EXHIBIT 10.34

[PALATIN LOGO]
--------------------------------------------------------------------------------
                                                            EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 1st day of October, 2005,
is entered into by Palatin Technologies, Inc., a Delaware corporation with its
principal place of business at 4C Cedar Brook Drive, Cranbury, NJ, 08512 (the
"Company"), and "), and Stephen T. Wills.

The Company desires to continue employing the Employee, and the Employee desires
to continue to be employed by the Company. In consideration of the mutual
covenants and promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties agree as follows:

1.0  TERM OF EMPLOYMENT. The Company hereby agrees to continue employing the
     Employee, and the Employee hereby accepts the continuation of employment
     with the Company, upon the terms set forth in this Agreement, for a two
     year period commencing on October 1, 2005 (the "Commencement Date") and
     ending on the second anniversary of the Commencement Date unless sooner
     terminated in accordance with the provisions of Section 4.

2.0  POSITION TITLE & CAPACITY

     2.1  The Employee shall serve as Chief Financial Officer, with
          responsibilities consistent with this position and as the Company's
          Board of Directors (the "Board") may determine from time to time, with
          powers and duties as may be determined, from time to time, by the
          Board, consistent with the Employee's position. The Employee shall
          report to the Company's Board of Directors. The Employee shall be
          based at the Company's corporate headquarters, which is based in
          Cranbury, New Jersey. The Employee shall also be available for travel
          at such times and to such places as may be reasonably necessary in
          connection with the performance of his duties hereunder.


2005-2007 Employment Agreement, Stephen T. Wills                    Page 1 of 17
<PAGE>


     2.2  The Employee may serve as an employee director on the Company's Board
          of Directors (the "Board") as determined and approved by the Board
          during the employment period; however upon termination of employment
          for any reason, the Employee will no longer serve as a member of the
          Company's Board of Directors and will take any and all actions
          necessary to effectuate such resignation as may be reasonably
          requested by the Company.

     2.3  The Employee hereby accepts such employment and agrees to undertake
          the duties and responsibilities inherent in such position and such
          other duties and responsibilities as the Board shall from time to time
          reasonably assign to him. The Employee agrees to devote substantially
          all of his business time, attention and energies to the business and
          interests of the Company during the Employment Period. The Employee
          agrees to abide by the rules, regulations, instructions, personnel
          practices and policies of the Company and any changes therein which
          may be adopted from time to time by the Company. The Employee
          acknowledges receipt of copies of all such rules and policies
          committed to writing as of the date of this Agreement.

     2.4  The Employee specifically covenants, warrants and represents to the
          Company that he has the full, complete and entire right and authority
          to enter into this Agreement, that he has no agreement, duty,
          commitment or responsibility of any kind or nature whatsoever with any
          corporation, partnership, firm, company, joint venture or other entity
          or other person which would conflict in any manner whatsoever with any
          of his duties, obligations or responsibilities to the Company pursuant
          to this Agreement, that he is not in possession of any document or
          other tangible property of any corporation, partnership, firm,
          company, joint venture or other entity or other person of a
          confidential or proprietary nature which


2005-2007 Employment Agreement, Stephen T. Wills                    Page 2 of 17
<PAGE>


         would conflict in any manner whatsoever with any of his duties,
         obligations or responsibilities to the Company pursuant to his
         Agreement, and that he is fully ready, willing and able to perform each
         and all of his duties, obligations and responsibilities to the Company
         pursuant to this Agreement.

3.0  COMPENSATION AND BENEFITS. During the Employment Period, unless sooner
     terminated in accordance with the provisions of Section 4, the Employee
     shall receive the following compensation and benefits:

3.1  SALARY. The Company shall pay the Employee, in equal semi-monthly
     installments or otherwise in accordance with the Company's standard payroll
     policies as such policies may exist from time to time, an annual base
     salary of $285,000. Such salary shall be subject to review thereafter, as
     determined by the Company's Compensation Committee and approved by the
     Board, on an annual basis, but the Board shall not decrease the Employee's
     annual base salary at any such annual review.

3.2  CASH PERFORMANCE BONUS. The Employee will be included in the Company's
     annual discretionary bonus compensation program based on a June 30th year
     end in an amount to be decided by the Company's Compensation Committee and
     approved by the Board, payable no later than September 30th of each year
     during the Employment Period. Such performance bonus compensation shall be
     based upon yearly objectives mutually agreed upon by and between the
     Employee and the Company.

