Alexza Reports 2008 Second Quarter Financial Results and Updates Development of Product Candidates

2008-08-06 15:30:00

Alexza Reports 2008 Second Quarter Financial Results and Updates Development of Product Candidates

    MOUNTAIN VIEW, Calif., Aug. 6 /EMWNews/ -- Alexza

Pharmaceuticals, Inc. (Nasdaq: ALXA) reported today financial results for

the quarter and six month period ended June 30, 2008 and provided an update

on the Company's progress with its product development candidates. The net

loss for the quarter and six month period ended June 30, 2008, as reported

in accordance with accounting principles generally accepted in the United

States (GAAP), was $14.1 million and $28.7 million, respectively, compared

to a net loss of $10.3 million and $21.2 million in the comparable periods

in 2007. Alexza had consolidated cash, cash equivalents and marketable

securities (including investments held by Symphony Allegro) at June 30,

2008 of $95.3 million.



    "Alexza continues to make significant progress with our lead program,

AZ-004 (Staccato(R) loxapine), which is being developed for the treatment

of acute agitation in schizophrenic or bipolar disorder patients," said

Thomas B. King, President and CEO of Alexza. "During the first seven months

of 2008, we initiated and completed the dosing of our first AZ-004 Phase 3

clinical trial, and have initiated dosing of our second AZ-004 Phase 3

clinical trial. In addition, we had clinical readouts from clinical trials

with AZ-104, AZ-007 and AZ-002. We are also scaling up our manufacturing,

quality systems, regulatory affairs and commercial operations as we prepare

for the future commercialization of AZ-004."



    Financial Results - Periods Ended June 30, 2008 and 2007



    GAAP operating expenses were $20.5 million and $39.7 million in the

quarter and six month period ended June 30, 2008, compared to $14.2 million

and $28.0 million for the comparable periods in 2007. The increases

resulted primarily from increased spending on AZ-004 and AZ-104 as the

Company continued development of these product candidates under the

Symphony Allegro agreement, increased spending on AZ-003 with continued

development of this product candidate under the development agreement with

Endo Pharmaceuticals, increased spending for device development and

manufacturing process scale-up efforts, increased personnel-related costs

to support these efforts, and increased share-based compensation costs.



    On January 1, 2006, Alexza adopted FAS 123R and reports employee

share-based compensation expense based on the fair value of the award.

Share-based compensation was $1,447,000 and $2,638,000 in the quarter and

six month period ended June 30, 2008 compared to $557,000 and $1,276,000 in

the comparable periods in 2007. Alexza's Consolidated Statements of

Operations include the operations of Symphony Allegro, Inc., its variable

interest entity. As the Company has no direct ownership in Allegro, it

reduces its net loss by the losses incurred by Allegro. "Loss attributed to

noncontrolling interest in Symphony Allegro, Inc." reduced net loss for the

quarter and six month period ended June 30, 2008 by $5.9 million and $9.6

million, and reduced net loss by $2.6 million and $4.7 million in the

comparable periods in 2007.



    Product Candidates Development Update



    -- AZ-004 (Staccato loxapine). Alexza is developing AZ-004 for the

treatment of acute agitation in patients with schizophrenia or bipolar

disorder. In June 2008, the Company completed enrollment in its first Phase

3 clinical trial of 344 schizophrenic patients with acute agitation at 24

U.S. clinical centers. The trial was an in-clinic, multi-center,

randomized, double-blind, placebo-controlled study and tested AZ-004 at two

dose levels, 5 and 10 mg. Patients received up to three doses of study drug

in a 24-hour period, depending on their clinical status. The primary

endpoint for the study is the change from baseline in the PANSS (Positive

and Negative Symptom Scale) Excited Component (PEC) score, measured at two

hours after the first dose. Various assessments of a patient's agitation

state were conducted at serial time points using standard agitation scales

over the first 4-hour post- dose time period, with follow-up assessments at

the end of the 24-hour study period. Side effects were recorded throughout

the 24-hour period. The Company expects to release initial results of this

trial before the end of September 2008.



