MOUNTAIN VIEW, Calif.,
May 11, 2016 /PRNewswire/
-- Alexza Pharmaceuticals, Inc. (Nasdaq: ALXA, "Alexza", or
the "Company") today reported financial results for the quarter
ended March 31, 2016. The net
loss for the first quarter was $3.4
million compared to $0.4
million during the same quarter in 2015. At
March 31, 2016, Alexza had
consolidated cash and cash equivalents of $4.5 million.
Alexza believes that, based on its cash and cash equivalent
balances at March 31, 2016, the
additional $2.3 million drawn in
April and May 2016 under the amended
and restated note issued May 9, 2016,
and the Company's expected cash usage, it has sufficient capital
resources to meet its anticipated cash needs to the end of June
2016. Changing circumstances may cause the Company to consume
capital significantly faster or slower than currently anticipated,
or to alter the Company's operations.
Alexza and Grupo Ferrer
Internacional, S.A. ("Ferrer") previously announced that
they have entered into a definitive agreement under which Ferrer
Pharma Inc., a wholly-owned subsidiary of Ferrer, will acquire
Alexza for $0.90 per share in cash. In addition to
the upfront cash payment, Alexza stockholders will receive a
contingent value rights to receive cash payments in four payment
categories if specified milestones are achieved following the
closing. The transaction is expected to close in the second
quarter of 2016 and is subject to customary closing conditions.
Financial Results - Periods Ended March
31, 2016 and 2015
Alexza recorded revenues of $0.7
million in each of the quarters ended March 31, 2016 and 2015. Revenues consist
of product sale from units of ADASUVE sold to Teva Pharmaceuticals
USA, Inc. ("Teva") and Ferrer, the
amortization of the upfront payments received from Ferrer and
royalty revenues from Teva for U.S. sales. Revenues for the
quarter ended March 31, 2016 and 2015
were as follows (in thousands):
|
Three Months
Ended
|
|
March
31,
|
|
2016
|
|
2015
|
|
|
|
|
Product
revenue
|
$ —
|
|
$ 87
|
Amortization of
upfront payments
|
712
|
|
613
|
Royalty
Revenue
|
8
|
|
5
|
Total
revenue
|
$ 720
|
|
$ 705
|
GAAP operating expenses were $5.8
million in the quarter ended March
31, 2016 and $13.7 million in
the same period in 2015.
Cost of goods sold were $0.9
million during the quarter ended March 31, 2016, compared to $6.1 million in the same period in 2015. In
February 2016, the Company entered
into an amendment to our License and Collaboration Agreement with
Teva (the "Teva Amendment"), whereby the Company reacquired the
ADASUVE commercial U.S. rights. As part of this exchange, all
remaining ADASUVE inventory held by Teva was transferred to the
Company along with a right to resell such inventory for up to one
year. The Teva Amendment is intended to allow the Company to
continue to provide ADASUVE product to patients and health care
providers either on its own or through another unaffiliated
partner, at which time all Teva license rights to ADASUVE would
terminate. The Company concluded that the cost of the
inventory transferred by Teva shall be based on the fair value of
the inventory received as its fair value is more clearly evident
than the fair value of the future milestone and royalty obligations
relinquished. The fair value of the inventory was determined
to be $0.9 million with an offsetting
gain on exchange that was reflected as a non-operating line item
within the Company's consolidated statements of loss and
comprehensive loss. However, given the Company's continued
operating losses, the uncertainty of when it will resume commercial
production, the limited ability to sell the inventory, the
twelve-month expiration of this inventory, and its ability to
continue as a going concern, the Company subsequently fully
impaired the inventory received by recording a $0.9 million impairment charge that was included
in its cost of goods sold within its consolidated statements of
loss and comprehensive loss.
Research and development expenses were $2.4 million in the quarter ended March 31, 2016, compared to $3.8 million in the same period in 2015.
The decrease of $1.4 million in
research and development expenses during the three months ended
March 31, 2016 as compared to the
same period in 2015 was primarily due to the effects of the
restructuring strategy inclusive of the reduction in employee
headcount. With the suspension of commercial ADASUVE
production operations in the third quarter of 2015, the decrease
was partially offset by a larger percentage of fixed overhead costs
being allocated to research and development expenses beginning in
the fourth quarter of 2015.
General and administrative expenses were $2.4 million in the quarter ended March 31, 2016, as compared to $3.7 million in the same period in 2015.
The decrease of $1.4 million in
general and administrative expenses during the three months ended
March 31, 2016 as compared to the
same period in 2015 was primarily due to the company's reduction in
employee headcount, decreased accounting fees due to the change in
auditors and lower consulting expenses.
