Seelos Therapeutics, Inc.

For the fourth quarter of 2017, Apricus reported a net loss of $2.4 million, or $0.16 per share, versus a net loss of $0.03 million, or $0.04 per share, in the fourth quarter of 2016. For the full year 2017, the company reported net income of $0.03 million, or $0.02 per share, versus a net loss of $7.4 million, or $1.15 per share, in 2016. Full-year net income was primarily driven by a $12.3 million gain from the sale of ex-U.S. Vitaros rights and assets to Ferring, partly offset by a $1.5 million regulatory milestone payment to Allergan and Vitaros commercialization and G&A expenses. Cash was $6.3 million at December 31, 2017, up from $2.1 million a year earlier, and remained $6.3 million as of February 26, 2018; management said that is expected to fund operations through the end of 2018.

Rich Pascoe said the company was disappointed by the FDA’s decision, especially because Vitaros is already approved and commercialized outside the U.S. and the resubmission included new clinical, nonclinical, and CMC updates intended to address the prior CRL. His tone was cautious but determined: the immediate goal is to use the planned FDA meeting to understand exactly what is needed to overcome the safety concern around DDAIP and to determine whether a viable U.S. path exists. He also emphasized that Apricus will look for business combinations or other opportunities to maximize shareholder value if the FDA path remains uncertain.

Kelly Deck reported the quarter’s and full year’s bottom line, including the fourth-quarter net loss of $2.4 million and full-year net income of $0.03 million. She explained that the year’s profitability was mainly due to the $12.3 million gain on the Ferring transaction, offset by the $1.5 million milestone payment to Allergan plus ongoing Vitaros prep and G&A costs. She also highlighted cash of $6.3 million at year-end and $6.3 million as of February 26, and management said it expects that to fund operations through the end of 2018 while also looking to reduce expenses and extend runway.

Analysts focused on whether Apricus would lower DDAIP concentration, reformulate, or run more clinical work if the FDA requires it. Management said that if reformulation is needed, a bridging study would likely be required to connect the new formulation to the existing efficacy data, but it was too early to say which route would be taken. Questions also covered safety signals outside the U.S.; Rich Pascoe said Apricus had not seen incidents in its own historical database that would suggest tumor promotion or increased STI transmission, but that the FDA still appears to want stronger mitigation of those theoretical risks. On Allergan, management said it must work with Allergan on U.S. Vitaros matters and keep it informed, but Apricus retains the development responsibility and decision-making unless it chooses to stop development and potentially return rights.