One NASDAQ-Listed Pharma Stock to Punt On - ACRX

AcelRx Pharmaceuticals, Inc.

ACRX Details

AcelRx Pharmaceuticals, Inc. (NASDAQ: ACRX) is a speciality pharmaceutical company focused on developing and commercializing therapies to treat acute pain. Its main pipeline products are DSUVIA (also known as DZUVEO in Europe) and Zalviso. In addition, ACRX is developing ARX-02 and ARX-03.

Latest News:

• Compliance Approval: ACRX was told in February 2022 that it had completed all the FDA's criteria with the FDA Warning Letter regarding certain DSUVIA advertising materials, dated February 11, 2021, and a Closeout Letter is expected in Q1 2022.
• Licensing Agreement: AcelRx has signed a licencing deal with Aguettant, which will provide the company with two novel pre-filled syringe product candidates for the United States. These two pharmaceutical candidates have a market opportunity of more than USD 100 million, and AcelRx aims to file New Drug Applications for both in 2022.

Financial Highlights: Full Year 2021 Results (period ended on December 31, 2021)

• Decent Financial Performance: As of December 31, 2021, the company's cash, cash equivalents, and short-term investments balance were USD 51.6 million. In addition, the first two months of Q1 FY22 had a 63% increase in unit sales compared to the first two months of Q4 FY21.
• Recovery in Net loss: Despite lower sales, the company's net loss decreased from USD 40.38 million in FY20 to USD 35.09 million in FY21, owing to non-cash interest income, lower interest expenses, and lower selling general and administrative costs.
• Key Approvals: ACRX had 725 approvals as of December 31, 2021, compared to its initial objective of 615. DSUVIA has received 813 formulary approvals for ACRX as of February 28, 2022.

(Source: Company Website)

Key Risks:

• Distributor Concentration Risk: ACRX distributes DSUVIA and Zalviso through a select group of distributors and pharmaceutical wholesalers. As a result, distributors' and wholesalers' violation of the contract might harm the business.
• Product Concentration Risk: ACRX's prospects are significantly dependent on the success of DSUVIA. It has invested a significant number of resources in its development. If it fails to get marketing permissions or set up an efficient manufacturing and distribution system, it could harm its operations.

Valuation Methodology: EV/SALES Multiple based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

ACRX shifted its commercial resources to a new customer base, which resulted in a significant rise in DSUVIA unit sales. The filing of two new drug applications (NDAs) for the company's pre-filled syringe product candidates is one of the company's year-end objectives for 2022. Based on a steep correction of 66.85% in the past six months, decent financial performance, key approvals, and current valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 0.33, up by 4.71% as of March 21, 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

1 Year Technical Price Chart (as of March 21, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Summary Analysis

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.