Talphera Inc (TLPH) 2014 Q2 法說會逐字稿

Good afternoon, and welcome to the AcelRx Pharmaceuticals second-quarter 2014 financial results conference call.

(Operator Instructions)

As a reminder, this conference is being recorded today. I would now like to turn the conference over to Timothy E. Morris, Chief Financial Officer. Please go ahead.

Thank you, Denise, good afternoon, everyone. Welcome to today's call. I am Tim Morris, Chief Financial Officer. Joining me today will be Richard King, CEO, and Pam Palmer, our Chief Medical Officer. On today's call we will provide an update on the activities since the receipt of the Complete Response Letter or CRL that we received for Zalviso on July 25, 2014. We will discuss the accomplishments and achievements since the first quarter call.

We will provide an update on ARX-04. We will share our plans for ongoing medical meeting activities in the fall. We will review the financial results for the quarter and six months ended June 30, 2014.

We will provide cash guidance for the remainder of 2014. And lastly, we will take your questions.

During the call today, we will make forward-looking statements including, but not limited to the Company's Zalviso NDA and the CRL, our plans to address the issues raised in the CRL, our anticipated resubmission of Zalviso NDA to the FDA including the scope of the resubmission, the timing of the resubmission, and the FDA review time, planned initiation of Phase 3 clinical trial for ARX-04, the therapeutic and commercial potential of AcelRx Pharmaceuticals' product candidates including Zalviso, statements related to future financial results including 2014 financial guidance and cash forecasts, potential milestones and royalty payments under the Grunenthal agreement, the process and timing of to the submission of the MAA and the CE registration in the EU, and the status of the collaboration agreement with Grunenthal and any other future potential collaborations.

These forward-looking statements are based on AcelRx Pharmaceuticals' current expectations and inherently involve significant inherent risk and uncertainties. AcelRx Pharmaceuticals' actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risk and uncertainties, which include without limitation risk related to AcelRx Pharmaceuticals' ability to receive regulatory approval for Zalviso, any delays or inability to obtain and maintain regulatory approval of our product candidates including Zalviso in the United States and Europe, our ability to obtain sufficient financing to commercialize Zalviso and proceed with the clinical development of ARX-04, the success, cost and timing of all product development activities and clinical trials, and other risks or details in the risk factors and elsewhere in AcelRx Pharmaceuticals' US Securities and Exchange Commission filing and reports, including our quarterly report on Form 10-Q filed with the SEC on May 8, 2014. AcelRx Pharmaceuticals undertakes no duty or obligation to update any forward-looking statement contained in this release, as the result of information future events or changes in its expectations.

I will now turn the call over to Richard.

Thanks for very much, Tim. I would like to thank everyone for joining us this afternoon for this call. As we discussed during our call on July 28, the FDA issued a CRL for the Company's NDA for Zalviso. The CRL was unexpected, however, we have reviewed the letter in detail, and have established a plan that we believe addresses the issues raised in the CRL.

Some of the issues raised in the CRL require clarification, and we intend to meet with the FDA to discuss and gain agreement with the agency that our plan can meet their requests. We had concern that the meeting request will be considered a Type A meeting, implying that the meeting should be granted within 30 days of the request. We intend to submit a data package to the agency that supports the meeting request by the end of this month, and hope to meet with the agency before the end of September.

We believe we have or will have sufficient information to address the FDA's concerns, and we believe that we will be able to resubmit the NDA by the end of 2014. The CRL contains requests for additional information mainly related to the Zalviso device, and the proper use of the device by patients and healthcare professionals.

We discussed the CRL request in detail on the last call. But as a reminder, the requests include the following. One, that we provide the FDA with data that demonstrates a reduction in the incidence of optical system errors.

Optical system errors were noted in the clinical trial setting. These optical errors occur when the optical system which tracks safe delivery of sufentanil tablets to patients would cause an error, despite there not being a reason or a need to record an error. In effect, an inappropriate error is recorded.

These errors occurred at a lower rate in the single-digits, and had no impact on the outcome of the Phase 3 trials, all on the levels of patient or healthcare provider satisfaction in use of the product. We have made improvements to the system design, and believe that these improvements will address the FDA concerns. Preliminary bench testing on the improved system has confirmed a reduction in the error rate from that seen in the clinical studies.

