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IPO Watch: 2011

AcelRx Pharmaceuticals

IPO Filing Date: Nov. 12, 2010

Expected IPO Date: Feb. 7, 2011

Amount of Proceeds Sought: ~$75 million

Expected Offering Price: $12 to $14

Expected Number of Shares to Be Sold: ~ 5.8 million

Use of Proceeds: To fund phase 3 development of lead, post-surgery pain treatment product ARX-01; working capital; and other general corporate purposes.

Expected Ticker Symbol: ACRX (ACRX) (NASDAQ)

Lead Underwriters: Piper Jaffray (PJC)

Co-Managers: Canaccord Genuity, Cowen and Company (COWN), JMP Securities (JMP)

About the Company: AcelRx is a drug company that focuses on developing and commercializing pain treatment therapies.

Currently it has three products in the pipeline, but not yet on the market. The lead product is post-surgery pain treatment product ARX-01. Its ARX-02 product treats pain in cancer patients and its ARX-03 product treats pain and anxiety caused by painful physician procedures.

The company aims to bring its products to market amid a burgeoning, global post-surgical pain market. According to AcelRx, the post-operative pain market in the U.S., Europe and Japan is expected to reach $6.5 billion by 2018.

Given that the company isn't selling any products yet, it hasn't generated any revenue since it was founded in Jul. 2005. AcelRx has experienced significant net losses every year since its inception. It could fail as a business if the company doesn't successfully commercialize its products.

Competitors: The main competitor against the company's ARX-01 product is the widely-used IV PCA pump. Leading manufacturers of IV PCA pumps include Hospira (HSP), CareFusion (CFN), Baxter International (BAX) and Smiths Medical (SMGZY).

Potential competitors for ARX-01 that are currently also being developed include Ionsys, which was originally developed by Johnson & Johnson (JNJ) subsidiaries.

Potential competitors for the company's ARX-02 product include Actiq and Fentora, made by Cephalon (CEPH); Onsolis, made by BioDelivery Sciences International (BDSI), and Abstral, made by ProStrakan Group (PKNGF).

IPO Scorecard:

Actual IPO Date: Feb. 11

Actual Proceeds Raised: $40 million

Actual Offering price: $5

Actual Number of Shares Sold: 8 million

First Day Closing Price: $4.55

IPO First Day Return: -9

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