UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended
or
| | TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from to
Commission File Number:
ACELRX PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of | (IRS Employer |
(
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class: | Trading symbol(s) | Name of Each Exchange on Which registered: |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes
As of November 3, 2023, the number of outstanding shares of the registrant’s common stock was
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023
TABLE OF CONTENTS
| Page |
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| PART I. FINANCIAL INFORMATION |
5 |
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| Item 1. |
Financial Statements (unaudited) |
5 |
|
| Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 |
5 |
||
| Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 |
6 |
||
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2023 and 2022 |
7 |
||
| Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 |
8 |
||
| Notes to the Unaudited Condensed Consolidated Financial Statements |
9 |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
|
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
34 |
|
| Item 4. |
Controls and Procedures |
34 |
|
| PART II. OTHER INFORMATION |
35 |
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| Item 1. |
Legal Proceedings |
35 |
|
| Item 1A. |
Risk Factors |
36 |
|
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
63 |
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| Item 3. |
Defaults Upon Senior Securities |
63 |
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| Item 4. |
Mine Safety Disclosures |
63 |
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| Item 5. |
Other Information |
63 |
|
| Item 6. |
Exhibits |
64 |
|
Unless the context indicates otherwise, the terms “AcelRx,” “AcelRx Pharmaceuticals,” “we,” “us” and “our” refer to AcelRx Pharmaceuticals, Inc., and its consolidated subsidiary. “Niyad” and “Fedsyra” are trademarks, and “ACELRX” and “Zalviso” are registered trademarks, all owned by AcelRx Pharmaceuticals, Inc. This report also contains trademarks and trade names that are the property of their respective owners.
Forward-Looking Statements
This Quarterly Report on Form 10-Q, or Form 10-Q, contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by that section. The forward-looking statements in this Form 10-Q are contained principally under “Part I. Financial Information - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II. Other Information - Item 1A. Risk Factors”. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Many important factors affect our ability to achieve our objectives, including:
| • |
our ability to obtain additional required financing and to continue as a going concern; |
| • |
our ability to manage our operating costs and reduce our cash burn; |
| • |
the accuracy of our estimates regarding the sufficiency of our cash resources, future revenues, expenses, and capital requirements; |
| • |
our ability to maintain listing of our securities trading on the Nasdaq exchange; |
| • |
the historical performance and high volatility in the market price of our common stock; |
| • |
macroeconomic uncertainties, including inflationary pressures, domestic and global supply chain disruptions, labor shortages, significant volatility in global markets, recession risks and the worldwide COVID-19 pandemic; |
| • |
our ability to conduct ourselves, or through a contract research organization, clinical trials in a timely and effective manner to advance the development of our product candidates, including our lead nafamostat developmental product candidate, Niyad™; |
| • |
our ability to successfully file for and obtain regulatory approval for, and then successfully launch and commercialize our developmental product candidates; |
| • |
the success of our corporate partner, Vertical Pharmaceuticals LLC, a wholly owned subsidiary of Alora Pharmaceuticals, LLC, or Alora, in integrating and commercializing the DSUVIA asset in the United States, including their effectiveness in marketing, sales, and distribution of the DSUVIA product, itself or with potential collaborators; |
| • |
the extent of future sales of DSUVIA by Alora to the Department of Defense, or DoD; |
| • |
the size and growth potential of the potential markets for our developmental product candidates in the United States and in other jurisdictions, and our ability to serve those markets; |
| • |
our ability to realize the expected benefits and potential value created by the acquisition of Lowell Therapeutics, Inc., or Lowell, for our stockholders, on a timely basis or at all; |
| • |
our ability to develop sales and marketing capabilities in a timely fashion, whether alone through recruiting qualified employees, by engaging a contract sales organization, or with potential future collaborators; |
| • |
successfully establishing and maintaining commercial manufacturing and supply chain relationships with domestic and global third-party service providers; |
| • |
our ability to manage effectively, and the impact of any costs associated with, potential governmental investigations, inquiries, regulatory actions or lawsuits that may be, or have been, brought against us; |
| • |
our ability to obtain adequate government or third-party payer reimbursement for our developmental product candidates, if approved; |
| • |
our ability to gain access to formularies and establish and then maintain effective relationships with pharmaceutical benefit managers and/or group purchasing organizations for our developmental product candidates, if approved; |
| • |
our ability to attract additional collaborators with development, regulatory and commercialization expertise; |
| • |
our ability to identify and secure potential strategic partners to develop, secure regulatory approval for and then commercialize our developmental product candidates; |
| • |
our ability to successfully retain our key commercial, scientific, engineering, medical or management personnel and hire new personnel as needed; |
| • |
existing and future legislation and other regulatory developments in the United States and foreign countries; |
| • |
the performance of our third-party suppliers and manufacturers, including any supply chain impacts or work limitations; |
| • |
the success of competing therapies that are or become available; and |
| • |
our ability to obtain and maintain intellectual property protection for our approved products and product candidates. |
In addition, you should refer to “Part II. Other Information - Item 1A. Risk Factors” in this Form 10-Q for a discussion of these and other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
AcelRx Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
| September 30, 2023 | December 31, 2022(1) | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Short-term investments | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| In-process research and development asset | ||||||||
| Other assets | ||||||||
| Assets of discontinued operations | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued and other liabilities | ||||||||
| Long-term debt, current portion | ||||||||
| Liabilities of discontinued operations, current portion | ||||||||
| Total current liabilities | ||||||||
| Warrant liability | ||||||||
| Other long-term liabilities | ||||||||
| Liabilities of discontinued operations | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock, $ par value— shares authorized as of September 30, 2023 and December 31, 2022; and shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
| (1) |
The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements as of that date included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which were recast to reflect discontinued operations and filed with the Company’s Current Report on Form 8-K on August 1, 2023. |
See notes to condensed consolidated financial statements.
