Alexza Pharmaceuticals' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Aug.10.12 | About: Alexza Pharmaceuticals, (ALXA)

Alexza Pharmaceuticals, Inc. (NASDAQ:ALXA)

Q2 2012 Earnings Call

August 8, 2012 5:00 pm ET

Executives

Mark K. Oki – Senior Vice President-Finance, Chief Financial Officer and Secretary

Thomas B. King – President and Chief Executive Officer

Analysts

Roy Buchanan – JMP Securities

Steve Brozak – WBB Securities, LLC

Operator

Good afternoon, everyone, and welcome to the Alexza Pharmaceuticals 2012 Second Quarter Financial Results and General Business Update Conference Call. At this time, all participants are in a listen-only mode for the conference call. Following the prepared remarks, there will be a question-and-answer session. (Operator Instructions) Today’s conference is also being recorded. And if you have any objections, you may disconnect at this time.

I would now like to turn today’s conference over to Mr. Mark Oki of Alexza. Mr. Oki, you may begin.

Mark K. Oki

Thank you. Good afternoon and welcome to our 2012 second quarter financial results and general business update conference call. Before we get started, I would like to remind you that the matters discussed on this call contain forward-looking statements that involve risks and uncertainties, including those related to the Company’s ability to address the issues raised in the May 2012 CRL, the eventual prospects that ADASUVE will be approved for marketing in the U.S. or other locations, and timing of the EMA review of the ADASUVE MAA, our ability to commercialize products, the timing of the commercialization of our products, our projected revenue and expenses, and the ability of Alexza to support operations based on existing cash resources.

Actual results may differ materially from the results predicted, and recorded results should not be considered an indication of future performance. These and other risk factors are more fully discussed in our quarterly report on Form 10-Q that we filed with the SEC earlier today most particularly under the caption Risk Factors. Alexza disclaims any obligation to update or revise any forward-looking statement made on this call as a result of new information or future developments.

As a reminder, Alexza’s policy is to only provide guidance on product candidates and corporate goals for the next 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 milestone guidance is as of today, August 8, 2012, and financial guidance relating to the company’s current cash, cash equivalents and marketable securities and restricted cash is based upon balances as of June 30, 2012.

I’d now like to summarize the financial information for the second quarter of 2012, which was filed earlier today with the SEC on Form 10-Q.

We recorded $0.8 million and $2.6 million of revenues in the three and six months ended June 30, 2012, respectively, and $1.3 million and $2.5 million of revenues in the same periods in 2011. In 2011 and the first quarter of 2012, we recognized revenues from our agreement relating to Staccato nicotine with Cypress Biosciences. Revenues in 2012 also include amounts earned under our ADASUVE agreement with Grupo Ferrer.

GAAP operating expenses were $7.9 million and $14.2 million in the three and six-month ended June 30, 2012, respectively, and $9.4 million and $18.5 million in the same periods in 2011.

R&D expenses were $5 million and $10 million in the three and six-month ended June 30, 2012, respectively, and $6.7 million and $12.9 million in the same periods in 2011. In 2012, we’ve reduced our costs through, among other items, reductions in our workforce and suspending the development of AZ-007, Staccato zaleplon, and completing our outlined work on Staccato nicotine.

G&A expenses were $2.9 million and $4.1 million in the three and six-month ended June 30, 2012, respectively, and $2.7 million and $5.6 million in the same periods in 2011. In March 2012, we recorded a non-recurring, non-cash, net contra expense of $1.4 million related to the termination of one our building leases and associated subleases.

Alexza ended the second quarter with cash, cash equivalents, marketable securities and restricted cash of $26.4 million. We believe that with our current cash, cash equivalents, marketable securities and restricted cash and our current expected cash usage, we have sufficient capital resources to meet our anticipated cash needs into the fourth quarter of 2012. Changing circumstances may cause us to consume capital significantly faster or slower than currently anticipated or to alter our operations.

I will now turn the call to Tom King, Alexza’s President and CEO, for a business update and concluding remarks.

Thomas B. King

Thanks, Mark. Good afternoon and thanks to all of you for joining our teleconference today. Alexza has been very busy during the past three months since our last update in May and we have accomplished much with our ADASUVE NDA and MAA. I’m going to start with a general business update. Following this update, I’ll have short concluding remarks, and then we’ll open up the conference call for Q&A.

