Matthew Beck - The Trout Group, IR Rich Pascoe - CEO Barbara Troupin - CMO Cath Bovenizer - Chief Accounting Officer

Scott Henry - Roth Capital Juan Noble - Taglich Brothers

Welcome to the Apricus Biosciences' Third Quarter 2015 Financial Results and Corporate Update Teleconference and Webcast. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matthew Beck. Please go ahead.

Good afternoon. And thank you for joining us today. I'm Matthew Beck with The Trout Group 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 provide a brief review of the company's progress in the third quarter as well as more recent events and goals for the remainder of 2015 and beyond. Barbara will discuss the products pipeline and Cath will provide an overview of the financials. We will then open up the line for questions. 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 relating to expectations around the timing for the commercial launch of products, the timing and outcomes of the clinical trial results and the regulatory approval process of Apricus product candidates, business development, plans and objectives such as out-licensing and acquiring products and product candidates, expected use of cash reserves, and the development of the company's products pipeline. Such statements are predictions based on current expectations and the actual results could differ materially. Please refer to company's most recent filings with the Securities and Exchange Commission, including Apricus annual report on Form 10-K and the quarterly report on Form 10-Q, which was filed earlier today for additional discussions regarding these and other risks that may affect our business. These documents can also be found on the company website at www.apricusbio.com. Apricus' financial results press release for the quarter ended September 30, 2015 crossed the wire earlier today, and can also be accessed on the company's website. I will now turn the call over to Rich Pascoe. Rich?

Thank you, Matt and good afternoon and thank you all for joining us on the call today. The third quarter of this year was one of the most productive quarters in our company's history as we continue to make progress across all facets of our business. Not only have we made a great deal of progress with our clinical pipeline, but we've also significantly enhanced the value of our flagship product by Vitaros in Europe, United States and now Latin America. On the clinical front we reported supportive top line Phase 2a data for RayVa, our topical treatment for Raynaud phenomenon and confirmed plans to move RayVa into Phase 2b clinical trial in the second half of next year. We were pleased to see early clinical signs of efficacy in Raynaud patients along with an attractive safety and tolerability profile in the disease area of unmet need. For our lead pipeline compound [indiscernible] Apricus recently announced completion of enrollment in the Phase 2b in symptomatic secondary hypogonadisma and we remain on schedule to report top line data during the first quarter of 2016 in our lead indication. It was also a productive quarter for Vitaros our novel treatment for erectile dysfunction. According to interim data obtained from. IMS retail unit sales in Europe increased 146% from approximately 74,000 units in the second quarter of 2015 to approximately 183,000 units in the third quarter of 2015. In addition Vitaros was approved in 12 additional countries in Europe under the decentralized procedure for DCP in August of this year expanding our reach potential to Eastern half of the European continent. Our marketing and distribution partner Bracco successfully launched Vitaross in Italy in September solidifying Vitaros' presence in the last of the five major European erectile dysfunction markets following the UK, Germany, France and Spanish introductions. Importantly Apricus license the U.S. Development and Commercialization rights to Vitaros from [indiscernible] in September. We are in the process of completing the transfer of the IND and NDA to Apricus from [indiscernible] and we’re working closely with our advisors to address the deficiencies found in the complete response letter with the goal of resubmitting the NDA in the second half of 2016. On October 1, of this year Apricus entered into a Vitaros distribution agreement with Ferring in Latin America for $2.2 million upfront payment and up to 16 million in regulatory and sales milestones plus royalties on sales. Ferring has a strong commercial presence globally and in the key Latin American markets in particular and we look forward to building a strong relationship with them. I would also like to quickly address an important issue that's likely on many investors' minds this week. The FDA's cancellation of its advisory committee on enclomiphene previously scheduled for November 3rd, since we in-licensed enclomiphene last year we have consistently focused on a strategy that allows us to move this fispemifene through the clinic in an effort to demonstrate clinical benefit in a well- defined, symptomatic patient population. We believe ease recent events regarding the regulatory pathway for a SERM and the treatment of secondary hypogonadism in man further validates our clinical development path for fispemifene. Based on our interactions with the FDA which guided the Phase 2b study design, patient selection criteria and clinical evaluations, we’re confident our development and regulatory approach with fispemifene is in-line with the current FDA guidance and we believe we are well positioned to bring the first and best in class SERM to the U.S. market for the treatment of symptomatic secondary hypogonadism characterized by sexual dysfunction. I will now turn the call over to our Chief Medical Officer Dr. Barbara Troupin for a more indepth update and discussion of our clinical programs. Barbara?

