Matthew Beck - The Trout Group, IR Rich Pascoe - Chief Executive Officer Barbara Troupin - Senior Vice President, Chief Medical Officer Cath Bovenizer - VP, Finance & Chief Accounting Officer

Scott Henry - ROTH Capital Juan Noble - Taglich Brothers

Greetings. And welcome to the Apricus Biosciences' Fourth Quarter 2015 Financial Results and Corporate Update Teleconference and Webcast. At this time all participants lines on the telephones are in a listen-only mode to reduce background noise. But later we will be conducting a question-and-answer session, 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, 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 overview of the company's progress in the fourth quarter, as well as provide a corporate roadmap for 2016. 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, the amount and sources of future revenue, expected uses of cash reserves, and the development of the company's products pipeline. Such statements are predictions based on current expectations and actual results could differ materially. Please refer to company's most recent filings with the Securities and Exchange Commission, including Apricus's annual report on Form 10-K, 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's financial results press release for the quarter ended December 31, 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. In the fourth quarter we made progress with our clinical pipeline and also enhanced the value of our flagship product Vitaros, through improving commercial sales in Europe and finalizing our US NDA resubmission schedule, as well as executing a distribution agreement in Latin America. On the clinical front, for our lead pipeline compound, Fispemifene, Apricus announced in late October the completion of enrollment in the phase 2b trial in symptomatic secondary hypogonadism, and we remain on schedule to report top line data by the end of the first quarter of this year. This clearly a seminal event for the company, so in a moment Barbara will review the status of the clinical study, as well as provide some context on the top line results which we expect to report later this month. The fourth quarter was also very productive for Vitaros, our novel treatment for erectile dysfunction. According to data obtained from IMS Midas, retail unit sales in Europe increased 23% from approximately 268,500 units in the third quarter of 2015 to approximately 330,600 units in the fourth quarter of 2015. The fourth was the first time that our marketing and distribution partners were marketing for the entirety of the quarter. As we have previously discussed, Apricus licensed the US development and commercialization rights to Vitaros from Allergan in September of last year. We are preparing our response to the deficiencies found in the complete response letter in the required electronic format and we are reiterating previous guidance [ph] that we expect to resubmit the new drug application in the second half of this year. On October 1st of last year, we entered into a Vitaros distribution agreement with Ferring in Latin America for a $2.25 million upfront payment and up to $16 million in regulatory and sales milestones, plus royalties. Ferring has a strong commercial presence globally, and particularly in the key Latin American markets and we look forward to building a strong relationship with them. Ferring is actively pursuing regulatory approval in multiple countries in Latin America, and we expect that they will file for approval in one or more of those countries in the second half of this year. Finally, we strengthened our cash position with a $10 million registered direct offering. The offering is backed by our existing institutional shareholders, including Sarissa Capital and Aspire Capital. Shareholder approval was acquired for the second closing of the offering under the NASDAQ rules and the shareholders approved the offering at a special meeting held on March 2nd. We believe Sarissa and Aspire's continued support is an indication of their faith in Apricus's products, our pipeline and our ability to execute. I'll now turn the call over to our Chief Medical Officer, Dr. Barbara Troupin, for a more in-depth update and discussion on our clinical programs. Barbara?

