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U.S. SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549  FORM 10-Q  [X]
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934       [  ]
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934          PALATIN TECHNOLOGIES, INC.(Exact name of registrant as specified in its charter)   Delaware
     95-4078884(State or other jurisdiction of
     incorporation or organization)
     (I.R.S. Employer Identification
     No.)4C Cedar Brook DriveCranbury, New Jersey
     08512(Address of principal executive
     offices)
     (Zip Code)  (609) 495-2200


Check whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been
subject
to such filing requirements for the past 90 days.    Yes [X]   No [  ]

Check whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
   Yes [  ]   No [X]

As of February 14, 2003, 28,383,557 shares of the issuer's common stock, par value $.01 per share, were
outstanding.

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PALATIN TECHNOLOGIES, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

|Item 1. | Financial Statements (unaudited)                                                                                                                                                                                 |        
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------
|        |                                                                                                                                                                                                                  |        
|        | CONSOLIDATED BALANCE SHEETS -- As of December 31, 2002
     and June 30, 2002                                                                                                                                    | Page 3 
|        |                                                                                                                                                                                                                  |        
|        | CONSOLIDATED STATEMENTS OF OPERATIONS --
      For the Three and Six Months Ended December 31, 2002 and
      December 31, 2001 and the Period from January 28, 1986
      (inception) through December 31, 2002 | Page 4 
|        |                                                                                                                                                                                                                  |        
|        | CONSOLIDATED STATEMENTS OF CASH FLOWS --
      For the Six Months Ended December 31, 2002 and
     December 31, 2001 and the Period from January 28, 1986
     (inception) through December 31, 2002             | Page 5 
|        |                                                                                                                                                                                                                  |        
|        | Notes to Consolidated Financial Statements                                                                                                                                                                       | Page 6 
|        |                                                                                                                                                                                                                  |        
|Item 2. | Management's Discussion and Analysis of Financial Condition
     and Results of Operations                                                                                                                       | Page 11
|        |                                                                                                                                                                                                                  |        
|Item 3. | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                       | Page 16
|        |                                                                                                                                                                                                                  |        
|Item 4. | Controls and Procedures                                                                                                                                                                                          | Page 16
|        |                                                                                                                                                                                                                  |        

PART II - OTHER INFORMATION

|Item 1. | Legal Proceedings                                        | Page 17
|------- | -------------------------------------------------------- | -------
|        |                                                          |        
|Item 2. | Changes in Securities and Use of
     Proceeds           | Page 17
|        |                                                          |        
|Item 3. | Defaults Upon Senior Securities                          | Page 17
|        |                                                          |        
|Item 4. | Submission of Matters to a Vote of
     Security Holders | Page 17
|        |                                                          |        
|Item 5. | Other Information                                        | Page 18
|        |                                                          |        
|Item 6. | Exhibits and Reports on Form 8-K                         | Page 18
|        |                                                          |        
|        | Signatures                                               | Page 19
|        |                                                          |        
|        | Certifications of Executive Officers                     | Page 20

2

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# PART I - FINANCIAL INFORMATION

## Item 1. Financial Statements

PALATIN TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)Consolidated Balance Sheets
                                 (unaudited)

`December 31, 2002  June 30, 2002
                                                                        -----------------  --------------
ASSETS
Current assets:
  Cash and cash equivalents                                               $   8,566,763    $   7,944,264
  Available for sale investments                                              3,126,745        1,160,773
  Prepaid expenses and other                                                    295,005          349,883
                                                                          --------------   --------------
      Total current assets                                                   11,988,513        9,454,920

Property and equipment, net                                                   3,541,698        2,416,499
Restricted cash                                                                 428,075          433,844
Other                                                                            57,369           52,953
                                                                          --------------   --------------
                                                                          $  16,015,655    $  12,358,216
                                                                          ==============   ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long term debt                                       $     144,488    $           -
  Accounts payable                                                            1,537,626        1,579,336
  Accrued expenses                                                              861,817          661,883
  Accrued compensation                                                                -          236,200
  Accrued litigation settlement                                                       -          400,000
  Deferred revenue                                                              683,009          794,018
                                                                          --------------   --------------
      Total current liabilities                                               3,226,940        3,671,437
                                                                          --------------   --------------

Long term debt                                                                  149,856                -
                                                                          --------------   --------------

Commitments and contingencies (Note 4)

Stockholders' equity:
  Preferred stock of $.01 par value - authorized 10,000,000 shares;
    Series A Convertible; Issued and outstanding 25,942 and 26,192 shares
      as of December 31, 2002 and June 30, 2002, respectively;                      259              262
    Series C Convertible; 700,000 shares issued and outstanding
      as of December 31, 2002 and June 30, 2002, respectively;                    7,000            7,000
  Common stock of $.01 par value - authorized 75,000,000 shares;
    Issued and outstanding 28,348,770 and 17,423,076 shares as of
      December 31, 2002 and June 30, 2002, respectively                         283,488          174,231
  Additional paid-in capital                                                 91,060,117       78,792,240
  Deferred compensation                                                        (43,832)         (53,942)
  Accumulated other comprehensive income                                         26,498           10,604
  Deficit accumulated during development stage                             (78,694,671)     (70,243,616)
                                                                          --------------   --------------
                                                                             12,638,859        8,686,779
                                                                          --------------   --------------
                                                                          $  16,015,655    $  12,358,216
                                                                          ==============   ==============`

The accompanying notes to the consolidated financial statements
are an integral part of these financial statements.

