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Lately there's been a lot of positive sentiment propping up shares of AcelRx (NASDAQ: ACRX), which has moved up about 40% in the last five trading sessions.

This recent move brings YTD returns of the stock to an impressive 120%, and removes most of the losses that were incurred after the company's IPO in 2011. This is quite encouraging, because it demonstrates that AcelRx was able to generate enough buying interest from the pool of public biotech investors to mitigate the bearish effects of post-IPO selling from major shareholders. Clearly there is some excitement about this company.

That recent 40% rally, which brought a substantial wave of new buyers into the stock, was a direct reaction to the results of a phase III clinical trial. The trial pitted AcelRX's most clinically developed program (ARX-01) against morphine in patients that were on pain medication. The improved pain medication that AcelRx created demonstrated non-inferiority to morphine in the trial, and reached its primary endpoint. There was a lot of commentary that seemed particularly encouraging too - specifically those from healthcare workers (nurses) that liked the utility of the tabs and considered them a true improvement over the standard of care. The company also went ahead and started ARX-01 in a third clinical trial which should probably provide enough data to allow for an NDA submission after its completion.

All of the company's current products in development use the generic pain medication sufentanil, which is one of the common anesthetic agents. The real difference is brought about by the method of delivery through AcelRx's NanoTab technology. Patients receive their dosage of sufentanil sublingually (under the tongue) through this system, which offers a number of advantages to the traditional IV drip according the company. AcelRx emphasizes that sublingual delivery of sufentanil through their nanotabs allow for more prolonged plasma levels relative to IV, and a lower the maximum concentration (as well as the variability in concentration) that patients would have during the dosing. The nanotabs are basically made to administer sufentanil to patients on pain medication in a much smoother and convenient manner. A chart from the company's website visually demonstrates the concentration of sublingually administered sufentanil with nanotab technology (10 mcg) in the bloodstream versus IV infusion (5 mcg).

There is an obvious difference in these two delivery systems, with the 10 mcg NanoTab demonstrating a much more prolonged and consistent effect relative to a 5 mcg IV infusion. NanoTab does require a larger dosage of sufentanil relative to IV infusion (double the dose in this case), but still does not reach a maximum concentration higher than the initial spike in blood concentration under IV infusion of sufentanil.

Although AcelRx is not creating a new compound (as mentioned, sufentanil is a widely available anesthetic agent) it's worth mentioning that the general consensus on the nanotabs seems to be overwhelmingly positive. As mentioned earlier, nurses were very fond of the tabs as well as patients. In surveys that measured Sufentanil nanotabs in overall satisfaction and ease of care. With the safety and efficacy profile of sufentanil well-established at this point, it's necessary to understand that the only improvements can come from the ease and method of delivery - something that AcelRx is attempting to capitalize on.

AcelRx has four separate sufentanil nanotab systems in development, which includes the aforementioned ARX-01 which is attempting to replace traditional IV administration of anesthetic agents for patients in post-operative care. ARX-02 targets a more complicated market for "breakthrough pain," and is designed for appropriate dosing of sufentanil with abuse-prevention in mind. ARX-03 combines Sufentanil and Triazolam into a nanotab for a combination of pain relief and anxiety reduction, which is designed to be used prior to any painful procedure. Lastly, there is ARX-04 for acute pain. AcelRx sees potential for this particular product on the battlefield (or for civilian emergencies) as an immediate and easy to use treatment for trauma or injury.

As you can see, AcelRx is hoping to make sweeping changes to the administration of anesthetic agents with its nanotab technology. Investors who are interested in the stock for the long run have to weigh potential nanotab sales revenue in the years following an FDA approval against the company's current valuation of $96 million. This is hard to do at this point, and since it's still going to be quite a wait before we even see the NDA submission for ARX-01 AcelRx should also be traded carefully with sentimental shifts in mind. Currently we are seeing a lot of bullishness around the stock (considering all the recent gains) and very lower short interest (at only .05% of float.) While the very low short interest can be mostly blamed on the fact that the company held its IPO in 2011 (brokerage firms have not been able to attain all that many shares), do consider that there is no short squeeze potential for ACRX and lots of profit-taking potential.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Source: Rally In AcelRx Gets More Intense On Recent Phase III Data