NASDAQ: PTN

We
are also developing, dependent on resources for development activities, MC1R agonist products, with potential to treat inflammatory and
autoimmune diseases, such as dry eye disease, which is also known as keratoconjunctivitis sicca, uveitis, diabetic retinopathy, and inflammatory
bowel disease. The Company believes that the MC1R agonist peptides in development have broad anti-inflammatory effects and appear to
utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses.

Our
new product development strategy focuses on development of MC4R selective agonists with improved pharmacokinetic properties. This includes
a modified MC4R peptide with an extended drug half-life and minimal blood pressure effects and an MC4R selective oral small molecule.

Activities
in inflammation disease indications focus primarily on development of MCR peptides for ocular conditions, and in the gut and kidney.
Utilizing peptides which are agonists at MC1R, and in some instances agonists at additional melanocortin receptors, we are developing
products to treat inflammatory and autoimmune diseases such as dry eye disease, uveitis, diabetic retinopathy, and inflammatory bowel
disease. We are actively engaged in discussions with potential partners and licensees that have the financial and operational resources
to progress our products through development, approval and commercialization.

Our
U.S. Food and Drug Administration (“FDA”) approved melanocortin receptor agonist, Vyleesi, an “as needed” therapy
used in anticipation of sexual activity and self-administered in the thigh or abdomen via a single-use subcutaneous auto-injector by
premenopausal women with hypoactive sexual desire disorder (“HSDD”), was acquired by Cosette in December 2023. Vyleesi is
the first FDA-approved melanocortin agent and the first and only FDA-approved as-needed treatment for premenopausal women with HSDD.

Our
program for treatment of retinal diseases culminated in an agreement with Boehringer Ingelheim International GmbH (“Boehringer
Ingelheim”), which in August 2025 acquired certain Palatin patent applications to first-in-class melanocortin receptor-targeted
compounds developed by Palatin. We retain rights to PL9643, which successfully completed an initial Phase 3 clinical trial for dry eye
disease, and was licensed to Altanispac Labs, LLC in January 2026.

Our
Business Strategy. Key elements of our business strategy include:

● Advancing
our MC4R selective long-acting peptide and oral small molecule agonist programs for the treatment
of obesity, with a primary focus on rare neuroendocrine diseases and other MC4R pathway disorders
with significant unmet medical need;

● Leveraging
our expertise in the melanocortin receptor system and our portfolio of MCR compounds to identify
and develop differentiated product candidates addressing significant unmet medical needs;

● Entering
into strategic collaborations, licensing arrangements and other partnerships with pharmaceutical
and biotechnology companies and academic institutions to facilitate and accelerate the research,
development, manufacture and commercialization of our product candidates;

● Utilizing
payments received under existing and future collaboration and license agreements, including
upfront payments, research funding, milestone payments and royalties, together with other
available financial resources, to partially fund our product development programs; and

● Advancing
selected product candidates through preclinical and clinical development and, where appropriate,
seeking regulatory approval independently or in collaboration with strategic partners.

1

Pipeline
Overview

The
following chart illustrates the status of our drug development programs. Planned development activities, timelines and milestones are
subject to the availability of appropriate funding.

Melanocortin
Receptor Programs

Our
Current Product Development Strategy. Our product development activities focus primarily on use of MC4R agonists for treatment of
obesity. Our principal strategic development focus is the advancement of MC4R agonists for the treatment of obesity, with an emphasis
on rare neuroendocrine and other MC4R pathway diseases. We are developing selective MC4R long-acting peptide agonists and oral small
molecule agonists with potential utility in hypothalamic obesity, Prader-Willi syndrome, Bardet-Biedl syndrome and other rare obesity
and orphan indications.

The
Company is also developing, subject to the availability of resources, melanocortin receptor agonists with potential utility in ocular
diseases and inflammatory and autoimmune diseases, including uveitis and inflammatory bowel disease. A product candidate targeting MC1R
for the treatment of dry eye disease, also known as keratoconjunctivitis sicca, has been licensed to a third party, and a family of melanocortin
receptor compounds for the treatment of retinal diseases has been licensed to Boehringer Ingelheim. The Company believes that certain
melanocortin receptor agonist peptides in development may have anti-inflammatory effects through mechanisms involved in the endogenous
melanocortin system’s regulation of immune responses and resolution of inflammation.

We
are also designing and developing potent and highly selective MC1R agonist peptides and agonist peptides specific for more than one melanocortin
receptor for treatment of a variety of inflammatory and autoimmune indications. We believe that our agonist peptides regulate certain
inflammatory cytokines, and modulate the activities of immune cells, such as monocytes and T cells, to reduce immune response, and may
utilize mechanisms engaged by the endogenous melanocortin system in regulation of the immune system and resolution of inflammatory responses.

Long-acting
Peptide MC4R Agonists. We are advancing a next-generation, MC4R selective long-acting peptide agonist, with plans to initiate a Phase
1 clinical study in the first half of calendar year 2027. The product candidate is being developed as a once-weekly subcutaneous injectable
for the treatment of obesity, with a primary focus on rare neuroendocrine diseases, including hypothalamic obesity, Prader-Willi syndrome
and potentially Bardet-Biedl syndrome.