In connection with the exercise of Alexza's option to purchase
all of the outstanding equity of Symphony Allegro, Inc. ("Allegro")
in 2009, Alexza is obligated to make contingent cash payments to
the former Allegro stockholders related to certain payments
received by Alexza from future collaboration agreements pertaining
to ADASUVE/AZ-104 (Staccato loxapine) or AZ-002
(Staccato alprazolam). In order to estimate the fair
value of the liability associated with the contingent cash
payments, Alexza prepared several cash flow scenarios for ADASUVE,
AZ-104 and AZ-002, which are subject to the contingent payment
obligation. Each potential cash flow scenario consisted of
assumptions of the range of estimated milestone and license
payments potentially receivable from such collaborations and
assumed royalties received from future product sales. Based
on these estimates, Alexza computed the estimated payments to be
made to the former Allegro stockholders. Payments were
assumed to terminate in accordance with current agreement terms or,
if no agreements exist, upon the expiration of the related
patents.
During the three months ended March 31, 2016, the Company
updated the discounted cash flow model to reflect adjusted U.S.
ADASUVE milestones and royalties with any future U.S. collaborator
and adjusted sales milestones for the ADASUVE in the Ferrer
Territories. These changes resulted in its recognizing a
non-operating, non-cash gain of $0.2
million during the three months ended March 31, 2016.
During the three months ended March 31, 2015, the Company
updated the contingent liability fair value model primarily to
reflect the projected uptake of ADASUVE in the U.S. market.
As part of this process, the Company received updated
projections from its collaboration partners in the first quarter of
2015 that indicated sales of ADASUVE would be lower in 2015 and
2016 than had been anticipated in the various projections and
scenarios used to estimate the contingent consideration liability
in previous periods. As a result of these lower projected
sales and the decision to suspend its commercial production
operations, the Company reevaluated the rate at which it believes
sales will increase, the amount of peak sales, the period of time
it will take to reach peak sales, the number of years at which peak
sales would be achieved, and the related impact on the amount and
timing of related royalties and milestones to be received.
This evaluation resulted in a decrease to projected sales and
the related milestones and royalties under the high, medium and low
sales scenarios and a heavier weighting to the lower sales
scenario. The change in projected product uptake, and the
projected related sales milestone payments, resulted in the
Company's recognizing a non-operating, non-cash gain of
$14.8 million. A payment of
approximately $0.9 million was made
during the same period to the former Allegro stockholders.
In February 2016 the Company and
Teva entered into an amendment on the $25.0
million note (the "Teva Note") from Teva whereby the Company
issued 2,172,886 shares of its common stock to Teva pursuant to a
stock issuance agreement as consideration for a reduction in the
outstanding balance on Teva's note by $5.0
million and the forgiveness of all accrued and unpaid
interest thereunder. The Company concluded that this
transaction qualified as a troubled debt restructuring, as defined
by the accounting literature, due to the Company's financial
difficulties and the restructured debt contained a concession
through a reduction in the effective interest rate from 5.2 percent
to zero percent. As the restructuring involved a partial
settlement by the Company granting Teva an equity interest and a
modification of the terms of the remaining Teva Note, the Company
reduced the carrying amount of the amended Teva Note by
$575,000, which represented the fair
value of the 2,172,886 shares of common stock granted to Teva based
on the $0.28 per share price as of
the restructuring date, net of $33,000 in direct issuance costs. The
remaining carrying amount of $22.5
million was then written down to $20.0 million, which represents the total future
undiscounted cash payments of the amended Teva Note and consists
entirely of the contingent repayments, resulting in a restructuring
gain of $2.5 million. The
remaining outstanding balance of $20.0
million of the amended Teva Note is classified as a
non-current liability as of March 31,
2016.
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 and development pipeline are based on the
Staccato® system, a hand-held inhaler designed to
deliver a pure drug aerosol to the deep lung, providing rapid
systemic delivery and therapeutic onset, in a simple, non-invasive
manner. Active pipeline product candidates include AZ-002
(Staccato alprazolam) for the management of epilepsy in
patients with acute repetitive seizures and AZ-007 (Staccato
zaleplon) for the treatment of patients with middle of the night
insomnia.
ADASUVE® is Alexza's first commercial product.
ADASUVE is approved for marketing in 42 countries and has been
submitted for approval in seven additional countries. ADASUVE
has been launched and is currently available in 21 countries.