We plan to conduct formal bench testing on the improved design, results for which will be included in the resubmission. We believe that we can also correlate the bench test rates to the levels observed in the clinical testing, and that the bench testing should suffice.

Secondly, that we make changes to the instructions for use or IFU for the device. The IFU encompasses multiple scenarios, and provides training and guidance to healthcare professionals. One issue that was noted by the FDA and that we will work to address was misplaced tablets.

In our Phase 3 studies, 7 patients out of a total of 768 patients using the Zalviso system experienced a combined total of 15 misplaced tablets, out of a total of approximately 30,000 tablets dispensed. We have identified several modifications in the IFU that we believe can address this issue, and plan to incorporate these along with several others and evaluate them in a human factor study. We hope to confirm with the agency during the Type A meeting that the changes proposed are sufficient to address the FDA's concerns.

And lastly, the FDA requested that we provide data to support the proposed shelf life of the product. This (inaudible) indicates that that this was not an approvability issue, but that the information is required.

AcelRx has already submitted some of the information to the FDA in an amendment to the NDA, but as the FDA noted in the CRL, this information may have not have been considered in their review. The remaining required information is expected to be submitted shortly.

We believe that the other license contained in the CRL are minor, and that we have addressed or can address them with information provided or in hand. As noted by the FDA in the CRL, nine of the amendments that were submitted to the NDA prior to receipt of the CRL have not been reviewed by the agency.

However, we cannot guarantee that the information previously provided to the FDA will be adequate to address the issues in the CRL. We do know that the improved system will acquire additional bench testing. We believe that with anticipated bench testing it is straightforward.

Additionally, human factor testing may be required to address certain items of the CRL. We expect to have additional clarity, after we meet with the FDA.

There were no requests to conduct additional human clinical studies, and none are contemplated at the present time. We believe we can satisfy all the FDA's requests in the CRL, and resubmit the NDA by the end of 2014.

Our expected meeting with the FDA should offer more clarity on process and on timing. I have noted we anticipate meeting with the FDA by the end of September, and we will provide an update for investors and analysts as soon as practical thereafter.

I would also like to update you on additional progress in the business since our last call. Firstly on July 7, Grunenthal, our partner in Europe submitted a Marketing Authorization Application or MAA to the European Medicines Authority or the EMA for Zalviso. This filing triggered a $5 million milestone payment to AcelRx, which we expect to receive in the third quarter of 2014.

We anticipate that the MAA process will take 12 to 15 months. In addition, we are progressing with CE Mark in the device components of the Zalviso system, with expectations that our quality systems will be audited by our notified body, the British Standards Institute in the coming months.

We anticipate tentative filing for the CE Mark by the end of the year. If Zalviso is approved for use in Europe, AcelRx is eligible to receive an additional $15 million milestone payment from Grunenthal.

Now for other comments on our progress, I am going to turn the call over to Pam Palmer to provide an update on ARX-04 development.

Thank you, Richard. In June, we completed a definitive PK study in support of the ARX-04 development program. In the study of 35 healthy volunteers, it was shown that the pharmacokinetics of two sublingual administration of Zalviso 15 micrograms sufentanil tablets dosed 20 minutes apart was equal to one sublingual administration, and administration of an ARX-04 30 microgram sufentanil tablet. The significance of this study is that we believe based on previous dialogue with the FDA, we can include approximately 300 patients from the Zalviso clinical program in the ARX-04 safety database.

The total ARX-04 database required by the FDA is 500 patients, and therefore we believe this demonstration of dose equivalency will allow for a significant reduction in a number of patients necessary to enroll in the ARX-04 Phase 3 clinical program. This could result in a significant savings of time and money for the Company. As we have stated previously, we intend to initiate our Phase 3 clinical study for ARX-04 before the end 2014.

I would also like to provide an update on continued progress with our Medical Affairs program, preparing for an anticipated launch of Zalviso. On the publications front, all of our Phase 3 studies have been submitted and/or accepted for publication. This includes the definitive PK studies, and all of the -- well, three of the Phase 3 clinical studies. Our goal remains to have all of these manuscripts in the public domain at the time of commercial launch.

