Carl Spana – President, Chief Executive Officer Steve Wills – Chief Financial and Operating Officer, Executive Vice President.

Charles Duncan – Piper Jaffray John Newman – Canaccord Rahul Jasuja – Noble Life Science

Good morning, ladies and gentlemen, and welcome to the Palatin Technologies First Quarter Fiscal Year 2016 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 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 you to our host for today, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Thank you and good morning. 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. On today’s call, we will provide updates on our development programs and our first quarter fiscal year 2016 financial results. To begin, Steve will provide the financial update. Steve?

Thank you, Carl, and good morning, everyone. Starting with recent financial highlights, in July 2015, we close on $30 million of debt and equity financing consisting of $10 million venture loan, which includes an interest only payment period for the first 18 months of a four year secured term loan, and $20 million private placement of Series E warrants to purchase approximately 21.9 million shares of common stock and Series F warrants to purchase 2.2 million shares of common stock. Regarding our development programs, in September 2015, we entered into a termination agreement pursuant to which Palatin and Gedeon Richter agreed to mutually and amicably terminate the license agreement. In connection with this termination, all rights and licenses to co-develop and commercialize bremelanotide for female sexual dysfunction indications held by Gedeon Richter terminated and reverted back to Palatin. Neither we nor Gedeon Richter have any future material obligations under the license agreement. There are no payment or reimbursement obligations as a result of the license agreement termination. We now have the global rights to bremelanotide for female sexual dysfunction, providing us and our business development efforts with additional options and flexibility. We are actively engaged in licensing and collaboration discussions with multiple companies for both global and regional commercial rights to bremelanotide. Regarding financial results, we reported a net loss of $12.4 million or $0.08 per basic and diluted share for the quarter ended September 30, 2015, compared to a net income of $0.8 million or $0.01 per basic and diluted share for the same period in 2014. The increase in net loss for the quarter ended September 30, 2015 compared to the net income for the quarter ended September 30, 2014 was primarily attributable to the increase in expenses relating to our Phase 3 reconnect study with bremelanotide for female sexual dysfunction in the quarter ended September 30, 2015. And secondarily, to the revenue recognition of the upfront payment related to the license agreement with Gedeon Richter in the quarter ended September 30, 2014. Regarding revenue, there were no revenues recognized in the quarter ended September 30, 2015 compared to $4.9 million of license revenue recognized for the quarter ended September 30, 2014, which consisted entirely of the portion of the license payment that was non-contingent and non-refundable under our agreement with Gedeon Richter. Regarding operating expenses, operating expenses for the quarter ended September 30, 2015 were $11.8 million compared to $4 million for the comparable quarter of 2014. The increase in operating expenses for the quarter ended September 30, 2015 was the result of higher period cost primarily related to our Phase 3 reconnect study with bremelanotide for female sexual dysfunction. Regarding Palatin’s cash position, our cash and cash equivalents were $47.5 million as of September 30, 2015 compared to net cash and cash equivalents of $27.3 million at June 30, 2015. Current liabilities were $10.6 million as of September 30, 2015, compared to $7.4 million as of June 30, 2015. We believe that our existing capital resources will be adequate to fund planned operations through the quarter, to at least the quarter ended September 30, 2016. And assuming our Phase 3 Reconnect Study for female sexual dysfunction is successful, as to which there can be no assurance or guarantee, we will need additional funding to complete submission of required regulatory applications to the FDA for bremelanotide for female sexual dysfunction. Carl?

