PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) Presents AcelRx's unaudited condensed consolidated financial statements and detailed notes for 2019 and 2018 periods, covering balance sheets, comprehensive loss, equity, and cash flows [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Item | Sep 30, 2019 | Dec 31, 2018 | | :----------------------------------- | :----------- | :----------- | | **Assets** | | | | Cash and cash equivalents | $21,949 | $87,975 | | Short-term investments | $58,451 | $17,740 | | Total current assets | $85,669 | $107,994 | | Total Assets | $104,978 | $120,533 | | **Liabilities and Stockholders' (Deficit) Equity** | | | | Total current liabilities | $11,431 | $15,928 | | Total liabilities | $133,252 | $116,280 | | Total stockholders' (deficit) equity | $(28,274) | $4,253 | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Item | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenue | $608 | $377 | $1,814 | $1,538 | | Total operating costs and expenses | $14,142 | $9,705 | $41,027 | $26,288 | | Loss from operations | $(13,534) | $(9,328) | $(39,213) | $(24,750) | | Total other income (expense) | $803 | $(3,130) | $399 | $(9,839) | | Net loss | $(12,731) | $(12,458) | $(38,817) | $(34,591) | | Net loss per share, basic and diluted | $(0.16) | $(0.21) | $(0.49) | $(0.64) | [Condensed Consolidated Statements of Stockholders' (Deficit) Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20(Deficit)%20Equity) Stockholders' (Deficit) Equity Changes (in thousands) | Item | Balance as of Dec 31, 2018 | Balance as of Sep 30, 2019 | | :------------------------- | :------------------------- | :------------------------- | | Common Stock (Shares) | 78,757,930 | 79,573,001 | | Common Stock (Amount) | $78 | $79 | | Additional Paid-in Capital | $349,194 | $355,330 | | Accumulated Deficit | $(345,019) | $(383,683) | | Total Stockholders' (Deficit) Equity | $4,253 | $(28,274) | - The company reported a cumulative effect adjustment for the adoption of ASU No. 2016-02, increasing accumulated deficit by **$153 thousand** as of January 1, 2019[21](index=21&type=chunk)[73](index=73&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(37,025) | $(20,085) | | Net cash used in investing activities | $(43,452) | $1,083 | | Net cash provided by financing activities | $14,451 | $23,666 | | Net (decrease) increase in cash and cash equivalents | $(66,026) | $4,664 | | Cash and cash equivalents—End of period | $21,949 | $57,566 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Summary of Significant Accounting Policies](index=12&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) - AcelRx Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on developing and commercializing innovative therapies for acute pain in medically supervised settings, primarily DSUVIA (approved in US and EU) and Zalviso (approved in EU, late-stage development in US)[28](index=28&type=chunk) - DSUVIA was approved by the FDA in November 2018 and commercially launched in Q1 2019, with distribution restricted to certified medically supervised healthcare settings under a REMS program[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - Zalviso is approved in Europe and commercialized by Grünenthal GmbH; the company is evaluating the timing for resubmission of its New Drug Application (NDA) for Zalviso in the United States[28](index=28&type=chunk)[31](index=31&type=chunk) - The company adopted ASU No. 2016-02, Leases (Topic 842), effective January 1, 2019, resulting in the recognition of right-of-use assets and lease liabilities on the balance sheet[42](index=42&type=chunk)[72](index=72&type=chunk) Impact of ASU No. 2016-02 Adoption (in thousands) | Item | Increase/(Decrease) | | :---------------------------------- | :------------------ | | Operating lease right-of-use assets | $4,730 | | Accrued liabilities | $(100) | | Operating lease liabilities | $484 | | Operating lease liabilities, net of current portion | $4,610 | | Deferred rent, net of current portion | $(416) | | Accumulated deficit | $(153) | - The Royalty Monetization of Zalviso European royalties and milestones with PDL BioPharma, Inc. is accounted for as a liability, amortized using the effective interest method, with estimates of future payments periodically assessed and adjusted[63](index=63&type=chunk)[65](index=65&type=chunk) [2. Investments and Fair Value Measurement](index=21&type=section&id=2.