Greetings and welcome to the DARA BioSciences Third Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I’ll now turn the conference over to Mr. Jim Polson, Investor Relations for DARA BioSciences. Thank you, Mr. Polson. You may now begin.

Thank you, operator. Good morning and welcome to the DARA BioSciences third quarter 2014 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 Chris 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, Vice President of Sales, Marketing, 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 followed by an update from Dr. Drutz regarding our development asset KRN5500. Dave Tousley will conclude with a review of the third quarter financials. We will then open the call up for your questions. It is now my pleasure to turn the call over to Chris.

Thanks, Jim, and good morning, everyone. I’m pleased to welcome you to our third quarter 2014 earnings call. As always, we appreciate your time, interest and participation in this event. As you likely saw in our press release aftermarket close last night, we reported another solid quarter of progress for DARA. DARA reported record net revenues of $598,000 for the third quarter based upon gross product sales in excess of $690,000 as compared to net revenues of $139 for the year-ago period, a year-over-year increase of 330%. The increase in revenues was primarily attributable to the continued progress of our sales organization as our nationwide team of experienced sales representatives continued to raise awareness and drive interest in our product portfolio as evidenced by increasing revenue growth. Our sales team is enthusiastic and the progress that they’re seeing in their respective territories and the meaningful impact that they’re making in cancer patients lives. Beyond continuing to build relationships with key oncologists, radiologists, physician assistance, nurses and other caregivers our entire company and in particular our sales reps are volunteering that personal time and participating in local open half events, educational programs and other cancer related fun raising activities. To facilitate this community involvement, DARA has instituted a novel program called the DARA Day of Service to allow our sales people to spend at least two days in their local communities working to support and help those affected by cancer. Local interest and involvement in community activities goes a long way in building and solidifying relationships to our sales team with their oncology and radiology practices. DARA also actively supports national cancer educational organizations with donations collaborative programs and other types of support. Turning specifically the third quarter highlights we are pleased with the progress and performance of our sales team.…

Thank you, Chris. Good morning and thanks to all for joining us. I’d like to take a few minutes to provide an update on our lead development asset, KRN5500 which I’ll now simply refer to as KRN. KRN is our novel, non-opioid, non-narcotic compound that’s being readied for Phase IIb clinical developments. KRN was previously awarded fast track development status by the FDA in 2011 based on a successful Phase IIa clinical trial in cancer patients with neuropathic pain. Significant progress has been made on KRN this year. In February, DARA received orphan drug designation for development of KRN for the parenteral treatment of painful, chronic chemotherapy-induced peripheral neuropathy or CCIPN that is refractory to conventional analgesics. As a reminder orphan drug designation provides DARA from seven years market exclusivity from the time of approval, tax credits, waver of PDUFA fees and access to federal grants. During the second quarter we announced that the FDA had granted orphan drug designation for a second indication for treatment of multiple myeloma. This allows us to approach the actual treatment of the hematological malignancies. We believe this myeloma specific orphan designation enhances both the visibility and the future market opportunity to this valuable pipeline product. The favorable consideration of myeloma as an orphan indication for KRN was reported by a peer reviewed publication in 2011, by an independent group of academic investigators which demonstrated its therapeutic potential based on its effect on both myeloma malignant cells and for bone marrow osteo class that permit bone invasion by this destructive disease. As we’ve previously stated, priority of the KRN program has been to secure a development partner to undertake, manage and fund the future clinical trials and ultimate worldwide commercialization of this asset. We’re engaged with a firm that specializes in these partnering transactions…

Thanks David and thank you all for joining us this morning. Our net revenues for the third quarter of 2014 were $598,000 compared to net revenues of a $139,000 for the third quarter last year, a significant increase in sales of Gelclair was responsible for the majority of this increase as Gelclair has just launched in April of 2013. In spite of the significant increase in net revenues, our cost of sales for the third quarter increased only slightly from the third quarter of 2013 due to the fact that third quarter 2013 included a write-down of Soltamox inventory with nearing expiration were approximately $81,000. Excluding net write-down the volume related cost of sales increased was approximately $83,000. Sales and marketing experience increased only $15,000 from $1,84,000 for the three months ended September 30 last year $1.1 million for the corresponding period this year. Despite the expansion of the sales force to 20 reps, which expansion became effective in early January 2014? Our sales force cost increased on a quarter-over-quarter basis, this increase was nearly offset by a decrease in marketing program expenses. Research and development expenses decreased $70,000 from $453,000 for the three months ended September 30 last year to $383,000 for the corresponding period this year, primarily as a result of formulation in API manufacturing cost associated with the KRN5500 program incurred in 2013, while none have been incurred this year. G&A expenses increased by $66,000 from $938,000 for the three months ended September 30 last year to $1 million for the corresponding period this year, primarily as a result of an increase in NASDAQ fees related to the issuance of shares earlier in the year. At the end of the third quarter this year, our principle sources of liquidity for our cash and cash equivalents, which totaled approximately $14 million? As of September 30th, we have networking capital of approximately $12.6 million. With cash on hand and based upon our current operating plan, we believe that we now have sufficient working capital to continue our operations through 2015. 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. Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions) Our first question is from Jason Napodano of Zacks. Please go ahead.

