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Palatin Technologies Announces New Strategic Objectives and Reports Third Quarter 2008 Financial Results

CRANBURY, N.J., May 13, 2008 /PRNewswire-FirstCall/ -- Palatin Technologies, Inc. today reported its financial results for the third quarter ended March 31, 2008 and announced new strategic objectives as part of a restructuring of its clinical-stage product portfolio and development programs. Palatin will continue to develop products targeting melanocortin and natriuretic receptors in the sexual dysfunction, obesity, and cardiovascular fields, including acute hospital care products for use in treatment of acute systemic hypertension, congestive heart failure and hemorrhagic shock. The restructuring focuses the Company's resources on the programs and opportunities that management believes are most likely to increase shareholder value. Additional details will be provided by management in a conference call today at 11:00 a.m. Eastern Time.

Strategic Restructuring

Palatin has undertaken a strategic restructuring with the following elements and objectives:

    -- Following a detailed evaluation, including review of regulatory and

       commercial information and data on its new melanocortin compounds under

       development for sexual dysfunction, Palatin has discontinued

       development of bremelanotide for the treatment of male and female

       sexual dysfunction;

    -- Developing bremelanotide as a therapeutic drug for treatment of

       hemorrhagic shock and related indications (shock induced by blood loss,

       such as secondary to surgery or trauma);

    -- Initiating a Phase 2A study this quarter with PL-3994, Palatin's

       natriuretic peptide receptor A agonist compound, in patients with

       controlled hypertension;

    -- Initiating a Phase 2A study of PL-3994 during the next fiscal year for

       treatment of acute congestive heart failure;

    -- Advancing new Palatin compound PL-6983, which in animal models causes

       significantly lower increases in blood pressure than seen with

       bremelanotide, into Phase 1 clinical studies for treatment of male and

       female sexual dysfunction;

    -- Continuing its melanocortin receptor-based collaboration with

       AstraZeneca AB on developing compounds for treating obesity; and

    -- Effecting an immediate reduction in force of 30% of the Company's


"Palatin has had a strong and productive research effort focused on two challenging and exciting scientific areas: melanocortin and natriuretic peptide receptors. We have generated a substantial amount of data and an extensive product portfolio that allows us numerous exciting opportunities to drive value for our shareholders," stated Carl Spana, Ph.D., President and Chief Executive Officer of Palatin. Dr. Spana continued, "Concentrating our efforts on value drivers and matching our resources to those projects with the highest potential for near-term success is our immediate priority."

The Company believes that the staff reduction aligns the Company's human resources with its new strategic objectives and will allow the Company to effectively advance its development and clinical programs. The downsizing is expected to result in annual savings of approximately $3 million. Palatin will record an estimated $400,000 charge for severance and related costs in the quarter ending June 30, 2008. The Company, which ended the March 31, 2008 quarter with $17.6 million of cash, cash equivalents and available-for-sale investments, anticipates that the restructuring will reduce its cash burn rate to approximately $16 million over the next four quarters.

Financial Results

Palatin reported a net loss of $5.1 million, or $(0.06) per basic and diluted share, for the quarter ended March 31, 2008, compared to a net loss of $6.7 million, or $(0.09) per basic and diluted share, for the same period in 2007. Total revenues for the quarter ended March 31, 2008 were $747,000, compared to $3.1 million for the same period in 2007.

The decrease in the net loss for the quarter ended March 31, 2008 compared to the quarter ended March 31, 2007 was primarily attributable to the reduction in development expenses for bremelanotide, the Company's drug previously under development for the treatment of male and female sexual dysfunction.

For the quarter ended March 31, 2008, Palatin recognized $0.7 million of contract revenue related to its collaboration agreement with AstraZeneca AB. In the comparable quarter of 2007, Palatin recognized $3.1 million of contract revenue, primarily related to the reimbursement by King Pharmaceuticals, Inc. of bremelanotide development costs pursuant to the companies' collaboration agreement, which was terminated in the quarter ended September 30, 2007.

Total operating expenses for the quarter ended March 31, 2008 were $6.0 million, compared to $10.2 million for the comparable quarter of 2007, primarily due to lower development costs of bremelanotide.

Palatin's cash, cash equivalents and available-for-sale investments totaled $17.6 million as of March 31, 2008.

Conference Call / Webcast

The Company will host a conference call today at 11:00 a.m. Eastern Time to discuss its strategic restructuring and its third quarter financial results. Individuals interested in listening to the conference call live can dial 1-888-221-3884 (domestic) or 1-913-312-1433 (international). A live webcast of the call is available online at A telephone replay will also be available approximately one hour after the completion of the call. To access the telephone replay, dial 1-888-203-1112 (domestic) or 1-719-457-0820 (international), passcode 1346503. The webcast and telephone reply will be available through May 20, 2008.

