Angeli Kolhatkar - Arecia Advisors Rich Pascoe - CEO Cath Bovenizer - Chief Accounting Officer Barbara Troupin - Chief Medical Officer

Juan Noble - Taglich Brothers

Greetings. And welcome to the Apricus Biosciences' First Quarter 2015 Financial Results and Corporate Update Teleconference and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Angeli Kolhatkar. Please go ahead.

Good morning. And thank you for joining us today. I'm Angeli Kolhatkar with Arecia Advisors, Investor Relations for Apricus Biosciences. With me today from Apricus is Chief Executive Officer, Rich Pascoe; Chief Medical Officer, Barbara Troupin and Chief Accounting Officer, Cath Bovenizer. During today's call, Rich will review the company's progress in the first quarter as well as more recent event and goals for the remainder of 2015 and beyond. Barbara will discuss Barbara our product pipeline, and Cath will provide an overview of the financials. We will then open up the line for question. I'd like to remind everyone that certain information discussed on today's conference call is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act, and that during today's conference call, management will be making certain forward-looking statements regarding future events or future financial performance of the company, including statements related to expectations around the timing for commercial launch of products, and the timing and outcomes of clinical trials and the regulatory approval process for product candidates, business development plans and objectives such as out-licensing and acquiring products and product candidates, plans to raise capital, expected use of cash reserves, and the development of the company's product pipelines. Such statements are predictions based on current expectations, and actual results could differ materially. Please refer to our most recent filings with the United States Securities and Exchange Commission including our annual report on Form 10-K and quarterly report on Form 10-Q, which will be filed later today. For additional discussions regarding these and other risks that may affect our business. These documents can be found on the company website at www.apricusbio.com. Apricus' financial results press release for the quarter ended March 31, 2015, crossed the wire earlier this morning, and can also be accessed on the company's website. I will now turn the call over to Rich Pascoe. Rich?

Thank you, Angeli. Good morning and thank you all for joining us on the call today. Apricus is off to a best start this year making significant progress and achieving our key corporate objectives. Namely the advancement of our clinical pipeline, sustained growth of our flagship product Vitaros in Europe and improving our financial position. Starting with our pipeline, we are excited to have two highly differentiated clinical stage products which we believe have significant clinical and commercial value. We expect to report on several important clinical development milestones later this year. This includes a go/no go decision for RayVa and Raynaud's phenomenon, pending guidance that we expect to receive in June of this year from the RayVa Data Monitoring Committee's review of the Phase 2a clinical trial. That trial is currently enrolling patients. After full review of the data, we will request the meeting with the FDA to confirm the regulatory path for subsequent clinical trials for RayVa so that we can move into a development program as soon as possible. Also in June, we plan to begin enrollment in our Phase 2b clinical trial for fispemifene in men with symptomatic secondary hypogonadism. Barbara will discuss our clinical programs in more detail in a few moments, but first I would like to share our thoughts on the potential value we see in fispemifene as a multi indication opportunity in male urological conditions. Fispemifene is the first tissue specific selected estrogen receptor modulator SERM designed specifically for use in men. The mechanism of actions potentially creates the opportunity for us to pursue additional male urological conditions such as lower urinary tract symptoms and chronic prostatitis. There are no approved therapies in the United States for non-bacterial chronic prostatitis and these indications we believe represent large and underserved markets. Given the opportunity to further expand fispemifene's clinical and commercial footprint, we plan to initiate an additional clinical study to further explore one of these indications in the second half of this year. We believe that this multi indication strategy enhances the clinical and commercial benefit risk profile of fispemifene. Turning to our marketed product Vitaros, we continue to be pleased with our commercial partners' efforts to establish Vitaros as the erectile dysfunction treatment of choice in Europe. In 2014, Vitaros was launched in the United States by Takeda and in Sweden, Germany and Belgium by Sandoz. Our partner Recordati recently launched by Teracin, Spain, one of the largest ED markets in Europe. In the first quarter our partner in France, Laboratoires Majorelle received a positive reimbursement decision for Vitaros and as such we expect that Majorelle will launch in France, the largest ED market in Europe as soon as final pricing is granted by the French authorities. Importantly, we believe that there is enough finished commercial product on hand to support a robust launch in France by Majorelle and their sales force is trained and ready to begin promotion upon the commencement of commercial launch in France. Lastly, Bracco, our partner in Italy has indicated that they expect to launch later this year. And as such have placed commercial product orders from our contract manufacturer Therapex to support that launch. We continue to work with Mylan in Canada where Vitaros is approved but not yet on the market and Actavis in the US with the goal of making Vitaros available to men suffering from erectile dysfunction in North America. While I cannot comment further on these matters, I can assure that we are working diligently to move this process forward. Finally, we continue to pursue additional partnership for Vitaros in Latin America and Asia Pacific. While we cannot predict the timing and the outcome of these efforts, we currently have indications of interests from several parties for these territories as we seek to make Vitaros available globally. Turning to our next generation Vitaros room temperature device development program, we reaffirm our previous target of an expected regulatory submission or approval for that device in Europe in 2016. In summary, we view Vitaros as a strategic asset with the potential to general meaningful, long-term revenue for the company and we will continue to support and leverage this core asset for the benefit of shareholders. With respect to our financial position, we have increased institutional holders in Apricus with an $11 million financing led by Sarissa Capital. This financing in combination with our other sources of capital should fund continued operations through the end of this year. We are pleased with the progress that we've made since the beginning of 2015. I believe the coming months would be even more exciting as we look forward to establishing proof of concept with RayVa and the start of the fispemifene Phase 2b program. I'd now like to turn it over to our Chief Medical Officer, Dr. Barbara Troupin to discuss those two programs in more detail. Barbara?

