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AcelRx Pharma (ACRX) Strengthens Cash Position for Regulatory with Zalviso Monetization - RBC Capital

September 21, 2015 11:14 AM EDT
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RBC Capital is postive on AxelRx Pharma (Nasdaq: ACRX) after hte company announced the monetization of the expected royalty stream from the sales of Zalviso (sufentanil sublingual tablet system) in the European Union by its commercial partner Grunenthal GmbH.

Analyst Randall Stanicky noted:

This morning, ACRX announced the sale of the majority of its royalty stream and milestones from Grunenthal for Zalviso in the EU to PDL BioPharma for $65 million (or ~$1.47 per share on current shares). We had previously modeled ex-US Zalviso as having peak sales of $185 million or about $2 in NPV. Effectively, the deal strengthens the balance sheet in the near-term and pulls forward a significant portion of value upfront. As per the agreement, PDL will receive 75% of the EU royalties from Grunenthal and 80% of the first four commercial milestones which will be capped at an agreed-upon limit. ACRX will receive the remaining royalties and milestones, in addition to the remaining commercial milestones and they retain their right to receive all development milestones which includes a potential $15 million for the approval of the Zalviso MAA.

The larger opportunity for ACRX remains its US application for Zalviso which we have did not receive an update on. Recall, the FDA had reiterated its request for another clinical trial in the general advice meeting that management had requested. Management noted that the sale will leave them with a year-end cash balance over $100 million which they believe should carry them through the completed regulatory submissions for ARX-04 in the US and EU, and allow for "limited additional work on Zalviso, if needed, in preparation for re-submitting an NDA". Management will be hosting an analyst day on Oct 2nd.



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