Thank you, Rich. The clinical and regulatory teams have indeed had a busy and productive quarter and we're very appreciative of their efforts. In September we reported our findings from our Phase 2a trial of RayVa in patients with scleroderma who also suffer from the acute vasoconstrictive events characteristic of Raynaud's phenomena. The RayVa 2A trial was a randomized double blind placebo controlled trial that enrolled approximately 35 subjects across four U.S. sites. The clinical trial was based on an experimental design where in subjects were exposed to a cold challenge to assess blood flow or hemodynamic and skin temperature thermodynamic changes by laser Doppler and thermography. In each case subjects were exposed to placebo and one of three active doses in this cross over design study. The primary objective of this first inpatients clinical trial was to establish safety and tolerability and to look for pharmacodynamic effects in this targeted Raynaud's population. Importantly RayVa met this primary objective and was well tolerated by all subjects and there were no significant safety issues observed in any dosing cohort. Well this exploratory study was not designed or powered to show a statistically significant pharmacodynamic result there were subjects at each dose level who demonstrated improvements in blood flow and/or hand temperature Apricus belief that this data coupled with previously generated non-clinical data supports moving RayVa forward into future clinical trials designed to evaluate symptomatic effects in subjects with Raynaud secondary to scleroderma. The next trial will be designed as an at-home on demand dosing trial where subjects will self-treat events which are causing them pain, numbness, throbbing or other symptoms or disability. Preparatory activities with study design, end point confirmation, formulation development and investigator and CRO selection are underway to allow for startup in the second half of 2016. As part of this process we plan to seek regulatory input into the next phase of clinical activities including whether this indication and patient population might qualify for orphan status. Turning now to fispemifene, we recently announced completion of involvement in the Phase 2b study in symptomatic hypogonadism men with sexual dysfunction. With more than half of the subjects having completed dosing we remain on track to deliver top line data in the first quarter of 2016. As a reminder this study is a double blind placebo controlled parallel design study assessing safety and tolerability as well as the ability of fispemifene to improve the sexual function outcomes of erectile function and libido compared to placebo. This protocol was developed after meeting with the FDA to discuss the patient population to be studied, the end points to be included in the protocol, the designated clinical benefit and other measures of interest to FDA. Apricus's clinical development and regulatory leadership have been mindful of incorporating FDA's input and designed a program based on what we believe is sound, clinical regulatory and commercial rationale. We will continue to seek opportunities to further our discussions with the reviewing division, the clinical outcomes assessment team at FDA as well as experts in hypogonadism from both the urology and endocrinology communities. Additionally we continue to make progress in our discussions and planning with both basic science and clinical experts internationally to further explore fispemifene multi indication potential in male urologic conditions, based upon our findings we have selected lower urinary tract symptoms or LUS as our next target. Our progress to-date includes engagement with some of the world's leaders in estrogenic and androgenic effects and end point measures in the lower urinary tract. As we finalize designs for upcoming exploratory studies, we will continue to focus on areas of unmet medical needs where there is a solid and efficient regulatory and commercial path forward. We are currently working on investigator and CRO selection and preparation of clinical trial materials to support these upcoming clinical activities. And with these updates. I'd now like to turn it over to our Chief Accounting Officer, Cath Bovenizer to review our third quarter and year to date financial results. Cath?