Our medical conference schedule is also busy for the fall. We expect to have a presence, including sponsoring medical symposia, presenting clinical posters, and/or having a corporate booth at a total of eight important medical meetings through the end of the year. These meetings, for example, include presentations at the primary National Meeting for Anesthesiologists, the American Society of Anesthesiologists, as well as attendance at the meeting of the American Society of Health System Pharmacists, a major international meeting of the hospital pharmacy community.

I will now the call over to Tim to provide an update on our financials and investor relations.

Thanks, Pam. For the second quarter 2014, we had a net loss of $10.6 million or $0.24 basic net loss per share, and $0.30 diluted net loss for per share. This compares to $17.4 million or $0.47 basic and diluted net loss per share for the second quarter last year. The decrease in net loss per share and net loss was primarily due to a change in the valuation of warrants issued in connection with a PIPE financing, which was completed in June of 2012. We will refer to these as the PIPE warrants.

Changes in the valuation of PIPE warrants are recorded to the other income or expense line on the P&L. During the second quarter of 2014, the change in the value of the PIPE warrants resulted in income of $2.5 million for the quarter, whereas the change in the fair value of the PIPE warrants for the second quarter last year resulted in expense of $8.7 million for the period, a positive swing of over $11 million. As a reminder, this is a non-cash charge.

Financial performance may be better measured by looking at the loss from operation. The loss from operation of $12.2 million increased in the second quarter of 2014, as compared to the loss of $7.8 million in the second quarter of 2013.

The increase in the operating loss was due to higher G&A expenses primarily related to the pre-commercialization efforts for Zalviso, and higher research and development expenses primarily due to continued work to support the FDA's review of the Zalviso NDA. For the six months ended June 30, 2014, we reported a net loss of $20.2 million or $0.47 basic net loss per share, and $0.50 diluted net loss per share. This compares to $30.2 million or $0.81 basic and diluted net loss per share for the same period in 2013.

Please note that the basic net loss per share for the six months ended June 30, 2014 includes a $1.8 million in non-cash income related to the valuation of PIPE warrants. This was deducted from net loss in order to arrive at the numerator for the calculation of diluted EPS, and 500,000 shares were added to the denominator using the Treasury stock method to reflect the dilutive effect of the PIPE warrants.

The basic net loss per share for the six months ended June 30, 2013, includes a $10.4 million in non-cash expense related to valuation of the PIPE warrants. Common shares used in calculating users earnings-per-share were 43.3 million for basic EPS, and 43.8 million for diluted EPS for the six months ended June 30, 2014, compared to 337.2 million for the basic and diluted EPS for the six-month ended June 30, 2014.

The loss from operations of $20.8 million increased in the first half of 2014, compared to the net loss of $18.3 million in the first half of 2013. The increase in operating loss was a due to higher G&A expenses, again related to pre-commercialization efforts for Zalviso, partially offset by slightly lower R&D expenses as the clinical trials for Zalviso ended in 2013.

As of June 30, 2014, we had cash, cash equivalents and investments of $92.3 million, as compared to $92.9 million at the end of March, and $103.7 million at the end of December. The net change in cash of $600,000 includes cash used during the quarter of $10.6 million, partially offset by the $10 million drawdown from the second tranche of the loan agreement with Hercules in June of 2014.

We reiterate our financial guidance for 2014, with total operating expenses estimated to be in the range of $48 million to $52 million. Estimated cash, cash equivalents and investment balance at the end of December 31, 2014 is expected to be at least $65 million. For additional details, I refer you to the press release for more information on the financial results.

As we enter into the third quarter, we continue our Investor Relation activities and presence. We have a number of conference presentations, and a variety of non-deal road shows planned in the next two months, including this week a presentation at the Canaccord Annual Growth Conference in Boston on Wednesday; participation in the Guggenheim One-on-One Day in San Francisco on August 19; a non-deal roadshow sponsored by RBC, Wednesday, August 20 in New York City; participation in a Trial Group Management Roundtable, Thursday, August 21 on Long Island; participation in the FBR Healthcare Conference, September 3 and 4 in Boston; and the Morgan Stanley Healthcare Conference, September 9, 10, in New York City.

With that, I would like to turn the call back over to Richard.

