AcelRx Pharmaceuticals Reports Third Quarter 2013 Financial Results

     AcelRx Pharmaceuticals Reports Third Quarter 2013 Financial Results

PR Newswire

REDWOOD CITY, Calif., Nov. 5, 2013

REDWOOD CITY, Calif., Nov. 5, 2013 /PRNewswire/ -- AcelRx Pharmaceuticals,
Inc. (Nasdaq: ACRX), a specialty pharmaceutical company focused on the
development and commercialization of innovative therapies for the treatment of
acute and breakthrough pain, today reported financial results for the three
and nine months ended September 30, 2013.

"With the submission of our NDA at the end of September for Zalviso™, AcelRx
has commenced activities related to an anticipated U.S. commercial launch,"
stated Richard King, president and CEO of AcelRx. "We also continue to
actively participate in key medical meetings worldwide to increase awareness
of the results from our completed Zalviso Phase 3 clinical trials among a
broad audience of medical professionals involved in pain treatment. Having
appointed our Chief Commercial Officer last quarter, we are working diligently
to prepare Zalviso to be well positioned for launch in the US market, subject
to regulatory approval."

Third Quarter and Nine Months Financial Results

Net loss for the third quarter of 2013 was $11.0 million, or $0.26 per share,
compared with a net loss of $8.6 million, or $0.38 per share for the third
quarter of 2012. The adjusted net loss for the third quarter of 2013 was $8.6
million, or $0.21 per share and excludes a $2.4 million non-cash expense
resulting from the liability accounting related to warrants issued in
connection with the PIPE financing completed in June 2012. There was no such
expense recorded in the third quarter of 2012.

During the third quarters of 2013 and 2012, AcelRx recognized revenue of $0.5
million and $0.2 million, respectively, as reimbursement for work completed
under a research grant from the U.S. Army Medical Research and Materiel
Command, or USAMRMC, for development of ARX-04, a sufentanil NanoTab product
candidate for the treatment of moderate-to-severe acute pain in a range of
military and ambulatory environments. 

Research and development, or R&D, expenses for the quarter ended September 30,
2013 totaled $6.5 million, compared with $6.9 million for the quarter ended
September 30, 2012. R&D expense for the third quarter of 2013 included a fee
of approximately $1.95 million for submission of the NDA for Zalviso.
Excluding the NDA submission fee, the third quarter R&D expenses reflect
lower clinical costs when compared to second quarter 2013 as a result of the
completion of the Phase 3 development program for Zalviso in the second
quarter of 2013.

General and administrative expenses were $2.3 million for the third quarter of
2013, compared with $1.4 million for the third quarter of 2012, due primarily
to an increase in Zalviso commercial preparation activities. 

Other income and expense includes a $2.4 million non-cash charge in the third
quarter of 2013 resulting from the liability accounting related to the
warrants issued in connection with the PIPE financing completed in June 2012.
The primary determinant of this charge was an increase in share price during
the third quarter of 2013 and its resulting impact on the Black-Scholes
valuation of these warrants.

For the nine months ended September 30, 2013, AcelRx reported a net loss of
$41.2 million, or $1.07 per share, compared with a net loss of $22.8 million,
or $1.09 per share for the same period in 2012. Adjusted net loss for the
nine months ended September 30, 2013 was $27.8 million, or $0.72 per share.
Adjusted net loss excludes the $13.4 million non-cash expense resulting from
the liability accounting related to the warrants issued in connection with the
PIPE financing completed in June 2012.

R&D expenses for the nine months ended September 30, 2013 totaled $22.0
million, compared with $17.1 million for the nine months ended September 30,
2012. The increase was primarily due to expenses associated with the Phase 3
clinical studies of Zalviso and the NDA filing fee. General and
administrative expenses were $6.6 million for the nine months of 2013,
compared with $5.3 million for the nine months ended September 30, 2012 due
primarily to an increase in stock based compensation and commercial
preparation activities.

As of September 30, 2013, AcelRx had cash, cash equivalents and investments of
$76.0 million, compared to $59.8 million at December 31, 2012 and $36.8
million at June 30, 2013. In July 2013, AcelRx raised $47.9 million in net
proceeds through the issuance of 4.37 million shares of common stock in an
underwritten public offering. Net cash used in the third quarter of 2013,
excluding the offering proceeds, was $8.7 million.

