AcelRx Pharmaceuticals To Benefit From DSUVIA Launch

| About: AcelRx Pharmaceuticals, (ACRX)

Summary

ACRX expects approval of lead drug candidate DSUVIA this year.

DSUVIA MAA in EU is progressing smoothly.

ACRX is initiating the fourth study for Zalviso.

AcelRx Pharmaceuticals Inc. (NASDAQ:ACRX) recently reported its first quarter results and provided updates for its corporate activities. While the company suffered a net loss of $15.6 million, up from a net loss of $11 million it had incurred for the corresponding quarter of the previous year, it also managed to ramp up its revenue. AcelRx Pharmaceuticals reported its revenue from the collaboration agreement with Grunenthal at $3 million, up from $1.8 million it had earned in the corresponding previous quarter. The company also generated $0.1 million in revenue from its work performed under the Department of Defence (NYSEARCA:DOD) contract for DSUVIA.

AcelRx Pharmaceuticals also presented its future course of action. The company's stock valuation is to be derived from its strong product pipeline. The pharma company is focused on developing therapies for treating acute pain. The main drug candidates for the company are DSUVIA or ARX-04 (as it is known in the EU) and Zalviso. The immediate catalyst for the company is likely to come from DSUVIA for which AcelRx Pharmaceuticals has already filed the New Drug Application (NDA) and Marketing Authorisation Application (NYSE:MAA) in the US and EU respectively. The applications are moving forward as the company was recently notified by the European Medicines Agency or EMA that its MAA is now in the scientific review phase. This shows that the application is already past the validation stage. The company had filed the MAA in March this year and it expects to receive an opinion from the Committee for Medicinal Products for Human Use (NASDAQ:CHMP) by the first half of 2018.

Similarly, in the US, the company's NDA has been accepted for review by the FDA, which has also informed the company about the convening of a joint meeting of the Anesthetic and Analgesic Drug Products Advisory Committee and the Drug Safety and Risk Management Advisory Committee. Both the applications pitch the drug for the treatment of patients with moderate-to-severe acute pain in a medically supervised setting. The company is now looking to focus on collaborating with the FDA and the EMA for smooth progression towards the potential approval and launch of the drug. AcelRx Pharmaceuticals expects the FDA decision to be delivered as early as by the fall of this year.

Now that the drug is nearing its approval, it is time to look at the potential of DSUVIA. In a recent press release, the company estimated the peak revenue from the drug at $1.1 billion per year, which has game-changing potential for a company with a market cap of only $116 million.

Another drug in the pipeline for the company is Zalviso, which is already approved in the EU. The drug is currently in Phase 3 in the US. While AcelRx Pharmaceuticals plans to promote DSUVIA as its main product, Zalviso also has an important role to play as a follow up drug. It has already completed three Phase 3 clinical trials which included two placebo-controlled efficacy and safety trials and one open-label active comparator trial which pitched Zalviso against IV PCA morphine, the usual method of controlling acute pain in patients. The drug is progressing smoothly as all three trials met their endpoints and its fourth study involving a diverse post-surgical population to further evaluate the overall performance of the Zalviso System has already been initiated.

Zalviso is already approved in the EU, which underscores the potential of the drug in the United States. The drug is marketed in the EU by Grunenthal Group. Given the current timeline, it is likely that the drug may hit the US market by late 2018. The company reported its latest quarterly revenue in the EU at close to $3 million, thus AcelRx Pharmaceuticals may look at north of $15 million in annual revenue in the US, as and when the drug is approved in the US.

While Zalviso's US market debut is still faraway, it is high likely that DSUVIA will be launched in the US markets later this year. This one catalyst is likely to provide long term investors with huge upside. The company stock is break-even in this year so far while it lost 19 percent of its market value in the past 12 months. The current price point is not only nearly 33 percent down from its 52 weeks high, but also provides a good entry potential as the company is on the cusp of delivering solid news in the coming months. The investors also need to keep in mind that any delay in approval of DSUVIA may hamper AcelRx Pharmaceuticals' fortunes. The company ended its previous quarter with As of March 31, 2017, AcelRx had cash, cash equivalents and investments of $72.3 million, compared to $80.3 million at December 31, 2016. At this rate, any delay in the launch of DSUVIA may cause cash crunch. This may not only impact the short term stock price but also the development plans for Zalviso. However, the potential approval of DSUVIA is not only going to provide short-term fillip to the stock price but is also going to deliver long term benefits in the form of a steady revenue stream for the company, the effects of which will eventually be shown in the market price of its stock.

Disclosure: I/we 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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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