Greetings and welcome to the DARA BioSciences Fourth Quarter and Full-Year 2014 Results 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. It is now my pleasure to introduce your host, Jim Polson, Investor Relations. Thank you, sir. You may now begin.

Thank you, Operator. Good morning and welcome to the DARA BioSciences fourth quarter and full-year 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 material 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, Vice President of Sales and 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, and fiscal 2014, followed by an update from Dr. Drutz 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. It is now my pleasure to turn the call over to Chris.

Thanks, Jim, and good morning, everyone. I’m very pleased to welcome you to our fourth quarter and full-year 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 closed 2014 on a positive note, with another solid quarter of commercial progress for DARA. DARA reported record net revenues of $717.8 thousand for the fourth quarter based on gross product sales in excess of $900,000 as compared to net revenues of $182.3 thousand for the year-ago period, a year-over-year increase of nearly 394%. For the full-year, DARA reported net revenues of $1.89 million, an increase over $419.3 thousand generated in all of fiscal 2013. Returning specifically to the fourth quarter results, our sales team continues to strengthen and enhance the relationships to establish throughout the year with their target offices and institutions. In line with what we have reported on previous calls, we continue to be pleased with the ongoing to access to the top prescribing oncology and radiology offices across the country, as evidenced by over 80% reach for these physicians, and their support staff, with an average of twice monthly in-person calls. Our sales team also exceeded our quarterly targets with respect to in-service programs and local regional and national speaker programs. Given their strategic positioning in oncology supportive care, which highlights the market need for supportive care oncology products, DARA's investment in awareness and educational initiatives, implemented by our sales and marketing team, continues to have a positive impact on each product in the portfolio, as well as establishing DARA as a leader in this important area of oncology. This positioning certainly differentiates DARA from other companies and facilitates the ongoing office access we enjoy, allowing for us to keep…

Thank you, Chris. Good morning and thanks to all of you for joining us. I'd like now to take a few minutes to provide an update on our lead development asset KRN5500. KRN5500 is our novel non-opioid non-narcotic therapeutic candidate that’s being readied for the next stage of its clinical development which is Phase 2b clinical trial. KRN5500 was previously awarded Fast Track status by the FDA in 2011, based on a successful Phase 2a clinical trial in cancer patients with treatment refractory neuropathic or nerve pain. During 2014, the FDA awarded separate orphan designations for use of KRN5500 in the management of two indications. The first is treatment refractory chronic chemotherapy-induced peripheral neuropathy or CCIPN. The second is for the treatment of multiple myeloma. At this time, we are entirely focused on the CCIPN development program. During the fourth quarter of 2014, we submitted a comprehensive 230 page KRN5500 briefing document to the Division of Anesthesia, Analgesia, and Addiction products of the FDA for their review. The package summarized to previous non-clinical and clinical study data, TMC data, including information concerning the new and simplified KRN5500 formulation and plans for manufacturing the drug product. The document also detailed our proposed plans for further clinical development and outlined a subsequent development pathway to the NDA. Included in the package was the series of specific questions for which we requested FDA input. We've recently received a formal reply from the FDA and are pleased to report that they are in broad general agreement with our overall development plans. Assuming we can come to agreement regarding certain specific design details of our Phase 2 clinical trials, they have indicated that a single confirmatory Phase 3 pivotal trial may be sufficient for drug approval in this orphan indication. As you know, standard regulatory…

