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)

Non-Derivative Transactions

Date	Security	Code	Shares	Price	A/D	Holdings After	Ownership
2011-02-16	Common Stock	C	13277	—	Acquired	13277	Indirect
2011-02-16	Common Stock	C	601335	—	Acquired	601335	Indirect
2011-02-16	Common Stock	C	10630	—	Acquired	23907	Indirect
2011-02-16	Common Stock	C	481465	—	Acquired	1082800	Indirect
2011-02-16	Common Stock	C	18928	—	Acquired	42835	Indirect
2011-02-16	Common Stock	C	857241	—	Acquired	1940041	Indirect
2011-02-16	Common Stock	C	11492	—	Acquired	54327	Indirect
2011-02-16	Common Stock	C	520510	—	Acquired	2460551	Indirect
2011-02-16	Common Stock	C	605	—	Acquired	54932	Indirect
2011-02-16	Common Stock	C	27440	—	Acquired	2487991	Indirect
2011-02-16	Common Stock	P	27863	$5.00	Acquired	82795	Indirect
2011-02-16	Common Stock	P	1261927	$5.00	Acquired	3749918	Indirect

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2011-02-16	Series A Convertible Preferred Stock	$	C	9721	Disposed		Common Stock (13277)	Indirect
2011-02-16	Series A Convertible Preferred Stock	$	C	440278	Disposed		Common Stock (601335)	Indirect
2011-02-16	Series B Convertible Preferred Stock	$	C	7088	Disposed		Common Stock (10630)	Indirect
2011-02-16	Series B Convertible Preferred Stock	$	C	321036	Disposed		Common Stock (481465)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	18928	Disposed		Common Stock (18928)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	857241	Disposed		Common Stock (857241)	Indirect
2011-02-16	Convertible Promissory Note	$	C		Disposed		Common Stock (10419)	Indirect
2011-02-16	Convertible Promissory Note	$	C		Disposed		Common Stock (471905)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	X	2597	Disposed		Series C Preferred Stock (2597)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	X	2597	Acquired		Common Stock (2597)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$5.00	S	2048	Disposed		Common Stock (2048)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	C	549	Disposed		Common Stock (549)	Indirect
2011-02-16	Warrant to purchase Series C Convertible Preferred Stock	$	X	117661	Disposed		Series C Preferred Stock (117661)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$	X	117661	Acquired		Common Stock (117661)	Indirect
2011-02-16	Series C Convertible Preferred Stock	$5.00	S	92783	Disposed		Common Stock (92783)	Indirect

Footnotes

F1: The shares reflect the automatic conversion of 9,721 shares of the Issuer's Series A Convertible Preferred Stock for 13,277 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 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.

F3: The shares reflect the automatic conversion of 440,278 shares of the Issuer's Series A Convertible Preferred Stock for 601,335 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 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.

F5: The shares reflect the automatic conversion of 7,088 shares of the Issuer's Series B Convertible Preferred Stock for 10,630 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 321,036 shares of the Issuer's Series B Convertible Preferred Stock for 481,465 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 $45,971.78 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 $2,082,045.53 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 $41,679.02 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 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 $1,887,621.87 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 549 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 24,878 shares of Series C Convertible Preferred Stock of the Issuer.