Good morning, ladies and gentlemen, and welcome to the Palatin Technologies Second Quarter Fiscal Year 2017 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 based on assumptions that may or may not prove to be accurate, actual results could for materially from those anticipated due to a variety of risks and uncertainties discussed in the Company's most recent filings with the Securities and Exchange Commission. Please consider such risks and uncertainties carefully in evaluating these forward-looking statements and Palatin's prospects. Now, I would like to introduce you to your host for today, Dr. Carl Spana, President and Chief Executive Officer of Palatin Technologies. Please go ahead, sir.

Thank you. Good morning, and welcome to the Palatin Technologies' Second Quarter Fiscal Year 2017 call. I'm Dr. Carl Spana, the CEO and President of Palatin, and with me on the call today is Steve Wills, Palatin's Executive Vice President, Chief Financial Officer and Chief Operating Officer. On today's call, we will provide a financial update and discuss our recent licensing transaction with AMAG Pharmaceuticals and outline our operating objectives for the next four to eight quarters. Last week, we announced the closing of licensing agreement with AMAG Pharmaceuticals for the North American development and commercialization rights for bremelanotide, which we will now refer to as Rekynda product for treating hypoactive sexual desire disorder in premenopausal women. We are very pleased to have AMAG as our Rekynda partner. AMAG Pharmaceuticals is a company dedicated to commercializing innovative products for female health via sales, marketing and commercial teams focusing on reaching the patients and healthcare providers that will be critical for successful Rekynda product launch. I'm now going to turn the call over to Steve, who will provide the financial updates and to review of the Rekynda licensing agreement. Steve?

Thank you, Carl. Good morning, everyone. Starting with recent operational highlights on February 2, 2017, we closed on a license agreement with AMAG Pharmaceuticals for exclusive North American rights to further develop and commercialize Rekynda. And investigational product design for on-demand treatment of hypoactive sexual desire disorder, HSDD in premenopausal women. Pursuant to the terms of the license agreement, we received an upfront payment of $60 million. AMAG is required to pay up to an aggregate amount of $25 million in reimbursement for all reasonable out-of-pocket expenses, incurred by us, following the effective date of February 2nd in connection with the development and regulatory activities necessary to file an NDA with the FDA for Rekynda for HSDD in the United States. AMAG is also required to pay us up to $80 million upon achievement of certain regulatory milestones, up to $300 million upon achievement of sales milestones, and AMAG is also obligated to pay us tiered royalties on annual net sales ranging from high single digits to low double digits. Now regarding the second quarter ended December 31, 2016 financial highlights. In December 2016, we closed on an underwritten public offering of units for gross proceeds of $16.5 million with net proceeds after deducting offering expenses of approximately $15.4 million. We issued approximately 25.4 million shares of common stock and five year Series J Warrants to purchase approximately 12.7 million shares of common stock at an exercise price of $0.80 per share. Regarding the second quarter ended December 31, 2016, financial results. Palatin reported a net loss of 10 million or $0.06 per basic and diluted share for the quarter ended December 31, 2016 compared to a net loss of 13.2 million or $0.08 per basic and diluted share for the same period in 2015. The difference between the three…

Thank you, Steve. Our Rekynda licensing agreement with AMAG Pharmaceuticals not only brought us an excellent commercial partner, but has provided us with the financial resources to unlock the potential value of our pipeline programs. I will start our second quarter fiscal year 2017 operational update with Rekynda and then cover the pipeline programs that will be the focus of our efforts, including the objectives we plan to achieve. Concerning Rekynda, we will be working with our licensing partner to complete the activities required to file a new drug application or NDA with the FDA. These activities include various drug-drug interaction studies, certain manufacturing activities and the preparation of a new drug application. We anticipate that Rekynda new drug application will be filed by early first quarter of 2018. Regarding developing Rekynda outside of the North American market, we will do this only in the context of a partnership. To this end, we are focusing our business development efforts on our Rekynda partnership with the European Union as well as other regions of the world. Now I will move on to our pipeline programs. As a drug development company, we have focused of our technology and efforts on 2 receptor families; the melanocortin and the natriuretic peptides. Both families have potential drug targets involved in a regulation of important physiological processes. As a reminder, Rekynda was the first product derived from our research work with melanocortin peptide family. As we think about the programs, we are focusing our efforts on mere two guiding principles that are important for success. One, there must be a substantial unmet medical need and two, the mechanism action of our drugs must support the potential to modify or halt the underlying disease pathology and not just treat disease symptoms. We believe our pipeline programs meet…

[Operator Instructions] We will go first to John Newman with Canaccord.