Thank you, Rich. The clinical and regulatory teams have indeed had a busy and productive quarter. As Rich noted, we announced completion of enrollment in the Phase 2b in symptomatic hypogonadal men with sexual dysfunction on October 28 and all subjects have now completed the study. We remain on track to deliver top line data later this month. 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 in mentioned with secondary hypogonadism. In this study subjects underwent a four week non-drug baseline period prior to randomization where sexual endpoint data was collected to create a baseline to which on-treatment endpoints are compared. I would like to take a minute to remind listeners of the endpoints of trial. Our erectile dysfunction endpoints are well bedded in a regulatory precedent. They are the International Index of Erectile Function or IIEF and we specifically look at the erectile function domain or IIEF. This questionnaire is completed by subjects at visits and reflects back on sexual activity over the prior four weeks. We will look at the IIEF overall and by baseline severity, which in this study means subjects with mild or moderate ED. The second set of ED endpoints are based on a sexual encounter profile or SEP Diary, which is completed by each subject shortly after each sexual encounter. This tool collects data on quality of erections and overall sexual satisfaction per encounter. We will also be evaluating changes in sexual desire using the Psychosexual Daily Questionnaire or PDQ, which was developed by experts at UCLA. This diary endpoint will be completed on a daily basis for the week prior to study visits. Two of the questions in this tool focused on sexual desire or low libido and we will assess changes compared to the baseline period. Our over-reaching goal in this study is to demonstrate clinical proof-of-concept in this defined patient population of hypogonadal adult men in one or both of the sexual function endpoints, demonstrating a clinical benefit and improving ED or improving or increasing low libido. Additionally, as seen in prior trials, we would like to see a meaningful increase in serum testosterone and further demonstration of safety and tolerability. Of note, on February 18, the testosterone trial or T Trial data was published in the New England Journal of Medicine. Although the population differs with the T Trial studying older men, and the used topical testosterone replacement, the data did demonstrate that with increases in testosterone there were improvements in sexual functioning as reported using the IIEF and the PDQ, the same tools used in our fispemifene trial. Briefly, in other regulatory and development news, we continue to make progress on addressing the outstanding deficiencies in the US Vitaros submission and are on-track to re-submit the NDA to the FDA in the second half of this year. Additionally, we held a successful scientific advisory board with many international experts in endocrine and urologic medicine earlier this quarter to address the broader potential for fispemifene in other indications. We will continue to assess the strategic potential of this approach once we have reviewed the upcoming fispemifene data in secondary hypogonadism as we continue to pursue a multi indication strategy with fispemifene in male urologic conditions. And with those updates, I would now like to turn it over to our Chief Accounting Officer, Cath Bovenizer, to review our fourth quarter and year end financial results. Cath?

Thank you, Barbara. Total revenues for the quarter ended December 31, 2015 was $2.6 million. Revenue in the fourth quarter of 2015 was comprised of $2.3 million of license fee revenues, 299,000 in royalty revenues and $80,000 in sales of product to our commercial partners. Total revenues for the full year of 2015 were $4.8 million. 2015 revenues were comprised of $3.6 million in license fee revenue, $650,000 in royalty revenues and $589,000 in sales product to our commercial partners. In 2016 we expect revenues generate will come primarily from milestone or licensing payments, and royalties received from our commercial partners for Vitaros. The timing of these revenues is uncertain and as such our revenue can vary significantly between quarters. The net loss for the fourth quarter of 2015 was $2.3 million or $0.05 per share, compared to $17.3 million or $0.40 per share in the fourth quarter of 2014. The net loss for the full year of 2015 was $19 million or $0.38 per share, compared to $21.8 million or $0.55 per share. The decrease in the net loss was primarily due to the recognition in the fourth quarter of 2014 of a one time charge of $13.6 million or $0.34 per share related to the in-licensing of Fispemifene from Forendo. As of March 4, 2016, subsequent to the second closing of our January 2016 financing, we had cash and cash equivalent of $9.7 million, 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 fund our based operations through the third quarter of 2016. We expect to have net cash outflows from operations during 2016 as we progressed our Phase 2b development program for fispemifene, continued 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 2015, we focused on creating a company with multiple potential value drivers through the advancement of our clinical development pipeline and by enhancing the long-term value of Vitaros. Moreover, we intentionally setout to build a shareholder base that supports that strategy. With the fispemifene Phase 2b data coming later this month, a US Vitaros NDA resubmission on target for later this year, a growing ex-US Vitaros commercial presence, and the establishment of a committed long-term shareholder base, I believe we had put ourselves on a path to realizing significant value as we strive to bring clinically and commercially relevant products to patients and healthcare providers. I am excited about our future and I am honored to work with the team here at Apricus that shares that excitement and has repeatedly demonstrated its commitment to delivering results. In closing, I want to recognize the support and feedback we receive from our shareholders. And with that, we will now open the call up for question. Operator?

[Operator Instructions] Our first question comes from the line of Scott Henry from ROTH Capital. Your line is open.

Thank you for taking the question. Just a couple questions on the pipeline. First, with regards to the resubmission of Vitaros in the US, I original thought that you would need new trials, is there a reason you believe you can be successful resubmitting it right now, I mean, have you had an FDA meeting? I am just trying to understand how to handicap that process?

