Q2 2020 AcelRx Pharmaceuticals Inc Earnings Call

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Operator: This call is being webcast live on the events page of the investor 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, today's call is being recorded. 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 events page of the Investor section of accelerates its website that accelerates dot com.

This call, it's the property pixelworks it any recording reproduction or transmission up this call.

I'll be expressed written consent of Acceleron is extreme is strictly prohibited.

As a reminder.

Today's call is being recorded.

You may listen to a webcast replay of this call by going to the Investor section of accelerate axis website.

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

Thank you for joining us this afternoon.

Raffi Mark Asadorian: Thank you for joining us this afternoon. Earlier today, we announced our previously previewed second 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. Also with me today are Vincent Angotti, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer.

Earlier today, we announced our previously previewed second 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, our Vincent Gotti, our Chief Executive Officer, Dr., Pam Palmer, our Chief Medical Officer.

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.

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 risks 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 Companys periodic current annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward looking statements I'll now turn the call over two decades.

Thank you Rafi and good afternoon, everyone I hope you in your families remaining safe and healthy we certainly appreciate you joining our call today.

Vincent J. Angotti: Thank you, Raffi, and good afternoon, everyone. I hope you and your families are remaining safe and healthy, and we certainly appreciate you joining our call today. On today's call, we'll describe the progress we've made toward achieving our strategic objectives of, one, advancing the use of Dysuvia throughout the Department of Defense, and expanding our business in large customer channels through partnerships.

On today's call will describe the progress we've made toward achieving our strategic objectives of one advancing they use it to sue them throughout the department of defense.

Two expanding our business and large customer channels through partnerships.

Three dedicating our internal sales team to the hospital and ambulatory surgery Center settings.

Vincent J. Angotti: Dedicating our internal sales team to the hospital and ambulatory surgery center settings, and four, licensing or acquiring additional products. Goals one and two allow for near-term growth without a significant AcelRx commercial investment. Well, objectives 3 and 4 will take a bit more time but are expected to have a significant return. We've made solid progress, both in the second quarter and more recently, towards achieving these strategic objectives and building our foundation for growth, despite the impacts of the COVID-19 pandemic. This progress is highlighted by our successful Milestone C approval in April that opens the door to purchases from the U.S. Army, as well as our recent distribution and promotion agreement with Zimmer Biomat for Dysuvia for the management of acute pain in adults during dental and oral surgery.

And for in licensing or acquiring additional products.

Objectors wanting to allow for near term growth without significant accelerates commercial investment.

Well objectives, three and four will take a bit more time, but are expected to have a significant return.

We've made solid progress both in the second quarter and more recently towards achieving these strategic objectives and building our foundation for growth. Despite the impacts from the Covance 19 pandemic [noise].

This progress is highlighted our successful milestones you approval in April that opens the door for purchases from Us Army.

As well as our recent distribution and promotion agreement with Zimmer Biomet four to sue the for the management of acute pain and adults during dental and oral surgeries.

Now as mentioned on our last call into Q, we received milestone C approval with the Us Army.

Vincent J. Angotti: Now, as mentioned on our last call, in 2Q, we received Milestone C approval with the U.S. Army for D'Souza's placement in all of the U.S. Army sets, kits, and outfits, or SKOs, associated with future deployment. This approval was the high case in our internal projections, with preliminary expectations that initial stocking orders from the U.S. Army SKOs alone will approximate $30 million over the next three We expect to know more about initial year orders for Army SKOs in the third quarter as the Department of Defense is going through its budgeting process for its fiscal year that begins on October 1st. In addition, the Department of Defense publicly communicated a notice of intent to contract for up to 12,200 boxes or 122,000 Desuvia single-dose applicators, which we expect to be ordered in the third quarter of this year after the request for proposal is issued and closed This is in addition to any SKO purchases which we expect will begin in the fourth quarter of this year.

Produced studious placement in all of US army sets kits and outfits or escos associated with future deployments.

This approval with the high Chase and our internal projections with preliminary expectations that initial stocking orders from the US Army Escos alone will approximate $30 million over the next three years.

We expect to know more about initial your orders for army Escos and the third quarter as the department of defense is going through its budgeting process for its fiscal year that begins on October onest.

In addition, the department of defense publicly communicated a notice of intent to construct for up to 12200 boxes or 122000 to sue the a single dose applicators, which we will expect to be ordered in the third quarter. This year. After the request for proposal is.

Issued and closed.

Now. This is in addition to any upscale purchases, which we expect will begin in the fourth quarter of this year.

We also anticipate the soon to be approved on the joint deployment formulary, we're JDRF and the third quarter.

