Palatin Technologies, Inc. Reports Fiscal Year 2007 Third Quarter Results; Conference Call and Webcast May 10, 2007 at 10:00 a.m. EDT

CRANBURY, N.J., May 9 /PRNewswire-FirstCall/ -- Palatin Technologies, Inc. (AMEX: PTN) today announced financial results for the third quarter ended March 31, 2007. Total revenues in the quarter were $3.1 million, compared to $5.0 million for the same period in 2006. Palatin reported a net loss of $6.7 million, or $(0.09) per share, for the quarter ended March 31, 2007, compared to a net loss of $7.6 million, or $(0.13) per share, for the same period in 2006. Research and development expenses related to the Company's bremelanotide development program and reimbursement revenue from its strategic collaboration partner, King Pharmaceuticals, Inc. (King), for its share of those expenses, decreased in the current quarter compared to the prior-year period.

LICENSES, GRANTS AND CONTRACTS

In the quarter ended March 31, 2007, the Company recognized revenue from licenses, grants and contracts of $3.1 million, including $2.5 million of cost reimbursements and deferred revenues from King pursuant to the companies' collaboration agreement for bremelanotide. Bremelanotide is the Company's drug under development for the treatment of erectile dysfunction (ED) and female sexual dysfunction (FSD).

The Company also recognized $0.5 million of research funding and license revenue from AstraZeneca AB related to the companies' January 2007 licensing and research collaboration agreement for the discovery, development and commercialization of small molecule compounds that target melanocortin (MC) receptors for treatment of obesity, diabetes, and related metabolic syndrome. As of March 31, 2007, the Company has deferred the recognition of $9.7 million of the $10.0 million up-front license fees received from AstraZeneca and will recognize those amounts over the term of the agreement.

In the quarter ended March 31, 2006, revenue from licenses, grants and contracts was $5.0 million, primarily reflecting higher reimbursable bremelanotide costs incurred by Palatin in the period.

COSTS AND EXPENSES

Total operating expenses for the quarter ended March 31, 2007 were $10.2 million, compared to $12.8 million for the same period in 2006, as research and development expenses in the period decreased to $8.1 million in the current quarter from $11.0 million in the comparable period of the prior year. Lower expenses related to the Company's bremelanotide development program were partially offset by increased spending on its other development programs. The Company completed two Phase 2 clinical studies of bremelanotide in ED patients earlier in the fiscal year and, with King, is currently preparing for an end-of-Phase 2 meeting with the FDA.

CASH POSITION

Palatin's cash, cash equivalents and investments totaled $42.9 million as of March 31, 2007, compared to $30.7 million at June 30, 2006. Under the January 2007 licensing and research collaboration agreement with AstraZeneca, the Company received an up-front payment of $10.0 million. In addition, in February 2007, the Company received net proceeds of $25.5 million from the sale of 13.75 million shares of common stock in an underwritten offering.

Palatin Technologies' management will discuss the third quarter financial results and provide an update on corporate developments during a conference call and webcast tomorrow, on May 10, 2007 at 10:00 a.m. EDT.

RECENT HIGHLIGHTS -- In January 2007, the Company entered into an exclusive global licensing and research collaboration agreement with AstraZeneca to discover, develop and commercialize small molecule compounds that target MC receptors for treatment of obesity, diabetes and related metabolic syndrome. The collaboration is based on the Company's MC receptor obesity program and includes access to compound libraries, core technologies and expertise in MC receptor drug discovery and development. Under the terms of the agreement, the Company received an upfront payment of $10 million from AstraZeneca and is eligible for milestone payments totaling up to $300 million, with up to $180 million contingent upon development and regulatory milestones and the balance on achievement of sales targets. In addition, the Company is eligible to receive royalties on sales of approved products. AstraZeneca will assume responsibility for product commercialization, product discovery and development costs, with both companies contributing scientific expertise in the research collaboration. -- In February 2007, the Company completed the sale of 13.75 million shares of its common stock in an underwritten offering at $2.00 per share, for $27.5 million in gross proceeds, before commissions and expenses. The net proceeds to Palatin were $25.5 million. The shares of common stock offered by Palatin were issued pursuant to effective shelf registration statements on Form S-3. Conference Call and Webcast Access Information -- Q3-Fiscal Year 2007 Conference Call - Live 5/10/2007 at 10:00 a.m. EDT Domestic Dial-In Number 1-800-562-8369 International Dial-In Number 1-913-312-1299 -- Q3-Fiscal Year 2007 Conference Call - Replay 5/10-5/17/2007 Domestic Dial-In Number 1-888-203-1112 International Dial-In Number 1-719-457-0820 Enter Pass Code I.D. # 1285245 -- Webcast Live and Replay Access http://www.palatin.com/ About Palatin Technologies

Palatin Technologies, Inc. is a biopharmaceutical company focused on discovering and developing targeted, receptor-specific small molecule and peptide therapeutics. The Company's lead product candidate, bremelanotide, is currently in Phase 2 clinical trials for both male and female sexual dysfunction. The Company's internal research and development capabilities, anchored by its proprietary MIDAS(TM) technology, are fueling product development. Palatin's strategy is to develop products and then form marketing collaborations with industry leaders in order to maximize their commercial potential. To date, the Company has entered into collaborations with AstraZeneca, King Pharmaceuticals, and Mallinckrodt. For additional information regarding Palatin, please visit Palatin Technologies' website at http://www.palatin.com/.

