AcelRx Pharmaceuticals Provides Corporate Update and Reports Fourth Quarter and Full Year 2015 Financial Results

News provided by

Mar 07, 2016, 04:01 ET

AcelRx logo.

REDWOOD CITY, Calif., March 7, 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 business update and reported financial results for the three and twelve months ended December 31, 2015.

Corporate Update and 2016 Objectives

ARX-04 ER and Postoperative Studies: In December 2015, AcelRx, along with representatives from its partner at the Department of Defense, held a pre-NDA meeting with the FDA to discuss the New Drug Application, or NDA, for ARX-04 (sufentanil sublingual tablet, 30 mcg) for the treatment of moderate-to-severe acute pain in a medically supervised setting. Based on these discussions, AcelRx decided to expand enrollment in the open-label SAP302 study, which was initiated in October 2015 in patients who present with moderate-to-severe acute pain in the emergency room, or ER. The extension phase of SAP302 is expected to be initiated this month, and will allow participants to be administered multiple doses of ARX-04, given hourly as needed for pain, for up to 4 doses. A new study of ARX-04, known as SAP303, was initiated last week in postoperative patients with moderate-to-severe acute pain. SAP303 will focus on enrolling patients older than 40 years of age and will allow for administration of ARX-04 for up to 12 hours. Both SAP302 and SAP303 are expected to be completed by the third quarter of 2016.
ARX-04 NDA Submission: AcelRx intends to pursue an indication for ARX-04 for the management of moderate-to-severe acute pain in a medically supervised setting. Assuming successful completion of the above studies by the third quarter of 2016, the company anticipates submitting the NDA for ARX-04 in the fourth quarter of 2016.
Zalviso Open-Label Phase 3 Study: The company continues to advance the regulatory process for Zalviso. AcelRx has completed a protocol review with the FDA of an open-label clinical study, known as IAP312, of Zalviso in post-operative patients. This study will primarily measure the rate of device errors, including the failure to dispense medication as well as the incidence of misplaced or dropped tablets. AcelRx expects to initiate the study later this month.
Zalviso NDA Submission: Pending timely completion of the IAP312 study, AcelRx expects to resubmit the NDA for Zalviso by the end of 2016.
Zalviso EU Commercial Launch: In September 2015, the European Commission approved Zalviso for the management of acute moderate-to-severe post-operative pain in adult patients. The marketing authorization was granted for the 28 EU member states as well as for the European Economic Area countries, Norway, Iceland and Liechtenstein. Grunenthal Group, AcelRx's licensee in Europe, has been working with the member states of the EU and EEA to ensure that Zalviso is made available to those patients who would benefit from an effective and reliable solution for their acute moderate-to-severe post-surgical pain. Grunenthal expects the product to be available to Western European patients in the first half of 2016.

"Having obtained significant input from the FDA on the regulatory requirements for ARX-04 and Zalviso late in 2015, our objectives and goals for 2016 will focus on the completion of the studies necessary to submit the FDA filings for both candidates by the end of 2016," stated Howie Rosen, interim CEO of AcelRx. "We ended 2015 with a strong balance sheet and what we believe is a clear regulatory pathway to filing. We look forward to executing the studies and to providing updates on their results during 2016."

Fourth Quarter 2015 Financial Results

Net loss for the fourth quarter of 2015 was $10.5 million, or $0.24 basic and diluted net loss per share, compared to $13.8 million, or $0.32 basic and diluted net loss per share, for the fourth quarter of 2014. The decrease in net loss in the fourth quarter 2015, as compared to the fourth quarter 2014, was primarily due to the reduction in costs related to the Zalviso development program, the cost reduction plan implemented at the end of March 2015, and revenue attributable to the research and development work performed for ARX-04 under the Department of Defense, or DoD, contract.

During the fourth quarter of 2015, AcelRx recognized revenue of $1.4 million related to work performed under the DoD contract and $0.3 million under the collaboration agreement with Grunenthal. Total revenue recognized during the fourth quarter of 2014 of $0.2 million was related exclusively to the collaboration agreement with Grunenthal.