3.3  STOCK OPTIONS. As additional compensation for services rendered, the
     Company has granted to the Employee the right and option (the "Option") to
     purchase shares of the Company's Common Stock (the "Option Shares"),
     subject to the vesting schedule set forth in subparagraph c hereof and the
     adjustments set forth in subparagraph g hereof. The Option is intended to
     be, to the maximum extent possible, a qualified incentive stock option,
     subject to the aggregate fair market value and other provisions of the
     Internal Revenue Service Code, as described in the Company's 2005 Stock
     Plan (the "Plan"). To the extent there are any inconsistencies between this
     Agreement and the provisions of the Plan, the provisions of the Plan shall
     govern.

(a)  PURCHASE PRICE. Except as otherwise provided in subparagraph g hereof, the
     purchase price (the "Option Price") of the Option Shares shall be as stated
     on the option grant as approved by the Company's Board of Directors.

(b)  OPTION TERM. Except as otherwise provided in the Plan or in this Agreement,
     the Option shall expire on the first to occur of: (i) 24 months following
     the Employee's termination of employment, or (ii) 10 years from the
     Commencement Date.


2005-2007 Employment Agreement, Stephen T. Wills                    Page 3 of 17
<PAGE>


(c) EXERCISE OF OPTIONS.

(i) Except as otherwise provided in the Plan and under section 3.3b hereof, the
right of the Employee to exercise Stock Options is conditioned upon the
Employee: (A) being in the employ of the Company, whether pursuant to this
Agreement or otherwise, or (B) serving as a director of the Company.

(ii) Stock Options shall vest (except as otherwise provided in the Plan) per the
provisions as stated on the option grant as approved by the Company's Board of
Directors.

(iii) The Options may be exercised, to the extent vested, in whole or in part,
at any time or times prior to the expiration or other termination thereof.

(d) METHOD OF EXERCISING OPTIONS.

(i)  The Option may be exercised by giving written notice, in form substantially
     as set forth in the Company's Stock Option Exercise Form, , to the Company
     at its principal office, specifying the number of Option Shares to be
     purchased and accompanied by payment in full of the aggregate purchase
     price for such Option Shares. Only full shares shall be delivered and any
     fractional share which might otherwise be deliverable upon exercise of the
     Option shall be forfeited.

     The purchase price for the Option Shares shall be payable, in cash or its
     equivalent.

(ii) Upon receipt of such notice and payment, the Company, within three (3)
business days after Exercise, shall deliver or cause to be delivered a
certificate or certificates representing the Option Shares with respect to which
the Option is exercised. The certificate or certificates for such Option Shares
shall be registered in the name of the person exercising the Option (or, if the
Employee shall so request in the notice exercising the Option, in the name of
the Employee and his spouse, jointly, with right of survivorship) and shall be
delivered as provided above to or upon the written order of the person
exercising the Option.

(iii) In the event the Option is exercised by any person after the death or
Disability of the Employee, such notice shall be accompanied by appropriate
proof of the right of such person to exercise the Option. All Option Shares
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable by the Company.

(e) NON-TRANSFERABILITY OF OPTION. The Option may not be assigned or
transferred, in whole or in part, by the Employee, otherwise than by will or by
the laws of descent and distribution. During the lifetime of the Employee, the
Option shall be exercisable only by the Employee or, in the event of his
Disability, by his legal representative.


2005-2007 Employment Agreement, Stephen T. Wills                    Page 4 of 17
<PAGE>



(f) WITHHOLDING OF TAXES. The obligation of the Company to deliver Option Shares
upon the exercise of any Option shall be subject to any applicable federal,
state and local tax withholding requirements.

(g) ADJUSTMENTS. The number of Option Shares and the Option Price shall be
adjusted as set forth herein:

     (i)  In the event that a stock dividend shall be declared on the Common
          Stock payable in shares of the Common Stock, the Option Shares shall
          be adjusted by adding to each Option Share the number of shares which
          would be distributed thereon if such Option Share had been outstanding
          on the date fixed for determining the shareholders entitled to receive
          such stock dividend.

