-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KkFqYt0ZLdapheB9d1Gl9azToIPTWZet7QCd3NG/3MuvCcPSkUqO43Za8S+/tBNb I1QnaB3O/OJJJOLGOMX3ag== 0000950134-07-013717.txt : 20070620 0000950134-07-013717.hdr.sgml : 20070620 20070620161602 ACCESSION NUMBER: 0000950134-07-013717 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20070620 DATE AS OF CHANGE: 20070620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Alexza Pharmaceuticals Inc. CENTRAL INDEX KEY: 0001344413 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 770567768 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-141724 FILM NUMBER: 07931499 BUSINESS ADDRESS: STREET 1: 1020 EAST MEADOW CIRCLE CITY: PALO ALTO STATE: CA ZIP: 94303 BUSINESS PHONE: 650.687.3900 MAIL ADDRESS: STREET 1: 1020 EAST MEADOW CIRCLE CITY: PALO ALTO STATE: CA ZIP: 94303 S-3/A 1 d45145a1sv3za.htm AMENDMENT TO FORM S-3 sv3za
Table of Contents

As filed with the Securities and Exchange Commission on June 20, 2007
Registration No. 333-141724
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
AMENDMENT NO. 1
TO
 
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
 
Alexza Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
 
     
Delaware   77-0567768
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
 
1020 East Meadow Circle, Palo Alto, CA 94303
(650) 687-3900
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant’s Principal Executive Offices)
 
Thomas B. King
President and Chief Executive Officer
Alexza Pharmaceuticals, Inc.
1020 East Meadow Circle,
Palo Alto, CA 94303
(650) 687-3900
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
 
Copies to:
 
James C.T. Linfield
Brent D. Fassett
Cooley Godward Kronish LLP
380 Interlocken Crescent
Suite 900
Broomfield, CO 80021
(720) 566-4000
 
Approximate date of commencement of proposed sale to the public:  From time to time after this registration statement becomes effective.
 
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  o
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.  þ
 
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If delivery of the Prospectus is expected to be made pursuant to Rule 434, please check the following box.  o
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
 

Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
SUBJECT TO COMPLETION DATED JUNE 20, 2007
 
PROSPECTUS
 
(ALEXZA LOGO)
 
2,000,000 Shares
 
Common Stock
 
 
We have prepared this prospectus to allow the selling stockholders we identify in this prospectus to sell shares of our common stock issuable by us upon the exercise of common stock warrants held by the selling stockholders.
 
We will not receive any of the proceeds from the sale of these shares of common stock by the selling stockholders. The selling stockholders, or their pledgees, donees, transferees or other successors-in-interest may offer and sell the common stock directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions. Such sales may be made through public or private transactions at prevailing market prices, at prices relating to prevailing market prices or at privately negotiated prices.
 
Our common stock trades on the Nasdaq Global Market under the trading symbol “ALXA.” On June 13, 2007, the last reported sale price of our common stock was $9.34 per share. We recommend that you obtain current market quotations for our common stock prior to making an investment decision.
 
Investing in our common stock involves a high degree of risk. Please carefully consider the “Risk Factors” beginning on page 2 of this prospectus.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
The date of this prospectus is          , 2007.

 

 
TABLE OF CONTENTS
 
         
  1
  2
  18
  18
  18
  19
  19
  21
  23
  24
  24
 Consent of Independent Registered Public Accounting Firm
 
You should rely only on the information contained in or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front of the document and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any sale of our common stock.

Table of Contents

 
SUMMARY
 
The following summary may not contain all the information that may be important to you. You should read the entire prospectus, as well as the information to which we refer you and the information incorporated by reference, before making an investment decision.
 
ALEXZA PHARMACEUTICALS, INC.
 
“Alexza” and “Staccato” are registered trademarks of Alexza Pharmaceuticals, Inc. Each of the other trademarks, trade names or service marks appearing or incorporated by reference in this prospectus belongs to its respective holder.
 
THE OFFERING
 
Issuer Alexza Pharmaceuticals, Inc., a Delaware corporation.
 
Selling Stockholders The selling stockholders of our common stock in the offering are named herein.
 
Securities Covered 2,000,000 shares of common stock issuable upon exercise of common stock warrants held by the selling stockholders.
 
Plan of Distribution The selling stockholders may offer and sell the common stock from time to time on the Nasdaq Global Market or otherwise, directly to purchasers or through underwriters, broker-dealers or agents.
 
Use of Proceeds We will not receive any of the proceeds of sales by the selling stockholders of any of the securities covered by this prospectus.
 
Trading Our common stock is quoted on the Nasdaq Global Market under the symbol “ALXA.”


1

Table of Contents

 
RISK FACTORS
 
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this Annual Report, before deciding whether to invest in shares of our common stock. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. The occurrence of any of the following risks could harm our business, financial condition or results of operations. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.
 
Risks Relating to Our Business
 
We have a history of net losses. We expect to continue to incur substantial and increasing net losses for the foreseeable future, and we may never achieve or maintain profitability.
 
We are not profitable and have incurred significant net losses in each year since our inception, including net losses of $41.8 million, $32.4 million and $16.6 million for the years ended December 31, 2006, 2005 and 2004, respectively, and $10.9 million for the three months ended March 31, 2007. As of March 31, 2007, we had a deficit accumulated during development stage of $129.9 million. We expect our expenses to increase as we expand our product candidate and manufacturing development programs and add the necessary infrastructure to support operating as a public company. As a result, we expect to incur substantial and increasing net losses and negative cash flow for the foreseeable future. These losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity (deficit) and working capital.
 
Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Currently, we have no products approved for commercial sale, and to date we have not generated any product revenue. We have financed our operations primarily through the sale of equity securities, capital lease and equipment financing and government grants. The size of our future net losses will depend, in part, on the rate of growth of our expenses and the rate of growth, if any, of our revenues. Revenues from potential strategic partnerships are uncertain because we may not enter into any strategic partnerships, and we do not expect any government grant revenue in 2007. If we are unable to develop and commercialize one or more of our product candidates or if sales revenue from any product candidate that receives marketing approval is insufficient, we will not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability.
 
We are a development stage company. Our success depends substantially on our lead product candidates. If we do not develop commercially successful products, we may be forced to cease operations.
 
You must evaluate us in light of the uncertainties and complexities affecting a development stage pharmaceutical company. We have not yet commenced Phase III trials for any of our product candidates. Each of our product candidates is at an early stage of development and will be unsuccessful if it:
 
  •  does not demonstrate acceptable safety and efficacy in preclinical studies and clinical trials or otherwise does not meet applicable regulatory standards for approval;
 
  •  does not offer therapeutic or other improvements over existing or future drugs used to treat the same or similar conditions;
 
  •  is not capable of being produced in commercial quantities at an acceptable cost, or at all; or
 
  •  is not accepted by patients, the medical community or third party payors.
 
Our ability to generate product revenue in the future is dependent on the successful development and commercialization of our product candidates. We have not proven our ability to develop and commercialize products. Problems frequently encountered in connection with the development and utilization of new and unproven technologies and the competitive environment in which we operate might limit our ability to develop commercially successful products. We do not expect any of our current product candidates to be commercially available before 2011, if at all. If we are unable to make our product candidates commercially available, we will not generate product revenues, and we will not be successful.


2

Table of Contents

 
We will need substantial additional capital in the future. If additional capital is not available, we will have to delay, reduce or cease operations.
 
We will need to raise additional capital to fund our operations, to develop our product candidates and to develop our manufacturing capabilities. Our future capital requirements will be substantial and will depend on many factors including:
 
  •  the scope, rate of progress, results and costs of our preclinical studies, clinical trials and other research and development activities, and our manufacturing development and commercial manufacturing activities;
 
  •  the amount and timing of payments from Symphony Allegro related to the development of Staccato alprazolam and Staccato loxapine;
 
  •  the amount and timing of any payments to Symphony Allegro related to the repurchase of rights to Staccato alprazolam and Staccato loxapine;
 
  •  the cost, timing and outcomes of regulatory proceedings;
 
  •  the cost and timing of developing sales and marketing capabilities;
 
  •  the cost and timing of developing manufacturing capacity;
 
  •  revenues received from any future products;
 
  •  payments received under any strategic partnerships;
 
  •  the filing, prosecution and enforcement of patent claims;
 
  •  the costs associated with moving to our new facility in 2007 and 2008; and
 
  •  the costs associated with commercializing our product candidates, if they receive regulatory approval.
 
We anticipate that existing cash, cash equivalents and marketable securities, along with interest earned thereon, payments expected to be received from Symphony Allegro and proceeds from stock option exercises and purchases under our Employee Stock Purchase Plan, will enable us to maintain our currently planned operations through at least the end of the first quarter of 2008. Changing circumstances may cause us to consume capital significantly faster than we currently anticipate. We may be unable to raise sufficient additional capital on favorable terms to us, or at all. If we fail to raise sufficient funds, we will have to delay development programs or reduce or cease operations, or we may be required to enter into a strategic partnership at an earlier stage of development than currently anticipated. Our estimates of future capital use are uncertain, and changes in our development plans, payments received from Symphony Allegro, partnering activities, regulatory requirements and other developments may increase our rate of spending and decrease the amount of time our available resources will fund our operations.
 
We may never be able to generate a sufficient amount of product revenue to cover our expenses. Until we do, we expect to finance our future cash needs through public or private equity offerings, debt financings, strategic partnerships or licensing arrangements, as well as interest income earned on cash balances and proceeds from stock option exercises and purchases under our Employee Stock Purchase Plan. Any financing transaction may contain unfavorable terms. If we raise additional funds by issuing equity securities, our stockholders’ equity will be diluted. If we raise additional funds through strategic partnerships, we may be required to relinquish rights to our product candidates or technologies, or to grant licenses on terms that are not favorable to us.
 
Unless our preclinical studies demonstrate the safety of our product candidates, we will not be able to commercialize our product candidates.
 
To obtain regulatory approval to market and sell any of our product candidates, we must satisfy the FDA and other regulatory authorities abroad, through extensive preclinical studies, that our product candidates are safe. Our Staccato technology creates condensation aerosols from drug compounds, and there currently are no approved products that use a similar method of drug delivery. Companies developing other inhalation products have not defined or successfully completed the types of preclinical studies we believe will be required for submission to regulatory authorities as we seek approval to conduct our clinical trials. We may not conduct the types of preclinical


3

Table of Contents

testing eventually required by regulatory authorities, or the preclinical tests may indicate that our product candidates are not safe for use in humans. Preclinical testing is expensive, can take many years and have an uncertain outcome. In addition, success in initial preclinical testing does not ensure that later preclinical testing will be successful. We may experience numerous unforeseen events during, or as a result of, the preclinical testing process, which could delay or prevent our ability to develop or commercialize our product candidates, including:
 
  •  our preclinical testing may produce inconclusive or negative safety results, which may require us to conduct additional preclinical testing or to abandon product candidates that we believed to be promising;
 
  •  our product candidates may have unfavorable pharmacology, toxicology or carcinogenicity; and
 
  •  our product candidates may cause undesirable side effects.
 