AcelRx Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2023 |
2022(1) |
2023 |
2022(1) |
|||||||||||||
| Royalty revenue |
$ | $ | $ | $ | ||||||||||||
| Operating costs and expenses: |
||||||||||||||||
| Research and development |
||||||||||||||||
| Selling, general and administrative |
||||||||||||||||
| Impairment of property and equipment |
||||||||||||||||
| Total operating costs and expenses |
||||||||||||||||
| Loss from operations |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense |
( |
) |
( |
) |
( |
) |
||||||||||
| Interest income and other income, net |
||||||||||||||||
| Non-cash interest income on liability related to the sale of future royalties |
||||||||||||||||
| Gain on extinguishment of liability related to the sale of future royalties |
||||||||||||||||
| Total other income (expense) |
( |
) |
||||||||||||||
| Net income (loss) before income taxes |
( |
) |
( |
) |
( |
) |
||||||||||
| Provision for income taxes |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
| Net income (loss) from continuing operations |
( |
) |
( |
) |
( |
) |
||||||||||
| Net income (loss) from discontinued operations – See Note 3 |
( |
) |
( |
) |
( |
) |
||||||||||
| Net income (loss) |
( |
) |
( |
) |
( |
) |
||||||||||
| Deemed dividends related to Series A Redeemable Convertible Preferred Stock |
( |
) |
( |
) |
||||||||||||
| Income allocated to participating securities |
( |
) |
||||||||||||||
| Net income (loss) attributable to Common Shareholders, basic |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ||||||
| Net income (loss) attributable to Common Shareholders, diluted |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ||||||
| Net income (loss) per share attributable to stockholders: |
||||||||||||||||
| Basic earnings (loss) per share |
||||||||||||||||
| Income (loss) from continuing operations |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ||||||
| Income (loss) from discontinued operations |
$ | $ | ( |
) |
$ | ( |
) |
$ | ( |
) |
||||||
| Net income (loss) per share |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ||||||
| Diluted earnings (loss) per share |
||||||||||||||||
| Income (loss) from continuing operations |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ||||||
| Income (loss) from discontinued operations |
$ | $ | ( |
) |
$ | ( |
) |
$ | ( |
) |
||||||
| Net income (loss) per share |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ||||||
| Shares used in computing net income (loss) per share of common stock, basic – See Note 10 |
||||||||||||||||
| Shares used in computing net income (loss) per share of common stock, diluted – See Note 10 |
||||||||||||||||
| (1) |
The condensed consolidated statements of operations for the three and nine months ended September 30, 2022 have been derived from the unaudited condensed consolidated financial statements for those periods included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, which were recast to reflect discontinued operations and filed with the Company’s Current Report on Form 8-K on August 1, 2023. |
See notes to condensed consolidated financial statements.
AcelRx Pharmaceuticals, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
(in thousands, except share data)
| Common Stock |
Additional |
Accumulated |
Total |
|||||||||||||||||
| Shares |
Amount |
|||||||||||||||||||
| Balance as of December 31, 2022 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes |
( |
) | ( |
) | ||||||||||||||||
| Exercise of prefunded warrants |
||||||||||||||||||||
| Issuance of common stock upon ESPP purchase |
||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||
| Balance as of March 31, 2023 |
( |
) | ||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||
| Issuance of hold back common stock in connection with asset acquisition |
||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||
| Balance as of June 30, 2023 |
( |
) | ||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes |
||||||||||||||||||||
| Exercise of prefunded warrants |
||||||||||||||||||||
| Issuance of common stock upon ESPP purchase |
||||||||||||||||||||
| Issuance of common stock and warrants, net |
||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||
| Balance as of September 30, 2023 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Additional |
Total |
|||||||||||||||||||||||||||
| Series A Redeemable | Paid-in |
Accumulated |
Stockholders’ |
|||||||||||||||||||||||||
| Convertible Preferred Stock |
Common Stock |
Capital |
Deficit |
Equity (Deficit) |
||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
| Balance as of December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
| Stock-based compensation |
— | — | ||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes |
( |
) | ( |
) | ||||||||||||||||||||||||
| Issuance of common stock in connection with asset acquisition |
||||||||||||||||||||||||||||
| Issuance of common stock upon ESPP purchase |
||||||||||||||||||||||||||||
| Net loss |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||
| Balance as of March 31, 2022 |
( |
) | ( |
) | ||||||||||||||||||||||||
| Stock-based compensation |
— | — | ||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units |
||||||||||||||||||||||||||||
| Net income |
— | — | ||||||||||||||||||||||||||
| Balance as of June 30, 2022 |
( |
) | ||||||||||||||||||||||||||
| Stock-based compensation |
— | — | ||||||||||||||||||||||||||
| Issuance of Series A Redeemable Convertible Preferred Stock and Warrants |
||||||||||||||||||||||||||||
| Deemed dividends related to Series A Redeemable Convertible Preferred Stock |
( |
) | ( |
) | ||||||||||||||||||||||||
| Net proceeds from issuance of common stock in connection with equity financings |
||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units |
||||||||||||||||||||||||||||
| Issuance of common stock upon ESPP purchase |
||||||||||||||||||||||||||||
| Net loss |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||
| Balance as of September 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
See notes to condensed consolidated financial statements.
