AcelRx Pharmaceuticals, Inc.

First quarter 2021 earnings call. This call is being webcast live on the events page of the investor select section of XLRX's website at acelrx.com. This call is the property of XLRX and any recording, reproduction, or transmission of this call without the express written consent of XLRX is strictly prohibited. As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the investor section of XLRX's website. I would now like to turn the call over to Rafi Asadorian, XLRX Chief Financial Officer. Please go ahead.

Thank you for joining us this afternoon. Earlier today, we announced our first quarter financial results and some business updates in a press release. This press release and the slide presentation accompanying this call are available in the investors section of our website. With me today is Vince Angotti, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer. Before we begin, I'll remind listeners that during this call, we will make forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties regarding the operations and future results of Accelerex. Please refer to our press release in addition to the company's periodic, current, and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward-looking statements. I will now hand the call over to Vince.

Thank you, Rafi, and good afternoon, everyone. We appreciate you taking the time to join the call. I'll keep our prepared remarks brief since our last update was just a couple of months ago. On the year-end call, we discussed the expectation that the COVID backlog for elective surgeries would begin clearing up in the second half of this year. In particular, these last two months have provided more clarity on the post-COVID environment as surgery centers and hospitals in the U.S. are beginning to open, accept visitors, and reinitiate elective surgeries. In fact, April was our best commercial month since the launch of Desuvia. We have a long way to go, but we're seeing light at the end of the tunnel and trending back to the growth we expected prior to COVID. Although the pandemic delayed formulary reviews over the last year, through April, we've achieved 432 approvals. We're well on track to achieve our year-end target of 615 formulary approvals. Also encouraging is the continued expansion of the clinical site studying Dissidia, as well as growth in the diversity of physician specialties beginning to adopt Dissidia. One of our key messages that is resonating with healthcare providers is how Dissidia supports opioid stewardship, which is reinforced with real-world clinical data published in the second half of last year. The generation of highly relevant clinical endpoints beyond what was studied in our registration trials remains a priority for us in 2021. We're supporting a diverse array of investigator-initiated studies with an emphasis on commonly performed orthopedic procedures. I'll touch on each of these important points shortly as I update you on the progress within our four pillars of revenue growth. Our first pillar is focused on the Department of Defense. Progress on sale to the DoD in the first quarter remains slow as they continue to work through complex administrative and logistical matters, which we expect will be resolved soon. Although the Army has ordered each of the last three quarters, we're awaiting clarity on regular shipments for deploying troops and an estimate of purchases for the year. We still believe the $30 million for initial stocking over three years is reasonable, but await further clarity on the timing of these purchases. Our second pillar is focused on specialty markets and partnering with larger, more established commercial partners. As you may recall, Zimmer Biomet Dental was our first partnership for specialty market outside hospitals and general surgery centers. Approximately 70 commercial team members at Zimmer Biomet have now been trained and were encouraged by the investment they're making in the distributed launch into the oral dental surgery space. We expect this segment to gain more traction as Zimmer Biomet Dental progresses the launch with the now trained personnel. Importantly, we were informed by the American Dental Association in April about a code that can be used guiding reimbursement for the administration of Desuvia in this discipline. We believe this will also help with increased adoption within this space. Our third pillar is focused on hospitals and ambulatory surgery centers, as well as an increasing focus on surgeries and procedures moving into surgical suites. Our internal commercial team is focused on this pillar, which is ultimately the largest market opportunity for Desuvia. As mentioned at the beginning of the call, the breadth of the type of physician specialists that are adopting Desuvia continues to grow. And the interest behind Desuvia initiated with the phase three clinical trial data demonstrating efficacy or low rate of side effects and lack of cognitive impairment. But broader enthusiasm is rebuilding due to recently published clinical data demonstrating significant reductions in the amount of opioids administered when using Desuvia, faster discharge times, and better patient satisfaction, as noted in the poster presentation announced last week. Each physician specialist has a unique reason for adopting Desuvia, but in the end, the universal drivers are, one, patient satisfaction, two, the differentiated pharmacokinetic profile, and three, the opioid-sparing nature of Desuvia. Each of these can support an economic advantage of adopting Desuvia. Our fastest-growing specialty remains plastic surgery, with orthopedics being close second. In addition to these, in oral and dental surgery, we're seeing increased interest in eye surgery, ENT procedures, and palliative care. I mentioned earlier that new data generation is a priority for us in 2021, data that was not available at launch. We've always known that peer-to-peer shared experiences amongst clinicians regarding the use of dysthymia is a powerful driver for adoption as we're disrupting the well-entrenched standard of care, IV opioids. To that end, the clinical data from the investigator-initiated studies will be extremely valuable to physicians and hospitals when they're assessing the practical applications of Desuvia in their clinical protocols. The two publications in the second half of last year that demonstrated reductions in overall opioid utilization when administering Vesuvia perioperatively, as well as faster packing discharge times have provided a strong value proposition. Opioid stewardship programs are becoming more common throughout institutions as clinicians realize the importance of including opioids in a multimodal treatment program. Yet, they want to minimize the side effects often seen with this drug class. From the clinical trial publications, as well as anecdotally discussions with physicians, Desuvia is becoming recognized as the opioid that is opioid sparing in the perioperative setting. In fact, the poster presentation last week at the ASRA annual meeting from a study performed at the University of Minnesota continued to illustrate this concept. Some statistically significant highlights from the poster supporting this opioid sparing effect are as follows. Compared to patients receiving standard IV opioids, Patients in the dysubia group dosed prior to extubation required 50% less opioids in the PACU, with significantly more of them opioid-free, 36% versus 8%. Furthermore, dysubia-treated patients had improved overall benefit of analgesia scores, referred to as OBAS, O-B-A-S, compared to the control group. OBAS is a validated seven-item tool that assesses pain intensity, adverse effects, and patients' satisfaction with analgesia. The limitations of the study include that Dissuvia was not compared to an active comparator, so please refer to our May 13th press release for the full poster and study results. And for more information, including important safety information and black box warnings, please visit Dissuvia.com. Many physicians, particularly plastic and orthopedic surgeons, are extremely sensitive to patient satisfaction, given that the vast majority of their practice is elective surgeries with a surgical volume that is about to increase more than it has in years to address the COVID backlog. We look forward to sharing more clinical data from the ongoing studies as it becomes available. Pillar four is our focus on business development, and we continue to make progress in advancing multiple ongoing discussions from both an out-licensing and in-licensing standpoint that we believe will add value to the company by enhancing our product portfolio. This does not replace our priority with Desuvia, but potentially provides our commercial team with additional sales opportunities on the same call. And on the operations front, our contract manufacturer has taken possession of the automated packaging line, which is currently being installed at their facilities here in the U.S. We remain on track with our previously disclosed timeline to have initial commercial batches being produced in the third quarter of 2022. We also expect the regulatory batches that would be produced before this time will be able to be sold. We're excited to finally get this phase of operations moving as we prepare for increased orders from the Department of Defense, as well as our commercial customers. We expect this will significantly reduce our cost of sales. Finally, before handing the call over to Rafi, I'd like to provide an update on the FDA warning letter. We've submitted our response and have had excellent dialogue with the FDA to ensure a proper closeout is received. We believe we've addressed all the points raised with the exception of finalizing the corrective action for the Dishuvia banner ads that were run back in 2019. The two alternatives being evaluated as a corrective action for this are to include a dear doctor letter on the DSUVIA website or to run corrected banner ads without the tongue in tongue tagline and other minor adjustments. Once this is cleared and resolved, we expect the FDA to issue a closeout letter. I'll now hand the call over to Rafi to take you through the first quarter financial results.