AcelRx Pharmaceuticals' CEO Discusses Q3 2013 Results - Earnings Call Transcript

| About: AcelRx Pharmaceuticals, (ACRX)

AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX)

Q3 2013 Earnings Call

November 5, 2013, 4:30 PM ET


James Welch - Chief Financial Officer

Richard King - Director, President and Chief Executive Officer


Mario Corso - Mizuho

Trevor Davis - Piper Jaffray


Welcome to the AcelRx Pharmaceuticals' third quarter 2013 financial results conference call. (Operator Instructions) I would now like to turn the call over to Jim Welch, Vice President and Chief Financial Officer. Please go ahead.

James Welch

Thank you, Amy, and good afternoon and welcome to today's call. Joining me on the call today is Richard King, AcelRx's President and CEO.

Earlier today, AcelRx issued its third quarter 2013 financial results, which we will discuss in more detail on this call. In addition, we would like to provide you with a corporate update and a review of our commercial preparations for Zalviso, our sufentanil sublingual microtablet system that has been evaluated for the treatment of moderate-to-severe acute pain in the hospital. The financial results press release has been posted on our website at Also a replay of this conference call will be available later today on the Investor page of our website.

Please keep in mind that uncertainties involved in the company's business may affect the matters referred to in forward-looking statements made by management during today's call. As a result, the company's performance may differ from those expressed in or indicated by such forward-looking statements, which are qualified in their entirety by the cautionary statements contained in this press release and the company's Securities and Exchange Commission filings.

At this point, I will turn this call over to Richard King.

Richard King

Thanks, Jim, and welcome everyone to this afternoon's call. The submission of AcelRx's first new drug application on September 27, 2013, for Zalviso, was the most significant event of the third quarter.

It is also a further demonstration of the transformation that is underway at AcelRx from a clinical development stage company to one with full commercial operations. That transformation to commercial capability began in earnest in the third quarter with the addition of David Chung, as our Chief Commercial Officer, and the transformation is expected to continue throughout 2014.

Our lead product Zalviso, also known as the sufentanil sublingual microtablet system is a patient activated non-invasive analgesic system, which delivers 15 micrograms of sufentanil per dose as needed for pain control, subject to a 20-minute lock-out period between doses.

The proposed indication for Zalviso is 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 clinical program that included two double-blind, randomized, placebo-controlled clinical trials, in addition to an open label active comparator trial comparing Zalviso to intravenous patient controlled analgesia or IV PCA for short with morphine conducted inpatients following either major abdominal or orthopedic surgery. Zalviso successfully achieved the primary efficacy endpoints for each of these studies.

In the course of these Phase 3 studies, Zalviso have consistently demonstrated an ability to achieve rapid onset of pain relief, faster in fact than IV delivery of morphine, thereby enabling patients to manage their moderate-to-severe acute pain, both early after the start of treatment and over 48-hours to 72-hours post surgery.

In addition, the non-invasive delivery of Zalviso and the pre-program nature of the Zalviso delivery device, showed strong Ease of Care and Satisfaction scores from both patients and nurses, higher in fact than the IV PCA with morphine alternative. Treatment emergent adverse events were typical of opioid usage postoperatively, generally mild-to-moderate in nature and similar in both active and placebo treatment groups for the majority of adverse events.

If approved by the FDA, Zalviso could provide hospital and patients with an attractive alternative to the management of moderate-to-severe pain in hospital setting. We expect to hear from the FDA later this quarter, regarding whether or not they deem the Zalviso application as sufficiently complete to permit substantive review, at which point the agency will file the application. After that point, we anticipate a 10-month review cycle, putting the PDUFA date for Zalviso in the third quarter of 2014.