AcelRx Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Nine Months |
||||||||
| 2023 |
2022 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net (loss) income |
$ | ( |
) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
| Non-cash interest income on liability related to royalty monetization |
( |
) | ||||||
| Depreciation and amortization |
||||||||
| Non-cash interest expense related to debt financing |
||||||||
| Non-cash issuance of Lowell holdback shares |
( |
) | ||||||
| Stock-based compensation |
||||||||
| Non-cash gain on termination of liability related to royalty termination |
( |
) | ||||||
| Impairment of property and equipment |
||||||||
| Revaluation of warrant liability |
( |
) | ||||||
| Impairment of net assets held for sale |
||||||||
| Impairment of fixed assets |
||||||||
| Gain on termination of lease liabilities |
( |
) | ||||||
| Gain on extinguishment of debt liability |
( |
) | ||||||
| Other |
( |
) | ( |
) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ( |
) | ||||
| Inventories |
||||||||
| Prepaid expenses and other assets |
||||||||
| Other assets |
||||||||
| Accounts payable |
( |
) | ||||||
| Accrued liabilities |
( |
) | ( |
) | ||||
| Operating lease liabilities |
( |
) | ( |
) | ||||
| Deferred revenue |
( |
) | ( |
) | ||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
( |
) | ( |
) | ||||
| Purchase of investments |
( |
) | ||||||
| Sale of the DSUVIA assets |
||||||||
| Cash paid for asset acquisition, net of cash acquired |
( |
) | ||||||
| Proceeds from maturities of investments |
||||||||
| Net cash provided by investing activities |
||||||||
| Cash flows from financing activities: |
||||||||
| Payment of long-term debt |
( |
) | ( |
) | ||||
| Net proceeds from issuance of Issuance of Series A Redeemable Convertible Preferred Stock and Warrants |
||||||||
| Net proceeds from issuance of common stock in connection with equity financings |
||||||||
| Net proceeds from issuance of common stock in connection with exercise of prefunded warrants |
||||||||
| Net proceeds from issuance of common stock through equity plans |
||||||||
| Payment of employee tax obligations related to vesting of restricted stock units |
( |
) | ( |
) | ||||
| Net provided by (cash used in) financing activities |
( |
) | ||||||
| Net change in cash, cash equivalents and restricted cash |
( |
) | ||||||
| Cash, cash equivalents and restricted cash—Beginning of period |
||||||||
| Cash, cash equivalents and restricted cash—End of period |
$ | $ | ||||||
| NONCASH INVESTING AND FINANCING ACTIVITIES: |
||||||||
| Purchases of property and equipment in accounts payable and accrued liabilities |
$ | |||||||
| Liability for hold back shares in connection with asset acquisition in other long-term liabilities |
$ | |||||||
| Issuance of common stock in connection with asset acquisition |
$ | |||||||
| Establishment of right-of-use asset and lease liability |
$ | |||||||
| Offering costs in accounts payable |
$ | |||||||
| Fair value of warrants issued to placement agent |
$ | |||||||
See notes to condensed consolidated financial statements.
AcelRx Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except where otherwise noted)
1. Organization and Summary of Significant Accounting Policies
The Company
AcelRx Pharmaceuticals, Inc., or the Company, or AcelRx, was incorporated in Delaware on July 13, 2005 as SuRx, Inc. The Company subsequently changed its name to AcelRx Pharmaceuticals, Inc. The Company’s operations are based in San Mateo, California.
AcelRx is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for use in medically supervised settings.
On March 12, 2023, the Company entered into an Asset Purchase Agreement, or the DSUVIA Agreement, with Vertical Pharmaceuticals, LLC, a wholly owned subsidiary of Alora Pharmaceuticals, LLC, or Alora, pursuant to which Alora agreed to acquire certain assets and assume certain liabilities of AcelRx relating to its sufentanil sublingual tablet product referred to as DSUVIA or DZUVEO, or any other single-dose pharmaceutical product for use in medically supervised settings containing a sublingual tablet that includes sufentanil as the sole active ingredient, as a 30 mcg tablet or other dosage form or strength as reasonably necessary for lifecycle management, or the Product. The closing of the DSUVIA Agreement occurred on April 3, 2023 (see Note 3, “Discontinued Operations”).