Any such events would increase our costs and could delay or prevent our ability to commercialize our product candidates, which could adversely impact our business, financial condition and prospects.
 
Preclinical studies indicated possible adverse impact of pulmonary delivery of AZ-001.
 
In our daily dosing animal toxicology studies of prochlorperazine, the active pharmaceutical ingredient, or API, in AZ-001, we detected changes to, and increases of, the cells in the upper airway of the test animals. The terms for these changes and increases are “squamous metaplasia” and “hyperplasia,” respectively. We also observed lung inflammation in some animals. These findings occurred in daily dosing studies at doses that were proportionately substantially greater than any dose we expect to continue to develop or commercialize. In subsequent toxicology studies of AZ-001 involving intermittent dosing consistent with its intended use, we detected lower incidence and severity of the changes to, and increases of, the cells in the upper airway of the test animals compared to the daily dosing results. We did not observe any lung inflammation with intermittent dosing. These findings suggest that the delivery of the pure drug compound of AZ-001 at the proportionately higher doses used in daily dosing toxicology studies may cause adverse consequences if we were to administer prochlorperazine chronically for prolonged periods of time. If we observe these findings in our clinical trials of AZ-001, it could prevent further development or commercialization of AZ-001.
 
Failure or delay in commencing or completing clinical trials for our product candidates could harm our business.
 
To date, we have not completed all the clinical trials necessary to support an application with the FDA for approval to market any of our product candidates. Current and planned clinical trials may be delayed or terminated as a result of many factors, including:
 
  •  delays or failure in reaching agreement on acceptable clinical trial contracts or clinical trial protocols with prospective sites;
 
  •  regulators or institutional review boards may not authorize us to commence a clinical trial;
 
  •  regulators or institutional review boards may suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or concerns about patient safety;
 
  •  we may suspend or terminate our clinical trials if we believe that they expose the participating patients to unacceptable health risks;
 
  •  we may experience slower than expected patient enrollment or lack of a sufficient number of patients that meet the enrollment criteria for our clinical trials;
 
  •  patients may not complete clinical trials due to safety issues, side effects, dissatisfaction with the product candidate, or other reasons;
 
  •  we may have difficulty in maintaining contact with patients after treatment, preventing us from collecting the data required by our study protocol;
 
  •  product candidates may demonstrate a lack of efficacy during clinical trials;


4

Table of Contents

 
  •  we may experience governmental or regulatory delays, failure to obtain regulatory approval or changes in regulatory requirements, policy and guidelines; and
 
  •  we may experience delays in our ability to manufacture clinical trial materials in a timely manner as a result of ongoing process and design enhancements to our Staccato system and the planned move to a new facility in 2007.
 
Any delay in commencing or completing clinical trials for our product candidates would delay commercialization of our product candidates and harm our business, financial condition and prospects. It is possible that none of our product candidates will successfully complete clinical trials or receive regulatory approval, which would severely harm our business, financial condition and prospects.
 
If our product candidates do not meet safety and efficacy endpoints in clinical trials, they will not receive regulatory approval, and we will be unable to market them.
 
Our product candidates are in preclinical and clinical development and have not received regulatory approval from the FDA or any foreign regulatory authority. The clinical development and regulatory approval process is extremely expensive and takes many years. The timing of any approval cannot be accurately predicted. If we fail to obtain regulatory approval for our current or future product candidates, we will be unable to market and sell them and therefore may never be profitable.
 
As part of the regulatory process, we must conduct clinical trials for each product candidate to demonstrate safety and efficacy to the satisfaction of the FDA and other regulatory authorities abroad. The number and design of clinical trials that will be required varies depending on the product candidate, the condition being evaluated, the trial results and regulations applicable to any particular product candidate.
 
Prior clinical trial program designs and results are not necessarily predictive of future clinical trial designs or results. Initial results may not be confirmed upon full analysis of the detailed results of a trial. Product candidates in later stage clinical trials may fail to show the desired safety and efficacy despite having progressed through initial clinical trials with acceptable endpoints. Prior clinical trial program designs and results are not necessarily predictive of future clinical trial designs or results.
 
If our product candidates fail to show a clinically significant benefit compared to placebo, they will not be approved for marketing.
 
Device failure rates higher than we anticipate may result in clinical trials that do not meet their specific efficacy endpoints. We experienced a 3% device failure rate in our Phase IIa clinical trial of AZ-001, which caused some of the results to be not statistically significant. We experienced a device failure rate in our Phase IIb clinical trial of AZ-001 of less than 1%. Device failures or improper device use by patients may impact the results of future trials. The design of our clinical trials is based on many assumptions about the expected effect of our product candidates, and if those assumptions prove incorrect, the clinical trials may not produce statistically significant results. In addition, because we are developing AZ-002 for a novel indication, and may develop future product candidates for other novel indications, and because our Staccato technology is not similar to other approved drug delivery methods, there is no clear precedent for the application of detailed regulatory requirements to our product candidates. We cannot assure you that the design of, or data collected from, the clinical trials of our product candidates will be sufficient to support the FDA and foreign regulatory approvals.
 
Regulatory authorities may not approve our product candidates even if they meet safety and efficacy endpoints in clinical trials.
 
The FDA and other foreign regulatory agencies can delay, limit or deny marketing approval for many reasons, including:
 
  •  a product candidate may not be considered safe or effective;
 
  •  the manufacturing processes or facilities we have selected may not meet the applicable requirements; and
 
  •  changes in their approval policies or adoption of new regulations may require additional work on our part.


5

Table of Contents

 
Any delay in, or failure to receive or maintain, approval for any of our product candidates could prevent us from ever generating meaningful revenues or achieving profitability.
 
Our product candidates may not be approved even if they achieve their endpoints in clinical trials. Regulatory agencies, including the FDA, or their advisors may disagree with our trial design and our interpretations of data from preclinical studies and clinical trials. Regulatory agencies may change requirements for approval even after a clinical trial design has been approved. Regulatory agencies also may approve a product candidate for fewer or more limited indications than requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates.
 
Our product candidates will remain subject to ongoing regulatory review even if they receive marketing approval. If we fail to comply with continuing regulations, we could lose these approvals, and the sale of any future products could be suspended.
 
Even if we receive regulatory approval to market a particular product candidate, the FDA or a foreign regulatory authority could condition approval on conducting additional costly post-approval studies or could limit the scope of our approved labeling. Moreover, the product may later cause adverse effects that limit or prevent its widespread use, force us to withdraw it from the market or impede or delay our ability to obtain regulatory approvals in additional countries. In addition, we will continue to be subject to FDA review and periodic inspections to ensure adherence to applicable regulations. After receiving marketing approval, the FDA imposes extensive regulatory requirements on the manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion and record keeping related to the product.
 
If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities or previously unknown problems with any future products, suppliers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions, including:
 
  •  restrictions on the products, suppliers or manufacturing processes;
 
  •  warning letters or untitled letters;
 
  •  civil or criminal penalties or fines;
 
  •  injunctions;
 
  •  product seizures, detentions or import bans;
 
  •  voluntary or mandatory product recalls and publicity requirements;
 
  •  suspension or withdrawal of regulatory approvals;
 
  •  total or partial suspension of production; and
 
  •  refusal to approve pending applications for marketing approval of new drugs or supplements to approved applications.
 
If we do not produce our devices cost effectively, we will never be profitable.
 
Our Staccato system based product candidates contain electronic and other components in addition to the active pharmaceutical ingredients. As a result of the cost of developing and producing these components, the cost to produce our product candidates, and any approved products, will likely be higher per dose than the cost to produce intravenous or oral tablet products. This increased cost of goods may prevent us from ever selling any products at a profit. In addition, we are developing single dose and multiple dose versions of our Staccato system. Developing multiple versions of our Staccato system may reduce or eliminate our ability to achieve manufacturing economies of scale. In addition, developing multiple versions of our Staccato system reduces our ability to focus development resources on each version, potentially reducing our ability to effectively develop any particular version. We expect to continue to modify each of our product candidates throughout their clinical development to improve their performance, dependability, manufacturability and quality. Some of these modifications may require additional


6

Table of Contents

regulatory review and approval, which may delay or prevent us from conducting clinical trials. The development and production of our technology entail a number of technical challenges, including achieving adequate dependability, that may be expensive or time consuming to solve. Any delay in or failure to develop and manufacture any future products in a cost effective way could prevent us from generating any meaningful revenues and prevent us from becoming profitable.
 
We rely on third parties to conduct our preclinical studies and our clinical trials. If these third parties do not perform as contractually required or expected, we may not be able to obtain regulatory approval for our product candidates, or we may be delayed in doing so.
 
We do not have the ability to conduct preclinical studies or clinical trials independently for our product candidates. We must rely on third parties, such as contract research organizations, medical institutions, academic institutions, clinical investigators and contract laboratories, to conduct our preclinical studies and clinical trials. We are responsible for confirming that our preclinical studies are conducted in accordance with applicable regulations and that each of our clinical trials is conducted in accordance with its general investigational plan and protocol. The FDA requires us to comply with regulations and standards, commonly referred to as good laboratory practices, or GLP, for conducting and recording the results of our preclinical studies and good clinical practices for conducting, monitoring, recording and reporting the results of clinical trials, to assure that data and reported results are accurate and that the clinical trial participants are adequately protected. Our reliance on third parties does not relieve us of these responsibilities. If the third parties conducting our clinical trials do not perform their contractual duties or obligations, do not meet expected deadlines, fail to comply with the FDA’s good clinical practice regulations, do not adhere to our clinical trial protocols or otherwise fail to generate reliable clinical data, we may need to enter into new arrangements with alternative third parties and our clinical trials may be extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the product candidate being tested in such trials.
 
Problems with the third parties that manufacture the active pharmaceutical ingredients in our product candidates may delay our clinical trials or subject us to liability.
 
We do not currently own or operate manufacturing facilities for clinical or commercial production of the API used in any of our product candidates. We have no experience in drug manufacturing, and we lack the resources and the capability to manufacture any of the APIs used in our product candidates, on either a clinical or commercial scale. As a result, we rely on third parties to supply the API used in each of our product candidates. We expect to continue to depend on third parties to supply the API for our lead product candidates and any additional product candidates we develop in the foreseeable future.
 
An API manufacturer must meet high precision and quality standards for that API to meet regulatory specifications and comply with regulatory requirements. A contract manufacturer is subject to ongoing periodic unannounced inspection by the FDA and corresponding state and foreign authorities to ensure strict compliance with current good manufacturing practice, or cGMP, and other applicable government regulations and corresponding foreign standards. Additionally, a contract manufacturer must pass a pre-approval inspection by the FDA to ensure strict compliance with cGMP prior to the FDA’s approval of any product candidate for marketing. A contract manufacturer’s failure to conform with cGMP could result in the FDA’s refusal to approve or a delay in the FDA’s approval of a product candidate for marketing. We are ultimately responsible for confirming that the APIs used in our product candidates are manufactured in accordance with applicable regulations.
 
Our third party suppliers may not carry out their contractual obligations or meet our deadlines. In addition, the API they supply to us may not meet our specifications and quality policies and procedures. If we need to find alternative suppliers of the API used in any of our product candidates, we may not be able to contract for such supplies on acceptable terms, if at all. Any such failure to supply or delay caused by such contract manufacturers would have an adverse affect on our ability to continue clinical development of our product candidates or commercialize any future products.


