Ed Cox – VP, IR and Corporate Development Bassam Damaj – CEO and President Steve Martin – SVP and CFO

Jason Butler – JMP Securities Scott Henry – ROTH Capital Partners

Greetings. Welcome to the Apricus Biosciences’ Second Quarter 2012 Results Conference. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ed Cox, Vice President of Investor Relations and Corporate Development for Apricus Biosciences. Thank you. You may begin.

Good afternoon and thank you for joining us today. I am Ed Cox, Vice President of Corporate Development and Investor Relations here at Apricus Bio. With me from Apricus, are Dr. Bassam Damaj, President and Chief Executive Officer, and Steve Martin, our Chief Financial Officer. During the call, Bassam will review the recent corporate events and Steve will discuss the second quarter financial results. Bassam will then recap the company’s upcoming milestones and provide a brief update before opening the call for questions. Before we begin, let me remind you, during today’s conference call the management team will make forward-looking statements regarding future events or future financial performance of the company. Please keep in mind that such statements are predictions based on current expectations and actual results could differ materially. You should refer to our most recent filings with the Securities and Exchange Commission for an additional discussion on factors affecting our business. With that, I will the turn the call over to Dr. Bassam Damaj. Bassam?

Thank you, Ed. Good morning to you all from sunny San Diego, and thank you for joining us today. The first half of 2012 has been an exciting time for Apricus, as we have continued to execute our growth strategy. The second quarter in particular has been one of our most exciting and as a result of our recent transactions to own Scomedica, the leading French healthcare contract sales and marketing organization and its parent and holding company Finesco. And I will go into more detail about this important milestone later in the call. Our growth strategy is simple, acquire, develop and commercialize new products either directly in geographical areas where we have our own sales force or through strategic partnerships with third party. We now have four approved products, a strong pipeline with multiple late-stage opportunities, and commercial partnerships with leading pharmaceutical companies including Novartis, Abbott, Sandoz, Warner Chilcott, Wockhardt, and Bracco. The second quarter was also marked by several important regulatory meetings that has Canada for Femprox and MycoVa and the issuance of multiple patents that strengthen our intellectual property portfolio. Later on the call, I will provide updates and more details on these corporate initiatives and updates. And but first, I will turn the call to our CFO, Steve Martin, to discuss the financial results of our second quarter. Steve?

Thank you Bassam. Yesterday afternoon we issued our report on Form 10-Q for the second quarter ended June 30, 2012. We continue to reduce our operating losses towards our goal of being cash flow positive. The net loss for the second quarter of 2012 was $4.9 million or $0.19 per share. This compares to the net loss in the second quarter of 2011 of $7.8 million or $0.39 per share, a reduction of 36%. As of June 30, 2012 we had cash and cash equivalents totaling $17.9 million compared to $7.4 million at December 31, 2011. We remain in a very strong cash position and believe we have sufficient capital to achieve our growth plans. With the addition of Scomedica in France, which closed in July, we added over $2 million in cash to our available funds. The Company entered into three license agreements in the first half of 2012, two for Vitaros and the other for MycoVa. Pursuant to these agreements, the company recorded approximately $0.7 million in license revenue for upfront license fees not including tax withholdings amounts totaling $125,000 related to Italy and Germany. Our cash inflows in 2012 will come from three primary sources. First, the receipt of license and milestone revenues associated with existing commercial partnerships and new commercial partnerships for our products Vitaros and MycoVa. Secondly, from product revenues associated with the current sale of oncology supportive care products in the United States. And thirdly, in beginning of July 2012, revenues from the delivery of promotional sale services from contracts we had in place for Scomedica in France. We continue to be in active negotiations for the out-licensing of our products in multiple geographies. And we expect to announce additional major partnership arrangements in the second half of 2012. Related to the oncology supportive care products now being sold in the United States, in late June and early July we sold through to hospital customers our initial Apricus Totect kits for the treatment of anthracycline extravasation, and we are excited by the prospects of re-supply to the marketplace in this important therapy. Both Totect and our product Granisol for nausea as a result of chemotherapy and radiation therapy are now available through our distributors in the United States. In addition, we plan to re-launch Totect with improved pricing, packaging and promotional activities during the second half of 2012, which we believe will expand the availability and use of this product in hospitals and clinics and drive sales in 2012 and beyond. In France, we will recognize revenue on a monthly basis from the delivery of promotional services for specific pharmaceutical products sold in France, including two Novartis products we currently promote. Consolidated net revenue for Apricus decreased by approximately $1.5 million to $0.1 million in the second quarter of 2012, as compared, to $1.6 million in the second quarter of 2011. The decrease in revenue is primarily due to the timing of the receipt of license revenues from our partners which will continue to vary from quarter to quarter. Research & Development costs were $1.2 million in the second quarter of 2012 compared to $2.0 million in the second quarter of 2011, a decrease of approximately $0.8 million or 41%. Selling, General and Administrative expenses were $3.7 million in both the second quarter of 2012 and 2011. We expect that our most significant expenditures in the second half of 2012 will include development expenditures, including filing for market authorization for multiple drugs in notable territories. Costs associated with product re-launches and for the overall expansion of the commercial operations of the company. We do not expect significant R&D costs for Vitaros manufacturing, as these activities are transitioning to our partner Abbott with the drug moving to commercial production. With that, I’ll turn the call back to Bassam.