Thanks, David, and thank you all for joining us this morning. Our net revenue for 2014 were approximately $1.9 million compared to the net revenues of $419,000 in 2013, representing an increase of 350% year-over-year. Our net revenues for the fourth quarter of 2014 were approximately $718,000 compared to net revenues of $182,000 for the same period last year, representing an increase of 295% quarter-over-quarter. The significant increase in sales of Gelclair was responsible for the majority of both the full-year increase and the quarter-over-quarter increase. Gelclair had just launched in April of 2013. In spite of this significant increase in net revenues, our cost of sales for 2014 increased only 102% year-over-year, and 152% on a quarter-over-quarter basis. 2013 cost of sales included a write-down of approximately $81,000 related to Soltamox inventory that was nearing expiration. Our sales and marketing expense increased approximately $1.4 million on a year-over-year basis and approximately $350,000 on a quarter-over-quarter basis reflecting the expansion of the sales force the 20 reps at the beginning of 2014. Our research and development expenses decreased by approximately $1.5 million on a year-over-year basis and by approximately $890,000 on a quarter-over-quarter basis. This significant reduction is primarily due to two factors. One, in 2013, we had incurred cost associated with formulation and API manufacturing costs associated with the KRN5500 program, while none have been incurred in 2014. And two, in the fourth quarter of 2014, we reported a reduction of expense of approximately $1.1 million as a result of the FDA waiving our product and establishment fees for fiscal years 2012, 2013, and 2014. Our general and administrative expenses increased by approximately $239,000 on a year-over-year basis and by approximately $257,000 on a quarter-over-quarter basis primarily as a result of an increase in personnel related cost. At the end of the year, our principle sources of liquidity were our cash and cash equivalents which totaled approximately $12 million. As of December 31, we had net working capital of approximately $10 million. Starting 2015, with cash on hand of approximately $12 million, and based upon achievement of our current operating plan, we believe that we have sufficient working capital to continue our operations through the first quarter of 2016. I will be happy to answer any questions you have during the Q&A. And I'll now turn the call over to Jim.

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

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. [Operator Instructions]. Our first question is coming from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Congrats on the progress during last year, good job. Few questions in terms of your existing portfolio of marketed products, Soltamox, if you could talk a little bit about your strategies there in terms of increasing utilization and gaining -- potential gaining market share in the tamoxifen space and your strategy there, may be touch on that first?

Sure. So Matt, this is Chris. Our strategy let me take you from a field point of view right now. Our sales reps in each territory we have a number of Soltamox users and we’re going to continue to call on those physicians that have used Soltamox throughout the year. But I think, as I mentioned, one of the challenges that we faced with trying to get to the appropriate patient population for Soltamox, how do you get and identify that niche group of patients that either can’t tolerate taking a tablet or they just prefer to have an alternative. Now we know there’s a market out there, but we know that it’s a subset of the overall tamoxifen market. Recently we’ve been able to collaborate with a provider that those patient portals. And the patient portal allows for this provider to communicate directly to the patient. So we see this as a very good avenue of now getting product specific messages to tamoxifen patients. So our overall strategy for going forward now is number one, to continue to call on physicians who have prescribed Soltamox in the past, to try to increase their utilization and number of prescriptions that they write. And number two, to work via this portal to get a Soltamox specific message directly to these tamoxifen patients to see if we can then create sort of a dynamic where the patient will then have the opportunity to decide if Soltamox therapy would be and you have something that they would like to try and they can then discuss that with their physician. So we think this is a way of getting more directly to the affected patient population and we believe that between the two levers that I just mentioned that we will see continued utilization or continued usage of Soltamox. And I’ll just stop here and ask David Benharris, if he wants to elaborate on anything that I have said.

Sure. I think Chris is right on the money that the only one point I would add to that Matt, and Chris had mentioned it previously in the call is our campaign with physicians interactive, which really gives us the opportunity to, and as we’ve talked about previously, have a message to healthcare practitioners where they go, so sites that they go to have a message on Soltamox, NETALERT Newsletters, different guidelines et cetera. So we have a greater share of voice outside of the two more focused approaches we are taking in the field and directly to patients. So the combination of the patient protocol ran with PI, which was actually implemented late in the fourth quarter, in addition to our refocused targeting efforts in the field, we saw, as Chris had mentioned, an increase in the fourth quarter with our refocused targeting efforts in the field, we feel these other two opportunities will be added to that moving forward and give us the opportunity to continue to grow and expand the utilization of Soltamox and hopefully reach a critical mass by doing that.

Thanks. And then in terms of Gelclair, Gelclair seems to be performing very well. Any thoughts there in terms of continuing that momentum and potential price increases or something like that?

The one thing that we’re going to, that we’re doing and again I alluded to this in the comment section and I’ll let David elaborate on this as well. We are seeing very nice growth, continued growth for Gelclair, increasing utilization among current users and adding new prescribers. One of the things that we want to do is to make sure ensure that is that patients are getting the appropriate amount of Gelclair. And so that we’re happy with the increase in prescriptions, but we want to increase the actual number of Gelclair sachets that they get as part of their treatment. And so that is something that's kind of an educational issue that we’re implementing in our proactive program in the market, because simply increasing the number of sachets that patients get for a typical course of treatment that will certainly increase the overall revenue for Gelclair based upon our current run rate of prescriptions, but I will let David elaborate on that as well.

