Alexza Pharmaceuticals Inc. is reducing its work force by a third, ending a license agreement with Endo Pharmaceuticals Inc., and placing a bigger bet on its lead product as it adjusts to the slumping economy.

The Mountain View, Calif., company is laying off 52 workers in an effort to reduce expenses by $21.5 million, net severance costs, for the current fiscal year. The move also is expected to cut $11.1 million from the 2010 budget.

The company is hoping those savings, plus the $78 million in cash and investments it had as of Sept. 30, 2008, will extend its runway to the second quarter 2010, perhaps long enough to file a new drug application (NDA) for its lead product, AZ-004, which is in late-stage development for the acute treatment of agitation in patients with schizophrenia or bipolar disorder. The company previously announced positive results in both of its two Phase III trials of AZ-004, and said it expects to submit an NDA in early 2010. AZ-004 is being developed through Symphony Allegro, a development partnership between Alexza and Symphony Capital LLC.

Alexza and Symphony also have begun Phase II studies of AZ-104 for the treatment of migraine. Data from the 360-patient trial is expected in the third quarter.

Headed for the development back burner is AZ-003 (Staccato fentanyl), an inhaled product in Phase I for breakthrough pain, which Endo has handed back to Alexza. In December 2007 Alexza licensed North American rights for the product to Endo for $10 million up front plus a potential $40 million in milestones. (See BioWorld Today, Dec. 31, 2007).

In announcing that the company was handing back those rights to Alexza, Ivan Gergel, Endo's executive vice president of research and development, said in a statement that as the result of a strategic review last year, Endo is terminating some research and development programs to focus on its pipeline and discovery program.

Last month, Chadds Ford, Pa.-based Endo moved to acquire Indevus Pharmaceuticals Inc. in a deal valued at $370 million in cash plus a potential $267 million in milestones. (See BioWorld Today, Jan. 7, 2009)

Alexza said Friday it does not intend to commit additional resources to AZ-003 during the current year.

Shares of Alexza (NASDAQ:ALXA) gained 1 cent Friday to close at $2.89.

In other restructuring news:

• GenVec Inc., of Gaithersburg, Md., is eliminating 22 positions, reducing its work force to 101 positions, which it said should, along with revenues from collaborations, provide funding for 18-24 months. The company said it also will be lowering other operating costs to focus on its lead product candidate, TNFerade, for the treatment of cancer. It is in a Phase III trial in patients with locally advanced pancreatic cancer. Top-line data from an interim analysis are expected in the first quarter of 2010. GenVec ended the year with approximately $17.4 million in cash, cash equivalents and short-term investments.