As AcelRx continues to build commercial capability, we are engaged in a number of ongoing initiatives that I would like to review for you. These activities include a presentation scheduled of the Zalviso Phase 3 clinical data at a variety of medical meetings that are attended by the Pain Treatment Community and hospital decision-makers. In addition, we have embarked on the formation of a commercial team that will become the largest part of our organization by the end of 2014 with the sole focus of preparing Zalviso for market and indeed preparing the market for Zalviso.

We are also continuing our effort to secure patents on a global basis to protect our proprietary technology. And finally as you are aware a key strategic business objective for AcelRx is to obtain an ex-U.S. partner experienced in commercializing products in the hospital environment. We continue our efforts in this regard to ensure that this valuable treatment option can be made available for patients around the world.

Presentation of the results from the Zalviso Phase 3 program at major medical meetings began late last year and will continue throughout 2014, as we educate anesthesiologist, surgeon, nurses and other relevant hospital staff on the clinical profile and benefits of Zalviso.

In November, we will be presenting dates for Zalviso at the American Society of Regional Anesthesia and Pain Management Meeting or ASRA in Phoenix, Arizona. And in December we will be presenting dates at the PostGraduate Assembly or PGA Meeting in New York City. We have already attended a number of key medical meetings for anesthesiologist and surgeons throughout the year, including the American Society of Regional Anesthesia and Pain Medicine Annual Meeting in Boston in May.

Most recently, October, we presented data for the first time at medical meetings from our Phase 3 studies of Zalviso, in the treatment of postoperative pain inpatients following either knee or hip replacement surgery at two different meetings; the American Society of Anesthesiology Annual Meeting in San Francisco and at the European Federation of IASP Chapters in Florence, Italy.

In total, in 2013, we will have attended 23 significant medical meetings, presented 32 different poster presentations of the Zalviso data, including six formal presentations of the data and we've also supported five Satellite Symposia. In 2014, I anticipate an even higher number of medical meetings attended and an expanded support of Satellite Symposia in particular.

Now, let me turn to our planned commercial capability expansion. In the third quarter, we established a small commercial chain that will expand over the coming year, as we prepare for the potential launch of Zalviso in the U.S., assuming FDA approval.

In September, David Chung joined the company, as our Chief Commercial Officer. Over his 20 year career, David has extensive hospital-focused sales and marketing experience with both medical devices and pharmaceuticals. Most recently he served as Chief Commercial Officer at Conceptus, which was recently acquired by Bayer.

Now at AcelRx, he is responsible for establishing, developing and leading our commercial operations. David has already initiated a quantitative market segmentation analysis, which we expect will define the earlier doctrine population, both at a hospital and a physician level for Zalviso. This work is key to defining our sales force deployment metrics and ultimately the geographical locations and focus for our planned 65% sales force and their management team across the U.S.

Also in the first half of 2014, David will develop strategies for Zalviso's positioning, messaging and brand identity. David has also initiated a pharmacy and therapeutics committee and hospital C-Suite executive research, as we establish the needs and structure of these gatekeeper groups to ensure we present our compelling clinical data in an appropriate format to reach constituency. Working with our clinical group, David is also focusing on building a pharmacoeconomic model that will underpin the value that Zalviso offers in the management of patients in pain in the hospitals.

Also getting underway in the first half of 2014, we plan to hire and established our internal group of medical science liaisons for the purpose of education in the hospital and at major medical meeting. These personnel along with our regional sales managers will begin initial contact with hospital, formerly decision makers, following Zalviso's anticipated approval in the third quarter 2014.

Over the next year-and-a-half or so, we've established a broad portfolio of both drug and device patents covering a substantial majority of the potential market for our products. AcelRx now has 19 issued patents worldwide and we believe we have established strong protection in both the U.S. and in Europe, which will be the initial areas of commercial focus for AcelRx.

The issued patents cover the sufentanil NanoTab, medication delivery devices and our platform technology. In addition to nine issued patents in the U.S., which are expected to provide coverage through 2031, we have filed an additional 13 U.S. patent applications, which if issued, will further strengthen the protection for our product pipeline.

