Alexza Establishes a Cash Pipeline

The first rule for development-stage drugmakers is that when the cash is available, you grab it. On Monday, Alexza Pharmaceuticals (Nasdaq: ALXA  ) announced that it had signed a deal that will provide it with up to $50 million over the next two years.

The deal with Azimuth Opportunity allows Alexza to sell shares of its stock to Azimuth at anytime over the next two years at a discount to its share price if Alexza needs the funding. It sounds similar to multiple deals that Azimuth has signed with other development-stage drugmakers such as Medivation (Nasdaq: MDVN  ) , Ariad Pharmaceuticals (Nasdaq: ARIA  ) , and Titan Pharmaceuticals (AMEX: TTP  ) .

The nice part about the Azimuth equity financing deals for the drugmakers is that they are never required to tap into the funds if they don't need them or if they think their share price is trading too low to its intrinsic value. Therefore Azimuth's cash can serve as a nice rainy-day fund, and not have to be used unless it becomes the cheapest way for a drugmaker to raise working capital.

Alexza ended 2007 with $109 million in cash and investments. With phase 3 testing of its lead drug -- AZ-004 (an inhaled version of the antipsychotic drug loxapine) -- just under way and a second phase 3 study with the compound expected to begin in the third quarter, Alexza's cash burn is only going to increase in 2008. When the money that Alexza could potentially receive from Azimuth is added to the already creative financing arrangement that it signed with Symphony Capital, Alexza guided that it will have enough cash to get it through the end of the first quarter in 2010.

AZ-004 is expected to produce its first phase 3 top-line data in the second quarter of 2009, so we should have a good idea of how Alexza's top pipeline candidate is faring well before Alexza needs additional funding. So no matter what you think of Alexza's compounds, it's hard to argue that the drugmaker hasn't handled the financial side of its operations quite nicely.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 612356, ~/Articles/ArticleHandler.aspx, 10/21/2016 7:53:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
ARIA $10.38 Down -0.40 -3.71%
Ariad Pharmaceutic… CAPS Rating: **
TTP.DL2 $0.03 Down +0.00 +0.00%
Titan Pharmaceutic… CAPS Rating: No stars