Welcome to the Palatin Technologies’ fourth quarter fiscal year 2008 conference call. (Operator Instructions) 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 your host for today’s call, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technology.

With me on the call today I have Steve Wills, our CFO and Head of Operations, as well as Dr. Trevor Hallam, who is our Executive Vice President of Research and Development. As we normally do, we will start the conference call off with Mr. Wills providing a financial update and then Dr. Hallam and I will take you through more of the details around the programs that we are on.

For the quarter ended June 30, 2008, which is the fourth quarter of our fiscal year, Palatin reported a net loss of $5.2 million, or $0.06 per share, compared to a net loss of $6.1 million, or $0.07 per share, for the same period in 2007. For the quarter ended, June 30, 2008, total revenues amounted $1.0 million, compared to $2.6 million for the same period in 2007. For the year ended, June 30, 2008, total revenues were $11.5 million as compared to $14.4 million for the previous fiscal year. For the year ended June 30, 2008, we reported a net loss of $14.4 million, or $0.17 per share, compared to a net loss of $27.8 million, or $0.36 per share, for the previous fiscal year. The decrease in the net loss and revenue for the current year periods, the year end and the quarter, was primarily attributable to the reduction in development expenses for bremelanotide, our drug previously under development for the treatment of male and female dysfunction. The audited consolidated financial statements in Palatin’s annual report on Form 10-K for the year ended June 30, 2008, contains a going concern qualification from our independent, registered public accounting firm. Going into a little detail, regarding revenue for the quarter ended June 30, 2008, Palatin recognized $0.8 million of contract revenue related to our collaboration agreement with AstraZeneca. In the comparable quarter of 2007 Palatin recognized $0.7 million of contract revenue related to our collaboration with AstraZeneca, and $1.8 million under our collaboration agreement with King Pharmaceuticals, which was terminated in the quarter ended September 30, 2007. Regarding costs and expenses, total operating expenses for the quarter ended June 30, 2008, were $6.4 million, compared to $9.1 million for the same period in 2007, reflecting lower development costs of bremelanotide.…

Dr. Hallam and I will now give an update on the company’s research and development programs. As you have heard from Steve, over the past year the company has focused on the restructuring of its product pipeline. Based on the strength of our science and technology and the hard work of our scientists, we have been able to put in place a product pipeline that is the strongest that the company has ever had. We now have four exciting programs that we believe can drive significant shareholder value. These are PL-3994, for the treatment of heart failure; our MCR4 obesity program which is partnered with AstraZeneca; PL-6983, melanocortin receptor compound for treating both male and female sexual dysfunction; and BMT for organ protection. All our programs target patient populations in which the medical need is high and with tremendous commercial potential. With that being said, in the current economic environment, how we drive value from our programs will vary. Over the next [inaudible] our primary focus will be on moving PL-3994 to additional Phase 2 studies and are working closely with AstraZeneca, our partner, on moving our MCR4 obesity-diabetes program through initial clinical trials. We will be seeking additional collaborations for our programs in sexual dysfunction and organ protection. PL-3994, which is a development as a treatment for heart failure, has completed both Phase 1 and early Phase 2 clinical studies and is our lead program. As Dr. Hallam will tell you in more detail, the initial clinical results of PL-3994 have been very encouraging. The PL-3994 clinical results and commercial potential have generated significant interest in both the medical community and from potential pharmaceutical partners. As you may be aware, heart failure is a progressive disease that affects over 5 million Americans and 10 million Europeans. In the U.S.…