To ensure sufficient financial results and to fund our commercial build-out, we completed a public offering of approximately 4.4 million shared of common stock in July of this year. The total gross proceeds of this offering were approximately $50.9 million with estimated net proceeds to AcelRx of $47.9 million after deducting underwriting discounts and expenses.

AcelRx intends to use the net proceeds from this offering to fund potential regulatory approval of Zalviso, both in the U.S. and in Europe to continue preparation for the potential commercial launch of Zalviso in the U.S., and for working capital and other general corporate purposes. Jim, will provide you with an update on our cash position later in the call.

The demand for pain treatment and the size of the market continues to grow. Postoperative pain treatment is already a large attractive market that exceeds $5 billion in annual sales, based on estimates for the U.S., Japan and the five largest EU countries combined.

In the U.S., we believe there are over 12 million surgeries per year, where moderate-to-severe postoperative pain occurs and approximately 95% of these patients will be candidates for treatment with Zalviso. Within this post-surgical group, about two-thirds of the population is admitted as inpatients to the hospital, where we we'll be attempting to replace IV PCA as the current standard-of-care for managing postoperative pain.

In addition, about one-third of the population is ambulatory, meaning they are in the hospital for less than 23 hours, where IV PCA is too cumbersome to setup right now, but simple to use, non-invasive patient-controlled analgesia systems such as Zalviso maybe very effective and appropriate.

Our market research also indicates that there are in excess of 7 million hospital inpatients with moderate-to-severe pain, that is not procedure related, but rather they are in the hospital for other painful medical conditions and that over two-thirds of this patient group maybe candidates for treatment with Zalviso.

This group would include hospitalized patients with the variety of clinical conditions that result in moderate-to-severe pain such as diverticulitis, burns, sickle cell disease or cancer and a myriad of other medical conditions.

Outside the U.S. in countries that have advanced healthcare systems, we believe there are three to four times as many patients undergoing surgical procedures that results in moderate-to-severe pain each year. Zalviso could provide effective and well-tolerated pain management for these patients. And given the low capital intensity of our product, we believe it represents an affordable technology from many countries to access.

With our positive clinical trial results of Zalviso, the large market opportunity represented by the number of patients recovering at hospitals worldwide after surgery and the attractiveness of the economics of our technology, we continue to explore partnership options for Zalviso in Europe, in Asia and elsewhere seeking out partners with the right set of capabilities to launch Zalviso into their markets to meet the needs of this patient population.

So let me update you briefly on the ARX-04. Earlier this year, AcelRx reported positive topline data showing that the primary endpoint was achieved in a placebo-controlled, dose finding Phase 2 clinical trial of ARX-04 for acute pain. This study randomized 101 patients following bunionectomy surgery and found the patients treated with a 30 microgram dosage of sufentanil NanoTabs have significantly greater pain reduction as measured by some pain intensity difference to the baseline during the 12-hour trial period in placebo-treated patients with a p-value equal of 0.003.

The clinical study and associated research activities for ARX-04 have been fully funded by a grant from the U.S. Army Medical Research and Material Command or USAMRMC. This product is designed to address the need for a rapid acting, strong analgesic where IV access is not possible. ARX-04 could potentially provide short-term treatment of moderate-to-severe pain for wounded soldiers on the battlefield, for victims of roadside traffic accidents or for patients in medically supervised settings such as the emergency room or for short stay ambulatory surgery patients. According to the CDC data, there are more than 45 million injury-related emergency department visits and 43 million ambulatory surgery procedures per year in the U.S. alone.

We are on track to complete an end of Phase 2 meeting with the FDA by the end of this year. The CPAS' feedback on our proposed Phase 3 development plan for ARX-04. We expect the meeting will provide us with the parameters such as Phase 3 trial design and what the chemical program will need to demonstrate. The outcome of the meeting with FDA and the level of further interest expressed by the Department of Defense and its willingness to provide additional funding will determine whether or not clinical studies will be conducted for ARX-04 in 2014.

