[PALATIN LOGO]

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                                                            EMPLOYMENT AGREEMENT



THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 1st day of October, 2005,

is entered into by Palatin Technologies, Inc., a Delaware corporation with its

principal place of business at 4C Cedar Brook Drive, Cranbury, NJ, 08512 (the

"Company"), and Carl Spana.



The Company desires to continue employing the Employee, and the Employee desires

to continue to be employed by the Company. In consideration of the mutual

covenants and promises contained herein, and other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged by

the parties hereto, the parties agree as follows:



1.0  TERM OF EMPLOYMENT. The Company hereby agrees to continue employing the

     Employee, and the Employee hereby accepts the continuation of employment

     with the Company, upon the terms set forth in this Agreement, for a two

     year period commencing on October 1, 2005 (the "Commencement Date") and

     ending on the second anniversary of the Commencement Date, unless sooner

     terminated in accordance with the provisions of Section 4.



2.0  Position Title & Capacity



     2.1  The Employee shall serve as Chief Executive Officer and President,

          with responsibilities consistent with this position and as the

          Company's Board of Directors (the "Board") may determine from time to

          time, with powers and duties as may be determined, from time to time,

          by the Board, consistent with the Employee's position. The Employee

          shall report to the Company's Board of Directors. The Employee shall

          be based at the Company's corporate headquarters, which is based in

          Cranbury, New Jersey. The Employee shall also be available for travel

          at such times and to such places as may be reasonably necessary in

          connection with the performance of his duties hereunder.





2005-2007 Employment Agreement, Carl Spana                          Page 1 of 17

<PAGE>





     2.2  The Employee may serve as an employee director on the Company's Board

          of Directors (the "Board") as determined and approved by the Board

          during the employment period; however upon termination of employment

          for any reason, the Employee will no longer serve as a member of the

          Company's Board of Directors and will take any and all actions

          necessary to effectuate such resignation as may be reasonably

          requested by the Company.



     2.3  The Employee hereby accepts such employment and agrees to undertake

          the duties and responsibilities inherent in such position and such

          other duties and responsibilities as the Board shall from time to time

          reasonably assign to him. The Employee agrees to devote substantially

          all of his business time, attention and energies to the business and

          interests of the Company during the Employment Period. The Employee

          agrees to abide by the rules, regulations, instructions, personnel

          practices and policies of the Company and any changes therein which

          may be adopted from time to time by the Company. The Employee

          acknowledges receipt of copies of all such rules and policies

          committed to writing as of the date of this Agreement.



     2.4  The Employee specifically covenants, warrants and represents to the

          Company that he has the full, complete and entire right and authority

          to enter into this Agreement, that he has no agreement, duty,

          commitment or responsibility of any kind or nature whatsoever with any

          corporation, partnership, firm, company, joint venture or other entity

          or other person which would conflict in any manner whatsoever with any

          of his duties, obligations or responsibilities to the Company pursuant

          to this Agreement, that he is not in possession of any document or

          other tangible property of any corporation, partnership, firm,

          company, joint venture or other entity or other person of a

          confidential or proprietary nature which





2005-2007 Employment Agreement, Carl Spana                          Page 2 of 17

<PAGE>





          would conflict in any manner whatsoever with any of his duties,

          obligations or responsibilities to the Company pursuant to his

          Agreement, and that he is fully ready, willing and able to perform

          each and all of his duties, obligations and responsibilities to the

          Company pursuant to this Agreement.



3.0  COMPENSATION AND BENEFITS. During the Employment Period, unless sooner

     terminated in accordance with the provisions of Section 4, the Employee

     shall receive the following compensation and benefits:



3.1  SALARY. The Company shall pay the Employee, in equal semi-monthly

     installments or otherwise in accordance with the Company's standard payroll

     policies as such policies may exist from time to time, an annual base

     salary of $350,000. Such salary shall be subject to review thereafter, as

     determined by the Company's Compensation Committee and approved by the

     Board, on an annual basis, but the Board shall not decrease the Employee's

     annual base salary at any such annual review.



3.2  CASH PERFORMANCE BONUS. The Employee will be included in the Company's

     annual discretionary bonus compensation program based on a June 30th year

     end in an amount to be decided by the Company's Compensation Committee and

     approved by the Board, payable no later than September 30th of each year

     during the Employment Period. Such performance bonus compensation shall be

     based upon yearly objectives mutually agreed upon by and between the

     Employee and the Company.



3.3  STOCK OPTIONS. As additional compensation for services rendered, the

     Company has granted to the Employee the right and option (the "Option") to

     purchase shares of the Company's Common Stock (the "Option Shares"),

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