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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
      Form 10-K
  For
    Annual and Transition Reports Pursuant to
    Section 13 or 15(d) of the Securities Exchange Act of
    1934
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended December 31,
    2009o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    000-51820
 Alexza Pharmaceuticals,
    Inc.
 (Exact name of Registrant as
    specified in its charter)
  Delaware(State or Other Jurisdiction
    of Incorporation or Organization)

77-0567768(I.R.S. Employer
    Identification Number)   2091 Stierlin Court
 Mountain View, California 94043
 (Address of Principal Executive
    Offices including Zip Code)
 Registrants telephone number, including area code:
 (650) 944-7000
  Securities
    registered pursuant to Section 12 (b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.0001 per share

Nasdaq Global Market   Securities registered pursuant to Section 12 (g) of
    the Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller
    reporting company)   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




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##### 





ANNUAL
    REPORT ON
    FORM 10-K
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
  TABLE OF
    CONTENTS
  PART IItem 1.


Business


3Item 1A.


Risk Factors


27Item 1B


Unresolved Staff Comments


44Item 2.


Properties


44Item 3.


Legal Proceedings


44PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


44Item 5A.


Quarterly Stock Price Information and Registered
    Shareholders


44Item 5B.


Use of Proceeds from the Sale of Registered
    Securities


45Item 5C.


Treasury Stock


45Item 6.


Selected Financial Data


45Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


46Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risks


60Item 8.


Financial Statements and Supplementary Data


61Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


98Item 9A.


Controls and Procedures


98Item 9B.


Other Information


100PART IIIItem 10.


Directors and Executive Officers of the
    Registrant


100Item 11.


Executive Compensation


100Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


100Item 13.


Certain Relationships and Related Transactions
    and Director Independence


101Item 14.


Principal Accountant Fees and Services


101PART IVItem 15.


Exhibits and Financial Statement Schedules


101Signatures


105Exhibits Index


107EX-10.55EX-10.56EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1   2




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Staccato Staccato Form 10-K
 PART I.



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  Some of the statements under Business, Risk
    Factors, Managements Discussion and Analysis
    of Financial Condition and Results of Operations and
    elsewhere in this Annual Report constitute forward-looking
    statements. In some cases, you can identify forward-looking
    statements by the following words: may,
    will, could, would,
    should, expect, intend,
    plan, anticipate, believe,
    estimate, predict, project,
    potential, continue, ongoing
    or the negative of these terms or other comparable terminology,
    although not all forward-looking statements contain these words.
    Examples of these statements include, but are not limited to,
    statements regarding the following: the prospects of us
    receiving approval to market AZ-004, our anticipated timing for
    receiving approval for our New Drug Application for AZ-004, the
    implications of interim or final results of our clinical trials,
    the progress and timing of our research programs, including
    clinical testing, our anticipated timing for filing additional
    Investigational New Drug Applications with the United States
    Food and Drug Administration, the initiation or completion of
    Phase 1, Phase 2 or Phase 3 clinical testing for our product
    candidates, the extent to which our issued and pending patents
    may protect our products and technology, the potential of such
    product candidates to lead to the development of safe or
    effective therapies, our ability to enter into collaborations,
    our future operating expenses, our future losses, our future
    expenditures, and the sufficiency of our cash resources. These
    statements involve known and unknown risks, uncertainties and
    other factors that may cause our actual results, levels of
    activity, performance or achievements to be materially different
    from the information expressed or implied by these
    forward-looking statements. While we believe that we have a
    reasonable basis for each forward-looking statement contained in
    this Annual Report, we caution you that these statements are
    based on a combination of facts and factors currently known by
    us and our projections of the future, about which we cannot be
    certain.
  In addition, you should refer to the Risk Factors
    section of this Annual Report for a discussion of other
    important factors that may cause our actual results to differ
    materially from those expressed or implied by our
    forward-looking statements. As a result of these factors, we
    cannot assure you that the forward-looking statements in this
    Annual Report will prove to be accurate. Furthermore, if our
    forward-looking statements prove to be inaccurate, the
    inaccuracy may be material. In light of the significant
    uncertainties in these forward-looking statements, you should
    not regard these statements as a representation or warranty by
    us or any other person that we will achieve our objectives and
    plans in any specified time frame, or at all.
  We undertake no obligation to publicly update any
    forward-looking statements, whether as a result of new
    information, future events or otherwise. You are advised,
    however, to consult any further disclosures we make on related
    subjects in our Quarterly Reports on
    Form 10-Q,
    Current Reports on
    Form 8-K,
    and our website.
  Item 1.
    Business  Staccato Staccato Staccato
 3




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Staccato Staccato
    
    AZ-004 (Staccato loxapine).  We are developing
    AZ-004 for the rapid treatment of agitation in patients with
    schizophrenia or bipolar disorder. In December 2009, we
    submitted our NDA to the FDA. In February 2010, the FDA accepted
    our filing and provided us a Prescription Drug User Fee Act
    (PDUFA) goal date of October 11, 2010. We believe that the
    data generated from our clinical and non-clinical studies (and
    is contained within our NDA submission) adequately demonstrate
    the efficacy and safety of AZ-004 for the rapid treatment of
    agitation in patients with schizophrenia or bipolar disorder.  ® and/or
     4