Thank you, Steve. Our first quarter fiscal year 2016 operational update will focus on our bremelanotide Phase 3 female sexual dysfunction program. The BMT Phase 3 Reconnect Study protocols 301 and 302, our multicenter, double-blind, randomized, placebo-controlled clinical studies with a six month randomized treatment phase in open label safety extension phase. The clinical trials are designed to randomize 1,100 women, which is approximately 550 in each trial to evaluate the efficacy and safety of subcutaneous bremelanotide in premenopausal women with hypoactive sexual desire disorder as an on-demand, as-needed treatment. The BMT Reconnect Studies are progressing on schedule, we’re currently over 90% enrolled and expect to be at full enrollment within the next 30 days. We will provide an update when the enrollment is completed. As we’ve previously stated, this puts us on track to have top line data by the third quarter of calendar 2016. This year the female sexual dysfunction field saw major positive changes with the approval and launch of Addyi first, FDA approved treatment for women suffering with female sexual dysfunction. The Addyi label contains contraindications for use of alcohol and drugs that are moderate or strong cytochrome P450 3A4 inhibitors. In addition the Addyi approval has a risk evaluation and mitigation program that requires both physicians and pharmacist certifications and patient counseling concerning the risk of using Addyi with alcohol. We believe that bremelanotide, if approved will play a major role as a treatment for premenopausal women with hypoactive sexual desire disorder. BMT is highly differentiated from Addyi. BMT is an on-demand product taken only when needed before a sexual event not a chronic medication taken everyday like Addyi. In clinical trials BMT has not shown any interaction with alcohol and is not a cytochrome P450 3A4 inhibitor. We therefore believe that it’s likely that if it is approved the BMT product label would not have alcohol restrictions or a significant risk evaluation and mitigation program. In light of the above events significant progress of the BMT or bremelanotide Phase 3 clinical trials we have received increased interest from potential licensing and commercial partners. We believe that there is a substantial global market for bremelanotide and we continue to make progress with our licensing 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. Moving on to our natriuretic peptide program, our clinical development candidate is PL-3994. Natriuretic peptide system is an endogenous Natriuretic hormone system involved in regulation of cardiovascular functions. Natriuretic peptide system includes the peptide hormones ANP, BNP and their associated receptors. Natriuretic peptide system is upregulated heart failure, and functions lower blood pressure, suppress the renin angiotensin aldosterone system, and inhibit cardiac hypertrophy and fibrosis. We also protect cardiac and kidney function. The high value of targeting the natriuretic peptide system as a treatment for heart failure was demonstrated by the recent FDA approval of Entresto in product that combined the angiotensin receptor blocker valsartan with a neutral endopeptidase inhibitor. Entresto works in part by upregulating the endogenous natriuretic peptide system. In Phase 3 clinical trials Entresto significantly decreased mortality due to cardio vascular causes, reduced hospitalizations and improved the quality of life of heart failure patients. We believe the Entresto data validates targeting the natriuretic peptide system as a treatment for heart failure and 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 with multiple approaches to upgrade relating the systems is uniquely positioned to take advantage of this potential paradigm shift in the treatment of heart failure. PL-3994, our lead drug candidate 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, diuresis, natriuresis, inhibits the renin angiotensin aldosterone system and also decreases systolic and diastolic blood pressure, while inhibiting cardiac remodeling in fibrosis. PL-3994 has potential application in heart failure and we plan to initiate enrollment in a Phase 2 multiple ascending dose study in heart failure patients in the first half of calendar 2016. We are also currently working with potential partners as they conduct due diligence on this exciting program. Regarding our melanocortin 1 program PL-8177, our lead candidate has completed our activities required to file an IND with the FDA and conduct Phase 1 human studies. We also continue to make progress with potential corporate partners. And finally, regarding our melanocortin 4 program for obesity and diabetes, we have made excellent progress in developing multiple potential lead candidates. And our business development efforts are continuing to advance nicely as well. In summary, we continue to make significant progress towards meeting our long-term strategic objectives. Bremelanotide Reconnect Phase 3 pivotal registration program is now greater than 90% enrolled and patient enrollment will be completed on schedule in the fourth quarter of calendar 2015. Data from these studies is on track for the third quarter of calendar 2016. We have designed a comprehensive Phase 3 program that if successful will provide the safety and efficacy data to support regulatory submissions or approval of bremelanotide as a treatment for premenopausal women with sexual dysfunction. The FDA approved the first treatment for female sexual dysfunction in August. We believe this is a major positive for the female sexual dysfunction field and reduces the regulatory risk in the U.S. for bremelanotide and we continue to make progress with potential global licensing partners. Recent clinical data indicates 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. And finally, our MCR1 and Melanocortin 4 programs continue to make substantial progress and we look forward to providing more detailed update on these exciting programs sometime next year. I would like to thank all of you participating in Palatin's first quarter fiscal year 2016 conference call. We’ll now open the call to questions.

[Operator Instructions] We’ll take our first question from Charles Duncan with Piper Jaffray. Your line is now open.

Hi guys, thanks for taking this question and for the quick update, also congrats on the enrollment of the Phase 3. It sounds like its making good progress. Can you tell me whether or not, I know it’s an ongoing program, but – or trial, but on a blinded basis. Is there anything surprising or different regarding the patients that you anticipated and what about the sites in terms of the concentration of patients being enrolled.