Ferrer is Alexza's commercial partner for ADASUVE in Europe, Latin
America, the Commonwealth of Independent States countries,
the Middle East and North Africa countries, Korea, the Philippines and Thailand.
ADASUVE® and Staccato® are registered
trademarks of Alexza Pharmaceuticals, Inc. For more
information about Alexza, the Staccato system technology or
the Company's development programs, please visit
www.alexza.com.
Safe Harbor Statement
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, including the ability of the
parties to complete the proposed acquisition of Alexza by Ferrer,
the likelihood that the minimum number of Alexza shares are
tendered in the offer related thereto, all closing conditions are
satisfied and Alexza's ability to secure additional funding to
continue its operations through the proposed closing and those
risks inherent in the process of developing and commercializing
drugs, Alexza's ability to secure a new U.S. commercial partner for
ADASUVE and the terms of any such partnership and the estimated
product revenues and royalties associated with the sale of
ADASUVE. 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, 2015 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.
IMPORTANT INFORMATION FOR INVESTORS AND SECURITY HOLDERS
A tender offer for the outstanding shares of Alexza has not yet
commenced. This communication is not an offer to buy or the
solicitation of an offer to sell any securities. A
solicitation and an offer to buy shares of Alexza will be made only
pursuant to an offer to purchase and related materials that Ferrer
intends to file with the SEC. When the tender offer is
commenced, Ferrer Pharma Inc. will file a Tender Offer Statement on
Schedule TO with the SEC, and thereafter Alexza will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the tender offer. Investors and stockholders are
urged to read the Tender Offer Statement (including the offer to
purchase, the related letter of transmittal and other offer
documents) and the Solicitation / Recommendation Statement on
Schedule 14D-9 when they become available, as well as other
documents filed with the SEC, because they will contain important
information. The Tender Offer Statement and
Solicitation/Recommendation Statement on Schedule 14D-9 (when
available) will be sent free of charge to Alexza stockholders, and
these and other materials filed with the SEC may also be obtained
from Alexza upon written request to the Investor Relations
Department, 2091 Stierlin Court, Mountain
View, CA 94043, telephone number +1-650-944-7900 or from
Alexza's website, www.alexza.com. In addition, all of these
materials (and all other documents filed with the SEC) will be
available at no charge from the SEC through its website at
www.sec.gov, or by directing requests for such materials to the
information agent for the offer, which will be named in the tender
offer statement.
ALEXZA
PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (in thousands, except per share
amounts) (unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2016
|
|
2015
|
|
|
|
|
Revenue
|
$ 720
|
|
$ 705
|
|
|
|
|
Operating
Expenses:
|
|
|
|
Cost of goods
sold
|
945
|
|
6,147
|
Research and
development
|
2,438
|
|
3,824
|
General and
administrative
|
2,392
|
|
3,737
|
Total operating
expenses
|
5,775
|
|
13,708
|
|
|
|
|
Loss from
operations
|
(5,055)
|
|
(13,003)
|
|
|
|
|
Change in fair value
of contingent consideration liability
|
200
|
|
14,833
|
Gain on restructuring
of financing obligations
|
2,506
|
|
—
|
Gain on fair value of
inventory due to restructuring of financing obligations
|
945
|
|
—
|
Interest and other
income/expense, net
|
2
|
|
(5)
|
Interest
expense
|
(1,960)
|
|
(2,229)
|
Net
loss
|
$ (3,362)
|
|
$ (404)
|
Net loss per share -
basic and diluted
|
$ (0.16)
|
|
$ (0.02)
|
ALEXZA
PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in
thousands) (unaudited)
|
|
|
|
|
|
March
31,
|
|
December 31,
|
|
2016
|
|
2015(1)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$ 4,502
|
|
$
7,755
|
Receivables
|
8
|
|
—
|
Prepaid expenses and
other current assets
|
2,933
|
|
3,237
|
Total current
assets
|
7,443
|
|
10,992
|
Property and
equipment, net
|
2,749
|
|
3,320
|
Other
assets
|
391
|
|
419
|
Total
assets
|
$ 10,583
|
|
$
14,731
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Total current
liabilities
|
60,352
|
|
58,198
|
Total noncurrent
liabilities
|
$ 24,566
|
|
$
28,191
|
Total stockholders'
deficit
|
(74,335)
|
|
(71,658)
|
Total liabilities and
stockholders' deficit
|
$ 10,583
|
|
$
14,731
|
|
|
(1)
|
The condensed
consolidated balance sheet at December 31, 2015 has been derived
from audited consolidated financial statements at that
date.
|
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SOURCE Alexza Pharmaceuticals, Inc.