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PALATIN TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)Consolidated Statements of Operations
                                 (unaudited)

`Inception
                                                                                                               (January 28,
                                                                                                                   1986)
                                               Three Months Ended December 31,  Six Months Ended December 31,     through
                                                       2002          2001            2002          2001        December 31, 2002
                                                 -------------  ------------    ------------   ------------    -------------
REVENUES:
     Grants and contracts                         $    35,000   $         -     $   460,000    $         -     $ 10,084,094
     License fees                                     198,505        41,667         397,009         83,334        2,498,398
     Other                                                  -             -               -              -          318,917
                                                 -------------  ------------    ------------   ------------    -------------
          Total revenues                              233,505        41,667         857,009         83,334       12,901,409
                                                 -------------  ------------    ------------   ------------    -------------
OPERATING EXPENSES:
     Research and development                       3,683,007     3,250,365       7,271,531      5,351,826       62,244,844
     General and administrative                     1,191,806     1,015,263       2,371,433      1,915,161       29,752,691
     Net intangibles write down                             -             -               -              -          259,334
                                                 -------------  ------------    ------------   ------------    -------------
          Total operating expenses                  4,874,813     4,265,628       9,642,964      7,266,987       92,256,869
                                                 -------------  ------------    ------------   ------------    -------------
OTHER INCOME (EXPENSES):
     Interest income                                   50,455        79,974          96,959        182,060        2,550,538
     Interest expense                                  (6,189)         (678)         (7,152)        (1,356)      (1,966,293)
     Merger costs                                           -             -               -              -         (525,000)
                                                 -------------  ------------    ------------   ------------    -------------
          Total other income (expenses)                44,266        79,296          89,807        180,704           59,245
                                                 -------------  ------------    ------------   ------------    -------------

          Loss before income taxes and cumulative
            effect of accounting change            (4,597,042)   (4,144,666)     (8,696,148)    (7,002,949)     (79,296,215)
     Income tax benefit                               245,093       162,010         245,093        162,010          962,655
                                                 -------------  ------------    ------------   ------------    -------------
      Loss before cumulative effect of
                   accounting change               (4,351,949)   (3,982,656)     (8,451,055)    (6,840,939)     (78,333,560)
     Cumulative effect of accounting change                 -             -               -              -         (361,111)
                                                 -------------  ------------    ------------   ------------    -------------

NET LOSS                                           (4,351,949)   (3,982,656)     (8,451,055)    (6,840,939)     (78,694,671)
PREFERRED STOCK DIVIDEND                              (98,340)     (285,725)       (115,799)      (285,725)      (3,424,426)
                                                 -------------  ------------    ------------   ------------    -------------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS                                      $(4,450,289)  $(4,268,381)    $(8,566,854)   $(7,126,664)    $(82,119,097)
                                                 =============  ============    ============   ============    =============

Basic and diluted net loss per common share       $     (0.18)  $     (0.33)    $     (0.38)   $     (0.59)
                                                 =============  ============    ============   ============
Weighted average number of common shares
     outstanding used in computing basic and
     diluted net loss per common share             24,871,723    13,013,547      22,376,419     12,106,579
                                                 =============  ============    ============   ============`

The accompanying notes to the consolidated financial statements
are an integral part of these financial statements.

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PALATIN TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)Consolidated Statements of Cash Flows
                                 (unaudited)

`Inception
                                                           Six Months Ended December 31,  (January 28, 1986)
                                                           -----------------------------      Through
                                                               2002           2001        December 31, 2002
                                                           ------------   ------------    -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                 $(8,451,055)   $(6,840,939)    $(78,694,671)
  Adjustments to reconcile net loss to net cash
    used for operating activities:
      Cumulative effect of accounting change                        -              -           361,111
      Depreciation and amortization                            291,397        575,745        2,822,127
      License fee                                                   -              -           500,000
      Interest expense on note payable                              -              -            72,691
      Accrued interest on long-term financing                       -              -           796,038
      Accrued interest on short-term financing                      -              -             7,936
      Intangibles and equipment write down                          -              -           278,318
      Common stock and notes payable issued for expenses            -              -           751,038
      Settlement with consultant                                    -              -           (28,731)
      Acceleration of options previously granted                    -              -         1,505,315
      Stock based compensation                                  10,110         30,576        4,407,891
      Deferred revenue                                        (111,009)       (83,334)         321,898
      Changes in certain operating assets and liabilities:
        Prepaid expenses and other                              60,647       (480,228)      (1,090,706)
        Accounts payable                                       (41,710)       861,319        1,537,626
        Accrued expenses and other                            (436,266)      (491,688)         400,650
                                                           ------------   ------------    -------------
            Net cash used for operating activities          (8,677,886)    (6,428,549)     (66,051,469)
                                                           ------------   ------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of investments                              (1,959,498)              -      (3,131,505)
      Purchases of property and equipment                     (993,672)      (212,845)      (5,801,407)
                                                           ------------   ------------    -------------
            Net cash used for investing activities          (2,953,170)      (212,845)      (8,932,912)
                                                           ------------   ------------    -------------

 CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from notes payable, related party                    -              -           302,000
      Payments on notes payable, related party                      -              -          (302,000)
      Proceeds from senior bridge notes payable                     -              -         1,850,000
      Payments on senior bridge notes payable                       -              -        (1,850,000)
      Payments on capital lease obligations                   (123,576)            -          (123,576)
      Proceeds from notes payable and long-term debt                -              -         3,951,327
      Payments on notes payable and long-term debt                  -              -        (1,951,327)
      Proceeds from Common stock, stock option
       and warrant issuances, net                           12,377,131     10,208,876       57,466,061
      Proceeds from Preferred stock, net                            -              -        24,210,326
      Purchase of treasury stock                                    -              -            (1,667)
                                                           ------------   ------------    -------------
            Net cash provided by financing activities       12,253,555     10,208,876       83,551,144
                                                           ------------   ------------    -------------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                         622,499      3,567,482        8,566,763
CASH AND CASH EQUIVALENTS, beginning
   of period                                                 7,944,264     11,456,424               -
                                                           ------------   ------------    -------------
CASH AND CASH EQUIVALENTS, end of period                   $ 8,566,763    $15,023,906     $  8,566,763
                                                           ============   ============    =============`

The accompanying notes to the consolidated financial statements are an integral part of these financial
statements.

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PALATIN TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)Notes to Consolidated Financial Statements
                                 (unaudited)

# (1) Organization Activities:

Nature of Business  Palatin Technologies, Inc.
(Palatin or the Company) is a development-stage biopharmaceutical company. The Company does not currently
offer any products for sale. The Company is currently conducting clinical investigations with its lead drug, PT-141, for the
treatment of male and female sexual dysfunction, and is developing additional therapeutic compounds, discovered using its enabling
peptide platform technology, MIDAS. Additionally, Palatin is developing a product for infection imaging, LeuTech®, based
on a proprietary radiolabeled monoclonal antibody.

