Q1 2020 Earnings Call

Welcome to the acceleration first quarter Twentytwenty conference call.

Operator: Welcome to the AcelRx first quarter 2020 conference call. This call is being webcast live on the Events page of the Investors section of AcelRx's website at acelrx.com. This call is the property of AcelRx, and any recording, reproduction, or transmission of this call without the express written consent of AcelRx is strictly prohibited. As a reminder, this call is being recorded. If you require operator assistance, please press star then zero. You may listen to a webcast replay of this call by going to the investor section of AcelRx's website. I would now like to turn the conference over to Raffi Asadorian, AcelRx Chief Financial Officer.

This call is being webcast live on the a bench page Oh, the Investor section public Stellarex is website that accelerates dot com.

This call is a property up accelerate any recording reproduction or transmission of this call without the express written consent up Acceleron is strictly prohibited as a reminder, today's call is being recorded.

If you require operator assistance. Please press Star then zero you.

We listen to a webcast replay of this call like go into the Investor section of accelerates as website.

I'd now like to turn the conference over to Raffi, Asadorian accelerates Chief Financial Officer.

Thank you for joining us this afternoon earlier today, we announced our previously previewed first quarter 2020 financial results in a press release.

Raffi Mark Asadorian: Thank you for joining us this afternoon. Earlier today, we announced our previously previewed first quarter 2020 financial results in a press release. This press release and the slide presentation accompanying this call are available in the Investors section of our website. With me today are Vincent Angotti, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer. Also on the call with us today is Dr. Christian Twettenstrand, who is the Chairman of Surgery and Director of Trauma at Wilson Medical Center, a United Health Services hospital, who will share his experience with Vesuvia.

This press release and a slide presentation accompanying this call are available in the Investor section of our web site.

With me today are been 10, Gotti, our Chief Executive Officer, and Dr., Pam Palmer, our Chief Medical Officer.

Also on the call with US today, its Dr. Christian twin strand.

It was the chairman of surgery and director of trouble at Wilson Medical Center, and United Health Services Hospital.

I will share his experience with Syria.

Before we begin I'll remind listeners that during this call we will make forward looking statements within the meaning of federal securities laws.

Raffi Mark Asadorian: Before we begin, I'll remind listeners that during this call, we will make forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties regarding the operations and future results of AcelRx. Please refer to our press releases. In addition to the company's periodic, current, and annual reports filed with the Securities and Exchange Commission for a discussion of the risk associated with such forward-looking statements. I'll now turn the call over to Vince.

These forward looking statements involve risks and uncertainties regarding the operations and future results of accelerates.

Please refer to our press releases.

In addition to the company's periodic current and annual reports filed with the Securities Exchange Commission for a discussion of the risks associated with such forward looking statements I'll now turn the call over to that.

Thank you, Rob and good afternoon, everyone I sincerely hope you and your families are safe and well during these challenging times. We appreciate you joining our call today.

Vincent J. Angotti: Thank you, Raffi, and good afternoon everyone. I sincerely hope you and your families are safe and well during these challenging times.

Vincent J. Angotti: We appreciate you joining our call today. I'd like to begin today's call by briefly addressing our planned acquisition of Tetraphine. We are aware that Tetraphase recently disclosed that it received and is reviewing a competing acquisition proposal from La Jolla Pharmaceuticals. It's important to note that at this time, the Tetraphase board continues to recommend that its shareholders support the acquisition by AcelRx. We commented a bit further on the La Jolla proposal in our earnings press release. Now, should TechaPhase notify us that the TechaPhase board intends to consider making a change in the recommendation in favor of our transaction? which, as of today's closing stock price, ties the upfront consideration at approximately $23.6 million. AcelRx would have a specified period of time to respond before Tetraphase could take such action.

I like to begin today's call by briefly addressing or planned acquisition tetraphase.

We're aware of the Tetraphase recently disclosed that they received in a reviewing the competing acquisition proposal from loyal pharmaceutical company.

It's important to note that at this time to Tetraphase Board continues to recommend that their shareholder support the acquisition bike Celebrex.

We commented a bit further on the lawyer proposal and our earnings press release.

No I shouldn't tetraphase notified us that the Tetraphase board intends to consider making a change in their recommendation favorite bar transaction, which as of todays closing stock price always the upfront consideration at approximately $23.6 million.

Accelerates would have a specified period of time to respond before tetraphase could take such action.

Vincent J. Angotti: Furthermore, AcelRx and TechaPhase remain fully committed to the co-promotion agreement, under which both companies' commercial teams have been fully trained on each other's products, and promotion to, and education of, our respective customers has begun. It's important to remember that regardless of whether the Tetraface board ultimately chooses to accept an offer other than the AcelRx transaction. The co-promotion agreement between our two companies would remain in place, safeguarded by significant financial obligations.

Further acceleration tetraphase remain fully committed to the co promotion agreement under which both companies commercial teams have been fully trained on each other's products and promotion to an education no our respective customers has begun.

It's important remember that regardless of whether the touch your face board ultimately chooses to accept an offer other than the accelerates transaction.

Copromotion agreement between our two companies would remain in place safeguarded by significant significant financial obligations.

Well provide additional updates to our shareholders regarding tetraphase at the appropriate time now turning to our business. We recently achieved one of our key objectives, which was the milestone C approval with the department of defense.

Vincent J. Angotti: We'll provide additional updates to our shareholders regarding Touch-A-Face at the appropriate time. Now, turning to our business, we recently achieved one of our key objectives, which was Milestone C approval with the Department of Defense. I'll provide details on the significance of this.

I'll provide details on the significance of this also update you on the impacts of coated on our commercial team and the commercial team with Tetraphase on of the Copromotion agreement.

Vincent J. Angotti: I'll also update you on the impacts of COVID on our commercial team and the commercial team with Tetraphase under the co-promotion agreement. Dr. Palmer will preview some early findings on Dysuvia's real-world experience. And then you'll hear from Dr. Christian Twentenstrand, a prominent surgeon and chair of surgery and director of trauma at a New York hospital where he's been collecting data on distributed treated patients.

Dr. Palmer preview some early findings on distribute real world experience and then you'll hear from Dr. Christian pointing stratum, a prominent surgeon and share of surgery and director of trauma or the New York Hospital, where he's been collecting data on distributor treated patients.

Well if you will then provide an update on our financial results and the key metrics of which were Preannounced a couple of weeks ago. So let's begin.

Vincent J. Angotti: Raffi will then provide an update on our financial results and the key metrics, which were pre-announced a couple of weeks ago, so let's begin. We're excited to announce that at the end of April, Dysuvia achieved Milestone C approval, which validates Dysuvia's key role in modernizing the treatment of acute pain within the military. What this means in practice is that the suite is now approved for use in all U.S. Army sets, kits, and outfits, or SKOs.

We're excited to announce at the end of April that distribute cheese milestones CE approval, which validates the studios key role and modernizing the treatment of acute pain within the military.

What this means that practice is that the serious now approved for use in all of the U.S. army sets kits and outfits or <unk>.

Vincent J. Angotti: The approval for all SKOs with the high case in our internal projections, so this is great news and more than we had expected. Working with the military project team on getting a better understanding of the timing and the size of the initial orders for DeSuvio. We're currently forecasting some preliminary orders in the Q2-Q3 time frame but believe larger orders will begin in the Q4 time frame when the federal government's new fiscal year begins. At this point, we expect that initial stocking orders for the U.S. Army FKOs alone will approximate $30 million over the next three years based on the timing of troop deployment schedules.