On January 7, 2022, the Company acquired Lowell Therapeutics, Inc., or Lowell, a privately held company (see Note 4, “Asset Acquisition” to the consolidated financial statements in the Company’s 2022 Annual Report on Form 10-K for additional information) and, as a result acquired Niyad™, a regional anticoagulant for the dialysis circuit during continuous renal replacement therapy for acute kidney injury patients in the hospital, that the Company plans to study under an investigational device exemption, or IDE, and which has received Breakthrough Device Designation status from the FDA. While not approved for commercial use in the United States, the active drug component of Niyad, nafamostat, has been approved in Japan and South Korea as a regional anticoagulant for the dialysis circuit, disseminated intravascular coagulation, and acute pancreatitis. Niyad is a lyophilized formulation of nafamostat, a broad-spectrum, synthetic serine protease inhibitor, with anticoagulant, anti-inflammatory, and potential anti-viral activities. The second intended indication for Niyad is as a regional anticoagulant for the dialysis circuit for chronic kidney disease patients undergoing intermittent hemodialysis in dialysis centers. In addition, the Company acquired LTX-608, a proprietary nafamostat formulation for direct IV infusion that it intends to develop for the treatment of acute respiratory distress syndrome, or ARDS, and disseminated intravascular coagulation, or DIC.
On July 14, 2021, the Company entered into a License and Commercialization Agreement, or the PFS Agreement, with Laboratoire Aguettant, or Aguettant, pursuant to which the Company obtained the exclusive right to develop and, subject to FDA approval, commercialize in the United States an ephedrine pre-filled syringe, or PFS, containing 10 ml of a solution of 3 mg/ml ephedrine hydrochloride for injection, and (ii) a phenylephrine PFS containing 10 ml of a solution of 50 mcg/ml phenylephrine for injection. Aguettant will supply the Company with the products for use in commercialization, if they are approved in the U.S.
Liquidity and Going Concern
The unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. The Company has incurred recurring operating losses and negative cash flows from operating activities and expects to continue to incur operating losses and negative cash flows in the future. Although in July 2023 the Company closed the private placement of its common stock, pre-funded warrants and common warrants for aggregate gross proceeds to the Company of $
Reverse Stock Split
On September 23, 2022, at a special meeting of stockholders, the Company's stockholders authorized the Company’s Board of Directors to effect a reverse stock split of all outstanding shares of common stock in a range of 1-for-
As the par value per share of the Company's common stock remained unchanged at $
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the United States. Securities and Exchange Commission, or SEC. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any future period. The unaudited condensed consolidated balance sheet as of December 31, 2022, was derived from the Company’s audited financial statements as of December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2023, which were recast to reflect discontinued operations and filed with the Company’s Current Report on Form 8-K on August 1, 2023. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which includes a broader discussion of the Company’s business and the risks inherent therein.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Management evaluates its estimates on an ongoing basis including critical accounting policies. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board, or FASB, issued Topic 326, or the Credit Losses standard, which the Company adopted using a modified retrospective approach on January 1, 2023. Topic 326 requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value. The adoption of this standard did not have a material impact on the Company’s financial statements or related disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
Significant Accounting Policies
The Company’s significant accounting policies are detailed in its Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2023, from those previously disclosed in its 2022 Annual Report on Form 10-K, except as follows:
Royalty Revenue
The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606). The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
| • | identify the contract with a customer; |
| • | identify the performance obligations in the contract; |
| • | determine the transaction price; |
| • | allocate the transaction price to performance obligations in the contract; and |
| • | recognize revenue as the performance obligation is satisfied. |
The Company’s royalty revenue relates to the Company’s portion of net revenue earned on the sales of DSUVIA to the Department of Defense, or DoD, by Alora under the Marketing Agreement (as defined in Note 3). The Company’s performance obligation is to serve as the exclusive sales agent for selling DSUVIA to the DoD through the term of the Marketing Agreement. The non-creditable and non-refundable royalty revenues are variable consideration based on
The consideration in the Marketing Agreement reflects a variable amount, for which the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer by using the expected value method. The Company includes in the transaction price the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. Royalty revenues are recognized when the DoD obtains control of the product, at which time the Company has an unconditional right to receive payment for such royalty earned.
Discontinued Operations
In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. In the period in which the component meets held-for-sale or discontinued operations criteria the major current assets, non-current assets, current liabilities, and non-current liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes, shall be reported as components of net loss separate from the net income (loss) of continuing operations.
The Company’s DSUVIA business met the definition of a discontinued operation as of March 31, 2023. Accordingly, the Company has classified the results of the DSUVIA business as discontinued operations in its unaudited condensed consolidated statements of operations for all periods presented. All assets and liabilities associated with the DSUVIA business were classified as assets and liabilities of discontinued operations in the unaudited condensed consolidated balance sheets for the periods presented. All amounts included in the notes to the unaudited condensed consolidated financial statements relate to continuing operations unless otherwise noted. (See Note 3, Discontinued Operations).