Thank you, Tim. And before I open the call for questions, I would like to confirm that our commercial planning for the future Zalviso launch continues. We are in the final stage of pricing evaluation for Zalviso, gaining insight from marketing and research on our pricing optionality, and potential impact from the pricing of the drug cartridge relative to disposables, and relative to the [reusable] components of the system. We also continue to refine and finalize the launch plans, including development and refinement of launch programs that address key levers that we have identified that will drive uptake of Zalviso in the market if approved.

I would now like to open the call for questions. So Denise, if I could turn it back to you, so you can coordinate, I would appreciate it.

Thank you.

(Operator Instructions)

Louise Chen, Guggenheim.

Hello. Thanks for taking my questions. I had a few.

First question I had, was on maybe if you could describe some of the swing factors on your timing for the Zalviso NDA resubmission. We have got some concern from people that the timelines may be a little aggressive in light of how much work that needs to be -- get done here.

And then secondly, what is your best estimate, if this will be a two-month review on resubmission or six-month, any thoughts here? And the last question is, just on an update on early adopters of Zalviso and any thoughts here as well? Thank you.

Sure, Louise. This is Tim.

I guess, in terms of swing factors, I think we will know a lot more, once we have our -- have had our meeting with the agency. Obviously, as we have stated before on the call, and in some of the subsequent discussions, we believe that we have the addressed the majority of these issues here. In terms of the top three that we have talked about, I believe we have a -- really have a fix for the optical error rate that will involve some additional bench testing. We think that will be sufficient.

We have some suggested changes for the IFU that should address those questions, and then we have the [stability] data available. Part of the unknowns here is any additional work that the agency may want us to complete, in terms of human factor studies, we think those are relatively simple and easy to do. But we do want to confirm that with the agency before we start down that pathway.

So we still feel very comfortable that we could be in a position to resubmit by the end of the year. As we stated before, there are no additional human clinical studies i.e. efficacy studies, and the comments were really directed mainly at the device, and we think we can accomplish that relatively quickly.

In terms of the two or six-month, submission, again, we hope to clarify that with the agency. It is a little gray, in terms of if you look at the regulations as it relates to the devices particularly.

There is no additional human clinical studies, and that is what typically throws you into the six-month area. But again, we don't know. So it's -- that is probably better left, until we after we have the meeting with the agency.

And then lastly, on your -- I am not entirely sure what your question was on the early adopters -- but obviously we have continued to stay in touch with our KOLs. Pam and her team, including the whole host of [MSLs] that are in the field, have a fairly very busy schedule in the fall with attendance, with no less than eight meetings.

They will continue to kind of work and visit various hospitals in the territories, to explain some of the data that we have to date. And so, we do believe that there will be early adopters, but we obviously have to go through the approval process first.

Thank you.

David Amsellem, Piper Jaffray.

Hello, this is Traver Davis on for David. Thanks for taking my question.

So I just wanted to drill down a little bit on the cash guidance, relative to where your cash balance is today. So approximately $93 million today, going down to $65 million by year end. So I guess, approximate cash burn of $30 million.

Is this the type of run rate that we can expect or at least reasonably expect for 2015? And if we assume that you can file by year-end and have, say, a six-month review, does that have you kind of flying close to the sun, in terms of balance sheet cash next year?

And then secondly, just a question around the two earlier stage programs, 02 and 03, is there any need now to sort of accelerate partnership agreements or discussions there, given at least the temporary setback on Zalviso? Thanks.

Yes, this is Tim. I -- in terms of the cash guidance, obviously, we try to be relatively conservative with our guidance there. We didn't change the expense guidance for the year, although I can tell you that it will probably clearly be on the low end, and our goal might be to actually beat that.

The $65 million that we gave -- that should be on the balance sheet at the end of the year, again we think is a relatively conservative number. That does include, I think some outlay for capital equipment that was already planned, so we can increase manufacturing and our capability there.

We haven't given any guidance for our 2015 yet, but we feel very comfortable that the current cash on hand, and even with a six-month review, clearly gets us to the launch of Zalviso. So we are good there.

As it relates to 02 and 03, we have always stated that those projects, we will wait for a partner in order to move forward with that. I still think that is our case.

In terms of accelerating or not accelerating, I think we will continue to discuss those opportunities with folks, and if we think that there is something that is a good deal for both parties, we would move forward. It is clear that we won't spend any of our own internal dollars to move those products along though.

Great. That is helpful. Thanks.

Sure.

Mario Corso, Mizuho.