Sure, to that point, we opened up; we have a limited distribution system prior to opening up to retail midway through this year. So as Chris said, making sure that the appropriate amount of Gelclair’s filled for prescription is in an educational process, not only in the office level, but at the pharmacy level. So we have put a program in place at the pharmacy level to make sure pharmacists are notified when a Gelclair prescription comes up, the appropriate amount of sachets that should be filled relative to the prescription length, and we’ve also put some things tactically in the field to make sure that our customers are reminded to write the product correctly. We don’t have the issue when it comes to specialty pharmacy and we do have a new Patient Assistance Program, David Drutz, alluded to earlier in the call as well and our partner for that also those commercial patients, so that's one way for the specialty we make sure it's filled correctly. However, with a large segment of the business in the retail sector, we need to make sure that those prescriptions are filled correctly as well. So we're working on both ends of the spectrum, making sure the pharmacists are educated through electronic messaging via the NDC for Gelclair when a prescription pops up and making sure our customers are educated in the office by having dosage cards in different various tactical things that consistently remind them the appropriate dosage of Gelclair and the appropriate amount of sachets.

Okay. Very good.

Okay.

And then in terms of just building your portfolio, you mentioned in your press release in terms of DD and potential to add to your pipeline, can you comment on that in terms of where you are and visibility you have to adding more supportive care products to your portfolio?

Yes. I mean it certainly is a key objective of ours to add additional products to the portfolio. I think, as I mentioned during the comment section, we are getting very positive reception, when we go into these oncology offices now. And the nurses and the physician assistants and the other office staff are beginning to see that DARA is more -- is multifaceted in a sense that we have a range of product offering. So our ability to get into the office, we can really enhance that as we bring other products into the portfolio and get them to be used. So we’ve been very active in looking for additional products. And what I could tell you is that, we’re very pleased with the progress that we’ve made in that regard and believe that we’ll be able to fulfill that objective.

Okay, great. And then, one other question, couple of other questions. One for Drutz, in terms of KRN5500, could you give a little bit more detail in terms of the development plan and where you are with that in terms of the Phase 2b and then timeline, where along the timeline and potential details on that study?

Well, I'm not sure how much detail I can go into here. Basically, we want to confirm the Phase 2a results, which indicated that the drug worked very nicely in chemotherapy-induced peripheral neuropathy. So we submitted a plan to be FDA that not only includes the next study, but the studies beyond that, all the way up to achieving an NDA. We, in order to confirm what we saw in the Phase 2a study, we don’t believe it's going to be particularly large study, but I can’t speak authoritatively about that until we hear definitively from the FDA, re-visualize a relatively circumscribed study in a relatively timeframe but I can’t speculate beyond that. There are no particular sticking points with the FDA we're just fine-tuning, basically fine-tuning some of the questions they want answered, but it takes time to get this one done.

Are you thinking though to be able to wrap that up with your discussions with the FDA and have that stuff to go sometime this year or second quarter or what's your thought?

Yes, no, I can’t say second quarter because I'm an optimist I'm pretty sure because I just can’t speak for the FDA, but yes, this year yes, I do expect it. We're on a good track with the FDA. They understand what we're trying to do. We have a very good interaction with them and its particularly augmented by the fact that the indication we're focused on is an orphan indication in an area where there is no drug approved. So we feel quite encouraged and I wish I could be more specific but I just can’t right now.

Okay fair enough, good. And then just quick accounting question in terms of the FDA waiver that you received clearance on in the fourth quarter of $1.1 million. How does that work from an accounting point of view and you obviously in the press release you mentioned that you're going to receive, I guess, reimbursement of like $600,000 from the FDA as well in the first quarter this year in January?

Yes, so the total waiver was -- it’s for three years of fees basically.

Okay.

And we have accrued those, and those were accrued on the R&D line. And so in the fourth quarter when we finally received the waiver for all three years, we reversed that expense on the R&D line that netting it down as far as the -- we don’t expect we had any.

