine month period for enrollment, I think at least – enrollment into the studies. And that puts us on track so with a six month interrogation period to be in the second quarter of 2016 for the data. Charles Duncan - Piper Jaffray: And how – one of the key phrases perhaps in your answer and thank you for that was the right patients enrolled. I guess, as you look at the risk term enrollment, how much concern do you have about that or do you believe that the protocol is pretty clear and that the investigative sites that you're planning to use will be able to get the right kind of patients or are there are other protocol features, such as run-in period that help you to limit that risk?

Sure. So again, you know, we pay very close attention to, making sure we have the correct patients, you know, patients with real FSD that actually are distressed by their sexual dysfunction into the studies. We have a very rigorous training program for sites that are new. So many of the sites that will participate in the study, participate in the Phase 2B program. However, with that being said, obviously there will be a whole lot of sites that did not, those sites go through a very rigorous training and certification program to make sure that we are comfortable that they can actually appropriately diagnose and screen and bring in the right patients. Its not very difficult diagnosis, but we do make – need to make sure that they are paying attention to you know, the details, making sure that patients not only have, say for example low desire, but that they also have distress associated with that low desire and that there is no logical cause for their dysfunction, i.e., they're going to be some relationship or they are taking drugs or they on a antidepressant. So its not truly difficult diagnosis, but we do pay a lot attention to it, to make sure that we get a good clean set of patients. Charles Duncan - Piper Jaffray: Okay. And then with regard to the recent FDA workshop, that was nice to see in my view. I am wondering if you think it could influence the FDA to approve a treatment for FSD or do you think the agency is waiting for one that has – for a drug that has – is perhaps if you were more approvable. And then, some of the end points that were discussed, do you think that that’s absolutely consistent with the protocol that you've designed and do you anticipate any formal guidance to come out of that FDA workshop?

We have a lot of component, yes. So let me adjust them. I think you know, again, this is a two pod meeting, one is to bring in patient you know, that bring in information from patients on how they perceive their disease condition, what type of symptoms they have, what they are looking for, what they looking for in treatment options. That’s also moderated by the key opinion leaders that are helping to treat these patients. And the secondary was a scientific workshop. We have to keep in mind of course none of this is binding on the FDA, although this is run by them and it’s them with sourcing information. So in my opinion having attended the meeting and talking to others that were there, as well, I think the FDA was quite clear that this is unmet medical condition and they are going to work with sponsors to try and get a treatment or multiple treatments approved. With that being said, I think there is meaning, if you run a clean set of pivotal trials and you submit a nice solid NDA, I think you have a good probability, assume there is no safety issue of getting approved. The next drug up for potential approval would be flibanserin and there are some safety studies that are being run or just being completely run there and we anticipate that some time in the second half of next year the FDA will review, will have completed their review of those safety studies and we'll see if they approve it or not and that’s going to be really a risk benefit decision. I think the FDA has already acknowledged benefit in that particular program. The question is what's the risk part. With regards to our program, I was very happy to see that with regards to how one measures the benefit with regards to improving desire, that the female sexual function index was unanimously by the panel agree to be a validated instrument and the appropriate instrument to use in Phase 3 clinical trials and that the 28 day recall for desire was the appropriate recall period to use for that instrument. So I think it will be kind of hard for the FDA to since they conducted this panel and pull this panel together and it was quite diverse since it was an unanimous decision that this is the appropriate way to measure benefit, I think that’s why is going to be the case. And quite frankly that is our agree to end point are with regards to measuring desire with the – in our pivotal trials as well. So I don’t anticipate any changes to our program based on this meeting. As I did say in the part that I read, I do believe that it confirms a lot of the things that we're doing. Charles Duncan - Piper Jaffray: Very good. Thanks for the added color.

Okay.

And we'll go next to Joe Pantginis with Roth Capital Partners. Joe Pantginis - Roth Capital Partners: Hey, guys. Good morning. Thanks, for the taking the question. I want to tack on my questioning about the – just using the cliché [ph] of strike while the iron is hot. And I am talking about the natriuretic peptide space, especially after Novartis's data. So I guess a couple of things. I guess when you look at 3994, can you discuss how the product might be differentiated, as well as how you think it might fit in the treatment landscape, especially with 696 moving forward. And then importantly, to my strike while the iron is hot comment, can you discuss potential next steps and more color, do you think you might want to hold on to this for a little longer to drive more potential value or do you think you'd look to you know, partner it first in order to get the biggest thing for the buck if you will?

