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Alexza Reports 2013 Third Quarter Financial Results



             Alexza Reports 2013 Third Quarter Financial Results

Management to Review Results and Provide Business Update in Conference Call
Scheduled Today for 5:00 p.m. Eastern Time

PR Newswire

MOUNTAIN VIEW, Calif., Nov. 6, 2013

MOUNTAIN VIEW, Calif., Nov. 6, 2013 /PRNewswire/ -- Alexza Pharmaceuticals,
Inc. (Nasdaq: ALXA) today reported financial results for the quarter ended
September 30, 2013.  The net loss for the third quarter was $12.4 million
compared to $6.9 million during the same quarter in 2012.  The net loss for
the nine months ended September 30, 2013 and 2012, was $33.9 million and $17.7
million, respectively.  At September 30, 2013, Alexza had consolidated cash,
cash equivalents and marketable securities of $32.5 million.

"In the third quarter we achieved a major milestone with the first commercial
sales of ADASUVE, as Grupo Ferrer launched the product in Germany.  We are
excited by Ferrer's progress in rolling out ADASUVE in Europe, with additional
countries expected to launch through 2014," said Thomas B. King, President and
CEO of Alexza.  "In the U.S., our partner Teva is ramping up their pre-launch
activities and we continue to be impressed by their commitment and
professionalism.  With regard to Alexza's product development pipeline, we are
planning to initiate the Phase 2 study of AZ-002 (Staccato alprazolam) for
acute repetitive seizures in the first quarter of 2014." 

Alexza Business Updates

  o In July 2013, Alexza's commercial partner Grupo Ferrer Internacional, S.A.
    initiated sales of ADASUVE^® inhalation powder, pre-dispensed (Staccato^®
    Loxapine) in Germany.  Ferrer's first sale and product shipment triggered
    a $1.25 million milestone payment to Alexza.
  o In July 2013, Kelly Seither was promoted to Vice President, Global
    Strategic Marketing and New Product Planning and Tatjana Naranda, PhD, was
    promoted to Vice President, Business Development and Global Alliance
    Management. 
  o In September 2013, Ferrer completed an ADASUVE commercialization agreement
    with Medivir AB, headquartered in Stockholm, for the Nordic region
    (Denmark, Finland, Norway, Iceland and Sweden).
  o In October 2013, Ferrer initiated sales of ADASUVE in Austria.  Ferrer is
    commercializing ADASUVE in Austria through a distribution agreement with
    AOP Orphan Pharmaceuticals AG.  AOP Orphan, headquartered in Vienna, is
    Ferrer's marketing partner for ADASUVE in Central and Eastern Europe
    (Austria, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania,
    Poland, Switzerland, Slovakia and Slovenia)

Financial Results - Periods Ended September 30, 2013 and 2012

Alexza recorded revenues of $2.2 million and $46.5 million in the three and
nine months ended September 30, 2013, respectively, compared to $0.7 million
and $3.3 million in the same periods in 2012, respectively.  The revenues in
2013 consist of $42.8 million of licensing revenues from Teva, amortization of
the upfront payment from the Ferrer agreement and transfer pricing of units
shipped to Ferrer.  Revenues in 2012 represent the amortization of upfront
payments earned under Alexza's agreements with Ferrer and Cypress Bioscience.

GAAP operating expenses were $12.5 million and $35.4 million in the three and
nine months ended September 30, 2013, respectively, and $7.1 million and $21.3
million in the same periods in 2012, respectively.

Cost of goods sold were $4.0 million and $6.9 million during the three and
nine months ended September 30, 2013.  Cost of goods sold primarily consists
of start-up activities related to commercial manufacturing operations, and, to
a lesser extent, manufacture of commercial product.  Alexza is in the early
stages of commercialization and has incurred significantly higher than normal
indirect costs in the production of its inventory.  These costs are associated
with manufacturing start-up costs and low production volumes, and Alexza
expects to continue to incur higher than normal indirect costs until it gets
closer to its normal manufacturing capacity.  Note that all costs associated
with the manufacturing process incurred prior to the first commercial product
produced in the second quarter of 2013were expensed as a component of research
and development expense.  