I want to take the time this morning to go through the scientific and clinical rational underpinning our programs and to describe why we are excited by the opportunities before us. I will start off describing our natriueretic peptide receptor programs, spending most of my time on chronic heart failure, but also discuss the opportunities in difficult-to-treat hypertensive states. Then I will get to melanocortin agonist programs on obesity, female sexual dysfunction, and lastly on organ preservation during cardiac surgery with cardiopulmonary bypass. PL-3994 is a novel, long-acting subcutaneous administered NPRA agonist that has been designed by Palatin scientists for the chronic treatment of heart-failure patients. The expectation is that PL-3994 will be administered daily and will affect heart remodeling and thereby reduce the rate of hospitalization and expand survival in this population. So firstly, I want to address the rationale for selective, chronically administered natriueretic peptide receptor A agonist for heart failure, and then secondly why, unlike other heart-failure therapies currently on the market, PL-3994 has the desired attributes for a drug that will be efficacious and suitable for chronic use. A cardinal feature of chronic heart failure is a phenomenon called ventricular remodeling, or ventricular hypertrophy. This is a condition in which the size and/or thickness of the ventricles of the heart increases in response to pathophysiological states and the condition is a powerful independent risk factor for cardiovascular morbidity and mortality. This increase in muscle mass of the ventricle is the body’s attempt to [inaudible] cardiac overload, but instead in contributes in multiple ways to the poor prognosis of these patients. The link between remodeling and prognosis is quite solid in that interventions which ameliorate remodeling have had a positive effect on survival and those that do not have such an effect fail to lengthen the lives…

I believe we have given you a rather detailed overview of the past year’s activities and where we plan to go in the upcoming year to drive and increase shareholder value. I just want to give a quick summary and then we will turn things over to questions. The key focus for us will be to draw PL-3994 forward to establish a strong foundation for Phase 2b and Phase 3 clinical studies as a chronic treatment for heart-failure patients. We believe this will set the stage for significant corporate collaborations for this program and in fact, we are already making progress on the collaboration front with multiple discussion already opened. As you have heard from Dr. Hallum, we anticipate that we will enter into our first clinical studies for MCR4 obesity-diabetes program later this year. We want to remain focused on supporting this program for these important indications. For our programs for organ protection and sexual dysfunction we are actively engaged in entering into corporate partnering and strategic collaborations for these programs. Finally, we anticipate that we will receive significant milestone payments from MCR4 obesity-diabetes program which we will compliment with additional funds from new collaborations and from strategic investors. Before I turn the call over for questions, in my opinion the company has gone through a very successful reorganization of its product portfolio. This has been done in the backdrop of a very difficult financial and operating environment. I believe that we are well positioned to continue to attract the corporate, human, and financial resources required to drive substantial shareholder value in the upcoming year. As the coming progresses we will be evaluating all means possible for the company and its shareholder to realize the growing value of our company as the Board, management, and employees of Palatin remain committed to the success of our company. Before we open this call up to questions, just a couple of quick notes. One, this is a rather detailed presentation and for those that are new to the company, we don’t normally cover our programs in this much detail, but because this is one of the first times that we are introducing the full company and all its potential, we wanted to give you a little more detail about the science and why we are so excited about the programs. Because of that, we will make a replay of this available for the next week and in addition we will put a transcript of the teleconference up on our website as well so you will have a little more time to go through the detail as you wish. With that, we will open the call to questions.

(Operator Instructions) Your first question is from Amy Wang with MDB Capital.

How do you see PL-3994 fitting into the [inaudible] market? Do you think that will be taken along with beta blockers and other drugs that are currently available.

Absolutely. We will develop that. It could be used as mono-therapy but I think in this chronic treatment paradigm which really does have very poor prognosis at the moment, there is plenty of room for an adjunct therapy on top of those other medications. So I think that’s how this will be actually used in anchoring that patient population.

And secondly, what aspect of PL-3994 do you think differentiates itself from NATRECOR and in particular can you address if it has perhaps a better safety profile and can you touch a little bit on hypotension or the risk of hypotension?