Just wanted, if you could you talk about when you might be projecting the clinical data for [indiscernible] of this year?

I'm sorry, John, you broke up on it.

Sorry, I just wanted, if you could talk about when you might be presenting the clinical data set for bremelanotide?

Yes, this is Steve. The next conference where we will have additional data presented will be the issuance conferences later in February call.

I think its March actually.

Either late February or in March. And there will be additional data presented from our Phase III Rekynda trials.

Okay. A may be that little bit more about what you're doing in [IGG] just from a mechanism standpoint. And I'm just curious as the importance of the mechanism that you're studying compared to some of the other approaches from a preclinical [indiscernible].

Yes, sure. John, We can think about the inflammatory conditions that are having both pro-inflammatory processes and pro-resolution. And many of the treatments that are out there and that are working really attacks certain aspects of pro-inflammatory side like [indiscernible] treatment, and so, and so forth. With melanocortin by role is, they're activated when you have autoimmune inflammatory condition locally at the sideway or its ongoing and their role is really to shut down on the broader way of those pro-inflammatory processes. So we really think that, they can have a very key role coming in, after you have treatment with, there are certainly generic treatments and more standard treatments such as steroids and then inflammatory that some of these patients go on. But as those treatments start to lose effect or don't have effect, these patients have a much more limited set of treatment options, and they generally head move on towards the biological treatment options, which really are much more difficult to use, have a lot more side effects. So we really see melanocortin mechanism coming in really between something like the steroid treatment and then at before one goes to the biologics. And the goal there would really be to help drive these patients into immune balance and really move them back into a state where they have disease remission. Now we don't know how well that can be done, if that can be -- in the animal models we certainly do that quite nicely, would they need to stay on, for examples steroid treatment or other treatments in conjunction with that, we're not sure yet, but those are some of these that we're working out on our preclinical models. But I can tell you is that, we've looked at really half a dozen types of inflammatory conditions with this approach. In all cases you're really working at least as good as if not better than the steroid treatment option. So this is quite a pro mechanism and we're really seeing very nice shutdown of those pro-inflammatory pathways, and the immune cell infiltrates that are causing disease process were also being reversed. So this is really a mechanism that we think, has potential to really halt and relatively reverse and potentially reverse the end processes that are ongoing.

And we'll go next to Michael Higgins with Roth Capital Partners.

A couple of questions for you. First on the Rekynda. If you can give us a little more color on 25 million reimbursed R&D timing for that, what kind of events that may trigger those milestone payments?

Thanks for the question, Michael, this is Steve. The way the license agreement is structured, Palatin is responsible as to lead for the remaining activities to be completed to file the NDA, the new drug application with the FDA, which is targeted for early in the first quarter of calendar 2018. And those activities are primarily finalizing the open-labeled extension study data, which we anticipate getting in the end of the second, early third quarter. There is also a number of what are characterized as a drug-drug interaction studies. These types of studies have already been discussed with the FDA. So we have a very specific understanding and clarity on the specific trials, and how these protocols need to be structured. And in addition, we have some CMC activities, specifically related to some what they call, consistency production runs. This is also characterized as validation runs to ensure that you are in control of your process. These are items that we are very comfortable with. We've produced many runs in the past, most notably for the two large Phase III studies, and we will be reimbursed from AMAG on a monthly basis as we complete these tests.

Okay. That's very helpful. Just a follow-up there, [indiscernible] the biggest reimbursement will come on the acceptance of the NDA filing?

Okay. That's helpful. And are you considering additional trials for Rekynda. And if so, what do you make from those, is that something that you would be funding?