7

Table of Contents

 
If our third party drug suppliers fail to achieve and maintain high manufacturing standards in compliance with cGMP regulations, we could be subject to certain product liability claims in the event such failure to comply resulted in defective products that caused injury or harm.
 
If we experience problems with the manufacturers of components of our product candidates, our development programs may be delayed or we may be subject to liability.
 
We outsource the manufacturing of some of the components of our Staccato system, including the printed circuit boards and the plastic airways. We have no experience in the manufacturing of these components, and we currently lack the resources and the capability to manufacture them, on either a clinical or commercial scale. As a result, we rely on third parties to supply these components. We expect to continue to depend on third parties to supply these components for our current product candidates and any devices based on the Staccato system we develop in the foreseeable future. In the future, we may outsource the manufacture of additional components, including the heat packages in our single dose design.
 
The third party suppliers of the components of our Staccato system must meet high precision and quality standards for those components to comply with regulatory requirements. A contract manufacturer is subject to ongoing periodic unannounced inspection by the FDA and corresponding state and foreign authorities to ensure strict compliance with the FDA’s Quality System Regulation, or QSR, which sets forth the FDA’s current good manufacturing practice requirements for medical devices and their components, and other applicable government regulations and corresponding foreign standards. We are ultimately responsible for confirming that the components used in the Staccato system are manufactured in accordance with the QSR or other applicable regulations.
 
Our third party suppliers may not comply with their contractual obligations or meet our deadlines, or the components they supply to us may not meet our specifications and quality policies and procedures. If we need to find alternative suppliers of the components used in the Staccato system, we may not be able to contract for such components on acceptable terms, if at all. Any such failure to supply or delay caused by such contract manufacturers would have an adverse affect on our ability to continue clinical development of our product candidates or commercialize any future products.
 
In addition, the heat packages used in the single dose version of our Staccato system are manufactured using certain energetic, or highly combustible, materials that are used to generate the rapid heating necessary for vaporizing the drug compound while avoiding degradation. Manufacture of products containing these types of materials is regulated by the U.S. government. We currently manufacture the heat packages that are being used in the devices used in our clinical trials. We have entered into a joint development agreement with Autoliv ASP, Inc. for the manufacture of the heat packages in the commercial design of our single dose version of our Staccato system. If we are unable to manufacture the heat packages used in our ongoing clinical trials or if in the future Autoliv is unable to manufacture the heat packages to our specifications, or does not carry out its contractual obligations to develop our heat packages or to supply them to us, our clinical trials may be delayed, suspended or terminated while we seek additional suitable manufacturers of our heat packages, which may prevent us from commercializing our product candidates that utilize the single dose version of the Staccato system.
 
If we do not establish additional strategic partnerships, we will have to undertake development and commercialization efforts on our own, which would be costly and delay our ability to commercialize any future products.
 
A key element of our business strategy is our intent to selectively partner with pharmaceutical and biotechnology companies to obtain assistance for the development and potential commercialization of our product candidates. On December 1, 2006, we entered into such a development relationship with Symphony Allegro. We intend to enter into additional strategic partnerships with third parties to develop and commercialize our product candidates that are intended for larger markets, and we may enter into strategic partnerships for product candidates that are targeted toward specialty markets. We believe the effective commercialization of AZ-001 and AZ-003 will require a large, sophisticated sales and marketing organization. We have completed a Phase I study of AZ-003, and we plan no additional development of AZ-003 in 2007 unless and until we secure a partner to support continued drug and device development. To date, other than Symphony Allegro, we have not entered into any partnerships


8

Table of Contents

with pharmaceutical or biotechnology companies for any of our product candidates. We face significant competition in seeking appropriate strategic partners, and these strategic partnerships can be intricate and time consuming to negotiate and document. We may not be able to negotiate strategic partnerships on acceptable terms, or at all. We are unable to predict when, if ever, we will enter into any additional strategic partnerships because of the numerous risks and uncertainties associated with establishing strategic partnerships. If we are unable to negotiate additional strategic partnerships for our product candidates we may be forced to curtail the development of a particular candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization, reduce the scope of our sales or marketing activities or undertake development or commercialization activities at our own expense. In addition, we will bear all the risk related to the development of that product candidate. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring our product candidates to market and generate product revenue.
 
If we enter into additional strategic partnerships with pharmaceutical or biotechnology companies, we may be required to relinquish important rights to and control over the development of our product candidates or otherwise be subject to terms unfavorable to us.
 
Due to our relationship with Symphony Allegro, and for any additional strategic partnerships with pharmaceutical or biotechnology companies, we are subject to a number of risks, including:
 
  •  we may not be able to control the amount and timing of resources that our strategic partners devote to the development or commercialization of product candidates;
 
  •  strategic partners may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing;
 
  •  strategic partners may not pursue further development and commercialization of products resulting from the strategic partnering arrangement or may elect to discontinue research and development programs;
 
  •  strategic partners may not commit adequate resources to the marketing and distribution of any future products, limiting our potential revenues from these products;
 
  •  disputes may arise between us and our strategic partners that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources;
 
  •  strategic partners may experience financial difficulties;
 
  •  strategic partners may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation;
 
  •  business combinations or significant changes in a strategic partner’s business strategy may also adversely affect a strategic partner’s willingness or ability to complete its obligations under any arrangement;
 
  •  strategic partners could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and
 
  •  strategic partners could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates.
 
If we fail to gain market acceptance among physicians, patients, third-party payors and the medical community, we will not become profitable.
 
The Staccato system is a fundamentally new method of drug delivery. Any future product based on our Staccato system may not gain market acceptance among physicians, patients, third-party payors and the medical community. If these products do not achieve an adequate level of acceptance, we will not generate sufficient product


9

Table of Contents

revenues to become profitable. The degree of market acceptance of any of our product candidates, if approved for commercial sale, will depend on a number of factors, including:
 
  •  demonstration of efficacy and safety in clinical trials;
 
  •  the existence, prevalence and severity of any side effects;
 
  •  potential or perceived advantages or disadvantages compared to alternative treatments;
 
  •  perceptions about the relationship or similarity between our product candidates and the parent drug compound upon which each product candidate is based;
 
  •  the timing of market entry relative to competitive treatments;
 
  •  the ability to offer any future products for sale at competitive prices;
 
  •  relative convenience, product dependability and ease of administration;
 
  •  the strength of marketing and distribution support;
 
  •  the sufficiency of coverage and reimbursement of our product candidates by governmental and other third-party payors; and
 
  •  the product labeling or product insert required by the FDA or regulatory authorities in other countries.
 
Our pipeline may be limited by the number of drug compounds suitable for use with the Staccato system.
 
The current versions of the Staccato system cannot deliver large molecule drugs, such as peptides and proteins. In addition, the physical size of the metal substrates in the single dose and multiple dose versions of the Staccato system limits their use to drugs that require dose amounts less than 10 to 15 milligrams and 100 to 200 micrograms, respectively. Further, approximately 200 of the 400 small molecule compounds we have screened for initial vaporization feasibility did not form drug aerosols with the 97% purity we use as an internal standard for further development. There are also many drug compounds that are covered by composition of matter patents that prevent us from developing the compound in the Staccato system without a license from the patent owner, which may not be available on acceptable terms, if at all. If we are not able to identify additional drug compounds that can be developed with the Staccato system, we will not be able to implement our strategy of filing one IND in 2007 and one to two INDs per year thereafter, and we may not develop enough products to develop a sustainable business.
 
AZ-001 and other product candidates that we may develop may require expensive carcinogenicity tests.
 
The API in AZ-001, prochlorperazine, was approved by the FDA in 1956 for the treatment of severe nausea and vomiting. At that time, the FDA did not require the carcinogenicity testing that is now generally required for marketing approval. It is unclear whether we will be required to perform such testing prior to filing our application for marketing approval of AZ-001 or whether we will be allowed to perform such testing after we file an application. Such carcinogenicity testing will be expensive and require significant additional resources to complete and may delay approval to market AZ-001. We may encounter similar requirements with other product candidates incorporating drugs that have not undergone carcinogenicity testing. Any carcinogenicity testing we are required to complete will increase the costs to develop a particular product candidate and may delay or halt the development of such product candidate.
 
If some or all of our patents expire, are invalidated or are unenforceable, or if some or all of our patent applications do not yield issued patents or yield patents with narrow claims, competitors may develop competing products using our or similar intellectual property and our business will suffer.
 
Our success will depend in part on our ability to obtain and maintain patent and trade secret protection for our technologies and product candidates both in the United States and other countries. We do not know whether any patents will issue from any of our pending or future patent applications. In addition, a third party may successfully circumvent our patents. Our rights under any issued patents may not provide us with sufficient protection against competitive products or otherwise cover commercially valuable products or processes.


10

Table of Contents

 
The degree of protection for our proprietary technologies and product candidates is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
 
  •  we might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;
 
  •  we might not have been the first to file patent applications for these inventions;
 
  •  others may independently develop similar or alternative technologies or duplicate any of our technologies;
 
  •  it is possible that none of our pending patent applications will result in issued patents;
 
  •  the claims of our issued patents may be narrower than as filed and not sufficiently broad to prevent third parties from circumventing them;
 
  •  we may not develop additional proprietary technologies or drug candidates that are patentable;
 
  •  our patent applications or patents may be subject to interference, opposition or similar administrative proceedings;
 
  •  any patents issued to us or our potential strategic partners may not provide a basis for commercially viable products or may be challenged by third parties in the course of litigation or administrative proceedings such as reexaminations or interferences; and
 
  •  the patents of others may have an adverse effect on our ability to do business.
 
Even if valid and enforceable patents cover our product candidates and technologies, the patents will provide protection only for a limited amount of time.
 
Our and our potential strategic partners’ ability to obtain patents is uncertain because, to date, some legal principles remain unresolved, there has not been a consistent policy regarding the breadth or interpretation of claims allowed in patents in the United States, and the specific content of patents and patent applications that are necessary to support and interpret patent claims is highly uncertain due to the complex nature of the relevant legal, scientific and factual issues. Furthermore, the policies governing pharmaceutical and medical device patents outside the United States may be even more uncertain. Changes in either patent laws or interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection.
 
Even if patents are issued regarding our product candidates or methods of using them, those patents can be challenged by our competitors who can argue that our patents are invalid and/or unenforceable. Third parties may challenge our rights to, or the scope or validity of, our patents. Patents also may not protect our product candidates if competitors devise ways of making these or similar product candidates without legally infringing our patents. The Federal Food, Drug and Cosmetic Act and the FDA regulations and policies provide incentives to manufacturers to challenge patent validity or create modified, non-infringing versions of a drug or device in order to facilitate the approval of generic substitutes. These same types of incentives encourage manufacturers to submit new drug applications that rely on literature and clinical data not prepared for or by the drug sponsor.
 