Business Risk and Liquidity  As shown in the
accompanying financial statements, the Company incurred a substantial net loss of $8,451,055 for the six months ended December 31,
2002 and has a deficit accumulated during development stage of $78,694,671, cash and cash equivalents of $8,566,763 and available
for sale investments of $3,126,745 as of December 31, 2002.The Company anticipates incurring additional losses in the future
as it continues development of LeuTech and expands clinical trials for other indications and for PT-141, and continues research and
development of PT-141 and its MIDAS technology. To achieve profitability, the Company, alone or with others, must successfully
develop and commercialize its technologies and proposed products, conduct pre-clinical studies and clinical trials, obtain required
regulatory approvals and successfully manufacture and market such technologies and proposed products. The time required to reach
profitability is highly uncertain, and there can be no assurance that the Company will be able to achieve profitability on a
sustained basis, if at all.

In November 2002, the Company concluded a private placement of its
common stock and warrants, which yielded gross proceeds of $11.5 million (see Note 5)

The
Company has incurred negative cash flows from operations since its inception. The Company
has expended and expects to continue to expend in the future, substantial funds to
complete its planned product development efforts. The Company expects that its existing
capital resources will be adequate to fund the Companys projected operations through
fiscal year 2003, based on current expenditure levels. No assurance can be given that the
Company will not consume a significant amount of its available resources before that time.
Management plans to continue to refine its operations, control expenses, evaluate
alternative methods to conduct its business, and seek available and attractive sources of
financing and sharing of development costs through strategic collaboration agreements or
other resources. Should appropriate sources of financing not be available, management
would delay certain clinical trials and research activities until such time as appropriate
financing was available. There can be no assurance that the Companys financing
efforts will be successful. If adequate funds are not available, our financial condition
and results of operations will be materially and adversely affected.

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# (2) Basis of
Presentation:

The
accompanying unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not include all
of the information and footnote disclosures required to be presented for complete
financial statements. In the opinion of management, these financial statements contain all
adjustments (consisting of only normal recurring adjustments) considered necessary to
present fairly the financial position as of December 31, 2002 and the results of
operations and cash flows for the three and six month periods ended December 31, 2002 and
2001 and for the period from January 28, 1986 (inception) to December 31, 2002. The
results of operations for the six month period ended December 31, 2002 may not necessarily
be indicative of the results of operations expected for the full year, except that the
Company expects to incur a significant loss for the fiscal year ending June 30, 2003.

The
accompanying financial statements should be read in conjunction with the audited financial
statements and notes thereto included in our annual report on Form 10-K, filed with the
Securities and Exchange Commission, which includes financial statements as of June 30,
2002 and 2001 and for each of the three fiscal years in the period ended June 30, 2002.

# (3) Summary of
Significant Accounting Policies:

Principles
of Consolidation  The consolidated financial statements include the accounts of
Palatin and its wholly owned inactive subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.

Use
of Estimates  The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of assets and contingent liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Statements
of Cash Flows  Cash and cash equivalents include cash on hand, cash in
banks and all highly liquid investments with an original maturity of less than three
months. As of December 31, 2002 and June 30, 2002, approximately $428,000 and $434,000,
respectively, of cash was restricted to secure letters of credit for security deposits on
leases.

Investments
 The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards No. 115 Accounting For Certain Investments in Debt
and Equity Securities. The Company classifies such investments as available for sale
investments and as such all investments are recorded at fair value. The investments
consist principally of corporate debt securities with a minimum credit rating of A2 and
mutual funds with average durations ranging from one to three years and credit ratings of
AAA. Unrealized holding gains and losses, net of the related tax effect, if any, are
excluded from earnings and are reported in other comprehensive income and as a separate
component of stockholders equity until realized. Interest on securities classified
as available for sale is included in interest income. Realized gains and losses are
recorded in the statement of operations in the period that the transaction occurs.

The following is a summary of available for sale investments as of
December 31, 2002:

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`Gross             Gross
                               Cost        Unrealized        Unrealized      Fair Value
                                              Gains            Losses
Corporate debt securities  $   100,000     $     1,333     $         -     $   101,333
Mutual funds                 3,000,247          25,165               -       3,025,412
                           ------------    ------------    ------------    ------------
Total                      $ 3,100,247     $    26,498     $         -     $ 3,126,745
                           ============    ============    ============    ============`

The following is a summary of available for sale investments as of June 30,
2002:

`Gross              Gross
                             Cost         Unrealized         Unrealized      Fair Value
                                             Gains             Losses
Government securities      $    50,000     $       672     $         -     $    50,672
Corporate debt securities      100,000             860               -         100,860
Mutual funds                 1,000,169           9,072               -       1,009,241
                           ------------    ------------    ------------    ------------
Total                      $ 1,150,169     $    10,604     $         -     $ 1,160,773
                           ============    ============    ============    ============`

Property and Equipment
 Property and equipment consists of office and laboratory equipment, office furniture and leasehold improvements. Property and
equipment are recorded at cost. Depreciation is recognized using the straight-line method over the estimated useful lives of five
years for equipment, seven years for office furniture and over the term of the lease for leasehold improvements. Maintenance and
repairs are charged to expense as incurred while expenditures that extend the useful life of an asset are capitalized.

Impairment
of Long-Lived Assets  The Company reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of the
assets may not be fully recoverable. To determine recoverability of its long-lived assets,
management evaluates the probability that future undiscounted net cash flows, without
interest charges, will be less than the carrying amount of the assets. Impairment is
measured at fair value. Fair value is determined by an evaluation of available price
information at which assets could be bought or sold including quoted market prices, if
available, or the present value of the estimated future discounted cash flows based on
reasonable and supportable assumptions.

Revenue
Recognition Grant and contract revenues are recognized as the Company provides
the services stipulated in the underlying grants and/or contracts based on the time and
materials incurred. License revenues are recognized when the license fee is received and
the Company has no future performance obligations.

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In
August 1999, the Company entered into a strategic collaboration agreement with
Mallinckrodt, Inc. a division of Tyco International. Ltd., to jointly develop and market
one of its proposed products. Under the terms of the agreement, the company granted a
worldwide license, excluding Europe, for sales, marketing and distribution and received a
nonrefundable licensing fee of $500,000. The licensing fee was recognized as revenue in
the period that such nonrefundable fees were received.