Vincent J. Angotti: We also anticipate Dissuvia to be approved on the Joint Deployment Formulary, or JDF, in the third quarter. This approval will be another significant milestone as it expands access to DSUVI throughout the other branches of the military. And while the U.S. Army represents approximately 60% of the expected deployment opportunity, there's still a sizable market from the other military branches upon JDF approval.

This approval will be another significant milestone as it expands access to distribute throughout the other branches will the military.

And while the US army represents approximately 60% of the expected deployment opportunity, there's still a sizable market from the other military branches upon jtf approval.

Vincent J. Angotti: The JDF approval also expands the opportunity for purchases throughout the network of military treatment facilities, several of which have already adopted Dysuvia into their formulary and are using it in various treatment settings. The DoD opportunity is one strong pillar that will support DeSouga's sales growth, which can be attained with a small infrastructure of just a few account managers and is therefore a profitable avenue for growth. Similarly, we announced our exclusive promotion and distribution partnership with Zimmer Biomet for Dysuvia in the dental and oral surgery space outside the hospital setting. This partnership allows us to access the large dental and oral surgery market of an estimated seven and a half million annual procedures, importantly, without additional investments in our commercial infrastructure. Zimmer Biomed Dental Division is a leader in the dental implant space and has over 250 sales representatives with established relationships who regularly visit dental and oral surgery customers, which should accelerate the CV's introduction, something we could not have done or attained without an entrenched partner.

The Jtf approval also expands the opportunity for purchases throughout the network of military treatment facilities several of which have already adopted this year. The on formulary are using various treatment settings.

The deal with the opportunity is one strong pillar that will support distributor sales growth, which is obtained with a small infrastructure will just a few account managers and is therefore profitable Avenue for growth.

Similarly, we announced our exclusive promotion in distribution partnership with Zimmer Biomet for distributor in the dental and oral surgery space outside the hospital setting.

This partnership allows us to access the large dental an oral surgery market of an estimated seven and a half million annual procedures importantly, without additional investments in our commercial infrastructure.

Zimmer Biomet Dental division is a leader in the dental implants basin has over 250 sales representatives with established relationships regularly visits dental and oral surgery customers, which should accelerate pursue these introduction.

Something we could not have done or attained without an entrenched partner.

Importantly, the covenant restrictions in oral surgery office have largely been lifted allowing access for sales representatives.

Vincent J. Angotti: Importantly, the COVID restrictions in oral surgery offices have largely been lifted, allowing access for sales representatives. So we're very excited about the prospects of this strategic partnership, as is Zimmer Biomet, who believes the SUVIA will provide them with a differentiated offering from which dental and oral surgeons will greatly benefit. The training of the Zimmer Biomath Dental sales representatives is currently being organized.

So we're very excited about the prospects of this strategic partnership as his Zimmer Biomet, who believes the Sunil will provide them with a differentiated offerings from which dental and all surgeons will greatly benefit.

The training of the Zimmer Biomet dental sales Representatives is currently being organized it'll take time to cover the entire Salesforce. We expect some initial benefits from this agreement in the fourth quarter. This year and we anticipate cells to pick up primarily in Q1 2021.

Vincent J. Angotti: It will take time to cover the entire sales force, but we expect some initial benefits from this agreement in the fourth quarter this year, and we anticipate sales to pick up primarily in Q1 2021, as this is the second part of our strategic pillar that supports profitable revenue growth from a large specialized market with minimal AcelRx investment. Looking forward, we see similar opportunities where customers in large specialty markets outside the hospital and ASCs can be educated on the benefits of Dissuvia through companies that already have a presence in those spaces. Examples of such opportunities are plastic surgery procedures. Fertility procedures and ambulance, and other emergency medical services. And unlike many hospital products, such as anti-infectives or critical care products, Receiver provides a different value proposition, and it can be broadly used across many different medically supervised settings.

As this is the second part of our strategic pillar that supports profitable revenue growth from a large specialized market with a minimal accelerates investment.

Looking forward, we see similar opportunities where customers in large specialty markets outside the hospital in SCS can be educated on the benefits of distributor through companies that already have a presence in those spaces.

Examples of such opportunities or plastic surgery procedures fertility procedures, an ambulance and other emergency medical services.

Unlike many hospital products such as anti Infectives, a critical care products distributed provides a different value proposition and that it can be broadly used across many different medically supervised settings.

Vincent J. Angotti: Successful partnerships in these specialty market opportunities will strengthen the second pillar and support the studio's sales growth with minimal AcelRx investment. Meanwhile, our existing account managers remain focused on delivering long-term value from hospital and ambulatory surgery customers. These customer segments often take longer to penetrate due to lengthy review periods and complexities in P&T schedules. We were slowed by COVID in the second quarter as access to hospitals and ASCs was restricted by states and institutions, each of which managed access differently.