2. Investments and Fair Value Measurement
Investments
The Company classifies its marketable securities as available for sale and records its investments at fair value. Available-for-sale securities are carried at estimated fair value based on quoted market prices or observable market inputs of almost identical assets, with the unrealized holding gains and losses included in accumulated other comprehensive income (loss).
As of September 30, 2023, and December 31, 2022, the contractual maturity of all investments held was less than one year.
The tables below summarize the Company’s cash, cash equivalents and short-term investments (in thousands):
| As of September 30, 2023 |
||||||||||||||||
| Amortized Cost |
Gross Unrealized |
Gross Unrealized |
Fair |
|||||||||||||
| Cash, cash equivalents and restricted cash: |
||||||||||||||||
| Cash |
$ | $ | — | $ | — | $ | ||||||||||
| Money market funds |
— | — | ||||||||||||||
| U.S. government agency securities |
— | — | ||||||||||||||
| Commercial paper |
— | — | ||||||||||||||
| Total cash and cash equivalents |
$ | $ | — | $ | — | $ | ||||||||||
| As of December 31, 2022 |
||||||||||||||||
| Amortized Cost |
Gross Unrealized |
Gross Unrealized |
Fair |
|||||||||||||
| Cash, cash equivalents and restricted cash: |
||||||||||||||||
| Cash |
$ | $ | — | $ | — | $ | ||||||||||
| Money market funds |
— | — | ||||||||||||||
| U.S. government agency securities |
— | — | ||||||||||||||
| Commercial paper |
— | — | ||||||||||||||
| Total cash, cash equivalents and restricted cash |
— | — | ||||||||||||||
| Short-term investments: |
||||||||||||||||
| Commercial paper |
||||||||||||||||
| Total short-term investments |
||||||||||||||||
| Total cash, cash equivalents, restricted cash and short-term investments |
$ | $ | — | $ | — | $ | ||||||||||
At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic conditions. There were no material realized or unrealized gains or losses on marketable securities for the three and nine months ended September 30, 2023 or the twelve months ended December 31, 2022. As such, we did not record a credit allowance for the three and nine months ended September 30, 2023.
Fair Value Measurement
The Company’s financial instruments consist of Level I and II assets. Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. For Level II instruments, the Company estimates fair value by utilizing third-party pricing services in developing fair value measurements where fair value is based on valuation methodologies such as models using observable market inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers and other reference data. Such Level II instruments typically include U.S. Treasury, U.S. government agency securities and commercial paper. As of September 30, 2023 and December 31, 2022, the Company held, in addition to Level II assets, a warrant liability related to the 2022 Warrants (see Note 12, “Warrants” in the Company’s 2022 Annual Report on Form 10-K for further description). The fair value of the warrant liability was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions: dividend yield, expected term in years; equity volatility; and risk-free interest rate (see Note 8, “Warrants” below). The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period. The estimated fair value of the warrant liability represents a Level III measurement. Changes to the estimated fair value of these liabilities are recorded in interest income and other income, net in the unaudited condensed consolidated statements of operations.
The following tables set forth the fair value of the Company’s financial assets by level within the fair value hierarchy (in thousands):
| As of September 30, 2023 |
||||||||||||||||
| Fair Value |
Level I |
Level II |
Level III |
|||||||||||||
| Assets |
||||||||||||||||
| Money market funds |
$ | $ | $ | $ | ||||||||||||
| U.S. government agency securities |
||||||||||||||||
| Commercial paper |
||||||||||||||||
| Total assets measured at fair value |
$ | $ | $ | $ | ||||||||||||
| Liabilities |
||||||||||||||||
| Warrant liability |
$ | $ | $ | $ | ||||||||||||
| Total liabilities measured at fair value |
$ | $ | $ | $ | ||||||||||||
| As of December 31, 2022 |
||||||||||||||||
| Fair Value |
Level I |
Level II |
Level III |
|||||||||||||
| Assets |
||||||||||||||||
| Money market funds |
$ | $ | $ | $ | ||||||||||||
| U.S. government agency securities |
||||||||||||||||
| Commercial paper |
||||||||||||||||
| Total assets measured at fair value |
$ | $ | $ | $ | ||||||||||||
| Liabilities |
||||||||||||||||
| Warrant liability |
$ | $ | $ | $ | ||||||||||||
| Total liabilities measured at fair value |
$ | $ | $ | $ | ||||||||||||
The following table sets forth a summary of the changes in the fair value of the Company’s Level III warrant liability for the three and nine months ended September 30, 2023 (in thousands):
| Three Months Ended September 30, 2023 |
Nine Months Ended |
|||||||
| Fair value—beginning of period |
$ | $ | ||||||
| Change in fair value of 2022 Warrants liability |
( |
) |
( |
) |
||||
| Fair value—end of period |
$ | $ | ||||||
There was no such warrant liability for the three and nine months ended September 30, 2022.
There were no transfers between Level I, Level II or Level III of the fair value hierarchy during the three and nine months ended September 30, 2023 and the year ended December 31, 2022.