The approval for all Escos was the high Chase and our internal projections. So this is great news from more than we had an expected.

Working with the military project team, we're getting a better understanding of the timing and the size of the initial orders for distributor.

We're currently forecasting some preliminary orders in the Q2 Q3 timeframe, but believe larger orders will begin in the Q4 timeframe when the federal governments new fiscal year begins.

At this point, we expect that initial stocking orders for the U.S. Army Escos alone will approximate $30 million over the next three years based on the timing of troop deployment schedules.

Needless to say, we're proud to pursue this approval, which is the result of our long term collaboration with department of defense.

Vincent J. Angotti: Needless to say, we're proud to receive this approval, which is the result of our long-term collaboration with the Department of Health. This approval gives us a very strong foundation on which to build. We expect it will open doors to other branches of the military and will serve as a validation signal to additional areas of the federal and state government and agencies, as well as further adoption by U.S. military treatment facilities. Specifically, we expect the next step with the Department of Defense will be to see this included on the Joint Deployment Formulary, which we believe will occur later this year. We'll provide more information as it becomes available, but suffice to say, we're thrilled with this achievement. As previously communicated in April, in response to the COVID-19 pandemic, hospitals and ambulatory surgical centers have restricted in-person meetings with pharmaceutical company personnel.

Mr approval gives us very strong foundation on which to build.

And we expect it will open doors the older branches of the military will serve as a validation signal to additional areas of the federal and state governments and agencies as well as further adoption, but U.S. military treatment facilities.

Specifically, we expect the next step with the Department defense will be the strongest inclusion on the joint deployment formulary, which we believe will occur later this year.

Well provide more information as it becomes available, but suffice to say, we're thrilled with this achievement.

As previously communicated in April.

Response to the Cobot 19 pandemic hospitals in ambulatory surgical centers have restricted in person meetings with pharmaceutical company personnel.

Accordingly year end 2020, rems sort of five facilities in for only approvals goals would be reevaluated. Once cobot 19 restrictions are lifted and there's greater visibility into health care facility access.

Vincent J. Angotti: Accordingly, year-end 2020 REMS-certified facilities and formal approvals goals will be reevaluated once COVID-19 restrictions are lifted and there's greater visibility in the Health Care Facility Act. To give it a bit more color, prior to the impacts of the COVID-19 pandemic, we were on pace to exceed our previous year approvals and REM-certified facilities goals for 2020. As of April 30, following the initial impact of COVID-19, our number of formal approvals in REM-certified facilities was 223 and 221 respectively. While states are beginning to open up in-person access, we have also initiated virtual meetings. We believe that achievement of our original year-end 2020 goals for access metrics will be delayed by approximately one quarter. However, we'll provide a better estimate and new guidance once more visibility is available.

To give it a bit more color prior to the impacts of the cobot 19 pandemic, we're on pace to exceed or from the your approvals and rems sort of five facility. These goals for 2020.

As of April 30, following the initial impact of Cobot 19, or number formerly approvals around sort of five facilities was to 23 and to 21, respectively.

Well states are beginning to open up in person access we have also initiated virtual meetings.

We believe the achievement of our original yearend 2020 goals for access metrics will be delayed by approximately one quarter.

However will provide a better estimate and new guidance, what's more visibility is available.

Vincent J. Angotti: As a reminder, the combined AcelRx and Tetraphase teams are currently cross-trained, and promotion efforts under our co-promotion agreement are underway. As we've said before, the acceptance of SUVIA onto formularies and eventual adoption of the protocols is a process. But based on the real-world results from healthcare practitioners using Dysuvia, we remain confident that this review will become a key treatment for the management of acute pain in medically supervised settings. Changing a standard of care takes time, but we believe healthcare practitioners and professionals are beginning to witness this transformation of the acute pain management space. Dr. Palmer will now elaborate more on how this UV is being used in real-world settings.

As a reminder of the combined accelerates and Tetraphase teams are currently cross trained and promotional efforts under our Copromotion agreement are underway.

As we said before the acceptance of the studio on the Formula is the vessel adoption of the protocols is process based on the real world results from healthcare practitioners using distributors, we remain confident.

You will become a key treatment for the management of acute pain medically supervised settings.

Changing standard of care takes time, but we believe health care product practitioners are professionals are beginning to witness distributors transformation over the acute pain management space.

Dr., Paul when I'll elaborate more on how this really is being used in real world settings.

Pamela Pierce Palmer: Thank you, Vince. We continue to hear feedback about how healthcare practitioners are using Dysuvia and its benefits for patients, clinicians, and healthcare settings. Physicians are now gathering and analyzing real-world data supporting the advantages of Dysuvia, and they report that the most important aspect of Dysuvia continues to be its unique pharmacokinetic profile. This profile provides a rapid onset of action, extended analgesic duration, and lack of cognitive impairment, which clinicians attribute to its dampened peak plasma concentrations and high therapeutic index. Therapeutic index is a measure of the safety of a drug, and it's conducted in an animal model.

Thank you Ben.

We continue to hear feedback about how healthcare practitioners are using to Cynthia its benefits to patients clinician and health care setting.

Positions are now gathering and analyzing real world data supporting the advantages of to Sylvia.

And the reports the most important aspect of just to be continues to be it's unique pharmacokinetic profile.

This profile provides a rapid onset of action extended analgesic duration and lack of cognitive impairment, which clinicians attribute to its dampened Pete plasma concentrations and high therapeutic index therapeutic index is a measure of safety. If the drug is conducted in animal models.

Pamela Pierce Palmer: Practically speaking, based on the data gathered by two hospitals, some important findings have been observed in dysuvia-treated patients. First, a substantial decrease in the time the patient is required to be in the post-anesthesia care unit, or PACU, and second, a dramatic decrease in IV opioid requirements in the package. We expect the studies to be published in full in the coming months.

Practically speaking based on the data gathered by two hospitals. Some important findings have been observed in just to be treated patients first a substantial decrease in the time to patients required to be in the post in teach you care unit or pack you.

And second a dramatic decrease in Ivy opioid requirements and the package.

We expect to studies to be published in full in the coming funds.

Pamela Pierce Palmer: This is truly informative data showcasing Dysuvia in the perioperative setting. Once these critical findings are published, they can be used to educate physicians, hospital administrators, directors of pharmacy, and other stakeholders. On previous calls, a plastic surgeon, an anesthesiologist, and a director of pharmacy have discussed their D'Souza experience. We thought sharing the perspective of a general surgeon who has substantial experience with Dysuvia and will be the lead author in one of these soon-to-be-published studies would be useful to the investment community. I am very pleased today to introduce to you Dr. Christian Twettenstrand, a general surgeon who specializes in bariatric, colorectal, and trauma surgery, as well as surgical critical care.

This is truly informative data showcasing just do the Harry operating setting.

Once these critical findings are published they can be used to educate physicians hospital administrators directors of pharmacy and other stakeholders.

On previous calls a plastic surgeons and anesthesiologists and a director pharmacy have discussed there to see the experience we thought sharing the perspective of the general surgeon, who had substantial experience with this subia and will be the lead author in one of these soon to be published studies would be useful.

So to the investment community.