Successful partnerships and these specialty market opportunities will strengthen the second pillar and support to see this sales growth with minimal accelerates investment.

Our existing account managers remain focused on delivering long term value from hospital and ambulatory surgery customers.

These customer segments, often take longer to penetrate did a lengthy review periods and complexities and PMT scheduling.

We were slowed by cobot in the second quarter as access to hospitals and assay is was restricted by states and institutions each of which managed access differently.

Vincent J. Angotti: But recently, access has improved versus the March to June time frame, and while restrictions still exist, we're seeing some recovery, highlighted by July being our largest month of demand by end-users to date. During this time, we've also had some exciting hospital system wins, which we expect will provide some benefit in the fourth quarter as they begin to place orders after they incorporate Desuvian into their protocols and medical information. One of these wins was a recent expansion to all hospitals within a system after initially being approved at just one location and with use limited to general surgery. After reviewing data from the initial trial use of the SUVIA, which illustrated both patient and economic benefits, the P&T Committee reconvened and approved Acelia for formulary system-wide, including its associated ASCs, with expanded use to all settings within the hospital, including the trauma service. This is a perfect example of how we see Dissuvia being adopted.

But recently access has improved versus the March to June timeframe.

And while restriction still exist were seeing some recovery highlighted by July being our largest month of demand by end users to date.

During this time, we've also had some exciting hospital system wins, which we expect will provide some benefit in the fourth quarter as they begin to place orders after the incorporate the Soviet into their protocols and medical information systems.

One of these wins was a recent expansion to all hospitals within a system. After initially being approved at just one location and with use limited to general surgery.

After reviewing data from the initial trial use of the studio, which illustrated with patient and economic benefits. The PMT Committee reconvened and approved this Julia for formulary system wide, including its associated SCS.

With expanded use the all settings within the hospital, including the trauma service.

There is a perfect example of how we see the sued the being adopted.

Vincent J. Angotti: We continually hear from our physician customers about the benefits they observe in their patients with Dysuvia. And importantly, gathering real-world data is key to demonstrating these advantages to other healthcare systems. In fact, we're excited that data providing evidence of these benefits will be published soon, including one manuscript that was recently accepted for publication in a peer-reviewed anesthesia journal. The economic benefits of Distributed to the Hospital and the reduction in use of intravenous opioids and other medications will be evident from these upcoming publications. We expect this data to have a favorable impact commercially, as healthcare providers will find the irrelevant, real-world data to illustrate why distribution should be used over some current standards of care. As we've said before, the acceptance of Vesuvia on the formula is an eventual adoption into protocols as a process. Based on the real-world results from healthcare practitioners using Dysuvia, we remain confident Dysuvia will become a key treatment for the management of acute pain. Again, changing the standard of care takes time, but we believe healthcare professionals are just now beginning to realize the benefits.

We continually here from our physician customers about the benefits they observe and their patients with the Sylvia and importantly gathering the real world data is key to demonstrate these advantages the other healthcare systems.

In fact, we're excited that data providing evidence of these benefits will be published soon including one manuscript that was recently accepted for publication and the peer reviewed anesthesia journal.

The economic benefits of distributed to the hospital and the reduction in use of intravenous opioids and other medications will be evident from these upcoming publications.

We expect this stated have a favorable impact commercially as health care providers will finally irrelevant.

Real world data to illustrate why distributorship used over some current standards of care.

As we've said before the except us off the Subia on a formula is an eventual adoption into protocols as a process based on the real world results from healthcare practitioners using distributors.

We remain confident decision will become a key treatment for the management of acute pain and medically supervised settings.

Again, changing standard of care takes time, but we believe healthcare perfect professionals are just now beginning to realize the benefits.

Raffi Mark Asadorian: I'll now hand the call over to Raffi to take you through the finances.

I'll now hand, the call over to refer to take you through the financials.

Raffi Mark Asadorian: Thank you, Vince. We continue to remain prudent with our cash as we launch Dissuvia. We ended the second quarter with $43.7 million in cash and short-term investments, which represents a change of nine million dollars from the first quarter of 2020. Our net cash outflow for the quarter was driven mainly by our $7.3 million of cash operating expenses, or combined R&D and SG&A expenses, excluding stock-based compensation, or $8.4 million, including stock comp. The operating expenses in the quarter included a net benefit of $0.5 million from the receipt of a breakup fee from the Tetraphase Acquisition, net of expenses incurred related to the transaction in the quarter. This compared to $11.2 million of cash operating expenses in the second quarter of 2019, or $12.5 million, including stock-based compensation.

Thank you Vince.

We continue to remain prudent with our cash as we launched the Sylvia.

We ended the second quarter with $43.7 million in cash and short term investments, which represents a change of $9 million from the low first quarter of 2020.