2

Oral
Small Molecule MC4R Agonists. We are advancing lead candidate selection and optimization activities for a next-generation, MC4R selective
oral small molecule agonist, incorporating data and program learnings from PL7737 and our broader MC4R small molecule development program.
We plan to advance a selected product candidate into IND-enabling activities in the first half of calendar year 2027 and initiate a Phase
1 clinical study in the second half of calendar year 2027. The program is focused on developing an orally administered MC4R agonist for
the treatment of obesity, with a primary focus on rare neuroendocrine diseases and other MC4R pathway disorders.

Partnered
and Out-Licensing Development Programs. In addition to our internally focused MC4R obesity development programs, our strategy
includes entering into collaborations, licensing arrangements and other strategic transactions to advance and maximize the value of certain
product candidates and programs. We have entered into collaboration and licensing arrangements with Boehringer Ingelheim for certain
MCR compounds for the treatment of retinal diseases and with Altanispac Labs for PL9643 for the treatment of dry eye disease. We are
also seeking development and commercialization partners or other strategic transactions for certain other product candidates and programs,
including bremelanotide or an MC4R agonist as an adjunct to GLP-1-based obesity therapies, PL8177 for inflammatory bowel diseases and
our MCR agonist program for diabetic nephropathy.

Retinal
Disease Collaboration with Boehringer Ingelheim. In August 2025, we entered into a research collaboration, license and patent assignment
agreement (the “Boehringer Ingelheim Agreement”) with Boehringer Ingelheim International GmbH (BI) for the development of
melanocortin receptor agonists for the treatment of retinal diseases, including diabetic retinopathy and diabetic macular edema. Under
the terms of the Agreement, BI agreed to pay Palatin a non-refundable upfront payment, success-based development, regulatory, and commercial
milestone payments of up to €280,000,000 (approximately $328,000,000), and tiered royalties on net sales of licensed products, if
commercialized. BI is responsible for advancing the licensed retinal disease program, with Palatin providing research and development
support during the research collaboration period. We received a €2.0 million ($2.3 million) upfront payment in August 2025 and subsequently
received a €5.5 million ($6.5 million) on achieving a research milestone in September 2025. Under our BI agreement, we retained
rights to PL9643 for dry eye disease, which we have subsequently sublicensed to Altanispac Labs.

PL9643
for Dry Eye Disease. PL9643 is a peptide melanocortin agonist active at multiple melanocortin receptors, including MC1R and MC5R,
that we developed for the treatment of dry eye disease, also known as keratoconjunctivitis sicca. We completed the Phase 3 MELODY-1 clinical
trial in 575 patients with moderate-to-severe dry eye disease. PL9643 achieved statistical significance for the co-primary symptom endpoint
of pain (p<0.025), and subsequent responder analyses demonstrated statistically significant complete symptom resolution compared with
vehicle for 6 of 13 symptom endpoints. PL9643 was well tolerated in the study. In January 2026, we entered into a sublicense agreement
with Altanispac Labs pursuant to which Altanispac acquired exclusive rights to develop and commercialize PL9643 for dry eye disease.
Under the agreement, we received $3.8 million in upfront consideration and are eligible to receive additional payments, including payments
related to future development, commercialization or disposition of the asset, as applicable, and royalties on net sales. Altanispac is
responsible for the future development and commercialization of PL9643 for dry eye disease. The remaining Phase 3 development program
is expected to include the MELODY-2 and MELODY-3 studies.

Bremelanotide
Co-administration with Tirzepatide to Treat Obesity. We completed a Phase 2 proof-of-concept clinical trial evaluating the safety,
tolerability and efficacy of co-administration of bremelanotide, an MC4R agonist, with tirzepatide, a GLP-1/GIP receptor agonist, in
patients with obesity. Topline results reported in the first quarter of calendar year 2025 demonstrated that the study met its primary
endpoint, with patients receiving co-administration achieving a 4.4% reduction in body weight compared with 1.6% for placebo during the
eight-week treatment period (p<0.0001). Low-dose bremelanotide also prevented weight regain following discontinuation of tirzepatide,
and no additional safety or tolerability issues were observed with the combination. We do not currently intend to independently fund
additional clinical development of this program and are evaluating potential out-licensing, development, and commercialization partnerships.

Oral
PL8177 for Inflammatory Bowel Diseases. PL8177 is a selective MC1R agonist peptide that has been evaluated for inflammatory bowel
diseases, including ulcerative colitis. We developed a polymer-encapsulated, delayed-release oral formulation designed to deliver PL8177
to the intestinal wall and completed clinical studies evaluating the formulation, including a Phase 2 proof-of-concept study in patients
with ulcerative colitis. Positive topline results from the Phase 2 study were reported in the first quarter of calendar year 2025 and
support the potential therapeutic utility of the program. We do not currently intend to independently fund further clinical development
of PL8177 and are pursuing out-licensing, development and commercialization partnerships or other strategic opportunities for the program.

