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AcelRx Pharmaceuticals Provides Corporate Update and Reports Second Quarter and Six Months 2016 Financial Results

REDWOOD CITY, Calif., July 28, 2016 /PRNewswire/ -- AcelRx Pharmaceuticals, Inc. (Nasdaq: ACRX), (AcelRx), a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of acute pain, today provided a corporate update and reported financial results for the three and six months ended June 30, 2016.    

Corporate Highlights

ARX-04 Clinical and Commercial Update:

AcelRx completed enrollment in two Phase 3 studies: SAP302, which treated a total of 76 patients who presented to emergency departments with moderate-to-severe acute pain associated with trauma or injury; and SAP303, which treated 140 patients who were 40 years of age and older and had moderate-to-severe acute pain following a surgical procedure. Both of these trials have had their last patient visits and data are currently being analyzed. AcelRx is planning to present top-line results from the emergency room study at the upcoming Military Health System Research Symposium (MHSRS) on August 15 during the plenary session of the conference. Results from the post-operative study are expected to be announced before the end of the third quarter 2016.

Pending successful results of the SAP302 and SAP303 studies, AcelRx anticipates submitting the New Drug Application (NDA) for the treatment of moderate-to-severe acute pain to the U.S. Food and Drug Administration (FDA) for ARX-04 by the end of 2016.

AcelRx has continued making commercial preparations for ARX-04, including performing a variety of market research and forecasting activities to better understand the opportunity in emergency medicine, post-operative pain and other settings. In the U.S. and Europe, AcelRx estimates the market opportunity for ARX-04 to be approximately $1.3 billion and €700 million, respectively.

Zalviso® U.S. and European Update:

In Europe, AcelRx's licensee, Grunenthal Group, completed the first commercial sale of Zalviso in April as part of a pilot program, in which a limited number of hospitals in Germany use Zalviso in a small number of post-operative patients. The pilot program, which is expected to last approximately two months at each institution, is being made available to additional hospitals in Germany. Then, pending success with the pilot program, Grunenthal expects to make the product widely available in Germany. Elsewhere in Europe, Grunenthal is following a similar methodology. They have initiated the sale of Zalviso in France, the United Kingdom, Italy and Belgium, and intend to launch Zalviso in the Netherlands, Ireland and Portugal by the end of 2016. 

In the U.S., AcelRx is finishing testing the updated Zalviso Systems to be used in the Phase 3 IAP312 study. AcelRx is coordinating with the manufacturing vendors for final study supplies and has moved forward with preparing the clinical sites with the goal of being ready to initiate IAP312 by the end of September. Once final supplies have been received and successfully tested, it is anticipated enrollment will commence. IAP312 will aim to enroll approximately 315 adult post-operative patients, who can self-administer 15 mcg of sublingual sufentanil as needed for 24-to-72 hours to manage their moderate-to-severe acute pain. The study will measure device usability, including the failure to dispense medication as well as the incidence of misplaced or dropped tablets. Efficacy pain measurements and safety data will also be collected. Once the study has started and enrollment is progressing, AcelRx will provide an estimate of the timing to study completion and NDA resubmission.

"For Zalviso, the initial feedback from customers in Europe has been positive, so we are looking forward to initiating the IAP312 study and ultimately resubmitting the Zalviso NDA," commented Howie Rosen. "In addition, we have made significant progress on ARX-04 during the last two quarters and I would like to thank AcelRx employees for their efforts on the clinical program, beginning preparation of the regulatory filings and increasing our understanding of the market opportunity. Over the next few months, we will continue to keep you apprised as we present clinical results and finish our NDA filing, which we are currently on track to submit by the end of this year."  

Second Quarter 2016 Financial Results

Net loss for the second quarter of 2016 was $11.1 million, or $0.24 basic and diluted net loss per share, compared to $8.9 million, or $0.20 basic and diluted net loss per share for the second quarter of 2015. The net loss from operations in the second quarter of 2016 was $8.3 million, compared to $8.1 million for the second quarter last year. Other expense increased by $2.0 million in the second quarter of 2016, primarily due to non-cash interest expense on the Royalty Monetization.