In
fiscal 2001, the Company adopted U.S. Securities and Exchange Commission Staff Accounting
Bulletin No. 101 Revenue Recognition in Financial Statements (SAB
101) which requires up front, non-refundable license fees to be deferred and
recognized over the performance period. The cumulative effect of adopting SAB 101 resulted
in a one-time non-cash charge of $361,111, which reflects the deferral of the $500,000
up-front license fee received from Mallinckrodt in August 1999. Under SAB 101, this
payment has been recorded as deferred revenue to be recognized as license revenue over the
remaining development term of this agreement. For the three and six months ended December
31, 2002 , the Company recognized $13,891 and $27,781, respectively in license revenue
that was included in the cumulative effect adjustment as of July 1, 2000.

In May 2002, the Company entered into an agreement with Mallinckrodt
to amend the original agreement. Under the terms of this amended agreement, Mallinckrodt committed, among other things, up to an
additional $3.2 million, subject to certain conditions and attainment of certain milestones, to cover half of the Companys
estimated expenses associated with completing the FDA review process of LeuTech. Pursuant to this amendment, $800,000 was received
upon execution of this agreement. Under SAB 101, this payment has been recorded as deferred revenue to be recognized as license
revenue over the remaining development term of this agreement. For the three and six months ended December 31, 2002 the Company
recognized $184,614 and $369,228, respectively in license revenue and $400,000 in contract revenue for the attainment of certain
milestones under this agreement.

Research
and Development Costs  The costs of research and development activities are
charged to expense as incurred.

Stock
Options Substantially all of the common stock options issued to employees and
non-employee directors have been issued at exercise prices greater than, or equal to,
their fair market value of the Companys common stock on the date granted.
Accordingly, no value has been assigned to these options. The Company has granted stock
options to non-employees for services. The fair value of these options, pursuant to the
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123), as calculated by the Black-Scholes option
pricing model, has been recorded as deferred compensation and is being expensed over the
vesting period of such options. During the six months ended December 31, 2002, the Company
recognized $17,889 of deferred compensation. The Company did not record any deferred
compensation in the three months ended December 31, 2002.

Income
Taxes  The Company and its subsidiaries file consolidated federal and combined
state income tax returns. The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes (SFAS 109). SFAS 109 requires, among other things, the use of the
liability method in computing deferred income taxes.

The
Company provides for deferred income taxes relating to temporary differences in the
recognition of income and expense items (primarily relating to depreciation, amortization
and certain leases) for financial and tax reporting purposes. Such amounts are measured
using current tax laws and regulations in accordance with the provisions of SFAS 109.

In
accordance with SFAS 109, the Company has recorded a valuation allowance against the
realization of its deferred tax assets. The valuation allowance is based on
managements estimates and analysis, which includes tax laws which may limit the
Companys ability to utilize its tax loss carry-forwards.

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Net
Loss per Common Share  The Company applies Statement of Financial Accounting
Standards No. 128, Earnings per Share (SFAS 128). SFAS 128
requires dual presentation of basic and diluted earnings per share (EPS) for
complex capital structures on the face of the statement of operations. Basic EPS is
computed by dividing the income (loss) by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution from the exercise
or conversion of securities into Common stock, such as stock options. For the three and
six months ended December 31, 2002 and 2001, there were no dilutive effects of stock
options or warrants as the Company incurred a net loss in each period. Options and
warrants to purchase 11,593,577 shares of Common Stock at prices ranging from $0.01 to
$21.70 per share were outstanding at December 31, 2002.

Fair
Value of Financial Instruments  Statement of Financial Accounting Standards No.
107 Disclosure about Fair Value of Financial Instruments (SFAS
107), requires disclosures of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to estimate
the value. In cases where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including discount rate and estimates of
future cash flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could not be
realized in immediate settlement of the instrument. SFAS 107 excludes certain financial
instruments and all non-financial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the underlying
value of the Company.

# (4) Commitments and
Contingencies:

Leases
 The Company currently leases two facilities in New Jersey under non-cancelable
operating leases and is in the process of terminating the lease for the Companys
former Corporate Offices located in Princeton. In July 2002, the Company moved into a new
facility in Cranbury, New Jersey that combined both the research and development facility
in Edison, New Jersey and corporate offices in Princeton, New Jersey.

As
of December 31, 2002, the Company had accrued $150,000 related to the estimated additional
costs to terminate the Princeton lease.

Capital
Leases In September 2002, the Company acquired $417,920 of lab equipment under
capital leases. The term of these leases range from 24 to 60 months. As of December 31,
2002, $294,344 remains outstanding pursuant to these lease obligations.

License
Agreements The Company has three license agreements that require minimum yearly
payments. The cost to maintain these license agreements for the fiscal year ending June
30, 2003 amounts to $250,000 of which $125,000 was expensed during the six months ended
December 31, 2002 under these agreements.

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# (5) Stockholders
Equity:

In November 2002, the Company concluded a private placement of its
common stock and warrants, which yielded gross proceeds of $11.5 million. Investors, consisting of domestic and European financial
institutions and other domestic accredited investors, purchased approximately 9,373,940 shares of common stock and 1,874,788
warrants at a market value of approximately $1.23 per share. For every five shares of common stock purchased, the investors also
received a five-year warrant. Each warrant entitles the purchaser to purchase one share of common stock at an exercise price of
$1.54 per share. Based on the sales price of the common stock and warrants in this private placement, the conversion price of the
Companys outstanding Series A Preferred Stock and the exercise price of certain outstanding warrants have been adjusted
downward in accordance with the existing terms of those securities. As a result, a deemed dividend of $98,340 has been reflected in
the Companys consolidated statement of operations.

In July 2002, the Company received gross proceeds of $1.8 million
pursuant to the second tranche of the Spring 2002 private placement of common stock and warrants. Investors, consisting of domestic
and European financial institutions and other domestic accredited investors, purchased 1,545,063 shares of common stock and 309,012
warrants at a market value of approximately $1.17 per share. For every five shares of common stock purchased, the investors also
received a five-year warrant. Each warrant entitles the purchaser to purchase one share of common stock at an exercise price of
$1.46 per share. Based on the sales price of the common stock and warrants in this private placement, the conversion price of the
Company's outstanding Series A Preferred Stock and the exercise price of certain outstanding warrants have been adjusted downward in
accordance with the existing terms of those securities. As a result, a deemed dividend of $17,459 has been reflected in the
Company's consolidated statement of operations.

