AcelRx Pharmaceuticals Reports Second Quarter 2013 Financial Results

REDWOOD CITY, Calif., Aug. 12, 2013 /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 and breakthrough pain, today reported financial results for the three and six months ended June 30, 2013.

"With the successful completion of our Zalviso™ clinical program that includes data from all three Phase 3 studies, each of which met its primary endpoint, we are preparing to submit our New Drug Application (NDA), by the end of the third quarter," stated Richard King, president and CEO of AcelRx.  "We were pleased with the financing completed last month in which we raised almost $48 million in net proceeds.  This additional cash provides the resources to fund operations at least through the end of 2014 including commercial preparation activities for, and the potential launch of, Zalviso in the United States."

Second Quarter Financial Results

Net loss for the second quarter of 2013 was $17.4 million, or $0.47 per share, compared with a net loss of $7.2 million, or $0.35 per share for the second quarter of 2012.  Adjusted net loss for the second quarter of 2013 was $8.1 million, or $0.22 per share and excludes the $9.3 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 second quarter of 2012.

During the second quarters of 2013 and 2012, AcelRx recognized revenue of $407,000 and $224,000, respectively, as reimbursement for work completed under a research grant from the U.S. Army Medical Research and Materiel Command (USAMRMC), for development of ARX-04, a sufentanil NanoTab product candidate for the treatment of moderate-to-severe acute pain in a range of ambulatory environments.   

Research and development (R&D) expenses for the quarter ended June 30, 2013 totaled $6.1 million, compared with $5.4 million for the quarter ended June 30, 2012.  Phase 3 clinical costs for Zalviso, AcelRx's lead product candidate designed to improve the management of moderate-to-severe acute pain in patients in the hospital setting, were very similar in the quarters ending June 30, 2013 and 2012. The increase over the quarter ended June 30, 2012 was primarily due to personnel related costs, including stock compensation expenses.  R&D expenses in the preceding quarter ended March 31, 2013 were $9.3 million, and the decrease to $6.1 million in R&D expenses in the quarter ended June 30, 2013 reflects lower Zalviso Phase 3 costs as we completed the Phase 3 clinical program.

General and administrative expenses were $2.1 million for the second quarter of 2013, compared with $1.8 million for the second quarter of 2012, due primarily to an increase in market research activities.  

Other income and expense includes the $9.3 million non-cash charge in the second 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 second quarter of 2013 and its resulting impact on the Black-Scholes valuation of these warrants.

For the six months ended June 30, 2013, AcelRx reported a net loss of $30.2 million, or $0.81 per share, compared with a net loss of $14.3 million, or $0.71 per share for the same period in 2012. Adjusted net loss for the six months ended June 30, 2013 was $19.2 million, or $0.52 per share.  Adjusted net loss excludes the $11.0 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 six months ended June 30, 2013 totaled $15.4 million, compared with $10.2 million for the six months ended June 30, 2012.  The increase over the six months ended June 30, 2012 was primarily due to expenses associated with Phase 3 clinical studies of Zalviso.  General and administrative expenses were $4.3 million for the six months of 2013, compared with $3.9 million for the six months ended June 30, 2012 due primarily to an increase in stock based compensation.

As of June 30, 2013, AcelRx had cash, cash equivalents and investments of $36.8 million, compared to $59.8 million at December 31, 2012 and $48.2 million at March 31, 2013.  In July 2013, we raised approximately $47.9 million in net proceeds through the issuance of 4.37 million shares of common stock in an underwritten public offering.  

