AcelRx Pharmaceuticals Reports Fourth Quarter 2017 Financial Results

- FDA Type A meeting in January 2018 provides path to DSUVIA™ NDA resubmission expected in Q2 2018

- $60.5 million of cash and short-term investments at December 31, 2017

- Q4 2017 combined G&A and R&D expenses declined 27% from Q4 2016 and 9% from Q3 2017

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Mar 08, 2018, 04:06 ET

REDWOOD CITY, Calif., March 8, 2018 /PRNewswire/ -- AcelRx Pharmaceuticals, Inc. (Nasdaq: ACRX), (AcelRx), a specialty pharmaceutical company focused on innovative therapies for use in medically supervised settings today reported fourth quarter 2017 financial results.

"As disclosed earlier today, we had a constructive meeting with the FDA regarding DSUVIA at the end of January 2018. In summary, based on the meeting outcome and official meeting minutes, we plan to resubmit our DSUVIA NDA in the second quarter of this year. The AcelRx team, including our consultants and our partners at the Department of Defense, did an exceptional job collaborating to reach consensus on a path forward to resubmission," said Vince Angotti, Chief Executive Officer of AcelRx. "We also continued to demonstrate financial discipline through control of our spending, and ended the year with over $60 million in cash and investments, which provides sufficient liquidity heading into an expected PDUFA date later in the year," continued Angotti.

Recent Highlights

The Type A FDA meeting on January 26, 2018 focused on addressing the two primary points in the October 2017 Complete Response Letter (CRL) regarding the DSUVIA New Drug Application (NDA). Official meeting minutes from FDA indicate proposals discussed in the Type A meeting were reasonable, which provides a path to resubmit the DSUVIA NDA in the second quarter of 2018.
Completed preparation of Zalviso® NDA resubmission inclusive of positive IAP 312 study results on device functionality and tablet dispensing errors. However, AcelRx intends to hold resubmission until the second half of 2018 to focus on DSUVIA.

Financial Information

December 31, 2017 cash and short-term investment balance of $60.5 million.
Revenues of $8.0 million for the full year 2017, consisting of $7.1 million from the Grunenthal collaboration agreement, and $0.9 million for work performed under the Department of Defense (DoD) contract for DSUVIA. In contrast, revenues from those two agreements for the full year 2016 were $6.4 million and $10.9 million, respectively. The year-over-year decrease in DoD contract revenue reflects our completion in 2016 of the Phase 3 clinical program for DSUVIA, which was reimbursed under the contract.
R&D and G&A expenses for the year ended December 31, 2017 totaled $36.0 million, and excluding stock-based compensation was $32.0 million, compared to $37.0 million, and excluding stock-based compensation, $32.8 million, for the year ended December 31, 2016. This decrease is due to lower DSUVIA-related expenses resulting from the completion of the Phase 3 clinical program in 2016, offset by an increase in Zalviso-related expenses attributed to the Phase 3 clinical program completed in 2017, and a small increase in pre-commercialization expenses in anticipation of potential FDA approval of DSUVIA. For the quarter ended December 31, 2017, R&D and G&A expenses totaled $7.6 million, and excluding stock-based compensation was $6.6 million, declining $2.8 million compared to the fourth quarter of 2016. The decrease was mainly due to lower DSUVIA-related expenses, which included the filing fee for the DSUVIA NDA during the fourth quarter of 2016. See the "Reconciliation of Non-GAAP Financial Measures" table below for a reconciliation of the non-GAAP operating expenses described above to their related GAAP measures.
For full year 2017, net loss was $51.5 million, or $1.10 basic and diluted net loss per share, compared to $43.2 million, or $0.95 basic and diluted net loss per share, for full year 2016. Net loss for the fourth quarter of 2017 was $9.9 million, or $0.20 basic and diluted net loss per share, compared to $9.7 million, or $0.21 basic and diluted net loss per share, for the fourth quarter of 2016.
Net cash usage during the fourth quarter 2017 of $7.5 million included $4.0 million of debt service, inclusive of the payment of a $1.7 million deferred fee.

2018 Guidance and Expected Upcoming Milestones
AcelRx expects quarterly net cash usage in 2018 to remain in the $10-11 million range before initiating pre-launch commercialization investments, which are planned to ramp after obtaining FDA approval of DSUVIA. This upcoming year has many key milestones for AcelRx, including:

Anticipated resubmission of NDA for DSUVIA in Q2 2018.
Expected opinion on the Marketing Authorization Application (MAA) for DZUVEO from the Committee for Medicinal Products for Human Use (CHMP) in H1 2018.
Expected FDA advisory committee meeting for DSUVIA in Q3 2018.
Anticipated PDUFA date for DSUVIA in Q4 2018.
Anticipated resubmission of NDA for Zalviso in H2 2018.

Conference Call and Webcast Information
As previously announced, AcelRx will conduct an investment-community conference call today, March 8, 2018 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss these financial results and provide other corporate updates. Investors who wish to participate in the conference call may do so by dialing (866) 361-2335 for domestic callers, (855) 669-9657 for Canadian callers or (412) 902-4204 for international callers. Those interested in listening to a webcast of the conference call live via the Internet may do so by visiting the Investors page of the company's website at www.acelrx.com and clicking on the webcast link on the Investors home page. The webcast will be archived on the AcelRx website for 90 days following the call.

About AcelRx Pharmaceuticals, Inc.
AcelRx Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for use in medically supervised settings. AcelRx's proprietary, non-invasive sublingual formulation technology delivers sufentanil with consistent pharmacokinetic profiles. The company has two product candidates including DSUVIA^™ (sufentanil sublingual tablet, 30 mcg), known as ARX-04 outside the United States, with a proposed indication for the treatment of moderate-to-severe acute pain in medically supervised settings, and Zalviso^® (sufentanil sublingual tablet system, SST system, 15 mcg) being developed as an innovatively designed patient-controlled analgesia (PCA) system for reduction of moderate-to-severe acute pain in medically supervised settings.