# (6) Income Tax Benefit:

In
December 2002, the Company sold New Jersey net operating losses pursuant to the New Jersey
Economic Development Authoritys Tax Transfer Program. As a result, the Company received
$245,093, which is reflected as an income tax benefit in the statement of operations

## Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.

The
following discussion and analysis should be read in conjunction with the consolidated
financial statements and accompanying notes filed as part of this report.

We
make forward-looking statements in this report. Sometimes these statements contain words
such as anticipates, plans, intends,
expects and similar expressions to identify forward-looking statements. These
statements are not guarantees of our future performance. Our business involves known and
unknown risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from what we say in this report. We
describe a number of these factors in our annual report on Form 10-K for the year ended
June 30, 2002. Given these uncertainties, you should not place undue reliance on these
forward-looking statements, which speak only as of the date of this report. We may not
revise these forward-looking statements to reflect events or circumstances after the date
of this report or to reflect the occurrence of unanticipated events.

We
expect to incur additional losses in the future as we continue development of LeuTech and
expand clinical trials for other indications and for PT-141 and continue research and
development of PT-141 and our MIDAS technology. Operating losses may fluctuate
from quarter to quarter as a result of differences in the timing of when we incur
expenses.

# Critical Accounting
Policies

Our
significant accounting policies are described in Note 3 to the consolidated financial
statements included in this report. We believe our most critical accounting policy is
revenue recognition. Revenue from corporate collaborations and licensing agreements
consists of up-front fees, research and development funding, and milestone payments.
Non-refundable up-front fees are deferred and amortized to revenue over the related
performance period. We estimate our performance period as the initial research term. The
actual performance period may vary. We will adjust the performance period estimate based
upon available facts and circumstances. Periodic payments for research and development
activities and government grants are recognized over the period that we perform the
related activities under the terms of the agreements. Revenue resulting from the
achievement of milestone events stipulated in the agreements is recognized when we have
adequate evidence that the milestone is deemed to be substantive.

11

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# Overview

We
are a development-stage biopharmaceutical company committed to the discovery, development
and commercialization of novel therapeutics. We do not currently offer any products for
sale. We are concentrating our efforts on the following:

| | PT-141, is a new, nasally administered peptide for the treatment of male and female
sexual dysfunction. Our research suggests this mechanism may involve the central nervous
system, which is a different mechanism from currently marketed male erectile dysfunction
(MED) therapies. We believe PT-141 has the potential to treat both male and female sexual
dysfunction (FSD) and that it may offer significant benefits in terms of safety and
efficacy over currently marketed products. We have completed various Phase 1 safety
studies and Phase 2A efficacy studies in male subjects and patients and a Phase 1 study in
female subjects. We are planning to start a placebo-controlled Phase 2B at
home efficacy study in male patients in the first half of calendar year 2003 and a
Phase 2A efficacy study in female patients in the second half of calendar year 2003.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | LeuTech®, is a product in development that is to be used to rapidly image and
diagnose sites of infection. When injected into the blood stream, LeuTech binds to white
blood cells present at the infection site, labeling these cells with a radioactive tracer.
As a result, physicians can rapidly image and detect an infection using a gamma camera, a
common piece of hospital equipment that records radioactivity. The FDA Medical Imaging
Drugs Advisory Committee unanimously voted that LeuTech is safe and effective for the
diagnosis of equivocal appendicitis. The FDA reviewed the biologics license application
(BLA) and determined that the efficacy and safety data are complete, yet additional
manufacturing and process validation data were required prior to final approval. We are
working to resolve the outstanding issues and anticipate filing an amendment to the BLA in
the first half of calendar year 2003. We are testing LeuTech for detection of other
infections, including osteomyelitis (infection deep inside a bone), fever of unknown
origin, post-surgical abscess, inflammatory bowel disease, and pulmonary imaging, which
are now in Phase 2 studies.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | MIDAS(Metal Ion-induced Distinctive Array of Structures), is our proprietary
technology platform that allows us to routinely design and synthesize novel
pharmaceuticals that mimic the activity of peptides, but which we believe offer
significant advantages to conventional protein or peptide-based drugs. MIDAS uses metal
ions to fix the three-dimensional shape of peptides, forming conformationally rigid
molecules that remain folded specifically in their active forms. These MIDAS molecules are
simple to synthesize, stable chemically and proteolytically, and have the potential to be
orally bioavailable. Moreover, unlike most other drug discovery approaches, we believe
that MIDAS is unique in that it can be used to generate either receptor antagonists (drugs
that block a particular metabolic response) or agonists (drugs that promote a particular
metabolic response). In addition, MIDAS molecules are information-rich and provide data on
structure-activity relationships that can be used to design traditional small molecule
drugs.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We have initiated a MIDAS program to discover and develop compounds
that interact with the melanocortin (MC) family of receptors. MC receptors regulate a diverse array of functions such as
pigmentation, adrenocortical function, immune modulation, sexual arousal and energy maintenance. Based on this effort, we have
identified several MIDAS molecules that are now in preclinical development as potential treatments for obesity, sexual dysfunction
and inflammation. We expect to file an IND for at least one of these preclinical compounds and initiate clinical testing within the
next 12 months.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

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| | Generation of commercially viable protein and peptide drug
molecules with desirable properties continues to be arduous, expensive and labor-intensive. We believe that our MIDAS technology
simplifies the development process by eliminating many of the inherent limitations associated with peptides and proteins. We intend
to seek to enter into strategic alliances or collaborative arrangements to provide additional financial and technical resources for
MIDAS development.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Results of Operations

Three and Six Month Periods Ended
December 31, 2002 Compared to Three and Six Month Periods Ended December 30, 2001.

