Staff Writer

Alexza Pharmaceuticals Inc. said that a second Phase III study of its inhaled antipsychotic for agitated bipolar patients hit the mark, but the product still has to clear some safety studies.

In the Phase III study of 314 bipolar patients, both the 5-mg and 10-mg doses of inhaled loxapine (AZ-004) showed a statistically significant reduction in agitation compared to placebo at the two-hour post-dose time point. Both doses also were shown to be highly statistically significant vs. placebo in the agitation improvement scores at the two-hour post-dose time point.

News of the positive results sent the company's shares up more than 32 percent.

The positive results from the second Phase III trial should result in approval by 2011, Piper Jaffray analyst Edward Tenthoff said in a research note.

Mountain View, Calif.-based Alexza said it believes it has a clear understanding of the development requirements for filing a new drug application for its inhaled antipsychotic, having completed an end-of-Phase II meeting with the FDA for AZ-004 in September 2007.

All five of the company's studies of inhaled loxapine (AZ-004) have had positive results, including the first Phase III study in schizophrenic patients. Loxapine is delivered using Alexza's Staccato device, a hand-held inhaler designed to achieve therapeutic effect as quickly as an intravenous injection.

Alexza plans to file for U.S. marketing approval of AZ-004 in 2010, following completion of additional safety studies and chemistry manufacturing and controls requirements. The company has said that it hopes to complete the safety studies by mid-2009.

The second Phase III study had moved at a quick pace, beginning in July and completing enrollment several months ahead of schedule in October. And Tenthoff predicted that the safety studies also will complete "on the early side" of the company's expectations.

There were no serious adverse events in the Phase III study. The only common side effect reported was taste (dysgeusia). That side effect was rated as mild in all patients and occurred in both drug and placebo dose groups.

So far, the data have been clean. Still, a potential source of risk in the program is the question of the drug's safety, Charles Duncan, an analyst with JMP Securities, told BioWorld Today. In previous studies of the company's migraine drug that utilizes the Staccato technology, there was a signal for upper airway irritation, he said.

One of the reasons for owning the stock, Duncan said, is that Alexza could be a takeout candidate. He said hospital-focused firms "would line up" to own it.

As a footnote, Duncan said that Tom King, Alexza's CEO, has experience selling a biotech company: Anesta Corp., which sold itself to Cephalon Inc.

AZ-004 is being developed through Symphony Allegro, a product development partnership formed between Alexza and Symphony Capital LLC.

Tenthoff said he believes that Alexza intends to seek a global commercial partner for AZ-004 in 2009, and Alexza may have to repurchase Symphony Allegro to partner either AZ-004 or its migraine drugs. But he said that the "clear terms" of the agreement do not present a major hurdle to any potential deals.

At an estimated price of $25 per AZ-004 dose, Tenthoff assumed that market penetration could reach 10 percent, equating to $30 million in sales by 2015.

Currently, agitation is treated with injectable and oral antipsychotic medications. The oral drugs work relatively slowly, while the intramuscular injections have a faster onset of action but are invasive and can be frightening to patients, according to Alexza.

Schizophrenia afflicts about 2.5 million adults, and bipolar disorder affects about 6 million adults, based on Alexza's analysis of patient information from the National Institute of Mental Health. About 90 percent of those patients are believed to experience agitation at some point during their lifetime, according to Alexza.

Patients experiencing agitation become uncomfortable, tense and restless, and as the agitation intensifies, patients can become threatening and violent if the agitation is not treated, the company said.

Loxapine is considered more sedating than other injectable antipsychotics like haloperidol and thiothixine, and sometimes is used when greater sedation is desired, according to Tenthoff. However, he said, intramuscular injections of haloperidol are the most commonly used treatment for acute agitation in the U.S.

Still, he said AZ-004 has the potential to deliver peak concentrations of loxapine within minutes, and could be a viable alternative to treat acute agitation for patients who are cooperative and able to make decisions about their own treatment alternatives. He added that AZ-004 would be "a painless alternative to injectable antipsychotic drugs in hospitals and in-patient facilities, representing a large market with more than 21 million prescriptions for agitation every year."

Shares in Alexza (NASDAQ:ALXA) rose 47 cents, or 32.4 percent, closing at $1.92 Wednesday.