We also rely on trade secrets to protect our technology, especially where we do not believe that patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. The employees, consultants, contractors, outside scientific collaborators and other advisors of our company and our strategic partners, if any, may unintentionally or willfully disclose our confidential information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming and the outcome is unpredictable. Failure to protect or maintain trade secret protection could adversely affect our competitive business position.
 
Our research and development collaborators may have rights to publish data and other information in which we have rights. In addition, we sometimes engage individuals or entities to conduct research that may be relevant to our business. The ability of these individuals or entities to publish or otherwise publicly disclose data and other information generated during the course of their research is subject to certain contractual limitations. These


11

Table of Contents

contractual provisions may be insufficient or inadequate to protect our trade secrets and may impair our patent rights. If we do not apply for patent protection prior to such publication or if we cannot otherwise maintain the confidentiality of our technology and other confidential information, then our ability to receive patent protection or protect our proprietary information may be jeopardized.
 
Litigation or other proceedings or third party claims of intellectual property infringement could require us to spend time and money and could shut down some of our operations.
 
Our commercial success depends in part on not infringing patents and proprietary rights of third parties. Others have filed, and in the future are likely to file, patent applications covering products that are similar to our product candidates, as well as methods of making or using similar or identical products. If these patent applications result in issued patents and we wish to use the claimed technology, we would need to obtain a license from the third party. We may not be able to obtain these licenses at a reasonable cost, if at all.
 
In particular, we are aware of at least one pending U.S. patent application and foreign counterparts filed by a biopharmaceutical company relating to the use of drugs, including alprazolam which is the API in AZ-002, for treating disorders of the central nervous system by pulmonary delivery. In addition, we are aware of another pending U.S. patent application and foreign counterparts, filed by another biopharmaceutical company, that claims a method of making a vapor medicament under specific manufacturing conditions. We do not currently have a license to these patent applications. If these patent applications were to result in issued patents as originally filed, the relevant patent holders at that time may assert that we require licenses.
 
If these patent applications issue as originally filed, we believe we have valid defenses against any assertions that our product candidates are infringing. We do not know whether a court would determine that our defenses are valid. If we decide to pursue a license to one or more of these patent applications, or patents issued therefrom, we do not know that we will be able to obtain such a license on commercially reasonable terms, or at all.
 
In addition, administrative proceedings, such as interferences and reexaminations before the U.S. Patent and Trademark Office, could limit the scope of our patent rights. We may incur substantial costs and diversion of management and technical personnel as a result of our involvement in such proceedings. In particular, our patents and patent applications may be subject to interferences in which the priority of invention may be awarded to a third party. We do not know whether our patents and patent applications will be entitled to priority over patents or patent applications held by such a third party. Our issued patents may also be subject to reexamination proceedings. We do not know whether our patents would survive reexamination in light of new questions of patentability that may be raised following their issuance.
 
Third parties may assert that we are employing their proprietary technology or their proprietary products without authorization. In addition, third parties may already have or may obtain patents in the future and claim that use of our technologies or our products infringes these patents. We could incur substantial costs and diversion of management and technical personnel in defending our self against any of these claims. Furthermore, parties making claims against us may be able to obtain injunctive or other equitable relief, which could effectively block our ability to further develop, commercialize and sell any future products and could result in the award of substantial damages against us. In the event of a successful claim of infringement against us, we may be required to pay damages and obtain one or more licenses from third parties. We may not be able to obtain these licenses at a reasonable cost, if at all. In that event, we could encounter delays in product introductions while we attempt to develop alternative methods or products. In the event we cannot develop alternative methods or products, we may be effectively blocked from developing, commercializing or selling any future products. Defense of any lawsuit or failure to obtain any of these licenses would be expensive and could prevent us from commercializing any future products.
 
We review from time to time publicly available information concerning the technological development efforts of other companies in our industry. If we determine that these efforts violate our intellectual property or other rights, we intend to take appropriate action, which could include litigation. Any action we take could result in substantial costs and diversion of management and technical personnel in enforcing our patents or other intellectual property rights against others. Furthermore, the outcome of any action we take to protect our rights may not be resolved in our favor.


12

Table of Contents

 
Competition in the pharmaceutical industry is intense. If our competitors are able to develop and market products that are more effective, safer or less costly than any future products that we may develop, our commercial opportunity will be reduced or eliminated.
 
We face competition from established as well as emerging pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions. Our commercial opportunity will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any future products that we may develop and commercialize. In addition, significant delays in the development of our product candidates could allow our competitors to bring products to market before us and impair our ability to commercialize our product candidates.
 
We anticipate that, if approved, AZ-001 would compete with currently marketed triptan drugs and with other migraine headache treatments, including intravenous, or IV, delivery of prochlorperazine, the API in AZ-001. In addition, we are aware of at least 14 product candidates for the treatment of migraines, including triptan products and a sumatriptan/naproxen combination product.
 
We anticipate that, if approved, AZ-004 would compete with the available intramuscular, or IM, injectable form and oral forms of loxapine for the treatment of agitation, and other forms of available antipsychotic drugs. In addition, we are aware of a post marketing study of Seroquel® quetiapine for reducing agitation in elderly patients with Alzheimer’s disease.
 
We anticipate that, if approved, AZ-002 would compete with the oral tablet form of alprazolam and several other approved anti-depressant drugs. In addition, we are aware of two product candidates in early stage clinical development for the treatment of acute panic attacks.
 
We anticipate that, if approved, AZ-003 would compete with some of the available forms of fentanyl, including injectable fentanyl, oral transmucosal fentanyl formulations and ionophoretic transdermal delivery of fentanyl. We are also aware of at least 20 products in Phase II and Phase III development for acute pain, five of which are fentanyl products. Two of these fentanyl products are inhaled versions. In addition, if approved, AZ-003 would compete with various generic opioid drugs, such as oxycodone, hydrocodone and morphine, or combination products including one or more of such drugs.
 
Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Established pharmaceutical companies may invest heavily to discover quickly and develop novel compounds or drug delivery technology that could make our product candidates obsolete. Smaller or early stage companies may also prove to be significant competitors, particularly through strategic partnerships with large and established companies. In addition, these third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business. Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA approval or discovering, developing and commercializing products before we do. If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition will suffer.
 
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate significant product revenue.
 
We do not have a sales and marketing organization and have no experience in the sales, marketing and distribution of pharmaceutical products. There are risks involved with establishing our own sales and marketing capabilities, as well as entering into arrangements with third parties to perform these services. Developing an internal sales force is expensive and time consuming and could delay any product launch. On the other hand, if we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenues are likely to be lower than if we market and sell any products that we develop ourselves.


13

Table of Contents

 
We may establish our own specialty sales force and/or engage pharmaceutical or other healthcare companies with existing sales and marketing organization and distribution systems to sell, market and distribute any future products. We may not be able to establish a specialty sales force or establish sales and distribution relationships on acceptable terms. Factors that may inhibit our efforts to commercialize any future products without strategic partners or licensees include:
 
  •  our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
 
  •  the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any future products;
 
  •  the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
 
  •  unforeseen costs and expenses associated with creating an independent sales and marketing organization.
 
Because the establishment of sales and marketing capabilities depends on the progress towards commercialization of our product candidates and because of the numerous risks and uncertainties involved with establishing our own sales and marketing capabilities, we are unable to predict when, if ever, we will establish our own sales and marketing capabilities. However, we do not anticipate establishing sales and marketing capabilities until at least 2010. If we are not able to partner with a third party and are unsuccessful in recruiting sales and marketing personnel or in building a sales and marketing infrastructure, we will have difficulty commercializing our product candidates, which would adversely affect our business and financial condition.
 
If we lose our key personnel or are unable to attract and retain additional personnel, we may be unable to develop or commercialize our product candidates.
 
We are highly dependent on our President and Chief Executive Officer, Thomas B. King, the loss of whose services might adversely impact the achievement of our objectives. In addition, recruiting and retaining qualified clinical, scientific and engineering personnel to manage clinical trials of our product candidates and to perform future research and development work will be critical to our success. There is currently a shortage of skilled executives in our industry, which is likely to continue. As a result, competition for skilled personnel is intense and the turnover rate can be high. Although we believe we will be successful in attracting and retaining qualified personnel, competition for experienced management and clinical, scientific and engineering personnel from numerous companies and academic and other research institutions may limit our ability to do so on acceptable terms. In addition, we do not have employment agreements with any of our employees, and they could leave our employment at will. We have change of control agreements with our executive officers and vice presidents that provide for certain benefits upon termination or a change in role or responsibility in connection with a change of control of our company. We do not maintain life insurance policies on any employees. Failure to attract and retain personnel would prevent us from developing and commercializing our product candidates.
 
We may encounter difficulties in managing our growth, which could increase our losses.
 
We expect to experience substantial growth in our business over the next few years. We expect to substantially increase our number of employees to service our internal programs and planned strategic partnering arrangements. This growth will place a strain on our human and capital resources. If we are unable to manage this growth effectively, our losses could increase. Our need to manage our operations and growth effectively requires us to continue to expend funds to improve our operational, financial and management controls, reporting systems and procedures, to attract and retain sufficient numbers of talented employees and to manage our facility requirements. If we are unable to implement improvements to our management information and control systems successfully in an efficient or timely manner, or if we encounter deficiencies in existing systems and controls, then management may receive inadequate information to manage our day to day operations.


14

Table of Contents

 
If plaintiffs bring product liability lawsuits against us, we may incur substantial liabilities and may be required to limit commercialization of the product candidates that we may develop.
 
We face an inherent risk of product liability as a result of the clinical testing of our product candidates in clinical trials and will face an even greater risk if we commercialize any products. We may be held liable if any product we develop causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing or sale. Regardless of merit or eventual outcome, liability claims may result in decreased demand for any product candidates or products that we may develop, injury to our reputation, withdrawal of clinical trials, costs to defend litigation, substantial monetary awards to clinical trial participants or patients, loss of revenue and the inability to commercialize any products that we develop. We have product liability insurance that covers our clinical trials up to a $10 million aggregate annual limit. We intend to expand product liability insurance coverage to include the sale of commercial products if we obtain marketing approval for any products that we may develop. However, this insurance may be prohibitively expensive, or may not fully cover our potential liabilities. Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or delay the commercialization of our product candidates. If we are sued for any injury caused by any future products, our liability could exceed our total assets.
 
Our product candidates AZ-002 and AZ-003 contain drug substances which are regulated by the U.S. Drug Enforcement Administration. Failure to comply with applicable regulations could harm our business.
 
The Controlled Substances Act imposes various registration, recordkeeping and reporting requirements, procurement and manufacturing quotas, labeling and packaging requirements, security controls and a restriction on prescription refills on certain pharmaceutical products. A principal factor in determining the particular requirements, if any, applicable to a product is its actual or potential abuse profile. The U.S. Drug Enforcement Administration, or DEA, regulates chemical compounds as Schedule I, II, III, IV or V substances, with Schedule I substances considered to present the highest risk of substance abuse and Schedule V substances the lowest risk. Alprazolam, the API in AZ-002, is regulated as a Schedule IV substance, and fentanyl, the API in AZ-003, is regulated as a Schedule II substance. Each of these product candidates is subject to DEA regulations relating to manufacture, storage, distribution and physician prescription procedures, and the DEA regulates the amount of the scheduled substance that would be available for clinical trials and commercial distribution. As a Schedule II substance, fentanyl is subject to more stringent controls, including quotas on the amount of product that can be manufactured as well as a prohibition on the refilling of prescriptions without a new prescription from the physician. The DEA periodically inspects facilities for compliance with its rules and regulations. Failure to comply with current and future regulations of the DEA could lead to a variety of sanctions, including revocation, or denial of renewal, or of DEA registrations, injunctions, or civil or criminal penalties and could harm our business, financial condition and prospects.
 