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
    AZ-007(Staccato zaleplon).  We are
    developing AZ-007 for the treatment of insomnia in patients who
    have difficulty falling asleep, including patients who awake in
    the middle of the night and have difficulty falling back asleep.
    AZ-007 has completed Phase 1 testing. In the Phase 1 clinical
    trial, AZ-007 delivered an IV-like pharmacokinetic profile with
    a median time to peak drug concentration of 1.6 minutes.
    Pharmacodynamics, measured as sedation assessed on a 100 mm
    visual analog scale, showed onset of effect as early as 2
    minutes after dosing with AZ-007.
    AZ-001 (Staccato prochlorperazine).  We are
    developing AZ-001 to treat patients suffering from acute
    migraine headaches. During the third quarter of 2008, we
    conducted an
    end-of-Phase
    2 meeting with the FDA. We believe we have a clear understanding
    of the development requirements for filing an NDA for this
    product candidate.
    AZ-104(Staccato loxapine,
    low-dose).  We are developing AZ-104 to treat
    patients suffering from acute migraine headaches. AZ-104 is a
    lower-dose version of AZ-004. In September 2009, we announced
    preliminary results from our 366 patient Phase 2b clinical
    trial of AZ-104 in patients with migraine headache. The trial
    was an outpatient, multi-center, randomized, double-blind,
    single administration, placebo-controlled study. The study was
    designed to evaluate the treatment of a single migraine attack
    of moderate to severe intensity. Two doses of AZ-104,
    1.25 mg and 2.5 mg, and placebo were evaluated in the
    clinical trial. Both AZ-104 dose groups trended towards
    statistical significance, but the study did not meet its primary
    endpoint, which was defined as pain-relief at the
    two-hour
    time point, compared to placebo. There were no serious adverse
    events in the clinical trial, and AZ-104 was generally safe and
    well tolerated in this patient population.
    AZ-002 (Staccato alprazolam).  AZ-002 has
    completed a Phase 1 clinical trial in healthy subjects and a
    Phase 2a
    proof-of-concept
    clinical trial in panic disorder patients for the treatment of
    panic attacks, an indication we are not planning to pursue.
    However, given the safety profile, the successful and
    reproducible delivery of alprazolam, and the IV-like
    pharmacological effect demonstrated to date, we are assessing
    AZ-002 for other possible indications and renewed clinical
    development.
    AZ-003(Staccato fentanyl).  We are
    developing AZ-003 for the treatment of patients with acute pain,
    including patients with breakthrough cancer pain and
    postoperative patients with acute pain episodes. We have
    completed and announced positive results from a Phase 1 clinical
    trial of AZ-003 in opioid-naïve healthy subjects.  and/or
 5




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Staccato
  Market
    Opportunity for Acute and Intermittent Conditions
    
    Oral Tablets.  Oral tablets or capsules are
    convenient and cost effective, but they generally do not provide
    rapid onset of action. Oral tablets may require at least one to
    four hours to achieve peak plasma levels. Also, some drugs, if
    administered as a tablet or capsule, do not achieve adequate or
    consistent bioavailability due to the degradation of the drug by
    the stomach or liver or inability to be absorbed into the
    bloodstream.
    Injections.  Intravenous, or IV, or
    intramuscular, or IM, injections provide a more rapid onset of
    action than oral tablets and can sometimes be used to titrate
    potent drugs with very rapid changes in effect. Titration refers
    to the ability of a patient or care giver to administer an
    initial dose of medication and then determine if the medication
    is effective; if the medication is effective no further dosing
    is required. However, if the medication is not yet effective,
    another dose can be administered repeating this process until
    the medication has had an adequate effect. However, with a few
    exceptions, injections generally are administered by trained
    medical personnel in a medical care setting. Other forms of
    injections result in an onset of action that is generally
    substantially slower than IV injection, although often
    faster than oral administration. All forms of injections are
    invasive, can be painful to some patients and are often
    expensive. In addition, many drugs are not water soluble and can
    be difficult to formulate in an injectable form.
    Traditional Inhalation.  Traditional dry powder
    and aerosolized inhalation delivery systems have been designed
    and used primarily for local delivery of drugs to the
    respiratory airways, not to the deep lung for rapid systemic
    drug delivery. Certain recent variants of these systems,
    however, can provide systemic delivery of drugs, either for the
    purpose of rapid onset of action or to enable noninvasive
    delivery of drugs that are not orally bioavailable.
    Nevertheless, many of these systems have difficulty in
    generating appropriate drug particle sizes or consistent emitted
    doses for deep lung delivery. To achieve appropriate drug
    particle sizes and consistent emitted doses, most traditional
    inhalation systems require the use of excipients and additives
    such as detergents, stabilizers and solvents, which may
    potentially cause toxicity or allergic reactions. Many
    traditional inhalation devices require patient coordination to
    deliver the correct drug dose, leading to potentially wide
    variations in the drug delivered to a patient.    Our
    Solution: Staccato System
  Staccato Staccato
 6




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Staccato
  
    Rapid Onset.  The aerosol produced with the
    Staccatosystem is designed to be rapidly absorbed
    through the deep lung with a speed of therapeutic onset
    comparable to an IV injection, generally achieving peak
    plasma levels of drug in two to five minutes.
    Ease of Use.  The Staccatosystem is
    breath actuated, and a patient simply inhales to administer the
    drug dose. Unlike injections, the Staccatosystem is
    noninvasive and does not require caregiver assistance. The
    aerosol produced with the Staccatosystem is relatively
    insensitive to patient inhalation rates. Unlike many other
    inhalation technologies, the patient does not need to learn a
    special breathing pattern. In addition, the Staccatodevice is small and easily portable.
    Consistent Particle Size and Dose.  The
    Staccatosystem uses rapid heating of the drug film to
    create consistent and appropriate particle sizes for deep lung
    inhalation and absorption into the bloodstream. The Staccatosystem also produces a consistent high emitted dose,
    regardless of the patients breathing pattern.
    Broad Applicability.  We have screened over 400
    drugs, and approximately 200 have exhibited initial vaporization
    feasibility using our Staccatosystem. The Staccatosystem can deliver both water soluble and water insoluble
    drugs and eliminates the need for excipient and additives such
    as detergents, stabilizers and solvents, avoiding the side
    effects that may be associated with the excipient or additives.
    Design Flexibility.  The Staccatosystem
    can incorporate multiple features, including lockout to
    potentially enhance safety, the convenience of patient
    titration, and a variety of dose administration regimens.  Drug
    Candidates Based on the Staccato System
  Staccato Staccato
  Staccato
    System
  Staccato
  Staccato Staccato
  
 7




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Staccato
 8




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Our
    Pipeline
    AlexzaDevelopment

CommercialProduct Candidate

API

Target Indication

Status

RightsAZ-004

Loxapine

Agitation in schizophrenia or bipolar disorder patients

NDA submitted December 2009, PDUFA date of October 11, 2010.

