Biostocks in Focus are AcelRx Pharmaceuticals (NASDAQ:ACRX) and Yellen

AcelRx Pharmaceuticals (NASDAQ:ACRX) is most likely to get stamped “FDA approved” for their pain-killing therapeutic device Zalviso, on 27 July. The studies from phase 3 of Zalviso were all positive and well designed. Zalviso uses an already approved generic FDA pain medication sufentanil. Getting an approval for the new conceptualization of an already proven drug is not much of a concern to regulators. Unresolved problems related to the medication’s delivery device or platform technology can risk the approval although no issues cropped up during clinical trials.

Zalviso uses NanoTab technology to deliver a high dosage of sufentanil underneath the tongue. This delivery method eliminates the complications of an IV PCA related to delivery system of morphine in post-surgical hospital patients, thus making the treatment safer and the drug more effective. AcelRx Pharmaceuticals (NASDAQ:ACRX) contains a good description of the Zalviso medications. This is accompanied by a user-guide video on the company’s website.

One of AcelRx Pharmaceuticals (NASDAQ:ACRX) top 10 holders stated that Zalviso is believed to take over 30% of post-operative surgical market wherein U.S. hospitals use IV PCA. The prices will be consistent and maximum sales of up to $400million will be achieved. The use of Zalviso as a mild to severe painkiller, outside the usual surgical setting can also generate upside revenue. The current market cap of the stocks has been recorded at $400 million. Also with a European partner pursuing Zalviso, the generated revenue will further benefit the estimates.

The thesis by Bear’s on AcelRx Pharmaceuticals (NASDAQ:ACRX) mainly focuses on how well the Zalviso will be adopted. Will hospitals let go of their firmly established IV PCA delivering morphine systems to replace them with the Zalviso device technology in order to treat post-op pain treatment? According to Bears, the hospitals don’t have much incentive to undergo this switch.

The AcelRx Pharmaceuticals (NASDAQ:ACRX) bulls believe that the nurses and doctors will love the idea of using Zalviso instead of IV PCA because it will eliminate the complications and be much less vulnerable to error. Likewise the hospital administrators will embrace Zalviso because of it will be more affordable than IV PCA, at the same time contributing more to patient satisfaction and healthcare quality. Shorting stocks of companies that sell into hospitals does not guarantee a win trade. Cadence Pharma (NASDAQ:CADX) was short before being acquired at $1.3 billion by Mallinckrodt (NYSE:MNK), or the shorting of Pacira Pharma (NASDAQ:PCRX) before being run over by the Exparel launch.

The FDA approval of Zalviso on 27 July is important to AcelRx Pharmaceuticals (NASDAQ:ACRX), But this would most likely not settle the debate of its adoption. However, Zalviso seems to be a well-thought and executed drug in the light of current issues facing the IV PCA and post-op surgical pain problems in hospitals.

Janet Yellen, Federal Chair reportedly stated on Tuesday that estimating the worth of small capital biotech stocks is significantly stretched. As might have been expected the biotechnology stocks fell rapidly in the light of Yellen’s remark.