Thank you Steve. It’s really exciting actually to see the reduction of net loss and we will try to continue this reduction in our losses. The highlight of the quarter was the addition of Finesco and Scomedica to the Apricus Bio family of companies. Scomedica, as we noted, is the leading healthcare contract sales and marketing organization in France. It is a profitable company with annual revenues of approximately €8 million which translates to about $10 million. Scomedica is comprised of a large pharmaceutical sales force that can deliver over 100,000 details a year, and is recognized as one of the best healthcare marketing and drug sales organizations in France. They have a long history of successful marketing pharmaceuticals and healthcare products and effectively positioning and launch in products for global companies like Novartis, who is to maximize their sales in France. We believe there is a tremendous opportunity to elaborate Scomedica’s strong sales and marketing infrastructure. This key strategic transaction will enable us to directly launch Vitaros when it is approved in 2013 and other pipeline products in France, Europe’s second largest drug market once they have been approved. We also intend to use our French sales force as a base for our commercial operation in Europe, and for this, we are in current negotiations for several products that are complementary to our sales force and the therapeutic areas we are present in. In addition, as you know, we have the right to Granisol and NitroMist in those areas. And the addition of Scomedica as is an excellent way to maximize French and European sales of these and other future products. Specifically, we are in discussions for multiple partnering opportunities in France, to co-promote and possibly end-license more products to add to our pipeline. As I mentioned at the beginning of the call, Vitaros and the benefits of our pipeline including Femprox, MycoVa and PrevOnco, remain key valid drivers to the company. Both for the revenues we will generate through partnerships and for the future product sales as they become commercialized in those territories we have results for ourselves. Let me take a moment to outline some of the products we have made and developing, commercializing, and partnering this pipeline. As Steve mentioned, in early 2012, we announced the execution of an exclusive licensing agreement with Abbott Laboratories to market Vitaros in Canada. Vitaros was approved in Canada in late 2010 and we expect Abbott to begin a two-step launch, a soft launch focusing on urologists later this year, followed by a full launch of the product in that country thereafter. The two teams have been working closely on the training of the sales force and the marketing position of the product and we look forward to the third trial in Canada this year. We also previously announced an exclusive licensing agreement with Sandoz, a division of Novartis to market Vitaros in Germany. According to RMS health data, the current erectile dysfunction market is approximately $180 million in Canada and $220 million in Germany. These two transactions are worth approximately $44 million in upfront and milestone payments, as well as two-digit royalties and demonstrate the value potential of both Vitaros and our drug delivery platform NexACT. Our near-term focus for Vitaros is to secure additional partnerships where high quality and large pharma marketing partners as to continue to pursue regulatory filings in global territories and secure partners in the five main European countries. As you know, we have partners in Germany, in Italy, and we will market ourselves in France. So, now, we are focusing our efforts on partnering this drug in Spain and United Kingdom. And our goal is to secure those commercial partners in those two countries this year. To that end in June, we filed a response to regulatory questions received from Swissmedic, the Swiss agency for therapeutic products in Switzerland, relating to our marketing applications previously filed for Vitaros. As you know, Switzerland is not part of the European Union and therefore not regulated by the European Medicines Agency. We believe we are also on track to file our response the DCP filed in Europe for Vitaros for erectile dysfunctions this December. And we will keep the market updated on the filing date. So, Vitaros now has partnered in multiple geographies around the world including US, Canada, Germany, certain countries in Middle-east the Gulf counties, Israel, Italy and France. It’s a very significant market as I mention. Apricus is prepared to commercial this important product through our own sales force in front. The global erectile dysfunction market is well established and current estimates place the total worldwide market close to $5 billion and ex-US market has over $2.6 billion, it is a big market for us. And we look forward to initiating sales of our product this year in Canada and later 2013, as approved in Europe and other territories. We believe there is plenty of room among the established competitive for a new product, especially one like Vitaros, which is as a topical application, the only on-demand prescriptions are approved, anywhere with faster onset than the current PDE5 inhibitors, significant efficacy, a favorable safety profile including patients with comprised cardiovascular systems, hypertension, prostatectomy, patients on nitrates and alpha blockers and patients who fail on Viagra. Our net most advanced products are Femprox, our topical cream for treatment of Female Sexual Arousal Disorder FSAD, or MycoVa for onychomycosis. And I will start with MycoVa, our late-stage topical treatment for mild to moderate onychomycosis or nail fungus. As we previously announced in July Apricus Bio had a pre-NDS meeting with Health Canada, the agency responsible for approving the drugs in Canada. And before I start on the guidance we received, it is important to understand and to know that the primary end point currently used for this disease as a complete cure is very difficult to achieve. And as you may know, even the oral Lamisol, which had an over 70% response state in humans, the efficacy was decreased now to 38% with wider use. And as you know, there have been no drugs approved for this indication in the U.S. for the past several years, as it has been very difficult to achieve this primary end-points, and the agencies around the world now are meeting and bringing KOLs to reevaluate this primary end-point. Going back to the meeting we had with Health Canada, I have to say we were overly excited from the outcome of this meeting, and it surpassed our expectations. Until