Grants
and Contracts For the three and six months ended December 31, 2002, we
recognized $35,000 and $460,000, respectively in contract revenue related to the shared
development costs of LeuTech pursuant to our collaboration agreement with Mallinckrodt,
Inc., a division of Tyco International, Ltd. compared to nothing for the three and six
months ended December 31, 2001. The increase in contract revenue was attributable to
additional shared development costs of LeuTech pursuant to the amended agreement. (See
Notes to Consolidated Financial Statements) We had no revenue from grants recorded for the
three and six months ended December 31, 2002 and December 31, 2001.

License
Fees and Royalties  During the fiscal year ended June 30, 2001, we adopted U.S.
Securities and Exchange Commission Staff Accounting Bulletin No. 101 Revenue
Recognition in Financial Statements (SAB 101), which requires up-front,
non-refundable license fees to be deferred and recognized over the performance period. The
cumulative effect of adopting SAB 101 resulted in a one-time, non-cash charge of $361,111
in fiscal 2001, which reflects the deferral portion of an up-front license fee received
from Mallinkrodt, Inc. related to licensing of LeuTech recognized in the fiscal year ended
June 30, 2000. Previously we had recognized up-front license fees when they were received
and we had no obligations to return the fees under any circumstances. Under SAB 101 these
payments are recorded as deferred revenue to be recognized over the remaining term of the
related agreements. For the three and six months ended December 31, 2002, we recorded
$198,505 and $397,009, respectively of license revenue. For the three and six months ended
December 31, 2002, $13,891 and $27,781, respectively of the license revenue recorded was
included in the cumulative effect adjustment as of July 1, 2000 and $184,614 and $369,228,
respectively, was recorded as a result of the initial $800,000 payment received from
Mallinckrodt pursuant to our amended collaboration agreement in May 2002. We recorded
$41,667 and $83,334, respectively, of license revenue for the three and six months ended
December 31, 2001 that was included in the cumulative effect adjustment as of July 1,
2000.

Research
and development  Research and development expenses (R&D)
increased to $3,683,007 and $7,271,531, respectively, for the three and six months ended
December 31, 2002 compared to $3,250,365 and $5,351,826, respectively, for the three and
six months ended December 31, 2001. The increase in R&D is primarily related to our
increased development efforts and expanding clinical trials of PT-141 and LeuTech. Our
R&D efforts, and their respective allocated costs, are currently concentrated on the
following:

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| |  |  | PT-141, to date we incurred approximately $16.6 million in allocated R&D
expenses. For the three and six months ended December 31, 2002, $1,634,238 and $3,545,486,
respectively, of R&D expense was allocated to PT-141 compared to $1,556,332 and
$2,618,546, respectively, for the three and six months ended December 31, 2001. We
anticipate incurring approximately $10.0 million over the next 12 months as we initiate
various Phase 2 efficacy studies in both male and female patients. We believe
commercialization will require approximately four years of further research, development
and testing at an estimated cost of over $75 million. We expect to execute a
collaboration agreement, including development cost sharing principles, which will offset
a significant portion of the estimated costs.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | LeuTech, to date we have incurred approximately $37.6 million in allocated R&D
expenses. For the three and six months ended December 31, 2002, $1,348,372 and $2,372,706,
respectively, of R&D expense was allocated to LeuTech compared to $1,168,414 and
$1,830,927, respectively, for the three and six months ended December 31, 2001. Currently,
we are in the process of resolving outstanding issues and we intend to file an amendment
to the Biologics License Application for equivocal appendicitis in first half of calendar
2003. We are also currently conducting various Phase 2 studies with respect to other
infection indications. We anticipate incurring approximately $4 million in additional
R&D expenses during calendar year 2003.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | MIDAS, to date we have incurred approximately $8.0 million in allocated R&D
expenses. For the three and six months ended December 31, 2002, $700,397 and $1,353,339,
respectively, of R&D expense was allocated to MIDAS compared to $525,619 and $902,353,
respectively, for the three and six months ended December 31, 2001. Based on this effort,
we have identified several molecules that are now in preclinical development as potential
treatments for obesity, sexual dysfunction and inflammation. We expect to file an
Investigational New Drug Application (IND) with the FDA for at least one of
these preclinical compounds and initiate clinical testing within the next twelve months.
We anticipate incurring approximately $4 million in expenses allocable to MIDAS over the
next 12 months. Any projections beyond that are highly uncertain due to the nature of such
an early stage in the development process.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

General
and administrative  General and administrative expenses increased to $1,191,806
and $2,371,433, respectively, for the three and six months ended December 31, 2002
compared to $1,015,263 and $1,915,161 for the three and six months ended December 31,
2001. The increase in general and administrative expenses is mainly attributable to an
increase in salaries and related personnel expenses and the costs associated with the
consolidation and move of our previous locations in New Jersey to Cranbury, New Jersey.

Interest
income  Interest income decreased to $50,455 and $96,959, respectively, for the
three and six months ended December 31, 2002 compared to $79,974 and $182,060,
respectively, for the three six months ended December 31, 2001. The decrease in interest
income is due to lower cash, cash equivalents and investments available to be invested and
lower interest rates on the Companys investments.

Net
loss  Net loss increased to $4,351,949 and $8,451,055, respectively, for the
three and six month periods ended December 31, 2002 compared to $3,982,656 and $6,840,939
for the three and six month periods ended December 30, 2001. This increase was
attributable to the increase in expenses explained above.

# Liquidity and Capital
Resources

Since
inception, we have incurred net operating losses. As of December 31, 2002, we had a
deficit accumulated during development stage of $78,694,671. We have financed our net
operating losses through December 31, 2002 by a series of debt and equity financings. At
December 31, 2002, we had cash and cash equivalents of $8,566,763 and available for sale
investments of $3,126,745.

14

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For
the six months ended December 31, 2002, the net increase in cash was $622,499. Net cash
used for operating activities was $8,677,886, net cash used by investing activities was
$2,953,170 and net cash provided by financing activities was $12,253,555.