Well, so Jeff and I will kind of answer this together. Just quickly from a differentiating standpoint, just keep in mind, that the Novartis compound is a fixed ratio of an angiotensin receptive blocker and neutral endopeptidase inhibitor. So, there is no ability to change how much natriuretic peptide up regulation you have with that compound. And it’s fairly limited in its ability to dose because of potential hypotension. So now as if you operate your NPS system too much, you can get some hypotension. So a key distinction with our program of course is that, the treating clinician will be able to vary you know, the angiotensin receptive blocker or the natriuretic peptide system because we giving a direct activator. So it does give a lot more flexibility. With that being said, that’s a twice day pill, ours an injectable, so its likely that will be going to patients that are little more difficult to treat, not fully responding to that treatment option. Jeff, I don’t know if you want to add any more color and talk a little bit the next study that we have on test…

Joe, it’s a great question. So as Carl says, as a direct agonist, 3994 does have pharmacologic some logic differentiation from the neurolysin inhibitor. And so who might benefit from that would be people who still have a potential to exploit that pathway despite the presence of the LCZ696 compound, specifically there is a population of people who have an abnormality of the natriuretic peptide processing enzyme systems, specifically corn and which is a protease which actually activates the NP. And there is large number of people who have either genetically acquired or functionally acquired defects in corn activation and then therefore can't process the NP. Therefore they never actually present a functional agonist to the receptor system. So in those patients, specifically we think a direct agonist will be potentially helpful. Now whether that’s in combination with 696 or in people who a refractory to 696, I think needs to be worked out a little bit in the clinic and that will be the first group. Second group of people with unmet need, despite that – the ability of that product to people who for whatever reason would prefer to take an actual ACE inhibitor, as you know those drugs include an ARB, angiotensin receptor blocker, plus the neurolysin inhibitor, but not an actual ACE inhibitor which appears to become authenticated. So in our case we could come with an ACE inhibitor and a direct agonist as an alternative for selected patients, again this would have to be worked out in the clinic. And that’s another potential segment that could be – could benefit from the 3994.

And then just for us you know, the next clinical trial for us would be a roughly about a 28 day study where we would be giving multiple doses of PL-3994 over the course of 28 days in a variety of patient populations i.e., we'd be looking at patients that had either preserved ejection fraction, reduce ejection fraction and those that accept core mutation. So its really the set up you know, study for us to be able to go home and treat and look for real out come in – with PL-3994. And from a collaboration standpoint, you know, we are – I think for us you know, it’s certainly the next study that’s up, is one that’s within the scope of Palatin to conduct it’s an in-clinic study. It’s not very large. I think after that you would like to have a partner on board. So – because those studies than become larger, they are at home, they take longer duration, you are dealing with lot more patient numbers, because you're looking for reductions in hospitalization, improvement and cardiovascular death and those things generally require large studies and you'd want to buy partner on board. So for us, you know, we have a nice example of companies that are interested. They are the appropriate companies. They are all large pharma and if we can strike the right deal we would do it sooner rather than later. But we would be willing to run the next set of studies if that was required to generate additional data. Joe Pantginis - Roth Capital Partners: Okay. Great. Thanks, for the added color guys.

And we'll go next to Rahul Jasuja with Noble White Klein Partners [ph].

Hey, good morning. And thanks for taking my question. So just sticking with the PL-399 program, kind of following up on what was being discussed. You know, besides heart failure, isn’t there a smaller indication, maybe a smaller market size such as in acute decompensated heart failure where you could run a smaller study with less of the sort of big pharma kind of you know, clinical project wide, is that something that has been considered?

Well, it’s Jeff speaking. Yes, that is in fact a potential application of the compound. As you know they precedent for the beta natriuretic peptide, nitro [ph] core being approved for relief of dyspnea in patients with acute decompensated heart failure. (inaudible) by working through the same receptor albeit with a much longer half life and a subcutaneous administration schedule, this brings the possibility of a subacute intervention followed by chronic domiciliary therapy. So we think that is an interesting segment that we do intend to explore in the program. As a small company, we sequence that development program probably behind treatment of patients with stable congestive heart failure with unmet need you know, looking for chronic therapy. But we'd be willing to obviously explore that and certainly if the program was to be partnered, the partner may wish to accelerate that particular program.

Okay. Great. And then one more question, this is sort of from my notes, is there any potential for – since PL-3994 really has pretty potent ability to sort of decrease blood pressure, is there any hopes for this in hypertensive population?

You know, that is a great point. We – I will say, the original development thesis for this compound was for treatment of refractory hypertension and there is no question it’s a vasodilator, there is no question that it may, there are people who basically refractory hypertension is essentially failure of three or more chronic therapies, and there is potential for benefit. Under expert care of hypertension sub specialist, I think that is a potential application of the drug whether or not it’s a registrational focus I think remains to be seen.