I'm very pleased today to introduce to Dr. Christian Tightens ran a general searching who specializes in very after colorectal and trauma surgery as well as surgical critical care.

Pamela Pierce Palmer: He provides patient care at Wilson Medical Center, a United Health Services hospital in New York, where he is the Chairman of Surgery and Director of Trauma. Dr. Twentyn Strand began administering Desuviat to his surgical patient population in February and more recently has expanded his use of Desuviat to his trauma patients, most notably those who are elderly. Before Dr. Twettenstrand discusses his observations with using Dysuvia in his surgical and trauma patients, I will cover some safety information about Dysuvia. The following information is intended for investors, not healthcare professionals, or patients. D'Souza is a Schedule II controlled substance that may only be dispensed to adult patients in a certified medically supervised healthcare setting for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate. Risks include life-threatening respiratory depression, addiction, abuse, misuse, cytochrome P450-384 interaction, and risk from associated use with benzodiazepines or other central nervous system depress The most commonly reported adverse reactions are nausea, headache, vomiting, dizziness, and hypotension.

He provides patient care at Wilson Medical Center, United Health Services Hospital in New York well. He is the chairman of surgery and director of trauma.

Dr. Trenton Strand began to midstream to still yet to be surgical patient population in February and more recently has expanded its use it just to the two is trauma patients most notably those who are elderly.

Before Dr. Twitting strand disgusted his observations with using to studio in a surgical in trauma patients.

I will cover some safety information about to see via.

The following information is intended for investors not health care professionals or patients.

She is a scheduled to controlled substance.

Only be dispensed to adult patients in a certified medically supervised health care setting for the management of acute pain severe enough to require an opioid analgesics and for which alternative treatments are inadequate.

Risks include life, threatening respiratory depression addiction abuse and misuse cytochrome P for 53, four interaction and risk from associate use of bend today to teams or other central nervous system depressing.

The most commonly reported adverse reactions or nausea, headache, vomiting, dizziness and hypertension.

Pamela Pierce Palmer: Insufficient data are available on the use of desuvi in patients with severe liver or kidney impairment. Therefore, desuvia should be used with caution in such patients due to the importance of these organs and the metabolism and excretion of sufentanil. AcelRx ensures proper use of Dissuvia via physician education and the Dissuvia Risk Evaluation Mitigation Strategies (or REMS) program. Dissuvia is only available to facilities that are part of the Dissuvia REMS program. Facilities that administer Dysuvia must be able to manage acute opioid overdose, train relevant staff on Dysuvia, and implement policies and procedures to ensure the appropriate administration of Dysuvia. Full safety information, including the black box warning for Dysuvia, can be found at www.dysuvia.com. Now I would like to hand the call over to Dr. Treutenstrand to share his patients' and hospitals' experience with Dysuvia in managing their acute pain.

Insufficient data are available on these are just to be in patients with severe liberal or can the impairment.

Just to be should be used with caution in such patients due to the importance of these organ organs and the metabolism and excretion of suit that now.

Accelerates ensures proper usage as to the physician education and they just do via risk evaluation mitigation strategies or friends program. Just see these only build the facilities that are part of the to see the Rems program.

Facilities that administered just to be it must be able to manage acute opioid overdose train relevant staff on to Sylvia and implement policies and procedures to ensure the appropriate administration of just yet.

For safety information the black box warning for to see they can be found at just give you dot com.

Now I would like to hand, the call over to Dr. threatens DRAM to share his patients and hospitals experience with the studio in managing their acute pain.

Christian Twettenstrand: Thank you, Dr. Palmer. Hello, all.

Thank you Dr. farmer, Oh, I'm Dr. Christian <unk>.

Christian Twettenstrand: I'm Dr. Christian D. Twettenstrand, and I'm excited to tell you about our experience with the Suvi at our hospital. Of note, I'm not being compensated for my time to speak with you today, but I have been compensated for attending an advisory board meeting with AcelRx. I was initially interested in trialing Dysubia in my surgical patients after learning of the pharmacokinetics of the drug. I often operate on obese patients, elderly patients, and patients with multiple comorbidities, all of whom are at higher risk for side effects and complications postoperatively. Well, we all utilize multi-modal analgesia regimens to enhance our patients' pain relief and outcomes.

And I'm excited to tell you about our experience with this.

Of note I'm not being compensated for my time to speak with you. Today. However, previously I have been compensated for attending and advisory Board meeting with the Celebrex.

I was initially interested and trialing distributing my surgical patients after learning the pharmacokinetics of the drug.

Also in operate on obese patients elderly patients in patients with multiple co morbidities.

All of whom are at higher risk for side effects of complications post operatively.

Well, we all utilize multi modal analgesia regiments and answer patients pain relief and outcomes.

Christian Twettenstrand: We know that after major surgery, this regimen is going to include opioids. To optimize opioid analgesia for these at-risk patients, I was especially interested in Dysuvia for its... Low and Steady Plasma Concentration and Extended Duration of Action. When we use IV opioids, especially fentanyl, we are finding that we have to continually re-dose the patient in the PACU due to the short duration of action. The rapid highs and lows of the plasma concentrations following each IV fentanyl injection are not ideal for these patients as they can quickly become confused and over-sedated, and then the drug levels rapidly fall off, and then we have breakthrough. Also important in my initial decision to utilize dysuvia in these higher-risk patients was the AcelRx clinical trial data, which showed no cognitive impairment using the six-item screener, a validated research tool, and the fact that dysuvia has no active metabolites.

After major surgery. This regimen is going to include opioids.

To optimize the opioid analgesia for these at risk patients I was especially interested in December.

For its.

Low and steady plasma concentration that extended duration of action.

I will use.

Especially if that's you know we're finding that we have to continually re dose the patient in the past due to the short duration of action.

The rapid highs and lows of the plasma concentrations following each I'd be that's it all injection is it not ideal for these patients that they can quickly become confused overstated and then the drug levels rapidly fall off and then we have breakthrough pain.

Also important my initial decision to utilize.

These higher risk patients once you accelerate clinical trial data, which showed no cognitive impairment using.

Six items screener, a validated research tool.

The fact that decision has no active metabolite very important renal impairment common after surgery elderly.

Christian Twettenstrand: Renal impairment, quite common after surgery in elderly patients with comorbidities, can significantly increase the level of active metabolites in the blood with opioids such as morphine or Dilaudid. These metabolites can quickly build up to levels that can cause central nervous system effects. As mentioned, since February, I have dosed over 100 patients with Dysuvia. For my surgical patients, I dose a single Dysuvia preoperatively, approximately 20 minutes prior to bringing them back to the operating room. We initially focused our use of Dysuvia in outpatient surgeries since it's critically important to maintain clear-headedness in these patients so we can facilitate a rapid discharge to home. Patients with post-op confusion or side effects such as nausea and vomiting can significantly delay time to discharge and can seriously impact our surgical patient flow. Most notably, the elderly can have severe postoperative delirium with many medications utilized in a perioperative setting, including opiates. The first day I dosed Suvi at my hospital, I trialed it in four patients undergoing abdominal surgery. These cases typically take an hour or so, depending on their complexity.

Patients with co morbidities and significantly increased the level acted like tablets.

The blood with opioid such as morphine.

A lot it.

Metabolites can quickly build up to levels that can cause central nervous system effects.

As mentioned since February I have those to over 100 patients would just sue for my surgical patients those a single just to your pre operatively approximately 20 minutes prior.