Our net cash outflow for the quarter was driven mainly by EUR $7.3 million of cash operating expenses or combined R&D and SGN, a expenses, excluding stock based compensation or $8.4 million, including stock comp.

The operating expenses in the quarter included a net benefit zero point $5 million further from the receipt of a breakup fee from the Tetraphase.

Acquisition net of expenses incurred related to the transaction in the quarter.

This compared to $11.2 million of cash operating expenses in the second quarter, 2019, or $12.5 million, including stock based compensation.

Raffi Mark Asadorian: The decrease in operating expenses in the second quarter of 2020 was primarily due to a reduction of $1.9 million in DeSuvia related commercialization expenses and a $1.7 million reduction in personnel costs. 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 spending. Revenues for the second quarter of 2020 were $2.9 million, compared to $0.9 million in the second quarter of 2019.

The decrease in operating expenses in the second quarter of 2020 was primarily due to a reduction of $1.9 million into Sylvia related commercialization expenses.

And a $1.7 million reduction in personnel costs.

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 spending.

Revenues for the second quarter of 2000 $22.9 million compared to zero point $9 million in the second quarter of 2019.

Raffi Mark Asadorian: Approximately $2.6 million of the revenue recognized in the second quarter of 2020 was attributable to the recognition of previously deferred revenues related to our collaboration agreement with Grunin-Solomon, our high-volume packaging line that is expected to be installed and operational at our contract manufacturer early next year has been delayed due to travel restrictions from COVID. We hope these restrictions will 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. Looking forward to the rest of the year, we are expecting an initial order from the DOD as indicated in their Notice of Intent to Contract, which will be converted to an RFP for Dissuvia. In addition, an initial stocking order for Army Sets, Kits, and Outfits is expected in the fourth quarter. We have reduced our 2020 quarterly cash operating expenses, which are now expected to range from $8 to $9 million, excluding stock-based compensation, or $9 to $10 million, including stock-based compensation, for the rest of the year.

Approximately $2.6 million of the revenue recognized in the second quarter of 2020 was attributable.

To the recognition of previously deferred revenues related to our collaboration agreement with Grunenthal.

Our high volume packaging line.

That is expected to be installed and operational at our contract manufacturer early next year has been delayed due to travel restrictions from cobot.

We hope these restrictions will be easy to 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 DLD as well as commercial customers were evaluating alternatives to accelerate final acceptance tests from the equipment manufacturer.

Looking forward to the rest of the year, we're expecting an initial order from the Deo D. As indicated in their notice of intent to contract, which will be converted to an RFP forward to Sylvia.

In addition, and initial stocking order for army sets kits and outfit is expected in the fourth quarter.

We have reduced our twentytwenty quarterly cash operating expenses, which are now expected to range from $8 million to $9 million, excluding stock based compensation or $910 million, including stock based compensation for the rest of the year.

Finally, we remain in discussions with our potential outlicensing partner for the studio in Europe, and hope to have more to report here in the coming months.

Vincent J. Angotti: Finally, we remain in discussions with our potential out-licensing partner for DeZuvio in Europe and hope to have more to report here in the coming months. We are also in discussions with potential US collaboration partners around marketing and distributing Dysuvia to other specialty markets, such as plastic surgery or fertility services in the US. In addition, we remain in active discussions on in-licensing and acquiring assets that are complementary to our existing portfolio, potential to add significant value to the business. Finally, we are still evaluating the timing of our Zalviso 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. With that, I will turn the call back over to Vince.

We're also in discussions with potential use collaboration partners around marketing and distributing the Sylvia to other specialty markets, such as plastic surgery or fertility services in the U.S.

In addition, we remain in active discussions on in licensing and acquiring assets that are complementary to our existing portfolio with the potential to add significant value to the business.

Finally, we're still evaluating the timing of our Zalviso 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.

With that let me turn the call back over to this.

Operator: Thanks, Raffi. So to summarize, we have successfully built two foundational pillars for further profitable growth with the DoD and with the Zimmer Biomed Dental Partnership. Leveraging this success while continuing our push into the hospital and ASC markets as we're able to demonstrate the economic and healthcare benefits of Dissuvia with real-world data will generate long-term value for our shareholders. As you previously heard, the early feedback from healthcare practitioners dosing Dysuvia is positive, and we look forward to publications about the data showcasing Dysuvia in the perioperative setting. And now I'd like to open the line up for any questions you might have. Operator?

Thanks, Rafi so to summarize we have successfully built to foundational pillars for further profitable growth with the duty and with the Zimmer Biomet dental partnership.

Leveraging the success, while continuing our push into the hospital in AOCI markets as we're able to demonstrate the economic and health care benefits of the studio with real World data will generate long term value for our shareholders.

As you previously heard the early feedback from the healthcare practitioners dosing distribute is positive we look forward to the publications about the data showcasing d'souza and the Perry operative setting.

