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Alexza Pharmaceuticals -- A Rare Find

|Includes: Alexza Pharmaceuticals, Inc. (ALXA)

Alexza is a rare find in the biotech sector, with low outstanding shares, a revolutionary drug delivery system, and a drug (AZ-004) w/ an upcoming PDUFA date of Oct. 11, 2010.

Alexza's drug delivery system is called the "Stacatto system". The Stacatto system is a heat package with a stainless steel substrate, onto which a thin film of unformulated drug is coated. When the patient draws a normal breath through the Staccato system, the substrate surface instantaneously heats to create a condensation aerosol. The patient inhales perfectly sized particles of pure drug down into the narrower, more vascularized tissue of the deep lung, allowing fast and more complete absorption into the bloodstream. This system has a use for potentially many different conditions.

Alexza has a well-diversified pipeline of drugs: AZ-004 (Acute Treatment of Agitation associated with Schizophrenia or Bipolar Disorder - PDUFA date of Oct. 11, 2010), AZ-001 (Migraine Headache - end-of-phase 2 meeting w/ FDA completed), AZ-104 (Migraine Headache - phase 2b trial completed), AZ-003 (Breakthrough Pain - phase 1 study completed), AZ-002 (Acute Panic Attacks - P2a study completed, but inconclusive results), and AZ-007 (Insomnia - phase 1 trial completed w/ positive results).

AZ-004 successfully completed both phase 3 trials (one for acute agitation in schizophrenia patients, the other for acute agitation in bipolar patients), and an NDA was filed near the end of 2009. In Feb. 2010, Alexza announced that they had formed a collaboration with Biovail to develop and commercialize AZ-004. The initial market size for AZ-004 is $300-$500M.

As far as analyst coverage goes, JMP Securities has given a target price for ALXA of $12/shr, and multiple other analysts have initiated coverage in the past year as well.

As you can see, Alexza is a very promising company w/ a drug going up for approval in October, along w/ possible share price appreciation in anticipation of the PDUFA date.

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Disclosure: Long ALXA