Good day everyone. And welcome to the AcelRx First Quarter 2017 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] And please note this event is being recorded. I’d now like to turn the conference over to Tim Morris. Please go ahead.

Thank you, Will. Good afternoon, everyone, and welcome to today’s call. I would like to welcome Vince Angotti, our Chief Executive Officer to his first AcelRx conference call. We are also joined here today by Pam Palmer, our Co-Founder and Chief Medical Officer; Gina Ford, our Vice President, Commercial Strategy; and Jane Wright-Mitchell, our Chief Legal Officer. Before we begin the call, Jane will remind you of our Safe Harbor language.

Thank you, Tim. During the call today, we will make forward-looking statements, including but not limited to statements related to the process and timing of anticipated future development of AcelRx’s product candidates DSUVIA, sufentanil sublingual tablet 30 microgram known as ARX-04 outside of the United States and sufentanil sublingual tablet system including U.S. Food and Drug Administration, or FDA review of the New Drug Application or NDA for DSUVIA and the anticipated joint advisory committee meeting; the potential approval of the DSUVIA NDA by the FDA; the European Medicines Agency, or EMA, scientific review of the ARX-04 Marketing Authorization Application, or MAA; the DSUVIA and ARX-04 clinical trial results; AcelRx's pathway forward towards gaining approval of ZALVISO in the United States., including successful completion of the IAP312 clinical study for ZALVISO; and the therapeutic and commercial potential of AcelRx's product candidates, including potential market opportunities for DSUVIA, ARX-04 and ZALVISO. These forward-looking statements are based on AcelRx Pharmaceuticals' current expectations and inherently involve significant risks and uncertainties. AcelRx Pharmaceuticals' actual results and timing of events could differ materially from those anticipated in such forward-looking statements, and as a result of these risks and uncertainties, which include, without limitation, risks related to AcelRx Pharmaceuticals' DSUVIA and ARX-04 development programs, including the FDA review of the DSUVIA NDA, the anticipated joint advisory committee meeting for DSUVIA, and EMA review of the ARX-04 MAA, including the possibility that the FDA or EMA may dispute or interpret differently clinical results obtained from the DSUVIA or ARX-04 Phase 2 and 3 studies; the ZALVISO development program, including successful completion of IAP312 and the resubmission of the ZALVISO NDA to the FDA; any delays or inability to obtain and maintain regulatory approval of its product candidates, including DSUVIA in the United States, ARX-04 in Europe, and ZALVISO in the United States; the uncertain clinical development process, including adverse events; the risk that planned clinical trials may not have an effective clinical design, enroll a sufficient number of patients, or be completed on schedule, if at all; the success and timing of all development activities and clinical trials, including the additional clinical trial for ZALVISO, IAP312; the accuracy of AcelRx's estimates regarding expenses, capital requirements and the need for financing; and other risks detailed in the "Risk Factors" and elsewhere in AcelRx's U.S. Securities and Exchange Commission filings and reports, including its Annual Report on Form 10-K filed with the SEC on March 3, 2017. AcelRx undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations. I will now turn the call back over to Vince, our Chief Executive Officer.

Thanks Tim and thanks Jane, and thanks to everyone for dialing in for today's call. In my short couple of months here at AcelRx, I've not had an opportunity to meet many of you. Let me take a very brief moment to introduce myself. My experience over the past 25 plus years has been across all business functions with primary focus toward sales, marketing and operations. I started out at Novartis where I spent 10 years holding several different positions including early in my career as a the sales rep and manager in the hospital and military accounts. This helped familiarize me with the unique challenges and opportunities in that segment. From Novartis, I moved to commercial startup called Reliant Pharmaceuticals where we built the commercial operations from scratch. After eight years we sold Reliant and I moved on to XenoPort where I held roles as the Chief Commercialization Officer, Chief Operating Officer and CEO. While at XenoPort relevant experiences included the reacquisition of Horizant and the successful rebranding and re-launch of that product in both restless leg syndrome and neuropathic pain. Those experiences help me to appreciate AcelRx’s commercial startup nature and its potential to have an impact on the current treatment paradigm of acute pain management, specifically in emergency and ambulatory hospital setting. And as such, we continue to develop a potential launch DSUVIA in U.S. and have made a few select additions to the commercial team in the areas of market access, sales strategy and marketing. We continue to believe that AcelRx’s portfolio is one that could be launched with the manageable commercial infrastructure and marketing spend. With that said, the acceptance of the new drug application for DSUVIA by the FDA, the potential to resubmit the ZALVISO NDA in the U.S. towards the end of the year and notification from the European Medicines Agency that ARX-04’s marketing authorization application passed validation and consequently is on the scientific review has our immediate focus on the regulatory paths for our portfolio. Now, I’ll turn the call over to Pam to provide an update on these matters.