Charles, this is Carl. The patents enrolled with are very similar to those that we enrolled in the Phase 2 program. We’ve taken very, you are paying very close attention to that aspect of the trials, you want to make sure we get the right patients in these studies, because they can be – these results can be depended upon that. So really overall, it’s running on schedule as we anticipated. We’ve been very closely monitoring patients coming in. You expected screening rates and moment rates are really well within the particular ranges that we anticipated based on the Phase 2. Site seem to be doing a good job. They are pretty much scattered throughout the country. We don’t see an overly large concentration in one or two sites doing most of the patients, which is what we want to see. So we see a very good broad distribution of patients throughout the sites as well. So overall, we haven’t seen anything in the trial that raises any concerns for us. Its really running on time as scheduled. The rates of screen failures discontinuations are all as predicted based on our Phase 2 study. So we’ve been very pleased with the progress and the team here is – I think a very good job bringing this trial forward on time.

And perhaps, this is a little forward reaching, but what about the event rate have they been then able to track down on a blinded basis and is it consistent with your expectations.

And – of course, we track as much as we can. And certainly, the memory to we see are in line with where that we want to see them big.

Okay. And then moving onto the data or potentially you talked about the data read in the first or third quarter of 2016, what else needs to be done in terms of filing, is there any additional clinical work at that point or will it be and pre-NDA filing or pre-NDA meeting that’s requisite. What do you anticipate at that time?

Sure, sure. Couple of things we’ll do. We will most likely file, I have a request to pre-NDA meeting, its sometime in the second quarter next year. So that we are – have our discussions with the agency anticipation of the data being positive and what additional things we may need. Studies – we have a number of smaller clinical studies that are on track here but predominantly safety in nature drug interaction studies, metabolism studies, all of which are we acquired types of studies for submissions. Some of those will start in the first half of next year, they all will be completed in time to keep our filing on track in early 2016, none of them are, I mean, protocols are developed we know this year we were also going to use. So really nothing special there, we have some manufacturing things that will also be running prior to the data coming in. So our plan is pretty solid and the activities that we have to do post the data or as the data comes in our pretty low risk and once that we can accomplish and get done pretty quickly.

Charles, this is Steve, the other trial is – we do have an open-label safety study extension trial that will be ongoing whereby FDA finished the treatment period, that’s what – when we talked about the top line data we’re talking for the treatment period of the patients. We will be tracking patients for at least a year with that open-label safety study and that will still be ongoing post the topline data readout.

And will that the ongoing post the NDA here or is that on a rate limit or in terms of NDA filing or a [indiscernible] filing.

It’s not rate limiting, we will be filing the data that we have at the time we’re targeting to file the NDA application with the FDA in the first half of calendar year 2017. At the safety study we’ll still be ongoing post that filing and you’ll just update your application with the FDA, which is very common place.

And have you have patient come off the study protocol and go on to that open-label extension.

Yes, we have. We have studies that are in that have rolled off the randomized part of the study and now we’re on the open-label study.

Okay, okay. Very good. I’ll hop back in the queue. Thanks.

Thanks.

Our next question comes from John Newman with Canaccord. Your line is now open.

Hi, guys thanks for taking the question. I just wondered if you could talk a little bit about your plans for 3994 in terms of the Phase 2 study that you plan on starting next year. Thanks.

Sure. 3994, it’s a pre-traditional dose multiple ascending dose study, it will be done in heart failure patients and the goal of that study is really to define the dosing range of which we feel comfortable dosing patients with 3994, before we send them into a at home study, which would occur starting much later the next year. So treatment period, you’ll probably be two weeks and it will be an heart failure patients, we would like to have some of those patients also be heart failure patients that have a mutation and a clinical code, which is the processing enzyme for natriuretic peptides, it may represent a very interesting population for us to study. So which really will be a comprehensive look at a multiple doses in a patient over two week period. So we can define a dosing range platform studies.

Okay, and do you have a sense now as to how many different doses you might look at in that study.

Yes. It will probably go over about four or five dose ranges, will continue to dose up with dose limiting effect for a natriuretic peptide is hypotension. So we will continue to do as we will dose range up until we see hypotension and then we’ll back off that dose and then continue forward with a slightly lower dose. So it will be over probably a three or four dose range, we anticipate when we’ll find that sweet spot.

Okay, great. And then on bremelanotide, has the FDA requested any additional work with regard to an alcohol interaction study you may, it teams like there is no interaction. But just wanted to still looking for anything else.

No, they have not. Obviously, that study we have done a fairly large study with both men and women with that product, or within bremelanotide. We will find out if they require, I think additional probably in the pre-NDA meeting, which should be in the second quarter next year. These studies are relatively, as you probably aware they are not hard to do. But I – there is really no, based on the evidence that we have in from the study we’ve done, there is no evidence that there is any interaction whatsoever between alcohol and bremelanotide. So I don’t see that there would be any reason to continue to study that.

Great thank you.