%20Investments%20and%20Fair%20Value%20Measurement) Cash, Cash Equivalents and Investments (in thousands) | Item | As of Sep 30, 2019 (Fair Value) | As of Dec 31, 2018 (Fair Value) | | :----------------------------------- | :------------------------------ | :------------------------------ | | Cash and cash equivalents | $21,949 | $87,975 | | Short-term investments | $58,451 | $17,740 | | Total cash, cash equivalents and investments | $80,400 | $105,715 | - The company's financial instruments include Level I and II assets (money market funds, U.S. government agency securities, commercial paper, corporate debt securities) and Level III liabilities (contingent put option liability related to debt financing)[79](index=79&type=chunk)[81](index=81&type=chunk) Changes in Fair Value of Level III Financial Liabilities (in thousands) | Item | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | | :---------------------------------------------------------------- | :------------------------------ | :----------------------------- | | Fair value—beginning of period | $657 | $121 | | Change in fair value of contingent put option associated with the Loan Agreement | $(143) | $514 | | Change in fair value of contingent put option associated with the Prior Agreement | — | $(121) | | Fair value—end of period | $514 | $514 | [3. Inventories, net](index=24&type=section&id=3.%20Inventories,%20net) Inventories, net (in thousands) | Item | Sep 30, 2019 | Dec 31, 2018 | | :---------------- | :----------- | :----------- | | Raw materials | $1,192 | $694 | | Work-in-process | $1,044 | $160 | | Finished goods | $744 | — | | Total | $2,980 | $854 | - During Q3 2019, the company recorded a **$0.9 million** inventory write-down for DSUVIA due to potential expiration of initial development batches, impacting Cost of Goods Sold[82](index=82&type=chunk) [4. Revenue](index=24&type=section&id=4.%20Revenue) Revenue Recognition (in thousands) | Revenue Source | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | | :----------------------------------- | :------------------------------ | :----------------------------- | | Performance obligations satisfied – Amended Agreements | $444 | $1,279 | | Royalty revenue | $48 | $317 | | Net product sales of DSUVIA | $116 | $218 | | Total revenue | $608 | $1,814 | - As of September 30, 2019, approximately **$3.2 million** of deferred revenue is attributable to the discount on future manufacturing services of Zalviso for Grünenthal, expected to be recognized through 2029[83](index=83&type=chunk) [5. Collaboration Agreement](index=24&type=section&id=5.%20Collaboration%20Agreement) - Under the Amended License Agreement with Grünenthal, AcelRx is eligible for approximately **$194.5 million** in additional milestone payments (**$28.5M** regulatory/development, **$166.0M** net sales) and tiered royalties (mid-teens to mid-twenties percent range)[85](index=85&type=chunk) - AcelRx recognized **$0.5 million** and **$1.6 million** in revenue under the Amended Agreements for the three and nine months ended September 30, 2019, respectively, an increase from **$0.2 million** and **$0.8 million** in the prior year periods, primarily due to increased orders from Grünenthal[88](index=88&type=chunk) - The deferred revenue balance of **$3.2 million** under the Amended Agreements is primarily from a significant discount on manufacturing services, recognized straight-line through 2029[88](index=88&type=chunk) [6. Long-Term Debt](index=25&type=section&id=6.%20Long-Term%20Debt) - On May 30, 2019, AcelRx entered into a **$25.0 million** Loan Agreement with Oxford Finance LLC, using **$8.9 million** to repay outstanding obligations under a prior agreement with Hercules, resulting in **$15.9 million** net proceeds[91](index=91&type=chunk) - The Oxford Loan Agreement has an interest-only period until July 1, 2020 (extendable to July 1, 2021 under certain conditions) followed by principal and interest payments through June 1, 2023, and includes a **5%** End of Term Fee[93](index=93&type=chunk) - The company's obligations under the Loan Agreement are secured by a security interest in all assets, excluding intellectual property, and require maintaining unrestricted cash of at least **$5.0 million**[95](index=95&type=chunk) - Interest expense related to the Loan Agreement was **$0.8 million** for Q3 2019 and **$1.1 million** for the nine months ended September 30, 2019, including debt discount amortization[98](index=98&type=chunk) [7. Leases](index=27&type=section&id=7.