Research Report: AcelRx Pharmaceuticals (ACRX)

• Company: AcelRx Pharmaceuticals, Inc.                                          
• Symbol: ACRX
• Analysis Date: 5/26/20
• Analysis Price: $1.52
• Price Target (PT): $5.80
• Upside: 282%
• Dividend: NA                                                                                                            
• Recommendation: Buy                                                                                   

ACRX: 5-Year Chart

(Click on image to enlarge)

Source: Seeking Alpha

INVESTMENT THESIS:

ACRX’s lead product Dsuvia, a 30 mcg sufentanil sublingual tablet for the treatment of moderate-to-severe acute pain, continues to gain hospital formulary wins, and management has finally begun to disclose dollar amounts for future orders from the Department of Defense (DOD). Another round of dilution remains a real possibility, as sales have ramped up much slower than investors were hoping for. But we remain bullish on Dsuvia becoming a successful niche product that can eliminate the need for IV morphine in certain instances. We think ACRX is a Buy.

LIQUIDITY POSITION: Fair

As of 1Q20, ACRD had cash and cash equivalents of $53M, with a quarterly burn rate of about $14M. The cash burn rate should improve towards the second half of 2020, as the initial orders from the Army begin to kick in. Still, it would not surprise us if another stock offering is needed.

COMMERCIAL PROSPECTS: Very Good

Previous peak net sales estimates for Dsuvia from both management and analysts have been at $1B+. At the moment sales are essentially zero, but management has made it clear that getting hospitals to place Dsuvia on their formulary can take up to a year. Once a drug has been added to the formulary, orders can then begin to be placed. Also, discussions with the DOD took some time, but it was recently disclosed that just the initial stocking orders for the Army will be about $30M over the next three years. The ramp up will be slow, but we remain bullish on the commercial prospects.

CONCLUSION:

ACRX has finally gotten Dsuvia approved and is working on building the sales channel at both hospitals and the DOD. It looks like it will be a slow ramp up, so another round of dilution is possible. But we like the chances of commercial success for Dsuvia, and think ACRX is a Buy.