Okay. Great. And then, just to follow up on the FSD program. The question is regarding US really have been discussed previously. But let me just ask you about the European timelines for the FSD. I know its throughout the second half of next year, what about the countries and the market size that you think you know, would be, what would be market size in Europe versus US, if you can comment on that?

Sure. I'll just comment quickly on the development part and let Steve talk about the market. We're targeting five countries in the EU to run the pivotal programming. That’s about the right size and the work to translate into the various languages is ongoing now. With that I'll hand over to Steve, he can talk about the marketing.

Right. (inaudible) mentioned, the initial trials will be in approximately five countries and we’ve used third parties for the market assessment here at Palatin and getting Richter use the combination of internal analysts of third parties. Peak sales for bremelanotide in the US we mentioned in the past are projected to be in that $750 million annual range and the European market approximately one third of that or say $250 million in the European, the European territories that we licensed to get in Richter. We also think there is you know several other, rest of the world regions outside there, say North America and the license territory to get in Richter, that could account for another $100 million to $200 million of annual peak sales.

Okay. That’s useful. And then shifting to you know, the MCR1 program, so obviously that you know, that’s a hot program for many. What is the progress there I mean, pre-clinical models do you have a lead compound, what should we expect out there, also in terms of potential indications that you are looking at?

It’s a program that we haven’t yet had opportunities to publish much on. There is a lot of exciting preclinical data that has not yet been presented. In IBD, uveitis and various models of nephritis. So we think it’s a very broadly active compound, as I said, 8177 is a lead compound. It’s a very potent agonist at the MCR1 receptor and we are in the process of putting the IND together just to start first in human studies with that. With regard to exact indication, which one will go with we haven’t come to a final decision yet. But we will over the next several months.

The first study would be…

Standard, first in humans single ascending dose study. So we can look at systemic effects of the drug after that we'll move into – be able to move into various patient populations.

Right, and you haven’t, maybe I missed that, but you haven’t publicly told us if there is going to be an IND timeline for that, but you haven’t discussed…

No, actually, we are – the IND enabling studies are completed and the – as the final reports come in we'll put them into the IND and file that before the end of the year.

Great. Thanks.

Yes.

And we'll go next to Charles Duncan with Piper Jaffray. Charles Duncan - Piper Jaffray: Thanks for taking the follow up guys. Couple of quick questions, just to make sure I understand the milestone payment from Gedeon, is with the commencement of screening that would result in a full, call it $8.5 million recognized this quarter?

Yes, the way that works is, as I mentioned the [add on] we received approximately $10 million of total upfront, half of that or approximately $5 million was recognized in the quarter ending September 30, the other half is deferred until we are able to remove if you will the non-contingent, non-refundable portion of that payment. Once we start the US Phase 3 trials, that component is removed. So we expect and anticipate for the quarter ending December 31, this quarter ending December 31 2014, we would recognize the remaining 50% of the upfront payment or approximately $5 million, plus the approximately $3.2 million related to the triggering the milestone for the initiation start of the Phase 3 trials in US. Charles Duncan - Piper Jaffray: That’s helpful. Thanks, Steve for that clarification. I wanted to ask perhaps on the MCR4 program, the obesity program with Astra. When do you believe that their collaborators will be in a position to decide our next steps in this collaboration?

I would think that you'll see something probably early in the New Year. We have discussions ongoing with them now and just based on that I think they would wrap up and lead to a decision on which, with real timeline or probably in the beginning of 2015. Charles Duncan - Piper Jaffray: Okay. And then, with regard to your internal candidates, is that impacting, how would that impact your efforts there. Have you had discussions beyond Astra, perhaps to look at those candidates?

I am not going to comment on that, but… Charles Duncan - Piper Jaffray: Fine…

Okay. Charles Duncan - Piper Jaffray: Do you have a compound that you've identified that could be moved through IND enabling studies?

If we were on our own and have the money, we would be well into the IND enabling studies. Charles Duncan - Piper Jaffray: Okay. Good. All right, well, we'll look forward to that update next year.

Great.

Thank you. That does conclude today's question and answer session. I would now like to turn the conference back over to Dr. Carl Spana for any closing remarks. End of Q&A

Well, thank you everyone for participating in the Palatin's Technologies first quarter fiscal year 2015 conference call. Everybody have a great day. I appreciate all the great feedback and questions that we got on the call. I think they were quite good. I like to thank everyone at Palatin for the work that they are doing and we look forward to updating you next quarter. Thanks a lot. Bye-bye.

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