Sure, bringing them back to the operating.

We have initially focused.

I assume you an outpatient surgeries since is critically important to maintain clear headedness in these patients. So we can facilitate a rapid discharged to home.

Patients with most of confusion or side effects, such as nausea, and vomiting can significantly delay time to discharge.

And.

Seriously impact our surgical patients.

Most notably the elderly can have.

Severe post operative delirium with many medications utilized in the Perry operator, setting including opioids.

The first day dose in my hospital I trial in four patients undergoing abdominal surgery.

These cases typically take an hour so depending on their complexity.

Christian Twettenstrand: The nurses in the PACU, as well as the anesthesiologists, were hesitant to believe that a single dose of dasuvia would be all that the patient would need for opioid analgesia. To say the results have been quite shocking to some is not an overstatement. Minimally, to no other IV opioids are required during the operative case. Normally, we would have been delivering multiple doses of fentanyl during and immediately after the case. In the PACU patients that are waking up... alert, oriented, and comfortable.

The nurses in the pack you as well as anesthesiologists were hesitant to believe that a single dose of the suit.

Would be all that the patient would need for opioid analgesics to say the results have been quite shocking to some it's not an over state.

No no other.

Hi required during the operative case.

Normally would have been delivering multiple doses of fentanyl during and immediately after the case in APAC you patients are waking up.

Alert.

Oriented and comfortable owning a few patients have required second dose so just to get even after likely surgeries. So the analgesic.

Christian Twettenstrand: Only a few patients have required a second dose of Dysubia, even after a lengthy surgery. Thus, the analgesic lasts for an extended period of time, as you would expect from a review of the pharmacon. Our overall use of opioids has decreased in these patients and has freed up the nurses in the PACU to focus more on the clinical care of the patient and moving them towards discharge instead of having to administer more IV opioids, which we find further extends their stay. We have been collecting time to discharge data on all our Dysuvia patients, and there is a dramatic reduction in the time needed for the patients to be ready for discharge compared to our historical controls. We have not seen respiratory depression, and we've seen very minimal nausea and no vomiting. It has really been a game changer for us.

Last an extended period of time as you would expect from review of the pharmacokinetics.

Our overall use of opioids has decreased in these patients has freed up the nurses and the pack you to focus more on clinical care, the patient and moving them towards discharge instead of having to administer more ivy opioids.

What we find further extends their stake.

We had been collecting time to discharge data.

On all our just to get patients and there is a dramatic reduction and the time needed for the patients to be ready for discharge compared to our Hurst historical controls.

We have not seen respiratory depression.

And we have seen very minimal nausea and no.

Has really been a game changer for us.

Christian Twettenstrand: We are currently in the process of fully analyzing the data for publication. I believe that other surgeons will be quite interested in learning about a new way to treat acute moderate to severe pain in the perioperative setting while potentially minimizing side effects, reducing overall opioid dosing, and decreasing discharge time. My second area of interest for DeSuvia was its use in the elderly patient. For years, I've observed the elderly with multiple comorbidities can decline quite rapidly after an acute traumatic event. These patients are initially admitted to the emergency department, and many times we see them in the winter after slips on the sidewalk with a myriad of fractures, hip, femur, arm fractures, and other types of injuries. In some cases, these patients are never discharged back home and are relegated to a skilled nursing facility. Treatment of severe pain can often require repeated doses of opioids, and as mentioned before, most commonly used opioids have active metabolites that can build up over time, especially when renal function is diminished, which is a common finding in the elderly.

Currently in the process a fully analyzing the data for publication as I believe that other Sir has been quite interested in learning about a new way to treat acute moderate to severe pain.

And the pace in the pre operative.

Setting well potentially minimizing side effects, reducing overall opioid dosing and decreasing just church time.

My second area of interest, we're just to be it was.

Well they use in the elderly patients for years I have observed the elderly with multiple corp, morbidities and declined quite rapidly after acute dramatic.

That.

These spaces are initially admitted typically city emergency department and many times, we see them.

In the winter after.

Slips honest sidewalk with a myriad of it fractures hip femur fractures and other types of injuries.

In some cases these spaces I never discharge back home and a relegated to skilled nursing facility treatment of severe pain can often require repeated doses opioids.

And as mentioned before most commonly use opioids have active metabolite second build up over time, especially when renal function has diminished diminished which is a common funding in the elderly.

Christian Twettenstrand: This results in mental clouding, confusion, and delirium, which can impair mobility, often leading to extended rehabilitation stays. I felt that if we could utilize Dysubia early on in the treatment of these patients, we could avoid this downward spiral. My first night using Dysuvia in the emergency department of a hospital was an eye-opener for me. I distinctly remember my first two patients. One was a 93-year-old gentleman who had broken his hip and had been dosed with Desuvi. After I went back to check on him, he was comfortable; he was awake, reading the newspaper, and doing the crossword puzzle. That is not something you see every day.

This results in mental clouding confusion, delirium, which could impair mobility, often leading to extended rehabilitation stays.

Well said, if we could utilize <unk> early on the treatment of these patients.

We could avoid this downward spiral.

First not using just sue <unk> emergency Department of a hospital wasn't eye opener for me.

Distinctly remember the first two patients.

One was a 93 year old gentleman, who had broken as hip and had been dose, but just to yet.

After I went back to check on him he was comfortable with awake reading the newspaper and doing the crossword puzzle.

That is not something you see every day second patient elderly woman she to had fallen and broker hip.

Christian Twettenstrand: The second patient, an elderly woman, had fallen and broken her hip, and she was initially dosed with IV Dilaudid, which is a common treatment, and the patient was quite confused after the dose and disoriented, and her family was quite concerned. I let the Dilaudid wear off for a few hours, and then I dosed DeSuvia. And lo and behold, her pain was quite controlled, and she was lucid, and her family was quite relieved. These are just two examples of what I've now observed time and time again with elderly patients. Overall, not only am I impressed with the efficacy and safety of Dysuvia, but I feel that Dysuvia has simplified the treatment of acute, moderate to severe pain in my surgical and acute trauma patients.

And she was initially dose would I be dilaudid, which is a common treatment and the patient was quite confuse after dosing and disoriented family was quite concerned.

Well, that's a lot it were off for a few hours and then I noticed the Sylvia.

Hello hold her pain was quite controlled and she was lucid and her family was quite relieved. These are just two examples of what I've now observed time and time again with the elderly trauma patients.

Overall, not only I'm impressed with the efficacy and safety.

Well I feel that the city has simplified the treatment of acute moderate to severe pain in my surgical and acute trauma patients.

Christian Twettenstrand: Our nurses and anesthesiologists have also recognized... It doesn't matter whether the patient has an IV or not, whether they're old or young, obese or frail, have renal impairment or not; it is always the same dose under the tongue, that is, 30 micrograms. While we can re-dose after an hour, it has rarely been necessary, and given all the benefits we have observed, the product more than pays for itself.

Nurses and anesthesiologists have also recognize the difference doesn't matter where the patient hasn't.

Whether they're older young.

Ill have meant renal impairment or not it's always the same dose under the Tom that's being 30 micrograms.

Well, we can read those after an hour.

Has really been necessary given all the benefits we have observed the product more than pays for itself.