     (ii) In the event that the outstanding shares of the Common Stock shall be
          changed into or exchanged for a different number or kind of shares of
          stock or other securities of the Company whether through
          re-capitalization, stock split, combination of shares, or otherwise,
          then there shall be substituted for each Option Share the number and
          kind of shares of stock or the securities into which each outstanding
          share of the Common Stock shall be so changed or for which each such
          share shall be exchanged.

     (iii)In the event that the outstanding shares of the Common Stock shall be
          changed into or exchanged for shares of stock or other securities of
          another corporation, whether through reorganization, sale of assets,
          merger or consolidation in which the Company is the surviving
          corporation, then there shall be substituted for each Option Share the
          number and kind of shares of stock or the securities into which each
          outstanding share of the Common Stock shall be so changed or for which
          each such share shall be exchanged.

(h)  SHARE OWNERSHIP. Neither the Employee nor the Employee's legal
     representatives nor the executors or administrators of his estate shall be
     or be deemed to be the holder of any share of Common Stock covered by an
     Option unless and until a certificate for such share shall have been
     issued.

3.4  FRINGE-BENEFITS. The Employee shall be entitled to participate in all
     benefit programs that the Company establishes and makes available to its
     employees, if any, to the extent that the Employee's position, tenure,
     salary, age, health and other qualifications make him eligible to
     participate. The Employee shall also be entitled to holidays and annual
     vacation leave in accordance with the Company's policy as it exists from
     time to time.

3.5  REIMBURSEMENT OF EXPENSES. The Company shall reimburse the Employee for all
     reasonable travel, entertainment and other expenses incurred or paid by the
     Employee in connection with, or related to, the performance of his duties,
     responsibilities or services under this Agreement, upon presentation by the
     Employee


2005-2007 Employment Agreement, Stephen T. Wills                    Page 5 of 17
<PAGE>


     of documentation, expense statements, vouchers and/or such other supporting
     information as the Company may request, provided however, that the amount
     available for such travel, entertainment and other expenses may be fixed in
     advance by the Board.

3.6  INSURANCE. The Employee will be covered under the Company's Directors' and
     Officers' liability insurance to the same extent the Company's directors
     and other officers are covered.

4.0 EMPLOYMENT TERMINATION. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:

4.1  Expiration of the Employment Period in accordance with Section 1, unless
     continued employment is mutually agreed upon between the Company and the
     Employee;

4.2  At the election of the Company, for Cause (as defined in Section 6),
     immediately upon written notice by the Company to the Employee, which
     notice of termination shall have been approved by a majority of the Board;

4.3  Immediately upon the death or determination of Disability (as defined in
     Section 6) of the Employee;

4.4  At the election of the Employee, for Good Reason (as defined in Section 6),
     immediately upon written notice of not less than sixty (60) days prior to
     termination by the Employee to the Company;

4.5  At the election of the Employee, within twelve (12) months following a
     Change in Control (as defined in Section 6), immediately upon written
     notice by the Employee to the Company;

4.6  At the election of either party, upon written notice of termination (the
     "Notice of Termination").


2005-2007 Employment Agreement, Stephen T. Wills                    Page 6 of 17
<PAGE>


5.0 EFFECT OF TERMINATION

5.1 COMPENSATION & BENEFITS

(a) As referenced in this section, compensation following the Employee's
termination shall be in the form of severance. Severance will be based on the
employee's base salary in effect as of the employee's last day of employment,
and will be paid in installments in accordance with the Company's regular
payroll schedule in effect at the time of termination.

(b) Severance is not considered compensation for purposes of employee and
employer matching contributions under the 401(k) plan;

(c) As referenced in this section, upon termination of the Employee's employment
with the Company, medical and dental benefits will be available to the Employee,
at his election, solely pursuant to the provisions of COBRA with the Company
paying the full cost of COBRA coverage for a period up to 18 months if
employment is terminated for any reason except an Employee resignation without
Good Reason (as defined in Section 6) and a Company discharge for Cause. If the
Employee is discharged for Cause or the Employee resigns without Good Reason,
the Employee will be required to remit the COBRA cost (102% of total benefit
cost) of coverage.

(d) Upon termination of the Employee's employment with the Company, apart from
the Employee's election under COBRA to continue medical and dental benefits (as
described in Section 5.1c), the Employee will cease to be eligible for
participation in the Company's health and welfare insurance and any other fringe
benefit programs that pursuant to their contracts or Company policy require an
active employee status.

