SEELOS THERAPEUTICS, INC. (SEEL)·Q2 2018 Earnings Summary

Executive Summary

• Apricus (soon to be renamed Seelos Therapeutics) reported Q2 2018 net loss of $2.28M ($0.10/share); operating expenses remained tightly managed while the company advanced strategic alternatives culminating in a definitive all‑stock merger agreement with Seelos Therapeutics announced July 30, 2018 .
• The merger is expected to close in Q4 2018; Apricus shareholders are expected to own ~14% of the combined company at an estimated $90M valuation and receive a CVR for 90% of any proceeds above $500K from monetizing U.S. Vitaros rights—key near‑term stock catalysts shift from quarterly results to transaction milestones .
• Cash was $6.84M at June 30, 2018 (vs. $5.68M at March 31, 2018), supporting operations into year‑end per prior commentary; management continues to focus on expense control during the transition .
• No Q2 earnings call transcript or formal financial guidance was filed; estimate comparisons are unavailable due to missing S&P Global mapping for SEEL, so beats/misses cannot be assessed .

What Went Well and What Went Wrong

• What Went Well

  • Signed a definitive merger agreement with Seelos Therapeutics to pivot the company to CNS disorders; expected close in Q4 2018 with Apricus shareholders owning ~14% of the combined company at an estimated $90M valuation .
  • Introduced a CVR structure granting Apricus holders 90% of any proceeds above $500K from monetizing U.S. Vitaros rights, preserving potential upside from legacy assets .
  • Maintained disciplined spending: Q2 R&D expense fell to $162K (from $839K YoY) as the company prioritized strategic alternatives and cash conservation; cash increased to $6.84M by quarter‑end . “We will continue to work with Seelos management…to complete the merger in the fourth quarter of 2018” — CEO Richard Pascoe .

• What Went Wrong

  • Year‑over‑year net loss widened versus Q2 2017 (driven by the absence of prior‑year discontinued‑ops income and lower other income): Q2 2018 net loss $(2.28)M vs. $(1.47)M in Q2 2017; other income swung to $(16)K from $719K YoY .
  • No formal guidance, and no Q2 earnings call transcript filed, limiting visibility into near‑term standalone operating plans while the merger process is pending .
  • Continued headwinds from Vitaros U.S. regulatory path (FDA CRL context) underpin the strategic shift; management earlier emphasized the need to reduce expenses and extend runway while evaluating combinations .

Financial Results

• P&L summary (USD thousands except per‑share amounts)

• Balance sheet & liquidity KPIs

Notes:

• Management has historically presented ex‑U.S. Vitaros as discontinued operations; continuing operations P&L does not include that business .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “On July 30, 2018 we announced that the Apricus Board of Directors has concluded that the proposed merger with Seelos was in the best interest of our shareholders… We will continue to work with Seelos management in the coming months to complete the merger in the fourth quarter of 2018.” — Richard W. Pascoe, CEO .
• “Our objective is to enable continued development and potential approval of the Vitaros product… In parallel, the Company is evaluating strategic alternatives… engaged Canaccord Genuity LLC to assist in that process.” — Richard W. Pascoe (Q1 update) .
• “We will submit a request to the FDA for an end‑of‑review meeting… Our objective… is to determine the specific requirements needed to address the deficiencies noted in the Complete Response.” — Richard W. Pascoe (Mar 1 update) .

Q&A Highlights

• FDA DDAIP safety path: Management outlined two potential paths—lower DDAIP concentration with bridging studies or additional nonclinical work; emphasized CMC items are addressable and not gating .
• Real‑world safety: Company had not seen real‑world incidents in prior ex‑U.S. datasets suggesting tumor promotion or enhanced STI transmission; the issue is specific to FDA’s risk‑benefit view for the U.S. product .
• Cash and spend: Planned to reduce expenses and pause substantial R&D pending FDA clarity; cash of ~$6.3M expected to fund operations through 2018 .
• Allergan engagement: Obligated to coordinate on U.S. Vitaros; Apricus retains development responsibility but would remain a “good partner” in any path forward .

Estimates Context

• S&P Global/Capital IQ consensus estimates for Q2 2018 EPS and revenue were unavailable due to missing mapping for SEEL; as a result, we cannot provide vs‑consensus comparisons for this quarter [tool error: GetEstimates].

Key Takeaways for Investors

• Near‑term narrative pivots from quarterly fundamentals to transaction execution: key catalysts include SEC filing of proxy/prospectus, shareholder vote, and Q4 2018 close of the Seelos merger .
• Deal terms provide upside optionality via CVR tied to U.S. Vitaros monetization, while transitioning to a CNS pipeline with multiple late‑stage assets under Seelos .
• Expense discipline and modest cash improvement in Q2 provide runway through year‑end during the merger process, reducing financing overhang in the immediate term .
• Absent an earnings call and with no formal guidance, incremental stock moves will likely track merger milestones and any updates on Vitaros CVR value realization .
• For positioning, focus on diligence of Seelos’ CNS assets and anticipated post‑close strategy rather than legacy Apricus operating metrics, which are limited and de‑emphasized in light of the transaction .

Sources: Q2 2018 8‑K and press release ; Q1 2018 8‑K and press release ; Q4 2017 earnings call transcript ; Mar 1, 2018 8‑K and press release .