3

Diabetic
Nephropathy. We completed a Phase 2 open-label proof-of-concept study evaluating an MCR agonist in patients with diabetic nephropathy,
with positive topline results reported in the fourth quarter of calendar year 2024. Based on clinical results and the potential therapeutic
role of melanocortin receptor agonism in diabetic kidney disease, we are pursuing out-licensing, development and commercialization partnerships
or other strategic opportunities for this program and do not currently intend to independently fund further clinical development.

Our
Drug Discovery and Development Technology

We
use an integrated drug design and development approach to discover and optimize proprietary peptide, peptide mimetic and small molecule
compounds that modulate the melanocortin receptor system. Our approach integrates rational and computer-aided drug design, medicinal
chemistry, structure-activity relationship analyses, experimental pharmacology, and artificial intelligence (“AI”) and machine
learning (“ML”)-based computational modeling. We utilize both internal capabilities and external collaborators with specialized
AI and ML expertise to analyze our proprietary compound and pharmacology data and assist in the identification, design and optimization
of potential product candidates.

Our
extensive experience developing melanocortin receptor agonists, together with data generated from our library of proprietary MCR compounds
and our preclinical and clinical development programs, has enhanced our understanding of the structural and pharmacological factors that
influence potency, activity and selectivity among the five melanocortin receptor subtypes. We use these capabilities and accumulated
data to optimize compounds for receptor selectivity, pharmacokinetic and pharmacodynamic properties, route and frequency of administration,
and other characteristics relevant to the intended therapeutic application, with the objective of developing product candidates with
differentiated efficacy, safety, tolerability and dosing profiles.

Competition

General.
The biopharmaceutical industry is highly competitive and characterized by extensive research and development activities, rapidly advancing
technologies, evolving standards of care and the introduction of new products and therapeutic approaches. Our product candidates, if
successfully developed and approved, will compete with approved therapies and product candidates under development by pharmaceutical
and biotechnology companies, many of which have substantially greater financial, technical, research and development, manufacturing,
regulatory, commercial and personnel resources than we do. Our ability to compete successfully will depend on, among other factors, the
efficacy, safety and tolerability, convenience and frequency of administration, durability of treatment effect, regulatory approval,
pricing and reimbursement, intellectual property protection and commercial availability of our product candidates relative to competing
therapies.

Competitors
may develop products that are more effective, safer, better tolerated, more convenient or less expensive than our product candidates,
or may obtain regulatory approval or establish significant market acceptance before we are able to do so. We cannot predict the timing
or extent of competitive developments, and products or technologies developed by others could render our product candidates or technologies
obsolete or noncompetitive.

MC4R
Agonists for Rare Obesity Disorders. Our principal internally funded development programs are focused on MC4R selective agonists
for obesity, with a primary focus on rare neuroendocrine diseases and MC4R pathway disorders, including hypothalamic obesity (“HO”),
Prader-Willi syndrome (“PWS”) and Bardet-Biedl syndrome (“BBS”). We are developing both a long-acting peptide
MC4R agonist intended for once-weekly subcutaneous administration and a next-generation oral small molecule MC4R agonist.

Our
most direct competitor in rare MC4R pathway diseases is Rhythm Pharmaceuticals, Inc. Rhythm markets IMCIVREE® (setmelanotide), an
MC4R agonist approved in the United States for chronic weight management in certain patients with monogenic or syndromic obesity due
to POMC, PCSK1 or LEPR deficiency and BBS, and for the treatment of acquired HO in adults and pediatric patients four years of age and
older. Rhythm is also developing next-generation MC4R agonists, including bivamelagon, an oral small molecule MC4R agonist, and RM-718,
a once-weekly injectable MC4R agonist. Bivamelagon and RM-718 are being evaluated in clinical development for rare MC4R pathway diseases,
including HO, and RM-718 is also being evaluated in PWS.

In
March 2025, the FDA approved VYKAT XR® (diazoxide choline extended-release tablets) for the treatment of hyperphagia in adults and
pediatric patients four years of age and older with PWS. VYKAT XR does not act through the MC4R pathway but represents an approved therapeutic
alternative for patients with PWS and could compete with any MC4R agonist we may develop for that indication. Other companies are also
developing therapies utilizing mechanisms other than MC4R agonism for rare obesity disorders and hyperphagia.

4

The
broader obesity market has undergone substantial development, particularly with the introduction and widespread use of GLP-1 and related
incretin-based therapies, including semaglutide and tirzepatide. Although these products are principally developed and marketed for general
obesity and metabolic disease and do not directly address the underlying MC4R pathway dysfunction associated with many of the rare obesity
disorders that are the primary focus of our programs, they may be used in some patients with these disorders and could compete with our
product candidates. Numerous large pharmaceutical and biotechnology companies continue to develop additional obesity therapies, including
oral therapies, combination products and agents utilizing novel mechanisms of action.