%20Leases) - AcelRx leases office and laboratory space under a New Lease effective February 1, 2018, through January 31, 2024, with monthly rent of approximately **$0.1 million** and annual **3%** increases[99](index=99&type=chunk)[100](index=100&type=chunk) - The company subleased approximately **47%** of its office and laboratory space starting February 16, 2019, generating initial monthly rent of approximately **$48,000**[101](index=101&type=chunk) Net Lease Costs (in thousands) | Item | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | | :---------------- | :------------------------------ | :----------------------------- | | Operating lease costs | $340 | $1,020 | | Sublease income | $(150) | $(446) | | Net lease costs | $190 | $574 | - The weighted-average remaining lease term for operating leases is **4.13 years**, with a weighted-average discount rate of **11.72%** as of September 30, 2019[104](index=104&type=chunk) [8. Liability Related to Sale of Future Royalties](index=30&type=section&id=8.%20Liability%20Related%20to%20Sale%20of%20Future%20Royalties) - In September 2015, AcelRx sold **75%** of European Zalviso royalties and **80%** of the first four commercial milestones to PDL BioPharma, Inc. for **$65.0 million**, capped at **$195.0 million**[106](index=106&type=chunk) - During Q2 2019, the company revised its estimates for future payments to PDL, projecting approximately **$36 million**, which is less than the **$65.0 million** received, leading to a prospective interest income rate of approximately **4.2%** and a potential contingent gain of **$29 million** upon liability expiration[107](index=107&type=chunk) Liability Related to Sale of Future Royalties (in thousands) | Item | Nine Months Ended Sep 30, 2019 | | :------------------------------------------------ | :----------------------------- | | Liability related to sale of future royalties — beginning balance | $93,679 | | Non-cash royalty revenue | $(241) | | Non-cash interest (income) expense recognized | $(375) | | Liability related to sale of future royalties as of Sep 30, 2019 | $93,063 | | Less: current portion | $(688) | | Liability related to sale of future royalties — net of current portion | $92,375 | [9. Warrants](index=31&type=section&id=9.%20Warrants) - In connection with the Loan Agreement, AcelRx issued warrants to Oxford Finance LLC and its affiliates on May 30, 2019, exercisable for **176,679 shares** of common stock at **$2.83 per share**, expiring in May 2029[110](index=110&type=chunk)[112](index=112&type=chunk) - The fair value of these warrants was estimated at **$0.4 million** as of the issuance date, calculated using the Black-Scholes option-valuation model[111](index=111&type=chunk) [10. Stock-Based Compensation](index=31&type=section&id=10.%20Stock-Based%20Compensation) Stock-Based Compensation Expense (in thousands) | Item | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of goods sold | $68 | $119 | $197 | $280 | | Research and development | $242 | $769 | $699 | $1,578 | | Selling, general and administrative | $1,016 | $920 | $2,883 | $2,078 | | Total | $1,326 | $1,808 | $3,779 | $3,936 | [11. Stockholders' Equity](index=33&type=section&id=11.%20Stockholders'%20Equity) - On May 9, 2019, the company increased its ATM Agreement offering price by **$40.0 million**, selling **500,000 shares** for net proceeds of approximately **$1.2 million** during the nine months ended September 30, 2019[116](index=116&type=chunk) - As of September 30, 2019, approximately **$45.3 million** of common stock remained available for sale under the ATM Agreement[116](index=116&type=chunk) [12. Net Loss per Share of Common Stock](index=33&type=section&id=12.%20Net%20Loss%20per%20Share%20of%20Common%20Stock) Net Loss per Share and Common Stock Equivalents | Item | Sep 30, 2019 | Sep 30, 2018 | | :------------------------------------------ | :----------- | :----------- | | Net loss per share of common stock, basic and diluted | $(0.49) | $(0.64) | | Shares used in computing net loss per share (basic and diluted) | 79,053,256 | 54,292,206 | | Excluded common stock equivalents (antidilutive) | 13,712,081 | 12,003,600 | | Common stock warrants (antidilutive) | 176,679 | 176,730 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes AcelRx's financial condition and operations, covering DSUVIA/Zalviso commercialization, performance, revenue, expenses, liquidity, and capital needs for 2019 [About AcelRx Pharmaceuticals, Inc.](index=34&type=section&id=About%20AcelRx%20Pharmaceuticals,%20Inc.) - AcelRx is a specialty pharmaceutical company focused on developing and commercializing innovative therapies for acute pain in medically supervised settings, with key products DSUVIA (approved in US and EU) and Zalviso (approved in EU, under development in US)[120](index=120&type=chunk) - DSUVIA, approved by the FDA in November 2018, is for