July 31, 2000

VIA FACSIMILE & FEDERAL EXPRESS

PERSONAL & CONFIDENTIAL

Mr. James T. O'Brien
11801 Pawnee Lane
Leawood, KS  66211


         Re:      Resignation as a Director/Extension of Options


Dear Jim:

     In connection with the above referenced matter each of James T. O'Brien
("you" and "your") and Palatin Technologies, Inc. (Palatin Technologies, Inc.
together with its subsidiaries and affiliates, the "Company", "we" or "our")
agree as follows:

     1. You hereby voluntarily resign, as of the date hereof, your position as
director of the Company.

     2. As of the date hereof, the Company is not aware of any claims or
liabilities now existing arising out of your services as a director to the
Company. The Company will maintain not less than its current directors and
officers insurance coverage.

     3. In consideration for your services rendered to the Company and your
agreement herein, all options (currently in the aggregate amount of 129,634)
previously granted to you will vest and will be exercisable for three (3) years
from the date hereof. You hereby agree not to offer, sell or otherwise dispose
of any shares of Common Stock of the Company or securities exercisable for or
convertible into shares of Common Stock of the Company for a period of ninety
(90) days from the date hereof, without our prior written consent.

     4. You shall keep the terms of this letter agreement ("Agreement")
confidential. You will not disparage, denigrate or defame the Company or any of
its business, products or services. The Company will not disparage, denigrate or
defame you.


<PAGE>


     5. You acknowledge that in deciding to sign this Agreement you have not
relied on any promises or commitments, whether spoken or in writing, made to you
by any Company representative, except for what is expressly stated in this
Agreement. This Agreement constitutes the entire understanding and agreement
between you and the Company, and replaces and cancels all previous agreements
and commitments, whether spoken or written, in connection with the matters
described, other than the option agreements which terms shall be deemed to be
modified by Paragraph 3 of this Agreement.

     6. This Agreement shall be construed, governed by and enforced in
accordance with the laws of the State of New Jersey. Any action arising out of
or relating to this Agreement may, at the election of the Company, be brought
and prosecuted in that State, and in the event of such election, you consent to
the jurisdiction venue of any courts of or in such jurisdiction and waive trial
by jury.

     7. This Agreement cannot be modified except by written agreement signed by
both you and an authorized Company representative.

     8. You agree to execute and deliver any further instruments or documents
which the Company may reasonably request in order to effectuate the terms and
purpose of this Agreement.

     If you are in agreement with the foregoing, kindly execute this Agreement
in the space provided below and return the same to the undersigned by facsimile
(609-520-0621) and Federal Express.


                                           Sincerely,

                                           Palatin Technologies, Inc.


                                           By:________________________________
                                                    Carl Spana, Ph.D
                                                    Chief Executive Officer
                                                    and President





AGREED AND ACCEPTED
AS OF THIS 31st DAY OF JULY 2000:

--------------------------------
James T. O'Brien