(e) Upon termination of the Employee's employment with the Company, apart from
the Employee's election under COBRA to continue medical and dental benefits (as
described in Section 5.1c), the Employee will cease to be eligible for
participation in the Company's health and welfare insurance and any other fringe
benefit programs that pursuant to their contracts or Company policy require an
active employee status.

5.2 TERMINATION BY THE COMPANY OR AT ELECTION OF THE EMPLOYEE (OTHER THAN FOR
GOOD REASON).

(a) If the EMPLOYEE ELECTS TO TERMINATE HIS EMPLOYMENT (other than for Good
Reason) pursuant to Section 4.6, no severance and/or benefits shall be paid, and
the Employee shall be entitled only to receive payment of his earned but unpaid
salary, and accrued vacation, as of his last day of actual employment by the
Company (the "Date of Termination");


2005-2007 Employment Agreement, Stephen T. Wills                    Page 7 of 17
<PAGE>



 (b) If the COMPANY ELECTS TO TERMINATE THE EMPLOYEE (other than for Cause)
pursuant to Section 4.6, the Company shall pay to the Employee his salary in
effect at that time for the greater of an eighteen (18) month period following
the Date of Termination, or for the duration of the then current Employment
Period, plus medical and dental benefits (as described in Section 5.1c);

(c) If the COMPANY TERMINATES THE EMPLOYEE FOR CAUSE pursuant to Section 4.2, no
severance and/or benefits shall be paid, and the Employee shall be entitled only
to receive payment of his earned but unpaid salary, and accrued vacation, as of
the Date of Termination. Employee may elect COBRA medical and dental benefits,
in which case the Employee will be required to remit the COBRA cost (102% of
total benefit cost) of coverage.

5.3 TERMINATION BY EMPLOYEE ELECTION FOR GOOD REASON. If the Employee terminates
employment at his election for Good Reason pursuant to Section 4.4, the Company
shall pay to the Employee his salary in effect at that time for the greater of
an eighteen (18) month period following the Date of Termination, or for the
duration of the then current Employment Period, plus medical and dental benefits
(as described in Section 5.1c).

5.4 TERMINATION FOLLOWING A CHANGE IN CONTROL. If the Employee or Company
terminates the employment relationship following a Change In Control pursuant to
Section 4.5:

(a) The Company shall pay to the Employee his annual salary in effect at
that time in a lump sum amount, calculated at one and one-half (1.5) times such
annual salary, within ten (10) business days following the Date of Termination
plus medical/dental care benefits (as described in Section 5.1c);

(b) All options to purchase shares of capital stock of the Company previously
granted to the Employee pursuant to any stock option plan with the Company which
have not vested at such time shall immediately vest and become fully exercisable
in accordance with their terms, and shall remain exercisable for a period of 24
months following the Date of Termination;

(c) For a six (6) month period after the Date of Termination, the Company shall
reimburse the Employee for reasonable fees and expenses incurred by him for the
purpose of locating employment in an amount, not to exceed $25,000, mutually
agreed upon by and between the Employee and the Company, including the fees and
expenses of consultants and other persons retained by him for such purpose,
promptly, within ten days, receipt by the Company of satisfactory evidence of
payment of such fees and expenses.

(d) Section 409A of the Code. In all respects, the definition of "Change in
Control" contained herein shall


2005-2007 Employment Agreement, Stephen T. Wills                    Page 8 of 17
<PAGE>


be interpreted and administered so as to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code"), and the provisions of
United States Treasury ("Treasury") Notice 2005-1, and any successor statute,
regulation and guidance thereto. If the definition of Change in Control is
inconsistent with any of the foregoing, the definition of Change in Control in
Treasury Notice 2005-1 and any successor Change in Control definition thereto
shall be incorporated into this Agreement by reference. In the event the
Treasury issues additional guidance which requires modification(s) to the
definition of Change in Control to comply with the requirements of Section 409A
of the Code and the Treasury guidance issued pursuant to the same or Section
409A of the Code is modified, the Executive and Company shall amend this
Agreement by way of mutual agreement to comply with the same. If at any time the
Change in Control benefits or payments pursuant to this Section 3 are found to
be in violation of Section 409A of the Code, Treasury Notice 2005-1, or any
successor statute, regulation and guidance thereto, Company shall pay Executive
an additional amount to "gross up" any payments made to Executive to make the
Executive whole for any additional taxes imposed on the Executive as a result of
Section 409A of the Code or any successor statute including, without limitation,
additional excise, employment, state, federal and local income taxes due on such
gross up payment.