We
believe that important competitive factors for MC4R agonists intended for chronic treatment of rare obesity disorders will include efficacy
in reducing body weight and hyperphagia, safety and tolerability, frequency and route of administration and the incidence and severity
of adverse effects, including gastrointestinal adverse events and hyperpigmentation associated with off-target melanocortin receptor
activity. Our product candidates are designed to provide selective MC4R activation with the objective of achieving clinically meaningful
efficacy while improving tolerability and reducing off-target effects relative to currently available therapies. However, our MC4R product
candidates are at an earlier stage of development than approved and clinical-stage competing products, and there can be no assurance
that they will demonstrate comparable or superior efficacy, safety, tolerability or convenience.

Bremelanotide
in Combination with Incretin-Based Obesity Therapies. We have completed a Phase 2 proof-of-concept study evaluating bremelanotide
in combination with tirzepatide, a dual GIP and GLP-1 receptor agonist, for the treatment of obesity. The market for obesity therapies
is highly competitive and includes approved and investigational GLP-1, GIP/GLP-1 and other incretin-based therapies, as well as numerous
combination approaches under development by large pharmaceutical and biotechnology companies. We do not currently intend to independently
fund further clinical development of this program and are seeking potential out-licensing, partnering or other strategic opportunities.
The availability and continued development of highly effective obesity therapies could affect our ability to enter into such an arrangement
on favorable terms or at all.

Partnered
Ocular Programs. We have licensed certain MCR compounds for the treatment of retinal diseases, including diabetic retinopathy and
diabetic macular edema, to Boehringer Ingelheim and have sublicensed PL9643 for dry eye disease to Altanispac Labs. These indications
are highly competitive and include numerous approved and investigational therapies utilizing a variety of mechanisms of action. The commercial
potential of these programs will depend in significant part on the ability of our collaborators to successfully develop differentiated
products that compete with existing and future therapies. Competition may also affect the willingness of our collaborators to continue
development; the resources they devote to the programs and our ability to receive potential milestone payments and royalties.

PL8177
and Other MCR Programs. PL8177, an oral MC1R agonist, has been evaluated in a Phase 2 proof-of-concept study for ulcerative colitis.
Ulcerative colitis is a highly competitive therapeutic area with numerous approved therapies, including biologics, small molecules and
immunomodulatory agents, as well as numerous additional products in clinical development. We are pursuing out-licensing, development
and commercialization partnerships or other strategic opportunities for PL8177 and certain other MCR programs, including our diabetic
nephropathy program. The availability of established therapies and competing product candidates could adversely affect our ability to
enter into transactions for these programs on favorable terms or to realize value from them.

Patents
and Proprietary Information

Patent
Protection. Our success will depend in substantial part on our ability to obtain, defend and enforce patents, maintain trade secrets
and operate without infringing upon the proprietary rights of others, both in the United States and abroad. We own a number of issued
United States patents and have pending United States patent applications, many with issued or pending counterpart patents in selected
foreign countries. We seek patent protection for our technologies and products in the United States and those foreign countries where
we believe patent protection is commercially important.

We
have filed patent applications under the Patent Cooperation Treaty claiming PL9643 and other peptides in development for ocular and inflammatory
disease indications and have entered national stage prosecution in the United States, European Patent Office, Eurasian Patent Office,
and broadly throughout the world. On August 14, 2025, pursuant to the Boehringer Ingelhiem Agreement we assigned this patent to Boehringer
Ingelheim, and received an irrevocable, royalty-free license for PL9643. If one or more patents are granted, the patents will have a
presumptive term until 2041. Until one or more product candidates covered by a claim of one of these patent applications are developed
for commercialization, which may never occur, we cannot evaluate the duration of any potential patent term extension under the Hatch-Waxman
Amendments.

5

We
own five issued patents in the United States, and issued patents in Australia, Belgium, Brazil, Canada, China, France, Germany, Ireland,
Israel, Japan, Korea, Mexico, New Zealand, Russia, South Africa, Sweden, Switzerland and the United Kingdom claiming highly selective
MC1R agonist peptides, including for treatment of inflammation-related diseases and disorders and related indications. The presumptive
term of the issued patents and pending patent applications is until 2030. Until one or more product candidates covered by a claim of
one of these patent applications are developed for commercialization, which may never occur, we cannot evaluate the duration of any potential
patent term extension under the Hatch-Waxman Amendments.

We
have additional issued United States patents on melanocortin receptor-specific peptides and small molecules, including patents on an
alternative class of melanocortin receptor-specific peptides for treatment of sexual dysfunction and other indications.

In
the event that a third party has also filed a patent application relating to an invention we claimed in a patent application, we may
be required to participate in an interference proceeding adjudicated by the United States Patent and Trademark Office (“USPTO”)
to determine priority of invention. The possibility of an interference proceeding could result in substantial uncertainties and cost,
even if the eventual outcome is favorable to us. An adverse outcome could result in the loss of patent protection for the subject of
the interference, subjecting us to significant liabilities to third parties, the need to obtain licenses from third parties at undetermined
cost, or requiring us to cease using the technology. Additionally, the claims of our issued patents may be narrowed or invalidated by
administrative proceedings, such as interference or derivation, inter partes review, post grant review or reexamination proceedings
before the USPTO.