    A second Phase 3 clinical trial was initiated in July 2008 and is

designed to enroll approximately 300 patients diagnosed with bipolar I

disorder and acute agitation at 18 U.S. clinical centers. The trial is an

in-clinic, multicenter, randomized, double-blind, placebo-controlled study

and will test AZ-004 at two dose levels, 5 and 10 mg. Patients may receive

up to three doses of study drug in a 24-hour period, depending on their

clinical status. Patients eligible for the study include those who are

admitted through an emergency department and those who are already

in-patients in a hospital setting, as long as they have acute agitation at

the time of patient randomization. This study is the first AZ-004 study

enrolling bipolar disorder patients. The Company projects that this second

Phase 3 clinical trial will take approximately 12 months to complete

patient enrollment. The primary endpoint for the study is the change from

baseline in the PEC score, measured at two hours after the first dose.

Various assessments of a patient's agitation state will be conducted at

serial time points using standard agitation scales over the first 4-hour

post-dose time period, with follow-up assessments at the end of the 24-hour

study period. Side effects will be recorded throughout the 24-hour period.

AZ-004 has been licensed to Symphony Allegro, Inc., or Symphony Allegro,

and Alexza has the right to repurchase all rights to this product

candidate.



    -- AZ-001 (Staccato prochlorperazine). Alexza is developing AZ-001 to

treat patients suffering from acute migraine headaches. Alexza requested an

end of Phase 2 meeting with the FDA during the second quarter of 2008 and

has been granted this meeting for the third quarter of 2008.



    -- AZ-104 (Staccato loxapine). Alexza is developing AZ-104 to treat

patients suffering from acute migraine headaches. AZ-104 is a lower dose

version of AZ-004. In March 2008, the Company announced initial results of

an in-clinic, multi-center randomized, double-blind, single administration,

placebo controlled Phase 2a proof-of-concept clinical trial in 168 migraine

patients with or without aura. Three doses of AZ-104 (1.25, 2.5 and 5 mg)

were evaluated against placebo in the clinical trial. Using the IHS 4-point

rating scale, the primary efficacy endpoint was pain-relief response at 2

hours post-administration. AZ-104 met the primary efficacy endpoint of the

clinical trial for the two highest doses of the drug compared to placebo.

Statistically significant improvements in pain response were observed in

76.7% of patients at the 5 mg dose (p= 0.02), 79.1% of patients at the 2.5

mg dose (p = 0.01) and 67.4% of patients at the 1.25 mg dose (p = 0.18),

compared to 51.3% of patients receiving placebo. Using survival analysis

for pain relief response, all three dose groups were statistically superior

(p http://www.alexza.com, under the "Investor Relations" link. Please join the

call at least 15 minutes prior to the start of the call to ensure time for

any software downloads that may be required. Interested parties may also

pre-register to avoid pre-call delays at

https://www.theconferencingservice.com/prereg/key.process?key=PHY9DE66U.



    To access the live conference call via phone, dial 888-680-0894.

International callers may access the live call by dialing 617-213-4860. The

reference number to enter the call is 37382979.



    The replay of the conference call may be accessed via the Internet, at

http://www.alexza.com, or via phone at 888-286-8010 for domestic callers or

617-801-6888 for international callers. The reference number for the replay

of the call is 47372481.



    About Alexza Pharmaceuticals



    Alexza Pharmaceuticals is an emerging specialty pharmaceutical company

focused on the development and commercialization of novel, proprietary

products for the treatment of acute and intermittent conditions. The

Company's technology, the Staccato system, vaporizes unformulated drug to

form a condensation aerosol that allows rapid systemic drug delivery

through deep lung inhalation. The drug is quickly absorbed through the

lungs into the bloodstream, providing speed of therapeutic onset that is

comparable to intravenous administration, but with greater ease, patient

comfort and convenience.



    Alexza has six product candidates in clinical development. Alexza's

lead program, AZ-004 (Staccato loxapine) for the treatment of acute

agitation in schizophrenic or bipolar disorder patients, is in Phase 3

testing and completed the enrollment of its first Phase 3 clinical trial in

June 2008. AZ-001 (Staccato prochlorperazine) for the acute treatment of

migraine headaches has completed Phase 2 testing. AZ-104 (Staccato

loxapine) for the acute treatment of migraine headaches and AZ-002

(Staccato alprazolam) for the acute treatment of panic attacks associated

with panic disorder are in Phase 2 testing. Product candidates in Phase 1

testing are AZ-003 (Staccato fentanyl) for the treatment of breakthrough

pain, which is partnered with Endo Pharmaceuticals in North America, and

AZ-007 (Staccato zaleplon) for the treatment of insomnia. More information,

including this and past press releases from Alexza, is available online at

http://www.alexza.com.



