CERTIFICATE OF DESIGNATIONS
                               of
              SERIES C CONVERTIBLE PREFERRED STOCK
                               of
                   PALATIN TECHNOLOGIES, INC.

                 Pursuant to Section 151 of the
        General Corporation Law of the State of Delaware

PALATIN TECHNOLOGIES,  INC., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), does hereby certify that, pursuant
to the authority  conferred on the Board of Directors of the  Corporation by the
certificate  of   incorporation,   as  amended  to  date  (the  "Certificate  of
Incorporation"),  of the  Corporation  and in accordance with Section 151 of the
General Corporation Law of the State of Delaware,  the Board of Directors of the
Corporation adopted the following resolution  establishing a series of 1,400,000
shares of Preferred Stock of the Corporation designated as "Series C Convertible
Preferred Stock":

     RESOLVED,  that  pursuant  to  the  authority  conferred  on the  Board  of
     Directors of this Corporation by the Certificate of Incorporation, a series
     of Preferred  Stock, par value $.01 per share, of the Corporation is hereby
     established  and  created,  and that the  designation  and number of shares
     thereof  and  the  voting  and  other  powers,  preferences  and  relative,
     participating,  optional  or other  rights of the shares of such series and
     the qualifications, limitations and restrictions thereof are as follows:

              Series C Convertible Preferred Stock

     Section 1. Designation, Amount and Par Value. The series of preferred stock
shall be  designated  as Series C Convertible  Preferred  Stock (the  "Preferred
Stock") and the number of shares so designated shall be 1,400,000. Each share of
Preferred Stock shall have a par value of $.01 per share and shall have a stated
value of $18.57 per share (the "Stated Value").

     Section 2. Dividends and Certain Distributions.

     (a) The holders (the "Holders" and, individually,  a "Holder") of Preferred
Stock shall not be  entitled  to receive  periodic  dividends  on the  Preferred
Stock.

     (b) So long as any Preferred  Stock shall remain  outstanding,  neither the
Corporation  nor any  subsidiary  thereof shall  directly or  indirectly  pay or
declare  any  dividend  or make  any  distribution  (other  than a  dividend  or
distribution described in Section 5) upon, nor shall any distribution be made in
respect of, any Junior Securities (as defined in Section 6).

     Section  3.  Voting  Rights.  Except  as  otherwise  required  by law,  the
Preferred Stock shall have no voting rights.

<PAGE>

     Section 4. Liquidation. Upon any liquidation,  dissolution or winding-up of
the Corporation, whether voluntary or involuntary (a "Liquidation"),  the Holder
shall be entitled to receive out of the assets of the Corporation,  whether such
assets are  capital or surplus,  for each share of  Preferred  Stock,  an amount
equal to the Stated Value before any  distribution  or payment  shall be made to
the Holders of any Junior Securities, and if the assets of the Corporation shall
be  insufficient  to pay in full  such  amounts,  then the  entire  assets to be
distributed  to the Holder of the Preferred  Stock shall be  distributed to such
Holder of the Preferred Stock ratably in accordance with the respective  amounts
that would be payable on such shares if all amounts payable thereon were paid in
full. Any Change in Control shall not be deemed to be a  Liquidation,  except to
the  extent it is a Change of Control  within  the  meaning of clause (e) of the
definition of Change of Control set forth in Section 6.

     Section 5. Conversion.

     (a) On or after August 15,  2004,  or upon a Change in Control with respect
to the  Corporation,  and in either such case  effective  upon  written  notice,
described below, by the Holder to the  Corporation,  the Holder may convert some
or all of the shares of Preferred Stock, including any shares of Preferred Stock
obtained  by  the  Holder   pursuant  to  Section  5(c),  into  fully  paid  and
nonassessable  shares of the Common  Stock on a  one-share-for-one-share  basis,
without  payment of funds or other  consideration  of any kind. The Holder shall
effect  conversions  by  surrendering  to the  Corporation  the  certificate  or
certificates  representing  the  shares  of  Preferred  Stock  to be  converted,
together  with a  completed  and duly  executed  conversion  notice  in the form
attached hereto as Exhibit A (a "Conversion  Notice").  Each  Conversion  Notice
shall  specify the number of shares of Preferred  Stock to be converted  and the
date on which such conversion is to be effected,  which date may not be prior to
the  date the  Holder  delivers  such  Conversion  Notice  by  facsimile  to the
Corporation  (the  "Conversion  Date").  If no Conversion Date is specified in a
Conversion  Notice,  the  Conversion  Date shall be the date that the Conversion
Notice is deemed  delivered  pursuant to Section  5(f).  Subject to Section 5(b)
hereof, each Conversion Notice, once given, shall be irrevocable. If a Holder is
converting  less than all the shares of the Preferred  Stock  represented by the
certificate  or  certificates  tendered  by  such  Holder,  or  if a  conversion
hereunder  cannot be  effected  in full for any reason,  the  Corporation  shall
promptly  deliver to such Holder (in the manner and within the time set forth in
Section  5(b)) a  certificate  for  such  number  of  shares  as have  not  been
converted.