Forward-looking Statements

Statements about the Company's future expectations, including statements about its development programs, proposed indications for its product candidates, pre-clinical activities, marketing collaborations, and all other statements in this document other than historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and as that term is defined in the Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. Palatin's actual results may differ materially from those discussed in the forward-looking statements for various reasons, including, but not limited to, the Company's ability to fund development of its technology, ability to establish and successfully complete clinical trials and pre- clinical studies and the results of those trials and studies, dependence on its partners for certain development activities, need for regulatory approvals and commercial acceptance of its products, ability to recommence marketing and gain commercial acceptance of NeutroSpec, ability to protect its intellectual property, and other factors discussed in the Company's periodic filings with the Securities and Exchange Commission. The Company is not responsible for updating for events that occur after the date of this press release.

                        PALATIN TECHNOLOGIES, INC.
                  Consolidated Statements of Operations
                               (unaudited)

                      Three Months Ended             Nine Months Ended
                            March 31,                     March 31,
                      2007           2006           2007            2006
  REVENUES:
    Royalties              $-             $-             $-      $1,508,862
    Licenses,
     grants and
     contracts      3,090,036      5,045,025     11,768,247      13,267,079
       Total
        revenues    3,090,036      5,045,025     11,768,247      14,775,941

  OPERATING EXPENSES:
    Cost of product
     sales                  -              -              -       2,041,175
    Royalties               -              -              -         299,995
    Research and
     development    8,128,584     10,954,466     29,821,764      29,639,751
    General and
     administrative 2,021,734      1,838,967      5,239,142       5,022,069
       Total
        operating
        expenses   10,150,318     12,793,433     35,060,906      37,002,990

  Loss from
   operations      (7,060,282)    (7,748,408)   (23,292,659)    (22,227,049)

  OTHER INCOME (EXPENSE):
    Investment
     income           348,337        155,677        899,711         496,917
    Interest
     expense           (9,223)        (9,375)       (32,411)        (17,477)
       Total other
        income,
        net           339,114        146,302        867,300         479,440

  Loss before
   income taxes    (6,721,168)    (7,602,106)   (22,425,359)    (21,747,609)
  Income tax
   benefit                  -              -        778,308         666,275

  NET LOSS        $(6,721,168)   $(7,602,106)  $(21,647,051)   $(21,081,334)

  Basic and
   diluted net
   loss per
   common share        $(0.09)        $(0.13)        $(0.30)         $(0.37)

  Weighted average
   number of common
   shares
   outstanding
   used in
   computing
   basic and
   diluted net
   loss per
   common share    78,052,712     59,339,220     73,329,042      57,503,198


                        PALATIN TECHNOLOGIES, INC.
                       Consolidated Balance Sheets
                               (unaudited)

                                                 March 31,       June 30,
                                                    2007           2006
  ASSETS
  Current assets:
    Cash and cash equivalents                   $40,576,297    $28,333,211
    Available-for-sale investments                2,338,417      2,330,834
    Accounts receivable                             415,014         69,591
    Prepaid expenses and other current
     assets                                         815,059      1,453,650
        Total current assets                     44,144,787     32,187,286

  Property and equipment, net                     6,350,181      6,347,705
  Restricted cash                                   475,000        475,000
  Other assets                                      856,103      1,037,296
        Total assets                            $51,826,071    $40,047,287

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Capital lease obligations and notes
     payable, current portion                      $214,104        $86,564
    Accounts payable                              3,104,708      3,092,962
    Accrued expenses                              3,612,133      4,466,428
    Accrued compensation                            433,750        803,900
    Deferred revenue, current portion             4,960,771      3,995,575
        Total current liabilities                12,325,466     12,445,429

  Capital lease obligations and notes
   payable, net of current portion                  335,981        229,585
  Deferred rent, net of current portion           2,021,436      2,358,550
  Deferred revenue, net of current
   portion                                       13,031,778      6,713,942
        Total liabilities                        27,714,661     21,747,506

  Commitments and contingencies

  Stockholders' equity:
    Preferred stock, $0.01 par value,
     10,000,000 shares authorized:
     Series A Convertible; 9,997 shares
     issued and outstanding as of March
     31, 2007 and June 30, 2006                         100            100
    Common stock, $0.01 par value,
     150,000,000 shares authorized,
     84,927,712 and 70,878,521 shares
     issued and outstanding as of March
     31, 2007 and June 30, 2006,
     respectively                                   849,277        708,785
    Additional paid-in capital                  205,399,781    178,089,176
    Accumulated other comprehensive loss            (47,153)       (54,736)
    Accumulated deficit                        (182,090,595)  (160,443,544)
        Total stockholders' equity               24,111,410     18,299,781
        Total liabilities and
         stockholders' equity                   $51,826,071    $40,047,287