Greetings and welcome to the DARA BioSciences Second Quarter 2015 Business Update and Financial Results Conference Call. 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.

I would now like to turn the conference over to Jim Polson, Investor Relations. Thank you, please go ahead..

Thank you, operator. Good morning and welcome to the DARA BioSciences second quarter 2015 earnings call. Thank you all for joining us on the call this morning. I’d like to begin by reminding our listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties.

Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the Federal Securities laws. Information contained in the forward-looking statements is based on current expectations and is subject to change and actual results may differ materially from forward-looking statements.

Some of the factors that could cause actual results to differ are discussed in reports DARA files with the SEC. These documents are available on the DARA website at www.darabio.com and we encourage you to review these documents carefully. Joining me on the call today is Christopher Clement, DARA’s President and Chief Executive Officer; Dr. David J.

Drutz, Executive Chairman of the Board and Chief Medical Officer; Dave Tousley, Chief Financial Officer; and David Benharris, Senior Vice President of Commercial Operations and Business Development, who will be available for the Q&A portion of the call.

Chris will begin the call with opening comments and review of the key progress and results made during the quarter, as well as an update on the Midatech agreement. Afterwards Dr. Drutz will provide an update regarding our development asset KRN5500. Dave Tousley will conclude with a review of the financials.

And we’ll then open the call up for your questions. With that it is now my pleasure to turn the call over to Chris.

Chris?.

Thanks, Jim, and good morning, everyone. I’m pleased to welcome you to our second quarter 2015 earnings call. As always, we appreciate your time, interest, and participation in this event. I’m pleased to report, we achieved record second quarter results, driven by strong performance of our commercial product portfolio.

We made significant progress during this quarter in the execution of our sales and marketing strategy, including expanding the commercial opportunity for our flagship oncology and oncology supportive care products.

DARA’s second quarter 2015 net revenues increased by 142% to $991,000 based on gross product sales in excess of $1.4 million, as compared to net revenues of $409,000 in the second quarter of 2014. This increase in revenues was attributable to the success of the DARA’s sales team in generating interest and prescriptions across our product portfolio.

The significant improvement in revenues solidifies our confidence in our market positioning and oncology supportive care and ongoing growth potential of our product portfolio.

DARA’s unique portfolio of supportive care products which provides value for both patients and physicians continues to result in positive sales trends across all of our products. Our specialty sales force to our strategic partnership with Alamo Pharma Services continues to build upon and expand the solid relationships.

Our representatives have established with their target physician offices and healthcare providers. These strong relationships are facilitating increased utilization of our current portfolio and providing the important platform as we look to successfully launch our new product Oravig in the fourth quarter.

Specifically relating to the second quarter results, we are very pleased with the prescription growth observed across all of our products are we continue to build upon our leadership position in oncology supportive care.

Our flagship product Gelclair continues to be the leading gel barrier product prescribed in the retail sector by almost 3:1 margin to its closest competitor for prescriptions written in June, according to Symphony Health data.

Gelclair outperformed the overall gel barrier retail prescription markets with an increase in retail prescriptions of 41% over the first quarter of 2015, as compared to the overall market increasing less than 20% of the same time period.

Another strong indication of product growth for Gelclair was demand for the product into the specialty oncology division of our key Gelclair [ph] partners, which is a good indication of utilization by in-house oncology practice pharmacies.

DARA also initiated an innovative Patient Assistance Program or PAP for Gelclair, which insures that all indicated patients who could benefit from the product will have access to our specialty pharmacy provider. We are pleased to work collaboratively with healthcare providers and physicians in helping these patients to get treatments.

Turing to Soltamox, the drug continues to increase in prescriptions over the previous quarter and provide an important alternative to those patients who find it difficult, and not possible to take an oral tablet or those who simply prefer to take the drug in the liquid formulation.

To help facilitate access to the drug to these patients, we’ve initiated a pilot program with a leading provider of patient portal services allowing for direct messaging to target patients regarding the availability of tamoxifen in a liquid formulation.

This leaves our focused approach to the appropriate group of existing tamoxifen patients, provides product information directly to the patient. So that in conjunction and discussion with their physician, they can determine if Soltamox is appropriate to them.

This is an effective of method of reaching those niche patients, who might benefit from the drug and providing them any opportunity to receive information from their portal provider, in a fully HIPPA compliance manner.

We were also pleased with the sales performance of Ferralet for treating iron deficiency anemia and Aquoral for treating cancer-related dry mouth or Xerostomia with both products showing continued quarter-over-quarter prescription growth.