     (b) Not  later  than 10  Business  Days  after  any  Conversion  Date,  the
Corporation will use its best efforts to deliver to the Holder (i) a certificate
or certificates representing the number of shares of Common Stock being acquired
upon  the  conversion  of  shares  of  Preferred  Stock  and  (ii)  one or  more
certificates representing the number of shares of Preferred Stock surrendered to
the Company for  conversion  that were not requested to be converted;  provided,
however,  that the  Corporation  shall not be  obligated  to issue  certificates
evidencing the shares of Common Stock issuable upon  conversion of any shares of
Preferred Stock until certificates evidencing such shares of Preferred Stock are
either delivered for conversion to the Corporation or any transfer agent for the
Preferred  Stock or Common Stock, or the Holder of such Preferred Stock notifies
the Corporation that such  certificates  have been lost, stolen or destroyed and
provides a bond (or other adequate security)  satisfactory to the Corporation to
indemnify the Corporation from any loss that may be incurred by it in connection
therewith.

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<PAGE>

     (c) So long as the  Purchase  Agreement  is in effect  with  respect to any
portion of the Territory (as defined in the Purchase Agreement), in the event at
any time a Dilutive Event (as defined in Section 6) results in a decrease in the
percentage of outstanding  Common Stock then owned by the Holder  (assuming full
conversion of the  Preferred  Stock) (the "Holder  Ownership"),  then the Holder
shall have the right,  exercisable as provided below, (i) if, at the time of the
occurrence of the Dilutive Event,  the Preferred Stock is not then  convertible,
to receive that number of shares of Preferred Stock which,  when converted along
with all other shares of Preferred  Stock and combined  with all other shares of
Common Stock then owned by the Holder,  would be required to preserve the Holder
Ownership at the same percentage immediately before and after the Dilutive Event
or (ii) if, at the time of the occurrence of the Dilutive  Event,  the Preferred
Stock is then  convertible,  to receive  that  number of shares of Common  Stock
which,  when  combined with all other shares of Common Stock owned by the Holder
(including  Common  Stock  underlying  any  Preferred  Stock  then  owned by the
Holder),  would  be  required  to  preserve  the  Holder  Ownership  at the same
percentage  immediately before and after the Dilutive Event. The foregoing right
shall be  exercisable  by payment to the  Corporation  of the purchase price and
delivery to the Corporation of the Purchase Notice (defined below). The purchase
price per share of Preferred  Stock or Common  Stock,  as the case may be, to be
paid by the Holder upon  exercise of the  foregoing  right shall be equal to the
consideration  per  share  (if  any)  paid or to be paid by the  person  to whom
securities  are being  issued in  connection  with the  Dilutive  Event.  If the
consideration  paid by any such third  party for such  securities  is other than
cash, such  consideration  shall be presumed to be cash equal to the fair market
value of such  consideration as determined by an independent party acceptable to
both the Holder and the Corporation.  The cost of making such determination,  if
any, shall be borne by the  Corporation.  The Corporation  shall provide written
notice to the Holder of a Dilutive Event within five (5) days after the issuance
of any securities  giving rise to such Dilutive Event, and the Holder shall make
its  election  to  purchase  all or any  portion of the  securities  which it is
entitled  to  purchase  or  receive  in  accordance  herewith  to  preserve  its
percentage  interest in the Common  Stock by written  notice to the  Corporation
(the  "Purchase  Notice") no more than thirty (30) days following its receipt of
the  Corporation's  written  notice of such  Dilutive  Event.  Upon the Holder's
failure  timely to return the  Purchase  Notice to the  Corporation,  the Holder
shall be deemed to have waived its right to  purchase or receive any  additional
securities of the Corporation on such occasion.  Upon the Holder's timely return
to  the  Corporation  of  the  Purchase  Notice,  the  Holder  shall  pay to the
Corporation  the  purchase  price  (if any) for the  securities  it so elects to
purchase or receive within thirty (30) days subsequent to its notice of election
to purchase or receive additional  securities.  Any failure by the Holder on any
occasion  to  purchase  or  receive  all or some of the  securities  which it is
entitled to purchase or receive  pursuant to this Section 5(c) as a  consequence
of the  occurrence of a single  Dilutive Event shall not affect the right of the
Holder,  on the  subsequent  occurrence  of any  different  Dilutive  Event,  to
purchase  or  receive  all or any  portion  of the  securities  which it is then
entitled  to  purchase  or receive as a  consequence  of the  operation  of this
Section 5(c).

