Biotech Catalyst Play: AcelRx Pharmaceuticals Inc (NASDAQ:ACRX)

We have had some big winners over the last month or so with our Biotech Catalyst series and here is another one to take a look at.

The company is AcelRx Pharmaceuticals Inc (NASDAQ:ACRX), a junior biotechnology stock-based out of California with a market capitalization of a little over $90 million as things stand.

Year to date, AcelRx trades for a 22% discount and, from 2017 highs, recorded early March, the company is down more than 41%.

Across the coming 12 to 16 weeks, however, this could all change.

There is one major catalyst set to hit press at some point during July and a subsequent catalyst slated for mid-October. If both come out as positive for the company, there is considerable upside potential on the cards. We are talking the potential to go from a $3 million revenues quarterly company to one targeting markets with a combined $1.5 billion in sales with just two drugs.

There is what we are watching out for.

So, the first catalyst, the July catalyst, derives from an ongoing phase 3 study of a drug called Zalviso. It is a pain management drug and it is already approved in Europe (and has been since 2015), but AcelRx hasn’t been able to mirror its European success in the US – yet. The company applied for approval in the US a few years ago based on the back of what looked like some pretty strong data, but the FDA turned down the drug and requested that AcelRx carries out an additional trial in order to reinforce its application and then resubmit.

The trial in question, which is investigating efficacy and safety of the asset in an acute pain indication, kicked off during September 2016 and is set to finish (and readout) this month. If the numbers are indicative of clinical benefit, and more importantly, if they look like they address the FDA’s concerns, we are going to see the stock run in anticipation of a near-term NDA resubmission for Zalviso in the US.

Peak sales on this one come in at around $150 million in Europe and somewhere between $175 million and $200 million in the US. To add some perspective, and to reiterate our above statement, AcelRx currently trades for just $90 million.

So that is the first catalyst; for the second one we have to move to the start of the final quarter, specifically, October.

In parallel to Zalviso, AcelRx is also trying to get a drug called DSUVIA approved in the US. This one is also a pain drug, this time designed for the treatment of moderate-to-severe pain in a medically supervised setting. The company submitted an NDA for the asset at the end of last year and, in February this year, the FDA accepted the submission for consideration. On acceptance, the agency set a PDUFA day of October 12, 2017, meaning it will make a decision as to whether it is willing to approve the drug before or on that date.

While Zalviso is our near-term catalyst, the DSUVIA decision probably holds more weight from a valuation perspective. Why? Because peak sales for this one are estimated at a little over $1.1 billion in the US alone. If FDA gives a green light for commercialization to the asset, therefore, the company could have a blockbuster drug on its hands. Combine that with the close to $400 million in revenues potential from Zalviso, and AcelRx could very justifiably become a multibillion-dollar biotech company before the end of the decade.

As ever, these are binary events, and while there is plenty of upside potential if they come in as positive, if they go against the company, there’s an equal amount of downside potential on any position. This isn’t anything out of the ordinary for biotechnology, of course, but it needs to be considered ahead of picking up exposure.

We will be updating our subscribers as soon as we know more. For the latest updates on ACRX, sign up below!

Image courtesy of Jan Tik via Flickr

Disclosure: We have no position in ACRX and have not been compensated for this article.

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Biotech Catalyst Play: AcelRx Pharmaceuticals Inc (NASDAQ:ACRX)
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