3. Discontinued Operations
Asset Purchase Agreement
On April 3, 2023, the Company, closed the transactions contemplated by the DSUVIA Agreement entered into on March 12, 2023, with Alora, pursuant to which Alora agreed to acquire certain assets and assume certain liabilities of AcelRx relating to its sufentanil sublingual tablet product referred to as DSUVIA or DZUVEO, or any other single-dose pharmaceutical product for use in medically supervised settings containing a sublingual tablet that includes sufentanil as the sole active ingredient, as a 30 mcg tablet or other dosage form or strength as reasonably necessary for lifecycle management, or the Product. The Product expressly excludes the pharmaceutical product referred to as Zalviso (sufentanil sublingual tablets, each 15 mcg), any other multi-dose administration system containing sufentanil sublingual tablets (whether as the sole active ingredient or in combination with other active ingredients), and any single-dose formulation of sufentanil for use outside of a medically supervised setting. With the closing of the transaction, AcelRx is entitled to receive (a) up to $
The DSUVIA Agreement contains customary representations, warranties, and covenants by each party. Alora agreed not to practice, license or otherwise exploit any of the intellectual property rights acquired by it under the DSUVIA Agreement to manufacture, develop or commercialize any product (other than Product) that is or has been commercialized by AcelRx or its affiliate as of the date of the DSUVIA Agreement, or any product that is competitive with any such product. In addition, Alora will use commercially reasonable efforts to maintain regulatory approvals for and commercialize Product in the United States. The DSUVIA Agreement also contains indemnification rights for each of AcelRx and Alora for breaches of representations, warranties, and covenants, as well as certain other matters, subject to certain specified limitations.
The Closing included the execution of the Amended DZUVEO Agreement (as defined below) and the Amended and Restated Supply Agreement (as defined below) between AcelRx and Aguettant, as well as certain ancillary agreements between AcelRx and Alora. Such ancillary agreements include (a) an intellectual property agreement, pursuant to which Alora granted fully-paid, royalty-free and perpetual licenses to AcelRx under certain specified intellectual property rights acquired by Alora under the DSUVIA Agreement for, among other things, the development, manufacture, commercialization and exploitation of certain products, including Zalviso, (b) a transition services agreement, pursuant to which, during the period specified therein, AcelRx will be paid to provide certain services (including, manufacturing technology transfer, supply chain, regulatory, and medical affairs services) to Alora, and distribute, on behalf of Alora, certain inventory of Product transferred to Alora under the DSUVIA Agreement, and (c) a marketing agreement, or the Marketing Agreement, pursuant to which AcelRx will have the exclusive right to market and offer Product for sale to DoD and Alora will pay to AcelRx
Amendments to Certain Agreements Between AcelRx and Aguettant
AcelRx and Aguettant are parties to (a) the License and Commercialization Agreement, dated July 14, 2021, pursuant to which Aguettant obtained the exclusive right to develop and commercialize DZUVEO in certain European countries for the management of acute moderate to severe pain in adults in medically monitored settings, or the DZUVEO Agreement, and (b) the supply agreement, dated December 6, 2021, with respect to the manufacture and supply of DZUVEO in form of bulk product by AcelRx to Aguettant, or the Supply Agreement. Pursuant to the DSUVIA Agreement, AcelRx and Aguettant entered into an amendment to the DZUVEO Agreement, or the Amended DZUVEO Agreement, and an amendment and restatement to the Supply Agreement, or the Amended and Restated Supply Agreement.
Pursuant to the Amended DZUVEO Agreement, (a) Aguettant’s obligations to make sales-based milestone payments and to achieve certain levels of minimum sales terminated, (b) AcelRx agreed to manufacture and supply DZUVEO in the form of bulk products (i.e., products that are pre-packaged in labeled pouches and packed in bright stock cartons for shipment) to Aguettant or its affiliates or sublicensees, and Aguettant will be responsible for manufacturing finished products from bulk products, before Aguettant establishes a semi-automated packaging line for Product, and (c) after Aguettant has established such semi-automated packaging line, AcelRx will cause DZUVEO to be manufactured and supplied in the form of bulk tablets (i.e., products in tablet forms supplied in bulk (not packaged) quantities) to Aguettant or its affiliates or sublicensees, and Aguettant will be responsible for manufacturing finished products from bulk tablets. The Amended and Restated Supply Agreement will govern the manufacture and supply of DZUVEO in the form of bulk products or bulk tablets, and contain customary terms, including those with respect to manufacturing requirements, forecast, delivery, and post-delivery inspection.
Pursuant to the DSUVIA Agreement, AcelRx assigned the Amended DZUVEO Agreement and the Amended and Restated Supply Agreement to Alora.
In addition, AcelRx and Aguettant amended the License and Commercialization Agreement, dated July 14, 2021, pursuant to which AcelRx obtained exclusive rights to develop and commercialize certain ephedrine pre-filled syringe and certain phenylephrine prefilled syringe in the United States, or the PFS Agreement (see Note 4, “In-License Agreement” below).
The Company’s DSUVIA business met the definition of a discontinued operation as of March 31, 2023. Accordingly, the assets and liabilities associated with these operations have been classified as assets and liabilities of discontinued operations in the accompanying condensed consolidated balance sheets at September 30, 2023 and December 31, 2022. The operations and cash flows of the DSUVIA business are presented as discontinued for all periods presented.
