Mail Stop 6010 February 8, 2006
Mr. Thomas B. King
President And Chief Executive Officer
Alexza Pharmaceuticals, Inc.
1020 East Meadow Circle
Palo Alto, California 94303
Re: Alexza Pharmaceuticals, Inc.
Amendment No. 1 to Registration Statement on Form S-1, file
no.
333-130644
Filed January 24, 2006
Dear Mr. King:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Summary
1. We note your response to comment 6. However, your disclosure
is
still unclear. Your disclosure states that you are creating
proprietary products by combining small molecule drugs that have
been
in use for many years with your staccato system. This implies
that
the drugs are the same as the drugs that have been used for many
years. Your response to comment 5 states that you are creating
aerosolized forms of drugs. If accurate, please revise to clarify
that you are creating aerosolized forms of drugs using active
pharmaceutical ingredients that have been used for many years and
that you are using these aerosolized forms with your staccato
system.
2. We note your response to comment 7. The difference between
acute
treatment of associated panic disorders and the management of
anxiety
disorder and the short term relief of the symptoms of anxiety is
not
clear from your revised disclosure. Please explain.
3. We note your response to comment 9. It appears that you have
taken one study and concluded that it is representative of the
entire
population of patients with cancer pain. Please revise to cite to
the study and to clarify that it is one study conducted over a
three
month period.
4. We note your response to comment 11. The discussion of the
risks
and obstacles you must address in implementing your strategy
should
be presented in a manner as prominent as the discussion of your
strategy, please revise to include a heading to precede the
discussion. Additionally, include disclosure that you do not
expect
any of your product candidates to be available before 2011, if at
all.
Risk Factors
Competition in the pharmaceutical industry is intense..., page 20
5. We note the statement in your response to comment 18 that you
are
unaware of any companies developing a deep lung inhalation system
for
small molecule drugs. However, this appears to contradict the
disclosure on page 19 which states that you are aware of a
biopharmaceutical company that claims a method of making a vapor
medicament and that if that party were to receive a patent you may
require a license from that party. Please revise or advise.
If we are unable to establish sales and marketing capabilities
....,
page 20
6. We note your response to comment 19. Please revise your
disclosure to clarify that you do not expect to establish a sales
and
marketing organization until at least 2010.
If we lose our key personnel or are unable to attract and retain
additional personnel ..., page 21
7. Please revise to disclose your change of control agreements.
Use of Proceeds, page 31
8. We note your response to comment 27. However, our comment is
reissued. Please revise to clarify the amount you expect to spend
on
the development of each product candidate and the stage of
development you reasonably expect to achieve using these proceeds.
Additionally, if you anticipate that you will need to use other
sources of funding to accomplish these objectives, provide this
information here. You may qualify this disclosure by explaining
that
the actual costs and timing of clinical trials may change
depending
on such factors as results of preclinical trials, earlier clinical
trials, etc.
Management`s Discussion and Analysis, page 38
Critical Accounting Estimates and Judgments, page 40
Stock-Based Compensation, page 41
9. Please include a through discussion of each significant factor
contributing to the difference between the fair value as of the
date
of each grant and the estimated IPO price once determined.
Development Status, page 55
10. We note your response to comment 39. However, you have not
provided sufficient information for a reader to understand the
significance of a p value less than 0.05. Please provide further
explanation.
11. We note your responses to comments 40, 41 and 42. The
difference
between the intent to treat population and the treatment received
population is still difficult to understand. This results in the
graph on page 56 being difficult to understand. Are the two
populations from different clinical trials or was there one
clinical
trial that was analyzed using two different techniques? Please
provide further explanation.
Financial Statements
Note 2. Summary of Significant Accounting Policies
Stock-based compensation, F-16
12. Refer to your response to our comment 32. Please provide the
table included in your response in the financial statements. Also
include in the table or in a separate table equity instruments
granted to non-employees.
Note 12. Warrants, page F-33
13. Refer to your responses to comments 51, 52, and 53. Since
there
are registration rights, it appears that the warrants should be
classified as a liability since the rights are outside of the
control
of the registrant. We do not believe it is appropriate to assess
the
probability of a demand for registration occurring in determining
whether or not a liability needs to be recorded. Thus we repeat
our
initial comments as follows:
* Please discuss the registration rights agreement in the
footnotes
and clearly outline its requirements and any related damages that
may
be incurred. Discuss the potential amount of damages possible
under
the contract, whether any cap exists to limit such damages, and
the
details of any options to have such damages settled in shares.
* Please tell us why you do not believe your warrants meet the
criteria of a derivative in SFAS 133. Refer to DIG A17 which
states
that net share settlement of a warrant meets the third criteria in
paragraph 6c of SFAS 133. Clarify to us why you believe equity
classification is appropriate for your warrants.
Note 17. Subsequent Events, page F-37
Officer Notes Receivable, page F-37
14. Refer to your response to our comment 54. Please include
disclosure that indicates the reclassification of accrued stock
compensation expense to additional paid-in-capital on the balance
sheet upon settlement. Also, please clarify what you mean by "the
Company expects to increase the aggregate exercise prices of
options
to purchase our common stock held by these officers in an amount
equal to the amounts of the loans and related taxes". Clarify the
intended accounting treatment of that transaction.
As appropriate, please amend your filing in response to
these
comments. You may wish to provide us with marked copies of the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information. Detailed cover letters
greatly facilitate our review. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Sasha Parikh at (202) 551-3627 or Mary Mast
at
(202) 551-3613 if you have questions regarding comments on the
financial statements and related matters. Please contact Sonia
Barros at (202) 551-3655 or Suzanne Hayes at (202) 551-3675 with
any
other questions.
Sincerely,
Jeffrey P. Riedler
Assistant Director
cc: James C. T. Linfield, Esq.
Brent D. Fassett, Esq.
Cooley Godward LLP
380 Interlocken Crescent, #900
Broomfield, Colorado 80021
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Mr. Thomas B. King
February 8, 2006
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