Alexza Shares Sink as the FDA Denies Its Antipsychotic Drug

Alexza Pharmaceuticals (ALXA) shares are tanking some 50% in early trading after the company announced today that the U.S. Food and Drug Administration has not approved its AZ-004, an antipsychotic inhaled drug for treating agitation in schizophrenia or bipolar-disorder patients.

Alexza'sStaccato system uses a hand-held inhaler to deliver the antipsychotic drug loxapine. When inhaled, the drug is quickly absorbed through the lungs into the bloodstream, says Alexa, providing comparable therapeutic speed to intravenous administration.

The FDA said it was primarily concerned about safety data from the three early-stage pulmonary studies with AZ-004, specifically, about lung function in healthy subjects and in subjects with chronic obstructive pulmonary disease (COPD) and asthma. Howver, some patients receiving placebo also exhibited the same decreased lung function.

The Mountain View, Calif., company adds that it found no serious or severe respiratory adverse events in these trials or in the two late-stage clinical trials of AZ-004.

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The FDA also raised concerns about the suitability of the stability studies undertaken by Alexza among others. And the FDA's Center for Devices and Radiological Health added a request for several tests, including another study and related analysis to ensure that the product can be used effectively in the proposed clinical setting.

"We appreciate the FDA's review of the first NDA [new drug application] for our novel Staccato technology, and we expect to work closely with FDA to resolve the issues raised in the Complete Response Letter," said Alexa President and CEO Thomas King. "Alexza continues to believe in the safety and efficacy of AZ-004 based on the comprehensive clinical development program we have conducted."

Valeant Pharmaceuticals (VRX) signed a deal with Alexza in February to develop and commercialize the AZ-004 in the U.S. and Canada.