(By Rich Bieglmeier) Once again, a small-cap biotech tops our accumulation/distribution list. Using our double secret, we'd have to kill you if we told you formula; last week, Alexza Pharmaceuticals Inc
) topped the leader-board with 5.48% of its market-cap accumulated, with big buying, again, today.
The pharmaceutical company is focused on the research, development and commercialization of novel, proprietary products for the acute treatment of central nervous system conditions. Alexza's technology, the Staccato® system, vaporizes unformulated drug to form a condensation aerosol that, when inhaled, allows for rapid systemic drug delivery through deep lung inhalation.
The company currently has six products in various stages for approval at the U.S. Food and Drug Administration (FDA). ALXA is chasing after some huge markets with Staccato. They include, Schizophrenia or Bipolar 1 Disorder in adults, Migraine Headaches, Pain Management, Insomnia, and Smoking Cessation. That's list covers just about every adult in the U.S., the only ailment missing is an inhaler for weight loss.
Perhaps Wall Street is gearing up for, could be a very busy event driven remainder of 2012 for the biotech. Alexza expects to receive the Day 180 List of Outstanding Issues for the ADASUVE Marketing Authorization Application (MAA) in late September 2012.
The company currently projects that it will receive the Day 210 Committee for Medicinal Products for Human Use (CHMP) Opinion for the ADASUVE MAA in December 2012. ALXA has already submitted its responses to the European Medicines Agency (EMA) for the objections raised in the Day 120 List of Questions.
December could provide a double dose of news for the baby biotech. In May, Alexza received a second Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA) regarding its ADASUVE New Drug Application (NDA).
In June, Alexza resubmitted its ADASUVE NDA to the FDA in response to the CRL. In July, the FDA accepted the resubmitted ADASUVE NDA as a complete, class 2 response to the FDA's action letter, with an indicated Prescription Drug User Fee Act (PDUFA) goal date of December 21, 2012.
Such a complicated bowl of alphabet soup, no? iStock will try to put it in English. (WARNING: More alphabet soup approaching)
The company hopes for FDA approval in December for ADASUVE, which is for the treatment of Schizophrenia or Bipolar 1 Disorder in adults.
The Psychopharmacologic Drugs Advisory Committee (PDAC) recommended that ADASUVE be approved for use as a single dose in 24 hours when used with the FDA recommended Risk Evaluation and Mitigation Strategy (REMS) for the treatment for agitation in patients with schizophrenia or bipolar mania. The FDA takes an advisory committee's advice into consideration as part of its review of an NDA, but is not bound by an advisory committee's recommendations.
According to ALXA's most recent 10Q, "After reviewing and discussing the ADASUVE data and the FDA proposed REMS, the committee voted on the following additional questions:
- Does the committee conclude that ADASUVE (loxapine) inhalation powder has been shown to be effective as a treatment for agitation in patients with schizophrenia or bipolar mania? The resulting vote was: 17/1/0 (yes/no/abstain).
- Does the committee conclude that ADASUVE (loxapine) inhalation powder has been shown to be acceptably safe for use as a treatment for agitation in patients with schizophrenia or bipolar mania:
- a. When used in conjunction with the REMS proposed by the sponsor? The resulting vote was: 1/17/0 (yes/no/abstain).
- b. When used in conjunction with the REMS proposed by the FDA? The resulting vote was: 5/12/1 (yes/no/abstain).
- Does the committee conclude that ADASUVE (loxapine) inhalation powder would be acceptably safe for use as a single dose in 24 hours as a treatment for agitation in patients with schizophrenia or bipolar mania when used in conjunction with the REMS proposed by FDA? The resulting vote was: 11/5/2 (yes/no/abstain)."
On questions a and b, Alexza has some minds to change and believes they have addressed the concerns accordingly. We'll see within the next four months if enough committee members agree.
As for Europe, CHMP is obliged to reach a decision within 210 days. Alexza feels they have adequately met EU Good Manufacturing Practices and could receive the certificate shortly. So, ADASUVE could have an EMA OK by the end of the year.
That one two punch will be a powerful driver for the stock price.
As it is with these Adam Dunne stocks, Alexza Pharmaceuticals Inc.'s (ALXA) shareholders will either hit a home run or strike out based on approval or rejection form the regulatory bodies – fundamentals mean nothing beyond the burn rate i.e. will the company run out of money before they have something approved.
On July 23rd, management secured $20 Million in committed equity financing with Azimuth Opportunity, L.P. With cash on hand and the newly acquired ability to sell another $20 million in equity, iStock believes ALXA has the resources for a minimum of 12-18 months of operation.
With one or two approvals by year's end, burn rate shouldn't be an issue. Rather, the issue will be the stock price. In the past 12 months, shares have traded between $2.55 - and $14.80. Based on the stock chart, we believe the stock could trade to $5 on anticipation of the announcements. With one approval, $8 could be the target. If Alexza hits two regulatory home runs, then $10-$11 looks about right. If EMA and FDA call strike threeee! then shareholders will grab some pine and could see a new 52-week low.