Our
product candidates are at various stages of research and development and may never be
successfully developed or commercialized. We will need regulatory approval to market
LeuTech for diagnosis of appendicitis. PT-141 and MIDAS will require significant further
research, development and testing. We may experience uncertainties, delays, difficulties
and expenses commonly experienced by early stage bio-pharmaceutical companies, which may
include unanticipated problems and additional costs relating to:

| | the development and testing of products in animals and humans;
|- | --------------------------------------------------------------
|  |                                                               
| | product approval or clearance;                                
|  |                                                               
| | regulatory compliance;                                        
|  |                                                               
| | good manufacturing practices;                                 
|  |                                                               
| | product introduction; and                                     
|  |                                                               
| | marketing and competition.                                    

Failure to obtain regulatory approval
of LeuTech, or delays in obtaining regulatory approval of LeuTech, would eliminate or
delay our potential revenues from sales of LeuTech. This could make it more difficult to
attract investment capital for funding our other research and development projects. Any of
these possibilities could materially and adversely affect our operations.

On
November 15, 2002, we concluded a private placement of our common stock and warrants,
which yielded gross proceeds of $11.5 million. Investors, consisting of domestic and
European financial institutions and other domestic accredited investors, purchased
9,373,940 shares of common stock and 1,874,788 warrants at a market value of approximately
$1.23 per share. For ever five shares purchased, the investors also received a five-year
warrant. Each warrant entitles the purchaser to purchase one share of common stock at an
exercise price of $1.54 per share. The net proceeds of approximately $10.7 million will be
used primarily for general corporate purposes, including the development and clinical
trials of new products based on certain of our proprietary technologies.

In
July 2002, we received gross proceeds of $1.8 million pursuant to the second tranche of
the Spring 2002 private placement of common stock and warrants. Investors, consisting of
domestic and European financial institutions and other domestic accredited investors,
purchased approximately 1.5 million shares of common stock shares at $1.17 per share. For
every five shares purchased, the investors also received a five-year warrant to purchase
one share of common stock at an exercise price of $1.46 per share. The net proceeds of
approximately $1.7 million will be used primarily for general corporate purposes,
especially for the development and clinical trials of new products based on our
proprietary technologies.

On
July 17, 2002, we moved into our new leased facility of approximately 28,000 square feet
in Cranbury, New Jersey that combines both the research and development facility formerly
located in Edison, New Jersey and the corporate offices formerly located in Princeton, New
Jersey. Our initial cash outlay related to the move was approximately $1.6 million.
Minimum annual future lease payments escalate from approximately $920,000 per year to
$1,550,000 per year. The lease will expire in July 2012.

15

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We
have three license agreements that require minimum yearly payments. Future minimum
payments under the license agreements are: 2003  $250,000, 2004  $250,000,
2005  $200,000, 2006  $200,000 and 2007  $200,000.

We
are and expect to continue searching for certain products and technologies to license or
acquire, now or in the future. If we are successful in identifying a product or technology
for acquisition, we may require substantial funds for such an acquisition and subsequent
development or commercialization. We do not know whether any acquisition will be
consummated in the future.

We
have incurred negative cash flows from operations since our inception, and have expended,
and expect to continue to expend in the future, substantial funds to complete our planned
product development efforts. We expect that our existing capital resources will be
adequate to fund our projected operations through fiscal year 2003, based on current
expenditure levels. No assurance can be given that we will not consume a significant
amount of our available resources before that time. We plan to continue to refine our
operations, control expenses, evaluate alternative methods to conduct our business and
seek available and attractive sources of financing and sharing of development costs
through strategic collaboration agreements or other resources. Should appropriate sources
of financing not be available, we would delay certain clinical trials and research
activities until such time as appropriate financing was available. There can be no
assurance that our financing efforts will be successful. If adequate funds are not
available, our financial condition and results of operations will be materially and
adversely affected, and we may be forced to cease operations.

We
anticipate incurring additional losses over at least the next several years, and we expect
our losses to increase as we expand our research and development activities relating to
LeuTech, PT-141 and our MIDAS technology. To achieve profitability, we, alone or with
others, must successfully develop and commercialize our technologies and proposed
products, conduct pre-clinical studies and clinical trials, obtain required regulatory
approvals and successfully manufacture and market such technologies and proposed products.
The time required to reach profitability is highly uncertain, and we do not know whether
we will be able to achieve profitability on a sustained basis, if at all.

## Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest
Rate Risk. Our exposure to market risk related to changes in interest rates relates
primarily to our investment portfolio. We invest in instruments that meet high credit
quality standards, and we limit the amount of credit exposure as to any one issue, issuer
and type of investments.

As
of December 31, 2002, our cash, cash equivalents and available for sale investments consisted of $11,693,508,
most of which were short term investments having an original maturity of less than three
months. Due to the average maturity and conservative nature of our investment portfolio,
we do not believe that short term fluctuationsin interest rates would materially
affect the value of our securities.

## Item 4. Controls and Procedures.

Evaluation
of Disclosure Controls and Procedures. Within the 90 days before we filed this report,
our chief executive officer and chief financial officer evaluated the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and
15d-14(c)). Based on their evaluation, they concluded that our disclosure controls and
procedures were adequate and effective to ensure that other persons within Palatin and its
consolidated subsidiaries informed those officers in a timely manner of material
information relating to Palatin and its subsidiaries, particularly during the period in
which we were preparing this report.

16

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Changes in
Internal Controls. There were no significant changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weaknesses in
our internal controls. Accordingly, we did not require or undertake any corrective actions .

# PART II - OTHER INFORMATION

## Item 1. Legal Proceedings.

None.

## Item 2. Changes in Securities and Use of Proceeds.

In a private placement of common stock and warrants which concluded
in November 2002, we sold 9,373,940 shares of our $.01 par value common stock at a market value of approximately $1.23 per share.
For every five shares purchased, the investors also received a five-year warrant which entitles the holder to purchase one share of
common stock at an exercise price of $1.54 per share. The gross proceeds were approximately $11.5 million and the net proceeds were
approximately $10.7 million. We made the private placement solely to foreign and domestic accredited investors pursuant to
Regulations D and S under the Securities Act of 1933. The investors represented to us that they were purchasing the securities for
their own accounts for investment and not with a view toward resale or distribution to others. The certificates representing the
shares of common stock and warrants bear restrictive legends. In connection with the private placement, we paid finder's fees
totaling $790,433 and issued five-year warrants to finders to purchase a total of 458,647 shares of common stock at $1.54 per share.

## Item 3. Defaults Upon Senior Securities.

None.