we receive the official minutes from Health Canada, we will not be able to announce the formal guidance received. But I can tell you right now in anticipations of the formal minutes the company initiated its new drug submission activities for MycoVa in Canada as we expect to file for market authorizations for this drug in Canada for the second half of 2013. And we also continue to pursue development of MycoVa in the US and Europe and expect to receive regulatory guidance from those two health agencies in the third or fourth quarter of 2012. We have great prospects for MycoVa, as the guidance will start to come in. And we will pursue those guidance’s, and our goal is to put MycoVa in as many territories as possible and start generating revenues from this product and with a product of having a second product approved in the market from our NexACT pipeline. Also in July, we completed our guidance meeting in Health Canada, regarding the suitability of the existing clinical trials, pre-clinical and chemistry data for Femprox, and we were encouraged by the guidance received from the agency. And currently we are waiting to receive the formal minutes before we can make the formal announcement. As a reminder, our guidance with Health Canada focused first on the acceptability of the current Phase III trial conducted in China, as one of the two pivotal trials needs to be run. Second, the acceptability of the primary and secondary endpoints use for disease which are mainly successful sexual events as a primary endpoint. And then FSFI score as a secondary endpoints, and the use of a single dose which is 900 microgram dose, where we achieve statistical significance in our first Phase III trial that we’re on. And the Phase III profile of the drug. And as I said, we are looking forward to receiving the formal minutes on the agency so I can share this great news with you shortly. As you know, our set-back in the place has been largely due to concerns over the systemic effects of the orally administered drug. And the advantage of our drug Femprox which has distinct characteristics is a topical delivery to a territory where the problem is, and to its mechanism of action which separates it from any other development candidate on several levels. Femprox is further along than any other compound in the public domain and is the only product that has successfully completed a 400-patient Phase III clinical trial FSAD, one which achieved statistical significance and its primary and secondary endpoints. In terms of the next steps in our development of commercialization assets, we are pursuing and expect to have guidances from health agencies in the US and Canada into third and fourth quarter of 2012. As you can see, we are extremely happy with the guidance we have received so far. And that actually puts now more value in our pipeline and in some of our products that have been discounted by the market. And when these guidances are made public, we look forward to the market adding the value of those products to our valuations in there. In addition, these candidates and indications, Apricus Bio has an extensive pipeline of products in early stage of development. These pipelines as you know consists of drug candidates that address a wide range of therapeutic areas including oncology, oncology supportive care, diabetes, pain management and anti-aging. As a quick update on our consumer care pipeline, I am pleased to announce that we applied for market authorization for our Tolnaftate-D OTC product in Canada a few months ago. And we started receiving questions from the Health Canada. We filed our response with the agency last week and the agency had until November to go into decision on the approvability of the product in Canada. And as a note, OTC approvability in Canada with added label is different than the United States and it requires over 200-base review by the agency. Our Tolnaftate-D contains DDIP and our label that we requested in our filing in Canada, has a deeper penetration plain which make it a proprietary product for this indication in the market. PrevOnco, for example, is our proprietary Phase III ready cancer treatment for patients with advanced HCC Hepatocellular Carcinoma, or liver cancer. Earlier in the second quarter, we received an official issuance of the first PrevOnco patents in the US. This patent claims certain composition and methods for inhibiting tumor growth. And will provide patent protection until 2029. And again, I want to actually reiterate our development efforts for PrevOnco. This novel therapy that we have, we expect to enter the clinic for our first human pharmacokinetic bioequivalence trial with our next act containing a formulation of PrevOnco that we developed in few months. And we will update the market on the data once available. Clearly, the second half of 2012 has been very productive. Yes, we expect even greater progress in the second half. Just as a reminder to the market, our upcoming milestones include first, the first sale of Vitaros for the treatment of erectile dysfunction by our partner Abbott in the second half of 2012. Next, we continue to engage in partnership negotiations for Vitaros, mainly now focusing on the United Kingdom and Spain, as well as other products in our pipeline. As we look forward to announcing those signed partnerships which will contain upfront cash, milestone as royalties in the third and fourth quarter of this year. 2012 has been marked by significant progress. And that significant progress would impact not just our short-term strategy but our long-term commercial viability and core growth strategies. In addition to the regulatory achievement that we have done for this quarter, the Finesco-Scomedica transaction marks the execution of a transformative agreement that surrounds our commercial operations in Europe that will allow us to sell our own drug at least in France. We expect this transaction to build a strong revenue base and several key market beginning with France and to create significant value for our shareholder over the long-term. Over the short term, we have seen the effect of this transaction on our company value and we look forward to continuing receiving value for these important transactions that we have done. We look forward to having a second drop from our pipeline move towards market authorization in 2013 we will update you further on that once the minutes are formally issued from Health Canada. And as we continue, I’m really excited in this quarter as a lot of things have happened in this very short period of time. And with this, I will stop. And I will turn the open the call for any questions. Operator?