The single dose version of our Staccato system contains materials that are regulated by the U.S. government, and failure to comply with applicable regulations could harm our business.
 
The single dose version of our Staccato system uses energetic materials to generate the rapid heating necessary for vaporizing the drug, while avoiding degradation. Manufacture of products containing energetic materials is controlled by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF. Technically, the energetic materials used in our Staccato system are classified as “low explosives,” and the ATF has granted us a license/permit for the manufacture of such low explosives. Additionally, due to inclusion of the energetic materials in our Staccato system, the Department of Transportation, or DOT, regulates shipments of the single dose version of our Staccato system. The DOT has granted the single dose version of our Staccato system “Not Regulated as an Explosive” status. Failure to comply with the current and future regulations of the ATF or DOT could subject us to future liabilities and could harm our business, financial condition and prospects. Furthermore, these regulations could restrict our ability to expand our facilities or construct new facilities or could require us to incur other significant expenses in order to maintain compliance.


15

Table of Contents

 
We use hazardous chemicals and highly combustible materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly.
 
Our research and development processes involve the controlled use of hazardous materials, including chemicals. We also use energetic materials in the manufacture of the chemical heat packages that are used in our single dose devices. Our operations produce hazardous waste products. We cannot eliminate the risk of accidental contamination or discharge or injury from these materials. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of these materials. We could be subject to civil damages in the event of an improper or unauthorized release of, or exposure of individuals to, hazardous materials. In addition, claimants may sue us for injury or contamination that results from our use or the use by third parties of these materials and our liability may exceed our total assets. We maintain insurance for the use of hazardous materials in the aggregate amount of $1 million, which may not be adequate to cover any claims. Compliance with environmental and other laws and regulations may be expensive, and current or future regulations may impair our research, development or production efforts.
 
Certain of our suppliers are working with these types of hazardous and highly combustible materials in connection with our component manufacturing agreements. In the event of a lawsuit or investigation, we could be held responsible for any injury caused to persons or property by exposure to, or release of, these hazardous and highly combustible materials. Further, under certain circumstances, we have agreed to indemnify our suppliers against damages and other liabilities arising out of development activities or products produced in connection with these agreements.
 
We will need to implement additional finance and accounting systems, procedures and controls in the future as we grow and to satisfy new reporting requirements.
 
The laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, and rules enacted and proposed by the U.S. Securities and Exchange Commission, or SEC, and by the Nasdaq Global Market, will result in increased costs to us as we undertake efforts to comply with rules and respond to the requirements applicable to public companies. The rules make it more difficult and costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage as compared to the policies previously available to public companies. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees or as executive officers.
 
As a public company, we need to comply with Sarbanes-Oxley and the related rules and regulations of the SEC, including expanded disclosure, accelerated reporting requirements and more complex accounting rules. Compliance with Section 404 of Sarbanes-Oxley and other requirements will increase our costs and require additional management resources. We have been upgrading our finance and accounting systems, procedures and controls and will need to continue to implement additional finance and accounting systems, procedures and controls as we grow to satisfy new reporting requirements. We currently do not have an internal audit group. In addition, we may need to hire additional legal and accounting staff with appropriate experience and technical knowledge, and we cannot assure you that if additional staffing is necessary that we will be able to do so in a timely fashion. If we are unable to complete the required assessment as to the adequacy of our internal reporting or if our independent registered public accounting firm is unable to provide us with an unqualified report as to the effectiveness of our internal controls over financial reporting as of December 31, 2007, investors could lose confidence in the reliability of our internal controls over financial reporting, which could adversely affect our stock price.
 
Our facilities are located near known earthquake fault zones, and the occurrence of an earthquake or other catastrophic disaster could damage our facilities and equipment, which could cause us to curtail or cease operations.
 
Our facilities are located in the San Francisco Bay Area near known earthquake fault zones and, therefore, are vulnerable to damage from earthquakes. We are also vulnerable to damage from other types of disasters, such as power loss, fire, floods and similar events. If any disaster were to occur, our ability to operate our business could be


16

Table of Contents

seriously impaired. We currently may not have adequate insurance to cover our losses resulting from disasters or other similar significant business interruptions, and we do not plan to purchase additional insurance to cover such losses due to the cost of obtaining such coverage. Any significant losses that are not recoverable under our insurance policies could seriously impair our business, financial condition and prospects.
 
Risks Relating to Owning Our Common Stock
 
Our stock price may be extremely volatile, and you may not be able to resell your shares at or above the price you paid for the stock.
 
Our common stock price has experienced large fluctuations since our initial public offering in March 2006. In addition, the trading prices of life science and biotechnology company stocks in general have experienced extreme price fluctuations in recent years. The valuations of many life science companies without consistent product revenues and earnings are extraordinarily high based on conventional valuation standards, such as price to revenue ratios. These trading prices and valuations may not be sustained. Any negative change in the public’s perception of the prospects of life science or biotechnology companies could depress our stock price regardless of our results of operations. Other broad market and industry factors may decrease the trading price of our common stock, regardless of our performance. Market fluctuations, as well as general political and economic conditions such as terrorism, military conflict, recession or interest rate or currency rate fluctuations, also may decrease the trading price of our common stock. In addition, our stock price could be subject to wide fluctuations in response to various factors, including:
 
  •  actual or anticipated results and timing of our clinical trials;
 
  •  actual or anticipated regulatory approvals of our product candidates or competing products;
 
  •  changes in laws or regulations applicable to our product candidates;
 
  •  changes in the expected or actual timing of our development programs, including delays or cancellations of clinical trials for our product candidates;
 
  •  period to period fluctuations in our operating results;
 
  •  announcements of new technological innovations or new products by us or our competitors;
 
  •  costs or delays related to our planned facility relocation in 2007;
 
  •  changes in financial estimates or recommendations by securities analysts;
 
  •  conditions or trends in the life science and biotechnology industries;
 
  •  changes in the market valuations of other life science or biotechnology companies;
 
  •  developments in domestic and international governmental policy or regulations;
 
  •  announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
 
  •  additions or departures of key personnel;
 
  •  disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;
 
  •  sales of our common stock by us; and
 
  •  sales and distributions of our common stock by our stockholders.
 
In the past, stockholders have often instituted securities class action litigation after periods of volatility in the market price of a company’s securities. If a stockholder files a securities class action suit against us, we would incur substantial legal fees and our management’s attention and resources would be diverted from operating our business in order to respond to the litigation.


17

Table of Contents

 
ABOUT THIS PROSPECTUS
 
This prospectus is part of a registration statement that we filed with the SEC to enable selling stockholders, from time-to-time, to sell the securities described in this prospectus.
 
This prospectus provides you with a general description of the common stock that the selling stockholders may offer. The information in this prospectus speaks as of the date of this prospectus and may not reflect changes in our affairs. This prospectus may also be accompanied by a prospectus supplement that may include additional risk factors or other special considerations, and may also add, update or change information in this prospectus. If there is any inconsistency between the information in this prospectus and any prospectus supplement, you should rely on the information in that prospectus supplement. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading “Additional Information.”
 
When used in this prospectus, the terms “Alexza,” “we,” “our” and “us” refer to Alexza Pharmaceuticals, Inc.
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
The statements in this prospectus and the documents incorporated by reference contain forward-looking statements which are subject to a number of risks and uncertainties. All statements that are not historical facts are forward-looking statements, including statements about our business strategy, our future research and development, our preclinical and clinical product development efforts, the timing of the introduction of our products, the effect of GAAP accounting pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds and all plans, objectives, expectations and intentions. These statements appear in a number of places and can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” or “certain” or the negative of these terms or other variations or comparable terminology, or by discussions of strategy.
 
Our actual results may differ materially from the results expressed or implied by these forward-looking statements because of the risk factors and other factors disclosed in this prospectus and documents incorporated by reference. The risk factors may not be all of the factors that could cause actual results to vary materially from the forward-looking statements. The forward-looking statements made or incorporated in this prospectus relate only to circumstances as of the date on which the statements are made. Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. We assume no obligation to update any forward-looking statements, except as required by applicable law.
 
INCORPORATION OF DOCUMENTS BY REFERENCE
 
The SEC allows us to “incorporate by reference” the information contained in documents that we file with them, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be part of this prospectus. Information in this prospectus modifies or supersedes information incorporated by reference that we filed with the SEC prior to the date of this prospectus, and information that we file later with the SEC also will automatically modify and supersede the information contained in, deemed to be a part of, or incorporated by reference into this prospectus. We incorporate by reference the documents listed below, any filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date we filed the registration statement of which this prospectus is a part and before the effective date of the registration statement and any future filings we will make with the SEC under those sections.
 
The following documents filed with the SEC are incorporated by reference in this prospectus:
 
1. Our Annual Report on Form 10-K for the year ended December 31, 2006, filed on March 29, 2007;
 
2. Our Current Report on Form 10-Q for the quarterly period ended March 31, 2007, filed on May 9, 2007;


18

Table of Contents

 
3. Our Current Reports on Form 8-K filed on January 9, 2007, January 18, 2007, February 9, 2007, March 5, 2007, March 16, 2007, March 26, 2007, April 27, 2007, April 30, 2007, May 9, 2007 and May 25, 2007.
 
4. The description of our common stock set forth in Registration Statement on Form S-1 (Registration No. 333-130644) filed with the SEC on December 22, 2005, as amended.
 
We will furnish without charge to you, on written or oral request, a copy of any or all of the documents incorporated by reference, including exhibits to these documents. You should direct any requests for documents to Alexza Pharmaceuticals, Inc., Attn: Investor Relations, 1020 East Meadow Circle, Palo Alto, California 94303, telephone (650) 687-3900, E-mail: info@alexza.com.
 
USE OF PROCEEDS
 
We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders.
 
SELLING STOCKHOLDERS
 
On December 1, 2006 we issued a warrant to purchase up to 2,000,000 shares of our common stock to Symphony Allegro Holdings LLC in a transaction exempt from the registration requirements of the Securities Act. Under the terms of the Symphony Allegro Holdings LLC operating agreement and other agreements related to the issuance of the warrant, Symphony Allegro Holdings LLC distributed the warrant to certain members in proportion to such member’s LLC interest, as adjusted, and one of those members, Symphony Allegro Investors LLC, in turn transferred the portion of the warrant it received to its members on a pro rata basis, as adjusted. All of those transactions were exempt from the registration requirements of the Securities Act. For those selling stockholders which may be considered affiliates of broker dealers, each selling stockholder has represented and warranted that it has purchased in the ordinary course of business and that, at the time of the purchase, it had no agreements or understandings to distribute the securities.
 