acute pain in certified medically supervised healthcare settings, administered sublingually via a single-dose applicator, and is subject to a REMS program[121](index=121&type=chunk)[122](index=122&type=chunk) - Zalviso, approved and marketed in the EU by Grünenthal, is a patient-controlled analgesia system for moderate-to-severe acute pain in hospitalized adults; its NDA resubmission in the US is currently being evaluated[124](index=124&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) [Financial Overview](index=35&type=section&id=Financial%20Overview) - AcelRx has incurred recurring net losses and negative cash flows since inception, with an accumulated deficit of **$383.7 million** as of September 30, 2019, and expects this trend to continue until DSUVIA gains significant market acceptance[130](index=130&type=chunk)[135](index=135&type=chunk) - The company launched DSUVIA commercially in the US in Q1 2019 and plans to increase personnel and capital expenditures for commercialization, including a high-volume automated packaging line for DSUVIA expected to decrease COGS in 2020[131](index=131&type=chunk) Net Loss and Cash/Investments (in millions) | Item | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | Sep 30, 2019 | Dec 31, 2018 | | :----------------------------------- | :------------------------------ | :----------------------------- | :----------- | :----------- | | Net Loss | $(12.7) | $(38.8) | N/A | N/A | | Cash, cash equivalents and short-term investments | N/A | N/A | $80.4 | $105.7 | [Critical Accounting Policies and Significant Judgments and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - No significant changes to critical accounting policies or estimates were made for the three and nine months ended September 30, 2019, except for the adoption of ASU No. 2016-02 (Leases) and updates to the 'Non-Cash Interest Income (Expense) on Liability Related to Sale of Future Royalties' policy[137](index=137&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) [Revenue](index=36&type=section&id=Revenue) Revenue Breakdown (in thousands) | Revenue Type | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net product sales (DSUVIA) | $116 | $0 | $218 | $0 | | Collaboration agreement | $492 | $177 | $1,596 | $802 | | Contract and other (DoD) | $0 | $200 | $0 | $736 | | Total Revenue | $608 | $377 | $1,814 | $1,538 | - Net product sales of DSUVIA commenced in Q1 2019, generating **$0.1 million** in Q3 2019 and **$0.2 million** for the nine months ended September 30, 2019[141](index=141&type=chunk) - Collaboration agreement revenue increased due to higher orders from Grünenthal, but future cash flow impact is expected to be minimal due to the Royalty Monetization with PDL[143](index=143&type=chunk) - Contract and other revenue from the DoD contract ended on February 28, 2019, resulting in no revenue from this source for the three and nine months ended September 30, 2019, compared to **$0.2 million** and **$0.7 million** in the prior year periods[145](index=145&type=chunk) [Cost of goods sold](index=37&type=section&id=Cost%20of%20goods%20sold) Cost of Goods Sold (in thousands) | Item | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :----------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of goods sold | $2,148 | $875 | $5,188 | $2,738 | | YoY Change (3M) | +145% | N/A | N/A | N/A | | YoY Change (9M) | N/A | N/A | +89% | N/A | - Direct costs from contract manufacturers for DSUVIA and Zalviso totaled **$1.4 million** (3M) and **$2.0 million** (9M) in 2019, while indirect costs were **$0.8 million** (3M) and **$3.2 million** (9M)[147](index=147&type=chunk)[149](index=149&type=chunk) - A **$0.9 million** inventory impairment reserve was recorded in Q3 2019 for DSUVIA due to potential expiration of initial development batches[147](index=147&type=chunk) - The company anticipates negative gross margins on Zalviso product delivered to Grünenthal for the foreseeable future due to predetermined transfer prices being less than direct manufacturing costs at current low volumes[146](index=146&type=chunk)[149](index=149&type=chunk) [Research and Development Expenses](index=39&type=section&id=Research%20and%20Development%20Expenses) Research and Development Expenses (in thousands) | Item | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | DSUVIA | $118 | $678 | $394 | $2,163 | | Zalviso | $148 | $65 | $487 | $567 | | Overhead | $792 | $2,899 | $2,717 | $7,703 | | Total R&D Expenses | $1,058 | $3,642 | $3,598 | $10,433 | | YoY Change (3M) | -71% | N/A | N/A | N/A | | YoY Change (9M) | N/A | N/A | -66% | N/A | - R&D