About Palatin Technologies, Inc.

Palatin Technologies, Inc. is a biopharmaceutical company primarily focused on discovering and developing targeted, receptor-specific peptide and small molecule therapeutics, including melanocortin ("MC")-based therapeutics. Therapeutics affecting the activity of the MC family of receptors may have the potential to treat a variety of conditions and diseases, including sexual dysfunction, obesity and related disorders, cachexia, hemorrhagic shock and inflammation-related diseases. The Company is exploring other receptor- specific therapeutics, including natriuretic peptide receptor A ("NPRA") agonist compounds for use in treatment of acute systemic hypertension, congestive heart failure and other diseases. Palatin's strategy is to develop products and then form marketing collaborations with industry leaders in order to maximize their commercial potential. The Company currently has collaborations with AstraZeneca and the division of Covidien. For additional information regarding Palatin, please visit Palatin Technologies' website at

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 shall 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(R), 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


                              Three Months Ended          Nine Months Ended

                                   March 31,                  March 31,

                               2008         2007          2008          2007


      Licenses, grants

       and contracts        $746,957   $3,090,036   $10,467,523   $11,768,247


      Research and

       development         4,561,047    8,128,584    16,296,268    29,821,764

      General and

       administrative      1,480,167    2,021,734     5,468,229     5,239,142

        Total operating

         expenses          6,041,214   10,150,318    21,764,497    35,060,906

    Loss from operations  (5,294,257)  (7,060,282)  (11,296,974)  (23,292,659)


      Investment income      197,199      348,337       908,290       899,711

      Interest expense       (14,136)      (9,223)      (44,834)      (32,411)

        Total other income,

         net                 183,063      339,114       863,456       867,300

    Loss before income

     taxes                (5,111,194)  (6,721,168)  (10,433,518)  (22,425,359)

    Income tax benefit             -            -     1,291,444       778,308

    NET LOSS             $(5,111,194) $(6,721,168)  $(9,142,074) $(21,647,051)

    Basic and diluted

     net loss per

     common share             $(0.06)      $(0.09)       $(0.11)       $(0.30)

    Weighted average

     number of common

     shares outstanding

     used in computing

     basic and diluted

     net loss per common

     share                85,204,169   78,052,712    85,195,179    73,329,042

                          PALATIN TECHNOLOGIES, INC.

                         Consolidated Balance Sheets


                                                   March 31,       June 30,

                                                     2008            2007


    Current assets:

      Cash and cash equivalents                  $14,223,326     $31,447,615

      Available-for-sale investments               3,385,752       2,323,642

      Accounts receivable                            338,870         607,841

      Prepaid expenses and other current assets      707,261       1,008,464

        Total current assets                      18,655,209      35,387,562

    Property and equipment, net                    5,478,267       6,070,226

    Restricted cash                                  475,000         475,000

    Other assets                                      58,926         848,446

        Total assets                             $24,867,402     $42,781,234


    Current liabilities:

      Capital lease obligations and notes

       payable, current portion                     $281,840        $216,841

      Accounts payable                               979,142       1,120,894

      Accrued expenses                             1,582,027       2,420,837

      Accrued compensation                           715,036         941,300

      Deferred revenue, current portion            1,916,669       4,864,833

        Total current liabilities                  5,474,714       9,564,705

    Capital lease obligations and notes

     payable, net of current portion                 180,371         275,126

    Deferred rent, net of current portion          1,597,647       1,966,628

    Deferred revenue, net of current portion       6,388,886      12,443,087

        Total liabilities                         13,641,618      24,249,546

    Stockholders' equity:

      Preferred stock of $.01 par value -

       authorized 10,000,000 shares;

       Series A Convertible; issued and

       outstanding 4,997 shares as of

       December 31, 2007 and June 30, 2007                50              50

      Common stock of $.01 par value -

       authorized 150,000,000 shares; issued

       and outstanding 85,204,169 and

       85,126,915 shares as of December 31,

       2007 and June 30, 2007, respectively          852,042         851,269

      Additional paid-in capital                 207,648,737     205,875,438

      Accumulated other comprehensive income          62,098               -

      Accumulated deficit                       (197,337,143)   (188,195,069)

        Total stockholders' equity                11,225,784      18,531,688

        Total liabilities and stockholders'

         equity                                  $24,867,402     $42,781,234

CONTACT: Stephen T. Wills, CPA, MST, EVP-Operations - Chief FinancialOfficer of Palatin Technologies, Inc., +1-609-495-2200, ,or Institutional Investors and Media, Carney Noensie of Burns McClellan,+1-212-213-0006, , for Palatin Technologies, Inc.

Web site:

Ticker Symbol: (AMEX:PTN)

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Posted: May 2008