During the second quarter of 2016, AcelRx recognized revenue of $1.3 million under the collaboration agreement with Grunenthal and $3.2 million related to work performed under the DoD contract for ARX-04. This compares to $0.5 million in revenue recognized under the collaboration agreement with Grunenthal and $1.4 million in revenue recognized related to the DoD contract in the second quarter of 2015.

In support of the launch of Zalviso in Europe by the company's licensee, Grunenthal Group, AcelRx recognized $1.3 million in product sales during the second quarter of 2016, consisting of of Zalviso devices, drug product and accessories. AcelRx did not recognize any royalty revenue in the second quarter of 2016 from the sales in the EU by Grunenthal. Beginning in the third quarter of 2016, AcelRx will receive quarterly royalty reports from Grunenthal for the prior quarter. As the royalty amounts are not currently reasonably estimable without royalty reports, AcelRx will recognize royalty revenue and non-cash royalty revenue quarterly in arrears beginning in the third quarter of 2016.    

As of June 30, 2016, AcelRx had current and non-current portions of the deferred revenue balance under the collaboration agreement with Grunenthal of $1.0 million and $3.1 million, respectively. Long term deferred revenue increased during the second quarter of 2016 from $2.4 million to $3.1 million. AcelRx anticipates that the long-term deferred revenue balance will peak at approximately $4.0 million, as AcelRx completes invoicing Grunenthal in connection with the collaboration agreement in 2016, and decline on a straight-line basis through 2029, as AcelRx recognizes manufacturing services revenue under the agreement.    

Total cost of goods sold was $3.0 million for the three months ended June 30, 2016 related to commercial production of Zalviso in support of Grunenthal's European launch. Costs of goods sold includes internal indirect costs (overhead) plus the actual cost to manufacture at AcelRx's contract manufacturers. Under the arrangement with Grunenthal, AcelRx sells Zalviso to Grunenthal at a predetermined transfer price that approximates the direct cost of manufacture at AcelRx's contract manufacturers. AcelRx will not recover internal indirect costs as part of the transfer price.

Research and development, and general and administrative expenses for the second quarter of 2016 were $6.3 million and $3.6 million, respectively. These compare to $7.3 million in research and development expenses and $2.7 million in general and administrative expenses in the comparable quarter last year. The decrease in research and development expenses was primarily due to lower personnel-related expenses due to a reduction in overhead costs, predominantly as a result of the cost reduction plan implemented in March 2015 and the allocation of certain personnel and related expenses to cost of goods sold. The increase in general and administrative expenses was primarily due to ARX-04-related market research activities during the second quarter of 2016.

Total other expense for the second quarter of 2016 were $2.8 million as compared to $0.8 million in the second quarter of 2015, primarily as a result of $2.3 million in non-cash interest expense on the liability related to the sale of future royalties. 

Year-to-Date Financial Results

For the six months ended June 30, 2016, AcelRx reported a net loss of $22.1 million, or $0.49 basic and diluted net loss per share, compared to $18.9 million, or $0.43 basic net loss per share and $0.47 diluted net loss per share for the same period in 2015.

During the six months ended June 30, 2016, AcelRx recognized revenue of $3.1 million under the collaboration agreement with Grunenthal and $4.4 million related to work performed under the DoD contract for ARX-04. This compares to $0.7 million in revenue recognized under the collaboration agreement with Grunenthal and $1.4 million in revenue related to the DoD contract recognized in the six months ended June 30, 2015.

In support of the launch of Zalviso in Europe by the company's licensee, Grunenthal Group, AcelRx shipped $2.7 million of commercial inventory during the six months ended June 30, 2016. In addition, AcelRx recognized $0.4 million in other revenue under the collaboration agreement with Grunenthal in the six months ended June 30, 2016, primarily related to demonstration devices and research and development services.    

Operating costs and expenses during the six months ended June 30, 2016 included cost of goods sold of $6.6 million. Research and development, and general and administrative expenses during the six months ended June 30, 2016 were $10.5 million and $7.4 million, respectively. These compare to $13.6 million in research and development expenses and $7.3 million in general and administrative expenses in the first half of last year. The decrease in research and development expenses was primarily due to lower personnel-related expenses of $2.2 million due to the reclassification of production-related personnel and facilities-related expenses to cost of goods sold and a reduction in headcount due to the March 2015 cost reduction plan. In addition, Zalviso-related spending decreased by $1.1 million due to the timing of development activities. The increase in general and administrative expenses was primarily due to ARX-04-related market research activities.