(Operator Instructions). Our first question comes from the line of Jason Butler with JMP Securities. Please proceed with your question. Jason Butler – JMP Securities: Hi, thanks for taking for the questions, and congratulations on the progress in the first half of the year. Bassam, first question on MycoVa, you talked about the challenges of the clinical cure endpoint. So, can you talk about the data that you have for MycoVa and the points which you think are strongly supportive of the drug as efficacy as you look to, moving towards regulatory submissions?

Definitely, I would be happy to Jason. So, maybe I will start a little bit with explaining, although there is – the gold standard now for onychomycosis, is the oral terbinafine, which is oral Lamisol, which became generic on the market. And I just want to point out although people think this is the treatment for this, this drug is really prescribed for patients who would have one to two toes affected out of 10, patients who are not elderly which means they can tolerate the hepatic side effects of this drug, and also patients can take one cycle of this drug. And that actually leaves patient who do not respond to this drug, is really without any available treatment. And just so you would know, the prescription information actually of oral terbinafine, where originally in the clinical trials, we had over 70% response rate has been lower to 38% response rate. Because when we see the actual use and the actual benefit of the patient, is not there. And that has left the agency in a big dilemma as they have actually had a consortium including actually the top KOLs, including our KOLs like Dr. Banum, who is the Chairman of the Mycological Society in the act, and they were looking for alternatives to this primary endpoint. When we had the product with Novartis, Novartis designs a trial to have includes actually patients who have up to 10 toes actually in affected in this. And to have patients over 4 millimeter thickness of nails, so those are very aggressive patients. We are basically looking patients whose toe nail is like a rock. And mere adding a nail solution around it, it’s really very difficult to achieve that primary endpoint which is the complete cure. Although this was very difficult we did achieve a high significance on the Mycological cure and negative KOL, which basically means that the fungus is dead. So the difference between the primary endpoint and the secondary endpoint is that, the primary endpoint the FDA has put forth is that they need to see the names growing to its full extent and be clear of any infection which actually takes tremendous amount of time over a year and half. And sometimes it is impossible to achieve, because once you have this infection, it affects the tissues and nail bed, and the nail never recovers to its original state. And this is what we based our strategy on, is that we went to FDA, they say listen. These are the experts in this consortium these are the experts who ran those clinical trials and they are here to tell you about this endpoint is technically impossible to achieve. And since patients would take oral Lamisol, they don’t have any other solution after the first cycle. This is a good alternative, not just to be used as a primary with the oral Lamisol benefit but also as a continued maintenance program due to its safety and Mycological efficacy that we have achieved. Does this answer your question though? Jason Butler – JMP Securities: Yeah, it does, that’s great. Thanks, thanks, Bassam. Second question is on Totect. Can you give us some initial feedback from the market and your early impressions of how you’re planning to grow this product?