I'd now like to open the lineup for any questions you might have.

Operator.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star and then 2. At this time, we will pause for a moment to assemble our roster. Our first question today will come from Brandon Folkes of Canthar Fitzgerald. Please go ahead.

Thank you.

We will now begin the question and answer session to ask a question you May Press Star then one on your touched on Fad.

If you're using a speakerphone please pick up your handset before Prosigna keys.

Withdraw your question. Please press star and then too.

This time, we will pause for a moment to December our roster.

Our first question today will come from Brandon Folkes of Cantor Fitzgerald. Please go ahead.

Hi, Thanks, taking my questions and congratulation.

Brandon Richard Folkes: I thank the team for their questions and congratulations on all the progress in the quarter. Just three for me today.

In the quarter Anne.

Just recently today.

Vincent J. Angotti: Firstly, could you just elaborate on the market opportunity for the Zimit deal? I think you talked about 7 million procedures. How many of those procedures do you think are suitable for dysphoria? And then currently, where are you seeing use? in Vesuvia. Any new areas during the quarter? Placing orders or... the use of the product. And then lastly, Sorry, I'm going to ask the question, even though I know you sort of insinuated that you would update us down the line, but with the recent opioid approval, does this change your thinking on Zalviso, or what can you say at this stage? Thank you.

He could you just elaborate on the market opportunity for visited deal and I think 27 million procedures.

How many of the exceeded procedures to think off suitable for diffuse yet and then currently where are you seeing use and it's easier.

Any new areas during the quarter, placing orders.

Seeing use of the product.

And then lastly.

Sorry, I'm going off can you.

Even in a sort of insinuating that you update us down the line, but with the recent period approval and does this change your thinking on that will be so what can you say at this stage. Thank you.

So I want to have Pam answer those questions. The first one is the Zimmer biomet opportunity.

Pamela Pierce Palmer: So I'm going to have Pam answer those questions. The first one is the Zimbra Biomed opportunity. Just in general, we said about 7 and 1 half million procedures eligible for deunity. But Pam, maybe you can give examples of what those procedures are.

Just in general, we said about seven and a half million procedures eligible for distributed repair maybe give examples of what those procedures are.

Sure, Yes, a third molar extractions other lines known as within piece extractions dental implants.

Pamela Pierce Palmer: Sure, yes, third molar extractions, otherwise known as wisdom teeth extractions, dental implants, you know, bone grafting. There's a number of dental and oral surgery procedures that are commonly performed by oral surgeons and dentists that use IV opioids, and we're really looking to replace them with IV opioids.

You know.

Grafting, there was a number of dental an oral surgery procedures that are commonly performed.

By oral surgeons and Dennis that you use I'd opioids, and we're really looking to replace the opioids in that market and brand and so so answering directly. Your question is all of those seven and a half million procedures, our addressable the Sylvia procedures, it's not all dental an oral procedures, that's the estimate of what the Sylvia.

Vincent J. Angotti: Brandon, so answering directly your question is all of those seven and a half million procedures are addressable dysuvia procedures. It's not all dental and oral procedures. That's the estimate of what dysphoria can be addressed.

And be addressing.

Vincent J. Angotti: The second component of that question, Brandon, if you recall, was where is DeSueva currently being used? Again, I'll defer to Pam as she's been working with various specialists around the country.

The second part of that question, Brian If I recall was wears to sue Recurrently disputed currently being used again I'll defer to permit she's been worked with various specialists around the country.

Sure I assume is being used in.

Pamela Pierce Palmer: Sure, DSUTI is being used in ambulatory surgery settings; it's being used in procedural suites, adjacent physicians' offices, and emergency rooms. So we're seeing a lot of Dysuvia use in short-term settings. Also, some interesting medically supervised settings, such as fertility clinics, which often have to do painful procedures and currently use IV opioids in that setting. They're finding Dysuvia to be a very nice, non-invasive alternative. We also typically see oral surgery, as well as some ENT procedures. So again, medically supervised settings cover a wide swath of medical specialties, and we're happy that they've seen the benefits of Dysuvia in each of those different areas.

Inventory surgery, setting, it's being used in procedural suite.

Jason Lippert physicians offices, it's being used in emergency rooms. So we're seeing a lot of this you view you.

In short term settings also in some interesting medically supervised settings, such as fertility clinics, which often have to do.

Painful procedures and currently use ideal deals in that setting their funding to Sylvia to the very nice noninvasive alternative.

We also are seeing oral surgery, typically as well as CMP procedures.

So again medically supervised setting covers a wide swath of medical specialties, and we're happy that they've seen the benefits of the CBS into different areas. Tim can you also comment briefly on how you're seeing industry views in the short term settings in particular for the same day surgeries and the timing of the dose and why.