expenses decreased by **$2.6 million** (**71%**) for the three months and **$6.8 million** (**66%**) for the nine months ended September 30, 2019, primarily due to shifting R&D personnel to commercialization efforts post-DSUVIA approval and substantial completion of DSUVIA and Zalviso development programs[151](index=151&type=chunk) [Selling, General and Administrative Expenses](index=39&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) Selling, General and Administrative Expenses (in thousands) | Item | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | SG&A Expenses | $10,936 | $5,188 | $32,241 | $13,117 | | YoY Change (3M) | +111% | N/A | N/A | N/A | | YoY Change (9M) | N/A | N/A | +146% | N/A | - SG&A expenses increased significantly by **$5.7 million** (3M) and **$19.1 million** (9M) in 2019, driven by increased personnel-related expenses and programs supporting the commercial launch of DSUVIA, including a **51-employee** increase in headcount[155](index=155&type=chunk) [Other Income (Expense)](index=41&type=section&id=Other%20Income%20(Expense)) Other Income (Expense) (in thousands) | Item | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :---------------------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest expense | $(828) | $(529) | $(1,704) | $(1,758) | | Interest income and other income (expense), net | $645 | $312 | $1,728 | $643 | | Non-cash interest income (expense) on liability related to sale of future royalties | $986 | $(2,913) | $375 | $(8,724) | | Total other income (expense) | $803 | $(3,130) | $399 | $(9,839) | | YoY Change (3M) | +126% | N/A | N/A | N/A | | YoY Change (9M) | N/A | N/A | +104% | N/A | - Interest expense increased in Q3 2019 due to a higher outstanding loan balance from the Oxford Loan Agreement, while interest income increased due to a larger average investment balance[156](index=156&type=chunk)[157](index=157&type=chunk) - Non-cash interest income on the royalty monetization liability increased significantly due to a material revision of estimates in Q2 2019, reducing the effective interest rate to **0%** prospectively and decreasing net loss by **$2.7 million** (3M) and **$5.4 million** (9M)[158](index=158&type=chunk)[159](index=159&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) - AcelRx had **$80.4 million** in cash, cash equivalents, and investments as of September 30, 2019, down from **$105.7 million** at December 31, 2018, primarily due to funding operations and DSUVIA commercialization[161](index=161&type=chunk) - Existing capital resources are anticipated to meet operational requirements through mid-Q4 2020, but additional capital will be needed for full commercialization of DSUVIA and Zalviso[161](index=161&type=chunk)[293](index=293&type=chunk) - The company has an ATM Agreement with Cantor Fitzgerald & Co., with approximately **$45.3 million** of common stock remaining to be sold as of September 30, 2019[162](index=162&type=chunk) Cash Flows Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(37,025) | $(20,085) | | Net cash used in investing activities | $(43,452) | $1,083 | | Net cash provided by financing activities | $14,451 | $23,666 | - Operating cash outflow increased to **$37.0 million** (9M 2019) from **$20.1 million** (9M 2018), driven by DSUVIA commercialization and changes in working capital, including a **$3.0 million** increase in inventories[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Investing activities used **$43.5 million** (9M 2019) primarily for purchases of investments (**$81.9M**) and property/equipment (**$3.2M**), partially offset by maturities of investments (**$41.7M**)[172](index=172&type=chunk) - Financing activities provided **$14.5 million** (9M 2019), mainly from **$24.8 million** net proceeds from the Oxford Loan Agreement, offset by debt repayments[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures were reported for the nine months ended September 30, 2019, compared to the 2018 Annual Report - No material changes to market risk disclosures were reported for the nine months ended September 30, 2019[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures as effective as of September 30, 2019, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of September 30, 2019[182](index=182&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[183](index=183&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) AcelRx is not currently involved in material legal proceedings but acknowledges potential future involvement that could adversely affect its business and financial condition - AcelRx is not currently involved