With that overview, let me turn the call back over to, Jim, who will review our financial results for the third quarter of 2013.

James Welch

Thank you, Richard, and good afternoon everyone. AcelRx reported a net loss for the third quarter of 2013 of $11 million or $0.26 per share compared to a net loss of $8.6 million or $0.38 per share for the third quarter of 2012. Common shares used in calculating basic and diluted earnings per share were $41.5 million in the third quarter of 2013 compared to $22.6 million in the period one year ago.

During the third quarter of 2013, AcelRx recognized revenue of $548,000 compared to $166,000 in the third quarter of 2012. The revenue resulted from reimbursement for work completed under a research grant from USAMRMC for the development of ARX-04, a sufentanil NanoTab for the treatment of moderate-to-severe acute pain.

Research and development or R&D expenses for the quarter ended September 30, 2013, totaled $6.5 million compared to $6.9 million for the quarter ended September 30, 2012, and compared to $6.1 million for the second quarter of 2013, which ended June 30, 2013. R&D expense for the third quarter of 2013 included an NDA filing fee for Zalviso of approximately $1.95 million. Without this filing fee, R&D expense would have been $4.6 million. Not including the NDA filing fee, the decrease in quarterly R&D expense from the second quarter of 2013 primarily reflects completion of the Zalviso Phase 3 clinical development program.

The $1.95 million NDA filing fee in the third quarter of 2013 was an unanticipated R&D expense. FDA regulations allow for the waiver of an NDA filing fee if a company is filing its first NDA and qualified as small business with less than 500 employees. The FDA requested the SBA, our Small Business Administration to determine if AcelRx was a small business and the SBA ruled that AcelRx could not qualify as a small business.

General and administrative expenses were $2.3 million in third quarter of 2013 compared with $1.4 million for the third quarter of 2012. The increase was due primarily to an increase in Zalviso commercial preparation activity. Other income and expense includes a $2.4 million of non-cash charge for the third quarter of 2013, resulting from the liability accounting related to the warrant issued in connection with the PIPE financing completed in June of 2012.

The primary determinant of this charge is an increase in the share price during the third quarter of 2013 and is resulting impact on the Black-Scholes valuation of these warrants. If this $2.4 million non-cash charge in the third quarter is excluded from the GAAP earnings per share calculation, our third quarter 2013 net loss per share would adjust down to a loss of $0.21 per share.

As of September 30, 2013, AcelRx had cash and cash equivalents and investments of $76 million compared to $59.8 million at December 31, 2012 and compared to $36.8 million at the end of the second quarter of 2013. Our net cash burn for the third quarter of 2013 excluding the $47.9 million of net proceeds from the July financing was $8.7 million.

Now, I would like to provide you with some guidance regarding our financial expectations for the balance of 2013. AcelRx records the reimbursement receipts from the $5.6 million USAMRMC grant for funding the development of ARX-04 as revenue. We have recorded $5.4 million in revenue from this grant through the end of the third quarter of 2013 and expect to record the remaining $200,000 during the fourth quarter of 2013.

We anticipate research and development expenses for the fourth quarter of 2013 will be lower than the third quarter due to the one-time charge for the NDA filing fee of $1.95 million that was recorded in third quarter. Additionally, AcelRx anticipates a modest increase in the fourth quarter 2013 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 the commercial launch. Total operating expenses in 2013 are anticipated to be modestly higher than the $32.1 million recorded in 2012.

Other income and expense in future periods is expected to include a non-cash charge that results from the liability accounting related to the warrants we issued in connection with the PIPE financing completed in the second quarter of 2012. Since the primary determinant of this charge is share price change during the quarter and its effect on the Black-Scholes valuation of these warrants, the impact in future periods is very difficult to predict and is not included in our guidance.

