Gotta love the FDA these days, don't you? I always thought the initials stood for "Food and Drug Administration" but apparently I was wrong; FDA now means "Forget Drug Approvals" (or perhaps "F*ck Drug Applicants" for those suitably inclined...).
Alexza Pharmaceuticals (Nasdaq: ALXA) is the latest company to run afoul of the agency's safety obsession, announcing the receipt of a complete response letter for its submission for Staccato Loxapine (aka Adusuve) - a fast-acting inhaled drug to deal with acute agitation in patients with severe schizophrenia and/or bipolar disorder. This is a relatively serious and common problem, and the existing therapies are tricky - it is not easy to give a shot to an unwilling patient, nor make them swallow a pill.
According to Alexza, and its partner Valeant (NYSE: VRX), the FDA was concerned about some safety issues seen in early Phase 1 studies and the absence of a "human factors study" for how people might use the technology.
The safety issues basically relate to some short-term changes in lung function seen immediately after administering the drug. Gee... an inhaled drug alters lung function upon use? I'm shocked! What's more, none of Alexza's late-stage studies showed any worrisome adverse respiratory effects - short-term issues occurred, but they either resolved themselves promptly, or could be handled with a normal asthma inhaler.
Now, a word on the human factors study ... Basically, the FDA apparently wants some sort of study to see what happens when Staccato Loxapine is put into the hands of the Ralph Wiggum's of the world .Will they stick it up their nose? Perhaps they will try to administer it in their ears, or become confused and think it's an exciting new suppository formulation.
I don't mean to be flippant, particularly, for those Alexza shareholders getting hammered today, but I'm getting a little fed up with how the FDA runs these days. A human factors study could have been requested years ago, and I frankly think its ridiculous to just assume that the people who will administer this (mostly orderlies and nurses in in-patient mental treatment facilities and perhaps prisons) can't figure it out with proper training.
I am not a doctor, and I am not intimately familiar with the specifics of Alexza's safety data, so perhaps there is a legitimate reason for concern. Even still, I can't help feel that the FDA has become actively hostile towards the pharmaceutical industry and new drug applications. This is not the first time that I've seen the agency spring a "gotcha" on a company - asking for an additional trial that could have been requested years ago, or taking issue with data from early studies. I mean, if those Phase 1 safety studies were so problematic, why did the agency allow them to progress to Phase 3?
Hell, the company even ran additional safety studies in special populations, and the FDA didn't see the need for a panel meeting.
So, what now for Alexza?
I've been interested in this biotech for a while, as I thought loxapine would be an interesting niche drug and a good test case for the company's inhalation technology. Now, though, I do not know what to think. The company froze development on migraine formulations that look interesting, but will require a lot of money to develop. Can Alexza raise those funds now (either through partnership or capital raising) with the FDA putting them on ice?
And what about that fast-acting insomnia compound (AZ-007)? The FDA is arguably even more paranoid about insomnia drugs, so who knows what sort of clinical trials they will demand from Alexza.
With cash on hand and effective technology, the stock probably has a floor somewhere in the $1.00 - $1.50 region. I think the stock is worth more than that, but the company will not be getting those milestones from Valeant any time soon and who knows what sort of supplementary studies ALXA will have to agree to perform.
If you really want to live wild, I can understand buying these shares on today's inevitable crushing decline. After all, the freaking drug *WORKS* and I do believe these safety issues can get ironed out. If you cannot handle a LOT of risk and uncertainty, though, it may be better to step aside at least until the company can lay out what it has to do to convince the FDA to grant approval.