in any material legal proceedings[186](index=186&type=chunk) - Future involvement in material legal proceedings is possible and could have a material adverse effect on the business[186](index=186&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) Outlines risks to AcelRx's business, financial condition, and operations, covering commercialization, clinical development, regulatory approval, financial needs, third-party reliance, operations, intellectual property, and common stock ownership [Risks Related to Commercialization of DSUVIA and Zalviso](index=48&type=section&id=Risks%20Related%20to%20Commercialization%20of%20DSUVIA%20and%20Zalviso) - Commercial success of DSUVIA is highly dependent on factors like physician/patient acceptance, effective marketing/sales, pricing, formulary placement, competition, REMS compliance, safety profile, and intellectual property protection[189](index=189&type=chunk)[191](index=191&type=chunk) - Failure to maintain or grow sales and marketing capabilities, or secure strategic partners for international commercialization (e.g., DZUVEO in Europe), could hinder product revenue generation[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) - Increased scrutiny and investigations into opioid manufacturers, including potential lawsuits, could adversely affect the business, reputation, and financial results, despite DSUVIA's use in medically supervised settings[205](index=205&type=chunk)[206](index=206&type=chunk) - Obtaining hospital formulary approvals for DSUVIA and Zalviso (if approved in US) is a time-consuming process, and failure to secure timely approvals or facing restrictions could limit commercial success[217](index=217&type=chunk) - Coverage and adequate reimbursement from government and private payers are crucial for profitability, and cost containment trends, generic competition, and evolving healthcare reforms could negatively impact sales and pricing[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) [Risks Related to Clinical Development and Regulatory Approval](index=60&type=section&id=Risks%20Related%20to%20Clinical%20Development%20and%20Regulatory%20Approval) - Evolving legislation and regulatory changes, particularly concerning opioids, could increase the difficulty and cost of commercializing products and affect pricing, as seen with the FDA's new benefit/risk framework for opioid analgesics[230](index=230&type=chunk) - The Affordable Care Act and other healthcare reform measures, including changes to Medicare and Medicaid, could negatively impact reimbursement for AcelRx's products and increase regulatory burdens[232](index=232&type=chunk)[235](index=235&type=chunk) - Delays or rejections in regulatory approval for Zalviso in the US are possible due to its drug/device combination nature, potential FDA disagreement with trial data, or requirements for additional studies (e.g., inadvertent dispensing rates)[244](index=244&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Post-marketing requirements for DSUVIA (e.g., pediatric study) and potential restrictions on Zalviso's label (e.g., limited to post-operative patients) could impact commercial opportunity and increase costs[245](index=245&type=chunk)[268](index=268&type=chunk) - DSUVIA requires a REMS program, and Zalviso will also require one if approved, which could significantly increase commercialization costs and restrict the potential market due to distribution and use limitations[279](index=279&type=chunk) [Risks Related to Our Financial Condition and Need for Additional Capital](index=72&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Need%20for%20Additional%20Capital) - AcelRx has incurred significant losses since inception, with an accumulated deficit of **$383.7 million** as of September 30, 2019, and expects to continue incurring losses, potentially never achieving profitability[280](index=280&type=chunk)[282](index=282&type=chunk) - The company is substantially dependent on Grünenthal for Zalviso's commercial success in Europe, and the Royalty Monetization limits AcelRx's share of royalties and milestones[285](index=285&type=chunk)[287](index=287&type=chunk) - Additional capital will be required for full commercialization of DSUVIA and Zalviso, and failure to raise sufficient funds on acceptable terms could force the company to scale back or discontinue programs[293](index=293&type=chunk)[296](index=296&type=chunk) - Selling additional equity securities may dilute stockholders, while incurring debt (like the Oxford Loan Agreement) imposes restrictive covenants and risks of default, potentially impacting