    Safe Harbor Statement



    Alexza's policy is to only provide guidance on product candidates and

corporate goals for the future one to two fiscal quarters, and to provide,

update or reconfirm its guidance only by issuing a press release or filing

updated guidance with the SEC in a publicly accessible document. Clinical

guidance is as of August 6, 2008 and financial guidance relating to the

Company's current cash, cash equivalents and investments is as of June 30,

2008.



    This press release includes forward-looking statements regarding the

development of the Company's product candidates, projected clinical trial

enrollment and data reporting timelines, and safety of the Company's

products and technologies. Any statement describing a product candidate or

Alexza's goals, expectations or beliefs is a forward-looking statement, as

defined in the Private Securities Litigation Reform Act of 1995, and should

be considered an at-risk statement. Such statements are subject to certain

risks and uncertainties, particularly those inherent in the process of

developing and commercializing drugs. The Company's forward-looking

statements also involve assumptions that, if they prove incorrect, would

cause its results to differ materially from those expressed or implied by

such forward-looking statements. These and other risks concerning Alexza's

business are described in additional detail in the Company's Annual Report

on Form 10-K for the year ended December 31, 2007, and the Company's other

Periodic and Current Reports filed with the Securities and Exchange

Commission including the risks under the headings "We have a history of net

losses. We expect to continue to incur substantial and increasing net

losses for the foreseeable future, and we may never achieve or maintain

profitability.", "We will need substantial additional capital in the

future. If additional capital is not available, we will have to delay,

reduce or cease operations.", "Failure or delay in commencing or completing

clinical trials for our product candidates could harm our business.", and

"If our product candidates do not meet safety and efficacy endpoints in

clinical trials, they will not receive regulatory approval, and we will be

unable to market them." Forward-looking statements contained in this

announcement are made as of this date, and we undertake no obligation to

publicly update any forward-looking statement, whether as a result of new

information, future events or otherwise.




Alexza Pharmaceuticals, Inc. (a development stage company) Condensed Consolidated Statements of Operations (unaudited, in thousands except per share data) Period from December 19, 2000 Three Months Ended Six Months Ended (inception) to June 30, June 30, June 30, 2008 2007 2008 2007 2008 Revenue $- $- $- $- $6,945 Operating expenses: Research and development 15,698 10,142 30,391 20,377 173,509 General and administrative 4,802 4,017 9,264 7,602 54,327 Acquired in-process research and development - - - - 3,916 Total operating expenses 20,500 14,159 39,655 27,979 231,752 Loss from operations (20,500) (14,159) (39,655) (27,979) (224,807) Interest and other income, net 729 1,481 1,809 2,538 13,001 Interest expense (242) (244) (533) (479) (3,179) Loss before noncontrolling interest in Symphony Allegro, Inc. (20,013) (12,922) (38,379) (25,920) (214,985) Loss attributed to noncontrolling interest in Symphony Allegro, Inc. 5,891 2,644 9,648 4,726 22,159 Net loss $(14,122) $(10,278) $(28,731) $(21,194) $(192,826) Basic and diluted net loss per share $(0.43) $(0.36) $(0.90) $(0.81) Shares used to compute basic and diluted net loss per share 32,532 28,480 31,879 26,175 Alexza Pharmaceuticals, Inc. (a development stage enterprise) Condensed Consolidated Balance Sheets (in thousands) June 30, December 31, 2008 2007 Unaudited (1) Assets Cash, cash equivalents and marketable securities $64,005 $69,391 Investments held by Symphony Allegro, Inc. 31,310 39,449 Other current assets 996 13,432 Total current assets 96,311 122,272 Property and equipment, net 25,302 26,156 Other non-current assets 666 697 Total assets $122,279 $149,125 Liabilities, noncontrolling interest and stockholders' equity Current liabilities $16,453 $16,180 Non-current liabilities 30,826 33,002 Noncontrolling interest in Symphony Allegro, Inc. 14,304 23,952 Stockholders equity 60,696 75,991 Total liabilities, non controlling interest and stockholders' equity $122,279 $149,125 (1) Derived from audited consolidated financial statements at that date.

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