Christian Twettenstrand: I'm looking forward to expanding our use of Dysubia in our inpatient surgical population at Wilson Medical Center, as well as expanding our use in the emergency department. I hope to have Dysubia added to the formulary at other hospitals where I work. I am very excited to publish our patient data as it is important to share our experience and knowledge of Dysubia to benefit other patients, healthcare providers, and hospital systems. Thank you for your kind attention.

Looking forward to expanding or use of <unk>.

Patient surgical population Wilson Medical center as well expanding our use in emergency Department.

Just to be added to the formulary and other hospitals we operate.

I'm very excited to publish our patient data as it is important to share our experience and knowledge of just to get to benefit other patients health care providers and hospital systems.

Thank you for your kind attention.

Pamela Pierce Palmer: Thank you, Dr. Twentynstrand, for sharing your experience, and I hope those remarks provided some perspective on yet another real-world application of this use. Dr. Twentynstrand will be available during the Q&A portion of today's call to answer any of your additional questions. I'd like to hand the call over to Raffi to take you through the financials.

No.

Thank you Dr. twins Jefferson your experience and I hope those remarks provided some perspective on yet another real world application of the Sue young.

After 20 I will be available during Q1, a portion of today's call answer any of your additional questions I.

I like to hand, the call over to Rafi take you should fall through the financials.

Raffi Mark Asadorian: Thanks Vince. We continue to remain prudent with our cash as we launch Dissuvia. We ended the first quarter with 52.7 million dollars in cash and short-term investments, which represents a change of 13.4 million dollars from year end 2019. Our net cash outflow for the quarter was driven mainly by our $13.6 million of cash operating expenses or combined R&D and SG&A expenses, excluding stock-based comp, for $14.7 million, including stock.

Thanks, Vince we continue to remain prudent with our cash as we launched a sylvia.

We ended the first quarter with $52.7 million in cash and short term investments, which represents a change of $13.4 million from year end 2019.

Our net cash outflow for the quarter was driven mainly by our $13.6 million of cash operating expenses or combined R&D and SGN a expenses excluding stock based comp.

Or $14.7 million, including stock comp.

Raffi Mark Asadorian: The operating expenses in the quarter included approximately $1.8 million of non-recurring Tetraphase transaction-related expenses. This compared to $10.3 million of cash operating expenses in the first quarter of 2019, or $11.4 million including stock-based compensation, the increase of which was mainly driven by commercial costs related to the launch of DeSuvio. We continue to focus on investing in the areas that will have the most positive impact on the launch and remain prudent in our overall cash spend. Revenues for the first quarter of 2020 were $0.4 million, compared to $0.3 million in the first quarter 2019.

The operating expenses in the quarter included approximately $1.8 million of nonrecurring tetraphase transaction related expenses.

This compared to $10.3 million of cash operating expenses in the first quarter of 2019 or $11.4 million, including stock based compensation.

Most of which was mainly driven by commercial costs related to the launch of the Sylvia.

We continue to focus on investing in the areas that will have the most positive impact on the launch and remain prudent and our overall cash spend.

Revenues for the first quarter 2020 were zero point $4 million compared to zero point $3 million in the first quarter 2019.

We continued our focus on facilitating health <unk> healthcare institutions access to Disturbia, which were slowed beginning in March as Vince noted.

Raffi Mark Asadorian: We continued our focus on facilitating health care institutions' access to Dysuvia, which was slowed beginning in March, as Vince noted. Insuvia sales have also been impacted by the postponement of elective surgeries across the country. Once elective surgeries restart with the increased backlog of surgeries, we believe Dysuvia is well-placed to capture increased volumes as efficiency becomes even more important in the PacU.

The Subia sales have also been impacted by the postponement of electrodes like to surgeries across the country.

Once elective surgeries restart with the increased backlog of surgeries. We believed to Subia is well placed to capture increased volumes as efficiency becomes even more important in APAC you.

Finally, with regards to our sales expectations with the department of defense.

Raffi Mark Asadorian: Finally, with regard to our sales expectations with the Department of Defense, we remain in close discussions with our project team to better understand order size and timing for the year and the coming years. And as Vince mentioned, our expectations for initial stocking orders for the U.S. Army SKOs alone will approximate $30 million over the next three years, based on the timing of troop deployment schedules. And then on top of that, we could see additional orders from the Army, other branches of the military, and also other federal and state agencies as they see the military's approval and use of Adesuvio.

Remain in close discussions with our project team to better understand order size and timing for the year.

And the coming years and as Vince mentioned, our expectations for initial stocking orders for the U.S. Army SK always alone will approximate like approximate $30 million over the next three years based on the timing of troop deployment schedules.

And then on top of that we can see additional orders from the army other branches of the military and also other federal and state agencies as they see the military's approval and use of it to Sylvia.

Our high volume packaging line that is expected to be installed and operational at our contract manufacturer. Later this year has been somewhat delayed due to travel restrictions from coven.

Raffi Mark Asadorian: Our high-volume packaging line that is expected to be installed and operational at our contract manufacturer later this year has been somewhat delayed due to travel restrictions from COVID. We expect these restrictions to be eased later this year, paving the way for final acceptance of the equipment, which will significantly reduce our cost of production once commercial production is running on this line. To meet the timing of volume demands from the DoD as well as commercial customers, we are evaluating alternatives to accelerate final acceptance tests from the equipment manufacturer. Our 2020 quarterly cash operating expenses for the rest of the year. Excluding impact from the Tetraphase acquisition, revenues are expected to range from $9 to $9.5 million, which excludes stock-based compensation, or $10-11 million including stock-based compensation.

We expect these restrictions to be either later this year paving the way for final acceptance of the equipment, which will significantly reduce our cost of production once commercial production is running on this line.

To meet the timing of volume demands from the D.O. D as well as commercial customers. We are evaluating alternatives to accelerate final acceptance tests from the equipment manufacturer.

Our 2020 quarterly cash operating expenses for the rest of the year, excluding impact from the Tetraphase acquisition are expected to range from nine to nine and a half million dollars, which excludes stock based compensation or $10 million to $11 million, including stock based compensation.

Raffi Mark Asadorian: We expect to provide updated guidance following the completion of the acquisition. Finally, we remain in discussions with our potential out-licensing partner for Dezuveo in Europe and hope to have more to report here in the coming months. We are also in discussions with potential U.S. collaboration partners around marketing and distributing Dysuvia to non-core customer specialties such as oral and plastic surgery in the U.S. In addition, we've continued our business development focus and are in active discussions on in-licensing opportunities that are complementary to our existing portfolio with the potential to add significant value to the business. Finally, we are still evaluating the timing of our Zelviso NDA resubmission, which we delayed pending further guidance from the FDA regarding a potential new opioid product approval framework. We hope to have more details on these opportunities in the near future. Let me turn the call back over to Vince. Thanks.

We expect to provide updated guidance following consummation of the acquisition.

Finally, we remain in discussions with our potential out licensing partner for does do Vale in Europe, and hope to have more to report here in the coming months.

We are also in discussions with potential U.S. collaboration partners around marketing and distributing to subia to non core customer specialties, such as oral and plastic surgery in the U.S.

In addition, we've continued our business development focus and are in active discussions on in licensing assets that are complementary to our existing portfolio with potential to add significant value to the business.

Finally, we are still evaluating the timing of our Zalviso and da Resubmission, which we delayed pending further guidance from the FDA regarding a potential new opioid product approval framework.