5.5 TERMINATION BY REASON OF THE EMPLOYEE'S DEATH OR DISABILITY. If, prior to
the expiration of the Employment Period, the Employee's employment is terminated
by the Employee's death or Disability pursuant to Section 4.3,

(a) The Company shall pay to the Employee, or in the case of the Employee's
death, to the estate of the Employee, the severance and medical and dental
benefits (as described in Section 5.1c).

(b) All options to purchase shares of capital stock of the Company previously
granted to the Employee pursuant to any stock option plan with the Company which
have not vested at such time shall immediately vest and become fully exercisable
in accordance with their terms, and shall remain exercisable for a period of 24
months following the Date of Termination.

5.6 WITHHOLDING AND DEDUCTIONS. (a) All payments hereunder shall be subject to
withholding and to such other deductions as shall at the time of such payment be
required pursuant to any income tax or other law, whether of the United States
or any other jurisdiction, and, in the case of payments to the executors or
administrators to the Employee's estate, the delivery to the Company of all
necessary tax waivers and other documents. (b) In the event the Employee is
required pursuant to Section 4999 of the Internal Revenue Code to pay (through
withholding or


2005-2007 Employment Agreement, Stephen T. Wills                    Page 9 of 17
<PAGE>


otherwise) an excise tax on "excess parachute payments" (as
defined in Section 280G(b) of the Code) made by the Company pursuant to Section
5.4 of this Agreement, the Company shall pay the Employee such additional
amounts as are necessary to place the Employee in the same after tax financial
position that he would have been in if he had not incurred any tax liability
under Section 4999 of the Code. (c) In the event the Employee is required to pay
any federal, state or local income taxes as a result of the Company's payment of
the Employee's COBRA premiums under this Section 5, the Company shall pay the
Employee such additional amounts as are necessary to place the Employee in the
same after-tax financial position that he would have been in if he had not
incurred any such tax liability.

5.7 RELEASE OF CLAIMS. The Employee's entitlement to severance, payment of COBRA
premiums, and accelerated vesting of options under any subparagraph of this
Section 5, is contingent upon the Employee's execution of a general release of
claims in a form prepared by the Company and presented to the Employee upon
termination of his employment hereunder, as well as the Employee's compliance
with the provisions of Section 7 hereof.


2005-2007 Employment Agreement, Stephen T. Wills                   Page 10 of 17
<PAGE>


5.8 NO REQUIREMENT TO MITIGATE. The Employee shall not be required to mitigate
the amount of any payment provided for in this Section 5 by seeking other
employment or otherwise.

6.0 DEFINITIONS. For purposes of this Agreement the following definitions apply:

6.1 "CAUSE" shall mean the occurrence of any of the following circumstances:

(a) (i) the Employee's material breach of, or habitual neglect or failure to
perform the material duties which he is required to perform under, the terms of
this Agreement; (ii) the Employee's material failure to follow the reasonable
directives or policies established by or at the direction of the Board; or (iii)
the Employee's engaging in conduct that is materially detrimental to the
interests of the Company such that the Company sustains a material loss or
injury as a result thereof, provided that the breach or failure of performance
by the Employee under subparagraphs (i) through (iii) hereof is not cured, to
the extent cure is possible, within ten (10) days of the delivery to the
Employee of written notice thereof;

(b) the willful breach by the Employee of
Section 7 of this Agreement or any provision of any confidentiality, invention
and non-disclosure, non-competition or similar agreement between the Employee
and the Company; or

(c) the conviction of the Employee of, or the entry of a
pleading of guilty or nolo contendere by the Employee to, any crime involving
moral turpitude or any felony. 6.2 "DISABILITY" shall mean the inability of the
Employee, by reason of illness, accident or other physical or mental disability,
for a period of 120 days, whether or not consecutive, during any 360-day period,
to perform the services contemplated under this Agreement. A determination of
disability shall be made by a physician satisfactory to both the Employee and
the Company; provided, however, that if the Employee and the Company do not
agree on a physician, the Employee and the Company shall each select a physician
and these two together shall select a third physician, whose determination as to
disability shall be binding on all parties.


