Teva partnership marks a reversal of fortune for Alexza


Where other small drug developers have fallen, Alexza Pharmaceuticals has managed to survive. US approval of its inhalable treatment for schizophrenia agitation, Adasuve, has been the trigger for an impressive $40m partnership with Teva Pharmaceutical Industries that will help offload the launch risk.

With an established hospital sales force and a presence in CNS drugs, the Israel-based generics giant is as good a partner as Alexza could have hoped for. Persevering through two FDA rejections and a loss of its original partner has paid off in spades for the California group.

Quicker response

Alexza shares rose 22% to a five-month high of $5.31 yesterday on the news of the deal, which includes the potential for $195m in additional commercial milestones as well as tiered royalties. The junior partner says it also stands to profit on supply payments should it be able to drive manufacturing costs down.

The junior partner will have access to a $25m convertible note that could see Teva becoming a significant shareholder in the event of an outstanding sum at maturity. Alexza executives said they expected a launch this year, but directed questions about timing to the senior partner. 

Teva is also taking on the costs of post-marketing studies, which include an observational trial in up to 10,000 patients as well as early-stage dosing work in children and adolescents for possible expansion of the current indication. The approved indication is to treat agitation in adult patients with schizophrenia or bipolar disorder who have had at least one manic or mixed episode.

Uncontrolled agitation often ends up being treated in hospital emergency departments and psychiatric wards, requiring use of injectable forms of Zyprexa or Geodon. Alexza said patients experienced on average 11 to 12 such episodes a year, with half resulting in a hospital visit.

Because Adasuve's label specifies administration only in an institutional setting with supervision from a trained clinician, it will not avert hospital visits; however, as an inhalable it could offer a fast-acting alternative that can avoid more invasive treatment.

That hospital treatment route, on the other hand, has a key commercial advantage – a smaller target population. Before the Teva deal was announced, Alexza had expected a sales force of 40 to be necessary to reach 1,000 key hospitals; Teva has committed to a sales force and effort at least of that magnitude, Alexza chief executive Thomas King said in a call with investors.

The Teva deal was well in excess of Adasuve's European signing with Grupo Ferrer, which snared $10m up front in 2011. Given that more modest sum – not to mention the knockbacks Adasuve has experienced – the terms of the US deal might have caught many investors off-guard. Roth Capital Partners analyst Scott Henry said most investors had been expecting Alexza to hire a contract sales organisation rather than getting the muscle of a big commercial partner.

Winding road

Two complete response letters – the first on safety, the second on manufacturing issues – did not look like the stepping stones to signing a partner as weighty as Teva (Alexza faces cash squeeze as Adasuve sent another Dear John letter, May 4, 2012). When put to an FDA advisory committee between the two rejections, the inhalable scraped by with just a one-vote majority, hardly the endorsement a company would expect before achieving FDA approval.

The first of those two rejections led to the loss of Alexza's original partner, Valeant Pharmaceuticals. The second setback could have spelled the end of the entire project.

The company persisted to see the US approval, which came contingent on a black-box warning of bronchospasm and increased mortality in elderly patients, and a risk evaluation and mitigation strategy that required administration in a hospital setting.

With the deal signed, the group needs to pay attention to launch planning and execution. But it can now give at least a passing thought to how to advance the rest of its pipeline, which has been forced to wait while executives managed the final stages of attaining Adasuve approval. The pipeline is based around the company’s Staccato inhalation technology, and includes a fentanyl product for breakthrough pain, alprazolam for seizures and zaleplon for insomnia.

Forced to wait three years to get a product to market, Alexza needs to make the most of the heightened expectations for launch. It is hard to think how the company could have done better than Teva.

To contact the writer of this story email Jonathan Gardner in London at or follow @JonEPVantage on Twitter

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