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.

Read the full analyst report on ALXA

“ALXA” Free Stock Analysis: Buy? Sell? Hold?
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