Cost of goods sold was $1.8 million in the fourth quarter of 2015. There were no such costs in the fourth quarter of 2014. Under the collaboration agreement with Grunenthal, AcelRx will sell Zalviso to Grunenthal at a small margin over direct costs and, as a result, recognizes indirect costs as period costs.

Research and development expenses for the fourth quarter of 2015 were $3.5 million, compared to $7.3 million for the fourth quarter of 2014. The decrease was primarily due to a reduction in Zalviso development program expenses and a reduction in headcount-related expenses.

General and administrative expenses were $4.0 million for the fourth quarter of 2015, compared to $4.7 million for the fourth quarter of 2014. The decrease was primarily due to a reduction in headcount-related expenses.

Total other expense increased in the fourth quarter of 2015, as compared to the fourth quarter of 2014, primarily as a result of the non-cash interest expense related to the monetization of the expected royalty stream, or Royalty Monetization, from the sales of Zalviso in the EU by Grunenthal to PDL BioPharma, Inc.

Full Year 2015 Financial Results

For the year ended December 31, 2015, AcelRx reported a net loss of $24.4 million, or $0.55 basic net loss per share and $0.60 diluted net loss per share, compared to a net loss of $33.4 million, or $0.77 basic net loss per share and $0.91 diluted net loss per share for 2014.

Revenue for 2015 was $19.3 million, including $14.9 million recognized under the collaboration agreement with Grunenthal and $4.4 million in revenue recognized under the DoD contract. Revenue for the year ended December 31, 2014 was $5.2 million related to the collaboration agreement with Grunenthal.

Research and development expenses for 2015 were $22.5 million, compared to $24.5 million for 2014. The decrease in research and development expense for 2015 was primarily attributable to a $5.7 million decrease related to the Zalviso development program, partially offset by a $2.8 million increase related to ARX-04 as AcelRx advanced its development into Phase 3 clinical trials, and a $0.9 million increase in overhead-related costs, primarily manufacturing facilities expense, and personnel-related expenses, including stock-based compensation.

Cost of goods sold was $1.8 million for 2015. There were no such costs for 2014.

General and administrative expenses for 2015 were $14.2 million, compared to $18.3 million for 2014. The decrease was primarily due to a reduction in Zalviso-related market research program expenses and other pre-launch activities conducted in 2014 in preparation for the potential commercialization of Zalviso.

As of December 31, 2015, AcelRx had cash, cash equivalents and investments of $113.5 million, compared to $75.4 million at December 31, 2014. The increase was primarily attributable to the $61.2 million in net proceeds in connection with the Royalty Monetization, partially offset by cash required to fund continuing operations. Excluding the net cash received from the Royalty Monetization and the milestone payment of $15.0 million for EU approval of Zalviso, the decrease in cash, cash equivalents and investments would have been $38.1 million in 2015.

Assuming the timely completion of the clinical studies and accomplishments of the 2016 Corporate Objectives listed above, AcelRx anticipates cash, cash equivalents and investments to be between $70 million and $75 million at December 31, 2016.

Conference Call

AcelRx will conduct a conference call and webcast today, March 7, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss its 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 and selecting the Webcast link for the Q4 2015 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 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 advanced ARX-04 into a study (SAP302) in emergency room patients. In addition, AcelRx initiated SAP303 in March 2016, with a focus on enrolling patients greater than 40 years of age, allowing for administration of ARX-04 for up to 12 hours. Zalviso delivers 15 mcg sufentanil sublingually through a non-invasive delivery route via a pre-programmed, patient-controlled analgesia device. In response to the NDA AcelRx submitted to the FDA seeking approval for Zalviso, AcelRx received a CRL on July 25, 2014. The FDA has requested an additional clinical study (IAP312), which AcelRx is planning to initiate later this month, to support resubmission of the NDA.

