Following news that Alexza Pharmaceuticals (NASDAQ: ALXA) received recommendation for FDA approval from the Psychopharmacologic Drugs Advisory Committee (PDAC) of the U.S. Food and Drug Administration (FDA) relating to their schizophrenia and bipolar mania treatment ADASUVE shares in the pharmaceutical company spiked, hitting high of 1.00 on Tuesday following a Monday closing of 0.63. Along with the share price spike ALXA triggered significant trading volume on the day, surpassing the 11.6 million mark as investors place their bets.
Tuesday’s news essentially kept ALXA breathing as the company could ill afford another dismissal from the FDA regarding ADASUVE. Originally submitted in December 2009, the NDA for ADASUVE (Staccato loxapine), developed for the rapid treatment of agitation in schizophrenic or bipolar disorder patients, was turned down by the FDA in October 2010 with the Complete Response Letter (CRL) citing primary clinical safety concerns related to data from the three Phase I pulmonary safety studies, essentially questioning the impact ADASUVE had on lung functionality in healthy subjects as well as in subjects with COPD and asthma.
ALXA resubmitted their NDA in August 2011 and this time around the PDAC concluded that ADASUVE be recommended for FDA approval 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.
It should also be pointed out that the October 2010, CRL had questions concerning the novel delivery system incorporated by AXLA, their Staccato system which vaporizes an unformulated drug to form a condensation aerosol that, when inhaled, allows for rapid systemic drug delivery through deep lung inhalation. The drug is quickly absorbed through the lungs into the bloodstream, providing speed of therapeutic onset that is comparable to intravenous administration, but with greater ease, patient comfort and convenience.
As positive as the recent news is for ALXA there are still some concerns regarding that novel delivery system, namely it can cause bronchial spasms that may be fatal in people with conditions such as asthma or chronic obstructive pulmonary disorder, the same issues that were present in the original CRL. These concerns led to the PDAC recommending approval for ADASUVE on the condition that it administered as a single dose in 24 hours when used with the FDA recommended REMS. Even with that recommendation the vote for approval was only 9/8/1 (yes/no/abstain).
Looking at the voting of the panel it was clear that they still had concerns about ALXA, voting results on the question “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?” produced a 1/17/0 (yes/no/abstain) response while “•b. When used in conjunction with the REMS proposed by the FDA?” produced a 5/12/1 (yes/no/abstain) response.
That being said ALXA is still on the path to FDA approval and producing the first inhaled treatment for agitation associated with schizophrenia and bipolar disorder. That doesn’t mean they will be the only treatment on the block as injectable forms of loxapine are already available from Eli Lilly & Co.: Zyprexa, Bristol-Myers Squibb Co.: Abilify and Pfizer Inc.: Geodon. ALXA certainly has an advantage with ADASUVE being an orally administered treatment, something company President and CEO Thomas B. King said “represents a valuable treatment option for patients and physicians alike.”
Just how valuable that is to ALXA is the question. While Zyprexa earned Eli Lilly $5 billion last year, Abilify earned Bristol-Myers $2.6 billion, and Geodon produced $1 billion in revenue for Pfizer early estimates for ADASUVE are much more conservative, around $150 million according to Jason Kantor, an analyst at RBC Capital Markets.
Of course the company won’t earn any revenue from ADASUVE if it isn’t first approved by the FDA, something that is expected by February 4, 2012. While the FDA usually follows the recommendation of the review panel it certainly shouldn’t be chalked up as a given in this case. Remember the concerns expressed by the FDA and their opinion that “It is likely that, even with adequate screening for pulmonary risk factors, some patients will require respiratory support post-dose, and some patients will be at risk for respiratory failure and death.” Given these warnings it is the belief of the FDA that even with approval ADASUVE should only be administered by professionals who have intubation tubes and ventilators readily available.
While the news driving ALXA’s shares closer to their 50-day moving average of 1.19 and 200-day moving average of 1.40 is certainly centered on ADASUVE what shouldn’t be lost on investors is the potential value that exists the technology behind AXLA’s Staccato system as the company has already demonstrated that more than 200 FDA-approved compounds are feasible for delivery by this novel system, “a hand-held, single-dose inhaler that delivers a medication comparable to intravenous administration, but with greater ease, patient comfort and convenience.” This opens the door to a number of licensing agreements with drug manufacturers looking for alternative delivery systems for their treatments.
By all accounts the FDA will approve ADASUVE in February and ALXA will finally have the drug on the market in 2012. ALXA also has their Marketing Authorization Application (MAA) under review by the European Medicines Agency in Europe and with a commercial partnership for ADASUVE with Grupo Ferrer International, S.A signed in October the drug should find its way to market quickly after approval.
In addition to Europe, Grupo Ferrer holds a commercial partnership with ALXA for Latin America, Russia and the Commonwealth of Independent States. ALXA does not currently have a commercial partner for the U.S. where there are approximately 2.4 million people affected by schizophrenia and 5.7 million adults affected by bipolar disorder.