Pamela Pierce Palmer: Pam, can you also comment briefly on how you're seeing CVUs in short-term settings, in particular for same-day surgeries, and the timing of the dose and why?

Pamela Pierce Palmer: Yeah, the majority of folks using Vesuvian now are giving it preoperatively about 15 to 20 minutes prior to incision, as they know it takes 15 minutes to reach that sort of therapeutic concentration. And 90 to 95 percent of the time, they're using just a single dose. We know from our PK, as well as our clinical trials, that we get about three to four hours of analgesia with a single dose, and in those settings, that's really all they need. So it's looking like a very nice replacement for the IV injectable clear liquid opioids with just a single dose.

Yes, the majority of.

Do you think the CV and now are giving it pre operative about 15 to 20 minutes prior.

To incision as they know it takes a 15 minutes to reach that sort of therapeutic concentrations and 90% to 95% of the time Theyre using just singled out.

We know from our PK as well as our clinical trials and we get about three to four hours of analgesics with a single dose and in those settings. That's really all they need so it's looking like.

A very nice replacement for the Ivy injectable clear liquid opioids, but just a single dose.

And I reiterate beyond what pants or more spending our time as a company with our resources in the short term or the same day surgery settings within the hospital lessees with Pam mentioned before regarding oral surgery dental surgery use theres plastic surgery users fertility clinic use.

Vincent J. Angotti: And I reiterate, beyond what Pam said, we're spending our time as a company with our resources in those short-term or those same-day surgery settings within the hospital or ASCs. As Pam mentioned before regarding oral surgery, dental surgery use, there's plastic surgery use, there's fertility clinic use. Those other uses really help reinforce our strategy because they're large, they're diffused, they're not centralized. Our strategy is to partner with others to penetrate those markets exactly as we did with Zimmer Beiner. That was Component 2 of your question, Brandon. I think Component 3 was Zalviso and Pam. You can comment on that one as well, as we're continuing to study the regulatory parameters.

Those other uses really help reinforce our strategy because there are large on their diffused cannot centralized our strategy to partner with others to penetrate those markets exactly as we did with Zimmer biomet.

That was component to a good question, Brent I think component three with Zalviso and Pam you can comment on that one is wells were continuing to study the regulatory parameters. Yes, I think it's still early we've not really had a definitive framework from the FDA yet on your evaluation of new openly products.

Pamela Pierce Palmer: Yeah, I think it's still early. We have not really had a definitive framework from the FDA yet on their evaluation of new opioid products. It's unclear whether, you know, olotheridine was approved under an old framework and sort of grandfathered in. And so we're really waiting for more clarity from the FDA and specifically the DAP division on a specified framework to, you know, sort of evaluate new opioid submissions.

Unclear, whether all the 17 was approved under an old framework in sort of grandfathered in and so we're really waiting for more clarity from the FDA and specifically the DAP division on.

On a specified frame up too.

You know sort of evaluate new opioid submission think the good news in that approval does that they're clearly seeing and recognize the importance of opioids image medically supervised settings and that continues to give us comfort moving forward.

Vincent J. Angotti: I think the good news in that approval is that they're clearly seeing and recognizing the importance of opioids in these medically supervised settings, and that continues to give us comfort moving forward. Brandon, I hope that you don't mind

Brent I hope that answered the three components of your question.

Brandon Richard Folkes: It does. Do you mind if I speak one more? And I apologize; you just forgot something else. And just in terms of the feedback you received from physicians using the product, is the onset of action and duration of effect being reported in practice, similar to what we saw in the clinical trial? And then that could come in, I promise. Thank you.

Hi, guys demands from corn Martin I apologize you just.

Predicts something out.

Just in terms of the feedback you receive from.

That physicians using the product.

Is the onset of action and duration of effects being reported in practice similar to what we saw in the clinical trial.

Thank you.

Absolutely.

Pamela Pierce Palmer: Absolutely. The onset of action is very consistent. Again, the sublingual route of administration avoids the first pass effect that you experience, meaning it doesn't go to the stomach and then have to be absorbed and metabolized by the liver, which makes it very erratic. That's why oral opioid medications don't really work quickly or that consistently. So from a sublingual onset standpoint, it is very consistent.

The onset of action is very consistent.

In the Sublingual route of administration avoids the first pass the fact that you, meaning it doesnt go to still make and then they have to be absorbed and metabolize, but a liver, which makes it very erratic onset of oral opioid medications don't really work quickly or that consistently.

So from a sublingual onset standpoint, it is very consistent and the duration of action is interesting, it's actually a little bit longer.