Good evening. Thanks for taking my questions.

A couple of things I wanted to ask. I guess, up until this point, have you had any substantial interaction with the FDA, where you are able to glean anything in terms of whether these issues are kind of minor or major on the spectrum, and whether it gives you any confidence on CR versus say, a 90 day extension, why they didn't go that route? I am just wondering if you have been able to glean anything in terms of context there?

And then it sounds to me like you can start the bench data, and maybe it is -- is it the human factor studies that you really need to wait to do before the FDA meeting? And then, my initial impression was the meeting might take place earlier in September, as opposed to later in September, splitting hairs a bit -- but is there something -- is it FDA scheduling? Is it more the comprehensive work that needs to go into your actual meeting request?

Thanks very much.

Sure. Let me kind of take those in order there.

In terms of the -- we have obviously had discussions back and forth with the agency. It is probably premature for me to comment as to the nature of those discussions. I think they do to tend to be a little bit more administrative in nature. So it is hard for us to say.

We don't know why, specifically was a CRL versus a 90 day extension. We can speculate on that, but that unfortunately, probably won't do us much good for right now.

But in any event, we have had discussions. I think we are moving along. And in terms of trying to have a meeting with them, as you know we do need to prepare briefing document and get it to them, and that would be in a set period of time.

So we still feel very comfortable that we could have that meeting by the end of September. There is some work that needs to get done, in terms of preparing that package. You want to make sure that you are very clear in the questions you ask, and that the data that we provide, you should help address some of the issues in the CRL.

As it relates to the bench data versus human factors study, we have already modified the device itself. We have done some preliminary bench testing. And again, that is something that we can run a formal bench test on, kind of at our own pace, and we are doing that.

In terms of the human factors study, while we could potentially run something ahead of the meeting with the FDA, we want to make sure that we only kind of do it once, and that the design of it will really address their concerns. So that is something that is probably better served to wait until the meeting itself.

But Pam has a thought though also, on some of our interactions with the agency.

We have also -- we have run about 14 plus human factor studies, so our ability to execute them, and execute them quickly has been demonstrated. So again, as Tim said, it is better just to find out what we need to do, and run one of them quickly.

We do have a pre-cleared REMS, and we did receive that information slightly after the CRL. So I think the messaging is good from agency, that they are willing to move forward and work with us. And certainly, a REMS is a very doable REMS, and it is something that we have had back and forth discussion on, and they have stated that it is pre-cleared. So I think that is a good signal from them.

John Newman, Canaccord.

Hello. Good afternoon, and thanks for taking my questions.

Richard, I just wanted to ask if you could remind us, how many of the amendments have not been reviewed at this point? And which of those do believe that you can fully address without additional data?

And then finally, I know you have to meet with the agency obviously, but what is it that makes you believe that the FDA will not require any additional studies in humans for the modification that you are making to the device, that only the bench data will be sufficient? Thank you.

So the number of amendments that they haven't yet reviewed is nine. They contain a number of pieces of information that actually answer a couple of the questions that have been addressed by the agency in the CRL. So we look forward to the agency, picking those up and reviewing them.

In terms of the bench test data, the ability for us to look at the way in which the optical system works can be evaluated on a bench. We have demonstrated how that works historically, and have shared some of those data with the agency, and we feel pretty comfortable that the optical system as an entity that can be evaluated well, and comparably to the clinical experience that we have.

And for that reason, we feel quite comfortable that the bench testing mechanism for the optical system will be an effective one. We obviously, have to discuss that with the agency, and get their confirmation and comfort level with that as well. But at this stage, we believe that is going to be a viable route for us to follow.

Okay. Great. And you -- the last call -- I know we have had a question on this earlier on the call -- but do you think at this point -- at least from our perspective as the analysts, it is safer for us to assume that you may be looking at a [class II] response here, and that the agency may take the six months to review this rather than two?

Again, it's difficult to say. I am going to defer until after we meet with the agency.

As Tim mentioned earlier on, as a standard the Type II submission is basically associated with new clinical data. We are not anticipating our delivering any new clinical data here. We are delivering human factors data which is nonclinical.

So I -- but the regs are not clear that they are designed for pharma purposes-- or not necessarily for device purposes, so we will have that discussion with the agency. At this stage it would appear, that the two-month review would be appropriate, but we need to have that dialogue

Great. Thank you.