Thank you, Rich. As you recall in October of last year we in licensed the US rights to fispemifene, a novel selective estrogen receptor modulation or SERM with solid Phase 2 clinical data which allows us to build upon our focus on innovative therapies for male urologic conditions. Since late last year we've been active in preparing the clinical path for fispemifene in the United States for the symptomatic treatment of adult man with secondary hypogonadism or low testosterone. As we near the June initiation of our first Phase 2 trial with fispemifene, we are finalizing details with our chosen CRO and the clinical sites where we will conduct the trial. We have IRB approval and sites have started identifying potential subjects. We expect the clinical trial to run through the end of the year with data to follow in the first quarter of 2016. In this trial, we will assess efficacy and safety in a randomized placebo controlled parallel arm study of a fixed dose fispemifene in approximately 160 hypogonadism men aged 18 to 65 presenting with one or more sexual symptoms that are closely associated with secondary hypogonadism. We will also assess relevant pharmacodynamics and pharmacokinetics parameters to evaluate the ability of fispemifene to increase testosterone level and assess other related hormonal measures at second end point in addition to continuing to characterize its safety and tolerability profile. As we discussed in our last quarterly call, we recently met with the FDA and we see clear regulatory guidance as to the core requirements needed to support and approval in our lead indication. The target patient populations and the key safety parameters of interested agency, all of which we are incorporating indoor development program. Most specifically the FDA provided guidance on clinical end points with the specific emphasis on incorporating the patient voice into key end points. This trial will focus on sexual symptomatology which is quite prevalent in secondary hypogonadism. And there is several patients reported outcome or PRO measures which have been used for these symptoms in this patient population in prior regulatory approvals and labeling. At a recent FDA public meeting on clinical outcome assessment and PROs, Dr. Janet Woodcock, Director of the Center for Drug Evaluation and Research at the FDA, open the session by stating that incorporation of the patient voice into drug development is a key initiative of the FDA under both PDUFA 5 and the 21st Century Cures Legislation that is currently making its way for the US Congress. She also acknowledged that the strict implementation of the 2009 PRO guidance had inadvertently stifled TCCL and several aspects of drug development. And that the FDA was changing its approach to be more collaborative and supporting incorporation of new or established tools to achieve this goal. We plan to continue our dialogue with the FDA on this and other topics related to the development fispemifene for its range of indications. We believe this study if successful will provide us with a sound rationale and robust clinical benefit data from moving fispemifene into later stage clinical development in important areas of unmet medical need. As Rich mentioned, we are pursuing a multi indication approach with fispemifene. Given the potential to treat other male urologic conditions with fispemifene, we began internal efforts to evaluate its use and follow on indications. The compound anti inflammatory effects on prostate as seen in animal models may provide clinical benefit in conditions such as chronic, non bacterial prostatitis or lower urinary tract symptoms or LUTS. Our goal for this year is to work with our scientific advisors to better understand the unmet needs in these conditions. And to initiate one exploratory clinical study to establish clinical proof of concept to guide future development. We firmly believe that pursuing a multi indication approach in this development program will further differentiate fispemifene from other SERMs optimize its clinical utility and enhance its long-term strategic and commercial value. The next five point compound is RayVa, our internally developed first in class product candidate for Raynaud's phenomenon. Raynaud is a circulatory disorder affecting primarily the hands and feet which leads to pain and impairment in function during an episode and frequently occurs in patients with underlying scleroderma and autoimmune disease. RayVa leverages our DDAIP Permeation Enhancer technology in combination with alprostadil, a vasodilator and a formulation that is topically applied to affected extremities. In early December, we enrolled the first patient in a Phase 2a proof of concept clinical trial and patient with Raynaud secondary scleroderma. This Phase 2a trial is a randomized double-blind placebo-controlled trial in up to 45 patients. Each patient will be randomized to receive one application of placebo and a second application of one of three different doses of RayVa in a crossed over design with each patient serving as their own control. This dose ranging study evaluate blood flow and skin temperature changes at the site of application by laser Doppler and thermography following a standard cold challenge. Additional safety endpoints are being assessed as well. With mostly academic sites contributing study start up with slower than anticipated. We now have all four site actively enrolling subjects and improve rate of double than the last month. We expect to make a go, no-go decision in the middle of this year based on end point of the Data Monitoring Committee or DMC which consist of internationally recognized clinical and biometric experts. This decision will be based on demonstration of efficacy in one or more doses and evidence of safety and tolerability. While the DMC functions independently, the final decision on continuing to pursue development of the compound lies entirely with Apricus. To date, we've seen no evidence from blinded data that would lead us to believe the trial will be stopped for safety reasons. Assuming positive results based on guidance we expect to receive from the DMC, we intend to request the meeting with the FDA in the second half of 2015 with a goal of moving in the late stage pivotal trials in 2016. For remainder of this year, we will need to complete clinical protocol development for at home dosing, finalize the RayVa formulation and delivery system, manufacture clinical trials materials, select a contract research organization and complete other critical tasks necessary to initiate and complete the development program. The FDA has indicated that RayVa may qualify for priority review given the unmet medical need and lack of approved therapies in the US to treat this condition. The FDA would determine if the RayVa new drug application qualifies for priority review following its submission, which could occur as early as 2017. With that I'll turn the call over to Catherine to discuss our first quarter financials. Cath?