At the closing of the PIPE, we issued $2.6 million warrants, which is the basis of these non-cash charges. In the third quarter of 2013, $1.1 million of these PIPE warrants were net exercised leading $1.5 million PIPE warrants outstanding as of right now.

AcelRx believes its current cash and cash equivalents and investments including funding from the recently completed public equity offering are sufficient to fund operations into 2015. We expect our use of cash will decrease over the fourth quarter of 2013 compared to the first three quarters of the year as expenditures related to R&D clinical activity have been completed and many of the final payments to our contract research organizations have been made.

With this, I will now turn the call back over to Richard.

Richard King

Thanks, Jim. And before we answer your questions, I'd like to summarize our major goals and potential milestones looking at over the coming months. We anticipate feedback from the FDA on the submitted Zalviso NDA later this quarter. Looking to the agency to confirm acceptance of this submission, and also to confirm a PDUFA date in third quarter of 2014.

We are continuing to present data from all Zalviso Phase 3 studies at major medical meetings in 2013 and through 2014, with the goal of ensuring awareness of the clinical data and the awareness of the patient experience with Zalviso amongst physicians, surgeons, nurses and pharmacist both in the U.S. and in Europe.

In addition, we plan to add medical science liaisons personnel in mid-2014, support educational initiatives around the management of postoperative pain in the hospital as well as to be able to provide information to pharmacy and therapeutics review committees on Zalviso after approval of the product.

We will complete an end of Phase 2 meeting with the FDA later this quarter for ARX-04 helping us to define the Phase 3 program for the product candidate and supporting identification of funding for the Phase 3 program. The build-out of our commercial capabilities is underway with the focus in 2013 on establishing marketing capability.

In mid-2014, we planned to add a sales management team and will add key account mangers after approval later in 2014. We will add the remainder of the sales force after approval of the product and I expect it early in the first quarter of 2015 to support the launch nationally as formally approvals are achieved.

We're licensing discussions with essential partners regarding ex-U.S. commercial like the Zalviso as a high-priority for AcelRx. A key strategic objective for the company is to obtain an ex-U.S. licensing agreement with the partner experienced in commercializing products in the hospital environment outside of the U.S.

So with that, I'd like to open the call for questions. Amy, if you can, we're ready for the first question.

Question-and-Answer Session


(Operator Instructions) Our first question comes from Louise Chen with Guggenheim Securities

Unidentified Analyst

This is [ph] Swati in place of Louise. So I had a couple of questions. The first one is about the postoperative pain market. There are several amount of products being developed currently on the market, do you feel this is a market that is big enough for more than one product and why? Can you please speak with respect to Pacira's EXPAREL and medicines IONSYS? And the next question I have is that if you are successful with Zalviso, how do you think in terms of competitors, specifically pump manufacturers will react?

Richard King

So first question, it is big enough for more than one product. I think the short answer is, yes, given the scale of procedures that are undertaken in the U.S. on an annual basis, about 12 million procedures resulting in moderate-to-severe pain, and that's a lot of patients requiring support while they're in the hospital to manage that extremely painful time for them.

Speaking specifically to the two products that you referenced, an EXPAREL is a longer acting bupivacaine product that's used to provide local site relief at the site of the wound. And traditionally bupivacaine has been around as an agent for use in managing postoperative pain for a long time now. And as the case historically and will be in the future EXPAREL will form one part of a multimodal analgesic regime, which will include opioids and likely include acetaminophen and likely include gabapentinoids and a variety of agents to manage pain effectively from a hosts of different pathways.

And certainly, I don't see EXPAREL as being competitive. I think it's adding to be armamentarium for surgeons and anesthesiologists to manage pain effectively as we will do. And our goal is to be that product of choice when they're looking for an opioid to manage that pain particularly because of the patient-controlled analgesia mechanism that we offer.

