COLLABORATIVE DEVELOPMENT AND MARKETING AGREEMENT



         This COLLABORATIVE DEVELOPMENT AND MARKETING AGREEMENT is entered into

as of August 12, 2004 (the "Effective Date"), by and between PALATIN

TECHNOLOGIES, INC., a Delaware corporation having an address of Cedar Brook

Corporate Center, 4C Cedar Brook Drive, Cranbury, New Jersey 08512 ("Palatin")

and KING PHARMACEUTICALS, INC., a Tennessee corporation having an address of 501

Fifth Avenue, Bristol, Tennessee 37620, ("King"). Each of King and Palatin is

sometimes referred to individually herein as a "Party" and collectively as the

"Parties".



        WHEREAS, Palatin Controls and develops certain Technology and/or

Proprietary Materials related to its proprietary treatment for sexual

dysfunction; and



        WHEREAS, King is engaged in the development and marketing of human

therapeutics; and



        WHEREAS, the Parties desire to enter into a collaboration for the

purpose of Developing and Marketing Products derived from Palatin Technology and

Proprietary Materials; and



        WHEREAS, King has also agreed to make, simultaneous with the Closing and

upon the occurrence of certain milestones specified herein, equity investments

in Palatin common stock, such investments to be made pursuant to the terms of

the Securities Purchase Agreement, in the form attached hereto as Exhibit H (the

"Securities Purchase Agreement"), dated as of the date of the Closing, which

Securities Purchase Agreement requires the issuance by Palatin of Warrants

pursuant to Section 6.2.4 hereof.



        NOW, THEREFORE, in consideration of the mutual covenants contained

herein, and for other good and valuable consideration the receipt and

sufficiency of which are acknowledged by the Parties, the Parties hereto,

intending to be legally bound, agree as follows.



1. DEFINITIONS



        Whenever used in this Agreement with an initial capital letter, the

terms defined in this Section 1 shall have the meanings specified.



1.1 "ACCOUNTING AND FINANCE PLANS" means the written plans (which shall include

a detailed strategy, budget, proposed timelines and all Collaboration Costs)

describing the financial plans to be carried out by each Party during each

Calendar Year pursuant to this Agreement which, with respect to Palatin, shall

include the activities for which responsibility has been allocated to Palatin

and, with respect to King, shall include the activities for which responsibility

has been allocated to King. In addition, the Accounting and Finance Plan shall

include all budgets for the Collaboration, including budgets for the overall

Development and Marketing Program and each of the Program Plans. After the date

hereof, each Accounting and Finance Plan will be set forth in a written document

prepared by the Parties and approved by the JDMC and annexed as an amendment to

Exhibit G. The Accounting and Finance Plans shall not create an obligation on

the Parties to coordinate their accounting methods or undertake any sort of

joint accounting, except to the extent specified in the definition of

Collaboration Costs.



1.2 "ACTION" HAS THE MEANING SET FORTH IN SECTION 12.5.



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1.3 "ADVERSE EVENT" means any life-threatening drug experience, serious adverse

drug experience, unexpected adverse drug experience, expected drug experience or

non-serious drug experience, all as defined in ICH Guidance ICH E2A or in any

provision of the Food and Drug Act, any law, rule or regulation promulgated

thereunder, or any foreign equivalent, or other similar experience in a human

who is administered a Product, whether or not considered Product related,

including, without limitation, any undesirable sign (including abnormal

laboratory findings of clinical concern), symptom or disease associated with the

use, abuse, or withdrawal of or from such Product.



1.4 "AFFILIATE" means any corporation, firm, partnership or other entity which

directly or indirectly controls or is controlled by or is under common control

with a Party to this Agreement. For purposes of this definition, (x) "control"

means ownership, directly or through one or more Affiliates, of (a) fifty

percent (50%) or more of the shares or voting rights in case of a corporation or

limited company, (b) fifty percent (50%) or more of the shares of stock entitled

to vote for the election of directors, in the case of a corporation, (c) fifty

percent (50%) or more of the equity or controlling interests in the case of any

other type of legal entity (including, without limitation, joint ventures) or

status as a general partner in any partnership, or (d) any other arrangement

whereby a Party controls or has the right to control the Board of Directors or

equivalent governing body of an entity, and (y) following the Merger, shall

exclude Somerset Pharmaceuticals, Inc.

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