Vincent J. Angotti: And the duration of action is interesting. It's actually a little bit longer than, you know, our clinical trial. We did not have a lot of multimodal analgesia when we were going up against placebo. You try to keep those studies quite clean. So in the real world setting, you know, we've had reports that the duration of analgesia can even last beyond three to four hours. And it has a very nice offset tail, meaning that it provides a very comfortable level of analgesia through to discharge with just that single dose.

Ben.

Our clinical trial, we did not have a lot of multi modal analgesia, we are going up against placebo you try to keep those studies quite clean so in the real world setting. We've had reports that the duration of analgesia. It can even last beyond the three to four hours. It has a very nice.

Offset tail, meaning that it provides a very comfortable level of analgesia through to discharge with just that single down.

Pamela Pierce Palmer: Yeah, I think the general feedback beyond what Pam said is that it's absolutely delivering on the messages we've communicated about the onset, the duration. And as doctors have mastered their art with it, bringing it forward in short-term surgeries and procedures has been the absolute key. Bringing it forward, meaning when they dose it, and they're timing the PK to the acute pain to really maximize the product. And it's really allowing them to use one dose, which I think has been the biggest surprise to all of them.

Yeah, I think the general feedback beyond what Pam said.

Is that it's absolutely delivering on the messages, we've communicated that offset the duration and as doctors have mastered there or was it bringing it forward in the short term surgeries and procedures has been the absolute G, bringing it forward, meaning when the doses and their timing the PK to the acute pain to really maximize the product.

And it's really aligned we use one dose, which I think it's been the largest surprise to all of them and and if I could add I think one of the most remarkable things we hear about is the lack of side effects.

Pamela Pierce Palmer: And if I could add, I think one of the most remarkable things we hear about is the lack of side effects. You know, I mean, in the PACU, the important time to discharge is sort of a composite measure. You have to have your adverse events under control, and you also have to have your pain under control to be discharged. So the thing that I love about, you know, sort of time to PACU discharge is it really is a way to look at safety at the same time, as well as, you know, making sure, when I say safety, your patients, including your elderly patients, don't have any cognitive impairment, and that's a huge part. So one of the things we're hearing back from customers is that that preoperative dose is carrying them through the operation, through the PACU. Many times, additional medications are not required at all, and they're able to discharge them more quickly because they do not have the side effects from the typical live injectable opioids that they're often seeing.

No I mean, the in the pack you the important.

Time to discharge is sort of a composite measure.

You have to have your adverse events under control and you also have to have European under control to be discharged. So the thing that I love about sort of time to packages charge is it really is a way to look at both.

And safety at the same time as well as you know making sure Mike.

On your patients, including your elderly patients don't have any cognitive impairment and thats a huge parks. So what are the things we are hearing back in Spain, and the customers is that that pre operative dose is carrying them through the operation. So rude APAC you many times additional medications and not required at all and they're able to discharge than more.

Quickly because they do not have decided effects from the typical light injectable opioids that they're often.

Brandon Richard Folkes: Brandon?

Brandon.

Vincent J. Angotti: I hope that that helps.

Very helpful. I hope so very much.

Vincent J. Angotti: I hope that helps. Thank you very much.

Thank you.

Our next question today will come from Michael Higgins of Ladenburg Thalmann. Please go ahead.

Michael Higgins: Our next question today will come from Michael Higgins of Leidenberg Zalman. Please go ahead.

My questions have been asked thanks.

Michael Higgins: My questions have been asked, thanks.

Thank you.

Operator: Thank you. Our next question today will come from Evan Seegerman of Credit Suisse. Please go ahead.

Our next question today will come from Evan Seigerman.

Credit Suisse. Please go ahead.

Evan Seegerman: Hey guys, thank you so much for taking my questions. As a follow-up on the Zimmer Biomet deal, what feedback have you gotten from dentists regarding using the product in their offices? Are they comfortable storing it in kind of all the necessary infrastructure that they would have to have by having the opioids in stock? You know, I know that they do use various drugs in the office, but just adding another one? And then, kind of, you mentioned business development. Any thoughts as to what you're looking for in terms of a target product profile? Or even more broadly speaking, you know, what type of patient population do we have? How should we be thinking about that?

Hi, guys. Thank you so much for taking my questions on a follow up on Zimmer Biomet deal what feedback have you gotten from dentists regarding using the product in office are they comfortable storing it and kind of all the.

The necessary infrastructure that they would have to have by having the opioids in stock I know that they do use various drugs in the office, but just adding another one Amen then kind of you had mentioned business development any thoughts as to what you're looking for him in terms of a target product profile or even more broadly speaking you know what type of pace.

And population how should we be thinking about that thank you so much.

Evan Seegerman: Thank you so much.

Sure well rulings oral surgeons, so we've never marketed to them that we sort of received a number of inbound queries. When it first was approved because they saw the obvious benefits.