Since our last update, we have accomplished the following: In May, we received a CRL from the FDA regarding our ADASUVE NDA. In this CRL, the FDA noted, “During a recent inspection of the Mountain View, California manufacturing facility for this application, our field investigator conveyed deficiencies to the representatives of the facility. Satisfactory resolution of these deficiencies is required before this application may be approved,” Alexza believed at that time that these deficiencies were medical device specific and readily addressable.

Importantly, in this CRL, there were no new clinical or safety issues identified, and there were no other identified deficiencies. The CRL also contained the FDA’s comments on Alexza’s draft product labeling for ADASUVE. We believe there is substantial agreement between Alexza and the FDA on both the REMS content and the final ADASUVE product labeling.

Following interactions with the FDA in May and June, we resubmitted our NDA in late June. In July, the resubmitted ADASUVE NDA was accepted as a complete class 2 response, with an indicated PDUFA goal date of December 21, 2012.

In May, Alexza and our EU corporate partner, Grupo Ferrer, met with our Rapporteur, the Co-Rapporteur and the EMA face-to-face to further understand specifics of the major objections raised in our Day 120 List of Questions.

In July, we resubmitted our responses regarding our ADASUVE MAA. According to the published EMA timetables, we expects to receive the Day 180 List of Outstanding Issues for our ADASUVE MAA in late September and we currently projects that we will receive the Day 210 CHMP Opinion for the ADASUVE MAA in December this year.

In July, we also completed the follow-up from the May European Pre-Approval Inspection. This inspection resulted in no findings the EMA classified as “Critical” or “Major” deficiencies. This preapproval inspection resulted in 12 findings classified as “Other” and 4 recommendations.

In response to the EMA inspection report, we developed a corrective action plan and submitted this plan to the EMA. The EMA has accepted Alexza’s final correction action plan, and our proposed timing for this action plan for completing it and reporting the outcome. We fully expect to receive an EU Good Manufacturing Practices Certificate for our Mountain View in due course.

In summary, we have made continued strong progress with the ADASUVE, resulting in the resubmission of our ADASUVE NDA and the Day 120 Response for our ADASUVE MAA. We also completed the EU Pre-Approval Inspection of our Mountain View facility and we now have an NDA PDUFA date of December 21 and are projecting our Day 210 opinion from the CHMP also in December.

Cash balances are important to us, and we have reduced our monthly spending as a result of the decisions we took earlier this year. We have also established a new committed equity financing facility with Azimuth Opportunity replacing a similar facility that expired in June. This new $20 million financing facility provides Alexza additional financing flexibility by giving us the potential ability to raise capital efficiently and we can provide adequate capital to get us beyond our ADASUVE PDUFA date. We fully expect partnering activities to be an additional source of capital for Alexza.

During all of the work we have done on the – with the regulatory agencies, it is sometimes easy for us to forget about what ADASUVE might mean to patients and the clinicians who treat their agitation. Agitation is an important unmet medical need, which is not well understood by many as it is difficult to research and to collect data. In the United States, ADASUVE is being developed for use in a hospital setting to treat agitation in adult patients with schizophrenia or bipolar I disorder. The clinical data from our Phase 3 results were strong and compelling in the treatment of agitation.

As I have said before, all of us at Alexza believe that ADASUVE represents a potential significant improvement in patient care for a group of patients who have few advocates and few approved therapeutic options. It is an important goal for all of us, and one that continues to keep our focus high. We look forward to updating you on our progress during the coming months and thank you, again, for your support.

We would now like to open today’s call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Charles Duncan with JMP Securities.

Roy Buchanan – JMP Securities

Hi, guys. This is Roy in for Charles. Thanks for taking the question. I had a question about the manufacturing validation for the 5-milligram and the 10-milligram doses of ADASUVE. Has that been completed, and if so, have you gotten any feedback from the FDA on the results from that?

Thomas B. King

With regard to the 10 milligram and 5 milligram, for the European regulations or the specifications, which are different, we’re completed for the 5 and 10. For the United States, we’re completed for the 10, and in our resubmission to the FDA, we simply removed the 5-milligram dose. With the one dose in 24 hours, it’s less medically compelling to use the 5-milligram dose as a second or third dose within 24 hours, and so the way that we’ve solved that particular question is to simply take the 5-milligram out of the U.S. application.