Good morning guys.

Good morning.

Hi, Jason.

Congrats on some more progress being demonstrated in the quarter. I’d like to start off with just kind of an analysis of the income statement, it’s good to see obviously revenues going up, it’s also good to see expenses coming down. I’m curious as to if you guys have given any thought on that inflection point in terms of when revenues will exceed expenses or when it where at least we’ll see some breakeven operations, because again we had a nice narrowing in the third quarter, but when do you think that will get to the point where we’ll see breakeven operations.

Yes, well it’s going to take some significant – further significant sales increase, for the quarter our burn, our average burn, net burn was about 600,000 month down significantly from where it was a year ago and primarily because we have been netting our expenses with positive cash coming in. So as we move forward we see further sales growth that we’ll move it towards breakeven and we are not giving any guidance right now on specifically when we expect that to happen.

Jason, I would also say that we – the infrastructure that we have in place with 20 sales reps and as I mentioned we did add a couple of resources in marketing, analytics, and in field management. But we believe that those resources are now sufficient to really accelerate and drive the business. So, hopefully we are making significant positive traction here we expect that to continue going forward. So I think we will see nice increase in revenues and not a lot of significant increase in expense, because we believe we have the commercial infrastructure in place to make that happen.

Yes, just to take that one step further I mean that the infrastructure we have now – we do expect continue increasing and lowering our net burn. And so to the extend we can bring in another product that should largely be incremental. And so that would accelerate our time to breakeven so it’s a little hard to predict right now.

As far as your agreement with Mission Pharmacal it’s been years since you sign that deal. I am curious if you are seeing expense reduction based on the promotion of those products I notice SG&A or marketing and sales was down sequential from the second quarter I am wondering if that’s due to some expense reduction based on promoting those products and when do you that we will see or you near the point where we will some revenue contribution from those products and maybe in 2015?

Yes, so the reduction in sales and marketing line is not due to any increase we are still on a fixed contribution basis with Mission that contribution is embedded against the expenses; the reduction in that line is really related to a reduction in marketing program expenses. As far as when we do have an option in the future to switch to a revenue sharing program of profit sharing I guess and we are evaluating that right now.

Okay. As far as your deferred revenues I notice that deferred revenue number increased again you are taking reserves for returns, you had a couple of quarters now of sales. Can you give me a sense if you think that you got the proper amount of reserves and inventory on hand or do you think that you will continue to take reserves in the fourth quarter and may be even early next year.

Yes, that the increase in the deferred is really related to I think we explained this in the queue [ph] we deferred a portion of our revenue in the quarter related to Gelclair. We had an increase in wholesaler acquisition price that really became effective in late September and prior to that we allowed wholesalers to buy in at the old price. And so some of the exit what we thought were excess purchases we deferred, and that’s really we have quite that increase in the deferred. We do feel that with regard to our reserves, we evaluate those on a quarterly basis and we do feel that they are appropriate.

Okay. Last question on KRN, Dr. Drutz you mentioned the discussions with the agency around the CCIPN. I’m curious if those discussions included multiple myeloma as well and you know just in terms of your goals and what you would like to see or what would be the ideal feedbacks on the agency, can you just give us a sense on again what would be kind of your ideal pass code there.

Yes, hi, Jason. So the situation with the FDA as we focused entirely on the neuropathy indication with CCIPN, one of the most obvious reasons is that where we actually have clinical data, the Phase IIa data, our clinical data. And although we had some nice curt icy of some academic investing in some very nice pre-clinical data in myeloma, we have no clinical data whatsoever in myeloma, which we mean that the strategy for moving the drug forward with the agency would be different on the cancer side then it is on the pain side. So the cancer side is an interesting side and it’s being held and deserved, the partners we’ve talked to are quite interested in it, but everybody we’ve talked to agreed that the focus really needs to be on the neuropathy for the reasons that I’ve stated. Is that answer your question.

