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A Safer, Quicker and Easier To Use ED Solution?

DOUBLED BARRELED OPPORTUNITY FOR BOTH SHORT & LONG TERM INVESTORS.

With a market cap under $100 million ($61.8 million to be near exact), with European and Canadian approval of

its novel erectile dysfunction (ED) topical cream called Vitaros® (affecting 150 million men worldwide), with its

marketing and sales just launched in June by two Pharmaceutical giants - Takeda ($16 billion in sales) and in

August by Sandoz ($9 billion in sales) - Apricus has considerable short-term upside potential and in our opinion

could easily return to its 2012 high of $4.00 per share, providing aggressive investors with potential gains in

excess of 150%.

The long-term share price potential (double digit) will be bolstered by any reports of significant success in its

current markets of Vitaros® (300,000 doses were shipped and re-orders have commenced) with the company

estimating “peak” revenue potential of $300 million in existing European markets. The upside may be further

bolstered with potential approval news and sales in Asia or Latin America (14% of worldwide sales) and of

course, the US (40% of ED sales). Sales of ED drugs are tracking $1.3 billion annually in Europe alone, as ED

solutions aren’t one time solutions, but rather ongoing solutions (and thus ongoing revenues) for men with ED

The Biotech Stock Review

Los Angeles / Chicago / New York

Apricus Biosciences (Symbol: APRI) $1.40

T h e B i o t e c h S t o c k R e v i e w . c o m Page 2

problems. While mature, very few drug markets have the same investor excitement potential for a new drug as

the ED market. Any signs of success could propel the shares considerably higher as success of the competing

drugs has been well documented in the press and on Wall Street.

In addition to Vitaros®, the Apricus pipeline features enormous long-term potential from the successful

development of two other medical solutions - RayVa™ for Raynaud’s disease and Fispemifene (announced in

October 2014), as a potentially safer and more effective solution to the current $2 billion Low Testosterone (Low-

T) market and whose current solutions are mired in controversy. An estimated 13 million men in the U.S. report

experiencing low levels of testosterone.

All in all, Apricus Biosciences (APRI) has all the characteristics we look for in an undiscovered medical company

including a small market capitalization, proven and approved medical solutions and well developed markets

exceeding $100 million.

And add to that, deep-pocketed billion dollar marketing partners who most importantly rigorously vett both the

efficacy and sales potential (in this case for Vitaros®) before agreeing to becoming their marketing arm and

investing millions to assure a successful launch of a new product – something a company of Apricus’ size could

never do alone.

The importance of the involvement of both Takeda and Sandoz to the investment equation, is such that in all

likelihood, we would not be adding Apricus to the Watch List - had their involvement not been announced to

spearhead the introduction of Vitaros® into the very competitive ED market. They are that good at marketing

new drugs.

In sum, we are adding Apricus to the Watch List with an initial $4 price target due to its low market capitalization

and knowledge that their safer, quicker acting and easier to use ED solution is being marketed by two of the

most successful and powerful drug marketing companies in the world.

Company Background.

E/D Drug Revenue Background.

Aprostadil Background.

Aprostadil/Vitaros® Background.

Marketing Partners.

RayVa™ Background.

Fispemifene Background.

Management.

Summary.

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COMPANY BACKGROUND:

Apricus entered the pharmaceutical industry in 1995 and initially focused on its NextACT DDAIP drug delivery

technology culminating with licensing agreements in 2005 with Novartis (and later Tribute Pharma) for a nail

fungus drug and in 2007 with Warner Chilcott for Vitaros®. The NextAct technology allows drug molecules

(including those made by other pharmaceutical companies) to be rapidly absorbed by the patient.

In plain English, NextACT is designed to enhance the topical or oral delivery of an active drug to the patient and

if successful, improve the effectiveness of the drug (which may not be able to penetrate the skin) and potentially

reduce the side effects. As such, Apricus is a technology company whose technology could improve the drugs

made by many other companies (including drugs off-patent) in a variety of formulations such as creams (like

Alprostadil in Vitaros®), gels, sprays, ointments, lotions, patches etc. In addition its oral delivery technology

employs the same permeation enhancers which can slow or increase the delivery of drugs, which may have

difficult characteristics with regards to being permeable or soluble.

As such, Apricus Bioscences’ next big drug could be a drug on the drawing board of another company or a drug

from a major pharmaceutical giant (which Apricus has proven success in developing relationships) just coming

off patent – and thus offers investors spectacular “out-of-the-blue” revenue potential. It’s this technology, not

just Vitaros® which makes Apricus such an attractive long term investment candidate.

Vitaros® is an excellent (if not perfect) example of this potential. Vitaros® isn’t a drug invented by Apricus, but

rather a newly “packaged drug” which is in essence the patented delivery method of the drug Alprostadil - using

the NextACT delivery technology. Alprostadil has been around for erectile dysfunction for years, but the other

competiting firms used a needle or pellet to deliver it to the penis. HELLO a needle?

Suddenly side effects such as headaches, dizziness, lower back pain, fainting, swollen lips, and complete loss of

vision as well as dangerous interaction with high blood pressure medications from the pill version of ED drugs -

don’t seem so scary after all.