Thanks, Vince, we had two significant regulatory milestones in the first quarter related to DSUVIA. First, as Vince mentioned, the U.S. FDA notified us that they accepted our new drug application for DSUVIA, our 30 microgram sublingual sufentanil tablet program; we've also been informed at a joint meeting of the Anesthetic and Analgesic Drug Products Advisory Committee and the Drug Safety and Risk Management Advisory committee will be convened and we anticipate it will take place this summer. Second, as Vince mentioned, the European Medicines Agency notified us that they have begun their scientific review of the Marketing Authorization Application for ARX-04 as DSUVIA is called outside the U.S. We expect an opinion on the MAA from the Committee for Medicinal Products for Human Use in 2018. The medical team is continually making presentations at medical meetings worldwide. We also published complete findings from the Phase 3 SAP301 trial comparing placebo to DSUVIA in patients who underwent ambulatory abdominal surgery. This publication is in the open access journal, Pain Practice in an article titled Sufentanil Sublingual Tablet 30 mcg for the Management of Pain Following Abdominal Surgery: A Randomized, Placebo-Controlled, Phase 3 Study. If you would like the link, please visit publication page on our website. As you’ll recall, patients in SAP301 who received DSUVIA, experienced a greater reduction in pain from baseline over the study's 12-hour period called SPID 12 than did patients administered a placebo with the P value less 0.001. This pain reduction was observed as rapidly 15 minutes after the administration. On average patients in the DSUVIA arm requested additional doses every three hours. DSUVIA was generally well tolerated by patients in SAP301 with mild to moderate nausea and headache being the most commonly reported side effects. Our other two DSUVIA Phase 3 studies SAP302 in emergency room patients with acute trauma or injury and SAP303 in patients aged 40 years or older have both been submitted for publication and hopefully will be available online later this year. Regarding ZALVISO, our 15-microgram sublingual sufentanil tablet system, we just completed enrollment in the IAP312 study which you’ll recall is Phase 3 study designed to capture information on device [ph]feasibility such as failures to dispense medication or dropped tablets as well as safety and efficacy. We expect to have top line results for you this summer and would then look to present the full data set at Medical Congress later this year or ear 2018. Based on the results of that trial, we would plan to resubmit the NDA for ZALVISO with the U.S. FDA towards the end of 2017. Now, let me turn the call to Tim who are going to run through the first quarter financials with you.

Thanks Pam. Earlier today, we reported financial results for the first quarter ended March 31, 2017; I’ll refer to that press release for specific details on the actual results. Net loss for the first quarter of 2017 was $15.6 million or $0.34 basic and diluted net loss per share, compared to a $11 million or $0.24 basic net loss per share and $0.25 diluted net loss per share for the first quarter of 2016. The net loss from operations in the first quarter of 2017 was $12.1 million compared to $8.5 million for the first quarter last year. The higher net loss was due to larger R&D expenses specifically for the IAP312 study. As of March 31, 2017, AcelRx had cash, cash equivalents and investments of $72.3 million, this compares to $80.3 million at December 31, 2016, the decrease was primarily attributable to cash used in operating activity. With that I believe we can open the call for questions. Operator?

Thank you. [Operator Instruction] And it looks like our first questioner today is Randall Stanicky with RBC Capital Markets. Please go ahead with your question.

Hey, Vince, can you may be drill down a little bit further into the launches coming up, DSUVIA and ZALVISO? Is it possible that you could have two launches within roughly six months? I assume there is an opportunity to leverage both of those, and may be just go back to your comments on manageable commercial infrastructure and maybe help us understand how many reps and the timing for both DSUVIA relative ZALVISO in terms of how those go?