Yes, it does and but just in terms of your discussions then with partners I assume all indications are on the table.

Yes, right definitely and then depending on the type of partner that you are talking to, some of them are much more oncologically oriented, then they are pain oriented. And for the folks that are focused entirely on oncology, or hematology or oncology their feeling is for that program to move forward there needs to be a Phase I study for multiple myeloma, plus the drugs really been in humans for this purpose. So clearly the deeper interest on the partnering side has been on the pain side and particularly because this is not an opioid, this particular aspect of the drug resonates, especially I could tell you with the pain clinics, especially with the pain clinics.

Gotcha. Okay guys. Thanks for taking the questions and again congrats on the process.

Thank you Jason.

Thanks Jason.

Thank you (Operator Instructions) The next question is from Ren Benjamin of H.C. Wainwright. Please go ahead.

Hi, good mornings guys, let me add my congratulations for the progress as well. Just I guess a couple of questions. One can you just remind us how big the filed force is and whether you feel that is the – this is the optimal size or what could be the optimal size going forward.

Hi, Ren its Chris. The current sales organization is at 20 field sales representatives and we have three field managers that are managing both 20 sales reps, when we originally look at the market and how we defiled [ph] positions, we really looked at the highest prescribing oncologist across the country relative to their tomaxifen usage. If they were very high defile virus of tomaxifen they became high target doctors for us to consider where we would put sales representatives. We pay our high prescribes of tomaxifen, they are going to be high prescribes of the other products that we have in our portfolio. So I can have David Benharris to comment on this in a little bit more detail, but relative to our reach and frequency then we felt that a national sales organization of 20 would give us the appropriate reach and frequency that we are currently seeing and that we are pleased with. So we believe that in order to execute our current plan that we are right sized at 20 as we continue to grow sales and if we bring additional products into portfolio and want to boost that reach a little bit and frequency, then it might be appropriate to increase the sales force at some point down the road, but not dramatically we think that given the number of oncologists and radiologists that we are calling on that we are getting pretty good coverage at this particular point in time, but let’s met ask David Benharris to expand on that a minute.

Sure. As Chris said, we definitely feel that we have a right size sales force, we have brought another sales manager in for the very reason that we have a better scope of controlled results and have more opportunity for interaction with our sales reps from a management perspective and it does give us a little flexibility as well as well should we see areas of opportunity where we could grow into. So as Chris stated, as we now have 20 folks in the field we are right sized, we have called on 85% of the top prescriber narcology and offices in the country with our current sales forces and we average almost two calls per month to those very same offices. So our reach is very good for 20 folks based on our targeted defiled customers and our frequency is excellent as well. So right now we add another sales manager so we can downsize the geographical footprint of the regions and it give us some flexibility moving forward to expand into those regions if and when we get other the products or if and when we see additional business opportunities that needs to be taken advantage of.

Okay. Thank you for that. I guess switching gears to Gelclair and obtaining of course market leadership position. When we take a look at the market, just looking at those numbers of patients that suffer with oral mucositis it’s a huge and sizeable market and so when we talk about market leadership position, normally we would be taking about some significant not just obviously market share,, but significant revenue. But there has got to be something in that dynamic that I’m missing and I’m hoping that you could help us understand maybe a little bit of the dynamics of the oral mucositis space and what it will take not just to have market leadership position, but clearly to grow that market leadership position with significantly relief [ph] on the revenue side.

This is David, I will gist that question. So there is various factors to answer that specific questions. So when we talk about market leadership in the gel barrier space, it’s often specifically about products that are similar to Gelclair in their composition and how they work, so there is a handful of products that do that. Outside of that there are other products that are utilized in oral mucositis that are specifically indicated to oral mucositis, but they are more artificial saliva agents. So there is a good opportunity for us to get oral mucositis patients there. But at the end of the day the oral mucositis treatment standard of care across the country is something called Magic Mouthwash. The Magic Mouthwash is a concoction of different constituents that makeup a prescription product that could be used to treat oral mucositis, it’s different everywhere you go. The statistics on oral mucositis is that approximately 400,000 patients per year suffer from this condition, either from chemotherapy, targeted cancer therapeutics or radiation therapy. So there is different slices of the market that we can gain traction in and we’ve done that very well initially which is the agents that are similar to us in gel barrier market. We’re now having the opportunity to grab market share from the artificial saliva agents that are used for treating oral mucositis based on our field force efforts, based on our clinical data and based on the way that Gelclair works from a mechanistic perspective and as we continue to educate and grow our basic business we will have the opportunity to encroach into the Magic Mouthwash space as well. So there is a lot of opportunity out there, we have market leadership and one specific segment of the opportunity which is products that are similar to us that work in the same way. Again we are now taking some share and have the opportunity to take share from the other agents that are using the space, which are artificial saliva agent as well as Magic Mouthwash.