We hope to have more details on these opportunities in the near future with that let me turn the call back over to them.

Thanks, Rafi so to summarize we continue to strongly believe in dispute is benefits and long term success in the market as well as its ability to change the standard of care for acute pain management medically supervised settings.

Vincent J. Angotti: Thanks Raffi. So to summarize, we continue to strongly believe in DistributeUS' benefits and long-term success in the market, as well as its ability to change the standard of care for acute pain management in medically supervised settings. We were only three-quarters into the launch of Dissuvia with our full sales team before COVID-19 hit. At that point, we were exceeding our access metrics, so we expect that trend to continue once restrictions are lifted. As you've heard, the early feedback from healthcare practitioners dosing Dysuvia is positive. We look forward to publications about the data showcasing Dysuvia in the perioperative setting. Finally, we're excited to receive Milestone C approval, paving the path for D'Souza to support modernizing acute pain management within the military.

We were only three quarters into the launch of disagree with you with a full sales team before cobot 19 hit at that point, we were exceeding our access metrics. So we expect that trend to continue once restrictions are lifted.

As you've heard the early feedback from the health care practitioners dosing distribute is positive we look forward to the publications about the data showcasing distribute the peri operative setting.

Finally, we're excited to receive milestones CE approval paving the path for distribute the support modernizing acute pain management within the military.

This deal the revenue stream bought a foundation for our business and as a catalyst as we continue to launch into hospitals and ambulatory surgery centers.

Before going to Q and I'd just like the note that we won't be commenting further on the Hoyas bid for touch your face beyond what we've said in our release. So we ask you limit your questions to our first quarter results and other business updates.

Vincent J. Angotti: This DOD revenue stream will provide a foundation for our business and act as a catalyst as we continue to launch into hospitals and ambulatory surgery centers. Before we go into Q&A, I'd just like to note that we won't be commenting further on La Jolla's bid for Tetraphase beyond what we have said in our release, so we ask you to limit your questions to our first quarter results and other business updates. And I'd like to open the line for any questions you might have. Operator?

And I like to open the line for any questions you might have operator.

We will now begin the question and answer session.

Lastly question you. Many press Star then one on your Touchtone phone.

If you are usually speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our raw. The first question comes from Brandon Folkes of Cancer Fitzgerald. Please go ahead.

Withdraw your question. Please press Star then too.

This time, we will pause momentarily to assemble our roster.

First question comes from Brandon Folkes of Cantor Fitzgerald. Please go ahead.

Hi, Thanks for taking my questions and congratulations on all the progress during the quarter.

Could you, perhaps just elaborate way in hospital you are seeing you would hit yeah, perhaps even more hi surgeries you see in useful and then on the flip side of that where do you see opportunities within the hospital I see and what type of surgeries do you think it then.

Brandon Richard Folkes: Hi, thanks for taking my questions, and congratulations on all the progress during the quarter. Could you perhaps just elaborate where in the hospital you are seeing useful Dysuvia, perhaps even what type of surgeries you're seeing it being used for? And then, on the flip side of that, where do you see opportunities within the hospital or ASC, and what type of surgeries do you think are best suited for Dysuvia in those settings? Thank you.

I think a bit to take care. Thank you.

Sure well I can tell you when all have Dr. threatened strand, you know add on his comments afterwards, but the wonderful thing about hopefully they really treat all types of pain, well, whether it's a vone orthopedic pain soft tissue pain, even on your of injury pain, all respond well to.

Pamela Pierce Palmer: Sure, well, I can tell you, and I'll have Dr. Twettenstrand, you know, add his comments afterwards, but the wonderful thing about opioids is that they really treat all types of pain well, whether it's boney orthopedic pain, soft tissue pain, even nerve injury pain, all respond well to opioid medication, so there really isn't a limit to the type of surgery that you can utilize with Dysuvia, but Dr.

Opioid medications, so there really isn't a limit to the type of surgery that you can utilize with the Sylvia, but dodger twin strand would you like to further on the I'll talk about your experience.

Oh absolutely.

I'm, an advanced laparoscopic surgery minimally invasive surgery lot of our procedures are same day operations should we do a lot of laparoscopic calls a stacked amaze laparoscopic hernias. He says the most common procedures in the United States and this is where a principal they started.

Christian Twettenstrand: I'm an advanced laparoscopic surgeon who does minimally invasive surgery. A lot of our procedures are same-day operations, so we do a lot of laparoscopic coloscopies, and laparoscopic hernias. These are the most common procedures in the United States, and this is where we principally started.

Looking at these patients.

<unk>.

Discussed, but the other areas I was able to use it on a patients with significant co morbidities patients that I thought.

Christian Twettenstrand: I started looking at these patients and those results that... discussed, but in other areas, I was able to use it on patients with significant comorbidities, patients that I thought might have to go to the ICU after the surgery for ventilatory care with severe COPD, or emphysema, if you will. And I was stunned, absolutely stunned, at the cases that I did with these types of patients where they woke up so cleanly, comfortably, without any respiratory depression. I was able to keep that patient out of the ICU, and she had a comfortable experience in the hospital and went home much quicker than I would have anticipated otherwise. So, as Dr. Palmer said, there are many areas in the hospital where orthopedists are chomping at the bit to start using this drug in their cases where a lot of their cases are same-day procedures as well, and they want to clear these patients out of the PACU as quickly as possible. So, And then, of course, the emergency department. There's a whole plethora of areas where pain needs to be treated.

I have to go to the I see you after the surgery for them to what Tory care.

With severe CBD emphysema, if you will and I was stunned absolutely stunning was the cases that I did with these types of patients that they woke up so cleanly comfortably without any respiratory depression, I was able to keep that patient I see when.

She had a comfortable experience in the hospital when how much quicker than I would've anticipated otherwise so as Dr. Palmer said, there's many areas in the hospital and theirs.

Okay chomping at the start using this this this drug where there are cases on a lot of their cases are same day procedures as well and they want to clear these patients out of the pack U.S. as quickly as possible. So.

And then of course, the emergency department as a whole plus oh areas, where pain needs to be treated.

Thanks, Dr. quite straight brand I hope that helped in just don't add some additional color the doctor to question in general.

Operator: [inaudible]

Vincent J. Angotti: And just to add some additional color to Dr. Twench, in general... The early adoption of it throughout the United States, we're seeing relative to hospitals, is same-day or outpatient surgery, which is mimicked often in the ASCs based on various surgeries they're doing which are typically an hour to two hours, and they're looking for obviously same-day discharge and efficiency matters so they keep their patient flow moving. Brandon, I hope that I answered your question.

The early adoption over throughout the United States, we're seeing relative to hospitals is the same day or outpatient surgeries.

Which is mimicked often in the FCC based off are you surgeries, they're doing which are typically an hour to two hours and the looking for obviously same day discharge inefficiency matters, they keep their patient flow moving.

Great and hope that answered your question.

It did very well thank you very much and congratulations on all the progress again.

Brandon Richard Folkes: It did very well. Thank you very much and congratulations on all the progress again.

Thanks, Thanks, Dr. twin strike.

The next question comes from Michael Higgins of Ladenburg Thalmann. Please go ahead.

Vincent J. Angotti: Thanks. Thanks, Dr. Twins-Trent.

Hi, This is Ed remarks on for Michael I. Appreciate you guys, taking the questions.