Boris Peaker, Cowen.

Good afternoon.

So I am just curious, in your market research, and particularly in regards to hospitals, what specific labeling characteristics do you think would be really helpful in commercial adoption of this device? And have you had discussions with the FDA specifically about those labeling issues? And I guess, what would it get -- what would it take to get it incorporated into the label?

Yes, probably the biggest advantage we could get, is a label that would just include moderate to severe pain in the hospital setting, with really no limitation. Even though that we ran the study for pain following surgery, we think a broader label indication that would encompass all pain in a hospital setting would be appropriate, and we think that would be commercially an advantage

Now if the label itself only focuses specifically on surgery or postsurgical pain, how significant of a constraint do you see that in terms of marketing broadly to hospitals?

Yes, when we look at the potential market opportunities there, clearly, the largest numbers of patients who suffer from large severe pain in hospital settings are postsurgical. So we think just having a broader label allows us more flexibility, and allows us probably a deeper penetration within the institution itself.

Great.

And my last question is, from the economics perspective from the hospital, if we compare Zalviso to some of the other patient-controlled analgesic device, what are some of the economic consequences to the hospital?

Well, we have conducted and published pharmacoeconomic research around IV PCA, and shown that the hard cost of the pump, the tubing, the drug, et cetera over a 48 hour period is around $200 to $250. So we are really looking at coming in, and not pricing it at extreme multiple of that.

We are looking to price generally in and around what it costs in providing PCA. Which is a tremendous advantage for us over other products that have recently been commercialized in the postoperative pain setting in the hospital, where they are looking at charging a substantial premium over the current standard of care.

And on the consumables end?

Price for the consumables?

So right. So when we are talking about that price, we are talking altogether, the combination

Oh, got you, okay.

The amortized price of the actual non-consumables and then the consumables all -- (Multiple Speakers).

Yes, we haven't set our price yet for any of our components. But I mean, it is probably safe to say that the consumable side, in their case is going to be two kits, saline, and we also have a dispenser and a few other things, so those will most likely be relatively close.

Got you.

Essentially budget neutral.

Well, thank you very much for taking my questions.

For sure.

Ed Arce, ROTH Capital Partners.

Hello. Good afternoon, and thanks for taking my question.

So I just had a question about ARX-04, and perhaps Pam this might be best suited for you. I just wanted to get some clarity on the comments made in the prepared remarks, about the 300 patients that could be included in the safety database. Does that translate directly into an assumption that around 200 more patients would be needed for the Phase III trial? And I guess, related to that, how much quicker do you think this would allow the trial to complete? Thank you.

Yes. Great. I am glad someone is interested in ARX-04. It is an exciting product for us.

Yes, exactly right. The FDA has required an overall safety database of 500. We have already conducted 40 of those 30 microgram dosing subjects in an adequately well-controlled bunionectomy study.

And so, the addition of the 300, if allowed by the FDA, and we did the PK study based on their guidance, that would be a total of 340 patients towards that 500. So we are looking at a very small Phase III program, purely powered just to get us the effect size that we want for a P value, and then moving forward. So, and we have already finished our definitive PK study. So this could be a very small quick and easy to run Phase III program for ARX-04.

Okay. That's it. Thank you so much.

Thanks, Ed.

Randall Stanicky, RBC.

Hello. This is James actually on for Randall. I had a question.

Two weeks ago, you mentioned reducing friction of the dispenser to lower the optical error rate, and that testing was underway. Is the change working as expected, or were there any other changes made? What kind of improvement in the errors are you seeing, and is there anything more that might need to be done there? Thanks.

Yes, hello, Jason, it is Tim here.

Yes, we believe that the modification design is working as expected. We do believe we can reduce that error rate. That is really the most significant change that we have made, so we are very pleased with it. Again, the preliminary bench testing supports that.

What we do have to do is do a formal protocol in terms of testing a number of units, and then we will submit that with the resubmission as well. So we don't think that there is anything else left to do on the design or modification of the device itself. We think that the change is going to be sufficient to address that optical error rate.

Great. Thanks.

And is it possible, if you could go through a walk-through of events, for what might it look like the back half of next year, a launch, ramp, build up, and potential timing around that?

Yes, I think that's a fair question.

