acrx20220331

acrx20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2022

☐	TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number: 001-35068

ACELRX PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	41-2193603
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

25821 Industrial Boulevard, Suite 400

Hayward, CA 94545

(650) 216-3500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Trading symbol(s)	Name of Each Exchange on Which registered:
Common Stock, $0.001 par value	ACRX	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes ☐ No ☒

As of May 10, 2022, the number of outstanding shares of the registrant’s common stock was 147,114,006.

ACELRX PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		5

Item 1.	Financial Statements	5

	Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021	5

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (unaudited)	6

	Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2022 and 2021 (unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION		29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64

Item 3.	Defaults Upon Senior Securities	64

Item 4.	Mine Safety Disclosures	64

Item 5.	Other Information	64

Item 6.	Exhibits	65

Unless the context indicates otherwise, the terms “AcelRx,” “AcelRx Pharmaceuticals,” “we,” “us” and “our” refer to AcelRx Pharmaceuticals, Inc., and its consolidated subsidiaries. “DZUVEO” and “Niyad” are trademarks, and “ACELRX,” “DSUVIA” and “Zalviso” are registered trademarks, all owned by AcelRx Pharmaceuticals, Inc. This report also contains trademarks and trade names that are the property of their respective owners.

Forward-Looking Statements

This Quarterly Report on Form 10-Q, or Form 10-Q, contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by that section. The forward-looking statements in this Form 10-Q are contained principally under “Part I. Financial Information - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II. Other Information - Item 1A. Risk Factors”. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Many important factors affect our ability to achieve our objectives, including:

•

the accuracy of our estimates regarding the sufficiency of our cash resources, future revenues, expenses, capital requirements and needs for additional financing, and our ability to obtain additional financing;

•

the uncertainties and impact arising from the worldwide COVID-19 pandemic, including restrictions on the ability of our sales force to contact and communicate with target customers and resulting delays and challenges to our commercial sales of DSUVIA®(sufentanil sublingual tablet, 30 mcg);

•

our success in commercializing DSUVIA in the United States, including the marketing, sales, and distribution of the product, whether alone or with contract sales organizations and other collaborators;

•

our ability to satisfactorily comply with FDA regulations concerning the advertising and promotion of DSUVIA;

•

the size and growth potential of the markets for DSUVIA, and, if approved, Zalviso® (sufentanil sublingual tablet system) and our other product candidates in the United States, and our ability to serve those markets;

•

our ability to maintain regulatory approval of DSUVIA in the United States, including effective management of and compliance with the DSUVIA Risk Evaluation and Mitigation Strategies, or REMS, program;

•

acceptance of DSUVIA by physicians, patients and the healthcare community, including the acceptance of pricing and placement of DSUVIA on payers’ formularies;

•

our ability to realize the expected benefits and potential value created by the acquisition of Lowell Therapeutics, Inc., or Lowell, pursuant to the Agreement and Plan of Merger, or Merger Agreement, for our stockholders, on a timely basis or at all;

•

our ability to develop and commercialize products and product candidates that we in-license;

•

our ability to develop sales and marketing capabilities in a timely fashion, whether alone through recruiting qualified employees, by engaging a contract sales organization, or with potential future collaborators;

•

successfully establishing and maintaining commercial manufacturing with third parties;

•

our ability to manage effectively, and the impact of any costs associated with, potential governmental investigations, inquiries, regulatory actions or lawsuits that may be, or have been, brought against us;

•

continued demonstration of an acceptable safety profile of DSUVIA;

•

effectively competing with other medications for the treatment of moderate-to-severe acute pain in medically supervised settings, including IV-opioids and any subsequently approved products;

•

our ability to manufacture and supply DZUVEO® to Laboratoire Aguettant, or Aguettant, in accordance with their forecasts and the License and Commercialization Agreement, or DZUVEO Agreement, with Aguettant;

•

the status of the DZUVEO Agreement or any other future potential collaborations, including potential milestones and revenue share payments under the DZUVEO Agreement;

•

our, or Aguettant’s, ability to maintain regulatory approval of DZUVEO in the European Union, or EU;

•

our ability to fulfill our obligations under the Purchase and Sale Agreement with SWK Funding, LLC, or SWK, (assignee of PDL BioPharma, Inc., or PDL) including our obligation to use commercially reasonable efforts to negotiate a replacement license agreement for Zalviso with a third party;

•

our ability to successfully execute the pathway towards a resubmission of the Zalviso New Drug Application, or NDA, and subsequently obtain and maintain regulatory approval of Zalviso in the United States and comply with any related restrictions, limitations, and/or warnings in the label of Zalviso if approved;

•

the outcome of any potential FDA Advisory Committee meeting held for Zalviso;