Research and development expenses were $5.5 million in the third quarter and
$16.5 million in the nine months ended September 30, 2013, compared to $4.8
million and $14.8 million in the same periods in 2012, respectively.  The
increase was primarily a result of additional regulatory expenses and costs
associated with Alexza's post-approval commitments related to the Marketing
Authorization Application approval, partially offset by expenses related to
quality and manufacturing being classified as cost of goods sold in 2013.

General and administrative expenses were $3.1 million in the third quarter and
$12.0 million in the nine months ended September 30, 2013, as compared to $2.3
million and $6.5 million in the same periods in 2012, respectively.  The
increase was partially due to pre-commercialization efforts such as market
research, including pricing and market segmentation studies, and increased
headcount and external expenses to support increased operational activities
following the approval of the ADASUVE New Drug Application (NDA) in December
2012 by the U.S. Food and Drug Administration (FDA).  As part of the license
and supply agreement signed in May 2013, Teva assumed these efforts.  In 2012,
general and administrative expenses were reduced by $1.4 million, as a result
of the termination of one of the Company's building leases and related
subleases in March 2012.

In connection with the acquisition of Symphony Allegro in August 2009, Alexza
is obligated to pay the former Symphony Allegro stockholders certain
percentages of cash payments that may be generated from collaboration
transactions for ADASUVE, AZ-002 (Staccato alprazolam) or AZ-104 (Staccato
loxapine, low-dose).  The Company records this obligation as a contingent
liability and updates the liability each quarter.  For the third quarter 2013,
the loss on the change in the fair value of the contingent liability was due
to the passage of three months on the discounted cash flow model resulting in
a non-operating loss of $1.6 million.  In the nine months ended September 30,
2013, Alexza updated the contingent liability fair value model to reflect the
increase in probability that Alexza would license the commercialization rights
of ADASUVE in the US to a third party rather than commercialize on its own,
and to reflect the terms of the Teva Agreement and reduced the discount factor
used in the model, resulting in Alexza recording non-operating loss of $44.0
million.  During 2013, Alexza made payments of $10 million and a $0.3 million
to the former Symphony Allegro stockholders as a result of the $40 million
upfront payment received from Teva and the $1.25 million payment received from
Ferrer for the first commercial sale made in Germany.

In the third quarter of 2013, the Company drew down $10 million against the
Teva Note and reclassified $901,000 of the unamortized right-to-borrow as a
cost of borrowing to be amortized to interest expense over the life of the
borrowing.  The Company recorded $348,000 and $555,000 in interest expense
related to the right-to-borrow in the three and nine months ended September
30, 2013, respectively.

Alexza believes that based on its cash, cash equivalents and marketable
securities balance at September 30, 2013, estimated product revenues,
royalties and milestones associated with the sale of ADASUVE, remaining
proceeds available under the Teva Note, and expected cash usage, it has
sufficient capital resources to meet its anticipated cash needs into the third
quarter of 2014.

Conference Call Information - 5:00 p.m. Eastern Time on November 6, 2013

Investors and analysts may access the live conference call by dialing
888-680-0879 (domestic) or +1-617-213-4856 (international).  The reference
number to enter the call is 95388115.  Interested parties may also
pre-register for the call at:
https://www.theconferencingservice.com/prereg/key.process?key=PK46KVA67.

To access the webcast via the Internet, go to 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. 

A replay of the conference call may be accessed at www.alexza.com under the
"Investor Relations" link, or by dialing 888-286-8010 or +1-617-801-6888
(international).  The reference number for the replay of the call is
37910049.  A replay of the call will be available for 30 days following the
event.

About Alexza Pharmaceuticals, Inc.

Alexza Pharmaceuticals is focused on the research, development and
commercialization of novel, proprietary products for the acute treatment of
central nervous system conditions.  Alexza's products are based on the
Staccato system, a hand-held inhaler designed to deliver a drug aerosol to the
deep lung, providing rapid systemic delivery and therapeutic onset, in a
simple, non-invasive manner.