Thank you, Barbara. Total revenues for the quarter ending September 30, 2015 were $1.3 million, revenues in the third quarter of 2015 are comprised of $1 million in license fee revenues, a 188,000 in royalty revenues and $85,000 in sales of product to our commercial partners. Total revenues for the nine months ended September 30, 2015 were $2.2 million, year to date revenues were comprised of $1.4 million in license fee revenue, $351,000 in royalty revenues and $509,000 in product sales revenues. For the remainder of 2015 and into 2016 we expect revenues generate will come from licensing, milestone and royalties received from our commercial partners for Vitaros and from sales of Vitaross to licensee partners. 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 partners sell product to their customers. Royalties reported in the third quarter of 2015 reflect our partners Vitaros sales in the second quarter of 2015 and therefore do not include any royalties on sales in territories for product sales that have only recently commenced such as in Italy. The numbers include only a partial quarter's worth of sales in France and Spain where Vitaross was launched midway through the second quarter. With that mind we expect Vitaros royalties to continue to increase in the fourth quarter of 2015 as sales increase in territories where the product will have been launched for a full quarter. Regarding product sales, we continue to transition our commercial partners to a direct relationship with our manufacturers, in particular Majorelle our partner in France, Bracco, our partner in Italy and now Recordati, our partner in Spain and other territories work directly with our manufacturers to obtain by Vitaros, as such those products sales and cost of product sales do not flow through our P&L. The net loss for the third quarter of 2015 was $5 million or $0.10 per share compared to $3.1 or $0.08 per share in the third quarter of 2014. The increase in the net loss was primarily due to the recognition in 2014 of $1.5 million of license fee revenue and increased spending in 2015 on our development programs largely attributable to the ongoing fispemifene and now completed RayVa clinical trials. We ended the quarter with $5.8 million in cash and cash equivalents compared with $11.4 million as of December 31, 2014. In October we entered into a Vitaros distribution agreement with Ferring in Latin America for which we received a $2.25 million upfront payment. This $2.25 million upfront payment is not included in the September 30, cash numbers. With our cash on hand access to additional capital under the existing committed equity facility with Aspire capital and ongoing cash flows from Vitaros. We believe that we have an appropriate level of cash to support our current operating plants into 2016. We expect to have net cash outflows from operations during 2015 and 2016 as we progress our Phase 2b development program for fispemifene, develop our Vitaros room temperature device, continue the development program for RayVa and meet other operating expenses. With that I'll turn the call back over to Rich for his closing remarks. Rich?

Thank you, Cath. In closing I want to recognize the entire Apricus team for the tremendous progress made in the third quarter. We have a strong and highly capable team of professionals that have consistently delivered on our key corporate goals. I believe we're well on our way to bringing clinically and commercially relevant products to the U.S. markets that address the unmet needs of patients and I believe that our business will continue to grow as we focus on the execution of our clinical development programs. The U.S. regulatory approval of Vitaros, the development of our next generation room temperature Vitaros products, and the continued growth of Vitaross revenue this year and throughout 2016. 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 the line of Scott Henry of Roth Capital. Your line is open.

I just wanted to walk through the pipeline model I guess to start first with RayVa, the Phase 2b I guess which will start in the second half of '16. When would you expect data readout from that and then I assume you need a Phase 3 confirmatory would that be the plan?

The approach to that trial that it will be a relatively short treatment trial but in a larger number of patients, so we expect executions to start in second half and we hope to have data out of the following mid-year '17 and that it would be our expectation that there will be at least the Phase 3 confirmatory trial. So you're spot on with that expectation.

Okay. And I had thought before that there was a potential to file in '17 obviously that’s -- was I just incorrect or did something change? Now it would seem like now you’ve to run a Phase 3 you’re looking at a filing in maybe 2019?

The one thing about Raynaud phenomena is it's largely seasonally mediated. So even if you could execute a little bit faster to get something started. The peak seasons are kind of mid to late fall into the early spring. So that's part of our reason for holding off on starting our major trials mid-third quarter as to make sure that we capitalize on kind of peak seasons for recruiting if you were to try to recruit a little earlier you wouldn't really get much momentum behind that and so the Phase 3 we expect we will also have a similar timeframe of needing to do an enrollment start in a similar timeframe.