     (d) In determining the amount of consideration  paid to the Corporation for
the issuance of Common Stock upon the exercise or conversion of  exercisable  or
convertible securities, all amounts paid to the Corporation in consideration for
the issuance of the convertible or exercisable  securities  shall be included as
part of the consideration to be paid by the Holder pursuant to this Section.

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<PAGE>

     (e) The  provisions  of the  foregoing  Section  5(c)  shall not apply with
respect to the issuance of Common Stock in connection with, or upon the exercise
or  conversion  of  securities   issued  in  connection   with,   the  following
transactions:

          (i)  exercise  of rights or  options  granted  or which may be granted
     under a stock option or other plan for the benefit of employees,  directors
     and/or consultants;

          (ii) exercise of rights,  warrants or options  outstanding on the date
     hereof;

          (iii) conversion of any shares of outstanding  Preferred Stock, or any
     additional  shares of  Preferred  Stock  issued  pursuant  to Section  5(c)
     hereof;

          (iv) after such time as the Holder first  becomes  eligible to convert
     any of the Preferred Stock in accordance with Section 5(c) above,  upon the
     issuance and sale of any shares of Common Stock,  including the issuance of
     Common Stock upon exercise of convertible or exercisable  securities,  sold
     in a firm  commitment  underwritten  public  offering,  including,  without
     limitation,  shares  sold upon the  exercise  of any  overallotment  option
     granted to the underwriters in connection with such offering; and

          (v)  issuance  of  Common  Stock  pursuant  to  antidilution  or price
     protection  provisions contained in existing employment  agreements and the
     issuance of Common Stock pursuant to antidilution  provisions  described in
     the certificate of  designations  with respect the  Corporation's  Series A
     Convertible Preferred Stock.

     (f) Any notice or other  communication or delivery required or permitted to
be  provided  hereunder  shall be in  writing  and  shall be deemed to have been
received on the earliest of (i) the date of  transmission  or hand delivery,  if
such notice or  communication  is delivered  to the address or to the  facsimile
telephone  number of the  addressee  prior to 6:00  p.m.  (Eastern  Standard  or
Daylight  time) on a  Business  Day,  (ii) the  Business  Day  after the date of
transmission or hand delivery,  if such notice or  communication is delivered to
the address or to the facsimile  telephone  number of the  addressee  later than
6:00 p.m. (Eastern Standard or Daylight time) on any date and earlier than 11:59
p.m.  (Eastern  Standard or Daylight time) on such date,  (iii) the Business Day
following  the  date of  sending,  if sent by  nationally  recognized  overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given.

     Section 6. Definitions.  For the purposes hereof, the following terms shall
have the  following  meanings:

     "Business  Day"  means any day  except  Saturday,  Sunday and any day which
shall be in New York, New York a day on which banking institutions are closed.

     "Change in Control" means the occurrence,  with respect to the Corporation,
of any one of the following events:

          (a) any  "person"  as such term is defined  in Section  3(a)(9) of the
     Exchange Act (and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange
     Act) is or becomes a

                                       4

<PAGE>

     "beneficial  owner"  (as  defined in Rule 13d-3  under the  Exchange  Act),
     directly or  indirectly,  of  securities  of the  Corporation  representing
     greater  than  fifty  percent  (50%) of the  combined  voting  power of the
     Corporation's then outstanding securities eligible to vote for the election
     of its board of directors;  provided,  however, that the event described in
     this  clause (a) shall not be deemed to be a change in control by virtue of
     any of the following  acquisitions:  (i) by the  Corporation  or any wholly
     owned  subsidiary  of the  Corporation,  (ii) by any employee  benefit plan
     sponsored  or  maintained  by  the  Corporation  or any  subsidiary  of the
     Corporation,  (iii)  by  any  underwriter  temporarily  holding  securities
     pursuant to an offering of such  securities,  or (iv) except as provided in
     subsection (c) below,  in which voting  securities of the  Corporation  are
     acquired from the Corporation, if a resolution providing expressly that the
     acquisition  pursuant to this clause (iv) does not  constitute  a change in
     control is approved by a vote of at least a majority of the  directors  who
     are directors of the Corporation on and as of the date hereof;

          (b)  individuals  who,  on the date  hereof,  constitute  the board of
     directors of the Corporation  cease for any reason to constitute at least a
     majority thereof,  provided that any person becoming a director  subsequent
     to the date hereof,  whose  election,  or nomination  for election,  by the
     Corporation's stockholders was approved by a vote of at least a majority of
     the  directors  comprising  the  current  board of  directors  (either by a
     specific vote or by approval of the proxy  statement of the  Corporation in
     which such person is named as a nominee for director,  without objection to
     such nomination) shall be, for purposes of this subsection (b),  considered
     as though  such person  were a member of the  current  board of  directors;
     provided,  however,  that no individual initially elected or nominated as a
     director of the Corporation as a result of an actual or threatened election
     contest  with  respect  to  directors  or any other  actual  or  threatened
     solicitation  of proxies or  consents  by or on behalf of any person  other
     than the board of  directors  shall be deemed to be a member of the current
     board of directors;

