In this article we cover a biotech stock that has been rising on the back of increased volumes. While this year has been not a good one for a number of health stocks as they faced a number of problems, AcelRx Pharmaceuticals Inc. (NASDAQ: ACRX) seems to be doing well, at least on the stock front. Shares of AcelRx Pharmaceuticals Inc. have increased by 150 percent since the beginning of this year and it seems there are likely to hold on to their gains.
Lucrative Niche Market
Each year in the United States, millions of surgical operations are carried out. Patients have been known to experience severe to moderate pain after a surgical procedure. These include minor headaches and back pain, which if left untreated, can increase the risk of post-operation mortality. Currently, patients are left by themselves to deal with these symptoms through over the counter prescribed drugs. AcelRx Pharmaceuticals Inc. has a number of drug candidates in the pipeline that are aimed at treating post operation pain. Its lead drug candidate, Zalviso™ has gone through three successful clinical trials. In a press release carried by Newswire, on the 2nd of December 2013, the company reported that Zalviso™ was approved for filing by the FDA, signifying that the drug met all conditions for it to be reviewed by the FDA for marketing and commercialization purposes. The post-surgery pain market is estimated to be worth $5 billion and is expected to record strong growth in the coming five years, especially in Japan, the United States, and other developed countries.
Whenever there is some optimism towards any stock, there are accompanying risks. AcelRx Pharmaceuticals Inc.'s finances are in the red. The company has not made any profit since its founding, signifying that it is yet to successfully commercialize any product. Revenues in comparison to operational costs are miniscule, which means the company is burning a great amount of cash. For investors, this means that the company's share price is currently being supported by speculation over successful commercialization of one of the company's drug candidates in the future. This has its downsides as well as possible rewards. Any negative reporting about the company can lead to a big fall in the company's share price resulting in huge loses, while it is possible for the stock to double or triple within a short time.
AcelRx Pharmaceuticals Inc.'s shares have been quite volatile this year, having started at a low of $3.45, climbed to $12 a share before falling to just slightly above $6 a share. This makes it quite a risky play, but the company seems to have enormous potential. AcelRx Pharmaceuticals Inc. is good pick for investors looking to invest long-term. Due to its unpredictability, it is advisable to limit your exposure to this stock.