operations and ability to pay dividends[298](index=298&type=chunk)[299](index=299&type=chunk)[302](index=302&type=chunk) [Risks Related to Our Reliance on Third Parties](index=78&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) - Reliance on third-party manufacturers for DSUVIA and Zalviso commercial and clinical supplies poses risks, including inability to meet specifications, capacity issues, quality problems, and compliance failures, which could lead to stock-outs or regulatory action[305](index=305&type=chunk)[306](index=306&type=chunk) - AcelRx relies on a single supplier for the active pharmaceutical ingredient (API) of DSUVIA and Zalviso; any disruption or regulatory non-approval of process changes could cause significant delays[308](index=308&type=chunk)[309](index=309&type=chunk) - Manufacturing sufentanil sublingual tablets requires specialized equipment and expertise, and problems with existing facilities or equipment could delay commercialization and increase costs[311](index=311&type=chunk) - Reliance on Contract Research Organizations (CROs) for clinical trials means limited control over their performance, and non-compliance with cGCPs or data quality issues could delay regulatory approval[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) [Risks Related to Our Business Operations and Industry](index=82&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations%20and%20Industry) - Compliance with DEA regulations for Schedule II controlled substances like sufentanil, including quota systems, can incur significant costs and any delays or reductions in quotas could hinder commercial sales or clinical development[323](index=323&type=chunk)[324](index=324&type=chunk) - Relationships with healthcare professionals, partners, and payers are subject to anti-kickback, fraud and abuse, and other healthcare laws, with potential for substantial fines, business interruptions, and reputational harm if non-compliant[325](index=325&type=chunk)[328](index=328&type=chunk) - Maintaining CE Mark approval and ISO 13485 certification for the Zalviso device is critical for European sales, and failure to comply with applicable European laws could prevent commercialization in the EU/EEA[329](index=329&type=chunk) - Disruptions to information technology systems or data security incidents could lead to financial, legal, regulatory, business, and reputational harm, including loss of sensitive information or delays in development programs[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - The company's future success depends on retaining key executives and attracting/motivating qualified personnel, with intense competition in the industry posing a risk to recruitment and retention[338](index=338&type=chunk) - Commercial sales of DSUVIA and Zalviso expose the company to product liability claims, which could result in substantial liability, costs, and reputational damage, potentially exceeding insurance coverage[339](index=339&type=chunk)[340](index=340&type=chunk) [Risks Related to Our Intellectual Property](index=90&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) - AcelRx relies on **74 issued patents** worldwide covering sufentanil sublingual tablets and delivery devices, with coverage expected until at least **2027-2031**, but faces risks from third-party challenges and the uncertainty of pending applications[345](index=345&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) - Patent infringement litigation is expensive and time-consuming, potentially delaying market entry and interfering with business, and an adverse ruling could prevent use of patented technology or require substantial royalty payments[351](index=351&type=chunk)[354](index=354&type=chunk) - Protecting proprietary rights is difficult and costly, with uncertainties in patent laws and enforcement, especially in foreign countries, which could allow competitors to use AcelRx's technologies[357](index=357&type=chunk)[360](index=360&type=chunk)[365](index=365&type=chunk) - Failure to adequately prevent disclosure of trade secrets and other proprietary information could enable competitors to develop competing products[362](index=362&type=chunk) [Risks Related to Ownership of Our Common Stock](index=93&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - The market price of AcelRx's common stock is highly volatile, influenced by factors such as commercialization success, funding, regulatory decisions, safety issues, competition, and broader market fluctuations[368](index=368&type=chunk)[369](index=369&type=chunk)[371](index=371&type=chunk) - Future sales