Review of Recent Accomplishments and Corporate Update

  oOn September 27, 2013, AcelRx submitted an NDA to the FDA for Zalviso for
    the management of moderate-to-severe acute pain in adult patients in the
    hospital setting. The NDA submission is based primarily on data from a
    Phase 3 registration program that included two double-blind, randomized,
    placebo-controlled clinical trials, one in patients following open
    abdominal surgery and the other in patients following hip or knee
    replacement surgery. An additional open label active comparator trial was
    conducted in patients following major abdominal or orthopedic surgery that
    compared Zalviso to intravenous patient controlled analgesia, or IV PCA,
    with morphine.
  oIn July 2013, AcelRx completed an underwritten public offering of
    4,370,000 shares of common stock, including 570,000 shares which were
    issued pursuant to the exercise of the underwriters' option to purchase
    additional shares, at a price of $11.65 per share. The total net proceeds
    of this offering were $47.9 million after deducting underwriting discounts
    and commissions and other expenses payable by AcelRx. AcelRx intends to
    use the net proceeds from this offering to fund potential regulatory
    approval of Zalviso both in the U.S. and Europe, the continuing
    preparation for and the potential commercial launch of Zalviso in the
    U.S., and for working capital and other general corporate purposes.
  oIn September 2013, David H. Chung joined AcelRx as chief commercial
    officer with responsibility for establishing, developing and leading the
    company's commercial operations. Mr. Chung has over 20 years of
    hospital-focused, global medical device and pharmaceutical marketing
    experience, most recently as chief commercial officer at Conceptus, Inc.
  oThe expanding patent portfolio for AcelRx now totals 9 issued U.S. patents
    and 19 issued patents worldwide. These issued patents cover AcelRx's
    sufentanil NanoTab, medication delivery devices and platform technology,
    and are expected to provide coverage through 2027 – 2031.
  oIn October, 2013, data from the Phase 3 clinical trial evaluating Zalviso
    in the treatment of post-operative pain in patients following either knee
    or hip replacement surgery compared to placebo, was presented at two major
    medical meetings. The presentations occurred during the European
    Federation of IASP Chapters Annual Congress in Florence, Italy and at the
    American Society of Anesthesiologists meeting in San Francisco. Results
    demonstrated that patients receiving Zalviso realized a significantly
    greater Summed Pain Intensity Difference to baseline for 48 hours
    (SPID-48), the FDA-requested primary endpoint, during the study period
    than placebo-treated patients (+76.1 vs. -11.5, p<0.001). Adverse events
    reported in the study were generally mild or moderate in nature and were
    similar in both placebo and treatment groups for the majority of adverse
    events. Additional posters presented at both of these meetings highlighted
    more detailed results from the Phase 3 placebo-controlled study conducted
    in abdominal surgery patients, the Phase 3 active-comparator study
    comparing Zalviso to IV PCA with morphine, and pharmacokinetic data from a
    study describing different routes of sufentanil delivery (IV vs.
    transmucosal vs. oral/swallowed).

Financial Outlook

AcelRx records as revenue the reimbursement received pursuant to the $5.6
million USAMRMC grant received in 2011. To date, revenue from this grant has
been the only source of revenue recognized by AcelRx resulting in recorded
revenues of $5.4 million through September 30, 2013. We expect the remaining
$0.2 million to be recorded as revenue in the fourth quarter of 2013.

We anticipate that quarterly R&D expenses through the end of 2013 will
continue to decline due to lower clinical development costs associated with
the Zalviso and ARX-04 programs.

Additionally, we anticipate higher general and administrative expense in the
fourth quarter of 2013 due to an increase in Zalviso U.S. commercial
preparations and the expansion of its corporate infrastructure to support an
emerging commercial organization.

Total operating expenses for 2013 are anticipated to be modestly higher than
they were in 2012.

Other income and expense in future periods is expected to include non-cash
charges that result from the liability accounting related to the warrants
AcelRx issued in connection with the PIPE financing completed in the second
quarter of 2012. The primary determinant of this charge is stock price change
over each quarter and its impact on the Black-Scholes valuation of these
warrants. For this reason, the impact in future periods is very difficult to
predict and is not included in the company's guidance.

AcelRx believes its current cash, cash equivalents and investments including
funding from the public equity offering in July 2013, are sufficient to fund
operations at least through the end of 2014. We expect the use of cash will
decrease during the fourth quarter of 2013 compared to the first three
quarters of the year as expenditures, primarily R&D expenses, decline for
clinical activity and final payments are made to contract research
organizations.