We are looking - you might want to have a look if you could get at something called the [indiscernible] are you familiar with that at all?

I’m not

Nobody follows Magic Mouthwash , there is no company that makes it, it basically sound good, but if you can get a hold of – or maybe I can send it to you if I can find it they are the only people who have ever paid in the attention to it and found that 21 different Magic Mouthwashes out there. They are not enthusiastic about it, but all they say well its out there and it’s popular, it seem to be popular because it has [indiscernible] which get into the mouth for fairly big period of time. If you want me to send you that I would be glad to send you that.

Definitely. And I guess just related to the growing market share any thoughts on running a post marketing sort of head-to-head comparison to be able to enable the sales force to show these physicians what Gelclair could do for them?

Yes, absolutely so have ongoing discussions now, this is David again. Of our accounts that are looking from a standard of care perspective of average patient populations who suffer from oral mucositis. So radiation patients particularly bone marrow transplants patients. We’ve engaged some though leaders across the country to work with us to see if there is opportunity to some very large cancer institutions, well known and respected cancer institutions to run some trials, and we’ve also been in discussion with our partner Helsinn who is the worldwide owner of Gelclair to support those types of trials. So those are discussions that are underway, I think they can be effective moving forward to help gain additional market share, but with that being said we do have most data on Gelclair of all the ages that are out there and we clearly have competitive selling advantages for the five not only versus the products in our class, but versus artificial salvia and specifically versus Magic Mouthwash as well. So we have what we need today from a perspective of selling, messaging and features and benefits versus the other products that are utilized, but it always is good to strengthen that with clinical data and we are working very diligently, David Drutz, myself and our customers and our partner Helsinn to see if we can accomplish some of those in the short term as well.

Okay, great. And just one final question in regards to Soltamox, you mentioned that sufficient to amend a label, so that it’s narrows the ASCO guidelines. Just remind me does the NCCN treatment guidelines mentioned Soltamox and if not how do you get Soltamox on for the NCCN guidelines?

The NCCN guidelines do not mention Soltamox, but we have asked the NCCN to consider at least mentioning that there exists more than one formulation of tamaxifen, because when you read the guidelines the only thing that’s been talked about in the guidelines of the pills. So we are waiting to hear from NCCN on that request.

And for this petition to the FDA is something different, can you just help me understand?

Yes, it’s totally different the issue is that the label for tamaxifen is written many, many years ago and the recommended duration with treatment for tamaxifen has evolved overtime. If we go way back in time, it was only though a year. I mean that’s a long time ago, but then recently for this five-years. However, as you very well know, now there are good data, Atlas and so on and Adam are indicating that at least ten-years is necessary for optimum outcome. So when you have a look at the tamaxifen label. All of a sudden its five-years and we feel that it’s important to have the label accurately reflect recommend standard of practice for both ASCO and NCCN. Our request to the FDA is for tamaxifen period, Soltamox is form of tamaxifen but it would impact all tamaxifen.

Okay. Thank you very much and good luck.

Thanks.

Thank you.

(Operator Instructions) doesn’t appear that we have any further questions. I would now turn the conference call over to Mr. Clement for any closing remarks.

Thank you, very much operator. I would like to sincerely thank you all for joining us this morning for our third quarter call. We are very encouraged with the traction of our commercial sales strategy and remain committed to building upon the positive momentum generated over the past several quarters of 2014. We believe this growing success is attributable to the commitment of our sales team and the breadth of our product portfolio and the value it brings to both patients and healthcare practitioners. We continue to proactively examine and enhancing our sales strategy, bolstering our existing product portfolio and maximizing the value of our key development asset KRN5500 with the ultimate goal of creating sustainable growth and value for our shareholders. Thank you again, and I look forward to providing you with future updates on our progress on our fourth quarter call and full year 2014 earning call. Have a good day.

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