Symphony Allegro Holdings LLC received the warrants to purchase the common stock offered hereby as part of a funding arrangement entered into on December 1, 2006 between it and us to advance the development of programs for Staccato alprazolam and Staccato loxapine. As part of the funding arrangement, Symphony Allegro Holdings LLC formed and capitalized Symphony Allegro, Inc., a newly formed Delaware corporation, in order (a) to hold certain intellectual property related to two of our product candidates, AZ-002 and AZ-004 which were exclusively licensed to Symphony Allegro, Inc. under the Novated and Restated Technology License Agreement and (b) to fund commitments to us in the amount of $50 million. The funding will support pre-clinical and clinical development by us, on behalf of Symphony Allegro, Inc., of the product candidates. We retain all rights to manufacture the product candidates for Symphony Allegro, Inc.
 
Pursuant to the agreements, we have received an exclusive purchase option that gives us the right, but not the obligation, to acquire all, but not less than all, of the equity of Symphony Allegro Inc., and reacquire the intellectual property rights that we licensed to Symphony Allegro Inc. This purchase option is exercisable at predetermined prices between December 1, 2007 and December 1, 2010, subject to an earlier exercise right in limited circumstances. If we exercise our purchase option at any time between December 1, 2007 and November 30, 2010 or when certain minimum funding level balances are reached, the purchase price provides for a compounded annual rate of return of approximately 27% to Symphony Allegro Holdings LLC, calculated as of the time of exercise and subject to a minimum purchase price. The purchase option exercise price may be paid for in cash or in a combination of cash and our common stock, in our sole discretion, provided that the common stock portion may not exceed 40% of the purchase option exercise price or 10% of our common stock issued and outstanding as of the purchase option closing date. If we do not exercise our exclusive right with respect to the purchase of the product candidates licensed under the agreement with Symphony Allegro, Inc., rights to the product candidates at the end of the development period will remain with Symphony Allegro, Inc., except for manufacturing rights, which remain with us, provided that we will be obligated to continue to provide manufactured products to Symphony Allegro, Inc.


19

Table of Contents

 
In exchange for the purchase option, we granted Symphony Allegro Holdings LLC, pursuant to the Warrant Purchase Agreement, a five-year warrant to purchase 2,000,000 shares of our common stock at an exercise price of $9.91 per share, which represents a 25% premium over our then-current 60 trading-day average closing price of $7.93. We agreed to provide certain registration rights under the Securities Act of 1933, as amended (the “Securities Act”) with respect to this warrant under the Registration Rights Agreement. In addition, to compensate Symphony Capital LLC for structuring the transaction and the payment of certain of its expenses, we paid a fee of $2.5 million and reimbursed certain Symphony Allegro, Inc. expenses up to $350,000.
 
The warrant was issued to an accredited investor, as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act. The warrant has not been registered under the Securities Act or any state securities laws. We relied upon Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder, as a transaction exempt from the registration requirements of the Securities Act.
 
On June 5, 2007, Symphony Allegro Holdings, LLC informed us that they assigned their shares to certain members of Symphony Allegro Holdings LLC and Symphony Allegro Investors LLC as set forth in the table below.
 
Other than for this funding arrangement, neither the selling stockholder nor any of its affiliates, officers, directors or principal equity holders has held any position or office or has had any material relationship with us within the past three years. The selling stockholder is not a broker-dealer or an affiliate of a broker-dealer.


20

Table of Contents

The following table sets forth information with respect to the selling stockholder and the shares of common stock beneficially owned by it that may be offered under this prospectus, assuming exercise of the warrants held by the selling stockholder, without regard to any limitations on exercise. The information is based on information provided by or on behalf of the selling stockholder to us and is as of the date of this prospectus. Because the selling stockholder may offer all or some portion of the common stock, no estimate can be given as to the amount of the common stock that will be held by the selling stockholder upon termination of this offering. For purposes of the table below, however, we have assumed that after termination of this offering none of the shares covered by this prospectus will be held by the selling stockholder.
 
Ownership is based upon information provided by each respective selling stockholder. Unless otherwise noted, none of the share amounts set forth below represents more than 1% of our outstanding stock as of June 12, 2007, adjusted as required by rules promulgated by the SEC. The percentages of shares owned after the offering are based on 30,945,242 shares of our common stock outstanding as of June 12, 2007.
 
                                 
          Maximum
 		             
          Number of
 		             
          Shares to be
 		             
    Number of
 		    Sold Pursuant
 		    Number of
 		    Percent of
 		 
    Shares Owned
 		    to this
 		    Shares Owned
 		    Shares Owned
 		 
Name of Selling Stockholder
  Prior to Offering(1)     Prospectus     After Offering     After Offering(2)  
 
Symphony Capital Partners, L.P. 
    1,256,148       1,256,148       0       0 %
Symphony Strategic Partners, LLC
    88,652       88,652       0       0 %
RRD International, LLC
    60,000       60,000       0       0 %
Howard Hughes Medical Institute
    610,147       186,000       424,147       1.37 %
Stormlaunch & Co., for the benefit of Morgan Stanley Private Markets Fund III LP
    148,800       148,800       0       0 %
Certain members of Symphony Allegro Investors LLC
    260,400       260,400       0       0 %
 
 
(1) Assumes the exercise of all warrants to purchase common stock offered in this prospectus held by the selling stockholders.
 
(2) Assumes the sale of all warrant shares offered in this prospectus.
 
PLAN OF DISTRIBUTION
 
We are registering the shares of common stock issuable upon exercise of the warrants to permit the resale of these shares of common stock by the holders thereof from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
 
The selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. We will file a prospectus supplement if the selling stockholders engage one or more underwriters. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be executed in transactions, which may involve crosses or block transactions:
 
  •  on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
 
  •  in the over-the-counter market;
 
  •  in transactions otherwise than on these exchanges or systems or in the over-the-counter market;


21

Table of Contents

 
  •  through the writing of options, whether such options are listed on an options exchange or otherwise;
 
  •  involving ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
 
  •  involving block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
  •  involving purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
  •  in an exchange distribution in accordance with the rules of the applicable exchange;
 
  •  in privately negotiated transactions;
 
  •  through the settlement of short sales;
 
  •  where broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
 
  •  in a combination of any such methods of sale; and
 
  •  through any other method permitted pursuant to applicable law.
 
The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus, provided it meets the criteria and conform to the requirements of such Rule.
 
If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
 
The selling stockholders may pledge or grant a security interest in some or all of the warrants or shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any supplement to this prospectus under Rule 424 or other applicable provision of the Securities Act of 1933, as amended, modifying and superseding, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling stockholders for purposes of this prospectus. We will file a prospectus supplement naming the new selling stockholders if the shares are transferred, donated or pledged.
 
The selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, may be distributed which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.
 
Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.


22

Table of Contents

 
The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.
 
We will pay all expenses of the registration of the shares of common stock pursuant to a registration rights agreement we entered into with the selling stockholders in connection with the issuance of the warrants, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that the selling stockholders will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreement, or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholders specifically for use in this prospectus, in accordance with the registration rights agreement, or we may be entitled to contribution.
 
Once sold under the shelf registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.
 
LEGAL MATTERS
 
Cooley Godward Kronish LLP will pass upon the validity of the common stock offered by this prospectus for us.
 
EXPERTS
 
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2006, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.
 
WHERE YOU CAN FIND MORE INFORMATION ABOUT ALEXZA AND THIS OFFERING
 
We are a reporting company and we file annual, quarterly and current reports, proxy statements and other information with the SEC. We have filed with the SEC a registration statement on Form S-3 under the Securities Act to register the shares of common stock offered by this prospectus. However, this prospectus does not contain all of the information contained in the registration statement and the exhibits and schedules to the registration statement. For further information with respect to us and the securities offered under this prospectus, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. You may read and copy the registration statement, as well as our reports, proxy statements and other information, at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by contacting the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for further information about the operation of the public reference rooms. Our SEC filings are also available at the SEC’s website at www.sec.gov. In addition, you can read and copy our SEC filings at the office of the National Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.


23

Table of Contents

 
 
 
(ALEXZA LOGO)
 
 
2,000,000 Shares
 
Common Stock
 
 
PROSPECTUS
 
 
          , 2007
 

Table of Contents

PART II
 
INFORMATION NOT REQUIRED IN THE PROSPECTUS
 
Item 14.   Other Expenses of Issuance and Distribution
 
The expenses to be paid by us in connection with the distribution of the securities being registered are as set forth in the following table. All amounts shown are estimates except for the Securities and Exchange Commission registration fee.
 
         
SEC registration fee
  $ 609  
Legal fees and expenses
  $ 45,000  
Accounting fees and expenses
  $ 15,000  
Miscellaneous expenses
  $ 5,000  
         
Total
  $ 65,609  
         
 
Item 15.   Indemnification of Directors and Officers
 
Under Section 145 of the General Corporation Law of Delaware (the “Delaware Law”), we have broad powers to indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act.
 
Our certificate of incorporation and bylaws include provisions to (i) eliminate the personal liability of our directors for monetary damages resulting from breaches of their fiduciary duty to the extent permitted by Delaware Law and (ii) require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware Law, including circumstances in which indemnification is otherwise discretionary. Pursuant to Section 145 of the Delaware Law, a corporation generally has the power to indemnify its present and former directors, officers, employees and agents against expenses incurred by them in connection with any suit to which they are, or are threatened to be made, a party by reason of their serving in such positions so long as they acted in good faith and in a manner they reasonably believed to be in or not opposed to, the best interests of the corporation and, with respect to any criminal action, had no reasonable cause to believe their conduct was unlawful. We believe that these provisions are necessary to attract and retain qualified persons as directors and executive officers. These provisions do not eliminate the directors’ duty of care, and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware Law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to us, for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for acts or omissions that the director believes to be contrary to our best interests or the best interests of our stockholders, for any transaction from which the director derived an improper personal benefit, for acts or omissions involving a reckless disregard for the director’s duty to us or our stockholders when the director was aware or should have been aware of a risk of serious injury to us or its stockholders, for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director’s duty to us or our stockholders, for improper transactions between the director and us and for improper distributions to stockholders and loans to directors and officers. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities law or state or federal environmental laws.
 
We have entered into indemnity agreements with our directors and certain of our executive officers that require us to indemnify such persons against expenses, judgments, fines, settlements and other amounts incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that such person is or was one of our directors or executive officers, provided, among other things, that such person’s conduct was not knowingly fraudulent or deliberately dishonest or constituted willful misconduct. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder.


II-1

Table of Contents

 
At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is being sought nor are we aware of any threatened litigation that may result in claims for indemnification by any executive officer or director.
 
We maintain an insurance policy covering our officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise.
 
Item 16.   Exhibits
 
         
  3 .1(1)   Amended and Restated Certificate of Incorporation.
  3 .2(1)   Amended and Restated Bylaws.
  3 .3(2)   Amendment to Amended and Restated Bylaws.
  4 .1(1)   Form of Specimen Common Stock Certificate.
  5 .1*   Opinion of Cooley Godward Kronish LLP.
  23 .1   Consent of Ernst & Young, LLP, independent registered public accounting firm.
  23 .2*   Consent of Cooley Godward Kronish LLP (included in Exhibit 5.1).
  24 .1*   Power of Attorney (included on the signature page hereto).
 