And in contrast, IONSYS is a competitive product to ourselves. There will be a choice between either IONSYS or Zalviso. I think that should both make it through into the commercial marketplace. That's a challenge that I feel pretty comfortable with. Some of the differences between the two products, they are both patient-controlled analgesia devices but delivering product sublingually versus transdermally, creates differences in onset of pain relief, creates differences in local irritations of patients and also on the wastage process of patients, where you can completely utilize all the drug in a Zalviso device, you have to throw away a lot of drugs from an IONSYS device, if you're comfortable in that comparison.

To the other part of your question how will pump manufacturers react? It's a great question, difficult to predict, obviously. There is an installed base of pumps that's out in the hospital community, many of them are now are leased because of all of the withdrawals of pumps that have occurred over the last five years or so due to FDA concerns of a functionality. So at the hospital level, I think it is relatively comfortable process to relief those pumps in access of a technology, at the manufacturer level more difficult to predict what we might actually do.


Our next question comes from Mario Corso of Mizuho.

Mario Corso - Mizuho

Maybe you can talk a little bit about what your commercial preparations and market research thus far have revealed? And I'm wondering related to that when you talk about potential in non-surgical pain treatment, I'm wondering what you're thinking about in terms of clinical trial plans versus is it more a matter of where the hospital formulary is going to allow usage? And then secondarily, on ARX-04, what type of confidence do you have at this point about some or all of Phase 3 being potentially funded by DOD?

Richard King

So market research today, obviously, I'm going to talk about what we have in the public domain. There is a host of research that we've conducted that is not in the public domain and is proprietary as we prepare the product for launch. Universally, what we see when we present Zalviso to surgeons, to anesthesiologists, to a variety of different nurses in the hospital, pharmacists, there's a very strong positive reaction to the product.

People like patient-controlled analgesia from a variety of perspectives. But they also like this technology, this preprogrammed, noninvasive delivery technology. Surgeons like the noninvasive part of it. It allows patients to get up and ambulate, which allows them to get to recovery and out of the hospital faster. It's good for patient and for surgeon.

Nurses like the preprogrammed nature of things. It reduces their time required to program and the risk and exposure that they experience. And patients like the fact that as a noninvasive delivery, they're not having to walk around with an IV infusion aligned in their arm that they can basically use that postoperative pain med as they need to, put it down, and go to the bathroom or the physical therapy as required.

By the way, physical therapists love it as well, because the challenge of trying to actually get somebody through a rehabilitation process. Whilst they're taking a pole with them and a swinging IV PCA pump and tubing and so on, it's very challenging indeed. So it has a whole variety of different positive connotations to a host of different patients. So that also applies by the way in the non-surgical patient population.

So the indication that we have proposed to the agency, as I referenced it for the management of moderate-to-severe acute pain in the hospital setting adult, it doesn't reference postoperative. And we anticipate that that will be allowed to commercialized in that broader indication in the hospital setting for a host of different patient times, as I alluded to during the comments.

Some comments I can give you Mario, for example, in our Phase 3 program, we had a lot of interest from nurses in burns unit, as we were in our Phase 3 clinical program, because at the moment, they do use IV PCA, its challenge for them. The risk and infection in a burns patient and indeed the ability to keep the IV line in damaged tissue is very difficult. Our non-invasive delivery presents them with a very attractive option for managing a very acutely painful situation.

So I do believe that from the we'll get-go will be up to look at that broader patient population. We might do some additional work really on experiential basis in hospitals with individual investigators sponsor studies, but I wouldn't anticipate a broader program.

With ARX-04, difficult to tell, we have a dialog ongoing with the department of defense. And obviously, there is an end of Phase 2 meeting that will define the scope and scale of our Phase 3 program that we will talk to the department of defense about. Given the challenges of funding at the governmental level, it's difficult to know just how able they are. We know they are enthusiastic, we just don't know able they are. So that will be a question that will approach towards the backend of this year and early in '14.


Our next question comes from David Amsellem with Piper Jaffray.