Out-licensed U.S. and Canadian commercialization rights,
    retained all other rights*AZ-007

Zaleplon

Insomnia

Phase 1 completed

WorldwideAZ-001

Prochlorperazine

Migraine headache

End of Phase 2 FDA meeting completed

WorldwideAZ-104

Loxapine (low-dose)

Migraine headache

Phase 2

WorldwideAZ-002

Alprazolam

Panic attacks and other CNS conditions

Phase 2

WorldwideAZ-003

Fentanyl

Acute pain

Phase 1 completed

Worldwide     *
    
    Licensed to Biovail Laboratories International, SRL  AGITATION
    PROGRAM: AZ-004 (Staccato loxapine)
  Staccato
    Market
    Opportunity
     9




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Staccato Staccato
      Development
    Status
    24-hour
      moderate-to-severe mild-to-moderate Staccato 1 1
   10




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INSOMNIA
    PROGRAM: AZ-007 (Staccato zaleplon)
    Market
    Opportunity
    30-60 20-30
    Development
    Status
  Clinical
    Studies
       11




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Preclinical
    Studies
    MIGRAINE
    HEADACHE PROGRAM: AZ-001 (Staccato prochlorperazine) and AZ-104
    (Staccato loxapine, low-dose)
  Staccato Staccato
  Market
    Opportunity
      AZ-001
    (Staccato prochlorperazine)
  Staccato
  Development
    Status
  Regulatory
    Status
  end-of-Phase
 12




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Clinical
    Studies
    2-hours intent-to-treat
  Primary Efficacy Endpoint. 2-hours
  Additional Efficacy Endpoints. 2-hours
  2-hour
      Safety Evaluations.
 13




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Preclinical
    Studies
  in vitro in vivo 28-day 28-day
  AZ-104
    (Staccato loxapine, low-dose)
    Development
    Status
  Clinical
    Trials
  2-hour
  intent-to-treat
  2-hours
   14




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Preclinical
    Studies
    ACUTE
    PAIN PROGRAM: AZ-003 (Staccato fentanyl)
  Staccato Staccato
  Staccato
  Development
    Status
  Clinical
    Studies
     15




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Staccato
    Preclinical
    Studies
    AZ-002
    (Staccato alprazolam)
  Staccato
  Development
    Status
  Clinical
    Trials
  proof-of-concept AZ-002 AZ-002 AZ-002 AZ-002
  proof-of-concept Staccato Staccato
 16




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Preclinical
    Studies
    Product
    Candidate Selection
  Staccato Staccato
    scale-up
    Our
    Strategy
    
    Focus on Acute and Intermittent Conditions.  We
    focus our development and commercialization efforts on product
    candidates based on our Staccatosystem that are intended
    to address important unmet medical and patient needs in the
    treatment of acute and intermittent conditions in which rapid
    onset, ease of use, noninvasive administration and, in some
    cases, patient titration of dosage are required.
    Establish Strategic Partnerships.  We intend to
    strategically partner with pharmaceutical and other companies to
    provide development funding or to address markets that may
    require a larger sales force, greater marketing resources or
    specific expertise to maximize the value of some product
    candidates. We also intend to seek international distribution
    partners for our product candidates. We may also enter into
    strategic partnerships with other pharmaceutical companies to
    combine our Staccatosystem with their proprietary
    compounds.
    Retain and Control Product Manufacturing.  We
    own all manufacturing rights to our product candidates. We
    intend to internally complete the final manufacture and assembly
    of our product candidates and any future products, potentially
    enabling greater intellectual property protection and economic
    return from our future products. We also believe controlling the
    final manufacture and assembly reduces the risk of supply
    interruptions and allows more cost effective manufacturing. 17




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Licensing
    Collaboration
  ® and/or
        Research
    and Development
    Year Ended December 31,Preclinical and Clinical Development:

2009


2008


2007AZ-004/104

$
30,084


$
26,789


$
15,524AZ-003


1,631



17,070



1,474AZ-001






1,151



8,163AZ-002


181



1,898



3,795AZ-007






1,773



8,214Total preclinical and clinical development


31,896



48,681



37,170Research


7,882



12,884



8,475Total research and development

$
39,778


$
61,565


$
45,645  18




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Manufacturing
        Staccato
        Autoliv
    ASP, Inc.
  Staccato
 19




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Product
    Commercialization
    Government
    Regulation
    
    preclinical laboratory studies and animal tests;
    the submission to the FDA of an IND for human clinical testing,
    which must become effective before human clinical trials
    commence;
    adequate and well controlled human clinical trials to establish
    the safety and efficacy of the product;
    the submission to the FDA of an NDA;
    satisfactory completion of an FDA inspection of the
    manufacturing facilities at which the product is made to assess
    compliance with cGMP. In addition, the FDA may audit clinical
    trial sites that generated the data in support of the
    NDA; and
    FDA review and approval of the NDA. 20




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
    Phase 1.  Phase 1 clinical trials involve the
    initial introduction of the drug into human subjects, frequently
    healthy volunteers. These studies are designed to determine the
    metabolism and pharmacologic actions of the drug in humans, the
    adverse effects associated with increasing doses and, if
    possible, to gain early evidence of effectiveness. In Phase 1
    clinical trials, the drug is usually tested for safety,
    including adverse effects, dosage tolerance, absorption,
    distribution, metabolism, excretion and pharmacodynamics.
    Phase 2.  Phase 2 clinical trials usually
    involve studies in a limited patient population to
    (1) evaluate the efficacy of the drug for specific,
    targeted indications; (2) determine dosage tolerance and
    optimal dosage; and (3) identify possible adverse effects
    and safety risks. Although there are no statutory or regulatory
    definitions for Phase 2a and Phase 2b, Phase 2a is commonly used
    to describe a Phase 2 clinical trial evaluating efficacy,
    adverse effects and safety risks and Phase 2b is commonly used
    to describe a subsequent Phase 2 clinical trial that also
    evaluates dosage tolerance and optimal dosage.
    Phase 3.  If a compound is found to be
    potentially effective and to have an acceptable safety profile
    in Phase 2 clinical trials, the clinical trial program will be
    expanded to further demonstrate clinical efficacy, optimal
    dosage and safety within an expanded patient population at
    geographically dispersed clinical trial sites. Phase 3 clinical
    trials usually include several hundred to several thousand
    patients.
    Phase 4.  Phase 4 clinical trials are studies
    required of, or agreed to by, a sponsor that are conducted after
    the FDA has approved a product for marketing. These studies are
    used to gain additional experience from the treatment of
    patients in the intended therapeutic indication and to document
    a clinical benefit in the case of drugs approved under
    accelerated approval regulations. If the FDA approves a product
    while a company has ongoing clinical trials that were not
    necessary for approval, a company may be able to use the data
    from these clinical trials to meet all or part of any Phase 4
    clinical trial requirement. These clinical trials are often
    referred to as Phase 3/4 post-approval clinical trials. Failure
    to promptly conduct Phase 4 clinical trials could result in
    withdrawal of approval for products approved under accelerated
    approval regulations.  1 2
   21




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method-of-use.
    and/or
 22




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Staccato Staccato
  Staccato Staccato Staccato
  paid-up
   23




