Alexza Pharma Down the Road

We are enthusiastic on Alexza Pharmaceuticals, Inc.'s (ALXA) proprietary novel Staccato system that reformulates oral or injectable small molecule compounds into an inhalable aerosol.' The development pipeline is moving forward nicely in our view.' The recent positive phase III data on AZ-004 is a significant milestone for the company.

Alexza has six product candidates in clinical stage trials; including leading candidates AZ-001 for migraine headache pain relief and AZ-004 for acute agitation in patients with schizophrenia. Recent data on both drugs lead us to believe the Staccato system is both safe and highly effective.' By 2011 both AZ-001 and AZ-004 could be on the market, or at least under regulatory review.

At this time we think investors can be patient with Alexza. Data on AZ-001 and AZ-004 looks encouraging, but the company still has to complete phase III trials before we proclaim either a success. The stock took a big hit after the failure of AZ-002 in June 2008.'

However, it is bouncing back nicely today on the positive phase III AZ-004.' Upside over the next few quarters could come from the announcement on a partnership for any of the rest of the pipeline. In the meantime, we see $7.50 as fair value.

Joy Global's Reason to Smile

We maintain our Buy recommendation on Joy Global, Inc. (JOYG) as the strength in the global coal markets show no signs of weakness. Although margins will be impacted slightly in the near term due to the start up of the P&H factory in China and from lower operating margins from its Continental acquisition, we see the company continuing to benefit as a global leader in mining equipment and services.

The company continues to see strong demand for its equipment across all geographic regions it serves as producers look to expand and ramp up production to capitalize on the persistent global growth in demand for electricity and steel.

Joy Global reported fiscal third quarter earnings of $113 MM or $1.03 per diluted share, a 55% increase compared to $73 MM or $0.66 per diluted share in Q3 07. Earnings in Q3 08 benefited from favorable foreign tax credits which increased EPS by $0.22 per share.

On August 28, JOYG announced that it's wholly owned subsidiary, China Mining Machinery, has entered into an agreement to acquire all of the outstanding shares of Wuxi Shengda, a manufacturer of long-wall shearing machines. The deal is expected to close in calendar Q4 08 and will cost approximately $22 MM.