Thanks, Scott. This is Barbara. So when we look at the list of deficiencies that came out of the prior submission, those deficiencies do not revolve around clinical issues. There is the non-clinical issue of carcinogenicity and then there were some manufacturing issues. So the issues that – and the approach to addressing them does not require additional clinical trials. In fact, there were some steps taken to start addressing that – those deficiencies partially on the CMS side, those were things that were overcome to get the drug on the market in Europe. So we have a pretty high confidence that those will address many of the CMC deficiencies. And then the non-clinical side, we've been working with a group of experts on how to reframe our approach to addressing those deficiencies. But none of those activities would require additional clinical trials.

Okay. And have you had correspondence either in writing or meeting with regards to this plan to more forward over the past year or two or…

No…

Or will you have a meeting upcoming or just trying to get a sense of that?

Yes. So, I mean, there are some logistic issues on approaching the resubmission, but there is not a need for a specific like pre-NDA or pre-filing meeting. So there is not a specific planned meeting with the FDA. There maybe some interaction as we go through some of the filing logistics. But that’s not a specific pre-resubmission meeting.

Okay. Thank you. And then, the second question just with regards to fispemifene, let say the data readout positive later this month, what would the timeline be for starting the Phase 3 clinical work?

Your want to make…

Yes, just broadly speaking, clearly we're looking forward to that data coming out and assuming it is positive on one of both of those endpoints as Barbara outlined, I think our first step would be go and interact with the FDA, which we plan to do. And then based upon those interactions, confirming our endpoints, confirming that the instruments that we would use to measure those endpoints and other parameters around that trial - and trial design would allow us to then come out and give guidance. There is clearly a lot of work to be done on the – in the wake of positive data. But our goal is to get this into a one or more pivotal trials, along the – alongside the non-clinical work that needs to be done, as quickly as possible. So I think we want to look at the data here when it’s available before the end of this month, speak with the FDA to confirm the path that we would want to follow and that would be obviously in the wake of having a good result, and then come out and provide some additional guidance on timing.

Okay. Great. Thank you for taking the questions.

Thank you, Scott…

Thank you.

Thank you. Our next question comes from the line of Juan Noble from Taglich Brothers. Your line is open.

Yes. Hi, good afternoon. Just a quick question on Europe and you gained something like 20%, 23% sequentially, now I know all of these things are based, probably just something that's changed in Europe, but how long do you think that 20% sequential growth rate is sustainable?

Well, Juan, you are right, we are now just seeing for the first time a quarter-over-quarter comparison where we have product that’s available that we will launch in the territories where the major market drivers are going create opportunity. We expect that the drug will continue to grow in Europe through two mechanisms, one just the organic growth that we're seeing through the partners that have launched, and secondly, and probably you know, even perhaps more importantly, additional launches that we would expect in Europe and even Latin America, as we go forward. And of course we'll be reporting out those launches as they occur and once the product is made available in additional territories, I think the growth rates for the drug will continue to be one that we can provide additional clarity on. Right now we're not going give any real guidance on revenue or growth rates. But clearly we're excited about the performance thus far. We're seeing some nice results coming out of Europe and we expect that those trends will continue directionally.

Okay, good. Just a clarification, I thought that when you reported numbers for the third quarter, that your unit sales for Vitaros in Europe was something on the - like 180, 190,000 range. But that number seems to increase since then, I understand that, some of these numbers have to be revised, because of the number of people coming into the mix, but could you explain the difference there?

Yes. So I think the number you're referring to is when we initially reported the interim data, that is provided to us through IMS Midas, which is the entity of Midas that provides that data, what you see reflected in the results, and in our K and in our presentation as well are the final numbers. For example, the UK has been historically slow in reporting out data. So we've been missing some data and that’s why we indicated that it’s not a complete data set, but it’s a partial data set when we reported that interim. So what you're seeing now in the data that we have reported as of today is the actual data, the final data set that came in for both third and fourth quarters of 2015.

Okay. That makes sense, good. Well, congratulations on the quarter and best of luck to you.

Yes. Thank you. We're excited about this year.

Thank you. That’s all the questionnaires that we have in the queue at this time. So I would like to turn the call back over to management for closing remarks.

Thank you, operator. And I want to thank you all for joining us on the call today. We hope to see some of you at our upcoming conferences, including the ROTH Conference next week. And we look forward to updating you on our Phase 2 fispemifene trial data here shortly. Thank you. And operator, you may now disconnect.

Ladies and gentlemen, thank you again for your participation in today's conference call. This now concludes the program. You may all now disconnect your lines at this time. Everyone have a great day.