The following table presents the results of the discontinued operations for the three- and nine-month periods ended September 30, 2023 and 2022 (in thousands):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Selling, general and administrative expense | ||||||||||||||||
| Impairment of net assets held for sale | ( | ) | ||||||||||||||
| Impairment of fixed assets | ||||||||||||||||
| Gain on termination of lease liabilities | ( | ) | ||||||||||||||
| Research and development expenses | ||||||||||||||||
| Net income (loss) from discontinued operations | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented (in thousands).
| | September 30, 2023 | December 31, 2022 | ||||||
| Accounts receivable, net | $ | $ | ||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets of discontinued operations | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Total non-current assets of discontinued operations | ||||||||
| Total assets of discontinued operations | $ | $ | ||||||
| | | | ||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Note payable, current portion | ||||||||
| Deferred revenue, current portion | ||||||||
| Total current liabilities of discontinued operations | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Deferred revenue, net of current portion | ||||||||
| Total non-current liabilities of discontinued operations | ||||||||
| Total liabilities of discontinued operations | ||||||||
| Net assets (liabilities) of discontinued operations | $ | ( | ) | $ | ||||
The following table presents the significant non-cash items and purchases of property, plant and equipment for the discontinued operations that are included in the accompanying unaudited condensed consolidated statements of cash flows (in thousands):
| | | | ||||||
| | Nine Months Ended | |||||||
| | September 30, | |||||||
| | 2023 | 2022 | ||||||
| Cash flows from operating activities: | ||||||||
| Depreciation and amortization | $ | $ | ||||||
| Stock-based compensation | ||||||||
| Impairment of net assets held for sale | ||||||||
| Impairment of fixed assets | ||||||||
| Gain on termination of lease liabilities | ( | ) | ||||||
| Gain on extinguishment of debt | ( | ) | ||||||
The following table represents the gain (loss) on sale of discontinued operations for the three and nine months ended September 30, 2023:
| Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | |||||||
| Cash proceeds | $ | $ | ||||||
| Less: net assets transferred | ( | ) | ||||||
| Less: disposal costs | ( | ) | ||||||
| Loss on sale of discontinued operations, before income taxes | ( | ) | ||||||
| Income tax expense | — | — | ||||||
| Gain (loss) on sale of discontinued operations | $ | $ | ( | ) | ||||
4. In-License Agreement
On July 14, 2021, the Company entered into a License and Commercialization Agreement, or the PFS Agreement, with Aguettant pursuant to which the Company obtained the exclusive right to develop and, subject to FDA approval, commercialize in the United States (i) an ephedrine pre-filled syringe containing 10 ml of a solution of 3 mg/ml ephedrine hydrochloride for injection, and (ii) a phenylephrine pre-filled syringe containing 10 ml of a solution of 50 mcg/ml phenylephrine hydrochloride for injection. Aguettant will supply the Company with the products for use in commercialization, if they are approved in the United States.
The PFS Agreement has an initial term of ten () marketing years, with the first marketing year ending on December 31 of the calendar year after the first launch of a product (or December 31 of the same calendar year if the first launch of a product occurs between January 1 and April 30 of a calendar year). The term will automatically renew for successive marketing year periods unless a party notifies the other party of its intention not to renew at least six (6) months prior to the expiration of the then-current term.
The Company will purchase each product from Aguettant at an agreed price, or the PFS Purchase Price, subject to adjustment. The Company will also make revenue share payments that, combined with the PFS Purchase Price, will range from
The Company and Aguettant will agree on minimum sales obligations twelve () months prior to the launch of each product.
The Company has the right to grant sublicenses to its affiliates or, with the prior approval of Aguettant, third parties, subject to certain limitations.
In connection with AcelRx’s and Aguettant’s agreement to enter into the Amended DZUVEO Agreement and the Amended and Restated Supply Agreement, the parties entered into an amendment to the PFS Agreement, or the Amended PFS Agreement, pursuant to which, effective April 3, 2023, (a) Aguettant paid AcelRx a complementary payment in the amount of EUR
As of September 30, 2023, there have been no payments by the Company to Aguettant under the PFS Agreement.
