Jefferies Reiterates $3.50 price target on AcelRx Pharmaceuticals Inc(NASDAQ:ACRX)

Equity Research Firm Jefferies Reiterated its $3.50 price target on AcelRx Pharmaceuticals Inc(NASDAQ:ACRX) and Issued a Research Report titled ”ACRX: HOLD: Key Takeaways from R&D Day” on October 2.

Equity Analysts Biren Amin, Hugo Ong, Ph.D., and Shaunak Deepak stated ”At its R&D Day, ACRX reviewed its pipeline portfolio which included a focus on ARX-04 which could be the next meaningful revenue opportunity. Based on clinical data and market research, ACRX estimates 10-12M patients annually could be eligible for ARX-04. ARX-04 is currently in an ongoing PIII SAP302 in the ER and could report data in Q1’16. On Zalviso, we await FDA minutes next week which could shed light on its regulatory path.”

AcelRx Pharmaceuticals Inc(NASDAQ:ACRX) is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of acute pain. In the US, the Company’s late-stage pipeline includes ARX-04 (sufentanil sublingual tablet, 30 mcg) for the treatment of moderate-to-severe acute pain in a medically supervised setting; and Zalviso™ (sufentanil sublingual tablet system) for the management of moderate-to-severe acute pain in adult patients in the hospital setting. ARX-04 delivers 30 mcg sufentanil sublingual, a high therapeutic index opioid, through a disposable, pre-filled, single-dose applicator (SDA).

AcelRx has reported positive results from the pivotal Phase 3 SAP301 ambulatory surgery study, and will be advancing ARX-04 into a study in emergency room patients in 2015. Zalviso delivers 15 mcg sufentanil sublingual tablets through a non-invasive delivery route via a pre-programmed, patient-controlled analgesia device. In response to the New Drug Application (NDA) AcelRx submitted to the U.S. Food and Drug Administration (FDA) seeking approval for Zalviso, the Company received a Complete Response Letter (CRL) on July 25, 2014. The FDA has requested an additional clinical study prior to the resubmission of the Zalviso NDA.  Zalviso is authorized for marketing in the European Union as well as in the European Economic Union.

Biren Amin , Hugo Ong, Ph.D., and Shaunak Deepak continue ”The company recently initiated the PIII trial in the emergency room (ER) setting which should read out in Q1 2016 and could lead to an NDA submission for ARX-04 in 1H 2016 and potential approval in mid-2017. Moreover, ACRX reviewed clinical data from the SAP-301, a pivotal PIII study investigating ARX-04 v. placebo in moderate-to-severe acute pain following ambulatory abdominal surgery. ARX-04 hit the primary endpoint with a difference in SPID-12 scores of +25.8 for ARX-04 pts v. +13.1 for placebo (p<0.001). No patient on ARX-04 dropped out prior to 24 hrs due to an AE, and a lower percent of ARX-04 patients dropped out due to lack of efficacy v. placebo (3.7% v. 18.5%, respectively; p=0.002). Also, a lower percentage of pts.

They go on to say that ”ACRX reviewed the potential market opportunity for ARX-04, which include the Emergency Room (ER), the in-patient surgical setting for less invasive surgeries not requiring PCA device, the out-patient or ambulatory settings, and non-surgical acute pain setting. ACRX anticipates that ARX-04 could be used as an alternative to IV opioids and/or as a bridge from IV to oral opioids in these settings. ACRX’ arrangement with the Department of Defense (DoD) was a purchase of up to 200k commercial units at $20/unit. If approved, ACRX anticipates pricing at a potential premium to this price for commercial use and possibly upwards to $75/unit which represents the current cost of IV morphine. Collectively, ACRX anticipates ARX-04 could be a $1.3B market opportunity at peak.

Concluding that ”ACRX reiterated that it had its meeting with the FDA in early September on Zalviso, and that it continues to await the minutes from that meeting which could come next week. At that point, we may gain clarity on the regulatory path for Zalviso and whether ACRX needs to run another clinical trial and what the design/nature of the trial might be. If a trial is needed, ACRX will finalize plans for the study in Q1’16. ACRX recently sold part of its EU royalties/milestones for Zalviso for $65M, which gives them a cash position of $100M+ which should give them sufficient runway until at least mid-’17.

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