Alprostadil in our opinion is a better drug, a better solution, than Viagra, Cialis, Levitra or the latest entrant

Stendra from Vivus. The problem in the past has been the “problematic” delivery system for Alprostadil – (a

needle or pellet) which is something two of the largest pharmaceutical drug giants in the world (Sandoz, Takeda)

apparently agree. Alprostadil – great drug. Delivery method – not so great. Vitaros® with the Apricus skin-

permeation enhancer that speeds and aids absorption and Alprostadil - game on.

Pharma-giants do not agree to take on the sales and marketing for companies which have drugs with $25 or $50

million in annual sales potential. In fact anything under $100 million is mathematically defined as “statistically

insignificant” for a billion dollar corporation. And yet, through their expertise and huge presence, pharma-giants

can often create their own success. Companies like Takeda, Sandoz and Abbott don’t take drugs with small

potential and make them big, they take drugs with big potential and make them huge.

They see the enormous potential in Vitaros® - something which is not yet recognized on Wall Street, as it’s not

approved for sale here. There’s no commercials for Vitaros® during the Super Bowl for Wall Street traders to

see. Smart money in our opinion comes in here, at these price levels, with a market cap under $100 million –

before Vitaros® becomes a proven success. Investors with lesser risk tolerances could of course wait until

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Vitaros® is a proven blockbuster (which we define as annual sales exceeding $100 million), but odds are the

share price will be considerably higher than where it trades at today, if it achieves that status.

E/D DRUG REVENUE BACKGROUND:

In late 2013, Transparency Market Research (TMR) released an extensive report (cost $4,795) covering the ED

market titled "Global Erectile Dysfunction Drugs Market – Industry Analysis, Size, Share, Growth, Trends and

Forecast 2013 – 2019."

In it they revealed the following information (some is a bit dated as it mentioned Vitaros® as “..under

investigation in both preclinical and clinical settings…”). The report included an annual sales forecast of $3.4

billion in 2019, despite the loss of patent protection, showing just how powerful the demand for E/D solutions.

Which we will repeat, is for repeated use vs. one time use. The “cure” for ED is ongoing, as are revenues.

TMR Report:

Erectile dysfunction is the inability to attain or maintain penile erection in men, sufficient for successful sexual

intercourse. Erectile dysfunction is a common medical disorder primarily affecting men older than 40 years of

age. In addition, other than the typical causes of erectile dysfunction, such as diabetes and hypertension, a

number of common lifestyle related factors are also associated with development of the condition. These

include obesity, excessive alcohol consumption, smoking, use of recreational drugs, and poor physical and

psychological health. Commonly, oral drugs belonging to the PDE 5 inhibitors class form the mainstay of erectile

dysfunction treatment. Other treatment options include lifestyle modification, testosterone therapy, penile

devices, injection therapies and psychotherapy. All less convenient than popping a pill or applying a crème.

The global market for erectile dysfunction drugs has been studied from the perspective of currently marketed

branded drugs and pipeline drugs. Branded drugs include Viagra (sildenafil citrate), Cialis (tadalafil),

Levitra/Staxyn (vardenafil), Stendra/Spedra (avanafil), Zydena (udenafil), MUSE (medicated urethral systems for

erection), Mvix (mirodenafil) and Helleva (lodenafil).

The drugs in the pipeline for erectile dysfunction treatment primarily consist of two major drugs, namely

Vitaros® (alprostadil) and Uprima (apomorphine) currently in later phases of clinical trials.

In 2012, Viagra (sildenafil citrate) accounted for the largest share (45%) by revenue of the total erectile

dysfunction drugs market. However, due to the loss of the drug's patent exclusivity in Europe and other

countries in 2013, the overall market revenue is expected to decline during the forecast period as international

markets contribute considerably to the overall market revenue of the drug.

In the U.S. market, Viagra will continue to maintain a major revenue share due to its extended patent exclusivity

till 2020. The market for Cialis (tadalafil) accounted for the second largest share at USD 1,926.8 million, in 2012.

However, it is expected to witness a decline in market revenue at a CAGR of (12.6%) from 2013 to 2019, owing

to loss of patent exclusivity in 2017. In addition, the patent for Bayer's Levitra/Staxyn (vardenafil) is scheduled to

expire in 2018 and is thus expected to contribute to the declining market revenue.

A few novel compounds are currently under investigation in both preclinical and clinical settings, for the

treatment of impotency. These studies are majorly focused on medications with improved efficacy, shorter

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onset of action and fewer side effects as compared to the currently available treatments. Such pipeline drugs

include Vitaros® (alprostadil), Uprima (apomorphine) and Topiglan (alprostadil), amongst others.

Geographically, North America dominated the global market for erectile dysfunction drugs in terms of revenue

generation and is expected to maintain its position throughout the forecast period. The extended patent

exclusivity for Pfizer's Viagra (sildenafil citrate) in the U.S., till 2020, will be responsible for the leadership of the

North American market. Europe was the second largest regional market for erectile dysfunction drugs in 2012,

owing to the increased demand for ED drugs. Market growth will also be facilitated by the expected marketing

approvals for a few promising drug candidates such as Stendra/Spedra (avanafil) and Zydena (udenafil) by mid-

2014.