2005-2007 Employment Agreement, Stephen T. Wills                   Page 11 of 17
<PAGE>


6.3 "GOOD REASON" shall mean the occurrence of any of the following
circumstances, and the Company's failure to cure such circumstances within
thirty (30) days of the delivery to the Company of written notice by the
Employee of such circumstances:

(a)  any significant diminution in the Employee's duties and responsibilities as
     described in Section 2.1 hereof, or assignment of duties and
     responsibilities inconsistent with the Employee's position;

(b)  any reduction in the Employee's salary as in effect on the Commencement
     Date or as the same may be increased from time to time;

(c)  the failure of the Company to continue in effect any material compensation
     or benefit plan in which the Employee participates as in effect on the
     Commencement Date, unless an equitable arrangement (embodied in an ongoing
     substitute or alternative plan) has been made with respect to such plan, or
     the failure by the Company to continue the Employee's participation therein
     (or in such substitute or alternative plan) on a basis not materially less
     favorable, both in terms of the amount of benefits provided and the level
     of the Employee's participation relative to other participants, as in
     effect on the Commencement Date;

(d)  the failure by the Company to continue to provide the Employee with
     benefits substantially similar to those enjoyed by the Employee under any
     of the Company's health and welfare insurance, retirement and other
     fringe-benefit plans insurance, which the Employee was participating as in
     effect on the Commencement Date, the taking of any action by the Company
     which would directly or indirectly materially reduce any of such benefits,
     or the failure by the Company to provide the Employee with the number of
     paid vacation days to which he is entitled in accordance with the Company's
     normal vacation policy in effect on the Commencement Date or in accordance
     with any agreement between the Employee and the Company existing at that
     time; or

(e)  the relocation of the Employee to a location which is greater than fifteen
     (15) miles from Cranbury, New Jersey.


2005-2007 Employment Agreement, Stephen T. Wills                   Page 12 of 17
<PAGE>


6.4 "CHANGE IN CONTROL" shall mean the occurrence of any of the following
events:

(a)  any "person," as such term is used in Sections 13(d) and 14(d) of the
     Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
     than the Company, any trustee or other fiduciary holding securities under
     an employee benefit plan of the Company, or any corporation owned directly
     or indirectly by the stockholders of the Company in substantially the same
     proportion as their ownership of stock of the Company) is or becomes the
     "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
     directly or indirectly, of securities of the Company representing 50% or
     more of the combined voting power of the Company's then outstanding
     securities;

(b)  individuals who, as of the Commencement Date, constitute the Board (the
     "Incumbent Board") cease for any reason to constitute at least a majority
     of the Board, provided that any person becoming a director subsequent to
     the Commencement Date whose election, or nomination for election by the
     Company's stockholders, was approved by a vote of at least a majority of
     the directors then comprising the Incumbent Board (other than an election
     or nomination of an individual whose initial assumption of office is in
     connection with an actual or threatened election contest relating to the
     election of the directors of the Company, as such terms are used in Rule
     14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of
     this Agreement, considered as though such person were a member of the
     Incumbent Board;

(c)  the stockholders of the Company approve a merger or consolidation of the
     Company with any other corporation, other than (i) a merger or
     consolidation which would result in the voting securities of the Company
     outstanding immediately prior thereto continuing to represent (either by
     remaining outstanding or by being converted into voting securities of the
     surviving entity) more than 80% of the combined voting power of the voting
     securities of the Company or such surviving entity outstanding immediately
     after such merger or consolidation or (ii) a merger or consolidation
     effected to implement a re-capitalization of the Company (or similar
     transaction) in which no "person" (as defined in Section 6.4(a)) acquires
     more than 50% of the combined voting power of the Company's then
     outstanding securities; or

(d)  a sale of all or substantially all of the assets of the Company.


2005-2007 Employment Agreement, Stephen T. Wills                   Page 13 of 17
<PAGE>


7.0 RESTRICTIVE COVENANTS

(a) For the purposes of this Agreement:

     (i)  "COMPETING PRODUCTS" means any products or processes of any person or
          organization other than the Company in existence or under development,
          which are substantially the same, may be substituted for, or applied
          to substantially the same end use as the products or processes that
          the Company is developing or has developed or commercialized during
          the time of the Employee's employment with the Company.