 
* Previously filed.
 
(1) Incorporated by reference to Alexza Pharmaceuticals, Inc.’s Registration Statement (File No. 333-130644) on Form S-1 filed on December 22, 2005, as amended.
 
(2) Filed as an exhibit to the Registrant’s report filed on Form 10-K on March 29, 2007, and incorporated by reference herein.
 
Item 17.   Undertakings
 
(a) The undersigned Registrant hereby undertakes:
 
(1) To file, during any period in which offers or sales are being made of securities registered hereby, a post-effective amendment to this registration statement:
 
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
 
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
 
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
 
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered


II-2

Table of Contents

herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
 
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
 
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
 
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
 
(C) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
(D) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.


II-3

Table of Contents

SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California, on June 20, 2007.
 
ALEXZA PHARMACEUTICALS, INC.
 
  By: 
/s/ August J. Moretti
August J. Moretti
Senior Vice-President and Chief Financial Officer
 
POWER OF ATTORNEY
 
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
 
             
Signature
 
Title
 
Date
 
*

Thomas B. King 		  President and Chief Executive Officer
and Director
(Principal Executive Officer) 		  June 20, 2007
         
/s/  August J. Moretti

August J. Moretti 		  Senior Vice-President and Chief Financial Officer
(Principal Financial and Accounting Officer) 		  June 20, 2007
         
*

Samuel D. Colella 		  Director   June 20, 2007
         
*

Alan D. Frazier 		  Director   June 20, 2007
         
*

Ernest Mario 		  Director   June 20, 2007
         
*

Deepika R. Pakianathan 		  Director   June 20, 2007
         
*

J. Leighton Read 		  Director   June 20, 2007
         
*

Gordon Ringold 		  Director   June 20, 2007
         
*

Isaac Stein 		  Director   June 20, 2007
         
*

Alejandro A. Zaffaroni 		  Director   June 20, 2007
             
*By:  
/s/  August J. Moretti

August J. Moretti,
Attorney-in-Fact 		      June 20, 2007


II-4

Table of Contents

INDEX TO EXHIBITS
 
         
  3 .1(1)   Amended and Restated Certificate of Incorporation.
  3 .2(1)   Amended and Restated Bylaws.
  3 .3(2)   Amendment to Amended and Restated Bylaws.
  4 .1(1)   Form of Specimen Common Stock Certificate.
  5 .1*   Opinion of Cooley Godward Kronish LLP.
  23 .1   Consent of Ernst & Young, LLP, independent registered public accounting firm.
  23 .2*   Consent of Cooley Godward Kronish LLP (included in Exhibit 5.1).
  24 .1*   Power of Attorney (included on the signature page hereto).
 
 
* Previously filed.
 
(1) Incorporated by reference to Alexza Pharmaceuticals, Inc.’s Registration Statement (File No. 333-130644) on Form S-1 filed on December 22, 2005, as amended.
 
(2) Filed as an exhibit to the Registrant’s report filed on Form 10-K on March 29, 2007, and incorporated by reference herein.

EX-23.1 2 d45145a1exv23w1.htm CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM exv23w1
 

EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the reference to our firm under the caption “Experts” in the amended Registration Statement (Amendment No. 1 to Form S-3) and related prospectus of Alexza Pharmaceuticals, Inc. for the registration of 2,000,000 shares of its common stock and to the incorporation by reference therein of our report dated March 27, 2007, with respect to the consolidated financial statements of Alexza Pharmaceuticals, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2006, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
June 20, 2007

GRAPHIC 3 d45145a1d4514501.gif GRAPHIC begin 644 d45145a1d4514501.gif M1TE&.#EAW`!#`.8``/3;R-:JBC`K3?W]^XF&ENJ34_[[\G9QB<^5:N?EZ_GD MR%51:=O9Y):3HKJWQJ6BML^(5_[7IOWUZ>?#G/S\_,=O,OCNXQ$),^:SBOW[__S\_O!D M`OW^_.^(/?[TV_C&FN2[E>6J=_[Y[/7T^/6WAX!]D/WMW/[IT[ER1?2C91`* M+.?+M/#)J_3BT?[\^K2ROZ:DK!@1./WCO?O:P?#N]*Q0(3\Z5_'6O_OBSNC1 MO>*KA/[*C/>T?>.;8/W^_F!<=?/>OOSV\/KY_?+;M/GY^>IW)=:`0?[4L/[W MY/7JW?W0G2$://?W^N>A;/#1IV(F&_[7NOFQ;_[[]^#"K:ZLNO+6L-BVG/6I M_@U.&_I?[PS?_:N._/ MG1D3,1`-(O70L]VP?_#!C/KHUMAH'O[^_?[^_/W]_?[^_O___R'Y!``````` M+`````#<`$,```?_@'^"@X2%@GM[?WY_>WZ+AI"1DI.4E9:7F)F:FYR=F7P# MC@-\CIZFIZBIJJNLF8V.%#)]CZVUMK>XN9Z+CDQ8$4NZPL/$Q:M\?'T,/B0- M%8Z.LZ6&?GW2T'M\KWX5SX*+R9'0X]76?@.O?^:*BM%]H.3C?8C5`[/BT/?M M?>JS_/'5XB':YBC;-F28")8C)PR9GP,D2`Q)4&HA+4(!R1DLU6W:J&KBI(FL M8&V4PFN#SOU98G$<.C_9[%U,ZRIP2)N5@=NY62],*Z0A0M8$;0%3J(!L">%Z\O/G:!(I: M\I/@`)WT,L<-\S,A8L0A9_R`VCV8T#9S?G#0`!MM-$4"%AOL`PTD^B62S04' M,-/4>+8Y9\8-$WZV6RB.[)!%!!.885\;`H0A'S5]P,`$,S<(L(%9Z@24@`P% MDM#&#>-9J*.%&!9XXP:C8$+:$"0P<49HB>CB1_\0IME(`AL$Z+??)"TY4L&* M3D:ICE4,:@-3,@X,82`3?L'`%P4.'"``"3`FT(20(=380!8D#`5/"`>AB1@X&0(%0[2Q(#3S0,,"$?1-<8`TRK_01!'`F\%*04'T(U5Z3 M;=1*5IX."(#CD=VQ$XT$&)#8`P<.%>1E/M8D2R<=#@23B09,3'B`GPSI4@$& M$1U@H``.5!-J)-GXL41H#ZS)YJJD@'1L2D,I(BBM@@6;+S^9UM'K/5_F*]1R M]@G00W]EK7@#`=YHYFS_'V<(P"Y)'UE[%`<+C$B`!A!3(H$`$V*P06BL`(B, M9A=@R,0%=42$Q00L"65Q)O6*1X&05`4Z*`FU1C/5.9IM,`1)BX02FA\PA-$D MT1=HHPA05O8L0`7L&-+'!E`^XVHAV8!2`0%L.(D?2BCZX\@3#M1X8`,WS;(1 MGIQ@XQ`!.#Y@`I$%3I3"E)KT?"_0&?7Q;U-%UY2('Q?T(+9FY%QS0;1-8=$` MY2TE@"X)#U@3219A3.3'"?L.$M,`RS7I0Q@P\)/ZU>3,Z&-$C2?'VS=C7X)K M0'UP0"`6,%300U-M0(FU:),8KBKB\R2S.-7NF&,]\-A6_\0:*!>H<@CP@*+K M_P0^T"$#127_P4$8,LC#3]L)-$K">PF(U)I/4H$M`',V/M6KQ_'H1#9\4@$> MV&@"UD@`4YKB*7]LPGD_NT0^$*&XH37.;;,(P1Z>9KU@`84!Y"N0^30@OE$\ MH0"J9R4;%*Y68PB&8[@@9CNPX.CA6`` M#,#`#=@`.[SQBT-N_$8?3E8C-O`@=CEAD$UFP8`%W.!\,IA4I^PRBY==JUR( M.\<`-#`I']2O&@2@$Q8.D(6`%,Y>SY-@T"KHI-Q9RO\A3P/>4)9TJAM!B0/U MB,*IS(<^:3!(*.6@!X,$)"$?G*\<;I.A-)ZP`2Q@H0$*T M;O"`F/BAC_:QDS4Q045-)HZ;@ME@-"BH$V]R<1S;FX`#LK"#+QC```.H``,. MX``8)$=TNO2'E^X&.?+9[`&HS`>@9B(/"1`)`QH(G@Q\$+A*!:V(FDC.0R-" M!XK\813@L8\/%L"!V34/FU7_%)J/:B641ABR)\"*H1X=P0$.C.(#"FA"$SZP M@YX8E$K0^.(L8#"@TQP@BWK,DR.RP`,Z^.``YBB=C:HB*:O.B$]CJ!3X2K)A,!0:`&>1`"Q!0`AS>$`6K M5F(<9=O#"3:`KJ8,(0(G2!_$Q@&A%H5N'K)*U0*.=+W#EB,+*&/B,T0BJQIA M0091H&PA+/O:;=8'B\N#24HEL`&Q62\DP1H`#<@@!1285P@UD$"O3`%;/K2' M&0>:UD0I`8T0M`X#"<`5#>E0IS7T!$#&M88$3./(?_@CJ@;"KW0)05WZ6M=1 M#CB#_X0G+.$-+&`",9)B2C9HC3W8007F-:\(N-``/[&7'BE:0V2+9*OYPC5% MFKK9ES8H1EI5%<"G<(<,<#0!@EJ)81%A@S,NZ;.L5K!&/F"#QC2F9(U%9`W+ MC:,B0-.'$R0AQ.?EP@(8L&!QX.H)-;[/&?[KVCS-,60;&T=[[#,$=XK5%!3T M')LE#!-$I"`%5PZQ M'KA`AP6XD[T.`:&$L$``&.PA/IJ$&ZH6$-1M[$'%IPE#%NC194DX)`PHNP$/ M-D#K6M/:`7EN6(*N6>0_6S&S!5I`&&K-@Q[T8`T'2%L$D/_F#AD*911J*&^6 M_^A44X`"/"LVDG[ZI4U^WN"Y,_Y2!#Y'@@/D-QVHV.`!F'(#0KO[W1@8H\T. M(+9D3A>KOM8JXR[0#9)8HP)!X!M%9*G;%#Q[`$6`@!"$P`4NM*BEB.!-Q/'1 MZ(+4LV$/>,)`1$NV5T2\&CXE$9U!U>\*:``B!?+GT5)!BC1&9,DPC_F*)5(_ MED6BP7#%;">SZ(Y1),`,F7BT-$*`@P,,`0MLP$`/@EHM1N,2EGRTZ8'.]PY[ M"P*64FH$Z8C*A@,0X.M@_SJY?;"&G+8:7LPD$!L>P/:VNYWM-2P0&U;FMO0) M`N='?/"^L?4./E1``$)*`5!`]07_"?2``&N(0!`JD(4LN)71UK.'-;#MJ'_. M@X*S8W4BK`&A5)$G.XB.R);7<8H^1,&F"&P-*)I[F@:XM":2P#O%`6U!GD,# M&2&@C@3GI1<)V.H+.]C!``1/.AX$U9MCM4@(PN2DIX!V@U&Q:DM"$($U88$) M$\B^]K<_!/AB@0=9$%7IEW,C1;^O+$+A(5%M1";7&%'V8Z7]S@62E_-7MQJ^ M.<`&8/#LO31@"+=53':3)&5!#Y\6"NNT:51G@%@#"8XE#7L0!&LP*2IT`19X M@1CX`&)R([=T=I!P-FG#!D)41/55?0UC(LL3>_AV6?*W=_'0=X@#(3Z@.?PG M%`[`!&ES_P/F5@J@\$JA<(`PX``KM@#+]H+ITS%>=`&S`FX'9VI\`$)JDQ\> M:`@PT"A,4%`N,2RG(0-!Y5COMX+WUX+4\X*?!C194"]M,`2*IC/,%V2P,X`, MEP4-@"HDX`/3,H6%`&L1\0`D MB$11X`"H$CB*!BLJV&LL^&OSYW[EL!EATB)K4(/(0$-I$S@1\'AZM#HSLFD$ MD%,_83>A$'_(,"=[9A$&,7CD9$.7MAF58U/XH1YFQD<+X",^0``:YV)RA(;W MTG2,L!M7$QKS8`]71#66@CW5TG2)XP@R>`,3P`!=-0^*LR<%8O]+":`S,<(. M]58-44,@-\($$C!*K*8(H\!!HN`'Y!29"/%!,`Q1>.5<./F4C M=_5%>@04$E@C;>".D`=!8R%3FL&'3V,0TV@L'20O2K5%+6$-(8!J0Q`&4?`2 M0\>(-L(&#@`*I(`23/,LGY.&J@8:H@$K\B$[_!`&D])F=0<)H!`&[*B#`P<: MP)@G!Y@7J,90_#>4WU`MU#=&).*(O4,3RJ@JU7,.FI<,H!)70G%%Q3)0U?!I M`()BK)8<^G@!?F1+064_V1`$4D<"C!4L'O5.JV@S!"!$804)",4-,J!HQB0E M!W`#J!$%^9(^V<``\B8`4C@0\W!$`D/_"BI"5/AQ3#N#$<#R:1`B-^9&>GDR ME>TB#QUS%Y%S#5UUD5X97G67`&$09;_R,AS0`T1%A(]W>WZW`?;2!G2P;`;6 M7GRPCD[BCLTH$\FW`T-`,1F!#,IB)TU'@/XQ`%FP(N-88D21+XP9C0,0`?9T M5Q&GG/PR>'S%7X$31?HTE9OS"OMQ@!YI87`$%*2)08-7#3S`!,*W08@@$[-0 MD$+V>DBD43!P*DY"57U0-Q"(#M!")VPDF)C7&M'``'3``]O&(1'@`S=`364C MG89@$"I6(Y8F-MHY6@71!P3`%*#C4LCXC%=1D$RU@_=32@4B`_,H)=&#E?R$ M`?\3#2H54$52_TVX9!%]<`!,4`'SZ%".,".3XHZA\8U\-';.L`1N<%3N%4@V M@AIV21"ZY`=\DQ]1L01\D&>H44EE0YC:<`'V-#\X15"2T*7*\#EL\$]OYA\R MB0C\Y"1I")XRM&X^,@1+H#/:]8U/8)U,\'C@F(MB9C^6`@,"(`.,L9)X`34^ M^92K=DBW(CXG4%=RQV7Z4@Z\^7(;P&$3JIW18`*9(B:NN$$)H'8-(`V@-"I" M$0+K1B>69IKV1S8.L9\+A!]6UQT.438AL`'K=XA&PC6CY9RI)C!WH3-10$Z3 M5&_`4F,B-#(X)`T),`$W`&6@]&Q["CC&0E.%5"UFN7[.9';C,*!UTO]I,_4R MG,H>:2(`/B``\;!C3O$B7P*<%?HR/&`OAS@REIB0%0`#W&,C)'(&+=D:!O@* MAFD?!S(!$M!O[J!2@+,N"R`#;_<`:S`!W2=D^50!J.8C;-"P:^!V#2"QS-`N M_V$"'R(_QHA86!@"RM@&/C`!"="2?3"7F<,$!S"S-%NS-``#;``=$`L2A