Sure, sure. Just as reminder, Totect is our drug for anthracycline extravasation which is basically the diffusion of anthracycline, like doxorubicin, and the tissues around the vein which causes tissue necrosis, and that could lead sometimes to death. So, basically what this drug does, if it’s infused within six hours, it neutralizes doxorubicin, and therefore inhibits activity and therefore necrosis of the tissues around it. Totect was manufactured by Ben Venue which is a subsidiary of Boehringer Ingelheim, that was shut down by the FDA and by Europe due to errors in manufacturing practices. So, and when we took over this drug, we were lucky to be able to retrieve one good bag size which is about 1,200 vile of its drug which was cleared by the FDA. And we actually had that on the market. In the meantime, we are actually moving manufacturing to two additional manufacturing sites, and we expect commercial batches to start production toward the end of this year. Of course the drug was on shortage – we actually have no problem selling the current stock that we have as we had of back orders. And again this is a drug that is needed by the hospital. So, this drug is practically selling on its own. We have not recognized any revenues in this quarter as we will recognize them in the next quarter as we currently – all the sales we have come after the Q2. So, we will actually be able to recognize this full batch in our revenues for Totect this year. And again, this is the product that is required, that is in the ONS guideline as the therapy to treat anthracycline extravasation. Of course the market was happy to know that the product is available even with one batch. And we would continue to push the manufacturing to make it continuously available in the commercial setting. Jason Butler – JMP Securities: Okay, that’ very helpful Bassam. Thank you for taking the questions.

Thank you Jason.

Our next question comes from the line of Scott Henry with ROTH Capital Partners. Please proceed with your question. Scott Henry – ROTH Capital Partners: Thank you. A couple of modeling questions as we try to get our arms around the many moving parts. For starters, Scomedica sales, what level of sales should we start to expect in Q3 going forward?

Good question Scott, this is Steve. So, we acquired the company in the middle of July. The run-rate has been approximately €8 million a year. And what we’ll continue to evaluate on a strategic basis is whether we will continue to continue with the contract sales activities which are at a pretty steady run-rate or whether we will start to convert those sales individuals to new opportunities that we have for in-licensed drugs or owned drugs. So, the easy answer for now is, it’s slightly profitable operation Scott roughly $8 million run rate with a number of contracts from third parties. And for the near term we’ll just ask them to keep on going ahead steady. Scott Henry – ROTH Capital Partners: Okay. And then, with regards to the oncology products, about $100,000 – $ 110,000 in Q2, should we start to see a significant ramp in Q3.