The global erectile dysfunction dugs market is dominated by few major players including Pfizer, Inc. Eli Lilly &

Co., and Bayer AG. Post patent expiration of the major branded drugs and intense genericization of the market,

the competition in this market is expected to be characterized by consolidation activities, partnerships, and

intensive mergers and acquisitions. The other key players in the erectile dysfunction drugs market include Dong-

A Pharmaceutical Co. Ltd., Vivus, Inc., Apricus Biosciences, Inc. and Meda Pharmaceuticals.

The full report can be purchased here: http://www.transparencymarketresearch.com/erectile-dysfunction-

drugs.html

THE HISTORY OF VIAGRA.

In March of 2013, Viagra celebrated its 15th year and CNN released an entertaining recounting of Viagra’s growth

and related events:

(CNN): Fifteen years ago, men who were suffering from impotence received a beacon of hope in the form of a

little blue pill.

Wednesday marks the 15th anniversary of Viagra's FDA approval in the United States. Viagra currently holds

45% of the sexual dysfunction market share, with competitor Cialis in close second, according to industry

researcher IMS Health. There were 8 million Viagra prescriptions written in 2012 with total sales of about $2

billion.

But how did a drug that was originally tested for the treatment of heart problems end up in bedrooms across

America? Take a look back at Viagra's history.

1989: British Pfizer scientists Peter Dunn and Albert Wood create a drug called sildenafil citrate that they believe

will be useful in treating high blood pressure and angina, a chest pain associated with coronary heart disease.

The drug is classified as UK-92480.

1991: Dr. Nicholas Terrett is named in the British patent for sildenafil citrate, or Viagra, as a heart medication.

Terrett is often considered the father of Viagra, according to ViagraBox.com.

Early 1990s: Pfizer completes several early trials of sildenafil citrate that provide little hope for its use as a heart

disease treatment. But volunteers in the clinical trials are reporting increased erections several days after taking

a dose of the drug, according to researcher Ian Osterloh.

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"Around the same time, other studies were revealing more information about the biochemical pathway involved

in the erection process," he writes for Cosmos magazine. "This helped us understand how the drug might

amplify the effects of sexual stimulation in opening up the blood vessels in the penis. With UK-92480′s chances

of treating angina now slim, we decided to run pilot studies in patients with erectile dysfunction."

1996: Pfizer patents sildenafil citrate in the United States.

March 1998: The FDA approves the use of the drug Viagra to treat erectile dysfunction. In the following weeks,

experts estimate, U.S. pharmacists dispense more than 40,000 Viagra prescriptions.

May 1998: TIME magazine's cover story, "The Potency Pill" quotes Penthouse publisher Bob Guccione as saying

he believes Viagra will "free the American male libido" from the emasculating doings of feminists. Feminists are

not amused.

On CNN's Larry King Live show, former presidential nominee Bob Dole admits he took part in experimental trials

for Viagra, calling it "a great drug.”

June 1998: Newsweek calls Viagra the "hottest new drug in history almost everywhere in the world." At the time

Viagra is only legal in the United States, Brazil, Morocco and Mexico, but Newsweek reports growing black

market sales in other countries.

December 1998: Pfizer announces it has hired Bob Dole for a television campaign aimed at raising awareness of

male impotence.

The Washington Post reports that the CIA is using Viagra to gain friends in Afghanistan. "While the CIA has a long

history of buying information with cash, the growing Taliban insurgency has prompted the use of novel

incentives and creative bargaining to gain support in some of the country's roughest neighborhoods, according

to officials directly involved in such operations.”

July 25, 1999: Popular TV show "Sex and the City" airs "The Man, The Myth, The Viagra," in which character

Samantha dates a wealthy older man who uses the little blue pills. In the next season, Samantha takes the little

blue pill herself to enhance her sexual experiences.

2000: Dr. Sanjay Kaul presents research at the 49th Annual Scientific Session of the American College of

Cardiology that suggests 522 patients died while taking Viagra in the first year the drug was on the market.

"Our data appear to suggest that there's a relatively high number of deaths and adverse cardiovascular events

associated with the use of Viagra. I want to emphasize that in no way are we trying to imply a cause-and-effect

relationship," Kaul told WebMD at the time.

August 19, 2003: The FDA approves Bayer Corporation's vardenafil hydrochloride, sold under the brand name

Levitra, to treat erectile dysfunction in men.

November 21, 2003: The FDA approves pharmaceutical company Lilly USA's tadalafil, or Cialis, for the treatment

of erectile dysfunction. The side effects for Cialis are similar to Viagra, and men with heart problems or

abnormal blood pressure are advised against taking it.

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2006: Rush Limbaugh is detained at a Florida airport after a bottle of Viagra is found in his luggage. The name on

the prescription bottle does not match his. Limbaugh's attorney says his doctor had prescribed the Viagra under

a different name "for privacy purposes," according to Forbes.