5. Long-Term Debt
Loan Agreement with Oxford
On May 30, 2019, the Company entered into the Loan Agreement with Oxford Finance LLC, or Oxford, as the Lender. Under the Loan Agreement, the Lender made a term loan to the Company in an aggregate principal amount of $
As of September 30, 2023 and December 31, 2022, the accrued balance due under the Loan Agreement with Oxford was $
In connection with the closing of the divestment of DSUVIA to Alora, on April 3, 2023, the Company paid Oxford the remaining amount due of approximately $
6. Commitments and Contingencies
Litigation
On June 8, 2021, a securities class action complaint was filed in the U.S. District Court for the Northern District of California against the Company and of its officers. The plaintiff is a purported stockholder of the Company. The complaint alleged that defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by making false and misleading statements and omissions of material fact about the Company’s disclosure controls and procedures with respect to its marketing of DSUVIA. The complaint sought unspecified damages, interest, attorneys’ fees, and other costs. On December 16, 2021, the Court appointed co-lead plaintiffs. Plaintiffs’ amended complaint was filed on March 7, 2022. The amended complaint named the Company and three of its officers and continued to allege that defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by making false and misleading statements and omissions of material fact about the Company’s disclosure controls and procedures with respect to its marketing of DSUVIA. The amended complaint also asserted a violation of Section 20A of the Exchange Act against the individual defendants for alleged insider trading. The amended complaint sought unspecified damages, interest, attorneys’ fees, and other costs. On September 1, 2022, the Court held oral hearings on the Company’s motion to dismiss the amended complaint with prejudice that was filed on July 21, 2022. On September 28, 2022, the Court issued a formal written opinion, or the First Opinion, dismissing all of the plaintiff’s claims against the Company and the named defendants with leave for plaintiffs to amend their complaint. On November 28, 2022 the plaintiffs filed their second amended complaint. On July 7, 2023, the Court issued a formal written opinion, or the Second Opinion, dismissing all of the plaintiff’s claims against the Company and the named defendants with leave for plaintiffs to amend their complaint in part and without leave to amend in part. On September 5, 2023, the plaintiffs filed a third amended complaint.
On July 6, 2021, a purported shareholder derivative complaint was filed in the U.S. District Court for the Northern District of California. The complaint names ten of the Company’s officers and directors and asserts state and federal claims based on the same alleged misstatements as the securities class action complaint. On September 30, 2021, October 26, 2021, and November 17, 2021, three additional purported shareholder derivative complaints were filed in the U.S. District Court for the Northern District of California. The complaints name nine of the Company’s officers and directors and also assert state and federal claims based on the same alleged misstatements as the securities class action complaint. All four complaints seek unspecified damages, attorneys’ fees, and other costs. On December 6, 2021, the Court entered an order consolidating all four actions and staying the consolidated action pending the outcome of any motion to dismiss the securities class action. Please see “Part II., Item 1A. Risk Factors—Risks of a General Nature—Litigation may substantially increase our costs and harm our business.”
The Company believes that these lawsuits are without merit and intends to vigorously defend against them. Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions. It is reasonably possible that this estimate may change in the near term. An adverse outcome regarding these matters could materially adversely affect the Company’s financial condition, results of operations, and cash flows.
Termination Agreement and Mutual Release Between AcelRx and Catalent
On March 12, 2023, AcelRx and Catalent Pharma Solutions, LCC, or Catalent, entered into a termination agreement and mutual release, or the Termination Agreement, to terminate the Site Readiness Agreement with an effective date of August 15, 2019 and as amended on September 24, 2020, the SRA Agreement, and the commercial supply agreement with an effective date of March 31, 2021, the CSA Agreement. Pursuant to the Termination Agreement, as of the date on which AcelRx has removed and transported certain equipment from Catalent’s site, the SRA Agreement and the CSA Agreement will terminate except with respect to certain specified provisions of such agreements.
7. Stockholders’ Equity
Common Stock
July 2023 Private Placement
On July 17, 2023, the Company entered into a securities purchase agreement, or the Purchase Agreement, with several institutional investors, or the Purchasers, relating to the issuance and sale to the Purchasers in a private placement of
The combined offering price was $
In May 2023, AcelRx engaged H.C. Wainwright & Co., LLC to act as placement agent in the private placement. As compensation, AcelRx paid the placement agent a cash fee equal to
ATM Agreement
The Company has entered into the ATM Agreement with Cantor, as agent, pursuant to which the Company may offer and sell, from time to time through Cantor, shares of the Company’s common stock having an aggregate offering price of up to $
The Company issued and sold approximately
Stock Plan
Amended 2020 Equity Incentive Plan
On October 10, 2023, at the 2023 Annual Meeting of Stockholders of the Company, upon the recommendation of the Company’s Board of Directors, the Company’s stockholders approved an amendment and restatement of the Company’s 2020 Equity Incentive Plan, or the Amended 2020 Plan, to increase the number of authorized shares reserved for issuance thereunder by
8. Warrants
The activity related to warrants during the nine months ended September 30, 2023, is summarized as follows:
| Common Stock from Warrants | Weighted-average | |||||||
| Outstanding at December 31, 2022 | $ | |||||||
| 2023 Pre-Funded Warrants issued | $ | |||||||
| Series A Common Stock Warrants issued | $ | |||||||
| Series B Common Stock Warrants issued | $ | |||||||
| Series A Common Stock Warrants issued to placement agent | $ | |||||||
| Series B Common Stock Warrants issued to placement agent | $ | |||||||
| 2022 Pre-Funded Warrants exercised | ( | ) | $ | |||||
| 2023 Pre-Funded Warrants exercised | ( | ) | $ | |||||
| Outstanding at September 30, 2023 | $ | |||||||
| Exercisable at September 30, 2023 | $ | |||||||
The pre-funded warrants issued in December 2022 to purchase
The common warrants issued in December 2022 to purchase an aggregate of