Do you recognize that all -- did you recognize all of that in the fourth quarter of last year?

Yes, that’s correct. And out of the $1.1 million, we had actually paid $600,000 for the first year of those three years. And so the FDA agreed to refund that to us and that’s sitting as a receivable at 12/31 which is why you see receivables are considerably high. That’s one of -- one piece of it.

Okay, good. All right. I'll jump back in the queue. Thanks for the additional color.

Thank you. Our next question is coming from the line of Reni Benjamin with H.C. Wainwright. Please proceed with your question.

Hi, good morning guys, thanks for taking the questions and congratulation on the progress. A couple of questions just following up on Matt, can you give us a sense of the mix of product sales, is Gelclair 60% of revenues kind of how is everything breaking down? Any color on that?

Sure, Reni, it’s Chris. We haven't given a breakdown of specific product sales but the majority, the vast majority of the revenue that we're reporting is coming from Gelclair at this point.

Okay. And then --

I mean, bear in mind, also that the -- bear in mind also that the other products in the portfolio that we're selling, we don’t book those sales either. So the sales reporting line is really a combination at this point of just Gelclair and Soltamox.

Fair enough. And then regarding sales strategy going forward, can you may be just give us a sense for 2015, clearly you have your call list, I think in your prepared remarks you talked about how you're getting to 80% of the top prescribers. Can you talk to may be a little bit about providing the color on the strategy, the increased sales going forward in 2015, in particular, if there has been thoughts regarding a direct-to-consumer campaign or the potential to expand out of oncology into for example by identity?

Sure. So let me take that a little bit and again I'm going to ask David to amplify on my comments. Relative to Soltamox, we do believe, as I mentioned to Matt's question, we do believe that we have the ability now, via this patient portal relationship to be able to communicate directly to patients that are on tamoxifen. And that’s always been kind of the issue, how do you best go about doing that? Well we believe in this relationship we now have, we have the ability to do that, and we really think that that is going to enhance our ability to get to the appropriate patient for Soltamox. And as David said, we are seeing some really nice improvements in Soltamox over the past few months. So that’s number one. On the Gelclair -- on the Gelclair front, we're going to continue to build new prescribers. We have a little bit of momentum relative to that. We continue to gain formulary approvals and build different relationships with some specific providers that we think that will enhance the growth of Gelclair. But also we kind of comment put on a little bit earlier we like what we’re seeing with Gelclair growth, in terms of prescriptions, but what we need to do is educate the caregivers relative to what those constitute the appropriate level of treatment of Gelclair. So I think as we run those programs that we currently have in place as we increase the number of sachet per prescription or boxes per prescription, we think we'll see some really nice improvement in Gelclair. And then to your point we are evaluating the use of Gelclair in markets outside of oncology because we do think that there are some very interesting markets where Gelclair could make some significant inroads. Now it's not our desire with our 20 reps to kind of distract them or to take them off their focus in the oncology specific segment, but we are in discussions with companies that have specific focus in some of these other areas where they could become our marketing partner and that would enhance the overall revenue for Gelclair as well. But again I'll let David to sort of amplify on my comment.

Sure. I will just add one point to that, Chris, is right on the mark with everything he said. The one other area we look to improve or expand utilization of Gelclair is in the hospital. So there has been some current data out there, specific patient populations that can benefit in the oncology space, who suffer from oral mucositis that can benefit from Gelclair that we feel we can take advantage of and have an opportunity in 2015 and moving forward to expand our base of business and in-patients in the hospital versus in the majority being an outpatient where our prescription for folks who are suffering from oral mucositis even from the chemotherapy they were on in the ambulatory and the outpatients or the radiation they received to their head and neck and again they are ambulatory, they are outpatients. But there are set of patients within the hospital that stay there for a particular amount of time that we should get oral mucositis through the different procedures in the oncology space, where some new data is being published we feel we have the opportunity to expand the Gelclair business into.

And the only other thing that I wanted to mention, Reni, as we kind of build and find the good base of relationships with all of our products, we are very focused on adding additional products into the mix. And we do believe that is -- we do believe that's achievable and we think we have the good base of interest and support with the target docs that we’re calling on that it would make it, it make it ideal for us to be able to bring another product in and just build upon the strong relationships that we’re beginning to put in place here.