Roy Buchanan – JMP Securities

Okay. And can you remind us, is the NDA submission, is that being reviewed as a drug or a drug device?

Thomas B. King

Yeah, the NDA submission is being reviewed by the drug side of the FDA, by CDER, and the division that takes care of psychopharmacology drugs.

Roy Buchanan – JMP Securities

Okay. And have you had any conversations with the FDA following the NDA submission, and could you characterize those, if you have, and have any of those focused on the REMS or the labeling? Thank you.

Thomas B. King

We have not had any conversations with the FDA other than they’ve confirmed they received all of the materials and they have no questions or further questions at his point in time.

Roy Buchanan – JMP Securities

Okay. Thank you. I’ll hop back in queue.

Thomas B. King

Okay. Thank you very much. Next question, please.

Operator

Your next question comes from the line of Steve Brozak with WBB Securities.

Steve Brozak – WBB Securities, LLC

Hey, good afternoon, and thanks for taking the call. I’ll make it simple, because you’ve got a lot of moving parts that are all running simultaneously. Could you, Tom, go over what you’d say the top three moving parts are? Because it’s very rare to see a company that candidly has the ability to go out there, provide a product, manufacture and also go and commercialize. So could you just give us a general rundown, and I’ll hop back into the queue after that.

Thomas B. King

Certainly, Steve. Thank you for your question, and thanks for the compliments on the quarter. During the last year or so we’ve tried to focus primarily on the things that we can control, and as a result of that the three primary areas where we spend a majority of our time is on the execution and prosecution of our applications. We have them live both in United States and in Europe. Also continuing to work on manufacturing, making sure the factory is ready for an inspection if we get one. We don’t know if we’ll get another inspection or not.

We’re starting to get notice from other countries where Ferrer is starting to do filings that they may come and want to do inspections, which would be great, but also starting to think about the supply chain and turning on the factory to make product for next year for both the U.S. and for Ferrer. And the last is the partnering. That’s something we spend a lot of time in. We have active discussions for partnering in territories outside the United States as well as in the United States, and we work very, very hard. So those are the three items that we’re working primarily on.

Steve Brozak – WBB Securities, LLC

Great. Thank you.

Thomas B. King

Next question, please.

Operator

Your next question comes from the line of Charles Duncan with JMP Securities.

Roy Buchanan – JMP Securities

Hi, guys. It’s Roy again. A follow-up on the EMA process validation inspection in May, did they inspect that same site that the FDA noted the deficiency in. It seems like you got a pretty much a clean bill of health from the EMA, some minor citations, but did they inspect that same site and note the same deficiency, just have a different response? Thank you.

Thomas B. King

It’s a good question. We only have one facility and it’s in Mountain View. So it’s our facility. It has R&D, our offices, as well as our manufacturing facility. I mean, the specifications and the rules and the way that inspections are done are just fundamentally different.

Having undergone EU and FDA inspections previously as well as these, the European inspectors spend a lot of time on the floor. They spend a lot of time with the people. They spend a lot of time with the processes. And so the fundamental approach of the European inspectors generally is out on the floor seeing how the process is run. They watch analysts do their analytical work, that sort of thing. The FDA inspections are more about documentation and paperwork. I mean, they do spend time in the facility. They spend time on the floor. But they spend a significant amount of time with the paperwork.

So, it’s a different sort of focus, and it’s a different sort of sets of things. I’m trying to think about the overall findings in both sets. I don’t think there is much overlap actually in terms of the minor items that the FDA talked about and the minor items that the EMA talked about. They just have different things that they’re looking to accomplish with their inspections.

Roy Buchanan – JMP Securities

Okay. That’s very helpful. Thank you, Tom.

Thomas B. King

Thank you, Roy.

Operator

At this time, I show no further questions.

Thomas B. King

Great, well, thank you very much, operator, and thank everyone for joining the call today. We really appreciate it. We have a very exciting few months here leading into December, when we continue to have high expectations for our PDUFA date and also our CHMP date. So we look forward to updating you as we continue to make solid progress, and thank you again for joining us today.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.

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