Okay. And do we know anything about the end point for the Phase 2b?

I mean we know is that these are going to be symptomatic end points from the treatment of an acute episode. So there's a range of symptoms that patients experience pain is pretty universal but people will also get tingling numbness and there are composite scores that are pretty well added and diaries and we are kind of actively engaged in the process of working with experts to get all of those tools ready to go for 2b and that we would expect that those will move in the Phase 3 with us as well but they will be symptomatic endpoints.

And then shifting gears, fispemifene, the LUS [ph] Trial. Do you think you would have data by the end of 2016?

Yes I think you know we're still in the early phases of that process but I think you know our goal would be to have some signal, some understanding by the end of '16 so that we can do you know future planning on building that second indication.

And then Femprox anything new there now that Flibanserin has been approved. How do you think about that molecule?

We still see Femprox as a strategic asset in the sense that we are seeking a licensee for that, we do believe that the Flibanserin approval has helped further clarify the regulatory path. Having said that as we've described before Femprox and its use in this condition is somewhat different than the Flibanserin label in the sense that we're focused more on arousal and less on the interest domain. And so clearly there needs to be some additional clarity from the FDA on what would be required for approval for topical agent in that arena but having said that we have an ongoing process where we are seeking actively seeking a partner for Femprox and as we said stated before it is not our intention to take that drug back into the clinic or pursue approval of the product ourselves.

Okay. And then rounding it out with Vitaros, did I hear you correctly that you could potentially resubmit -- within the U.S. in second half '16?

That's their targets, we would be -- our current assumption and of course we're still in the process of transferring the IND and the NDA is that with an active NDA we are in a position to respond to the complete response sometime in the first part of -- the middle part of next year with a submission to follow shortly thereafter. Assuming the FDA accepts that resubmission there would be at least on the current construct a six month clock and so the decision around by Vitaros U.S. could come late next year and into early '17.

And our next question comes from the line of Juan Noble of Taglich Brothers. Your line is open.

Just a question also on the transfer of the Vitaros trial material [indiscernible], you say you're going to transfer the IND and NDA over now, just how fully formed are those trials and just could you just help us understand what the mechanics are of transferring them over?

Well there is a regulatory process that has to be followed but that's more of a paperwork drill, I will call it more than anything else and just as a reminder to everyone on the call. There was a submission of that NDA back in 2008 and a rejection of that NDA in 2009 and shortly thereafter the company Apricus that is sold the rights to Vitaros in the U.S. to [indiscernible] and through a series of transactions Vitaros came under the ownership of U.S. that is of Allergan and that’s who we licensed it back from .So what needs to happen Juan, is that once we transfer those regulatory documents and the ownership of those back into Apricus's hands we can then begin to address the deficiencies in the complete response which we've outlined previously specifically there are some deficiencies that were noted as it relates to the permeation enhancer, as well as some manufacturing deficiencies both of which we believe we have a plan to address and would seek to do that in the timeframe I laid out. There are no additional clinical trials that are required at least in the in the current context of and status of the NDA, of course as we go back to the FDA with our resubmission we'll have one or two outcomes either they'll approve the drug which is our target or they will further clarify what's needed for that to happen, but in the current state of play with the regulatory status we believe that by addressing the non-clinical issues and the CMC issues. noted in the previous complete response that we can submit the data needed to overcome those objections and have the product be approved and shortly thereafter on the market in the U.S.

And I'm showing no further questions in the queue. I'd like to turn the program back to Richard Pascoe, Chief Executive Officer.

Thank you operator and thank you all for joining us on the call today. We hope to see some of you in New York City when we present at the Stifel 2015 Health Care Conference on November, 17. Again thank you and operator you may now disconnect.

Ladies and gentlemen thank you for participating in today's conference. This does conclude our call. You may now disconnect. Everyone have a wonderful day.