Running another trial with the pain drug Zalviso "to us, just doesn't make sense," Timothy Morris, chief financial officer (CFO) of Acelrx Pharmaceuticals Inc., told BioWorld Today, and the company will find out next month how flexible the FDA might be in its demands regarding the stalled drug-device combination therapy.

"Typically, you see a request for clinical studies when there's a question about the safety or efficacy of the drug," Morris said. "In our case, there isn't any question about that. They have an issue with the device errors and the error rate. We've been able to show a reduction in error rates in our bench testing, but it appears they want us to run a clinical study with the device error rate as an endpoint. We haven't told anyone that we agree with that approach. That's why I'm hopeful during the meeting we can clarify what they're looking for and maybe find some common ground." The meeting is slated for early next month, but he declined to specify the date.

U.S. regulators hit Redwood City, Calif.-based Acelrx with a complete response letter (CRL) about a year ago regarding Zalviso, which delivers the opioid agonist sufentanil in a sublingual tablet non-invasively through a pre-programmed, hand-held, patient-controlled device, also to relieve moderate to severe acute pain in adult hospital patients. (See BioWorld Today, July 29, 2014.)

The CRL hobbled Zalviso in its race to approval against Ionsys, the fentanyl iontophoretic transdermal system from The Medicines Co., of Parsippany, N.J., cleared by the FDA in April. Ionsys, also patient-controlled, is also indicated for acute postoperative pain in adult, hospitalized patients requiring opioid analgesia. Sixty-five dedicated sales reps are included in the U.S. launch team for Ionsys.

In the first quarter of this year, the FDA frustrated Acelrx by denying the firm's request for a type B meeting. Piper Jaffray analyst David Amsellem said it's "not at all clear how this will play out, but Acelrx did note that it is still not ruling out initiating a formal dispute resolution process with the agency (and that would not be entirely surprising to us given that [the company] has essentially run into a brick wall at the agency, despite what in our view is a relatively clean body of safety and efficacy data for Zalviso)." The path to commercialization in Europe is "far clearer," he wrote in a research report, given that the European Union's Committee for Medicinal Products for Human Use adopted a positive opinion on Zalviso last month.

ARX-04 COULD DRAW PARTNER

In late 2013, Acelrx signed a deal for Zalviso in Europe with Aachen, Germany-based Grunenthal GmbH, which paid $30 million up front and potentially $220 million more in development and regulatory milestones for rights there as well as Australia. An approval decision in Europe is expected late next month or in early October, and would trigger a $15 million milestone payment to Acelrx. (See BioWorld Today, Dec. 17, 2013.)

Meanwhile, Acelrx has "made some modifications internal to the device to reduce the error rate" with Zalviso, which went as high as 8 percent in some trial results, Morris said, and improvements have brought the rate down to about 1.5 percent – a level that "should be sufficient." Such is the company's hope. "Clearly our preference is to not do any additional work, but if forced to, we want to do something we could all benefit from," he said, and by this he means a head-to-head trial with Ionsys. "I guess our view of the world is that, if we need to do another study anyway, why not do one that should give us some data that will be helpful in the market," he said.

RBC Capital Markets analyst Randall Stanicky noted that "another clinical trial could require a substantially large patient population focused on two lingering concerns (1) system errors and (2) inadvertent dispensing (dropped pills). A U.S. Zalviso launch is the biggest opportunity for Acelrx, if it can find an acceptable path to market. Currently, we model peak sales in 2022 of $330 million with a 60 percent probability of approval."

The company expects to end 2015 with $45 million in cash, including $15 million from the U.S. Department of Defense for the candidate ARX-04, described as non-invasive, fast-onset sufentanil for the potential treatment of patients with moderate to severe acute pain, in military and civilian settings of trauma or injury. ARX-04 won a federal grant to conduct phase II dose-finding studies and prepare for phase III experiments. In the phase II effort, a dose of 30 mcg of sufentanil was decided upon for testing in the late-stage work.

The company expects a 2016 new drug application filing for ARX-04 in 2016 and characterized the market potential as substantial. "Since this opportunity may come to market before Zalviso, management opened the possibility to a partnership deal," RBC's Stanicky wrote in a research report, estimating ARX-04's worth at $100 million. Acelrx ended the second quarter with $51.2 million in cash, and the burn rate ahead is forecast at about $9 million per quarter through this year. "The $15 million Grunenthal milestone (expected in the second half of next year) upon launch and royalties (of 15-25 percent) will be important, given the current funding situation," in the opinion of Stanicky, who modeled peak year sales of Zalviso outside the U.S. at $185 million.

About the FDA meeting, CFO Morris said he "could speculate as to multiple outcomes here in terms of [whether a new study will be necessary] and study design" if the agency won't bend, but the comparison trial with Ionsys seems likely if more clinical research is demanded by U.S. regulators in the end. Shares of Acelrx (NASDAQ:ACRX) closed Tuesday at $4.45, up 40 cents.