Yes. Thank you, John.

Our next question comes from Rahul Jasuja with Noble Life Science. Your line is now open.

Hi guys, okay, few questions. So Carl, you mentioned that in the Phase 3 FSD study and there are patients that have chosen to be part of the extensive study. I’m not sure, you can answer this. Can you tell us what percentage of patients that have completed are in the extension study or chosen to be on that extension study.

I don’t remember what – the exact number. I think most of them are actually rolling into the study.

Yes. We’re not going to get that granular with the percent. We’re comfortable with stating that greater than 50% of the patients that have rolled off the treatment period have entered into the open label extension studies.

Okay, all right, or thanks. So then other question I have is, in the experience that you’ve had with the BMP with this current delivery, which obviously is the preferred one, now given BMP the sub q versus the previous intranasal. Are you finding any differences in patients preferences or is that something that comes up in your enrollment and in your study with these patients the intranasal versus the sub q.

Really, you are getting in mind that when patients are a screen or screen into come in to the study. They know that it’s a subcutaneous dosing. So when a patient walks into a clinical trial site, they already know that – they already know that it is going to be subcutaneous. So – I’m sorry. We have a – we were testing an alarm morning here, apologies. We have the fire marshal in our development and fire marshal controls when they want to test the alarm. So we apologies for the background noise. But the answer for your question is, there is a pre-selection for patients that you – if a patient had an issue, we’re taking a sub q product. We won’t see them in this type of study, because they wont come into the clinical trial site. With that being said, you can see that our enrollment is really on track. We have no problem attracting patients in the – patients don’t discontinue the study, because of the sub q dosing.

Yes. The enrollment is very, very encouraging and that’s really great views and a positive sign. Before I move onto the MCR4 program. So this is really both the AstraZeneca partnership, could you add some color. I mean are you looking for new partnerships there. What are the plans for MCR4 now.

For that program in MCR1 as well it always are depended on how aggressively we can prosecute those programs are always dependent on the resources that we have. So with that caveat, we’ve made a lot of progress. We’ve done tremendous amount of preclinical work study where we have collaborators and on our own, which we haven’t yet put out. But our goal for MCR4 is that we actually have a fair amount of interest of post at the AstraZeneca collaboration. And so we’re working through those potential collaborations, while we continue to really improve the preclinical data set that we have. We’re at a point – where we do believe that our compound PL-8905 is legitimately candidate. And if we want to progress forward on our own, we would – we really stock a preclinical stocks activities for that compound. So we can move it towards clinical trial.

Okay. And then I guess something a little redundant here, you did have some thing in the prepared statements maybe, but post the acquisition of spread by [indiscernible] Could you discuss a little bit about the corporate interest for FSD. I mean the regulatory barriers now, the risk associated how far more decreased if you could just touch upon the corporate interest and so on regarding our partnerships regarding BMP for FSD.

I’ll say something briefly and so Steve will jump in as well. What I can say you certainly renew from our discussions with potential partners prior to the summer time, the June 4, AdCom and then the August approval that there was very high interest in bremelanotide as a company due diligence they were very impressed with the work we were doing. But there was the issue of with the FDA approve something for the indication. Now that the regulatory hurdle has been past, what I can say is the interest level is higher. The amount of diligence being done is greater. The touch of questions we’re getting are much more comprehensive than we have seen in the past. So we’ve been pretty encouraged with we’re seeing, Steve, I don’t know if you want comment a little more.

I think you’re - the one point you mentioned Rahul was probably the most significant regarding the interest level. Once you - we did have the indication had regulatory clarity specifically with the FDA approval of Addyi and then even further with the acquisition of that asset. No question, the activity in the interest has increased and from an update standpoint we are inactive discussions regarding diligence, under confidentiality. We don’t have a set if you will preference that we want to do a deal now, that we want to do a deal post the data, that we want to do a deal post the approval. We’re in a good position from a cash flow standpoint that we don’t have to do a deal now. We don’t even have to do a deal, exactly when the data comes out. So it’s nice to have that flexibility, so we can be – what you would call opportunistic, we’re willing to have discussion we want potential interested collaboration partners know where we’ve been, where we are at, where we’re going. There is always some general update that you gave at different conferences. But we’re in the process and we’re going to make sure that we stay on top of the process with development and if opportunity arises that we think is – if you will equates to what we believe is fair value for the asset at a certain stage and that stage could be now or post data. Then will give it more than serious consideration and decide what’s in the best interest of the shareholders.