Thank you, Barbara. We released our financial results for the first quarter 2015 with the press release this morning. And we intend to file our quarterly report on Form 10-Q with the SEC later today. Total revenues for the quarter ended March 31, 2015, were $475,000. Revenues in the first quarter of 2015 were comprised of $350,000 in license fee revenue, which includes the --fees in the extension of licensing agreement with Sandoz to now incorporate certain Asia Pacific territory. Also included in revenue our $37,000 in sales of product to our commercial partners and $88,000 in royalty revenues. Regarding product sales, the decrease in product sales in the quarter was driven primarily by a shift in product being manufactured for some our partners by Groupe Parima on a direct basis for which we do not book product sales revenue. Looking forward as we continue to transition our commercial partners to a direct relationship with our manufactures as this is the case with Majorelle and Bracco, product sales and the cost of those product sales are expected to decline as those revenues and cost shift to our manufactures. For the remainder of 2015, we expect revenues generated will come from licensing, milestone and royalty revenues received from our commercial partners for Vitaros. And from sales of Vitaros to our licensee partner. The timing of these revenues is uncertain and as such our revenue can vary significantly between quarters. As a reminder, we recognize royalty revenues one quarter after our partner sell product to their customers. Royalties reported in the first quarter of 2015 reflect our partners' Vitaros sales in the fourth quarter of 2014. While there is a logical connection between our sales of Vitaros to our partners and future royalties from those partners, due to the relatively brief period since the product launched and due to our partners' control over their respective supply chain, we are unable at this time to provide guidance on future royalties. Having said that, we expect Vitaros' royalties to be more meaningful in 2015 as sales increased in territories where the product isn't launched and as our partners conduct launches in additional territories. Net losses for the first quarter of 2015 were $6.4 million, or $0.13 per share compared to a net loss of $3.3 million, or $0.09 per share in the first quarter of 2014. The increase was primarily due to increased spending on the company's development programs. Largely attributable to the company's fispemifene and RayVa clinical trials. We ended the quarter with $16.2 million in cash and cash equivalent compared with $11.4 million as of December 31, 2014. With our existing cash on hand, access to additional capital under the existing committed equity facility with the Aspire Capital, access to the second $5 million tranche of our existing debt facility established with Oxford Finance and Silicon Valley Bank and ongoing cash flow from Vitaros, we believe that we have an appropriate level of cash to support the current operating plan through 2015. We expect to have net cash out flows from operations during 2015 as we progress our Phase 2 development program for fispemifene, develop our RayVa's room temperature device, continue the Phase 2a development for RayVa and meet other operating expenses. I'll now turn the call back over to Rich.