Review of Recent Accomplishments and Corporate Update

• On July 23, 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 approximately $47.9 million after deducting underwriting discounts and commissions and other estimated expenses payable by AcelRx. AcelRx intends to use the net proceeds from this offering to fund potential regulatory approval of Zalviso both in the United States and Europe, our continuing preparation for and the potential commercial launch of Zalviso in the United States, and for working capital and other general corporate purposes.
• On June 27, 2013, AcelRx held an investor day in New York City, introducing the trade name of Zalviso for the sufentanil NanoTab PCA System. Presentations delivered at the meeting covered a range of topics, including insights from an anesthesiologist and an orthopedic surgeon on the potential role of Zalviso in the management of post-operative patients and additional data from the Zalviso Phase 3 clinical program. We also discussed AcelRx's intent to pursue a broad label for Zalviso for the treatment of moderate-to-severe acute pain in the hospital setting in the United States.
• On May 21, 2013, AcelRx announced top-line data demonstrating that Zalviso met its primary endpoint in a pivotal Phase 3 trial comparing the efficacy and safety of Zalviso to placebo in the management of acute post-operative pain after major orthopedic surgery. Utilizing a randomized, double-blind, placebo-controlled design, this pivotal Phase 3 trial enrolled 426 adult patients at 34 U.S. sites. The primary endpoint evaluated pain intensity difference to baseline over the 48-hour study period, or SPID-48, in patients following major orthopedic surgery, specifically knee or hip replacement. Patients receiving Zalviso demonstrated a significantly greater SPID-48 (pain reduction) compared to placebo-treated patients during the trial period (p<0.001). Treatment-emergent adverse events were generally mild-to-moderate in nature and similar for the majority of adverse events between Zalviso and placebo treated patients, with the exception of nausea, vomiting, itching and dizziness, which were higher in the sufentanil treated group. Two patients (one each in the Zalviso group and placebo group) experienced a severe adverse event considered possibly or probably related to the trial drug by the investigator.
• On May 2, 2013 AcelRx presented five posters relating to clinical and pharmacokinetic data from the Phase 3 Zalviso clinical program, as well as data from design and human factors studies relating to the Zalviso delivery system at the American Society of Regional Anesthesia and Pain Medicine (ASRA) annual meeting in Boston. In one of these posters, new analyses from the Phase 3 trial comparing Zalviso to intravenous patient-controlled analgesia (IV PCA) with morphine demonstrated that Zalviso had a significantly faster reduction in pain intensity compared to IV PCA morphine (p<0.01). In addition, fewer patients experienced oxygen desaturation events below 95% in the Zalviso-treated group compared to the IV PCA morphine-treated group (p=0.028). Overall, adverse events were similar between groups, and most were generally mild-to-moderate in nature in both groups.
• On April 24, 2013, AcelRx reported top-line data showing that the primary endpoint was achieved in a placebo-controlled, dose-finding, Phase 2 clinical trial of ARX-04 for moderate-to-severe acute pain. This trial randomized 101 patients following bunionectomy surgery in a 2:2:1 ratio to 30 mcg sufentanil, 20 mcg sufentanil or placebo treatment. Results demonstrated that patients receiving 30 mcg sufentanil NanoTab doses, administered by a healthcare professional, no more frequently than once per hour, had significantly greater pain reduction as measured by Summed Pain Intensity Difference to baseline during the 12-hour trial period (SPID-12) than placebo-treated patients (p=0.003). The clinical study and associated research activities for ARX-04 are funded by a grant from USAMRMC.

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 and we have recorded revenues of $4.8 million through June 30, 2013.  We expect the remaining $0.8 million to be recorded as revenue over the remaining life of the grant, which is scheduled to end on January 31, 2014.

We anticipate that the quarterly R&D expenses in the second half of 2013 will be lower than the expense recorded in Q2 of 2013, due to lower clinical development costs associated with the Zalviso and ARX-04 programs. These decreases in clinical R&D expenses will be partially offset by costs associated with the preparation of an NDA filing for Zalviso, expected to be submitted to the FDA by the end of the third quarter of 2013. 

Additionally, AcelRx anticipates continued increases in 2013 in general and administrative expense due to costs associated with commercial preparations for the launch of Zalviso in the U.S. and expansion of its corporate infrastructure to support a commercial launch. 

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 we 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 recently completed public equity offering, are sufficient to fund operations at least through the end of 2014.  We expect our use of cash will decrease during the second half of 2013 compared to the first half of the year as expenditures, primarily R&D expenditures, decline for clinical activity and final payments are made to contract research organizations.

Conference Call

AcelRx will conduct a conference call and webcast today, August 12, 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 (800) 860-2442 for domestic callers, (866) 605-3852 for Canadian callers, or (412) 858-4600 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 Q2 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 IV PCA 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 Phase 3 clinical trials for Zalviso and AcelRx anticipates submitting a New Drug Application with the FDA in the third quarter of 2013. AcelRx also announced positive top-line results for a Phase 2 trial for ARX-04, a sufentanil formulation for the treatment of moderate-to-severe acute pain, funded through a grant from USAMRMC.  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 recently completed financing, the process and timing of anticipated future development of AcelRx's product candidates, the potential submission of an NDA for Zalviso and the timing thereof, therapeutic and commercial potential of Zalviso and the anticipated timing and 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 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 with the SEC on August 12, 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.

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SOURCE AcelRx Pharmaceuticals, Inc.