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 the process and timing of anticipated future development of AcelRx's product candidates, including the process and timing of anticipated future development of Zalviso and ARX-04; timing for initiation and completion along with anticipated results of IAP312 for Zalviso; anticipated results and timing of the completion of the SAP302 and SAP303 studies for ARX-04; anticipated cash balance at year-end 2016; launch timing and commercial availability for Zalviso in Europe; AcelRx's plans to seek a pathway forward towards gaining approval of Zalviso in the United States; and anticipated resubmission of the Zalviso NDA to the FDA, including the scope and timing of resubmission. 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: any delays or inability to obtain and maintain regulatory approval of its product candidates, including Zalviso and ARX-04; its ability to successfully design and complete the additional clinical study requested by the FDA to support resubmission of the Zalviso NDA; its ability to timely resubmit the Zalviso NDA to the FDA and to receive regulatory approval for Zalviso; the fact that the FDA may dispute or interpret differently positive clinical results obtained to date from the pivotal Phase 3 SAP301 ambulatory surgery study of ARX-04; its ability to complete Phase 3 clinical development of ARX-04; the success, cost and timing of all product development activities and clinical trials, including the SAP302 and SAP303 ARX-04 trials and the IAP312 Zalviso trial; ability to manufacture commercial supply of Zalviso; 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 with the SEC on November 3, 2015. 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		Twelve Months Ended
	December 31,		December 31,
	2015	2014	2015	2014
Statement of Comprehensive Loss Data

Collaboration agreement revenue	$ 327	$ 226	$ 14,857	$ 5,217
Contract and other revenue	1,403	-	4,406	-
Total revenue	1,730	226	19,263	5,217

Operating costs and expenses:
Cost of goods sold ⁽¹⁾	1,770	-	1,770	-
Research and development ⁽¹⁾	3,479	7,281	22,488	24,520
General and administrative ⁽¹⁾	4,017	4,724	14,203	18,346
Restructuring costs	-	-	756	-
Total operating expenses	9,266	12,005	39,217	42,866
Income (loss) from operations	(7,536)	(11,779)	(19,954)	(37,649)

Other (expense) income:
Interest expense	(681)	(821)	(2,977)	(2,639)
Interest income and other income (expense), net⁽²⁾	(195)	(1,218)	1,720	6,935
Non-cash interest expense on liability related to sale of future royalties to PDL	(2,146)	-	(2,428)	-
Total other (expense) income	(3,022)	(2,039)	(3,685)	4,296
Provision for income taxes	12	-	(760)
Net income (loss)	$ (10,546)	$ (13,818)	$ (24,399)	$ (33,353)

Basic net income (loss) per common share	$ (0.24)	$ (0.32)	$ (0.55)	$ (0.77)

Shares used in computing basic net income (loss) per common share	44,568	43,709	44,300	43,427

Diluted net income (loss) per common share	$ (0.24)	$ (0.32)	$ (0.60)	$ (0.91)

Shares used in computing diluted net income (loss) per common share	44,568	43,709	44,468	44,322



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

Cost of goods sold	$ 67	$ -	$ 67	$ -
Research and development	620	645	2,587	2,252
General and administrative	503	727	2,356	2,188
Total	$ 1,190	$ 1,372	$ 5,010	$ 4,440

(2) Interest income and other income (expense) includes $0.3 million in non-cash charges and $2.1 million in non-cash income for the three and twelve months ended December 31, 2015, respectively, as compared to $1.2 million in non-cash charges and $7.0 million in non-cash income for the three and twelve months ended December 31, 2014, respectively, related to warrants issued in connection with a private placement equity financing, completed in June 2012.

	December 31, 2015	December 31, 2014
Selected Balance Sheet Data
Cash, cash equivalents and investments	$ 113,464	$ 75,350
Total assets	127,785	86,416
Total liabilities	94,672	39,760
Total stockholders' equity	33,113	46,656