2010: Actor Michael Douglas makes headlines when he admits to AARP magazine that he has used erectile

dysfunction drugs with wife, actress Catherine Zeta-Jones. "Bless her that she likes older guys," he says. "Some

wonderful enhancements have happened in the last few years -- Viagra, Cialis -- that can make us all feel

younger."

2011: A federal judge extends Pfizer's U.S. patent for Viagra, making sure generic brands cannot come to market

until 2019, according to the Wall Street Journal.

April 2012: The FDA approves a new erectile dysfunction drug called avanafil, which will be sold under the brand

name Stendra. Stendra is taken on an as-needed basis 30 minutes before sexual activity, according to a news

release.

THE HISTORY OF APROSTADIL:

Aprostadil as we mentioned earlier is the key ingredient in Vitaros® which has been made “super-effective”

when enhanced by Apricus NexACT skin-permeation technology, to the extent it attracted the attention of both

Takeda Pharmaceutical and Sandoz (and Abbott Labs – though delayed due a merger with Mylan.)

Aprostadil was first launched in the US as an E/D solution in 1997 by Vivus (VVUS) using the MUSE delivery

system (pellet). It was probably one of the most fantastic boom to bust drug stories in history. Muse was off to a

good start, with sales totaling $129 million during its first year on the market, shortly before Viagra's

appearance. Muse was the first revolutionary product for erectile dysfunction, but Viagra basically trumped it.

Despite its effectiveness, Muse's mode of “pellet” delivery was uncomfortable for many men. To make a long

story short, Muse was sold it to Sweden based MEDA Pharmaceutical (MDABY) for $23.5 million in 2010.

But it was quite a ride for both the sales it generated and the excitement in the share price, as the chart below

shows in a five-year period from May of 1995 to May of 2005 – with Vivus shares running from $3 to $40.

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VITAROS® BACKROUNDER

Due to the presence and involvement of Takeda and Sandoz – we quite literally don’t feel the need to spend an

undue amount of time, effort and writing space in analyzing the Vitaros® effectiveness and sales potential.

In sum, investors have to ask, do they

have the capabilities to better

analyze the sales potential of Vitaros®

then Takeda and/or Sandoz - who

combined have agreed to upfront and

pre-commercialization payments of

$7.5 million and potential milestone

payments of $110 million?

This is in addition to the millions

required to successfully market

Vitaros®? We think their due

diligence suffices, so at this point

we’ll simply share some slides from a

recent corporate presentation and

share what we think are the three

most attractive markets.

VITAROS® MARKET

In our opinion, there are three

markets which hold the greatest

potential for Vitaros® - despite

consumers’ propensity to solve

health related problems by “popping

pills.” The first is the growing amount

of individuals who simply prefer not

to orally treat issues (aka pills) which

may have wide ranging potential

side-effects.

Vitaros demonstrated none of the

side effects of PDE-5 inhibitors like

Viagra, Cialis and Levitra, which are

known to commonly cause

headaches (in over 10% of patients), nasal congestions, vision changes, dizziness, flushing, etc. In fact, it appears

that Vitaros is actually considerably safer than current oral treatments.

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Vitaros® has no known interactions because of its non-systemic nature. As such, it is not known to be

significantly affected by food, alcohol or medication. This makes it appropriate for many patients in whom oral

therapies are not suggested, such as those patients taking nitrates.

The second market is to overweight individuals who as a result of their obesity, suffer from high blood pressure

and are required to medically treat the blood pressure with medications - which may conflict with PDE-5

inhibitors. The slide above describes them as “contraindicted” users.

1. 67 million American adults have high blood pressure (That’s one in three).

2. High blood pressure costs the nation $47.5 billion each year.

3. 54% of all men over the age 55 have high blood pressure.

CDC Factoids: http://www.cdc.gov/bloodpressure/facts.htm

The third market is for the “easy of use and quick to desired results” consumer.

Consumer reviews which we read, have stated that using the Vitaros® applicator is no more difficult or time

consuming than putting on a prophylactic. It takes a few seconds to apply and a 30 second wait. It’s a discreet

drop of crème, which comes in a single dose, disposable container. No mess, no application pain, though some

consumers have reported unexpected “warmth” when first used which is later posed no issue.

UK Information leaflet: http://www.drugs.com/uk/vitaros-3-mg-g-cream-leaflet.html

With regards to time of effectiveness, due the NextACT technology, Vitaros® has been reported to be the

fastest acting E/D product on the market with desired results in as quick as five minutes. This in our opinion is

probably one of the most compelling product features over the competition and something we feel both

Takeda and Sandoz are well aware of. Faster is better. Faster sells.

Not to get overly technical, but what makes Alprostdail work, is the NexACT technology. The skin “down below”

is relatively impermeable, even at its thinnest point. This is due to a tissue layer called the stratum-corneum

which limits the absorption of drugs.

The NexACT interacts with proteins which keep these skin cells together, loosening them up enough, to allow

the active drug to swiftly pass through (This is the NexACT magic, which can work with a host of other drugs).