Sure. Let me see if I can talk to that question, and thanks for that, Randall. So, when we talk about manageable cost structure, there’s a couple of different ways you look at it. First of all, from the sale of team deployment standpoint, when we look at and do our research as it relates to institutional sales teams in the U.S., comes out the data suggesting about an average of around 60 headcount in order to efficiently penetrate the markets. Now, I can’t tell you that where we're going to be exactly, we’d likely be on the lighter side of that as it relates an adaptive approach where would start small and as we begin to master the communications, understanding the timing of TNT [ph] committees et cetera and have success with the smaller small team, look to replicate that as move forward to give us more predictable return on our investment. And by doing so that allows us to really manage our cost structure to make sure it doesn’t get too far ahead of revenue as we ramp up. So, that’s as it to the structure. As you think about advertising and promotional spend, the unique aspect of our particular product and marketing [ph] institutions is that where you typically might see many launches with DTC spend and samples which often make up the predominant amount of investment in those launches outside of the sales team, those are two aspect we would not have in the launch of a DSUVIA or ZALVISO, keeping it much more manageable moving forward. So, we like the fact that you can penetrate the market with a relatively tight headcount and tight A&P spend moving forward, A&P being advertising and promotion. Beyond that Randall, I think you mentioned a question that relates to…

Randall we're really starting or digging into hospitals that will be most receptive to DSUVIA drug’s initial adaptive launch. We believe those types of hospitals include hospitals with both high volume emergency departments as well as those that conduct the high volume of surgeries or procedures that result in moderate-to-severe acute pain. In addition to that we are looking at hospitals that would be considered earlier doctors of new technology or efficiency program. And then finally, we are looking at hospitals with emergency departments that are reporting, providing pain relief in that first 30 to 45 minutes of the patient reporting moderate-to-severe acute pain.

So, as you can see that there is really going to potentially be efficiency and account targeting. But as it relates to the partnership within the account, and as the doctors approach and describe, will be going to the EMS setting first with hopefully not long after expansion to the areas of hospital appropriate for both products. Does that help, Randall?

It does. And Vince, if we look at the other two buckets, the non-hospital setting buckets, I assume those are the later opportunity. But, is there an opportunity to partner that aspect as a market and really focus on the hospital and ER?

Yes. That’s a great question. So, I would communicate that they would be later segments as it relates to penetrating that market, and it's certainly something that we would entertain as it relates to penetrating those markets moving forward. Again, we want to stay focused as best as we can, at least today in the accounts which we’ll be calling on at the start.

Great. And Tim, just really quick on cash, the $72 million. Is that generally where you thought you would be? And I think you threw [ph] $50 million target, mid-year target previously, maybe can you update that first?

Yes. We won't change that guidance. I mean historically, we thought about a $10 million per quarter burn rate, obviously a little bit under that in the first quarter, but it has to do with timing of working capitals. But right now, I think the prior guidance is still same.

And our next questioner is Boris Peaker with Cowen. Please go ahead with your questions.

My first question is I am just curious, what you anticipate the advisory committee to focus on since this is not really new chemical entity?

Thanks Boris. We’ll have Pam answer that.

Sure. I think, yes, you are right. It is pretty much new for them. Most of the opioids that have gone to the AdCom have really been around abuse deterrent formulation. And so, certainly that’s not what we were looking to be used in medically supervised settings. So, the majority of our REMS is really around making sure we have restricted distribution, specifically to medically supervised settings and not to retail pharmacies, so there could possibly be questions regarding the appropriateness and the details of our REMS. But we will see certainly we will be learning more from the FDA when we get a chance to see the questions they’re specifically interested in asking the AdCom.

And also in that context of your regulatory process, I am just curious, does the DEA get involved or what stage does it get involved, specifically?

No, the DEA is not specifically involved with us directly, they could be involved with the FDA but we are not interacting with the DEA in this process.

Great and lastly maybe on ZALVISO, with the study that’s currently ongoing, I am just curious what pill handling error rate do you think is acceptable from the current study or kind of where do you anticipate to be good outcome sort of in the ongoing trial?

We know that what the FDA has requested from us from a standpoint of powering the study and that is we're looking for a device failure rate to be lower than 5% to the upper confidence interval. That’s what we’ve agreed to with the FDA and now that’s how we powered our Phase 2 clinical trial.

And our next questioner for today is David Amsellem with Piper Jaffray. Please go ahead with your question.

This is Sameer on for David, so just two quick one here. How do you think the overall environment for opioids could impact your ability to gain traction with DSUVIA? Also you touched on this, on last question, but are you planning for potentially getting a more restrictive labeling or restrictive REMS for the product, given all the scrutiny of this phase?