Michael Higgins: The next question comes from Michael Higgins of Bladenburg-Thalmann. Please go ahead.

It's still in regards to the military advanced that they were talking about I'm. Just wondering what other branches are you looking to approve in order to few via and when might we see some of those further movements from those branches.

Edward Markson: Hi, this is Edward Markson on behalf of Michael. I appreciate you guys taking the time to answer the questions. So in regards to the military advancements that you were talking about, I'm just wondering what other branches are you looking to approve and order for SUVIA, and when might we see some of those further movements from those branches? And then, kind of relatedly, we believe that, through NATO, the U.S. military has a reciprocal ordering relationship for something like medical equipment. I'm just wondering when some of the other countries or organizations, like NATO, might begin to make use of SUVIA.

And then kind of related Lee, we believe that through NATO. The U.S. military has a reciprocal ordering relationship or something like medical equipment.

Just wondering when my somebody other countries organizations like NATO begin to maybe used to Sylvia.

Yeah. Thanks, seven for the question so I'll just.

At a little bit of close to that so that the positive out some of the milestone C really signals the completion of the project and its transition implementation.

I think relative to your question. This transition now allows for distribute to be added to the joint deployment formulary. So we expect that over the next few months. So not only will give US army include just to be in their escos as initial orders for other branches or the government would be able to add this you into there.

Vincent J. Angotti: Yeah, thanks, Evan, for the question. I'll just add a little bit of color to that.

Vincent J. Angotti: So the positive outs on milestone C really signals the completion of the project and its transition implementation. I think, relative to your question, this transition now allows for DSUVIA to be added to the joint deployment formulary, so we expect that over the next few months. So not only will the U.S. Army include Dissuvia in their SKOs as initial orders, but other branches of the government will be able to add Dissuvia to their medical kits for deploying troops as well. We haven't accounted for that in the estimates we've provided. And those two events, the milestone C approval and the addition of the JDF, will serve, we believe, as validation signals to other state and federal agencies, examples you might consider are the FBI, U.S. Marshals, U.S. Border Patrol, etc.

It'll come kits for deploying troops as well, we haven't accounted for that and the estimates we provided to you.

And those two events the milestone C approval in the addition of the JD yeah, well. So we believe its validation signals to other state federal agencies. Examples you might consider is the FBR U.S. marshals U.S. border patrol et cetera.

So we think the other branches will happen postage deployment formulary, which we expect to happened in the next two to three months.

Relative to NATO reciprocal ordering we've been really focused on the U.S. and getting through the milestone C approval and supporting them all but we do believe that that will be an opportunity moving forward as well to quantify that we haven't been it we have been generated those estimates yet but that is certainly an opportunity moving forward and good touch.

Vincent J. Angotti: So we think the other branches will happen post-deployment formulary, which we expect to happen in the next two to three months. Relative to NATO and reciprocal ordering, we've been really focused on the U.S. and getting through the milestone C approval and supporting them. But we do believe that that will be an opportunity moving forward as well to quantify that. We haven't generated those estimates yet, but that is certainly an opportunity moving forward and a good catch.

[noise] X, it's great to hear and then when you talk about those estimates.

Particularly with a 30 million.

Just wondering if some of the assumptions around maybe ramp occurring.

Over this year in through the next three years something like a three to 5 million in the second half of this year, maybe 10 million in 21, and the rest of the balance and 22 does that sound to accurate.

Edward Markson: And then when you talk about those estimates, particularly with the $30 million, I was wondering if some of the assumptions around maybe a ramp occurring over this year and through the next three years, something like $3 million to $5 million in the second half of this year, maybe $10 million in 2021, and the rest of the balance in 2022. Does that sound accurate?

Yeah, but it's it's his rafi.

So where we need the we need to wait to get those estimates from the the military because it's based on obviously confidential information on the joint the point on the of deployment schedules.

So that 30 million just keep in mind is also those are initial stocking orders that is not from use or anything. So that is just to have initial pack outs on top of that would be the actually use you know to replenish and again, that's just for the army S.K. OWS.

Raffi Mark Asadorian: Yeah, this is Raffi. So we need to wait to get those estimates from the military because they're based on, obviously, confidential information on the deployment schedules. Um, so that $30 million, just keep in mind, is also those are initial stocking orders. That is not from use or anything.

But we need to wait to get the actual how much is that going to be split evenly bert per year or is it going to be front loaded. We don't we don't have that that information yet because it's on a deployment schedules that were not privy to.

Vincent J. Angotti: So that is just for initial packouts. On top of that would be the actual use, you know, to replenish. And again, that's just for the Army SKOs. But we need to wait to get the actual amount. How much is that going to be split evenly per year? Is it going to be front-loaded? We don't have that information yet because it's on deployment schedules that we're not privy to.

I think I think in the meantime, just a little additional color as Rafi mentioned repeat ordering is not considered a not on double depended on the medix use it will depend on if there's a conflict area on the amount of use et cetera.

You should know then in the short term there's plan training for Medix at the Army schoolhouse, there will be done by the military happening in the very near future and our accelerates federal accounts team will be facilitating training for the Brigade Battalion surgeons in field hospital personnel as well so there's a lot of activity around the product Oh throughout the army just just to add.

Vincent J. Angotti: I think in the meantime, just to add a little additional color, as Raffi mentioned, repeat ordering is not considered in that. That will depend on the medic's use; it will depend on whether there's a conflict area, the amount of use, etc. You should know that in the short term, there's planned training for medics at the Army Schoolhouse that will be done by the military in the very near future. And our AcelRx Federal Accounts team will be facilitating training for brigade and battalion surgeons and field hospital personnel as well. So there's a lot of activity around the product throughout the Army.

This was so this is going into all army Escos, which was our high case right. This was not in our base case and that was a that was very pleasing to see that they're putting it into all of their sets kits and their outfits.

Excellent that's good to hear and that's all from me. Thank you guys.

Thank you.

The next question comes from at Ares.

I think C. Wainwright. Please go ahead.

Raffi Mark Asadorian: Just to add, this is going into all Army SKOs, which is our high case, right? This was not in our base case, and it was very pleasing to see that they're putting it into all of their sets, kits, and their outfits.

Good afternoon, everyone. This is Thomas your Baskin couple of questions for.

First congratulations on your progress we're still gets so far this year and also great to hear more services through our news today.

Edward Markson: Excellent. That's good to hear. And that's all for me. Thank you, guys.

First question.

Edward Markson: Thank you.

Thomas Yip: This question comes from Ed Arce of HC Wainwright. Good afternoon, everyone. This is Thomas Yip asking a couple of questions for Ed. First, congratulations on your progress with Vesuvius so far this year, and it's also great to hear more of Vesuvius' real-life use today. First question about Vesuvius' potential military stock and order. Should we expect a formal contract with a very clear outline of the stock and schedule, or are they purchased as needed, and how does the JDF expect them to be used later this year? and any potential impact on that.

About the Soviets professional rytary stocking order.

Should we expect a formal contracts, where there are very clear out livestock and schedule or they purchase.

That's needed and how does that Jay the expected later this year.

At any potential impact.

On that.

Yeah. So so as they've communicated also to be the depending on the deployment schedules, where they will preorder dependent on those deployment schedules in the pack out the Medicare hits as those troops are deployed.