Using Vitaros® the Alprostadil is rapidly absorbed into the corpus songiosum and then the corpora cavernosa to

quickly and effectively do its job. Afterwards, NexACT is quickly broken down into fatty and amino acids that

occur naturally in the body.

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In comparison, one additional competitor to Vitaros ® as a side note is called Alprostadil for Injection (brand

names Caverject and Edex) once available as a powder in an injection bottle (vial). Caverject had to be mixed

with a solution called Bacteriostatic Water for Injection USP. Messy. And yes, an actual injection.

Edex had to be mixed with a solution called Sodium Chloride Injection USP. The solution for mixing came with

the product and/or may have be already loaded into a syringe or contained in another injection bottle (vial). Not

surprisingly, they didn’t have the likes of Takeda or Sandoz knocking on their doors. Vitaros® - No pills, no

mixing, no needles and no pellets – just a single dose drop of crème.

MARKETING PARTNERS:

This is probably the most important section of our report and investment thesis. The marketing partners’

stature - both lowers the risk commonly associated with any newly launched drug and at the same time greatly

enhances the upside potential. For both the company and the share price.

In June 2013, Apricus received approval in Europe through the DCP for commercialization of Vitaros®, giving

them the right to sell Vitaros® in multiple countries in the European Union. In little more than a year preceding

the approval, Apricus announced that two of the most successful and powerful Pharmaceutical companies in

the world were launching and spearheading the sales of the product. Not just one giant, but two. It’s akin to

having both Michael Jordan and Magic Johnson sign at the same time. This is in essence the team. Will they

succeed? Only time will tell, but we feel highly confident of their capabilities.

In August of 2014, Nick Haggar, Sandoz Head of Western Europe, Middle East & Africa stated, “Vitaros® is the

first topical ED therapy to be made available to patients in Europe and the first novel ED treatment in nearly a

decade. It is characterized by its ease of use, rapid onset and high tolerability. This launch demonstrates

Sandoz’s commitment to finding novel and innovative ways to meet patient need across a wide range of

therapeutic areas.”

Sandoz employs over 26,500 employees and its products are available in more than 160 countries, offering a

broad range of high-quality, affordable products that are no longer protected by patents. With $9.2 billion in

sales in 2013, Sandoz has a portfolio of approximately 1,100 molecules, and holds the #1 position globally in

biosimilars as well as in generic injectables, ophthalmics, dermatology and antibiotics, complemented by leading

positions in the cardiovascular, metabolism, central nervous system, pain, gastrointestinal, respiratory, and

hormonal therapeutic areas. They couldn’t find a better marketing partner, unless of course you consider

Takeda!

In June of 2014 Takeda announced their launch of Vitaros®, Yasuhiro Fukutomi, Managing Director, Takeda UK

Ltd. stated, “This is an innovative new product that offers the potential to provide men with a new first line or

alternative treatment option. Vitaros® has been shown in clinical trials to provide rapid efficacy together with

convenient local administration that is well tolerated. Takeda UK Ltd envisages that it will be a significant

addition to our urology franchise... this is great news for Takeda UK and for the many men living with erectile

dysfunction.”

To pull quotes, Nick Haggar mentions “rapid onset” and Yasuhiro Fukutomi mentions “rapid efficacy.”

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Takeda is the largest pharmaceutical company in Japan and Asia and one of the top 15 pharmaceutical company

in the entire world. The company has over 30,000 employees worldwide and achieved $16.2 billion in revenue

during the 2012 fiscal year.

With two of the 15 largest Pharmaceutical companies in the world (Sandoz is part of Novartis, the second

largest in the world behind Pfizer - who interestingly own Viagra), we feel extremely optimistic that Vitaros®

goes on to achieve the success it deserves.

The launch into Canada by Abbott Labs has been delayed by Mylans’ division acquisition from Abbott which

included an attractive portfolio of more than 100 specialty and branded generic pharmaceutical products in five

major therapeutic areas including Vitaros®. Mylan will retain an active sales organization of approximately 2,000

representatives in more than 40 non-U.S. markets. So we’ll have to wait.

VITAROS® MARETING PARTNERS.

PIPELINE:

Apricus Biosciences has numerous other projects in the pipeline which are further out on the investment

horizon, but add considerable upside potential to the long term. We’ll again use company sourced presentation

slides, which were well put together and easily understandable by non-medical investing community.

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RAYVA™ BACKGROUND.

RayVA™ which again uses Alprostadil - enhanced by NexACT DDAIP.

Raynaud's phenomenon secondary to systemic sclerosis affects an estimated three to five percent of people in

the U.S., disproportionately affecting women and currently has no approved therapy in the U.S., representing an

unmet medical need. The FDA has indicated that Apricus' RayVa™ product may qualify for priority review, given

the unmet medical need and lack of approved products to treat secondary Raynaud's phenomenon. The FDA will

determine if the RayVa New Drug Application qualifies for priority review following its submission, which could

occur as early as 2017.

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FISPEMIFINE BACKGROUND.