Trevor Davis - Piper Jaffray

This is Trevor Davis on for David. Just a few questions. Can you provide some color on your partnering discussions? And is finding an ex-U.S. partner for Zalviso a near-term priority or a post-FDA approval priority? And are there any updates on partnership talks on O2 and O3?

Richard King

So I'm not going to comment on that, it's just ongoing discussions. I think the primary goal for us is the identification of the right partner in whose hands we feel Zalviso could be bought to a strong commercial success, in whichever geography we are focusing on.

From a timing standpoint, it could be with all the Phase 3 data in hand presents a set of information that's available to partners. And obviously, post-regulatory approval presents an additional set of information. I think that at this stage I'd say, the primary focus for us is that right partnership and getting to a place where we feel that Zalviso can be bought to a successful conclusion in any given market that we're focusing on.

Zalviso has been the focus of our partner discussions. I don't have any specific update to give you on O2 or O3. We have had some interest in partnership around O2 and O3, particularly following the O1 data. We always felt that the O1 data would be helpful. Two partners looking at those two programs, but nothing more specific than that to offer you.

Trevor Davis - Piper Jaffray

And just one quick question. Can you remind us how many hospitals you guys are going to initially target with the sales organization, given Zalviso is approved later next year?

Richard King

The focus will be within the top 2,000 hospitals in the U.S., exactly how many of those we actually do ultimately focusing on initially at launch will depend on that work that I described earlier on. But David Chung has embarked on segmentation, looking at both a hospital level and also at a surgical level, as to where the significant opportunity and the early adoption opportunity is going to exist. We will obviously, push our and target our sales organization at that hospital set. At this stage, I don't have an exact number, it will be within the top 2,000 hospitals in the U.S.


The next question comes from [ph] Rekha Patel, Private Investor.

Unidentified Analyst

My name is [ph] Rekha Patel. And my question is more around how cost competitive your pricing strategy will be to compete and convert the hospitals you planned to target?

Richard King

Obviously, hospitals are very, very price sensitive. And our goal is to be able to offer a comparable price point to the hospitals, to that current IV PCA usage on a per day basis for patients in the hospital post-surgical and also on a broader patient population, but on a day-by-day basis to offer a comparable price.

And ultimately to be able to demonstrate that from a pharmacoeconomic standpoint, the value of a delivery device, which is noninvasive, the value of a drug, which provides a rapid onset of pain relief and doesn't push patients towards excessive dosing of the product. The value of not having an IV delivered medication, but actually having patients untethered from an IV, presents a significant positive upside for hospitals.

So that will be how I will describe it. In so doing as well, I would add that one of the areas of focus for us is with a drug device combination, our ability to leverage the device component of our product at a substantial cost reduction compared to current technology, IV PCA infusion pumps specifically is quite an attractive leverage point. So we are conscious of the marketplace and we're conscious of pricing this such that we can offer a very competitive price point to hospitals.

Unidentified Analyst

Just follow-up, how would that compare cost-wise to the IONSYS product?

Richard King

It's difficult to tell, because IONSYS hasn't priced. So that will obviously depend on where the medicines company chooses to price IONSYS. And I will point out that from a cost perspective, a cost to manufacture perspective, with a product such as ours, which has a reusable component and a small part of it is disposable. You can recycle the reusable component and not at cost on a per patient basis.

Where the IONSYS product is fully disposable, every patient gets a fully new product, which probably means that cost of manufacturer is going to be higher than ours on a per patient basis, which will, I'm going to guess, translates through into a price point as well. But that will obviously remain to be seen.


There are no further questions at this time. I'd like to turn the conference back to Richard King for closing remarks.

Richard King

Thanks, Amy. And thanks everyone for your questions and for joining us on the call today. If you have any additional questions that you'd like to ask, then please feel free to contact either Jim Welch or myself. In the meantime, have a great rest of the day and a great evening, everybody. Bye.


The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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