Future
Patent Infringement. We do not know for certain that our commercial activities will not infringe upon patents or patent applications
of third parties, some of which may not even have been issued. Although we are not aware of any valid United States patents which are
infringed by our product candidates, we cannot exclude the possibility that such patents might exist or arise in the future. We may be
unable to avoid infringement of any such patents and may have to seek a license, defend an infringement action, or challenge the validity
of such patents in court. Patent litigation is costly and time consuming. If such patents are valid and we do not obtain a license under
any such patents, or we are found liable for infringement, we may be liable for significant monetary damages, may encounter significant
delays in bringing products to market, or may be precluded from participating in the manufacture, use or sale of products or methods
of treatment covered by such patents.

Proprietary
Information. We rely on proprietary information, such as trade secrets and know-how, which is not patented. We have taken steps to
protect our unpatented trade secrets and know-how, in part with confidentiality and intellectual property agreements with our employees,
consultants and certain contractors. If our employees, scientific consultants, collaborators or licensees develop inventions or processes
independently that may be applicable to our product candidates, disputes may arise about the ownership of proprietary rights to those
inventions and processes. Such inventions and processes will not necessarily become our property but may remain the property of those
persons or their employers. Protracted and costly litigation could be necessary to enforce and determine the scope of our proprietary
rights.

If
trade secrets are breached, our recourse will be solely against the person who caused the secrecy breach. This might not be an adequate
remedy to us because third parties other than the person who causes the breach will be free to use the information without accountability
to us. This is an inherent limitation of the law of trade secret protection.

U.S.
Governmental Regulation of Pharmaceutical Products

General.
Our research, development, manufacture and potential commercialization of pharmaceutical products are subject to extensive regulation
in the United States and other countries. In the United States, our product candidates are regulated principally by the U.S. Food and
Drug Administration (“FDA”) under the Federal Food, Drug, and Cosmetic Act (“FFDCA”) and related laws and regulations.
These requirements govern, among other things, research, development, preclinical and clinical testing, manufacturing, quality control,
safety, efficacy, labeling, packaging, storage, recordkeeping, reporting, advertising, promotion, distribution and import and export
of pharmaceutical products.

Before
a new drug may generally be marketed in the United States, the FDA regulatory process typically includes:

● completion
of preclinical laboratory and animal studies and formulation and manufacturing development;

● submission
to the FDA of an Investigational New Drug application (“IND”), which must become
effective before clinical trials may commence;

6

● completion
of adequate and well-controlled clinical trials to establish the safety and efficacy of the
product candidate for its intended use;

● development
and validation of manufacturing processes and controls;

● submission
to the FDA of a New Drug Application (“NDA”);

● satisfactory
completion of FDA inspections, as applicable, of manufacturing facilities and clinical trial
sites; and

● FDA
review and approval of the NDA, including the proposed prescribing information and labeling.

The
research, development and regulatory approval process requires substantial time, effort and financial resources, and regulatory approval
may not be obtained on a timely basis or at all.

Preclinical
Development and Investigational New Drug Applications. Preclinical development generally includes laboratory evaluations of a product
candidate’s pharmacology, composition, formulation, impurities and stability, as well as animal studies to assess pharmacology
and potential toxicity. Certain preclinical safety studies must be conducted in accordance with applicable Good Laboratory Practice requirements.
The results of preclinical studies, together with manufacturing information, analytical data, clinical protocols and other required information,
are submitted to the FDA as part of an IND.

An
IND generally becomes effective 30 days after receipt by the FDA unless the FDA places the proposed clinical trial on clinical hold.
The FDA may impose a clinical hold before or during a clinical trial if, among other reasons, it determines that subjects may be exposed
to unreasonable or significant risks or that the IND does not contain sufficient information to assess such risks. If the FDA imposes
a clinical hold, the sponsor must address the FDA’s concerns before the affected clinical trial may begin or resume. Positive results
from preclinical studies do not necessarily predict successful results in clinical trials.

Clinical
Trials. Clinical trials involve administration of an investigational product to human subjects under the supervision of qualified
investigators. Clinical trials must be conducted under protocols submitted to the FDA as part of an IND and in compliance with applicable
requirements, including Good Clinical Practice requirements and requirements relating to informed consent and institutional review board
(“IRB”) oversight. An IRB generally must review and approve each clinical trial before it begins at a clinical site and must
monitor the trial until completion.

Clinical
development is generally conducted in phases that may overlap or be combined. Phase 1 clinical trials generally evaluate safety, tolerability,
pharmacokinetics and pharmacodynamics and may be conducted in healthy volunteers or patients. Phase 2 clinical trials generally evaluate
preliminary efficacy, dose response and safety in patients with the targeted disease or condition. Phase 3 clinical trials generally
involve larger patient populations and are designed to provide substantial evidence of effectiveness and additional safety information
necessary to evaluate the overall benefit-risk relationship of the product candidate and support regulatory approval. The number, size
and design of clinical trials required for approval vary depending on the product candidate, indication, patient population and other
factors.

Sponsors
of certain clinical trials are also required to register and disclose specified information and results on ClinicalTrials.gov in accordance
with applicable federal requirements.