As a general rule, we don’t get overly excited about products in clinical development (a 2a study with 149 Low-T

men was completed) but the market for a safer more effective low testosterone solution unlike anything on the

market today, simply can’t be ignored. Management describes the company’s involvement as transformational.

Fispemifine is not another or “new and improved” testosterone replacement therapy, but an antiestrogen at

the level of the hypothalamus and pituitary, inhibiting the negative feedback of testosterone production via

estrogens. Fispemifene is an oral once-daily, new chemical entity SERM.

Based on the mechanism of action and on the clinical experience with the SERMs (selective estrogen receptor

modulators), it is evident that this group of compounds, including Fispemifene, could offer significant benefits

over the current testosterone replacement in the treatment of secondary type hypogonadism in men.

Secondarily, Apricus enlisted the help of two of the most sophisticated financial firms on Wall Street to acquire

US rights from Fortendo Pharma based in Finland and to work towards a Phase 2b clinical trial which is expected

to commence during the first half of 2015 to confirm the optimal Fispemifene doses to treat men with

secondary hypogonadism, and provide proof-of-concept data.

Currently, gel formulations of testosterone are the most commonly prescribed testosterone replacement

therapies. In the U.S. alone, sales for testosterone products reached $2 billion in 2012, a growth of 30%

compared to 2011, and doubling since 2009.

THE MARKET FOR T-GELS.

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In the phase II studies conducted with hypogonadal men, Fispemifene treatment significantly increased the

testosterone levels, resulting to a normal testosterone level, similarly to that published for transdermal

testosterone products. In the conducted

phase I and the phase II studies,

altogether eight studies, Fispemifene has

shown to be safe and well tolerated at

all dose levels.

Apricus believes that an oral therapy

that elevates testosterone levels into the

normal physiologic range without

increasing the risk of prostate

enlargement or elevated blood

hemoglobin levels would be an

important therapeutic option for the

treatment of the symptoms of low

testosterone. In addition, Fispemifene is

expected to maintain or improve sperm

production, which is a critical aspect for men having low testosterone symptoms but favoring to preserve their

fertility. Such a therapy could substantially increase the market and represent a significant commercial

opportunity.

Two successful U.S.-based Phase 2 trials have demonstrated clinical proof-of-concept for the treatment of male

secondary hypogonadism, without exhibiting the negative effects on prostate health often associated with

testosterone replacement therapies.

FINANCIAL PARTNERS.

A key feature the Fispemifine

announcement on October 20th was

news that Oxford Finance LLC and

Silicon Valley Bank were partnering

with Apricus to fund the cash portion

of the acquisition ($5 million) and to

fund the Phase 2b clinical development

program during 2015.

In addition to the $5 cash payment,

Apricus issued to Fortendo $7.5 million

of Apricus common stock priced at

$2.08 per share (3.6 million shares.

Near simultaneous with the

agreement, Apricus paid off convertible notes in the amount of $1,225,000 to three Wall Street PIPE funds and

T h e B i o t e c h S t o c k R e v i e w . c o m Page 15

gave them warrants to buy 480,392 shares of Common Stock, at an exercise price of $2.55 per share. This is a

good thing.

The Company additionally announced entered into a loan and security agreement with Oxford Finance LLC and

Silicon Valley Bank, pursuant to which the Lenders agreed to make term loans available to the Company in order

to pay off existing indebtedness and for working capital and general business purposes, in a principal amount of

up to $10 million. The first term loan was funded on the closing date of the credit facility in an aggregate

principal amount of $5 million. A second term loan of up to a principal amount of $5 million will be funded at the

Company’s request prior to April 30, 2015, subject to initiation of a Phase 2b trial of the Company’s Fispemifene

program and other customary conditions to funding.

With existing cash on-hand, access to the Company's committed equity financing facility, and $10 million from

this non-dilutive Oxford/SVB debt facility, Apricus fully funded the up-front license fee and the Phase 2b trial

costs expected to be incurred in 2015. The venture debt will include interest-only payments for 12 months,

followed by payments of principal and interest for 36 months.

Oxford Finance, headquartered in Alexandria, Virginia, is a specialty financial services firm that provides capital

exclusively to life sciences and healthcare services companies worldwide. For over two decades, their

management team has been delivering loans to some of the most innovative participants in this industry.

Oxford has remained a leader in the lending industry because of their commitment to remain fair, flexible and

responsive to the changing needs of its clients. Furthermore, since opening their doors, they have been a stable

and constant source of capital. Over the past few years, they have originated over $2 billion in loans to over 200

companies, with lines of credit ranging from $500 thousand to $75 million. Oxford is a portfolio company of

Sumitomo Corporation and Welsh, Carson, Anderson & Stowe with assets exceeding $70 billion.

Silicon Valley Bank assists many of the world's most innovative healthcare and technology companies. SVB's

diverse financial services, knowledge, global network, and world class service increase its clients' probability of

success. With $33 billion in assets and more than 1,700 employees, they provide commercial, international and

private banking through 34 locations worldwide. Forbes Magazine ranks them among America's Best Banks and

Fortune considered SVB one of the best places to work. For clients looking for potential customers, partners,

acquisitions, or investors to grow their business, SVB's deep connections with industry influencers include large

healthcare providers, big pharma, growing companies, promising startups, and the investors — top-tier private

equity and venture capital firms as well as corporate venture funds.