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##### Table of Contents



Pharmaceutical
    Pricing and Reimbursement
      
    controls on government funded reimbursement for medical products
    and services;
    controls on healthcare providers;
    challenges to the pricing of medical products and services or
    limits or prohibitions on reimbursement for specific products
    and therapies through other means;
    reform of drug importation laws; and
    expansion of use of managed care systems in which healthcare
    providers contract to provide comprehensive healthcare for a
    fixed cost per person.    Patents
    and Proprietary Rights
    
    the Staccatosystem and its components;
    methods of using the Staccatosystem;
    the aerosolized form of drug compounds produced by the
    Staccatosystem; and
    methods of making and using the drug containing aerosols,
    including methods of administering the aerosols to a patient.   24




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Staccato
  AZ-004/AZ-104
    (Staccato loxapine)
  Staccato
  AZ-007
    (Staccato zaleplon)
  Staccato
  AZ-001
    (Staccato prochlorperazine)
  Staccato
  AZ-002
    (Staccato alprazolam)
  Staccato
  AZ-003
    (Staccato fentanyl)
  Staccato
  Competition
   25




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
    develop products that are superior to other products in the
    market;
    attract and retain qualified scientific, product development,
    manufacturing, and commercial personnel;
    obtain patent
    and/or other
    proprietary protection covering our future products and
    technologies;
    obtain required regulatory approvals; and
    successfully collaborate with pharmaceutical and biotechnology
    companies in the development and commercialization of new
    products.  and/or
    
    AZ-004 would compete with the injectable form of loxapine and
    other antipsychotic drugs;
    AZ-007 would compete with non-benzodiazepine GABA-A receptor
    agonists;
    AZ-001 and AZ-104 would compete with available triptan drugs
    and IV prochlorperazine;
    AZ-003 would compete with injectable and other forms of fentanyl
    and various generic oxycodone, hydrocodone and morphine
    products; and
    AZ-002 would compete with the oral tablet form of alprazolam and
    other benzodiazepines.    Employees
    Corporate
    Information
    Available
    Information
  Form 10-Q, Form 8-K
 26




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1-800-SEC-0330.
  Item 1A.
    Risk
    Factors  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
    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.
    
    does not demonstrate acceptable safety and efficacy in
    preclinical studies and clinical trials or otherwise does not
    meet applicable regulatory standards for approval; 27




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
    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.    We
    will need substantial additional capital in the future. If
    additional capital is not available, we will have to delay,
    reduce or cease operations.
    
    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 cost, timing and outcomes of regulatory proceedings;
    the cost and timing of developing manufacturing capacity;
    the cost and timing of developing sales and marketing
    capabilities prior to receipt of any regulatory approval of our
    product candidates;
    revenues received from any existing or future products;
    payments received under any future strategic partnerships;
    the filing, prosecution and enforcement of patent
    claims; and
    the costs associated with commercializing our product
    candidates, if they receive regulatory approval.  
  
    expenditures related to continued preclinical and clinical
    development of our product candidates during this period within
    budgeted levels;
    achievement of the milestone payments pursuant to our license
    agreement with Biovail;
    no unexpected costs related to the development of our
    manufacturing capability; and
    no growth in the number of our employees during this period.   28




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Form 8-K Form S-3 Form S-1
  The
    process for obtaining approval of an NDA is time consuming,
    subject to unanticipated delays and costs, and requires the
    commitment of substantial resources. The FDA accepted our NDA in
    February 2010 with a PDUFA goal date of October 11,
    2010.
    
    the information we submit may be insufficient to demonstrate
    that AZ-004 is safe and effective;
    the FDA might not approve the processes or facilities that will
    be used for the commercial manufacture of AZ-004; or
    the FDAs interpretation of the nonclinical, clinical or
    manufacturing data we provided in our NDA may differ from our
    own interpretation of such data.        Unstable
    market conditions may have serious adverse consequences on our
    business.
   29




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Unless
    our preclinical studies demonstrate the safety of our product
    candidates, we will not be able to commercialize our product
    candidates.
  Staccato
  
    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.    Preclinical
    studies indicated possible adverse impact of pulmonary delivery
    of AZ-001.
  28-day
 30




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##### Table of Contents



Failure
    or delay in commencing or completing clinical trials for our
    product candidates could harm our business.
    
    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;
    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 Staccatosystem.    Continuing
    development of our single dose version device may delay
    regulatory submissions and marketing approval for
    AZ-004
  Staccato and/or in vitro and/or
 31




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##### Table of Contents



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.
    proof-of-concept Staccato Staccato
    If our
    product candidates fail to show a clinically significant benefit
    compared to placebo, they will not be approved for
    marketing.
  Staccato
  Regulatory
    authorities may not approve our product candidates even if they
    meet safety and efficacy endpoints in clinical
    trials.
    
    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.     32




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##### Table of Contents



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.
      
    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.
  Staccato Staccato Staccato Staccato
 33




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##### Table of Contents



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.
    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.
          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.
  Staccato
 34




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##### Table of Contents



Staccato Staccato
  Staccato
  Staccato Staccato Staccato
  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.
  AZ-003.
 35




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If we
    enter into additional strategic partnerships, 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.
    
    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.
  Staccato Staccato
  
    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; 36




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##### Table of Contents




    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.  AZ-001
    and other product candidates that we may develop may require
    expensive carcinogenicity tests.
    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.
      
    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;
    the claims of our issued patents may be narrower than as filed
    and not sufficiently broad to prevent third parties from
    circumventing them;
    it is possible that none of our pending patent applications will
    result in issued patents;
    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. 37




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Even
    if valid and enforceable patents cover our product candidates
    and technologies, the patents will provide protection only for a
    limited amount of time.
    and/or
      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.
     38




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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.
        AZ-001.
     39




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If we
    are unable to establish sales and marketing capabilities or
    enter into additional agreements with third parties to market
    and sell our product candidates, we may be unable to generate
    significant product revenue.
    and/or
  
    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.    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.
   40




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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.
    Our
    product candidates AZ-002, AZ-003 and AZ-007 contain drug
    substances which are regulated by the U.S. Drug Enforcement
    Administration. Failure to comply with applicable regulations
    could harm our business.
    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.
  Staccato
 41




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##### Table of Contents



Staccato Staccato Staccato Staccato
  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.
      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.
     42




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##### Table of Contents



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.
    Risks
    Relating to Owning Our Common Stock
  Our
    stock price has been and may continue to be extremely
    volatile.
    