Success
in preclinical studies or early-stage clinical trials does not assure success in later-stage clinical trials. Results may be subject
to differing interpretations, and the FDA may require additional preclinical studies, clinical trials or analyses before permitting further
development or granting regulatory approval.

New
Drug Applications and FDA Review. If clinical trials are successful, the results of preclinical studies and clinical trials, together
with detailed information regarding the product’s chemistry, manufacture, controls, proposed labeling and other required information,
are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications. The FDA may refuse
to file an NDA that it determines is incomplete and has substantial discretion in the review and approval process. The FDA may determine
that the data submitted do not establish that a product candidate is safe and effective for its proposed use, request additional information
or analyses, or require additional preclinical studies or clinical trials.

Before
approving an NDA, the FDA may inspect facilities involved in manufacturing the product and clinical sites involved in generating data
supporting the application. The FDA will not approve an application unless it determines that the manufacturing processes and facilities
are in compliance with applicable requirements and that the NDA provides sufficient evidence that the product is safe and effective for
its intended use.

7

If
the FDA approves an NDA, it may impose limitations on the approved indications or patient populations, require warnings or precautions
in the labeling, require postmarketing studies or clinical trials, or impose a Risk Evaluation and Mitigation Strategy (“REMS”)
or other restrictions.

Manufacturing
Regulation. Manufacturers of pharmaceutical products for clinical trials and commercial use must comply with applicable current Good
Manufacturing Practice (“cGMP”) requirements. These requirements govern manufacturing processes and controls, quality systems,
testing, recordkeeping and other activities intended to ensure that pharmaceutical products meet applicable standards of identity, strength,
quality and purity.

Manufacturing
facilities may be subject to inspection by the FDA and other regulatory authorities. Failure by us or our third-party manufacturers to
comply with applicable cGMP or other regulatory requirements could result in regulatory or enforcement action, including delays or refusal
of regulatory approval, clinical holds, suspension of manufacturing, product recalls or seizures, import restrictions, warning letters,
fines, injunctions or civil or criminal penalties.

Postmarketing
Regulation. Any pharmaceutical product that receives FDA approval remains subject to continuing regulation, including requirements
relating to manufacturing and quality control, recordkeeping and reporting, adverse-event reporting, labeling, advertising and promotion,
product distribution and postmarketing surveillance.

The
FDA may require postmarketing studies or clinical trials to evaluate known or potential safety risks and may require labeling changes,
restrictions on distribution or use, or other measures based on newly identified safety or efficacy information. The FDA’s Sentinel
System also provides an electronic system for monitoring the safety of FDA-regulated medical products.

The
FDA regulates the advertising and promotion of prescription drug products and generally prohibits promotion of a product for uses that
have not been approved by the FDA. Failure to comply with applicable requirements may result in regulatory or enforcement action, including
warning or untitled letters, restrictions on marketing or manufacturing, product recalls or seizures, suspension or withdrawal of approvals,
refusal to approve pending applications or supplements, fines, injunctions or civil or criminal penalties.

We,
our collaborators, licensees and third-party manufacturers may be unable to comply with applicable regulatory requirements. The discovery
of previously unknown problems with an approved product, manufacturing facility or manufacturing process, or failure to comply with applicable
regulatory requirements, could result in restrictions on the product or its manufacture or commercialization and could materially adversely
affect our business.

Healthcare
Laws and Regulation. In addition to FDA regulation, our operations may be subject to federal, state and foreign healthcare laws and
regulations, including the federal Anti-Kickback Statute, federal and state false claims laws, healthcare fraud laws, transparency and
reporting requirements, and privacy and data security laws. These laws may apply to our clinical development activities, interactions
with healthcare professionals and organizations, relationships with collaborators and other third parties and, if any of our product
candidates receive regulatory approval, commercialization activities. Failure to comply with applicable healthcare laws and regulations
could result in significant civil, criminal or administrative penalties, damages, fines, exclusion from participation in government healthcare
programs, additional reporting or compliance obligations, reputational harm or restrictions on our operations.

Orphan
Drug Designation and Exclusivity. Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug or biological product
intended to treat a rare disease or condition, generally defined as a disease or condition affecting fewer than 200,000 individuals in
the United States. Orphan drug designation may provide certain development incentives, including tax credits for certain qualified clinical
testing, exemption from certain FDA user fees and, if the designated product subsequently receives FDA approval for the designated disease
or condition and applicable requirements are satisfied, the potential for seven years of orphan drug exclusivity.

Orphan
drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process and does not
assure that the product will receive marketing approval. Orphan drug exclusivity generally prevents the FDA, for seven years following
approval, from approving another application for the same drug for the same rare disease or condition, subject to certain exceptions.
Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition or the same drug for
a different disease or condition.

We
may seek orphan drug designation for product candidates targeting rare diseases or conditions when we believe the applicable requirements
are satisfied. However, there can be no assurance that the FDA will grant orphan drug designation for any product candidate for which
we seek such designation, that a designated product candidate will receive regulatory approval, or that we will ultimately obtain or
maintain orphan drug exclusivity.