Just a follow-up, Our primary objective right now is really focusing on making sure we deliver study protocols 301 and 302 on track, on time that those studies are well run, well conducted and we get the best data possible. That’s really what our primary operational focus is, and we think there are other things that we can do it those with bremelanotide, will continue to increase the value of that and those from commercial standpoint and we are looking at some of those options now. And our real goal is to make sure that operationally we delivered the interest from the corporate standpoint is high, as you say happens now or when the data comes we know that we can’t tell.

Okay, guys that’s very helpful thank you. I had no more question, thanks.

Thanks.

Thanks, Rahul.

We’ll take a follow-up question from Charles Duncan with Piper Jaffray. Your line is now open.

Hi, guys thanks for taking this follow up. I had a question regarding the use of bremelanotide in patient populations that are perhaps more targeted that are not explicitly included in your current ongoing Phase 3. Are there any that you’re considering that might make sense that are particularly capital efficient.

Yes, there are number of – there are several potential populations that are of high interest. Certainly, we’re postmenopausal women, which we’ve done a – you may not be aware, but there has been – we’ve done a pilot study in postmenopausal women that was reported on several years ago, where we saw a very good efficacy so that is one population where we certainly dig - is very attractive. The second area which is also potentially tracking from a commercial standpoint or women that are an antidepressants. Many women have sexual dysfunction prior to going on their antidepressants and maintain their sexual dysfunction as they go untreated and become stable. It’s likely that they are currently indicated for the approved product that is out there. [indiscernible] fairly substantial population 25% to 30% of the women that are coming in to these types of studies and potentially seeking treatment will be on antidepressants. I mean, almost common stream failure is women on antidepressants. So we believe that’s a very potential attractive market and our third area would be women with gynecological cancers, there incidence of sexual dysfunction is high. One of the things that we’re doing right now is we’re working on protocols for each of those patient populations and we’re also working with some – I think some topnotch commercial people to determine, which one of those indications are the right ones to bring on and when should we do them. How do we stage them, which one gives us the biggest upside for the money we spend.

That’s helpful. It makes sense. Carl, the other question that I had is regarding the recently approved product, it seems to me that the perspective on the unmet need or whatever is perhaps going to change over the course of the next year. Or whether or not need is satisfied within the product. Do you plan to do some additional if you will market intelligence work that provides you feedback on how that product is getting traction. And do you still believe that your product has an acute need or injectable agent has good potential competitive advantage.

The [indiscernible] absolutely, we believe bremelanotide has a very strong competitive advantage with regards to what products that are – that was recently approved. We of course will be monitoring very closely how that product does in the marketplace. How perceptions about treating these patients are changing. I know Steve if you want jump in a little bit.

Yes. There is no question. Now you have a – the regulatory path is clear. There is a product approved out there. And it’s the first product launch in this indication. So we’ve already started the process. And we’re going to continue the process of [indiscernible] I am just making sure we understand the market how is the market reacting. And then when I say the market that’s from the patients to the describers to be insurers across the board. We’re fortunate that with Palatin even though we’re a smaller biotech company. We do have some, some Board members that have a very significant amount of expertise in the marketing of products and the launch of products. And as we go forward and as what they are selling in the marketplace and how that’s being received in a nice way. We can see what worked well. What didn’t work well. What we may need to do to address for our product. There is no question. As Carl mentioned there is a number of a significant differentiating factors already with the product. And regarding the sub q administration, the on demand is probably the most significant differentiating factor from the patient preference standpoint or one of the most significant differentiating factors from patient preference standpoint or one of the significant differentiating factors. And when we did our focus group we – it came back that it was not a significant the turn if you will. This is really similar to an EpiPen [ph] smaller and quicker. But we understand that it is a device there and we’re cognisant of that. But we start the process probably two quarters ago and we’ve enhanced the process regarding market intelligence making sure we’re listing and ideally reacting as we get that intelligence and we’ve enhanced that more so post the Addyi approval and the launch.

Our KOL diligence actually suggest that the approach maybe favored both just acutely and there is into return in terms of the injectable component to that are subq

That’s great to hear, we like those size of comment.

Its also inline with our - its also inline with our research work as well.

Okay, thanks for the added color, and thanks for taking the follow-up.

Thanks.

And it appears we have no further questions. At this time I’ll turn the call back to Dr. Carl Spana for any additional or closing remarks.

Great, thank you everyone for participating on the Palatin Technologies first quarter fiscal year 2016 conference call. We look forward to continue keep you updated and of course appreciate the great questions that came in as well. So the call is now over. Have a great day. And look forward to see you guys throughout the quarter. Thank you. Bye bye.

This does conclude today’s teleconference. You may now disconnect. Thank you and have great day.