    actual or anticipated regulatory approvals or disapprovals of
    our product candidates or competing products;
    actual or anticipated results and timing of our clinical trials;
    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;
    changes in financial estimates or recommendations by securities
    analysts;
    sales results for AZ-004, if it is approved for marketing;
    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 (or other securities) by us; and
    sales and distributions of our common stock by our stockholders. 43




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##### Table of Contents



If we
    sell shares of our common stock in future financings, existing
    common stock holders will experience immediate dilution and, as
    a result, our stock price may go down.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Item 5A.
    Quarterly
    Stock Price Information and Registered
    Shareholders    2009

High

LowFirst Quarter

$
3.40


$
1.40Second Quarter


3.25



1.50Third Quarter


3.01



1.90Fourth Quarter


2.55



1.93   2008

High

LowFirst Quarter

$
8.16


$
5.76Second Quarter


7.55



3.75Third Quarter


6.20



3.85Fourth Quarter


4.91



1.16  44




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##### Table of Contents



Item 5B.
    Use
    of Proceeds from the Sale of Registered Securities    Item 5C.
    Treasury
    Stock    Item 6.
    Selected
    Financial Data    Period fromDecember 19,2000(Inception) toYear Ended December 31,


December 31,2009


2008


2007


2006


2005


2009(In thousands, except per share data)Consolidated Statement of Operations Data:Revenue

$
9,514


$
486


$



$
1,028


$
2,230


$
16,945Operating expenses:Research and development(1)


39,778



61,565



45,645



36,494



26,235



244,461General and administrative(1)


15,406



17,641



14,888



9,969



9,654



78,110Restructuring charges(1)


2,037



















2,037Acquired in-process research and development






















3,916Total operating expenses(1)


57,221



79,206



60,533



46,463



35,889



328,524Loss from operations


(47,707
)


(78,720
)


(60,533
)


(45,435
)


(33,659
)


(311,579
)Loss on change in fair value of contingent consideration
    liability


(7,983
)


















(7,983
)Interest income/(expense) and other income/(expense), net


(375
)


1,679



4,623



1,909



1,257



9,850Net loss


(56,065
)


(77,041
)


(55,910
)


(43,526
)


(32,402
)


(309,712
)Consideration paid in excess of carrying value of the
    noncontrolling interest in Symphony Allegro, Inc.


(61,566
)


















(61,566
)Loss attributed to noncontrolling interest in Symphony Allegro,
    Inc.


13,987



18,591



10,791



1,720







45,089Net loss attributable to Alexza common stockholders

$
(103,644
)

$
(58,450
)

$
(45,119
)

$
(41,806
)

$
(32,402
)

$
(326,189
)Basic and diluted net loss per share attributable to Alexza
    common stockholders

$
(2.68
)

$
(1.81
)

$
(1.58
)

$
(2.13
)

$
(18.98
)Shares used to compute basic and diluted net loss per share
    attributable to Alexza common stockholders


38,609



32,297



28,605



19,584



1,707     (1)
    
    Includes stock-based compensation as follows: 45




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Period fromDecember 19,2000(Inception) toYear Ended December 31,


December 31,2009


2008


2007


2006


2005


2009(In thousands)Research and development

$
3,443


$
2,926


$
1,885


$
1,770


$
167


$
10,295General and administrative


3,025



2,520



1,531



447



874



8,397Restructuring expenses


56



















56Total

$
6,524


$
5,446


$
3,416


$
2,217


$
1,041


$
18,748   December 31,2009

2008

2007

2006

2005(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents and marketable securities

$
19,916


$
37,556


$
69,391


$
42,623


$
38,369Investments held by Symphony Allegro, Inc.






21,318



39,449



49,956



Working capital


(3,830
)


42,771



106,092



79,649



30,760Total assets


46,174



84,635



149,125



105,766



47,405Noncurrent portion of equipment financing obligations






2,515



6,317



5,865



5,155Convertible preferred stock


















107,194Deficit accumulated during development stage


(264,623
)


(222,545
)


(164,095
)


(118,976
)


(77,170
)Total stockholders (deficit) equity


(7,126
)


39,054



99,943



84,517



(74,385
)   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following Managements Discussion and Analysis of
    Financial Condition and Results of Operations contains
    forward-looking statements that are based upon current
    expectations. In some cases, you can identify forward-looking
    statements by terminology such as may,
    will, should, expect,
    plan, anticipate, believe,
    estimate, predict, intend,
    potential or continue or the negative of
    these terms or other comparable terminology. Forward-looking
    statements involve risks and uncertainties. Our actual results
    and the timing of events could differ materially from those
    discussed in our forward-looking statements as a result of many
    factors, including those set forth under Risk
    Factors and elsewhere in this Annual Report on
    Form 10-K.
  Overview
  Staccato Staccato
   46




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
    AZ-004 (Staccato loxapine).  We are developing
    AZ-004 for the rapid treatment of agitation in patients with
    schizophrenia or bipolar disorder. In December 2009, we
    submitted our NDA to the FDA. In February 2010, the FDA accepted
    our filing and provided us a Prescription Drug User Fee Act
    (PDUFA) goal date of October 11, 2010. We believe that the
    data generated from our clinical and non-clinical studies (and
    contained within our NDA submission) adequately demonstrate the
    efficacy and safety of AZ-004 for the rapid treatment of
    agitation in patients with schizophrenia or bipolar disorder.  In February 2010, we entered into a collaboration and license
    agreement, or license agreement, and a manufacture and supply
    agreement, collectively, the collaboration, with Biovail
    Laboratories International SRL, or Biovail, for AZ-004
    (Staccato®