We would recommend investors to listening to the Fispemifine conference call which is archived here:

http://www.investorcalendar.com/event/173330

MANAGEMENT.

Kleanthis G. Xanthopoulos, Ph.D. Chairman of the Board. Dr. Xanthopoulos is an experienced and visionary

leader in the biotechnology and pharmaceutical research industries, with a strong foundation in both operations

and corporate development. Dr. Xanthopoulos joined our board in November 2011 and became Chairman of the

board in December of 2013. He is currently President and Chief Executive Officer and a member of the board of

T h e B i o t e c h S t o c k R e v i e w . c o m Page 16

directors of Regulus Therapeutics Inc. Prior to joining Regulus Therapeutics Inc. in 2007, Dr. Xanthopoulos was

the Managing Director of Enterprise Partners Venture Capital. He co-founded Anadys Pharmaceuticals, Inc.,

served as President and Chief Executive Officer from 2000 to 2006, and remained a Director until its acquisition

by Roche in 2011. Before that, Dr. Xanthopoulos was Vice President at Aurora Biosciences (acquired by Vertex

Pharmaceuticals) from 1997 to 2000, and Section Head of the National Human Genome Research Institute from

1995 to 1997.

Richard Pascoe (CEO). Mr. Pascoe joined Apricus in March of 2013 following the merger of Somaxon

Pharmaceuticals with Pernix. At Somaxon Mr. Pascoe was the Chief Executive Officer since August 2008 and was

responsible for the FDA approval of Somaxon’s lead drug Silenor®. Prior to Somaxon, Mr. Pascoe was with ARIAD

Pharmaceuticals, Inc., a specialty pharmaceutical company where he was most recently Senior Vice President

and Chief Operating Officer.

Prior to joining ARIAD in 2005, Mr. Pascoe held a series of senior management roles at King Pharmaceuticals,

Inc., a specialty pharmaceutical company, including Senior Vice President positions in both marketing and sales,

as well as Vice President positions in both international sales and marketing and hospital sales. Prior to King, Mr.

Pascoe was in the commercial groups at Medco Research, Inc. (which was acquired by King), COR Therapeutics,

Inc., B. Braun Interventional and The BOC Group. Mr. Pascoe is a member of the board of directors of

KemPharm, Inc., Cohera Medical, Inc., and the Corporate Directors Forum (CDF).

Mr. Pascoe served as a Commissioned Officer with the U.S. Army 24th Infantry Division, following his graduation

from the United States Military Academy at West Point where he received a B.S degree in Leadership.

Mr. Martin (CFO), a certified public accountant, has over 25 years of financial leadership, with significant

expertise in growing public companies in a variety of industries, including the life sciences. Since 2008, Mr.

Martin served as Senior Vice President and Chief Financial Officer of BakBone Software, a publicly-traded

software company. Mr. Martin also served as Interim CEO over the final 10 months with BakBone and through

the successful sale of the company that was completed in January of 2011. From 2005 to 2007, Mr. Martin

served as Chief Financial Officer of Stratagene Corporation, a publicly-traded company specializing in the

development, manufacture and marketing of specialized research and clinical diagnostic products. Mr. Martin’s

experience also includes the position of Controller with publicly-traded Gen-Probe Incorporated, a life sciences

company, as well as 10 years with the public accounting firm of Deloitte & Touche.

Mr. Martin holds a B.S. in Accounting from San Diego State University. In 2011, Mr. Martin was awarded the San

Diego Business Journal’s “CFO of the Year Award” for Medium Public Companies. He is also the former President

and a member of the Board of Directors of the Financial Executives International San Diego Chapter.

Mr. Cox is the Company’s Vice President, Commercial Development with a primary focus on supporting the

launches of Vitaros® in Europe and Canada. Mr. Cox has previously served as Vice President of Business

Development, Corporate Development and Investor Relations for the Company and since December 2009.

Dr. Meier-Davis joined Apricus as Vice President of Safety in February 2012, directing the pharmacovigilance

and nonclinical/clinical safety activities for the company. Additionally, she currently serves as project leader for

the Femprox® development program and manages clinical development. Dr. Meier-Davis has more than 16

T h e B i o t e c h S t o c k R e v i e w . c o m Page 17

years of wide-ranging experience in the pharmaceutical industry having actively participated in transdermal,

anti-infective, Alzheimer’s disease, chemotherapy and cardiovascular drug development.

Dr. Martin (VP Chemistry) has over 20 years of research and development experience in the fields of

antibacterial, inflammation, oncology, antiviral, antifungal, cardiovascular and metabolic diseases as well as

sexual dysfunction. Dr. Martin oversees the chemistry, manufacturing and supply chain activities for the

company, which he joined as Vice President of Chemistry in March 2010. Previously, Dr. Martin was the Senior

Director of Chemistry, founding partner and investor of RetroVirox.