The prescription increase was seen in the second quarter, as well as previous consecutive quarters for our product portfolio are encouraging and indicate there our positioning in oncology supportive care is taking root. As we have stated on previous calls, we believe in the strength of our portfolio and believe each product in turn helps the others.

We expect this trend to continue as we expand and introduce other supportive care products. The next being Oravig, which not only will strengthen our growth prospects, but will also strengthen our positioning and supportive care. Speaking of Oravig, we made significant strides in the second quarter, in preparing for the Oravig launch later this year.

As a reminder, we licensed Oravig from on sale FA as planned, earlier this year with exclusive U.S. commercial rights.

This product is unique buccal oral formulation of miconazole, which offers a once-daily dosing advantage over competitive agents is non-systemic and is an ideal complement to our existing portfolio of supportive care products, since a significant number of cancer patients suffered from OPC or oral thrush.

Recently completed market research indicate, a high level of interest among our target physicians. The overall market is large with over three million localized oral thrush prescriptions written on an annual basis.

To make the most of this opportunity, DARA supportive care sales team will focus on the oncology market and our partner Mission Pharmacal will sell Oravig with their sales team into the primary care market. We are very excited about the addition of Oravig to our portfolio and its market prospects in both the oncology and primary care sector.

I look forward to providing you with future updates, as we prepare for market launch. Given our continued momentum in growth for our products, we have decided to expand our sales coverage in certain parts of the country, where we currently have no, or limited sale presence.

These so called white space areas exist in certain areas in the map in [ph] west to south and the midwest. We are initiating sales coverage in these areas, first with a tele rep, who will call on high potential offices and then based upon the success of these territories we’ll expand to a dedicated sales representative in the future, if wanted.

Refer please to reform our full year guidance for Gelclair and Soltamox of net 2015 revenues $3.7 million, excluding any net revenue contribution from the launch of Oravig in 2015.

Although our primary focus will remain in driving revenue growth for the existing portfolio and a successful launch of Oravig, we will also remain active and aggressive in looking for new products to add to and commence our existing supportive care portfolio.

As mentioned earlier, we believe in the synergy of having a multitude of product offerings in the portfolio and will continue to reevaluate and pursue additional products for acquisition or license. We’ve had several important developments during the quarter regarding KRN5500 and David Drutz will shortly provide an update on this asset.

Lastly, let me take a few minutes to comment on the proposed merger with Midatech Pharma PLC, which we announced on June 4. The merger remains on track to close later this year. As you saw, Midatech took a significant step in this process with the filing of their registration statements on Form F-4 with the SEC on Tuesday, August 11.

As way of background, Midatech is an international specialty pharmaceutical company located in Oxford, UK with a diversified portfolio of high value products and developments.

Midatech’s strategy is to develop its products in-house in rare cancers and with partners in other indications, and to accelerate growth of its business through strategic acquisition of complementary products and technologies.

The agreement with Midatech provides DARA with the opportunity to maximize and expand DARA’s commercial portfolio based on the depth of resources that will be available within the combined company.

We are pleased to have a partner who has a similar strategic vision regarding the opportunity and oncology supportive care, as well as realizes the significance of our established commercial U.S. team. We view this proposed agreement as a win-win for both companies, employees, shareholders, and the oncology patients and the community that we serve.

Midatech will help accelerate our long-term goal of having a comprehensive portfolio of oncology supportive care products that meet unmet medical needs. We are excited to become part of Midatech and believe there is significant value in the combined assets of the company.

Growth opportunities for existing and new products and long-term value based on Midatech’s development pipeline and technology platforms. As we head into the second half of the year, we are encouraged by the performance to-date and believe we are on track to achieve our 2015 revenue guidelines.

We are excited about our upcoming four big launch [ph] and on-merging with Midatech to help prepare [ph] the company for long-term sustained success. With that, I will turn the call over to David Drutz to discuss KRN5500.

David?.

Thank you, Chris. Good morning and thanks to all you for joining us. I’d now like to provide an update on our development candidate KRN5500. We had several important developments during the quarter for which I want to provide this update. On April 8 of this year, the company received noticeable allowance from the U.S.

Patent Office for a modified formulation of KRN5500 that will simplify intravenous administration of this drug from a two-step procedure to a one-step procedure. On July 14, the patent was issued, the results of which was an increase in patent protection for this drug until 2033.

Also in July, the FDA provided formal agreement with the Company's full proposed development plan, beginning with design of the phase 2b dose-escalation strategy in cancer patients with painful, chronic chemotherapy-induced peripheral neuropathy, or CCIPN. The FDA also indicated agreement for proposed bridging studies for the new KRN5500 formulation.