Vincent J. Angotti: Yeah, so as they've communicated also to be dependent on the deployment schedules where they will pre-order, dependent on those deployment schedules, and then pack out the medkits as those troops are deployed. As it relates to that schedule, we have not gotten the final details of it, just kind of the overall amount over the next three years, in that it's fairly significant just for the initial order.

As it relates to that schedule, we have not gotten the final details of it just kind of the overall over the next three years and that it's fairly significant just for the initial orders.

What was the second part of that question Thomas.

Right.

Yeah, Yeah, that's right. So that's just how does the jvs.

Vincent J. Angotti: How does the JVF change that ordering expectation?

Change change the.

Other against our patient.

Yeah. So that the JDRF is part of the process. Following the milestone C. So we expect that to happen in the next two to three months. So with that then allows is for they're not caught SK goes in the balance of the military branches, whether it be coast Guard nave. Your air force well just consider him a pack outs for their medix, but it opens up there.

Vincent J. Angotti: Yeah, so the JDF is part of the process following Milestone C. So we expect that to happen in the next two to three months. So what that then allows is for them not to be called SKOs in the balance of the military branches, whether it be Coast Guard, Navy, or Air Force; we'll just consider them packouts for their medics, but it opens up the additional three branches, which will add significant volume, we believe, to that moving forward.

Additional three branches, which will add significant volume believes to that moving forward and again those are there's there's two parts or there's the actual stocking orders.

Vincent J. Angotti: And again, those are, there's two parts to it. There's the actual stocking orders for all the sets of kits and outfits. Then there's the use of the Suvia.

Into all the such gets it off its then there's the use of the Subia ongoing use of the Subia now that it's a it's been approved.

Vincent J. Angotti: And then my second question regarding the ongoing RIMS certification and formulary review. As you mentioned, due to COVID-19, that has been on hold for now. Are there any chances of switching to a virtual-based channel on both fronts?

Okay, all right. Thank your for clarifying.

And then my second question.

Regarding to the ongoing certification and formulary review.

Especially motion a theoretical but not in us and.

On hold for now.

Are there any chance so switching to your vessel base channel on on bolt.

On both fronts.

Yes, absolutely. So we're already starting to see some of the regulations ease as it relates to access for face to face, but we shifted very early to virtual with our key customers pending there are billability and what was happening with covidien their respective geographies, making them available or not for those.

Vincent J. Angotti: Yeah absolutely, so we're already starting to see some of the regulations ease as it relates to access to face-to-face meetings, but we shifted very early to virtual with our key customers pending their availability and what was happening with COVID and their respective geographies making them available or not for those calls, but there's been a solid reception to that. Just as an example, during the last month, we had three originally scheduled meetings. They were And I can tell you that not only was it efficient in terms of cost, but the engagement was extremely high.

Calls, but there's been a solid reception to that.

Just as an example during the last month, we had three originally scheduled face to face advisory boards.

They were all executed with full attendance and engagement in a virtual manner. So it was a swift shift from in person face to face to virtual meetings and I can tell you know he was an efficient in cost, but the engagement was extremely high.

Vincent J. Angotti: We're just beginning our other virtual tactics now beyond the sales team. For instance, virtual speaker programs are starting this week. That can be national in nature from a webinar perspective.

We're just beginning or other virtual tactics now beyond the sales team for instance, virtual speaker programs are starting this week that can be national in nature from a webinars perspective, and we're also exploring that used to call centers moving forward. In addition to our sales representatives in their communications with these customers. So we are active in the virtual space have already.

Vincent J. Angotti: And we're also exploring the use of call centers moving forward in addition to our sales representatives in their communications with these customers. So we are active in the virtual space. We've already converted some of those planned meetings to the virtual space with very strong results and are looking to really create that as part of the norm moving forward.

We converted some of those planned meetings to the virtual space with its very strong results and looking to really.

Create that as part of the norm moving forward.

Vincent J. Angotti: Yeah, that just sounds good. And then perhaps switching gears to, not necessarily for the merger, but for the co-promoted effort between Silvia and Sarava. Can you highlight some early efforts in that co-promote?

Yes, that's sounds good.

And then perhaps a switching gear two or not necessarily for the other merger, but for the co promote effort Thats really servier a survivor.

Okay allies. Some some early efforts in that and that co promote.

Vincent J. Angotti: Yeah, and it is early, I'll highlight that. Just to give you a background on the timing. So when we announced the merger agreement, I think it was now about five weeks ago, during that course of the week, we restructured our teams, and the following week, we went right into the training for Dasuvia. And following that, we went right into the complementary training for Zarabo. So that took about four weeks of time with our team, during which they had breaks.

Yeah. It is early I'll highlight just to give you a background on the timing. So when we announced the merger agreement I think it was now about five weeks ago I'll turn that course of the week, we restructured our teams in the following we went right into the training for distributors are and following that we went right into the complementary training for.

It's robin so that took about four weeks worth of time with our team where they had breaks they were making their virtual customer calls so really field penetration has just begun last week for both respective teams co promoting each other's products and the response, thus far has been excitement for both respective teams about the profiles of the products.

Vincent J. Angotti: They were making their virtual customer calls. So really, field penetration had just begun last week for both respective teams, co-promoting each other's products, and the response thus far has been excitement from both respective teams about the profiles of the products.

Vincent J. Angotti: Again, receptivity from the customers. And it's highly geography dependent on access right now. Whether you're in Texas or Georgia, you might have more access. Parts of Florida and parts of the Northeast, you might have less access. So it's variable related to that on the face-to-face. But the engagement's high. The training was done at a very high level. And the energy has been strong from the combined team.

Again receptivity from the customers.

And it's highly geography dependent on access right now whether you're in Texas for Georgia, you might have more access parts of Florida in parts of North East you might have less access so it's variable related to that on the face to face up at the engagement is high the training was done at very high level and the energy has been strong from the combined team.

Good for here. Thank you for picking all questions and look on workers in more progress this year.

Thomas Yip: Good to hear. Thank you for taking our questions. I am looking forward to seeing more progress this year.

Vincent J. Angotti: Thank you, Thomas.

Thank you Thomas.

Vincent J. Angotti: This concludes our question and answer session. I would like to turn the conference back over to Vincent Angotti for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to events and Gotti for any closing remarks.

Vincent J. Angotti: Thank you for joining us today and for your continued support of AcelRx. That was very important news for us at Milestone C over the course of this past month. Really, not only creating a base or a foundation for our company moving forward with the initial ordering by the Army, but pursuant to that, we believe that that will open up to other branches of the military and only expand our base of business moving forward. We believe that provides further validation even in the non-military for our civilian accounts as well based on our government's backing of the product and use of it for our key people, that being our military personnel. So, thank you for joining us today and for your continued support of AcelRx. We look forward to sharing more developments with you in the future, and we hope you all remain safe. Thanks.

Yeah. Thank you for joining us today and for your continued support accelerates that was very important news for us in the milestone C. Over the course of this past month really not only creating a base where a foundation for our company moving forward with the initial ordering by the army, but pursuant to that believe that that will open up the other branches the military and only.

We expand our base of business moving forward. We believe that provides further validation and even in the non military for our civilian accounts as well based off of our government's backing of the product and use of it.

For our T. people that being our military personnel. So thank you for joining us today and your continued support of accelerates we look forward to sharing more developments with you in the future and we hope you all remain say thanks.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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Operator: BF-WATCH TV 2021 (inaudible)