8

Pediatric
Drug Development and Pediatric Exclusivity. Our product candidates may be developed for diseases and conditions that affect pediatric
patients. The Pediatric Research Equity Act (“PREA”) authorizes the FDA to require sponsors of certain applications for new
active ingredients, indications, dosage forms, dosing regimens or routes of administration to conduct studies to assess the safety and
effectiveness of the product for relevant pediatric populations and to support appropriate pediatric labeling. The FDA may grant deferrals
or waivers of certain pediatric study requirements under specified circumstances.

Separately,
under the Best Pharmaceuticals for Children Act (“BPCA”), the FDA may issue a Written Request for pediatric studies. If a
sponsor conducts and submits studies that satisfy the terms of the Written Request and applicable statutory requirements, the sponsor
may qualify for an additional six months of pediatric exclusivity. Pediatric exclusivity does not provide a separate six-year or six-month
period of exclusivity standing alone; rather, it generally extends by six months certain existing patent protection and regulatory exclusivity
applicable to the active moiety.

Pediatric
clinical trials involve additional considerations relating to study design, informed consent and assent, appropriate formulations, enrollment
and the ethical conduct of research involving children. These requirements may increase the time, complexity and cost of developing products
intended for pediatric populations.

Rare
Pediatric Disease Priority Review Voucher Program. Federal law also provides incentives for development of certain products for rare
pediatric diseases through the Rare Pediatric Disease Priority Review Voucher (“PRV”) program. A sponsor of an eligible product
that receives FDA approval for a qualifying rare pediatric disease may, if applicable statutory requirements are satisfied, receive a
PRV that may be used to obtain priority review of a subsequent marketing application or may be transferred or sold to another party.
Rare pediatric disease designation itself does not assure that a product will qualify for or receive a PRV.

In
February 2026, the Rare Pediatric Disease PRV program was extended, but under current law the FDA may not award a rare pediatric disease
PRV after September 30, 2029. Accordingly, there can be no assurance that any of our current or future product candidates will qualify
for or receive a PRV before expiration of the program or that the program will be further extended.

Generic
Competition

Orange
Book Listing. Upon approval of an NDA, certain patents that claim the approved drug substance, drug product or approved methods of
use must be submitted to the FDA for listing in the FDA’s publication Approved Drug Products with Therapeutic Equivalence Evaluations,
commonly known as the “Orange Book.” The Orange Book also identifies certain periods of regulatory exclusivity applicable
to approved drug products.

An
applicant seeking approval of a generic version of an approved drug generally submits an abbreviated new drug application (“ANDA”)
and may rely on the FDA’s prior determination of safety and effectiveness for the reference listed drug rather than independently
demonstrating safety and effectiveness through clinical trials. An ANDA applicant generally must demonstrate that its proposed product
is bioequivalent to the reference listed drug and must make certain certifications concerning patents listed in the Orange Book for that
product.

Regulatory
Exclusivity. Certain drug products may be eligible for periods of regulatory exclusivity that can delay FDA approval of certain competing
applications. For example, a drug containing a new chemical entity may generally receive five years of regulatory exclusivity, subject
to certain exceptions, and certain changes to an approved drug, such as a new indication supported by new clinical investigations essential
to approval, may qualify for three years of exclusivity applicable to the approved change. Regulatory exclusivity is separate from, and
may run concurrently with, patent protection.

Depending
on the characteristics of a product candidate and the indication for which it is approved, additional forms of regulatory exclusivity
may also be available, including orphan drug exclusivity and pediatric exclusivity.

Section
505(b)(2) NDAs. Section 505(b)(2) of the FFDCA provides an alternative NDA pathway that permits an applicant to rely, in part, on
data not developed by or for the applicant and for which the applicant does not have a right of reference, including published literature
or the FDA’s prior findings of safety and effectiveness for an approved drug. This pathway may be available for certain new formulations,
dosage forms, routes of administration or uses of previously approved drugs. The FDA may nevertheless require additional preclinical
or clinical studies to support approval.

A
505(b)(2) applicant generally must make patent certifications with respect to applicable patents listed in the Orange Book for a referenced
product, and approval may be delayed by applicable patent protection, regulatory exclusivity or patent litigation.

Changing
Legal and Regulatory Landscape. The laws, regulations, policies and guidance governing the development, approval, manufacture, marketing,
reimbursement and commercialization of pharmaceutical products are subject to change. Congress, federal and state agencies, including
the FDA, and courts may enact, promulgate, revise or reinterpret laws, regulations, policies and guidance in ways that could materially
affect our product development activities, regulatory approval pathways, intellectual property protections, commercialization strategies
or the economics of our product candidates. We cannot predict the nature, timing or impact of future legislative, regulatory or judicial
developments.

9

Third-Party
Reimbursements

Successful
commercialization of any of our product candidates that receive regulatory approval will depend in part on the availability and adequacy
of pricing, coverage and reimbursement from governmental healthcare programs, private health insurers and other third-party payers. Third-party
payers increasingly seek to control healthcare costs by limiting coverage, establishing restrictive eligibility criteria, requiring prior
authorization or step therapy, negotiating discounts or rebates and otherwise limiting reimbursement for pharmaceutical products.

