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 III LLC (10% Owner)
Reporting Person: WAN MARK A (Director)
Reporting Person: JAEGER WILFRED E (10% Owner)
Reporting Person: THREE ARCH PARTNERS III LP (10% Owner)
Reporting Person: THREE ARCH ASSOCIATES III LP (10% Owner)

Non-Derivative Transactions

Date	Security	Code	Shares	Price	A/D	Holdings After	Ownership
2011-02-16	Common Stock	C	31357	—	Acquired	31357	Indirect
2011-02-16	Common Stock	C	583255	—	Acquired	583255	Indirect
2011-02-16	Common Stock	C	25106	—	Acquired	56463	Indirect
2011-02-16	Common Stock	C	466990	—	Acquired	1050245	Indirect
2011-02-16	Common Stock	C	44702	—	Acquired	101165	Indirect
2011-02-16	Common Stock	C	831466	—	Acquired	1881711	Indirect
2011-02-16	Common Stock	C	27142	—	Acquired	128307	Indirect
2011-02-16	Common Stock	C	504860	—	Acquired	2386571	Indirect
2011-02-16	Common Stock	C	1430	—	Acquired	129737	Indirect
2011-02-16	Common Stock	C	26615	—	Acquired	2413186	Indirect
2011-02-16	Common Stock	P	65806	$5.00	Acquired	195543	Indirect
2011-02-16	Common Stock	P	1223983	$5.00	Acquired	3637169	Indirect

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2011-02-16	Series A Convertible Preferred Stock	$	C	22959	Disposed		Common Stock (31357)	Indirect
2011-02-16	Series A Convertible Preferred Stock	$	C	427040	Disposed		Common Stock (583255)	Indirect
2011-02-16	Series B Convertible Preferred Stock	$	C	16741	Disposed		Common Stock (25106)	Indirect
2011-02-16	Series B Convertible Preferred Stock	$	C	311384	Disposed		Common Stock (466990)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	44702	Disposed		Common Stock (44702)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	831466	Disposed		Common Stock (831466)	Indirect
2011-02-16	Convertible Promissory Note	$	C		Disposed		Common Stock (24608)	Indirect
2011-02-16	Convertible Promissory Note	$	C		Disposed		Common Stock (457716)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	X	6135	Disposed		Series C Preferred Stock (6135)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	X	6135	Acquired		Common Stock (6135)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$5.00	S	4838	Disposed		Common Stock (4838)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	1297	Disposed		Common Stock (1297)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	X	114123	Disposed		Series C Preferred Stock (114123)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	X	114123	Acquired		Common Stock (114123)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$5.00	S	89993	Disposed		Common Stock (89993)	Indirect

Footnotes

F1: The shares reflect the automatic conversion of 22,959 shares of the Issuer's Series A Convertible Preferred Stock for 31,357 shares of the Issuer's Common Stock immediately prior to the closing of the Issuer's initial public offering.

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

F3: The shares reflect the automatic conversion of 427,040 shares of the Issuer's Series A Convertible Preferred Stock for 583,255 shares of the Issuer's Common Stock immediately prior to the closing of the Issuer's initial public offering.

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

F5: The shares reflect the automatic conversion of 16,741 shares of the Issuer's Series B Convertible Preferred Stock for 25,106 shares of the Issuer's Common Stock immediately prior to the closing of the Issuer's initial public offering.

F6: The shares reflect the automatic conversion of 311,384 shares of the Issuer's Series B Convertible Preferred Stock for 466,990 shares of the Issuer's Common Stock immediately prior to the closing of the Issuer's initial public offering.

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.

F8: Notes and accrued interest in the aggregate of $108,572.10 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.

F9: Notes and accrued interest in the aggregate of $2,019,445.02 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.

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

F11: These shares have no expiration date.

F12: A note with the principal amount plus accrued interest of $98,433.72 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 of 80.0% of the per share price of the Common Stock sold in the Issuer's initial public offering.

F13: A note with the principal amount plus accrued interest of $1,830,866.97 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.

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.

F21: These shares represent the net exercise of a warrant to purchase Series C Convertible Preferred Stock for an acquisition of 1,297 shares of Series C Convertible Preferred Stock of the Issuer.

F22: These shares represent the net exercise of a warrant to purchase Series C Convertible Preferred Stock for an acquisition of 24,130 shares of Series C Convertible Preferred Stock of the Issuer.