Total other expense of $5.2 million during the six months ended June 30, 2016 compare to $0.6 million in other income during the six months ended June 30, 2015. The difference was primarily a result of $4.5 million in non-cash interest expense on the liability related to the sale of future royalties. 

As of June 30, 2016, AcelRx had cash, cash equivalents and investments of $98.8 million, compared to $113.5 million at December 31, 2015. The decrease was primarily attributable to cash used in operating activities.

Conference Call

AcelRx will conduct a conference call and webcast today, July 28, 2016, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these financial results and business updates. To listen to the conference call, dial in approximately ten minutes before the scheduled call 1- 866-361-2335 for domestic callers, 1-855-669-9657 for Canadian callers, or 1-412-902-4204 for international callers. Those interested in listening to the conference call live via the Internet may do so by visiting the Investors section of the company's website at www.acelrx.com. A webcast replay will be available on the AcelRx website for 90 days following the call by visiting the Investors section of the company's website at www.acelrx.com.

About AcelRx Pharmaceuticals, Inc.

AcelRx Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of acute pain. The Company's late-stage pipeline includes ARX-04 (sufentanil sublingual tablet, 30 mcg) designed for the treatment of moderate-to-severe acute pain in a medically supervised setting; and Zalviso® (sufentanil sublingual tablet system) designed for the management of moderate-to-severe acute pain in adult patients in the hospital setting.

ARX-04 delivers 30 mcg sufentanil, a high therapeutic index opioid, sublingually through a disposable, pre-filled, single-dose applicator. AcelRx has reported positive results from the pivotal Phase 3 SAP301 ambulatory surgery study, and has recently completed enrollment of SAP302 (study in emergency room patients) and SAP303 (study in post-operative patients 40 years and older). Zalviso delivers 15 mcg sufentanil sublingually through a non-invasive delivery route via a pre-programmed, patient-controlled analgesia device. In response to the New Drug Application (NDA) AcelRx submitted to the U.S. Food and Drug Administration (FDA) seeking approval for Zalviso, AcelRx received a Complete Response Letter (CRL) on July 25, 2014. The FDA has requested an additional clinical study (IAP312), which AcelRx is planning to initiate once supply testing is complete in order to support its NDA resubmission.

For additional information about AcelRx's clinical programs, please visit www.acelrx.com.

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to financial results and trends, the process and timing of anticipated future development of AcelRx's product candidates, ARX-04 (sufentanil sublingual tablet, 30 mcg) and Zalviso® (sufentanil sublingual tablet system), including the ARX-04 clinical trial results and the timing of such results; ability to fund ARX-04 development from the contract with the Department of Defense; anticipated submission of the New Drug Application, or NDA, for ARX-04 to the U.S. Food and Drug Administration, or FDA; AcelRx's pathway forward towards gaining approval of Zalviso in the U.S.; the anticipated timing, design and results of the IAP312 clinical trial for Zalviso; anticipated resubmission of the Zalviso NDA to the FDA including the scope of the resubmission and the timing of the resubmission, and FDA review time; the status of the Collaboration and License Agreement with Grunenthal GmbH, a company organized under the laws of Germany, or Grunenthal, or any other future potential collaborations, including potential milestones and royalty payments under the Grunenthal agreement; and submission of the ARX-04 NDA to the U.S. Food and Drug Administration, or FDA; and the therapeutic and commercial potential of AcelRx's product candidates, including potential market opportunities for ARX-04 and Zalviso. These forward-looking statements are based on AcelRx Pharmaceuticals' current expectations and inherently involve significant risks and uncertainties. AcelRx Pharmaceuticals' actual results and timing of events could differ materially from those anticipated in such forward-looking statements, and as a result of these risks and uncertainties, which include, without limitation, risks related to AcelRx Pharmaceuticals' ability to complete Phase 3 clinical development of ARX-04 and support ARX-04 development under the contract with the Department of Defense; AcelRx's ability to successfully execute the pathway towards a resubmission of the Zalviso NDA to the FDA, including the initiation and completion of the IAP312 clinical study for Zalviso; any delays or inability to obtain and maintain regulatory approval of its product candidates, including ARX-04 in the United States and Europe, and Zalviso in the United States; AcelRx's ability to receive any milestones or royalty payments under the Grunenthal agreement and the timing thereof; ability to manufacture and supply sufficient quantities of Zalviso to Grunenthal on a timely basis; the commercial success of Grunenthal's launch of Zalviso in the European Union, or EU; the uncertain clinical development process, including adverse events; the risk that planned clinical trials may not begin on time, have an effective clinical design, enroll a sufficient number of patients, or be initiated or completed on schedule, if at all; the success, cost and timing of all development activities and clinical trials, including the Phase 3 ARX-04 SAP302 and SAP303 trials, and the additional clinical trial for Zalviso, IAP312; the fact that the FDA may dispute or interpret differently clinical results obtained to date from the Phase 3 SAP301 study of ARX-04; the market potential for AcelRx's product candidates; the accuracy of AcelRx's estimates regarding expenses, capital requirements and the need for financing, and other risks detailed in the "Risk Factors" and elsewhere in AcelRx's U.S. Securities and Exchange Commission filings and reports, including its Annual Report on Form 10-Q filed with the SEC on May 2, 2016. AcelRx undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