     (ii) "COMPETING ORGANIZATION" means any person or organization engaged in,
          or with definitive plans to become engaged in, research or
          development, production, distribution, marketing or selling of a
          Competing Product.

(b)  The Employee acknowledges that he has, on or prior to the date of the
     Agreement, executed and delivered to the Company an Employee Agreement on
     Confidentiality, Intellectual Property, Debarment Certification and
     Conflict of Interest (the "Confidentiality Agreement") and the Employee
     hereby affirms and ratifies his obligations thereunder; and the Employee
     agrees that after termination by the Company for Cause pursuant to Section
     4.2 (except in the case where such termination occurs within 12 months
     following a Change in Control), by the Employee pursuant to Section 4.6, or
     by either party upon expiration of the Employment Period, he will not
     render services of any nature, directly or indirectly, to any Competing
     Organization in connection with any Competing Product within any
     geographical territory as the Company and such Competing Organization are
     or would be in actual competition, for a period of six (6) months,
     commencing on the Date of Termination.

(c)  The Employee agrees that he will not, during the Employment Period and for
     a period of nine (9) months commencing on the Date of Termination, directly
     or indirectly employ, solicit for employment, or advise or recommend to any
     other person that they employ or solicit for employment, any person whom he
     knows to be an employee of the Company or any parent, subsidiary or
     affiliate of the Company.


2005-2007 Employment Agreement, Stephen T. Wills                   Page 14 of 17
<PAGE>


(d)  In the event a court of competent jurisdiction should find any provision in
     this Section 7 to be unfair or unreasonable, such finding shall not render
     such provision unenforceable, but, rather, this provision shall be modified
     as to subject matter, time and geographic area so as to render the entire
     section valid and enforceable.

8.0 NOTICES. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon either: (a) personal delivery; or (b)
three (3) days following deposit in the United States Post Office for delivery
by registered or certified mail, postage prepaid, or one (1) day following
deposit with a reputable overnight courier service, addressed to the other party
at the address shown above, or at such other address or addresses as either
party shall designate to the other in accordance with this Section 8.

9.0 PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa. 10.0 ENTIRE AGREEMENT. This Agreement, together with the "Confidentiality
Agreement", constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.

11.0 AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee. 12.0 GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in accordance with
the laws of New Jersey, without regard to its principles of conflict of laws.

13.0 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of both parties and their respective successors and assigns,
including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the
obligations of the Employee are unique and personal and shall not be assigned by
him.


2005-2007 Employment Agreement, Stephen T. Wills                   Page 15 of 17
<PAGE>


14.0 WAIVER OF BREACH.

14.1 WAIVER BY THE COMPANY. No delay or omission by the Company in exercising
any right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion. No waiver by the Company shall be valid unless
in writing signed by an authorized officer of the Company and approved by a
majority of the Board. 14.2 WAIVER BY THE EMPLOYEE. No delay or omission by the
Employee in exercising any right under this Agreement shall operate as a waiver
of that or any other right. A waiver or consent given by the Employee on any one
occasion shall be effective only in that instance and shall not be construed as
a bar or waiver of any right on any other occasion. No waiver by the Employee
shall be valid unless in a writing signed by the Employee.

15.0  MISCELLANEOUS.

15.1 The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement. 15.2 In case any provision of this Agreement
shall be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.

16.0 SURVIVAL. The provisions of Sections 3.3, 5, 6, 7 and 8 shall survive the
termination of this Agreement.

17.0 ATTORNEY'S FEES. The Company shall reimburse the Employee for all legal
fees and expenses associated with the negotiation and drafting of this
Agreement, upon reasonable documentation thereof, up to a maximum of $5,000.


2005-2007 Employment Agreement, Stephen T. Wills                   Page 16 of 17
<PAGE>


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal as of the day and year set forth above.

PALATIN TECHNOLOGIES, INC.                    EMPLOYEE

By:_____________________________              ________________________________
Name: Carl Spana                              Stephen T. Wills
Title: Chief Executive Officer/President      Executive V.P. of Operations and
                                              Chief Financial Officer

Date:____________________________             Date: ____________________________


2005-2007 Employment Agreement, Stephen T. Wills                   Page 17 of 17