SECURITIES PURCHASE AGREEMENT

        This Securities Purchase Agreement (this Agreement) is made effective as of August 18, 2004 (the Effective Date) by and between Palatin Technologies, Inc. a Delaware corporation, with its principal place of business at Cedar Brook Corporate Center, 4C Cedar Brook Drive, Cranbury, New Jersey 08512 (the Company), and King Pharmaceuticals, Inc., a Tennessee corporation with a place of business at 501 Fifth Street, Bristol, Tennessee 37620 (the Purchaser). The Company and the Purchaser are sometimes hereafter referred to individually as a Party and together as the Parties. Capitalized terms not defined in this Agreement shall have the meaning given to them in the Collaborative Development and Marketing Agreement by and between the Company and the Purchaser, dated August 12, 2004 (the Collaboration Agreement).

        WHEREAS, the Company and the Purchaser have previously entered into the Collaboration Agreement for the purpose of developing and marketing Products derived from Palatin Technology, Palatin Patent Rights, and Proprietary Materials; and

        WHEREAS, the Company desires to issue and sell to the Purchaser, from time to time, and the Purchaser desires to acquire, from time to time, on the terms and subject to the conditions set forth in this Agreement, shares of the Companys common stock, par value $0.01 per share (the Common Stock), and warrants to purchase shares of Common Stock for an aggregate purchase price of up to [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.] (the Purchase Price) in a private placement basis pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the Securities Act), as provided in this Agreement and the Collaboration Agreement.

        NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement, the Parties hereto agree as follows:

ARTICLE 1 PURCHASE AND SALE OF THE COMMON STOCK AND WARRANT

1.1 Initial Closing. Subject to the terms and conditions set forth in this Agreement, and in reliance on the representations and warranties set forth in this Agreement, the Company hereby issues and sells to the Purchaser, and the Purchaser hereby purchases from the Company on the date hereof (i) One Million, One Hundred and Seventy Six Thousand, One Hundred and Twenty Five (1,176,125) shares of Common Stock (the Initial Common Stock) and (ii) a three (3) year warrant to purchase Two Hundred Thirty Five Thousand, Two Hundred and Twenty Five (235,225) shares of the Companys Common Stock at an exercise price of $4.25 per share, for an aggregate purchase price of $5 million. The warrant shall be in the form attached to the Collaboration Agreement as Exhibit I, (the Warrant). The closing of the purchase and sale of the Initial Common Stock and Warrant (the Initial Closing) shall take place at the offices of Mintz Levin Cohn Ferris Glovsky and Popeo PC, 666 Third Ave., New York, NY 10017 at 10:00 a.m. on the date hereof, or at such time and date thereafter as the Purchaser and the Company may agree (the Initial Closing Date). At the Initial Closing, the Company will execute, issue, and deliver to the Purchaser (i) a certificate in the name of the Purchaser for the number of shares of Initial Common Stock being purchased against delivery by such Purchaser to the Company of the applicable portion of the Purchase Price by wire transfer or other method acceptable to the Company and (ii) the Warrant.

1.2 Subsequent Closings. In accordance with Section 6.3 of the Collaboration Agreement, and subject to Article 7 hereof, upon achievement of the development milestones as determined and identified in Section 6.3 of the Collaboration Agreement, additional closings (each a Subsequent Closing) of the issuance of Common Stock (Additional Common Stock) and the issuance of an additional Warrant (the Additional Warrant) shall take place at the offices of Mintz Levin Cohn Ferris Glovsky and Popeo PC, 666 Third Ave., New York, NY 10017 on the date that is within ten (10) days after the determination of the first achievement of each such development milestone, or at such time and date thereafter as the Purchaser and the Company may agree (each a Subsequent Closing Date), but in no event later than the date milestone payments are made pursuant to Section 6.3.1 of the Collaboration Agreement. At each Subsequent Closing, the Company will execute, issue and deliver to the Purchaser a certificate in the name of the Purchaser for the number of shares of Additional Common Stock being purchased against delivery by such Purchaser to the Company of the applicable portion of the purchase price by wire transfer or other method acceptable to the Company. In addition, at the Subsequent Closing that occurs in connection with the milestone identified in Section 1.2(a) below, the Company will execute, issue and deliver to the Purchaser the Additional Warrant. Subject to the terms and conditions set forth in this Agreement, and in reliance on the representations and warranties as shall be made on each Subsequent Closing Date, the Company agrees to issue to the Purchaser at the applicable Subsequent Closing, such number of shares of Additional Common Stock, and the Company further agrees to issue to the Purchaser the Additional Warrant upon completion of the milestone identified in (a) below, in each case as shall be determined as follows:

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