Mr. Morton (VP Development) brings to Apricus a successful track record in business development in specialty

pharmaceuticals, most recently serving as the Executive Director of Business Development at Auxilium

Pharmaceuticals Inc., where he successfully led their efforts to build a pipeline of men’s health products. Prior to

Auxilium Pharmaceuticals, Mr. Morton served in business development and marketing roles at King

Pharmaceuticals, attaining the position of Senior Director, Commercial Development.

Sandford D. Smith (Director), joined the Apricus Board of Directors in August of 2014. Mr. Smith has been

actively engaged in the development of international biotech and pharmaceutical companies for almost four

decades. Most recently, Mr. Smith served as President, International Group, and Executive Vice President of

Genzyme Corporation, until the company’s acquisition by Sanofi in 2011.

Wendell Wierenga (Director), Ph.D. joined as a director in March 2014. Dr. Wierenga brings to our board over

four decades of experience in research, drug discovery and drug development, including clinical research,

regulatory affairs, manufacturing, safety, and medical affairs, and an extensive background serving as a public

company executive and board member in the pharmaceutical and biotechnology industries. He most recently

served as Executive Vice President, Research and Development, at Santarus, Inc., a specialty biopharmaceutical

company, until its acquisition by Salix Pharmaceuticals.

Paul V. Maier (Director), joined the Apricus Bio Board of Directors in June of 2012. Mr. Maier currently serves as

the Chief Financial Officer of Sequenom, Inc. Prior to joining Sequenom, Mr. Maier served as Senior Vice

President and Chief Financial Officer of Ligand Pharmaceuticals, Inc. from 1992 until 2007, where he helped

build Ligand from a venture stage company to a commercial, integrated biopharmaceutical organization.

Deirdre Y. Gillespie, M.D. (Director), has been a director since June 2010. She has served as a member of our

Audit and Corporate Governance/Nominating Committees since June 2010. She is the former President and

Chief Executive Officer of publicly-held La Jolla Pharmaceutical Company. She has over 20 years experience in

general management in pharmaceutical and biotechnology companies.

Rusty Ray (Director), has been a director since December 2009. He is currently a partner with 11T Partners, a

healthcare-only investment bank. He has worked with a wide variety of clients across the healthcare industry

ranging from large pharmaceutical companies to early-stage drug development companies to medical device

and service-based companies. Prior to forming 11T Partners, Mr. Ray was a Partner with Brocair Partners, a

healthcare investment banking boutique.

T h e B i o t e c h S t o c k R e v i e w . c o m Page 18

T h e B i o t e c h S t o c k R e v i e w . c o m Page 19

SUMMARY

Biotech companies can be much less complicated than they look, if investors focus on who is investing in the

company, who is partnering with the company and what the overall size of the market they are addressing is in

relation to their total market capitalization. Or in other words, what is the total value Wall Street is placing on

the company - which is determined by simply multiplying the shares outstanding by the current market price.

This in our opinion much easier than trying to assess the science and then further assess the marketability of

whatever drug or solution a particular biotech company is working on. Drugs don’t sell by themselves.

On the fronts that are of concern to us, Apricus Biosciences scores high on every mark. Of course always at

issue is how much can make they make (revenues) from selling Vitaros® – but we feel any attempts to estimate

revenues on a newly launched drug is sheer speculation. In the most basic of view-points, we will note that on

page 11 of this report (solely as it relates to Vitaros®) the company reported potential upfront and pre-

commercialization milestone payments of $19 million, total potential milestone payments of $210 million and

potential royalties in the double digits. In numerous press release the company has mentioned analyst

estimated peak-revenues in the range of $300 million (excluding the US). While management has not revealed

what percentage the royalty is, we’ll be conservative and take the minimal definition of double-digit as 10% (not

12, 25 or 20%) and that adds to $30 million. And they have $16 million in the bank (as of 9/30/2014)

So let’s step back for a minute and look at the big picture (assuming Vitaros® is a commercial success) – we

potentially have total milestone payments of $210 million and then add to that, $30 million in royalty revenues,

which of course are ongoing as ED solutions are ongoing. And the market valuation? 43.6 million Shares x the

current price of $1.50 = $65.4 million. Are we missing something here? Actually no. Is Wall Street missing

something here? In our opinion, actually yes.

Of course all of the above is predicated on a successful full roll-out of Vitaros®. Again, trying to predict the future

is sheer speculation, but when you have assembled the dream team to launch a better, safer and easier to use

drug into a market which has world-wide “annual” sales of $5.5 billion, we feel pretty good about things and

comfortable with our initial price target of $4.00 per share.

For an investor package and full PowerPoint presentation, call investor relations at Chris Eddy or David Collins

from Catalyst IR in NY at 212-924-9800

INSTITUITONAL ANALYST INC.

NY - CHICAGO - BEVERLY HILLS

ROLAND RICK PERRY, EDITOR.

310-594-8062

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an analysis of the Company’s financial position and is not a solicitation to purchase or sell securities of the Company. Readers should consult their own financial advisors with respect to investment in this or

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not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products or services, government approval processes, the impact of

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