Coverage
and reimbursement decisions are generally made independently by individual payers and may depend on, among other factors, the approved
indication, clinical effectiveness and safety, medical necessity, comparative benefits relative to alternative treatments and cost. Obtaining
and maintaining favorable coverage and reimbursement can be time-consuming and uncertain, and there can be no assurance that adequate
reimbursement will be available for any product we or our collaborators may commercialize.

Manufacturing
and Marketing

We
do not own or operate facilities for the manufacture of our product candidates and currently rely, and expect to continue to rely, on
third-party contract manufacturers and suppliers for active pharmaceutical ingredients, drug substance, drug product and other materials
used in our preclinical and clinical development activities. Our current development programs include both peptide and small molecule
product candidates, including our next-generation MC4R selective long-acting peptide agonist and oral small molecule agonist programs.

The
manufacture of pharmaceutical products involves complex processes and may present difficulties associated with process development, formulation,
scale-up, purification, analytical testing, stability, quality control and availability of raw materials and other components. As our
product candidates advance through development, manufacturing processes will need to be developed and scaled to produce sufficient quantities
meeting applicable quality and regulatory requirements for clinical trials and, if approved, commercial use.

Manufacturers
of drug substance and drug product for clinical and commercial use must comply with applicable current Good Manufacturing Practice (“cGMP”)
requirements and may be subject to inspection by the FDA and other regulatory authorities. Failure by a manufacturer or supplier to comply
with applicable regulatory requirements, manufacture product meeting required specifications or supply sufficient quantities on a timely
basis could delay our development programs or regulatory approvals.

If
any of our product candidates receive regulatory approval, we may commercialize such products directly, through licensing, co-promotion,
distribution or other arrangements with third parties, or through a combination of these approaches. We currently have limited internal
sales, marketing and distribution capabilities and would need to establish or expand such capabilities or enter into arrangements with
third parties to successfully commercialize an approved product.

Product
Liability and Insurance

Our
business is subject to product liability risks inherent in the development, clinical testing, manufacture and potential commercialization
of pharmaceutical products. We maintain product liability and clinical trial insurance that we believe is appropriate for our current
activities. However, our insurance coverage may not be sufficient to cover all liabilities that we may incur, and adequate insurance
coverage may not be available in the future at an acceptable cost or in sufficient amounts. As our product candidates advance through
clinical development and potential commercialization, we may need to obtain additional or increased insurance coverage.

Compliance
with Environmental Laws

Our
operations are subject to applicable federal, state and local environmental, health and safety laws and regulations, including requirements
relating to the use, handling, storage and disposal of hazardous materials and wastes. Our operations are primarily focused on the research
and development of pharmaceutical product candidates, and a significant portion of our research and development activities is conducted
by third parties, including contract research organizations, contract manufacturers, academic institutions and other research organizations.

10

We
do not currently expect compliance with applicable environmental, health and safety laws and regulations to have a material effect on
our capital expenditures, financial condition or competitive position. However, environmental laws and regulations may change, and we
could become subject to additional requirements, liabilities or remediation obligations. Any failure to comply with applicable environmental,
health and safety requirements, or the imposition of significant new requirements or liabilities, could result in fines, penalties, remediation
costs or other expenses and could adversely affect our business and financial condition.

Employees

As
of September 25, 2026, we employed 25 full-time employees, of whom 16 were engaged primarily in research and development activities and
nine were engaged primarily in administration and management. We had no part-time employees. Competition for qualified personnel in the
biopharmaceutical industry is significant, and our continued success depends in part on our ability to attract, retain and motivate skilled
and experienced personnel. None of our employees are represented by a labor union or covered by a collective bargaining agreement. Our
employees are subject to confidentiality and intellectual property agreements. We consider our relations with our employees to be good.

We
also rely on contractors, consultants, scientific advisors, academic institutions and other third-party organizations to support our
research and development programs and other activities. These third parties provide services and expertise in areas including drug discovery
and design, artificial intelligence and machine learning-based computational modeling, medicinal chemistry, manufacturing, preclinical
testing and evaluation, clinical development and management, regulatory strategy and other specialized functions. We generally enter
into agreements with these third parties that contain confidentiality provisions and provisions addressing the ownership or assignment
of intellectual property developed in connection with their work for us.

Corporate
Information

We
were incorporated under the laws of the State of Delaware on November 21, 1986 and commenced operations in the biopharmaceutical area
in 1996. Our executive offices are located at 301 Carnegie Center Drive, Suite 304, Princeton, New Jersey 08540 and our telephone number
is (609) 495-2200. Our research laboratory is located at 11 Deer Park Drive, Suite 204, Monmouth Junction, New Jersey 08852. We maintain
an Internet site at www.palatin.com, where among other things, we make available free of charge on and through this website our
Forms 3, 4 and 5, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) and Section 16 of the Exchange Act as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the SEC. Our website and the information contained in it or connected to it are not incorporated
into this Annual Report. The reference to our website is an inactive textual reference only.

The
SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that
file electronically with the SEC (www.sec.gov).