•

our ability to successfully commercialize Zalviso, if approved in the United States;

•

the rate and degree of market acceptance of Zalviso, if approved in the United States;

•

our ability to obtain adequate government or third-party payer reimbursement;

•

our ability to attract additional collaborators with development, regulatory and commercialization expertise;

•

our ability to successfully retain our key commercial, scientific, engineering, medical or management personnel and hire new personnel as needed;

•

regulatory developments in the United States and foreign countries;

•

the performance of our third-party suppliers and manufacturers, including any supply chain impacts or work limitations resulting from shelter-in-place orders related to COVID-19;

•

the success of competing therapies that are or become available;

•

our liquidity and capital resources; and

•

our ability to obtain and maintain intellectual property protection for our approved products and product candidates.

In addition, you should refer to “Part II. Other Information - Item 1A. Risk Factors” in this Form 10-Q for a discussion of these and other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AcelRx Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	March 31, 2022 (unaudited)			December 31, 2021⁽¹⁾
Assets
Current Assets:
Cash and cash equivalents	$	21,822		$	12,663
Short-term investments		17,527			38,967
Accounts receivable, net		184			160
Inventories, net		1,045			1,111
Prepaid expenses and other current assets		2,233			2,588
Total current assets		42,811			55,489
Operating lease right-of-use assets		4,147			4,302
Property and equipment, net		15,933			15,928
In-process research and development asset		8,819			—
Other assets		261			2,174
Total Assets	$	71,971		$	77,893
Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable	$	2,715		$	2,121
Accrued and other liabilities		4,321			6,524
Long-term debt, current portion		8,813			8,796
Operating lease liabilities, current portion		1,184			1,068
Total current liabilities		17,033			18,509
Long-term debt, net of current portion		3,041			5,007
Deferred revenue, net of current portion		1,122			1,151
Operating lease liabilities, net of current portion		3,578			3,750
Liability related to the sale of future royalties		84,615			85,288
Other long-term liabilities		855			81
Total liabilities		110,244			113,786
Commitments and Contingencies
Stockholders’ Deficit:
Common stock, $0.001 par value—200,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 147,109,007 and 136,819,647 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		147			137
Additional paid-in capital		443,838			437,554
Accumulated deficit		(482,258	)		(473,584	)
Total stockholders’ deficit		(38,273	)		(35,893	)
Total Liabilities and Stockholders’ Deficit	$	71,971		$	77,893

⁽¹⁾	The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements as of that date included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

See notes to condensed consolidated financial statements.

AcelRx Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share data)

	Three Months Ended March 31,
	2022			2021
Revenue:
Product sales	$	442		$	451
Contract and other collaboration		—			60
Total revenue		442			511

Operating costs and expenses:
Cost of goods sold		784			1,040
Research and development		1,315			969
Selling, general and administrative		7,338			7,644
Total operating costs and expenses		9,437			9,653
Loss from operations		(8,995	)		(9,142	)
Other income:
Interest expense		(390	)		(672	)
Interest income and other income, net		38			76
Non-cash interest income on liability related to future sale of royalties		673			782
Total other income		321			186
Net loss	$	(8,674	)	$	(8,956	)
Net loss per share of common stock, basic and diluted	$	(0.06	)	$	(0.08	)
Shares used in computing net loss per share of common stock, basic and diluted – See Note 11		145,623,751			113,256,550

See notes to condensed consolidated financial statements.

AcelRx Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Deficit

(Unaudited)

(in thousands, except share data)

	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
	Shares		Amount
Balance as of December 31, 2021		136,819,647	$	137	$	437,554		$	(473,584	)	$	(35,893	)
Stock-based compensation		—		—		783			—			783
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes		515,393		—		(58	)		—			(58	)
Issuance of common stock in connection with asset acquisition		9,620,532		10		5,501			—			5,511
Issuance of common stock upon ESPP purchase		153,435		—		58			—			58
Net loss		—		—		—			(8,674	)		(8,674	)
Balance as of March 31, 2022		147,109,007	$	147	$	443,838		$	(482,258	)	$	(38,273	)

	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
	Shares		Amount
Balance as of December 31, 2020		98,812,008	$	98	$	382,637		$	(438,485	)	$	(55,750	)
Stock-based compensation		—		—		1,089			—			1,089
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes		404,172		—		(249	)		—			(249	)
Net proceeds from issuance of common stock in connection with equity financings		19,701,562		20		36,340			—			36,360
Issuance of common stock upon ESPP purchase		183,132		—		192			—			192
Issuance of common stock upon exercise of stock options		2,125		—		2			—			2
Net loss		—

SEC Form 10-Q filed by AcelRx Pharmaceuticals Inc.