ADASUVE (Staccato loxapine) is Alexza's first commercial product, which was
approved by the U.S. Food and Drug Administration in December 2012 and by the
European Commission in February 2013.  Teva Pharmaceuticals USA, Inc. is
Alexza's commercial partner for ADASUVE in the U.S.  Grupo Ferrer
Internacional, S.A. is Alexza's commercial partner for ADASUVE in Europe,
Latin America, Russia and the Commonwealth of Independent States countries.

For more information about Alexza, the Staccato system technology or the
Company's development programs, please visit www.alexza.com.  For more
information about ADASUVE, please visit www.adasuve.com. 

ADASUVE^® and Staccato^® are registered trademarks of Alexza Pharmaceuticals,
Inc.

Safe Harbor Statement

Alexza's policy is to provide guidance on product candidates and corporate
goals only 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 and
corporate milestones guidance is as of November 6, 2013 and financial guidance
relating to the Company's current cash, cash equivalents, investments and
restricted cash is based upon balances as of September 30, 2013 and certain
subsequent events, including drawing down on the Teva Note.

This news release contains forward-looking statements that involve significant
risks and uncertainties. Any statement describing the Company's 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, including the ability of Alexza and our partners, Teva and Ferrer, to
effectively and profitably commercialize ADASUVE, estimated product revenues
and royalties associated with the sale of ADASUVE, the adequacy of the
Company's capital to support the Company's operations, and the Company's
ability to raise additional funds and the potential terms of such potential
financings. 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, 2012
and the Company's other Periodic and Current Reports filed with the Securities
and Exchange Commission. Forward-looking statements contained in this
announcement are made as of this date, and the Company undertakes no
obligation to publicly update any forward-looking statement, whether as a
result of new information, future events or otherwise.

 

ALEXZA PHARMACEUTICALS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 
                                    Three Months Ended    Nine Months Ended
                                    September 30,         September 30,
                                    2013       2012       2013       2012
Revenue                             $ 2,166    $  729     $46,530    $3,341
Operating expenses:
 Cost of goods sold                 3,951      -          6,912      -
 Research and development           5,457      4,784      16,475     14,826
    General and administrative      3,097      2,338      12,016     6,487
Total operating expenses            12,505     7,122      35,403     21,313
(Loss) income from operations       (10,339)   (6,393)    11,127     (17,972)
(Loss) gain on change in fair value
of contingent consideration         (1,613)    (200)      (44,013)   1,000
liability
Interest and other income           1          5          18         413
(expense), net
Interest expense                    (461)      (333)      (1,055)    (1,146)
Net loss                            $(12,412)  $(6,921)   $(33,923)  $(17,705)
Basic and diluted net loss per      $  (0.72)  $  (0.52)  $  (2.06)  $ (1.55)
share

 

 

ALEXZA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 
                                            September 30,   December 31,
                                            2013            2012(1)
ASSETS
Current assets:
  Cash and cash equivalents                 $      23.807   $     17,715
  Marketable securities                     8,650           -
  Restricted cash                           -               5,051
  Accounts receivable                       25              -
  Inventory                                 2,061           -
  Prepaid expenses and other current assets 1,795           852
Total current assets                        36,338          23,618
Property and equipment, net                 15,507          16,531
Other assets                                1,727           402
Total assets                                $        53,572 $      40,551
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities                   16,047          18,718
Total noncurrent liabilities                57,473          19,260
Total stockholders' (deficit) equity        (19,948)        2,573
Total liabilities and stockholders' equity  $    53,572     $    40,551

(1) Derived from audited consolidated financial statements at that date.

 

 

SOURCE Alexza Pharmaceuticals, Inc.

Website: http://www.alexza.com
Contact: BCC Partners, Karen L. Bergman, 650.575.1509,
kbergman@bccpartners.com, or Michelle Corral, 415.794.8662,
mcorral@bccpartners.com
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