Thank you, Cath. In closing, I want to reiterate how excited we are about the prospects for Apricus in 2015 and beyond. I believe that we are achieving our goals and are on our way to bringing products to the market that address the unmet needs of patients. For the remainder of the year we look forward to value creating milestones including receiving guidance from DMC as to whether we move RayVa into a pivotal clinical program later this year. We also look forward to the start the fispemifene Phase 2b study in June in secondary hypogonadism and symptomatic men for which we expect to have data in the first quarter of 2016. Additionally, we expect to provide updates on our early exploration of other indications for which fispemifene may be applicable. On the Vitaros front, we look forward to additional European launches by our partners for the remainder of the year, and to see the success of these launches reflected in our revenue. We continue to compile the required stability data for our Vitaros' room temperature device and expect to submit for a European approval in 2016. Since the beginning of this year, Apricus has focused on becoming a leading specialty pharmaceutical company in urology and rheumatology therapeutics with the objective of creating substantial growth opportunities through the advancement of our product pipeline. We believe that we have demonstrated the ability to successfully acquire novel assets and to design plan and execute on multiple clinical program to fully leverage those assets. While I am proud of our accomplishments today, I look forward to our continued success this year and beyond as we seek to bring clinically and commercially relevant products that address significant unmet needs to the US market. As always, we appreciate the support and feedback we receive from our shareholders. And with that we will now open the call up for questions. Operator?

[Operator Instructions] Our first question comes from Juan Noble with Taglich Brothers. Your line is open.

Good morning, Rich. Thanks for the update. I was wondering as you transition to Vitaros sale from your contracted to your partners, are there any metrics that you can give us or provide us that will give us some visibility on the progress of Vitaros sales? Just something to up or stack our progress. How are they informally as you go forward? Thank you.

Yes, Juan, thanks for the question. As you know we have reported to date individual doses that have been shipped into Europe for the support of the ongoing commercial launches, the four countries that we mentioned, they were launched last year. And as we noted this morning several of our partners and our ultimate goal is to shift all of our partners over to a direct relationship with our manufactures and as such we will not have visibility on that particular metric. So going forward we will continue to look at feedback or receive feedback from our partners. I think the primary number that we will rely upon going forward will be quarterly royalty reports, understanding that those are quarter lag in terms of the actual reporting that we do relative to the time in which they are reported. But I think going forward as we see more launches occur throughout this year, we will rely primarily upon the royalty reports and also look for other feedback mechanism from our partners that we could share with the market here on a quarterly basis. One thing I will just remind everyone obvious that we have said consistently that we believe the 2015 is sort of the year that we fully expect Vitaros to be launched in Europe where it is approved. And we are seeing evidence of additional launches here recently with Recordati's launch in a major market that being Spain. We expect other major markets to launch later this year. I think the biggest one that we are all waiting on is France. And we have confidence in our partner's ability they have to a do job once they get pricing from the French's authority. And so over the course of this year as we the product fully launched we will be able I think to more fairly evaluate its commercial performance as we end this year. And having said that then of course we will rely exclusive upon the royalty report that we receive from our collective partners to be able to judge or to gauge the performance of the product in the market place.

[Operator Instructions] This concludes our question-and-answer session. I'd now like to turn the call back to Rich Pascoe, Chief Executive Officer for closing remarks.

Thank you, operator. And thank you all for joining us today on the call. And we hope to see many of you on May 14th at our Annual Meeting of Stockholders here in San Diego. As a reminder, if you are a stockholder of record as of March 26, 2015, please vote your shares as soon as possible. If you need assistance or like to vote your shares by phone, please call Morrow & Company at 1855-231-8973. We also hope to see some of you in New York City when we present at the SeeThruEquity Conference on May 28. Thank you. Operator, you may now disconnect.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.