Carl Spana – President and CEO Steve Wills – CFO and EVP, Operations Trevor Hallam – EVP, Research & Development

Good morning, ladies and gentlemen, and welcome to the Palatin Technologies third quarter fiscal year 2010 conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions for the question-and-answer session will be given at the end of the company's remarks. As a reminder, this 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 your host for today's call, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies.

Thank you. Good morning, ladies and gentlemen, and welcome to the Palatin conference call. I’m Carl Spana, President and CEO of Palatin Technologies. With me today is Steve Wills, Palatin's Executive Vice President of Operations and Chief Financial Officer, and Dr. Trevor Hallam, Palatin's Executive Vice President of Research and Development. Today Mr. Wills will take you through the financial summary for the quarter. That will be followed by Dr. Hallam who will go through our research and development programs and update you on the progress we have made there. I will finish with a summary and overview, and then we will open it up to questions. So to start off our call, I’m going to hand it over to Mr. Wills who will go through the financial summary.

Thank you, Carl. And good morning, everyone. For the quarter ended March 31, 2010, which is the third quarter of our fiscal year, Palatin reported a net loss of $2 million or $0.02 per share compared to a net income of $0.1 million or $0.00 per share for the same period in 2009. Total revenues in the quarter ended March 31, 2010 were $2.6 million compared to $5.2 million for the same period in 2009. The net loss for the quarter ended March 31, 2010 compared to the net income for the quarter ended March 31, 2009 was primarily attributable to a decrease in the recognition of revenue under our agreements with AstraZeneca. Regarding costs and expenses, total operating expenses for the quarter ended March 31, 2010 amounted to $4.6 million compared to $5.1 million for the comparable quarter of 2009. Included as a component of operating expenses were non-cash, share-based expenses of $0.2 million and $0.3 million for the third quarter of fiscal year 2010 and 2009, respectively. As of March 31, 2010, Palatin's cash, cash equivalents and investments totaled $10.2 million. This compared to $7.8 million as of June 30, 2009. The increase in cash, cash equivalents, and investments is primarily the net result of the receipt of $5 million in milestone payments from AstraZeneca related to the September 2009 amendment to the license and collaboration agreement, plus net proceeds of approximately $5.2 million from the sale of common stock and warrants in two registered direct offerings, one in August 2009 and one in March 2010, less the cash utilized to fund operations during the nine months ended March 31, 2010. During the quarter ended March 31, 2010, we received $2.5 million in a milestone payment from AstraZeneca related to our September 2009 amendment to our collaboration agreement. And in March of 2010, we sold approximately 9.6 million units in a registered direct offering. For gross proceeds of $2.6 million, we netted $2.4 million. Each unit consisted of one share of common stock, a Series A warrant exercisable for 0.33 shares of common stock at an exercise price of $0.30, and a Series B warrant exercisable for 0.33 shares of common stock at an exercise price of $0.27. The Series A warrant is exercisable 181 days from the date of issuance and expires three years thereafter. The Series B warrant is exercisable immediately upon issuance and expires 180 days from the date of issuance. Additionally, during the quarter, we received a letter from the New York Stock Exchange, AMEX Exchange, determining that Palatin successfully resolved the continued listing deficiencies referenced in a December 2008 letter from the Exchange.

Thank you, Steve. Now Dr. Hallam will give you an update on our research and development programs.

Thanks, Carl, and good morning. Let me start as usual with our sexual dysfunction program. You will be aware that we have switched the routes of administration for the development of bremelanotide from intranasal dosing to subcutaneous. Over the last 18 months, Palatin has performed a number of preclinical studies and an additional clinical study with bremelanotide to further understand the relationship between bremelanotide plasma levels, its route of administration and blood pressure changes. We’ve made progress in demonstrating the subcutaneous injection of BMC has more consistent plasma levels and lower incidence of adverse events when observed with intranasal dosing. In the last few months, we have recently conducted a clinical study with a subcutaneous formulation of bremelanotide in men 45 to 65 years old. This study will evaluate the effects of BMC on blood pressure at rest and under conditions of physical stress. Positive results in this study would support the safe transition of bremelanotide into larger Phase II studies in men erectile dysfunction and not sufficiently responsive to currently marketed phosphodiesterase-5 inhibitor products. We will have the data mid-calendar year and we will then discuss with the FDA the results from this study together with a rigorous cardiovascular risk analysis of all previous BMC studies administered by subcutaneous and intranasal means. By completing this rigorous analysis, we aim to establish procedures and protocols to assure safe execution of Phase II at-home studies in the target population. Palatin had a guidance meeting with the FDA late last year to discuss the development program for bremelanotide as the second line therapy for erectile dysfunction patients that are non-responsive to the phosphodiesterase-5 class of inhibitors. The meeting was very constructive and resulted in a clear plan that we are now in the process of executing. The Phase II program will evaluate…

Trevor, thank you very much for that overview. Just a few more words before we open the call up to questions. At Palatin, we are very excited about our product line, the depth and potential of our programs. In the near-term, we will continue to focus on our melanocortin programs with sexual dysfunction and obesity and diabetes. Because of our strength in melanocortin research, our partnership with AstraZeneca, and the size of the commercial opportunities, we believe these programs represent the best risk return ratio for shareholders. Sexual dysfunction space we are targeting is an area where there is clinical need with limited products in development. Approximately 35% of the patients with erectile dysfunction do not respond to current PD-5 inhibitor therapy and an additional 20% are only marginally satisfied. We believe this non-responsive population is an excellent commercial opportunity for bremelanotide. Based on our clinical experience with bremelanotide, we believe that bremelanotide will have significant benefit in this patient population. Our recent work to address the potential safety concerns of bremelanotide has increased our confidence that bremelanotide can be commercialized with an acceptable risk to benefit ratio. Regarding female sexual dysfunction, patients and their doctors have limited treatment options. Based on our clinical data, we believe that a melanocortin-4 targeted therapy such as bremelanotide holds great potential for treating these patients. Finally, regarding our natriuretic peptide program, our lead molecule PL-3994 and the expansion of this program into two new therapeutic areas has increased our confidence and the potential to attract corporate partnerships to access the resources required to move these exciting programs forward. In closing, we continue to make substantial progress in all of our programs while maintaining tight control of our expenses and increasing our cash flows by expanding our collaboration with AstraZeneca. We are looking forward to an exciting year in 2010 with the recommencement of the bremelanotide sexual dysfunction program in ED and FSD and the potential of the corporate collaboration of a partnership for natriuretic peptide program. Thank you all for participating on our call. And now the operator will now open the call up to questions.

Thank you. (Operator instructions) There are no questions in the queue. I'd like to turn it back to Dr. Carl Spana for any additional or closing remarks.

Thank you. Once again, I'd like to thank all of you for participating on our third quarter conference call. We are very excited here at Palatin, and I look forward to seeing many of you as we go out and talk to investors over the next quarter, and we of course look forward to updating you on our progress next quarter. Thank you all. Have a great day.

This does conclude today's conference. We thank you for your participation.