Well, you might remember that our product sales also improved some diagnostic products. Scott Henry – ROTH Capital Partners: Okay.

So, what you’ll see in that run rate of $117,000 is diagnostic products. Well, as Bassam said, we just started selling the Totect kits and Granisol products into our shelves and to the wholesalers in very late June or early July. So, we really are just starting third quarter with those two oncologies care products. Scott Henry – ROTH Capital Partners: Okay. So, I would take that, I mean, it would be a gradual ramp just progress in Q3 but perhaps the inflection in Q4?

That’s right, progress in Q3, inflection in Q4 much more available products, perceivably for Totect in the first quarter of 2013. So, as you’d expect, with a re-launch we’re building up the supply. We’ve got new manufacturers in place for Totect. And so it’ll be latter half of this year and pushed for ‘13 as it ramps up. Scott Henry – ROTH Capital Partners: Okay. And then, looking at the 10Q, there were some comments with regards to Vitaros and Warner Chilcott, who by the way did mention the product on their recent conference call. My question is the new supply agreement, is that for the new version, the non-refrigerated version or is that for the prior refrigerated version?

Maybe I’ll take that – to answer that question Scott. I think just important for the market to know that the specifications of Vitaros in Canada are different than the one in the US. And I just want to make this clear as it – it wasn’t clear from the conference call from Warner Chilcott. And that that actually did create a lot of questions that came from our investors. So, just to make it clear, the specifications of Vitaros in the US are different than the ones in Canada, which means, we cannot go to our therapies and take Vitaros from our stock and hand it over to Warner Chilcott. So, the supply that we’re doing for Warner Chilcott is specifically for the US. And this is what we will be starting – doing for them for that product. And this is what actually – what’s his name, Roger, CEO of Warsh Chilcott actually, he looked into it and he would answer to that question. So, unfortunately I cannot – it is actually not for the room temperature formulation, this is for the refrigerator product but it’s for its specification that the FDA has put for Vitaros in the US again, which are different than Canada. So, whatever we’re doing with Warner Chilcott has no impact on our development and commercialization plan in Canada and in Europe. Does that answer your question? Scott Henry – ROTH Capital Partners: That is helpful yes. And then, also, the Q, you did note that you’re currently manufacturing three commercial batches of Vitaros. Could you comment on what kind of capacity in terms of revenue, a batch, a commercial batch of Vitaros equates to, you may not want to comment but?

Sure. I mean, the current batch size that we have for Vitaros are 6.5 kilos which will generate about 28,000 dispensers, single minutes. So, basically the capacity of the production right now is about 1 million dispensers a year in one shift. So, and the site can go into three shifts which will increase that capacity. And again, we have done scale-ups with that. So, once the orders grow, the scale-up can take place easily and support the market. We have also – just to let you know, we have also actually manufactured several millions of dispensers. We have manufactured kilograms of DDIP, and we have actually reserved a large amount of alprostadil in anticipation of the projections we have from our partners for Vitaros. Scott Henry – ROTH Capital Partners: Okay. And final question with regards to Femprox, do you still expect to be in partnership discussions for that compound in 2012, or should we think about that as a 2013 event?

Well, I mean, we are in partial discussions, we are actually in confidential discussions with multiple partners. As you know, we are – we went out to get guidance as this was something that our partners needed to have in order to assess what is the investment needed in Femprox and the second Phase III trial before they go over to commercial. And again, now that we have started getting the guidance from Canada, we await the guidance from the US and from Europe. So that of course will impact when we would want to make a deal on this product. Again, my preference for this product to do a worldwide deal, a global deal, and to do that deal, you would have to wait for the guidance from Europe and Canada. My second preference is to do of course an SQS, a global deal, which means we only would take Canada and EU regulatory. And my third would be really to do like it was done with Vitaros, is to do regional deals. Scott Henry – ROTH Capital Partners: Okay. All right, great. Well, thank you for taking the questions Bassam.

Thank you Scott, we appreciate that.

(Operator Instructions). There are no further questions at this time. I’d like to hand the floor back over to management for closing comments.

Thank you for joining us today on the call. And as always, if you have questions, please do not hesitate to contact the company directly. Again, thanks everyone for your time.

Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.