    loxapine) for the treatment of psychiatric
    and/or
    neurological indications and the symptoms associated with these
    indications, including the initial indication of treating
    agitation in schizophrenia and bipolar disorder patients. The
    collaboration contemplates that we will be the exclusive
    supplier of drug product for clinical and commercial uses and
    have responsibility for the NDA for AZ-004 for the initial
    indication of rapid treatment of agitation in patients with
    schizophrenia or bipolar disorder, as well as responsibility for
    any additional development and regulatory activities required
    for use in these two patient populations in the outpatient
    setting. Biovail will be responsible for commercialization for
    the initial indication and, if it elects, development and
    commercialization of additional indications for AZ-004 in the
    U.S. and Canada.Under the terms of the license agreement, Biovail paid us an
    upfront fee of $40 million, and we may be eligible to
    receive up to an additional $90 million in milestone
    payments upon achievement of predetermined regulatory, clinical
    and commercial manufacturing milestones. We may be subject to
    certain payment obligation to Biovail, up to $5 million, if
    we do not meet certain other milestones prior to a termination
    of the license agreement. We are also eligible to receive tiered
    royalty payments of 10% to 25% on any net sales of AZ-004. We
    are responsible for conducting and funding all development and
    regulatory activities associated with AZ-004s initial
    indication for the rapid treatment of agitation in patients with
    schizophrenia or bipolar disorder as well as for its possible
    use in the outpatient setting in these two patient populations.
    Our obligation to fund the outpatient development efforts is
    limited to a specified amount, none of which is expected to be
    incurred in 2010. Biovail is responsible for certain Phase 4
    development commitments and related costs and expenses. For
    additional indications, we have an obligation regarding certain
    efforts and related costs and expenses, up to a specified
    amount, and, if it elects, Biovail is responsible for all other
    development commitments and related costs and expenses.Under the terms of the manufacture and supply agreement, we are
    the exclusive supplier of AZ-004 and have responsibility for the
    manufacture, packaging, labeling and supply for clinical and
    commercial uses. Biovail will purchase AZ-004 from us at
    predetermined transfer prices. The transfer prices depend on the
    volume of AZ-004 purchases, subject to certain adjustments.Either party may terminate the collaboration for the other
    partys uncured material breach or bankruptcy. In addition,
    Biovail has the right to terminate the collaboration
    (a) upon 90 days written notice for convenience;
    (b) upon 90 days written notice if FDA does not
    approve the AZ-004 NDA for the initial indication for the rapid
    treatment of agitation in patients with schizophrenia or bipolar
    disorder; (c) immediately upon written notice for safety
    reasons or withdrawal of marketing approval; (d) upon
    90 days written notice upon certain recalls of the product;
    or (e) immediately upon written notice within 60 days
    of termination of the supply agreement under certain
    circumstances. The supply agreement automatically terminates
    upon the termination of the license agreement. 47




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
    AZ-007(Staccato zaleplon).  We are
    developing AZ-007 for the treatment of insomnia in patients who
    have difficulty falling asleep, including patients who awake in
    the middle of the night and have difficulty falling back asleep.
    AZ-007 has completed Phase 1 testing. In the Phase 1 study,
    AZ-007 delivered an IV-like pharmacokinetic profile with a
    median time to peak drug concentration of 1.6 minutes.
    Pharmacodynamics, measured as sedation assessed on a 100 mm
    visual-analog scale, showed onset of effect as early as 2
    minutes after dosing.
    AZ-001 (Staccato prochlorperazine).  We are
    developing AZ-001 to treat patients suffering from acute
    migraine headaches. During the third quarter of 2008, we
    conducted an
    end-of-Phase
    2 meeting with the FDA. We believe we have a clear understanding
    of the development requirements for filing an NDA for this
    product candidate.
    AZ-104(Staccato loxapine,
    low-dose).  We are developing AZ-104 to treat
    patients suffering from acute migraine headaches.
    AZ-002 (Staccato alprazolam).  AZ-002 has
    completed a Phase 1 clinical trial in healthy subjects and a
    Phase 2a
    proof-of-concept
    clinical trial in panic disorder patients for the treatment of
    panic attacks, an indication we are not planning to pursue.
    However, given the safety profile, the successful and
    reproducible delivery of alprazolam, and the IV-like
    pharmacological effect demonstrated to date, we are assessing
    AZ-002 for other possible indications and renewed clinical
    development.
    AZ-003(Staccato fentanyl).  We are
    developing AZ-003 for the treatment of patients with acute pain,
    including patients with breakthrough cancer pain and
    postoperative patients with acute pain episodes. We have
    completed and announced positive results from a Phase 1 clinical
    trial of AZ-003 in opioid-naïve healthy subjects.  Staccato Staccato Staccato Staccato Staccato Staccato and/or
  Staccato
   48




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Critical
    Accounting Estimates and Judgments
   49




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##### Table of Contents



Preclinical
    Study and Clinical Trial Accruals
    
    fees paid to contract research organizations in connection with
    preclinical studies;
    fees paid to contract research organizations and other clinical
    sites in connection with clinical trials; and
    fees paid to contract manufacturers in connection with the
    production of components and drug materials for preclinical
    studies and clinical trials.    Share-Based
    Compensation
         50




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Symphony
    Allegro, Inc.
  Staccato Staccato
     51




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##### Table of Contents



Description

Fair ValueFair value of consideration transferred:10,000,000 shares of Alexza common stock

$
28,000Warrant consideration, net


8,085Contingent cash payments to Symphony Allegro stockholders


16,855Total consideration transferred


52,940Add: Deficit of noncontrolling interest in Symphony Allegro


8,626Excess consideration transferred over the carrying value of the
    noncontrolling interest in Allegro

$
61,566      52




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##### Table of Contents



Revenue
    Recognition
  Revenue Recognition in Financial Revision of Topic 13.
      Results
    of Operations
  Comparison
    of Years Ended December 31, 2009 and 2008
  Revenue.
  Operating
    Expenses
    Year Ended December 31,2009


2008


2007Non share-based compensation expenses:Research and development

$
36,335


$
58,639


$
43,760General and administrative


12,381



15,121



13,357Restructuring charges


1,981







Total non share-based compensation expenses


50,697



73,760



57,117Share-based compensation expenses:Research and development


3,443



2,926



1,885General and administrative


3,025



2,520



1,531Restructuring charges


56







Total share-based compensation expenses


6,524



5,446



3,416Total operating expenses

$
57,221


$
79,206


$
60,533  53




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##### Table of Contents



Research and Development Expenses.
  
    external research and development expenses incurred under
    agreements with third party contract research organizations and
    investigational sites where a substantial portion of our
    preclinical studies and all of our clinical trials are conducted;
    third party supplier, consultant and employee related expenses,
    which include salary and benefits; and
    facilities, depreciation and other allocated expenses, which
    include direct and allocated expenses for rent and maintenance
    of facilities, depreciation of leasehold improvements and
    equipment and laboratory and other supplies.    FromDecember 19,2000(Inception)ThroughDecember 31,Preclinical and Clinical Development:

2009


2008


2007


2009.AZ-004/104

$
30,084


$
26,789


$
15,524


$
81,776AZ-003


1,631



17,070



1,474



31,525AZ-001






1,151



8,163



39,372AZ-002


181



1,898



3,795



15,191AZ-007






1,773



8,214



12,371Other preclinical programs














3,243Total preclinical and clinical development


31,896



48,681



37,170



183,478Research


7,882



12,884



8,475



60,983Total research and development

$
39,778


$
61,565


$
45,645


$
244,461   Research and Development Expenses.
  