This is Steve. We have a joint steering committee in place now with AMAG, well represented from both AMAG folk and Palatin folk. And there's no question where we’re having discussions on, ways to enhance the asset, to illuminate the asset for the millions of patients out there suffering from female sexual dysfunction. And over the next several months, I anticipate that with AMAG, we will be able to give some guidance on the types of things that we are considering doing. The way the agreement is in place, right now, it could be AMAG paying for these types of items or it could be a combination. It depends on the item, and what we think makes sense for Palatin. There is not a mechanism that Palatin is obligated to pay for any of these types of additional items, but it may be something that we do consider based on other factors, but that won't be decided until sometime later this year. And we do look forward to AMAG Pharmaceuticals discussing marketing commercial plans around the program as they are presenting out in conferences and earnings announcements.

True okay, thank you guys. And moving on to your natriuretic peptide receptor program in cardiovascular and pulmonary indications. Can you describe the activity and how it differs from ENTRESTO for me?

Sure. It's pretty simple, ENTRESTO, it's a combination of an angiotensin receptor blocker which provides suppression of the angiotensin class one system, neprilysin inhibitor, and neprilysin is the peptidase that breaks down the endogenous natriuretic peptide in the body, among others as well. That's with a prognosis. So it's really an indirect mechanism. You take that drug, you get some rash suppression, and, then in addition, you'll get up regulation of natriuretic peptides and the system. We are a little bit different, our compounds are direct acting agonists at the various receptors. So you have a lot better flexibility, one of the issues with ENTRESTO is that, you have a very limited dosing flexibility to press the system up, because as you press the system up you have more angiotension receptor blocker going on as well. So with direct acting agonist, you can really put in as much agonist activity as you want. You can really just push specifically the natriuretic peptide system. The one, that's important is, you really can see a very pronounced reduction, at least in the work we're doing and we've been doing with our collaborators in the preclinical models, we really see a very pronounced reversal of the cardiac hypertrophy, fibrosis, that's occurring in the diseased heart. So the ability to really push that I think is going to be quite important. Also, you have flexibility and how the clinician chooses to suppress [indiscernible] system. When you're using ENTRESTO, it's always an [indiscernible]. You can't put an ACE inhibitor on for an example. So I think, it's just overall, it will provide a much cleaner mechanism and a much cleaner approach to using the system and exploiting the system.

Makes sense. Can you remind me again, the specific indication, you would be speaking?

We're still in the early stages. The next trial that we're doing with 3994 is in heart failure patients with preserved ejection fraction. That doesn't necessarily mean that, that would be the final indication for that product. Certainly, there are some of the reasons for that is that, that trial, the next trials is 3994 is being funded by grants received from the American Heart Association. And they are specific to treating patients with preserved ejection fraction. So, although, 3994 is going to be evaluated, we are not actually paying for those studies. So that's one of the things we haven’t really talked much about, but that study is actually funding by a third party in conjunction with some major academic centers, which will be our partners in those studies. We'll talk a little bit more about that when we start enrollment, with subject to courtesy to our academic collaborators. We told them we wouldn't give a lot of detail until we start enrolling patients. But I think you guys will be quite pleased to see who we are collaborating with on that study. But it's is very important study because preserved ejection fraction patients do not have any treatment options. They are really the very large on a medical need, and if we can show some potential benefit there, I think you really open up the potential for natriuretic peptides. I mean, more than half the patients out there have preserved ejection fraction or preserved ejection fraction in heart failure, and they're not treated or they are not treated very well today. So we think it's very important study and one that we're excited about, and we'll be very excited to talk more about it with people we're collaborating with when we begin enrolling more patients.

And it appears that are no further questions at this time. Dr. Carl Spana, I would like to turn the conference back to you for any additional or closing remarks.

Well, thank you. Well, first of all, I want to thank everyone for participating on our second quarter calendar year 2017 call. We're very excited here at Palatin, I think it's been a long time coming for work with Rekynda. We're very happy to have that work recognized by AMAG Pharmaceuticals and having as a partner help move them forward. And we're really quite excited really for the first time in quite a while to have some resources to really illuminate the other assets that we have. I think that we can do quite a lot to unlock shareholder value here. We're excited by it, and we're also very excited by the fact that we can do this and really provide the value without having constantly go to the marketplace to raise capital. So I think it's a new day for us, and we're very excited and look forward to talking about the company and in really updating you on the progress that we intend to be making. So thank you for participating on the call, and we look forward to updating you next quarter. Thank you. Bye, bye.

And this concludes today's all. Thank you for your participation. You may now disconnect.