TALPHERA, INC. — Director's Dealing 2011

Feb 10, 2011

SEC Form 3 — Initial Statement of Beneficial Ownership

Issuer: ACELRX PHARMACEUTICALS INC (ACRX)
CIK: 0001427925
Period of Report: 2011-02-10

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

Holdings (Derivative)

Security	Exercise Price	Expiration	Underlying	Shares	Ownership
Series A Convertible Preferred Stock	$		Common Stock (22959)		Indirect
Series A Convertible Preferred Stock	$		Common Stock (427040)		Indirect
Series B Convertible Preferred Stock	$		Common Stock (16741)		Indirect
Series B Convertible Preferred Stock	$		Common Stock (311384)		Indirect
Series C Convertible Preferred Stock	$		Common Stock (44702)		Indirect
Series C Convertible Preferred Stock	$		Common Stock (831466)		Indirect
Warrant to Purchase Series C Convertible Preferred Stock	$		Series C Preferred Stock (6135)		Indirect
Warrant to Purchase Series C Convertible Preferred Stock	$		Series C Preferred Stock (114123)		Indirect
Convertible Promissory Note	$		Common Stock ()		Indirect
Convertible Promissory Note	$		Common Stock ()		Indirect

Footnotes

F1: Immediately convertible into shares of the Issuer's common stock.

F2: These shares have no expiration date.

F3: Reflect a 1-for-4 reverse stock split of the Company's issued an outstanding securities effective January 28, 2011.

F4: The shares will automatically convert into 31,357 shares of the Issuer's common stock immediately prior to the closing of the Issuer's initial public offering

F5: 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.

F6: The shares will automatically convert into 583,255 shares of the Issuer's common stock immediately prior to the closing of the Issuer's initial public offering.

F7: 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.

F8: The shares will automatically convert into 25,106 shares of the Issuer's common stock immediately prior to the closing of the Issuer's initial public offering.

F9: The shares will automatically convert into 466,990 shares of the Issuer's common stock immediately prior to the closing of the Issuer's initial public offering.

F10: Automatically converts into common stock on a one-for-one basis upon the closing of the Issuer's initial public offering.

F11: Exercisable contingent upon and effective immediately prior to the closing of the Issuer's initial public offering.

F12: Pursuant to its terms, the warrant shall terminate at the closing of the Issuer's initial public offering. Holder has elected to net exercise the warrants contingent upon and effective immediately prior to the closing of the Issuer's initial public offering. In the event the Issuer's public offering does no occur, the warrant shall terminate on September 14, 2017, unless earlier terminated in accordance with its terms, in a liquidation or change of control transaction.

F13: The exercise price per share is $3.9428.

F14: Principal amount of $96,767.17 plus interest accrued at the rate of 4.0% per annum shall convert automatically upon the closing of the Issuer's initial public offering into shares of common stock at a conversion price of 80.0% of the per share price of the common stock sold in the Issuer's initial public offering.

F15: Principal amount of $1,799,869.22 plus interest accrued at the rate of 4.0% per annum shall convert automatically upon the closing of the Issuer's initial public offering into shares of common stock at a conversion price of 80.0% of the per share price of the common stock sold in the Issuer's initial public offering.