This clarity and alignment with the FDA allows for greater precision and determining timing and cost considerations for the remaining development program and very important elements in partnering discussions. I look forward to providing future updates on progress in these efforts.

With that, I’ll turn the call over to Dave Tousley for an overview of our second quarter financial results..

Thanks, David, and thank you all for joining us this morning. Our net revenues for the second quarter of 2015 were approximately $991,000, compared to net revenues of $409,000 in the same quarter of 2014, representing an increase of 142%.

The increase in revenue was primarily attributable to the standard commercial sales organization and ongoing success in generating interest and prescriptions across our product portfolio.

In line with the significant increase in net revenues our cost of goods sold for the first quarter of 2015, increased by approximately $170,000 over the same quarter last year. Including an inventory right off of $50,000 related to Soltamox inventory, which is approaching its expiration date.

Excluding the right off, our cost of goods sold increased by 131%. Sales and marketing expense increased approximately $131,000 on a quarter-over-quarter basis, reflecting increased personnel costs including an increase in subject based field sales compensation driven by higher sales achievement.

Our research and development expenses increased by $59,000 quarter-over-quarter, reflecting an increase in consulting in professional services expense and PDUFA fees offset by decrease in personnel costs.

General and administrative expenses increased by approximately $269,000 on a quarter-over-quarter basis, primarily driving by increased professional service costs related to the proposed merger agreement with Midatech.

At the end of the second quarter of this year, our principal sources of liquidity were our cash and cash equivalents which totaled approximately $7 million. As of June 30, we had networking capital of approximately $5 million.

Starting Q3 2015 with cash on hand of approximately $7 million and based upon achievement of our current operating plan, we believe that we have sufficient working capital to continue our operations into the first quarter of 2016. I’ll be happy to answer any questions you have during the Q&A, and I’ll now turn the call over to Jim..

Operator, we are ready to open the call up for questions. Thank you..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Matt Kaplan with Ladenburg Thalmann. Please go ahead with your question..

Hi, guys, good morning..

Good morning Matt..

Good morning Matt..

First off, I guess, could you talk a little bit about Oravig and its potential in the marketplace and what you think where to go in the future of few years after launch?.

Since that is dated, the Oravig market is large for us, as Chris had stated, there’s over three million prescriptions, written on an annual basis for localized treatment of oral thrush. The three million prescriptions represent just the opportunity in both oncology and primary care.

The overall Oravig market or the overall oral thrush market is broken nearly into two buckets the first is localized treatment versus systemic treatments, the localized treatments is an additional one million prescription written outside of oncology and primary care on an annual basis.

The broader market for oral thrush includes systemic agents, as well, where there is some opportunity for us to go and that represents almost an eight fold increase in the marketplace, relative to prescriptions on an annual basis on 24 million prescriptions on an annual basis.

So there is a lot of opportunity for Oravig, both in the oncology space, within the primary care space and some other markets that we will explore, as well. So we feel very positive about Oravig, relative to its past performance and the fact that we know it is a promotionally sensitive product.

And our primary care partner Mission, has expanded their primary care force, as we speak. So we will have two sales forces out of the gate upon launch, to promote the product coming close to 70 people across the country..

I’ll add that [ph] it does fit ideally into our supportive care strategy and our supportive care portfolio. So we’ve stated about that in the oncology space, because it helps solidify our oral gel [ph] positioning. But as David said, there is really significant opportunity in other market segments and we plan on capitalizing on that.

The only other point that I will make and we did not mention this in this particular call, but we also have the right to explore the opportunity in the Canadian market. And we are in discussions with some potential partners that could help launch the product in Canada, as well.

So that will be sort of downstream opportunity, but certainly something that we will be looking at. Beyond that there’s also downstream opportunity in the pediatric market and we will be undertaking a study to look at that, as part of the overall growth potential for Oravig..

And I guess can you talk a little bit about pricing in that market and what you’re thinking about..

So the pricing is something that we are researching and working right now with our managed market folks, and the public and the private payers in the market. So we’ll have some more information on that coming soon..

Great, and then I guess, with your success in terms of Gelclair in gaining market share actually it sounds like achieving a dollar position there as a percentage of the market, what do you think about, I guess, current price and taking price increases in the future is that a potential in that marketplace?.

I think we have some opportunity there that we are accessing in the future. I think there’s some opportunity there too Matt, relative to life cycle management of the product and how it’s presented in package to both the wholesale trade, the retail trade and the in-house pharmacy/specialty pharmacy segments of our market as well.

So we’re exploring all those things, but this is under discussion as we speak..