Got it. Fair enough. Another question regarding may be some color or reminder as to depict on the label amendment. Can you just take us through what's happening there with [indiscernible]?

So I'm going to ask David Drutz to comment on this. But very interesting in the sense that as David likes to say tamoxifen is a venerable drug that's been out there for decades. And when a drug is been out there so long, over time you tend to see these products wane their and give way to the newer therapies that's not the case with tamoxifen, and in fact that it’s been studied or patients who have stayed on the drug at over time the existing label talks about the guidelines for treatment at five years. But there has been some studies that have been conducted and reported on that talk about the guideline being changed now form five years out to 10 years, and now we are even beginning to hear data that says that it goes out to even 15 years. So there's very good data now to support long-term use of tamoxifen, don’t stop it five years continue on and a lot of oncologists are saying that, hey, once I get a patient on tamoxifen I'm not going to take them off tamoxifen. I mean that is pretty good in that regard. So what we’ve done is that we have petitioned the FDA using the basis of this data that's been published to ask for a revision to the label that would state okay that the treatment guideline here is not five years now it's out to 10 years. All right. And then potentially even down the road to amend that label to go even further as the additional data becomes available. So that would not just affect the Soltamox label that would affect oral tamoxifen labeling. But we do think that's important not only for knowledge in the oncology, among the oncology community, but also for patients, for them to see that is a treatment that is something that they should be on long-term. But I'm going to ask David Drutz just to give a little bit more color to that.

It's hard to improve on Chris’s response there except to add that we have not heard back from the FDA that tends to move in a stately manner, as we might say. There is a definite need to improve the tamoxifen label and I mean across the board of Soltamox falling under that broader category of tamoxifen. There are other improvements that need to be made in that label. I don’t think the FDAs really concentrated on this and we’re trying to get them concentrated on it, so that’s about as much as we’re able to say at this point.

Got it. And then one last question regarding KRN5500. I guess I know you provided some color on the feedback, I guess may be just to begin a little bit more I’m curious as to why the FDA is requiring additional preclinical data and does that have more to do with the formulation or is it kind of just going back and binding you guys in cross and tees?

No, it’s binding us in cross and tees. They’re not requesting any new preclinical data. They’re asking for more information on existing preclinical or nonclinical data including greater details of some of the charts we submitted in terms of going back to the background information and fine-tuning it, so that’s what it’s about.

Okay. And so based on I guess everything that you’ve been asked, you have a sense to forgetting their dialogue after you split everything do you have a sense as to when you might be able to submit all the information that they’re requesting?

Yes, we do.

Is there something in a second -- second sort of an event or --?

Well, I mean are you saying when will the FDA say yes, it’s okay, we agree with the next step is a Phase 2b clinical trial. We’d like to hear from them because they’re not going to say, this is what you have to do all the way up to NDA. What they’re going to say is this is the pathway that we agree with you. If you’re successful along the way this is the path for the NDA and we’ve come a long way in that regard. I’m expecting but this is me, it’s not the FDA. I’m expecting we’ll be able to provide the information although we will be provided with the information that allows us to move forward within 2015, as I told Matt, and I’m optimistic. Yes, I would say that we will have the information in hand somewhere towards the end of the second quarter, but I don’t know I’m very hopeful.

Right, yes that and maybe it was just the way I phrased it, I was looking for when you would have the information to submit to the FDA but doesn’t really matter?

Oh, I’m sorry, I’m sorry, Reni. No, we’re gathering that information up right now.

Yes. That’s -- that’s real fine. I mean, there is no big issue on that that’s real fine for us to get that data in.

Perfect. Well thanks very much and rest of 2015.

Thank you. It appears we have no further questions at this time. I would like to move the call back over to Mr. Clement for any additional concluding comments.

Well thank you everyone and I would like to sincerely thank you all for joining us this morning for our fourth quarter call. We are very encouraged with the traction of commercial sales strategy and remain committed to building upon the positive momentum generated over the course of 2014. We believe this growing success is attributable to the breadth of our product portfolio and the value that it brings to both patients and healthcare practitioners alike. We continue to proactively examine enhancing our sales strategy both doing our existing 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.

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