P`0V``8AV(R%Y!CE5 MIIE66VT[!(%[`9$@@0M`:$P@`V`G`Z&;&KKE/A_R=3*`L_`F`[;2'H36L&$' M;[:+`0L0)984!J&+`:/[=:Y[N^Y&`/*(#&[:]0P`#M0$A7;]CM!\D6DT`ZX4HWW,`OS`A3/ MEC`J:4@'H3-'P1)]IZ/+]*ZN=2N"`(/O`Q.,P!*4`T[74(W;EJU>Q"'GB,1> MZE58.0II/)GD"Q`1V3'Q=PW_FL0*4CFMXDWYU"ID#'N;C#W18*LDV%5V5PJ? M&2.-P1JA1"JRJ53BYTIY'%ZPJ$MX;+ZD*,Z]`^^ M(D?R``VL<50`!LA'13O8N#QW$PGRU,2^`@IN('C*#$!8\SOB@Q,Z=:N&)/]E MGZ:'4@(/,,7(A7#,.[%MEH00\N`&Z&P-2IH"?O!H@N<^3$-R+@%&]5#$2S`X M%'G#'"9^A9";UF(/*>#.RV,2]2NT)'&G"A,*9Y2>'0%`%"TOCJ%#63Q[EF*> MW,`\,J&D=B<(_>P:#TR?VY9A9GS,YN`8+$'/V?5OL]`-K=(=Y?!%T'#0@\,A MX47.IV-$9A%+#G'1&@$K@R<-=<9LZHS4[N)O>1I+834O*OT.L2A#B6,."FUG M#@@L?;"D/KW0_SG2[LQ9W:"2].Q=_Q56^]P(:;/C&$<-V8:P`R?5V>C@&+/P:"<%?-U@4B>5Q139!YR]`]9@<*#Q:275 MV0:P`WMPQN6@I,`G=/*"",%G#Z(,%'SP!5_P$CP9?`;P`LAM`,,]"BF0#9PM MV\/-8:IMVL(GVLJ]`^1LVK)]4CMPT)#$B^0!B/@ M'6Y@9\.W!&AUWU#0!"/0W15<#87]`2/@!*S]GRFP`TY@`08@,#IM#1:0!DZ@ MAX80W&D`!7,P!V+0!%;P_P4GT,]\L`,?8-_X/0+C4`$?D`9J90'"-P!`K@-5 MH!HS(.%*K@`?P-*/9@%IA>+_)<01O@5;``4*8`&0L`,K4`8[@"UN,`!?,`-J MA>+OW1T&H`!BL`5BP%:2H`,!@``!$``=@`-"?C4#@`9'@`!C,`,D,0-C@``M M@`;/)L1^0`,E``9?P-A"\6AY$.@=,.=]G@)PC.$I4`9C8`0O8`UA;@%&8`0C MCM;UD`-'X.6B404```=TC@"1#@8C?J=B_@8=(.=S3@05Y^-@@``(\`9?``HX MP.=:OA\X$.FS3NMCD`=.?NEQ#@EC0.?$;@>08`!&T`$5+L]]@--. M0/\$<0X&(W#F!@``8]`!LVX%YQT)5=`"':`#"M`!$#`'59`"3(T$(D`$!N`( M7T`$4\`";@-*?L`"4J`%>?#E(B$4+Y`!\3X#.#`%7I!!_H8,3<#J<4#I??`" M8H``(%`%9"SF-B`%.9#B'8<$$,#L2CH"8!``*U`]%J`$'6`%#/\&>:K:5@`! M!4`#TA`'-0``7T`5.```;Y`#*F`#;P``.)`'U0P4ZXX`./`"2#,`;A`':H`` M:O#?(6`%'1`#D#`#-C`%:E`%E@T4*W`'"(#OD!`'?&X%53`&6>"KD%`%(!`` M:;`"5``!,6`!UCS/]DX$+R#<+P``4^`!,F&>?.`$,2#_!06``_GNO`.0\/&^ M`A]0``7`=T(!!1```5]@`')`!?+A!SM0!`4P!0A0\5W#RN` M`"6@`%4P`RE5H8(`]W)?!42``'CP`3>=`O;.`@H`"&F"35,>?'Z(?7U+.TTE M+DHN<8J(E2\9$',O`UI>B7Z4?5M3*C9.7SM%*E-W590IL'XO)25:$%N;BHH& M1"(>`Z$A40-\P(@62EI%,U8?_RE]H!70!04T2TMN<34`7XA\WWQ]JF2(`P.P MNE4@'40&?BEN;GUD*D6ZT'Q1T,2@3C@(7J9<\1.BDJ(5=Q"THV1N@)\J`:9X M2;-#T9^+&#&J"]`$P!B.[O:<2X%$Q!$X8%*"*10N$2P#((YX<%&@B[E0?2Y! MP*/@C1(/H!3=[#-'(@0B+RQD*$#&Q0J7Z"P@F',%0@P+ST)`,]!"Q`]CP!J* MA.8'&8(,.,"42>%G3Q]I;JC1@)=MVQ=\Y\Z-:SM@#ZP];M6Q,R!47H%ZB*2E MV%&Q#ZPE??*,*7%%!9DO!8/V0:B0\+Z;+X`HF7*$!K",%Q']$:RFQ!@K6OTT M[%,R@_^.-V5P%S*HRX(6+6+(2(EA8$=+'*Y MD<(`VG`CWC4IC+/$,WL4%Z!+4`#0H MT4$`6JB@11D&L"?2)5,D<846"/SPA4C%.(B'"VF4``$2>`0P0P9*_*`+6WU\ M@68``10@A1U14F)`#B)X\<4YX810W()]`(.,%@JL0(,%0OW_%URJRAP$*!`!M3D0@_Y#F#NSE!,=.57PA1W8_-L;'#C:XL(,% MI9;@RK`L=-K0!^LH0!A"$*AA`=;$5'`%`L\200,0<(SQ`EL-S:`$`G;\D`,` M9"7*@JE`T`#`$3$8PY=(7P!1BMN(B`0+W2!4\4PB*X#P;@9`%.%1!HH1J1/1#=][&"%#3&@\8(" M<+QA0`4Z3*_#70/X@@)<<(3UM8D(2B`#`/2%B"\`P`5:<`$+8N`"'+R@=?'+ M@PW2%P,RV/\!9?+APPQ`X((DJ$$-+6!6);Z!B`_D@"G<<`@H^N('Y2DAA?$Y MDA.V`$$3QD`[E?###TIP!`5<8PE%*(`-%G@(/Q2!#$J@7PQ*D`<#/*,/"BB! M&B98@CTA[P\6`((8G9`:/\S(C'_H0A<`,`-$"*L+0$##(?ZP!R>(L8IT_`(- MUHB&/9S1"44`0A=&P!BH=>$-?$C-"."(AB\DI3A^<((<@""B -----END PRIVACY-ENHANCED MESSAGE-----