          (c) a  merger,  consolidation,  share  exchange  or  similar  form  of
     corporate  reorganization of the Corporation  requiring the approval of the
     Corporation's stockholders (whether for such transaction or the issuance of
     securities in the  transaction or  otherwise);  provided,  however,  that a
     "Change  in  Control"   shall  not  be  deemed  to  occur  upon  a  merger,
     consolidation,  share exchange or similar form of corporate  reorganization
     of the  Corporation,  whether or not stockholder  approval is required,  so
     long as (i) the board of  directors  of any entity  surviving  or resulting
     from such  reorganization  contains  at least  fifty  percent  (50%) of the
     directors  who were members of the board of  directors  of the  Corporation
     immediately  prior to such  reorganization  and (ii)  the  Chief  Executive
     Officer  of any such  surviving  entity  is the same  person  as the  Chief
     Executive   Officer   of  the   Corporation   immediately   prior  to  such
     reorganization;

          (d)  the  direct  or  indirect  sale  or  other  disposition  of  all,
     substantially  all or any  substantial  parts  of the  assets  or  lines of
     business  of  the  Corporation,   whether  or  not  approval  of  any  such
     transaction  by  stockholders  is  required;  provided,  however,  that the
     Corporation  shall be able to sell or otherwise  dispose of non-LeuTech (as
     defined  in the  Purchase  Agreement)  assets  or  lines of  business  in a
     transaction  not  otherwise  qualifying  as a  "Change  in  Control"  under
     subsections (a), (b) and (c) set forth  immediately  above,  whether or not
     approval of such transaction by stockholders is required,  and such sale or
     other disposition shall not constitute a "Change in Control"; or

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<PAGE>

          (e) the  stockholders  of the  Corporation  approve a plan of complete
     liquidation or dissolution of the Corporation.

     "Commission" means the Securities and Exchange Commission.

     "Common Stock" means the Corporation's voting common stock, $.01 par value.

     "Dilutive Event" shall mean (i) the issuance and sale by the Corporation of
any shares of Common Stock (including the issuance of Common Stock upon exercise
or conversion of securities exercisable for or convertible into Common Stock) or
(ii) the issuance by the Corporation of any Common Stock or other  securities in
connection with any stock split, stock dividend or other recapitalization.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Junior  Securities" means the Common Stock and all other equity securities
of the Corporation,  other than the Corporation's Series A Convertible Preferred
Stock  and  Series B  Convertible  Preferred  Stock  (which  are  senior  to the
Preferred Stock) or any other security that the Holder consents in writing to be
pari passu with the Preferred Stock.

     "Person" means a corporation, an association, a partnership,  organization,
a business,  an individual,  a government or political  subdivision thereof or a
governmental agency.

     "Purchase Agreement" means the Strategic Collaboration Agreement,  dated as
of the date  hereof,  among  the  Corporation  and the  original  Holder  of the
Preferred Stock.

     "Securities Act" means the Securities Act of 1933, as amended.

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<PAGE>

IN WITNESS WHEREOF,  the Corporation has caused this certificate to be signed on
its behalf by Edward J. Quilty, its Chairman and Chief Executive  Officer,  this
17th day of August, 1999.

                              The Corporation:

                              PALATIN TECHNOLOGIES, INC.

                              By:   /s/ Edward J. Quilty
                                   ----------------------------------
                              Name:  Edward J. Quilty
                              Title: Chairman and Chief Executive Officer


<PAGE>


                            EXHIBIT A
                      NOTICE OF CONVERSION

(To be Executed by the Holder in order to
Convert shares of Preferred Stock)

The  undersigned  hereby  elects  to  convert  the  number of shares of Series C
Convertible Preferred Stock indicated below, into shares of voting Common Stock,
$.01 par  value  (the  "Common  Stock"),  of  Palatin  Technologies,  Inc.  (the
"Corporation")  according to the conditions of the Certificate of  Designations,
as of the date written below. If shares are to be issued in the name of a person
other than undersigned, the undersigned will pay all transfer taxes payable with
respect  thereto and is delivering  herewith such  certificates  and opinions as
reasonably requested by the Corporation in accordance therewith.  No fee will be
charged to the Holder for any  conversion,  except for such transfer  taxes,  if
any.

Conversion calculations:
                             ---------------------------------------------------
                             Date to Effect Conversion


                             ---------------------------------------------------
                             Number of shares of Preferred Stock to be Converted


                             ---------------------------------------------------
                             Number of shares of Common Stock to be Issued


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                             Signature


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                             Name


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                             Address