Alexza Pharmaceuticals first-quarter net loss increases to $13.4 million

Alexza Pharmaceuticals, Inc. (Nasdaq: ALXA) today reported financial results for the first quarter ended March 31, 2010 and provided a business update.  

The net loss for the quarters ended March 31, 2010 and 2009, as reported in accordance with accounting principles generally accepted in the United States (GAAP), was $13.4 million and $6.9 million, respectively.  Alexza had consolidated cash, cash equivalents and marketable securities at March 31, 2010 of $41.0 million.

Alexza Business Updates

The following key events occurred since the beginning of the first quarter of 2010:

• Alexza established its first collaboration for AZ-004 (Staccato loxapine) with Biovail Laboratories International SRL, a subsidiary of Biovail Corporation, for the US and Canada.
• Alexza received notification from the FDA that its AZ-004 NDA was accepted for filing and the PDUFA goal date is October 11, 2010.
• In May, Alexza executed a $15.0 million working capital loan agreement with Hercules Technology Growth Capital.
• Alexza presented AZ-004 clinical and scientific data at four meetings; the annual meetings of the European Psychiatric Association, the International Society of Psychiatric-Mental Health Nurses, the College of Psychiatric and Neurologic Pharmacists, and the 2010 Respiratory Drug Delivery Scientific Program; and published data in two peer-reviewed journals:  The Journal of Clinical Pharmacology and Clinical Therapeutics.

"In the first quarter of 2010, we continued on the path toward AZ-004 commercialization.  In February, we announced our Biovail collaboration for AZ-004 in the U.S. and Canada, and also received notice of our AZ-004 PDUFA date from the FDA," said Thomas B. King, President and CEO of Alexza.  "A majority of our focus and effort through the end of 2010 will be on executing a successful NDA review, finalizing the commercial manufacturing scale-up for AZ-004, supporting our Biovail collaboration and working on international commercial strategies for AZ-004."

Alexza First Quarter 2010 Financial Results

Alexza recorded no revenues in the three months ended March 31, 2010, and $9.5 million of revenues during the three months ended March 31, 2009.  In January 2009, Alexza and Endo mutually agreed to terminate their development agreement for AZ-003 (Staccato fentanyl), at which time Alexza had fulfilled its obligations under the development agreement and recognized the remaining $9.5 million of deferred revenues into revenues.

GAAP operating expenses were $12.6 million and $16.4 million in the quarters ended March 31, 2010 and 2009, respectively.  Research and development expenses in the first quarter of 2010 were $7.6 million, compared to $11.0 million for the same period in 2009.  The decrease in expenses for the quarter was primarily due to decreased development expenses for AZ-004.  General and administrative expenses for the first quarter of 2010 were $5.1 million, compared to $3.9 million for the same period in 2009.  The increase in expenses is primarily related to a one-time, non-cash charge of $1.1 million related to Alexza entering into a sublease agreement for a portion of one of its Mountain View facilities.

During the first quarter of 2010, Alexza received an upfront payment of $40 million from Biovail.  In connection with the acquisition of Symphony Allegro, Inc. in August 2009, Alexza is obligated to pay the former Symphony Allegro shareholders certain percentages of cash payments that may be generated from collaboration transactions for AZ-002, AZ-004 or AZ-104.  Under these terms, Alexza paid $7.5 million of the $40 million upfront payment from Biovail to the former Symphony Allegro shareholders.  In addition to the payment to the Symphony Allegro shareholders, Alexza recorded a non-cash charge of $722,000 in the first quarter of 2010, as a result of an increase in the present value of the estimated possible future payments under this transaction.  Changes in the calculated fair value of this contingent liability are recognized in earnings in the period of the change.

Alexza anticipates that with current cash, cash equivalents and marketable securities along with interest earned thereon, borrowings under the Hercules loan agreement, the proceeds from option exercises and purchases of common stock pursuant to its Employee Stock Purchase Plan, it will be able to maintain its currently planned operations through the second quarter of 2011, which time period will extend into 2012 if Alexza achieves the eligible milestones under the Biovail collaboration during the next 12 months.  Changing circumstances may cause Alexza to consume capital significantly faster or slower than currently anticipated.