Can AcelRx Overcome Yet Another FDA Roadblock?

By Chris Lange Published Mar 9, 10:25AM EDT

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AcelRx Pharmaceuticals Inc. (NASDAQ: ACRX) announced an update on the timing and potential content of its resubmission of the New Drug Application (NDA) for Zalviso. Unfortunately the update was not good for the company, as the U.S. Food and Drug Administration (FDA) is requesting an additional clinical study to assess Zalviso.

The NDA had been previously rejected in July of 2014.

As a result of this FDA communication and the need for clarity, AcelRx will hold off on making the Zalviso NDA resubmission this quarter. After the company receives more information from the FDA, it will provide an update on the time frame for the resubmission of the Zalviso NDA.

Prior to Monday’s announcement, the company had a market cap of roughly $382 million, but after the markets opened it took a sharp turn downward to $251 million.

Back in September, the company had a little over $85 million in cash on the books. However, the need for a new clinical trial will force a higher burn rate for this cash going forward.

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The communication from the FDA was detailed in the press release:

AcelRx late last week received correspondence from the Food and Drug Administration stating that in addition to the bench testing and two Human Factors studies it has performed, an additional clinical study is needed to assess the risk of inadvertent dispensing and overall risk of dispensing failures. AcelRx had previously obtained confirmation from the FDA that the protocol designs for the bench testing evaluating dispensing failures and the Human Factors studies evaluating inadvertent dispensing were acceptable to the FDA.

It is worth noting that the company will report its fourth-quarter earnings after the markets close on Monday. Thomson Reuters has consensus estimates of a loss of $0.30 per share on $590,000 in revenue for the fourth quarter. In the previous year, the fourth-quarter results were $0.41 in earnings per share on $27.61 million in revenue.

You might be asking how a company goes from making $27.6 million in one quarter to only $590,000 only a year later. What happened was that during the previous fourth quarter, AcelRx received a $30.0 million upfront payment from Grunenthal GmbH associated with the Zalviso commercialization agreement in the European Union and Australia, of which $27.4 million was recognized as revenue in the quarter. Of this cash, $26.3 million was put toward research development.

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In Monday morning trading, AcelRx shares were down 32.5% at $5.90, after hitting a new 52-week low of $5.07. The stock has a consensus analyst price target of $11.22, and the 52-week high is $13.40.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.