## Item 4. Submission of Matters to a Vote of Security Holders.

At our annual meeting of stockholders which convened on December 6, 2002, the stockholders:

| | elected seven directors                                                                                                      
|- | -----------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                              
| | ratified the appointment of KPMG LLP
     as our independent public accountants for the fiscal year ending June 30,
     2003

Common stock and Series A convertible preferred stock voted as a
single class on all matters. The following tables show the votes cast.

|Election of
     directors:       | For        | Witheld
     Authority | Broker
     Non-votes
|--------------------------------- | ---------- | ---------------------- | ---------------------
|                                  |            |                        |                      
|Carl Spana,
     Ph.D.            | 10,510,728 | 123,470                | 0                    
|                                  |            |                        |                      
|Perry B. Molinoff,
     M.D.      | 10,573,347 | 60,851                 | 0                    
|                                  |            |                        |                      
|John K.A. Prendergast,
     Ph.D. | 10,573,347 | 60,851                 | 0                    
|                                  |            |                        |                      
|Robert K. deVeer,
     Jr.        | 10,573,347 | 60,851                 | 0                    
|                                  |            |                        |                      
|Kevin S.
     Flannery            | 10,573,347 | 60,851                 | 0                    
|                                  |            |                        |                      
|Zola P. Horovitz,
     Ph.D.      | 10,573,347 | 60,851                 | 0                    
|                                  |            |                        |                      
|Robert I. Taber,
     Ph.D.       | 10,573,347 | 60,851                 | 0                    

17

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|Item:                       | For        | Against | Abstentions | Broker
     Non-votes
|--------------------------- | ---------- | ------- | ----------- | ---------------------
|                            |            |         |            
|Ratification of accountants | 10,500,030 | 109,404 | 24,764      | 0                    

Abstentions and broker non-votes were counted neither for nor
against the election of officers or the ratification of accountants.

## Item 5. Other
Information.

None.

## Item 6. Exhibits and Reports on
Form 8-K.

(a) Exhibits filed with this
report:



| | None.
| | -----

(b) Reports on Form
8-K

| |  |  |  | On November 20, 2002, we filed a current report on Form 8-K reporting an Item 5 event
regarding the completion of a private placement.
| |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | On October 1, 2002, we filed a current report on Form 8-K reporting an Item 9 Regulation
FD disclosure regarding a certification pursuant to Section 906 of the Sarbanes 
Oxley Act of 2002.
| |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

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# Signatures

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                        |  | Palatin Technologies, Inc. (Registrant)                                                                                                                      
|----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        |  |                                                                                                                                                              
|                        |  |                                                                                                                                                              
|                        |  |                                                                                                                                                              
|Date: February 14, 2003 |  | /s/ Carl Spana
     Carl Spana, Ph.D.
     President and 
     Chief Executive Officer                                                                       
|                        |  |                                                                                                                                                              
|                        |  |                                                                                                                                                              
|Date: February 14, 2003 |  | /s/ Stephen T. Wills
     Stephen T. Wills
     Executive Vice President and 
     Chief Financial Officer (Principal 
     Financial and Accounting Officer)

19

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# CERTIFICATION OF CHIEF
EXECUTIVE OFFICER

I, Carl Spana, certify
that:

1.    
          I have reviewed this quarterly report on Form 10-Q of Palatin Technologies,
          Inc.;

2.    
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;

3.    
          Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;

4.    
          The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    
          designed such disclosure controls and procedures to ensure that material
          information relating to the registrant, including its consolidated subsidiaries,
          is made known to us by others within those entities, particularly during the
          period in which this quarterly report is being prepared;

b)    
          evaluated the effectiveness of the registrants disclosure controls and
          procedures as of a date within 90 days prior to the filing date of this
          quarterly report (the Evaluation Date); and

c)    
          presented in this quarterly report our conclusions about the effectiveness of
          the disclosure controls and procedures based on our evaluation as of the
          Evaluation Date;

5.    
          The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent function):

a)    
          all significant deficiencies in the design or operation of internal controls
          which could adversely affect the registrants ability to record, process,
          summarize and report financial data and have identified for the
          registrants auditors any material weaknesses in internal controls; and

b)    
          any fraud, whether or not material, that involves management or other employees
          who have a significant role in the registrants internal controls; and

6.    
          The registrants other certifying officers and I have indicated in this
          quarterly report whether or not there were significant changes in internal
          controls or in other factors that could significantly affect internal controls
          subsequent to the date of our most recent evaluation, including any corrective
          actions with regard to significant deficiencies and material weaknesses.

Date: February 14, 2003

/s/ Carl Spana

Carl Spana, Chief
Executive Officer

20

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# CERTIFICATION OF CHIEF
FINANCIAL OFFICER

I, Stephen T. Wills, certify that:

1.    
          I have reviewed this quarterly report on Form 10-Q of Palatin Technologies,
          Inc.;

2.    
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;

3.    
          Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;

4.    
          The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    
          designed such disclosure controls and procedures to ensure that material
          information relating to the registrant, including its consolidated subsidiaries,
          is made known to us by others within those entities, particularly during the
          period in which this quarterly report is being prepared;

b)    
          evaluated the effectiveness of the registrants disclosure controls and
          procedures as of a date within 90 days prior to the filing date of this
          quarterly report (the Evaluation Date); and

c)    
          presented in this quarterly report our conclusions about the effectiveness of
          the disclosure controls and procedures based on our evaluation as of the
          Evaluation Date;

5.    
          The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent function):

a)    
          all significant deficiencies in the design or operation of internal controls
          which could adversely affect the registrants ability to record, process,
          summarize and report financial data and have identified for the
          registrants auditors any material weaknesses in internal controls; and

b)    
          any fraud, whether or not material, that involves management or other employees
          who have a significant role in the registrants internal controls; and

6.    
          The registrants other certifying officers and I have indicated in this
          quarterly report whether or not there were significant changes in internal
          controls or in other factors that could significantly affect internal controls
          subsequent to the date of our most recent evaluation, including any corrective
          actions with regard to significant deficiencies and material weaknesses.

Date: February 14, 2003

/s/ Stephen T. Wills

Stephen T. Wills, Chief
Financial Officer

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