Yes, of course. Firstly, in any chronic treatments of any chronic disease you need the ability to get coverage 24 hours a day so that you can have the maximum possible benefits. And the Fusion 2 studies with nesiritide were really trying to get to a more chronic cover in those patients visiting outpatient clinics, but they only amounted to a couple of infusions per week. Remember, nesiritide and NATRECOR has a 22 minute half-life and there are two very active mechanisms for getting rid of it when dosed. One is an anti-peptidace in the plasma which degrades it and the other is because the compound nesiritide binds to the NPRC receptor and gets rapidly cleared. So it’s very difficult to actually adjust dose because as soon as you infuse it’s getting churned out by two mechanisms. So getting it accurately dosed is tough. Trying to infuse something 24 hours a day, 7 days a week is not feasible, of course, for chronic treatment. So the reason why we have developed PL-3994 is to really go for the same receptor, which is so fundamentally linked to the heart remodeling and the survival outcomes, and that’s the genetic evidence I covered, but also supported by clinical precedence of the other agonist, ANP, which is commercialized in Japan, and they have the continuous infusions to greater than 3 days and can show a signal that you’re improving heart remodeling measured 3-4 weeks later. So I think the clinical precedence efforts to coming back to PL-3994, PL-3994 has got a 3 hour half-life, certainly twice a day will cover the 24 hour exposure you need on a chronic basis. It will be developed as a subcutaneous injection, so it could be self-administered, and the good thing about it is that we have designed…

So the PL-3994 is differentiated from NATRECOR in extended half-life, it’s sub-cu delivery, so that you can better control the amount of PL-3994 you are administering to the patients, which is not necessarily what you have with NATRECOR.

Yes, that’s largely correct.

Your next question comes from Rahul Jasuja with MDB Capital.

You mentioned ventricular modeling as a surrogate end point that equated to survival. You’ve got a template that you can follow based on what NATRECOR did, is this one of the end points that NATRECOR also used or is this something that is novel given recent findings for PL-3994.

Why I’m making such a strong case for the link between hypertrophy remodeling and ultimately the outcomes for survival, which is the bee’s knees for these patients, is that that has been linked, when you look at ACE inhibitors and beta blockers you can see an improvement to go along. So the better you affect hypertrophy, the better the survival is. Although, there is plenty of room for improvement. And the direct effects of the NPRA, the natural agonist, on the NPR receptor through human genetics and through the Japanese infusion studies, further support the therapeutic application of NPRA agonists are going to work, chronically. So that’s the rationale for it. Nesiritide was trying to play to the chronic market by reducing re-hospitalization. You remember, it’s approved for actually decompensated IV infusions in the ER. That’s where it is approved. But it got taken up in these out-patient clinics by physicians that were trying to offload some fluid, reduce the blood pressure somewhat, and keep people out of the re-hospitalization. And that’s what the Fusion studies, the Fusion 2 study was all about, which failed to show any benefits at all. My conclusion from that, the conclusion of Palatin scientists, and those experts that we’ve talked to externally, is that simply the NPRA mechanism is a good mechanism, it’s just that nesiritide didn’t have what it takes to give you that coverage to allow benefits to be seen.

It seems like you have been able to tease out the blood pressure effects that you’re seeing with the melanocortin receptor program and get the desired effect. Was the move from using peptide-based agents to small molecule agents the secret answer there?

No, in short. Obviously we have done a lot of peptide work, bremelanotide is a psychic peptide, and we started, we had a chemistry and peptide program going in the background over the last year and a half to two years, looking for something that would be better than bremelanotide should the blood pressure effect and other selectivities not previewed, so we are always looking for something better. And we were always into small molecules because ultimately we would have like to emulate the success of something like Viagra by having an on-demand oral tablet. So we would be looking for that as another opportunity as well. The obesity deal with AstraZeneca is largely around small molecules but we’ve actually been exploring small molecules as well as peptides for sexual dysfunction and we’ve moved with AstraZeneca to include peptide structures, too. So for both series we’re into both peptides and small molecules and that is separate, again, from the blood pressure effects that we’re separating in both series.

There are no further questions.

Thank you for participating on the call.