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Here's Why AcelRx Pharmaceuticals Fell as Much as 14% Today

Maxx Chatsko, The Motley Fool

What happened

Shares of AcelRx Pharmaceuticals (NASDAQ: ACRX) dropped 14% today after the company announced first-quarter 2019 operating results. The business reported revenue that was well behind Wall Street estimates. More importantly, generating revenue of only $265,000 for the quarter suggests the company's sole drug product, Dsuvia, had a very slow start. 

While the pain treatment only launched in late February, it generated just $47,000 in revenue in the five weeks it was available. Wall Street estimates suggest analysts were expecting nearly 10 times that amount after accounting for grant revenue, according to numbers compiled by Yahoo! Finance. What's more, AcelRx Therapeutics reported $1.2 million in cost of goods sold.

As of 12:24 p.m. EDT, the stock had settled to a 7.9% loss.

A scientist sitting in a lab with his left hand on his forehead and a disappointed look on his face..

Image source: Getty Images.

So what

It's still very early for Dsuvia, which some analysts believe has immense potential as a rapid-acting, oral treatment for pain in hospital settings. Clinical results and marketing approvals powered the company's stock to nearly 140% year-to-date gains at one point in 2018, but shares finished the year with a gain of just 14% after the media-inflated worries over the approval of an opioid amid the ongoing opioid crisis. However, administering it to patients only in a hospital setting should significantly reduce the risk of abuse.

The slower-than-expected launch for the drug is creating new problems. Are hospitals avoiding Dsuvia, or are investors simply overreacting to just five weeks of sales data?

Now what

AcelRx Pharmaceuticals remains confident in its commercialization efforts and expects to end 2019 with 125 hospitals in its network. The business exited March with $90.2 million in cash, cash equivalents, and short-term investments so it's relatively well funded to get Dsuvia up to speed. That said, if drug sales appear weak, then Wall Street will need to significantly reduce expectations for full-year 2019 revenue of $7.9 million and full-year 2020 revenue of $32 million.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.