So, just as a general comment here, I just would remind everyone that well we -- it certainly isn’t lost on us, concerns in the opioid market and epidemic in the U.S. and we clearly sympathize with that. Our product is as at it relates to the indication in the studies we’re moving forward under medical supervision, typically in an institutional setting for the most part. So, this is not a product that reminds you that you could get to take home with you, that you could get every local Rite Aid, your CBS, your Walgreens et cetera. And just by the nature of that, we feel that is an opioid place in the acute pain setting and it would be restricted as it relates to ability to receive that product in those institutional settings for the most part. Pam, do you have any additional commentary on that.

No. That’s basically right. In fact our label specifically will for pain that cannot be managed, adequately managed any other way and it is restricted to use in moderate-to-severe pains. Opioids have been around for many, many years and they will continue to be around and specifically in the acute setting in medically supervised settings, no one is really questioning their appropriate use there.

And our next questioner today is Michael Higgins with ROTH Capital Partners. Please go ahead with your question.

Question is first on DSUVIA if I could. If you look at the European market dynamics, how would you describe those in contrast with the U.S. market?

Hey, Michael, it’s Gina. Thanks for the question. We still consider the European market as good opportunity for DSUVIA. Certainly, as Pam just mentioned, opioids in the treatment of acute pain is not restricted in the U.S. it’s universal. So, certainly applies there as well. We have looked at the size of that market and truly believe again the right place for an organization to target their opportunity would be in emergency medical services and then also looking at those top pain [ph]opportunities.

So, given the learning that you had from Europe so far with ZALVISO, how much clarity and insights can you gain from what Grunenthal’s being doing to leverage the DSUVIA interaction?

I think what we can do you is give you some insight as it relates to some recent performance related to ZALVISO and the European markets. So, Tim, if you can quickly touch based on that, some of the recent ramp or acceleration that we've seen.

Sure. Through March, ZALVISO has been used in about 4,800 patients and about 153 hospitals and 9 countries, across the EU. We have seen a nice growth in the first quarter of this year as compared to all the prior quarters. And so, I think -- shown that the product has a good uptake and people are looking forward to continue to use the product.

Yes. I think some specifics as it relates to that; we have seen during the first quarter of this year close to 100% growth in the number of patients treated versus through the fourth quarter of last year. And we have seen the growth in actual accounts that have utilized ZALVISO, almost 40% as well. So that translates into couple of different things. Number one, the hospitals that were currently purchasing the product are beginning to expand their purchasing of the products; you’re getting more adoption within those institutions. And second is newer accounts are beginning to adopt ZALVISO as well. So, we are excited about how Grunenthal is continuing to move forward, again in a really fairly stepwise approach as it relates to their targeting moving forward by country and by account and the more recent growth or slope in the line as it relates to adoption of the product.

That’s great, very helpful. Thanks. Question for you back on this phase on DSUVIA, kind of AdCom related question I suppose is how many doses have patients received per patient in the DSUVIA studies? I guess I am looking so more for the max number across those studies.

The maximum dose that has ever been dosed to a patient across those studies?

Right.

Well, it can be dose hourly. On average, the patient are dosing every two and half to three hours depending on the study, it also depends on the length of the study. Most of our studies will run for 12 hours, one study did run out to 48 hours. But the most frequent dosing we’ve seen is about every hour and a half. Of course, Phase 1 study, we gave dose every hour to get a multiple dose exposure. But those patients were naltrexone-blocked. So, if you are looking at it from a safety standpoint, it's going to be limited safety data given naltrexone block.

There looks to be no further questions. So, this will conclude our question-and-answer session. I would like to turn the conference call back over to Vince Angotti for any closing remarks.

Thank you, operator. As you heard, we have two important milestones in the first quarter. The FDA accepted our new drug application for DSUVIA and EMA notified us that their scientific review of the Marketing Authorization Application for ARX-04 has commenced. Over the next few months we expect to be able to provide you with more information about a date for the joint meeting of the anesthetic and analgesic drug products advisory committee and the drug safety and risk management advisory committee for DSUVIA. Our effort is to build a commercial infrastructure to support a DSUVIA launch. And finally, topline results and the presentation of complete results from ZALVISO IAP312 study has recently concluded enrollment. We are working to prepare for the DSUVIA AdCom meeting, which we will expect to be taking place in the summer, and with a conclusion of IAP312, we are also preparing for resubmission of the new drug application for ZALVISO, which we expect to be submitted by the end of the year. Needles to say the second half of 2017 was a significant number of milestones for AcelRx. And we will continue to keep you informed as we move forward with commercialization plans and we appreciate your continued support. So, thanks again for tuning in for our first quarter call. Have a great evening.

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