Jefferies Downgrades AcelRx Pharmaceuticals After FDA Requests Additional Clinical Trial For Lead Drug Zalviso

Shares of AcelRx Pharmaceuticals Inc ACRX were down substantially on Tuesday after its earnings call on Monday. Although the company reported in-line financial results, it also announced it wouldn't submit a new drug application for its lead drug candidate, pain medication Zalviso, in the current quarter.

The company will not submit an application for Zalviso because it received a letter "in which the FDA requests an additional clinical study to assess the risk of inadvertent dispensing w/ Zalviso and overall risk of dispensing failures. Mgmt does not have details on the design of the trial, however. its unclear how one could design a clinical trial to assess the risk of dispensing failures," a report issued by Jefferies explained.

As a consequence of the regulatory uncertainty, the firm now expects Zalviso to be launched on 2018 (instead of 2016) and is thus downgrading the stock from Buy to Hold. The price target was also trimmed, from $12 to $6.