Selected Financial Data

(in thousands, except per share data)

(unaudited)










 Three Months Ended  


 Six Months Ended  


June 30


 June 30 


2016


2015


2016


2015

Statement of Comprehensive Loss Data
















Collaboration agreement revenue

$          1,314


$                       486


$    3,107


$       667

Contract and other revenue 

3,217


1,438


4,449


1,438

      Total revenue

4,531


1,924


7,556


2,105









Operating costs and expenses:








Cost of goods sold (1)

2,976


-


6,575


-

Research and development (1)

6,280


7,310


10,451


13,616

General and administrative (1)

3,597


2,735


7,374


7,256

Restructuring costs

-


2


-


756

Total operating expenses

12,853


10,047


24,400


21,628

Loss from operations

(8,322)


(8,123)


(16,844)


(19,523)









Other (expense) income:








Interest expense

(687)


(777)


(1,367)


(1,583)

Interest income and other income(2)

241


4


660


2,184

Non-cash interest expense on liability related to sale of future royalties to PDL

(2,324)


-


(4,520)


-

Total other (expense) income

(2,770)


(773)


(5,227)


601

Provision for income taxes

-


-


(2)


-

Net loss

$       (11,092)


$                  (8,896)


$(22,073)


$(18,922)









Basic net loss per common share

$           (0.24)


$                    (0.20)


$    (0.49)


$    (0.43)









Shares used in computing basic net loss per common share

45,312


44,343


45,300


44,109









Diluted net loss per common share

$           (0.24)


$                    (0.20)


$    (0.49)


$    (0.47)









Shares used in computing diluted net loss per common share

45,312


44,343


45,300


44,397

























(1)   Includes the following non-cash, stock-based compensation expense:













            Cost of goods sold

$               77


$                         -


$       148


$         -

            Research and development

586


629


1,186


1,331

            General and administrative

482


482


996


1,318

                   Total 

$          1,145


$                    1,111


$    2,330


$    2,649


(2)  Interest income and other income (expense) includes $0.2 million in non-cash income for the three months ended June 30, 2016 and $0.5 million on non-cash income for the six months ended June 30, 2016, as compared to $0.1 million in non-cash charges for the three months ended June 30, 2015 and $2.1 million in non-cash income for the six months ended June 30, 2015, respectively, related to warrants issued in connection with a private placement equity financing, completed in June 2012. 


June 30, 2016


December 31, 2015

Selected Balance Sheet Data




Cash, cash equivalents and investments

$        98,800


$                113,464

Total assets

113,572


127,785

Total liabilities

100,074


94,672

Total stockholders' equity 

13,498


33,113

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SOURCE AcelRx Pharmaceuticals, Inc.

Timothy E. Morris, Chief Financial Officer, 650.216.3511, tmorris@acelrx.com; Brian Korb, The Trout Group LLC, 646.378.2923, bkorb@troutgroup.com