TALPHERA, INC. — Director's Dealing 2011

Feb 18, 2011

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: ACELRX PHARMACEUTICALS INC (ACRX)
CIK: 0001427925
Period of Report: 2011-02-16

Reporting Person: Three Arch Management IV, L.L.C. (10% Owner)
Reporting Person: THREE ARCH ASSOCIATES IV LP (10% Owner)
Reporting Person: WAN MARK A (Director)
Reporting Person: JAEGER WILFRED E (10% Owner)
Reporting Person: THREE ARCH PARTNERS IV LP (10% Owner)

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2011-02-16	Series C Convertible Preferred Stock	$	C	24878	Disposed		Common Stock (24878)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	J	267	Acquired		Series C Preferred Stock (267)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	X	267	Disposed		Series C Preferred Stock (267)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	X	267	Acquired		Common Stock (267)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$5.00	S	211	Disposed		Common Stock (211)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	56	Disposed		Common Stock (56)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	J	12119	Acquired		Series C Preferred Stock (12119)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	X	12119	Disposed		Series C Preferred Stock (12119)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	X	12119	Acquired		Common Stock (12119)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$5.00	S	9557	Disposed		Common Stock (9557)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	2562	Disposed		Common Stock (2562)	Indirect
2011-02-16	Convertible Promissory Note	$	J		Acquired		Common Stock (1073)	Indirect
2011-02-16	Convertible Promissory Note	$	J		Acquired		Common Stock (48605)	Indirect
2011-02-16	Convertible Promissory Note	$	C		Disposed		Common Stock (1073)	Indirect
2011-02-16	Convertible Promissory Note	$	C		Disposed		Common Stock (48605)	Indirect

Footnotes

F2: The shares are held by Three Arch Associates IV, L.P. The voting and dispositive decisions with respect to the shares held by Three Arch Associates IV, L.P., are made by the following Managing Members of its general partner Three Arch Management IV, L.L.C.: Mark Wan and Wilfred Jaeger, each of whom disclaims beneficial ownership of such shares.

F4: The shares are held by Three Arch Partners IV, L.P. The voting and dispositive decisions with respect to the shares held by Three Arch Partners IV, L.P., are made by the following Managing Members of its general partner Three Arch Management IV, L.L.C.: Mark Wan and Wilfred Jaeger, each of whom disclaims beneficial ownership of such shares.

F7: The shares reflect the automatic conversion of shares of the Issuer's Series C Convertible Preferred Stock into Common Stock on a one-for-one basis upon the closing of the Issuer's initial public offering.

F10: Immediately convertible into shares of the Issuer's Common Stock.

F11: These shares have no expiration date.

F14: The exercise price is $3.942 per share.

F15: Immediately exercisable prior to and contingent upon the closing of the Issuer's initial public offering.

F16: Pursuant to its terms, the warrant was to be terminated at the closing of the Issuer's initial public offering. Holder elected to net exercise the warrants immediately prior to the closing of the Issuer's initial public offering. In the event the Issuer's public offering did not occur, the warrant would have terminated on September 14, 2017, unless earlier terminated in accordance with its terms, in a liquidation or change of control transaction.

F17: Pursuant to that certain Note and Warrant Transfer Agreement dated February 16, 2011, ACP IV, L.P. transferred (i) a convertible promissory note in the amount of $4,292.76 including accrued interest and (ii) an associated warrant to purchase preferred stock of the Issuer, exercisable into 267 shares of Series C Convertible Preferred Stock to Three Arch Associates IV, L.P., for a nominal consideration, contingent upon the closing of the Issuer's initial public offering.

F18: Pursuant to that certain Note and Warrant Transfer Agreement dated February 16, 2011, ACP IV, L.P. transferred (i) a convertible promissory note in the amount of $194,423.66 including accrued interest and (ii) an associated warrant to purchase preferred stock of the Issuer, exercisable into 12,119 shares of Series C Convertible Preferred Stock to Three Arch Partners IV, L.P., for a nominal consideration, contingent upon the closing of the Issuer's initial public offering.

F19: A note with the principal amount plus accrued interest of $4,292.76 converted automatically upon the closing of the Issuer's initial public offering into shares of Common Stock at a conversion price of $4.00, which is 80.0% of the per share price of the Common Stock sold in the Issuer's initial public offering.

F20: A note with the principal amount plus interest of $194,423.66 converted automatically upon the closing of the Issuer's initial public offering into shares of Common Stock at a conversion price of $4.00, which is 80.0% of the per share price of the Common Stock sold in the Issuer's initial public offering.

F23: These shares represent the net exercise of a warrant to purchase Series C Convertible Preferred Stock for an acquisition of 56 shares of Series C Convertible Preferred Stock of the Issuer.

F24: These shares represent the net exercise of a warrant to purchase Series C Convertible Preferred Stock for an acquisition of 2,562 shares of Series C Convertible Preferred Stock of the Issuer.