And then I guess, with respect to your revenues in the quarter Soltamox plus Gelclair, can you give us a sense in terms of your percentage write-down between the two, is it still dominated by Gelclair and I guess by how much? And…..

Yes, the net revenue is largely Gelclair, although we are seeing a very nice growth in the Soltamox, but still Gelclair is the major portion of our revenue..

And with all of the endeavors, I guess, you’ve had with respect to Soltamox in the past and going forward, do you see any, I guess, are you starting to gain some traction there in the marketplace and I guess if not why?.

Yes, I mean, I think, Matt as we’ve learned since the launch of the Soltamox, it’s really, there is a market need out there for those patients that we alluded to earlier. It is somewhat of a niche market and reaching those appropriate patients has obviously been the challenge.

But I think as mentioned in the call, now that we’re partnered with provider of portal services, these companies now have direct access to patients, they’re fully HIPPA compliance, but it allows for a more efficient and direct approach to patients that might benefit to here to message about Soltamox.

So we’ve started on that program we’re pleased with the initial results that we’re seeing and we will continue to monitor that over time.

But what we are seeing now is as Dave just mentioned, we are seeing pretty good uptake that’s sustained with Soltamox and hope that by working via these more directed targeted approach that this growth force Soltamox will continue so that the patients they truly would benefit from this formulation will be able to get the drug..

Okay, very good, thanks. And then last question for Dr.

Drutz is with 65% for KRN5500 now that you’ve, I guess, kind of consummated an agreement with the FDA in terms of what needs to be done and new patent portfolio and modify the formulation – what do you need – is there anything else you need to do to be able to complete a partnering or licensing of the product? And where are you in those discussions?.

Yes. Hi, Matt, so it’s been a long road here, we’ve had a lot of obstacles we’ve had to remove and clarifications that we’ve had to achieve.

And I think we’re there, we basically have what we need in order to be able to continue the discussions that we’re having, there are a number of them are going on and we’re expecting definitive outcome hopefully before the end of this year..

But there is no intention on your part to launch a Phase 2b study on your own at this point?.

No, I mean, still our prepared pathway, particularly given the direction to this company is an expanding spec pharma, we are very solidly entrenched in that area now. We just are not looking to do internal development at this time. I don’t know if Chris has any comments on that..

I think that’s right, I mean, I think, we – the strategy here has been pretty clear. We want to find an appropriate partner to move to development program forward with clarity now around the cost and the timing. We can with the level of precision, I think, now better estimate what the full development program will look like.

And I think that will aide in trying to move this development program forward. And obviously, we’d like to maintain a downstream interest in the product, but at this point relative to other priorities we’re really continuing to establish the commercial business that’s where we’re going to deploy the assets..

Great. Thanks for taking my question..

Thanks, Matt..

Thanks, Matt..

Thank you Matt..

Thank you. And our next question comes from the line of Swayampakula Ramakanth with HC Wainwright. Please go ahead with your questions..

Good morning, gentlemen..

Good morning..

Good morning Ramakanth..

Couple of quick questions, first one is on Oravig. I believe you signed this in March the agreement with Onxeo [ph] what is the pay away or what is that you need to pay Onxeo [ph] in terms of license fee or what not, I mean, the difference for the United States and the Canadian Gelclair fields [ph]..

Yes, well, we haven’t disclosed all the terms of our agreement with Onxeo [ph]. But as you can see probably from our cash flow there hasn’t been any upfront in that agreement and we consider the terms of the agreement very, very favorable terms for us..

Yes, I mean, it will provide us with a good – it will provide us with a good product margin as we move forward with those. So we’re pleased with those firms but we have not disclosed all of the financial elements of the agreement with Onxeo [ph]..

The next question is on the white space stage as you put it, what do you need to see in terms of either sales of [indiscernible] before you start placing a dedicated sale reps to service these geographies..

So, well, this is David. What we’ll look at there is a run rate of prescriptions that support the average cost of sales rep before we put somebody in place. So not necessarily having that history of the sales that will support a sales rep.

But once we get that run rate, we feel it would be right to put a person on the ground to make sure we can then leverage the opportunity that’s been created by the telesales program to continue to drive the sales forward to be profitable in the territory..

Okay, thank you..

Thank you Ramakanth..

Thank you. And since we have no further questions at this time. I would now like to turn the floor back to Mr. Clement for closing remarks..

Well, thank you everyone, I’d like to sincerely thank you for joining us this morning for our second quarter call. I look forward to providing you with future updates on our progress. Have a good day..

Thank you. This concludes today’s teleconference you may disconnect your lines at this time. And thank you for your participation..