Alexza Pharmaceuticals, Inc. (ALXA)

Q2 2012 Earnings Call

August 8, 2012 5:00 pm ET


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

Thomas B. King – President and Chief Executive Officer


Roy Buchanan – JMP Securities

Steve Brozak – WBB Securities, LLC



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.

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