Pamela Pierce Palmer: Sure. Well, relating to oral surgeons, we've never marketed it to them. We sort of received a number of inbound queries when it first was approved because they saw the obvious benefits. We are only REM certifying and supplying it to oral surgeons and IV sedation dentists. So that means they already have approval and already have the locked C2 storage and all the necessary oxygen and medications to treat respiratory depression due to opioids. So these are very savvy surgeons who already know how to use IV opioids. And they certainly see the advantage of a rapid onset and extended duration sublingual tablet that avoids them having to stop their procedure and redose their IV opioids, which they typically have to do multiple times throughout a procedure. So they clearly see the benefit. And that's, again, why, you know, Zimmer saw the benefit as well. They know these surgeries very well, and they know the benefit that just UVA can use.

The we are only.

Ran certifying and supplying it to oral surgeons and Ivy cetacean, Dennis so that means they already have approval and already have the luck C storage and all the necessary oxygen and medications to treat respiratory depression due to opioids. So these are very savvy surgeons, who.

Already know how to use ideal feeling any certainly see the advantage of a rapid onset and extended duration sublingual tablet that have four points and having to stop there procedure and retail their IB opioids, which they typically have to do multiple times so out of procedure. So they clearly see the benefit and thats.

Again why.

Zimmer saw the benefit as well they know the surgery is very well they know the benefits that is Sylvia can use.

Yes, Kevin just just to reiterate what why.

Vincent J. Angotti: Yeah, Evan, just to reiterate why we go with Zimmer and we mentioned these other specialty markets. They're large markets, but we don't have a large enough sales force to penetrate them like these partners have, as well as the relationships that they've built up compared to what we have. So we want to focus on the hospital ambulatory surgery center markets, with the partners that are already in these, we're calling them specialty markets. They're specialty for us, but not for others, with partners that are already in that space with established relationships and with large sales forces.

Go with a Zimmer and we mentioned that these other specialty markets.

There are large markets, but we don't have a large enough salesforce to penetrate like these partners have.

As well as the relationships that they've built up.

Compared to what we have so we want to focus on the hospital ambulatory surgery Center markets.

With the partners.

That are already in these were calling them specialty markets or their specialty for us, but not for others, but.

With partners that are already in that space with established relationships with large sales forces.

Vincent J. Angotti: And that leads into, I think, the second component of your question, Evan, which was the target product profile as we look at business development opportunities moving forward. So for us, the biggest key is efficiency.

And that bleeds into that I think the second component of your question, Evan which was target product profile as we look at business development opportunities moving forward. So for us the biggest key is efficiency.

Vincent J. Angotti: Meaning, oh, it's the call patterns within these medically supervised settings where we currently deploy our resources. We want to keep them focused where they currently are, whether it's the hospital or the AFC, or the anesthesiologists in the office suites, et cetera. We want to continue to target those.

Meaning owes the call patterns within these medically supervised settings, where we're currently deployed or resources, we want to keep them focused where they currently ARX, whether the hospital the AMC.

Or the anesthesiologists and the office suites et cetera, we want to continue to target those the actual.

Vincent J. Angotti: The actual therapeutic area is less relevant for us. It's more of where they are located for the use of these products. Account overlap is critical and will be opportunistic moving forward. One of the common themes through all that, other than efficiency, is going to be something that's very late term or already on the market. We're not looking for long-term R&D projects.

No.

Therapeutic area is less relevant for us.

It's more of where they are located for use of these products.

Account overlap is critical and we'll be opportunistic on a moving forward one of the common themes through all that other than the efficiency is going to be something thats very late term already on the market. We're not looking for long term R&D projects.

Evan Seegerman: Okay, great. Thank you so much, guys. I appreciate the call. Thank you.

Okay, great. Thank you so much guys appreciate the color.

Thank you.

Ladies and gentlemen, this will conclude our question and answer session.

Vincent J. Angotti: Ladies and gentlemen, this will conclude our question and answer session. At this time, I'd like to turn the conference back over to Vincent Angotti for any closing remarks.

At this time I'd like to turn the conference back over to Vinson God for any closing remarks.

Vincent J. Angotti: Thank you, Operator, and thank you all for joining us today and for your continued support of AcelRx. We feel we're very well positioned for future growth, and we look very much forward to sharing more developments as they occur. So please be safe, and we look forward to giving you updates as they happen. Best.

Thank you operator, and thank you all for joining us today and for your continued support accelerates we feel we're very well positioned for future growth and we look very much forward to sharing more developments as they occur. So please be safe and look forward to giving you updates as they happen.

Yes.

Operator: The conference is now concluded, and we thank you for attending today's presentation. You may now disconnect your lines.

Oh.

The conference has now concluded and we thank you for attending today's presentation. You may now disconnect your lines.