BST Trade Alert: December 4, 2014

| December 4, 2014


Buy AcelRx Pharmaceuticals (NASDAQ: ACRX) up to $7.25 per share.

About the Company:

ACRX is the kind of biotech stock we love.  They have a late-stage product candidate with blockbuster sales potential.

Here’s why we’re very excited about ACRX…

AcelRx is a specialty pharmaceutical focused on developing innovative therapies for acute and breakthrough pain.  They currently have 3 products in phase 2 testing and one product that has an NDA submitted to the FDA.

Each of the company’s products uses Sufentanil to treat pain.

Sufentanil is a strong opioid analgesic currently marketed for intravenous epidural anesthesia.  As such, the drug’s efficacy has been well established.  It facilitates rapid cell membrane penetration and onset of action.

With that said, use of Sufentanil has been limited due to its short duration of action when delivered intravenously.  And right now, the only FDA approved way to deliver the drug is by IV.

But that could be about to change…

AcelRx has developed a new technology called Zalviso to deliver Sufentanil in a novel way.  Zalviso is a non-invasive, sublingual (under-the-tongue) dosage form.  By using the sublingual delivery route, it resolves the short duration of action problem inherent to IV administration.

What’s more, AcelRx has plenty of cash to get through the regulatory catalyst expected in the first half of 2015.

As of September 30, 2014, the company had $85 million in cash on the books.  And according to management, these funds are sufficient to fund the biotech’s operations and clinical trials through the catalyst.

As you can see, AcelRx has innovative proprietary technology, multiple products in development, and a strong financial position.  Let’s take a closer look now at their leading product candidate.

About the Drug:

Zalviso’s phase three trials showed the system treats pain and only has a few adverse side effects that are similar to other opioid pain medications.  It also received high praise from patients and nurses for ease of care. 

This amazing product is a non-invasive, handheld system that allows patients to self-dose with sublingual Sufentanil NanoTabs to manage their post-operative pain.

AcelRx submitted a NDA for Zalviso to the FDA in the first half of 2014.  And they received a CRL on July 25, 2014.

The major issues noted by the FDA had to do with the device that delivered the medication, not the medication itself.  They wanted AcelRx to reduce the incidence of optical system errors and change the instruction to address inadvertent dosing.

In fact, they have since completed the modifications to the dispenser and instructions.

The device has already received CE Mark approval for use in Europe.  And the FDA is likely to follow suit when they re-file the NDA in the end of the first quarter 2015.

After reviewing the CRL, we are confident that Zalviso will obtain regulatory approval from the FDA when it is re-submitted.

They also have three additional product candidates using the same technology in clinical development…

ARX-02 for the treatment of cancer breakthrough pain.

ARX-03 for providing mild sedation, anxiety reduction, and pain relief for patients undergoing painful procedures in a physician’s office.

ARX-04, a non-invasive, fast-onset sublingual product for the treatment of moderate-to-severe acute pain.

About the Market for This Drug:

According to the 2010 Decision Resources Acute Pain Report, the post-operative pain market in the US, Europe, and Japan is growing steadily.  In fact, this market is expected to reach a staggering $6.5 billion by 2018.

But despite its size, the market remains underserved.

Studies show that up to 75% of patients experience inadequate pain relief after surgery.

The 2010 DR Report projects that in 2013, 20.7 million in-patient procedures performed in the US and the five largest European Union countries will require post-operative treatment of pain.  And that figure is expected to increase by 1% a year going forward.

Clearly, ARX-01 is targeting a very large and growing market that needs a more effective way to manage post-operative pain.

And the product’s already gaining acceptance in the medical community.

Market research targeting surgeons and anesthesiologists has identified a consistent positive response to the NanoTab System.  And these medical professionals have indicated an interest in using it in at least 75% of their eligible patients.

No question about it, the Zalviso has blockbuster potential.  And the company’s target market has expressed strong interest in using the product for the vast majority of their patients.

About the Potential Catalyst:

The NDA resubmission is expected in the first quarter of 2015.  And it will be reviewed within six months.

About the Shares:

ACRX is currently trading for $6.53.  It’s well off the 52-week high of $13.64 it set prior to receiving the CRL from the FDA.

But we believe the stock is poised to rocket higher after the NDA is re-submitted.

Given our positive outlook for Zalviso and the other drugs in ACRX’s pipeline, we believe the $286 million market cap is too low.

Grab your shares of ACRX now while the stock’s trading at a nice discount to its recent high.  Use the recent weakness to establish your position at an attractive entry point.

Key Facts:

Company: AcelRx Pharmaceuticals
Ticker: ACRX
Recent Price: $6.53
Market Cap: $286 million
Avg. Daily Volume: 613,500 shares





Category: BST Trade Alert

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