    decreased spending on our AZ-003 product candidate in connection
    with the termination of the license agreement with Endo in
    January 2009; and
    the suspension of the development of our AZ-001, AZ-002 and
    AZ-007 product candidates and decreased spending on basic
    research in connection with our decision to focus our resources
    on AZ-004.    
    increased spending on our AZ-004/104 product candidates as we
    continued our development of these product candidates under the
    Symphony Allegro agreement, including our efforts to support an
    NDA filing for AZ-004, which was filed in December 2009, and the
    AZ-104 Phase 2b clinical trial which initiated in late 2008 and
    completed in 2009.   54




---



##### Table of Contents



General and Administrative Expenses.
    Restructuring Charges Staccato
  Interest and Other Income, Net.
  Interest Expense.
  Change in the Fair Value of Contingent Consideration
    Liability. and/or and/or
    Loss Attributed to Noncontrolling Interest in Symphony
    Allegro.
 55




---



##### Table of Contents



Comparison
    of Years Ended December 31, 2008 and 2007
  Revenue.
  Research and Development Expenses.
  
    increased spending on our AZ-004/104 product candidates as we
    continued development of these product candidates under the
    Symphony Allegro agreement, including our first Phase 3 clinical
    trial of AZ-004 which began enrollment in February 2008 and
    completed enrollment in June 2008 and our second Phase 3
    clinical trial of AZ-004 which began enrollment in July 2008 and
    completed enrollment in October 2008,
    increased spending on our AZ-003 product candidate as we
    continued development of this product candidate under the Endo
    agreement, and
    increased research expenses as we increased our device
    development and manufacturing process
    scale-up
    efforts.    
    our AZ-001 product candidate due to Phase 2b clinical trial
    efforts and ongoing non clinical efforts occurring in 2007,
    our AZ-002 product candidate due to higher development and
    manufacturing efforts to modify the AZ-002 device and
    manufacture clinical trial materials for the Phase 2a trial in
    2007, and
    our AZ-007 product candidate due to the preclinical and
    regulatory efforts in 2007 to support and prepare the IND filing
    that occurred in the fourth quarter of 2007.  General and Administrative Expenses
  Interest and Other Income, Net.
  Interest Expense.
  Loss Attributed to Noncontrolling Interest in Symphony
    Allegro.
  Liquidity
    and Capital Resources
   56




---



##### Table of Contents




    achievement of the milestones in the Biovail agreement;
    expenditures related to continued preclinical and clinical
    development of our lead product candidates during this period
    within budgeted levels; 57




---



##### Table of Contents




    no unexpected costs related to the development of our
    manufacturing capability; and
    no growth in the number of our employees during this period.    
    the scope, rate of progress, results and costs of our
    preclinical studies, clinical trials and other research and
    development activities;
    the terms and timing of any distribution, strategic partnerships
    or licensing agreements that we may establish;
    the cost, timing and outcomes of regulatory approvals;
    the number and characteristics of product candidates that we
    pursue;
    the cost and timing of establishing manufacturing, marketing and
    sales capabilities;
    the cost of establishing clinical and commercial supplies of our
    product candidates;
    the cost of preparing, filing, prosecuting, defending and
    enforcing any patent claims and other intellectual property
    rights; and
    the extent to which we acquire or invest in businesses, products
    or technologies, although we currently have no commitments or
    agreements relating to any of these types of transactions.    Contractual
    Obligations
     58




---



##### Table of Contents



Staccato
    Payments Due by PeriodLess ThanContractual Obligations

Total


1 Year


1-3 Years


3-5 Years


Thereafter(In thousands)Equipment financing obligations

$
2,669


$
2,226


$
443


$



$
Operating lease obligations


39,239



4,516



9,538



9,327



15,858Autoliv payment


12,000



12,000











Total

$
53,908


$
18,742


$
9,981


$
9,327


$
15,858   Recently
    Adopted Accounting Standards
  Noncontrolling
    interest
     59




---



##### Table of Contents



Recently
    Issued Accounting Standards
  Revenue
    Arrangements with Multiple Deliverables
  2010-13, 2010-13
  Off-Balance
    Sheet Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   60




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  ALEXZA
    PHARMACEUTICALS, INC.
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  Report of Independent Registered Public
    Accounting Firm


62Consolidated Balance Sheets as of
    December 31, 2009 and 2008


63Consolidated Statements of Operations for the
    years ended December 31, 2009, 2008 and 2007 and for the
    period from December 19, 2000 (inception) to
    December 31, 2009


64Consolidated Statements of Convertible Preferred
    Stock and Stockholders (Deficit) Equity for the period
    from December 19, 2000 (inception) to December 31,
    2009


65Consolidated Statements of Cash Flows for the
    years ended December 31, 2009, 2008 and 2007 and for the
    period from December 19, 2000 (inception) to
    December 31, 2009


74Notes to Consolidated Financial Statements


75  61




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
            
    62




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC
    (a development stage company)CONSOLIDATED BALANCE SHEETS  December 31,2009


2008(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
13,450


$
26,036Marketable securities


6,466



11,520Investments held by Symphony Allegro, Inc.






21,318Other receivables


1,406



Prepaid expenses and other current assets


804



1,130Total current assets


22,126



60,004Property and equipment, net


23,598



24,152Restricted cash


400



400Other assets


50



79Total assets

$
46,174


$
84,635LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable

$
2,705


$
4,928Accrued clinical trial liabilities


303



1,294Other accrued liabilities


3,481



5,205Current portion of contingent consideration liability


13,202



Other current liabilities


3,750



Current portion of equipment financing obligations


2,515



4,139Deferred revenues






1,667Total current liabilities


25,956



17,233Deferred rent


15,708



17,386Deferred revenue






7,847Noncurrent portion of contingent consideration liability


11,636



10,439Noncurrent portion of equipment financing obligations






2,515Other noncurrent liabilities






600Commitments (See Note 8)Stockholders (deficit) equity:Preferred stock, $0.0001 par value, 5,000,000 shares
    authorized at December 31, 2009 and 2008; no shares issued
    and outstanding at December 31, 2009 or 2008






Common stock, $0.0001 par value; 100,000,000 shares
    authorized at December 31, 2009 and 2008; 52,411,356 and
    32,820,874 shares issued and outstanding at
    December 31, 2009 and 2008, respectively


5



3Additional paid-in capital


257,493



256,426Deferred stock compensation






(219
)Other comprehensive income


(1
)


28Deficit accumulated during development stage


(264,623
)


(222,545
)Total Alexza Pharmaceuticals, Inc. stockholders (deficit)
    equity


(7,126
)


33,693Noncontrolling interest in Symphony Allegro, Inc.






