AcelRx Pharmaceuticals (ACRX) has set its sights on treatments for acute and breakthrough pain. Its lead product is Zalviso for post-operative pain following open abdominal surgery and hip or knee replacement surgery. The company has announced that the FDA accepted the NDA for Zalviso. On December 16 AcelRx stated:
“AcelRx announced today that the U.S. Food and Drug Administration (FDA) has established a Prescription Drug User Fee Act (PDUFA) action date of July 27, 2014, for AcelRx's New Drug Application (NDA) for Zalviso. AcelRx announced on December 2, 2013 that FDA accepted for filing the Zalviso NDA.”
We expect AcelRx to run higher as it nears the PDUFA action date for Zalviso. In the middle of this year the company had an unwarranted selloff on no fundamental news. The stock hit a high of $13.50 in July and dipped to about $6 in November. On that dip, Perceptive Advisors bought almost $5M worth of stock.
Since those buys, AcelRx has released positive news. On December 16, the company announced they have agreed on a commercial agreement for Zalviso with Grunenthal in the European Union and Australia. Under the agreement AcelRx will receive an upfront cash payment of $30M and is eligible to receive up to $220M in milestone payments. On December 19, the company announced that it had secured a $40M credit facility with Hercules Technology Growth Capital. This is non-dilutive for the shareholders and gives the company a strong position of working capital.
We also believe AcelRx has a strong management team that has a successful track record of developing biotech companies. Given that the insiders own a large portion of the company, the management's goals are aligned with those of the investors, i.e., management has a stake in the company with their own money and will not seek ways to reward themselves that would hurt the stock for retail investors Management also has a history of getting their companies sold to large pharmaceutical firms. We think this possibility gives AcelRx additional upside.
All things considered, we believe AcelRx is currently undervalued and could run to $15 or more before the PDUFA date in July.