and issuances of common stock, including under the ATM Agreement and equity incentive plans, could result in significant dilution for existing stockholders and depress the stock price[373](index=373&type=chunk)[375](index=375&type=chunk) - Securities-related class action litigation is a risk following stock price declines, potentially diverting resources and management attention[376](index=376&type=chunk)[377](index=377&type=chunk) - The company's ability to use net operating loss carryforwards and other tax attributes may be limited due to past and potential future ownership changes under Section 382 of the Internal Revenue Code[378](index=378&type=chunk) - AcelRx does not intend to pay dividends on its common stock, and is prohibited from doing so under the Loan Agreement, meaning returns are limited to stock value[379](index=379&type=chunk) - Provisions in the company's charter documents and Delaware law could make it more difficult or costly for a third party to acquire the company, potentially frustrating attempts to replace management[380](index=380&type=chunk)[382](index=382&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=98&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds were reported[383](index=383&type=chunk) [Item 3. Defaults Upon Senior Securities](index=98&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[384](index=384&type=chunk) [Item 4. Mine Safety Disclosures](index=98&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable[385](index=385&type=chunk) [Item 5. Other Information](index=98&type=section&id=Item%205.%20Other%20Information) No other information was reported - No other information was reported[386](index=386&type=chunk) [Item 6. Exhibits](index=98&type=section&id=Item%206.%20Exhibits) Lists exhibits filed as part of the Form 10-Q, including organizational documents, agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, agreements with SpecGX, LLC, and certifications from principal executive and financial officers[387](index=387&type=chunk)

AcelRx Pharmaceuticals, Inc. (ACRX) Q 2, 2019 Earnings Conference Call August 5, 2019 5:00 PM ET CompanyParticipants Vince Angotti - Chief Executive Officer Raffi Asadorian - Chief Financial Officer Pam Palmer - Chief Medical Officer and Co-Founder Jacob Hutchins - Anesthesiologist and Associate Professor, Department of Anesthesiology Conference CallParticipants Brandon Folkes - Cantor Fitzgerald Randall Stanicky - RBC Capital Markets Ed Arce - H.C. Wainwright Chris Howerton - Jefferies Andrew D'Silva - B R ...

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 June 30, 2019 or ☐ 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 ...

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, 2019 or ☐ 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 (Exact name of registrant as specified in its charter) Delaware 41-2193603 (State or other jurisdiction of incorporation or organiz ...

AcelRx Pharmaceuticals, Inc. (ACRX) Q1 2019 Earnings Conference Call May 8, 2019 4:30 PM ET Company Participants Raffi Asadorian - Chief Financial Officer Vince Angotti - Chief Executive Officer Pam Palmer - Chief Medical Officer Conference Call Participants Dan Busby - RBC Capital Markets Brandon Folkes - Cantor Fitzgerald Vamil Divan - Credit Suisse Michael Higgins - Ladenburg Thalman Andrew D'Silva - B Riley FBR Aryeh Gold - Oppenheimer Operator Welcome to the AcelRx First Quarter 2019 Conference Call. T ...

| --- | --- | |---------------------------------------|--------------------| | | | | | | | | | | | | | Oppenheimer 29 th Annual Healthcare | | | Conference | | | March 20, 2019 | | | | | | Investor materials | MED-US-DSU-1900037 | Cautionary statements 2 This presentation contains forward-looking statements, including, but not limited to, statements related to the safety, efficacy and therapeutic value of DSUVIA™ (sufentanil sublingual tablet, 30 mcg) and ZALVISO® (the sufentanil sublingual tablet system); ...

Call Start: 16:30 January 1, 0000 5:19 PM ET AcelRx Pharmaceuticals, Inc. (ACRX) Q4 2018 Earnings Conference Call March 7, 2019, 4:30 pm ET Company Participants Raffi Asadorian - CFO Vince Angotti - CEO Pam Palmer - CMO Conference Call Participants Ashley Ryu - RBC Brandon Folkes - Cantor Fitzgerald Vamil Divan - Credit Suisse Ed Arce - H.C. Wainwright & Company Roger Song - Jefferies Michael Higgins - Ladenburg Thalmann David Buck - B.Riley FBR Leland Gershell - Oppenheimer Operator Welcome to the AcelRx F ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or ☐ TRANSITION REPORT 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 inc ...