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

Non-GAAP Financial Measures
To supplement AcelRx's financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the company uses certain non-GAAP financial measures in this press release, in particular, excluding stock-based compensation expense from its operating expenses. The company believes that this non-GAAP financial measure provides useful supplementary information to, and facilitates additional analysis by, investors and analysts. In particular, the company believes that this non-GAAP financial measure, when considered together with the company's financial information prepared in accordance with GAAP, can enhance investors' and analysts' ability to meaningfully compare the company's results from period to period and to its forward-looking guidance. In addition, this type of non-GAAP financial measure is regularly used by investors and analysts to model and track the company's financial performance. AcelRx's management also regularly uses this non-GAAP financial measure internally to understand, manage and evaluate the company's business and to make operating decisions. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with AcelRx's consolidated financial statements prepared in accordance with GAAP. The non-GAAP financial measures in this press release and the accompanying tables have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.

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, DSUVIA^™ (sufentanil sublingual tablet, 30 mcg), known as DZUVEO outside the United States, and Zalviso^® (sufentanil sublingual tablet system), including the timing and review of the NDA resubmission for DSUVIA based on the outcome of the Type A FDA meeting; the timing and results of the MAA opinion on DSUVEO; the anticipated timing of any FDA advisory committee meeting or PDUFA date regarding DSUVIA following the DSUVIA NDA resubmission; the timing of the planned resubmission of the Zalviso NDA; anticipated quarterly net cash usage for 2018 prior to any ramp up in pre-launch commercialization expenditures in anticipation of an FDA approval of the DSUVIA NDA; and the company's ability to continue its cash management plan and maintain a solid liquidity position. These forward-looking statements are based on AcelRx's current expectations and inherently involve significant risks and uncertainties. AcelRx's actual results and 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 DSUVIA in the United States, DZUVEO in Europe and Zalviso in the United States; the possibility that the FDA may dispute or interpret differently the results of the company's planned Human Factors study to validate the effectiveness of the changes in the Directions for Use, or the supplemental information included in the planned resubmission of the NDA for DSUVIA; EMA review of the DZUVEO MAA, and the possibility that EMA may dispute or interpret differently clinical results obtained from the ARX-04 Phase 2 and 3 studies; the possibility that the FDA may dispute or interpret differently the results of the Zalviso development program, including the results from the IAP312 clinical trial; 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 Quarterly Report on Form 10-Q filed with the SEC on November 9, 2017. 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
	2017	2016	2017	2016
Statement of Comprehensive Loss Data

Revenue:
Collaboration agreement revenue	$ 699	$ 1,771	$ 7,143	$ 6,440
Contract and other revenue	41	4,664	852	10,917
Total revenue	740	6,435	7,995	17,357

Operating costs and expenses:
Cost of goods sold ⁽¹⁾	962	3,161	10,659	12,315
Research and development ⁽¹⁾	3,676	6,334	19,409	21,402
General and administrative ⁽¹⁾	3,909	4,078	16,609	15,597
Total operating costs and expenses	8,547	13,573	46,677	49,314
Loss from operations	(7,807)	(7,138)	(38,682)	(31,957)

Other (expense) income:
Interest expense	(720)	(701)	(3,316)	(2,770)
Interest income and other income (expense), net⁽²⁾	725	618	510	918
Non-cash interest expense on liability related to sale of future royalties	(2,786)	(2,461)	(10,721)	(9,382)
Total other expense	(2,781)	(2,544)	(13,527)	(11,234)
Benefit (provision) for income taxes	703	-	701	34
Net loss	$ (9,885)	$ (9,682)	$(51,508)	$(43,157)

Basic and diluted net loss per common share	$ (0.20)	$ (0.21)	$ (1.10)	$ (0.95)

Shares used in computing basic and diluted net loss per common share	50,391	45,334	46,884	45,313




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

Cost of goods sold	$ 80	$ 77	$ 324	$ 302
Research and development	459	562	1,901	2,308
General and administrative	514	432	2,069	1,869
Total	$ 1,053	$ 1,071	$ 4,294	$ 4,479

(2) Interest income and other income (expense) includes $0.6 million and $0.5 million in non-cash income for the three months ended December 31, 2017 and 2016, respectively, and $0.3 million and $0.6 million in non-cash income for the twelve months ended December 31, 2017 and 2016, respectively, related to warrants issued in connection with a private placement equity financing, completed in June 2012. These warrants expired in November 2017.

	December 31, 2017	December 31, 2016
Selected Balance Sheet Data
Cash, cash equivalents and investments	$ 60,469	$ 80,310
Total assets	75,552	99,993
Total liabilities	112,061	105,330
Total stockholders' deficit	(36,509)	(5,337)

*Reconciliation of Non-GAAP Financial Measures*
*(Operating Expenses less associated stock-based compensation expense)*

	Three Months Ended December 31,		Three Months Ended September 30,	Twelve Months Ended December 31,
	2017	2016	2017	2017	2016
Operating expenses (GAAP):
Research and development	$ 3,676	$ 6,334	$ 3,913	$ 19,409	$ 21,402
General and administrative	3,909	4,078	4,406	16,609	15,597
Total operating expenses	7,585	10,412	8,319	36,018	36,999
Less associated stock-based compensation expense	973	994	938	3,970	4,177
Operating expenses (non-GAAP)	$ 6,612	$ 9,418	$ 7,381	$ 32,048	$ 32,822