It's hard for me to put specifics on the timing, obviously depends on the review period. But I think if we you look at the timing that we had talked about previously, where we were looking at an approval, and then potentially a launch six months later.

I think we can actually compress that. We still need to go through a P&T process, in order to get the product on formulary. However, we probably can compress that from the original estimate of six months to something shorter.

In addition, we have all of our regional business managers essentially in place. We have our MSLs in place. We can, as Richard talked about earlier, continue to kind of refine our approach and our market research.

So all of those things that would have had to take place prior to launch, are ongoing right now. So I think we can compress that. So we do look forward to approval, and launching sooner than six months as originally planned.

Okay. Great. Thanks.

Oren Livnat, JMP Securities.

Hello, thanks for taking my question.

Correct me if I am wrong, is this language in your press release today around the IFU, regarding clinical inadvertent dosing. Is that actually something incremental to what we heard before? Or is that just -- are you just reframing the issue of the misplaced tablet, is that one and the same issue?

It is the exact same. Whether it is a misplaced tablet, i.e. a dropped tablet or an inadvertent dosing, in our mind and the FDA's mind, it is the same thing, just slightly different adjectives. (Multiple Speakers).

And just so I under -- yes, go ahead. (Multiple Speakers). All right.

Oren, hang on, go ahead.

Sorry. Inadvertent dosing doesn't means inadvertently dosing into their mouth, just to clarify that. We should say that.

Got you.

And just maybe to speculate around that same issue -- obviously missing a dose, and not ever getting it, and not having pain relief is one issue. Is the FDA theoretically concerned that -- I don't know -- that a patient finds a nanotab sitting in their lap, right after they have gotten another one 20 minutes later, and then they are popping that one in their mouth, and now they are getting double the dose?

I mean, I know that sufentanil has a much wider therapeutic index, but can you sort of characterize where the risks around that maybe, particular scenario would be, and how concerned the FDA would be about that?

Well, sure, and that is probably the beauty of our ARX-04 program, because our ARX-04 program is in fact, a double-strength Zalviso. It's 30 microgram versus 15, and it is well-tolerated, and we have been doing a lot of analysis of that, from both from a PK standpoint and in clinical trials. So it's not -- I can't imagine it as much of a concern that someone will get two doses versus one.

Okay. Great. Well, that's it for me. Thanks.

Thanks, Oren.

Biren Amin, Jefferies.

Yes. Thanks for taking my question. I might have missed this, but has the date been set when you will be meeting with FDA?

No, we haven't set the date yet, although what we have said, Biren, is that we expect to the meeting to take place before the end of September.

Okay. And then with regards, to the dispenser change, and I think you mentioned earlier in the call that you will be testing a number of units. Can you, I guess, quantify how many units you would be testing and for how long?

Yes, we haven't given a specific number, but I think it is safe to say that it ends up being hundreds. And then you will run them for a certain period of time, so essentially to go through a -- to replicate what might have happened in a clinical study. So but it is all very manageable, and it is an automated process.

Great. Thanks.

John Newman, Canaccord.

Hello. Thanks for taking the follow-up.

Pam, you mentioned earlier that post CRL, you have received clearance for your REMS. I am just wondering in your opinion, how much of the delay in terms of the CRL was related to the FDA working on the REMS versus the device? Thank you.

No. I don't think there was any delay in working with the REMS. I think we quickly -- we proposed a very good REMS to them, and they came back with just some minor modification, which we did, and then they came back with a pre-cleared REMS. So that seemed to have run quite smoothly, and was really not connected to some of these device-related issues.

Okay. Thank you.

And ladies and gentlemen, this will conclude our question and answer session. I would like to turn the conference back over to Richard King for his closing remarks.

Thanks, Denise, and thanks everybody for today.

While the CRL was unexpected, I am pleased to how quickly the AcelRx organization has overcome that disappointment, and has developed a plan to address the FDA's requests in the CRL. We plan to have a meeting with the FDA by the end of Q3 2014, to confirm that this plan is adequate, and can be anticipated to meet the agency's needs.

In the meantime, we will use the time afforded by the delay to refine and hone our commercial launch plans, such that we can maximize our recent uptake in the event of approval.

I would like to thank you for your time today, and also for your questions. I hope everybody has a good rest of the day. Bye-bye.

Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your line.