Conference Call

AcelRx will conduct a conference call and webcast today, November 5, 2013 at
4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss its financial
results and program updates. To listen to the conference call, dial in
approximately ten minutes before the scheduled call to (877) 870-4263 for
domestic callers, (855) 669-9657 for Canadian callers, or (412) 317-0790 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 and selecting the webcast link for the Q3
2013 earnings conference call. 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 and breakthrough pain. AcelRx's lead product candidate,
Zalviso™, is designed to solve the problems associated with post-operative
intravenous patient-controlled analgesia which has been shown to cause harm to
patients following surgery because of the side effects of morphine, the
invasive IV route of delivery and the complexity of infusion pumps. AcelRx
has announced positive results from each of the three completed Phase 3
clinical trials for Zalviso, and has submitted an NDA to the FDA seeking
approval for Zalviso to be used to treat moderate-to-severe acute pain in the
hospital setting. AcelRx has also announced positive top-line results for a
Phase 2 trial for ARX-04, a product candidate for the treatment of
moderate-to-severe acute pain in a medically supervised setting, funded
through a grant from the U.S. Army Medical Research and Materiel Command. The
company has two additional pain treatment product candidates, ARX-02 and
ARX-03, which have completed Phase 2 clinical development. 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 future financial results, including 2013
financial guidance and cash forecast, use of proceeds from the recently
completed financing, the process and timing of anticipated future development
of AcelRx's product candidates, the potential acceptance by the FDA of the NDA
for Zalviso and the timing thereof, therapeutic and commercial potential of
Zalviso and the anticipated timing, therapeutic and commercial potential of
other AcelRx product candidates. These forward-looking statements are based
on AcelRx's current expectations and inherently involve significant risks and
uncertainties. AcelRx's actual results and the timing of events could differ
materially from those anticipated in such forward-looking statements as a
result of these risks and uncertainties, which include, without limitation,
risks related to: AcelRx's ability to submit an NDA and receive regulatory
approval for Zalviso, that fact that FDA may not accept for filing the NDA for
Zalviso or dispute or interpret differently positive clinical results obtained
to date; any delays or inability to obtain and maintain regulatory approval of
its product candidates, including Zalviso, in the United States and Europe;
its ability to attract funding partners or collaborators with development,
regulatory and commercialization expertise; its ability to obtain sufficient
financing to commercialize Zalviso; the market potential for its product
candidates; the accuracy of AcelRx's estimates regarding expenses, capital
requirements and needs 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 Quarterly Report on Form 10-Q filed today
with the SEC on November 5, 2013. 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     Nine Months Ended
                            September 30,           September 30,
                            2013         2012         2013         2012
Statement of Operations
Data
                            $       $     
Research grant revenue                    $  1,895   $    719
                            548         166
Operating expenses:
Research and development    6,548        6,948        21,974       17,113
^(1)
General and administrative  2,310        1,410        6,571        5,290
^(1)
Total operating        8,858        8,358        28,545       22,403
expenses
Loss from operations        (8,310)      (8,192)      (26,650)     (21,684)
Interest expense            (348)        (573)        (1,205)      (1,765)
Other income (expense),     (2,328)      183          (13,340)     608
net^(2)
                            $       $     
Net loss                                        $(41,195)    $(22,841)
                            (10,986)     (8,582)
Basic and diluted net loss  $       $     
per common share                             $  (1.07)  $  (1.09)
                            (0.26)       (0.38)
Shares used in computing
basic and diluted net loss  41,462       22,633       38,635       20,962
per common share
(1) Includes the following non-cash, stock-based compensation expense:
 Research and    $       $     
development                               $  1,193   $    762
                            427         258
 General and     449          304          1,242        871
administrative
                            $       $     
 Total                 $  2,435   $  1,633
                            876         562
(2) Other income and expense includes a $2.4 million and $13.4 million
non-cash charge for the three and nine months ended September 30, 2013,
respectively, related to warrants issued in connection with a private
placement equity financing, completed in June 2012.
                            September    December
                            30, 2013     31, 2012
Selected Balance Sheet Data
Cash, cash equivalents and  $       $     
investments                            
                            75,968       59,763
Total assets                80,661       64,520
Total liabilities           27,456       30,673
Total stockholders' equity 53,205       33,847



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SOURCE AcelRx Pharmaceuticals, Inc.

Website: http://www.acelrx.com
Contact: Jim Welch, Chief Financial Officer, 650.216.3511, jwelch@acelrx.com
 
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