5,361Total stockholders (deficit) equity


(7,126
)


39,054Total liabilities and stockholders (deficit) equity

$
46,174


$
84,635    63




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)CONSOLIDATED STATEMENTS OF OPERATIONS  Period fromDecember 19,2000 (Inception)Year Ended December 31,


to December 31,2009


2008


2007


2009(In thousands, except per share amounts)Revenue

$
9,514


$
486


$



$
16,945Operating expenses:Research and development


39,778



61,565



45,645



244,461General and administrative


15,406



17,641



14,888



78,110Restructuring charges


2,037











2,037Acquired in-process research and development














3,916Total operating expenses


57,221



79,206



60,533



328,524Loss from operations


(47,707
)


(78,720
)


(60,533
)


(311,579
)Loss on change in fair value of contingent consideration
    liability


(7,983
)










(7,983
)Interest and other income, net


92



2,614



5,626



13,898Interest expense


(467
)


(935
)


(1,003
)


(4,048
)Net loss


(56,065
)


(77,041
)


(55,910
)


(309,712
)Consideration paid in excess of carrying value of the
    noncontrolling interest in Symphony Allegro, Inc.


(61,566
)










(61,566
)Loss attributed to noncontrolling interest in Symphony Allegro,
    Inc.


13,987



18,591



10,791



45,089Net loss attributable to Alexza common stockholders

$
(103,644
)

$
(58,450
)

$
(45,119
)

$
(326,189
)Basic and diluted net loss per share attributable to Alexza
    common stockholders

$
(2.68
)

$
(1.81
)

$
(1.58
)Shares used to compute basic and diluted net loss per share
    attributable to Alexza common stockholders


38,609



32,297



28,605    64




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##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED
    STOCK AND STOCKHOLDERS (DEFICIT) EQUITY  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


in


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-in


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Issuance of common stock to founders at $0.22 per share in
    December 2000 in exchange for technology and cash of $8





$







$




454,536


$



$
100


$



$



$



$



$



$
100Issuance of Series A preferred stock for cash at $0.40 per
    share in July 2001, net of issuance costs of $9


2,500,000



991











































Issuance of Series A1 preferred stock at $1.55 per share in
    December 2001, in connection with merger


1,610,250



2,496











































Issuance of Series B preferred stock for cash at $1.40 per
    share in December 2001, net of issuance costs of $71


6,441,000



8,946











































Issuance of common stock in connection with merger at $1.10 per
    share in December 2001


















868,922







956























956Warrants assumed in merger transaction


























10























10Issuance of common stock for cash at $0.22 per share upon
    exercise of options in December 2001


















9,090







2























2Compensation expense related to consultant stock options


























3























3Net loss










































(5,652
)






(5,652
)Balance at December 31, 2001 (carried forward)


10,551,250


$
12,433






$




1,332,548


$



$
1,071


$



$



$



$
(5,652
)

$



$
(4,581
)    65




---



##### Table of Contents






ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


in


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-in


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2001 (brought forward)


10,551,250


$
12,433






$




1,332,548


$



$
1,071


$



$



$



$
(5,652
)

$



$
(4,581
)Issuance of common stock for cash at $0.22 per share upon
    exercise of options in February 2002


















10,606







3























3Issuance of warrants to purchase Series B preferred stock
    in March 2002, in connection with equipment financing loan






27











































Issuance of common stock for cash at $0.22 per share upon
    exercise of options in July 2002


















2,180































Issuance of common stock to stockholder at $0.99 per share in
    exchange for promissory note in July 2002


















53,156







53



(53
)


















Issuance of Series C preferred stock for cash at $1.56 per
    share in September 2002, net of issuance costs of $108


28,870,005



44,892











































Repurchase of common stock for cash at $1.05 per share in
    October 2002


















(2,634
)






(3
)






















(3
)Issuance of common stock for cash at $1.05 per share for
    services upon exercise of warrants in December 2002


















9,368







10























10Compensation expense related to consultant stock options


























10























10Unrealized gain on investments






































51











51Net loss










































(8,163
)






(8,163
)Balance at December 31, 2002 (carried forward)


39,421,255


$
57,352






$




1,405,224


$



$
1,144


$
(53
)

$



$
51


$
(13,815
)

$



$
(12,673
)    66




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


in


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-in


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2002 (brought forward)


39,421,255


$
57,352






$




1,405,224


$



$
1,144


$
(53
)

$



$
51


$
(13,815
)

$



$
(12,673
)Issuance of common stock for cash at $0.22, $0.99 and $1.10 per
    share upon exercise of options


















74,903







47























47Issuance of warrants to purchase Series C preferred stock
    in connection with equipment financing loan in January 2003






35











































Issuance of warrants to purchase Series C preferred stock
    in connection with equipment financing loan in September 2003






27











































Repurchase of common stock for cash at $1.05 per share in
    January 2003


















(1,172
)






(1
)






















(1
)Repurchase of common stock for cash at $0.22 per share in
    November 2003


















(14,772
)






(3
)






















(3
)Compensation expense related to consultant stock options


























31























31Deferred stock compensation expense related to modification of
    consultant stock option


























1







(1
)














Unrealized loss on investments






































(55
)










(55
)Net loss










































(14,328
)






(14,328
)Balance at December 31, 2003 (carried forward)


39,421,255


$
57,414






$




1,464,183


$



$
1,219


$
(53
)

$
(1
)

$
(4
)

$
(28,143
)

$



$
(26,982
)    67




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


in


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-in


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2003 (brought forward)


39,421,255


$
57,414






$




1,464,183


$



$
1,219


$
(53
)

$
(1
)

$
(4
)

$
(28,143
)

$



$
(26,982
)Cancellation of unvested common stock at $0.99 per share in
    March 2004


















(24,365
)






(24
)


24



















Repayment of vested portion of stockholder note receivable for
    cash






























29



















29Issuance of warrants to purchase Series C preferred stock
    in connection with equipment financing loan in April 2004






20











































Issuance of common stock for cash at $0.22, $0.99 and $1.10 per
    share upon exercise of options


















100,192







72























72Repurchase of common stock for cash at $1.05 per share in
    September 2004


















(404
)






























Issuance of Series D preferred stock at $1.29 per share in
    November and December 2004, net of issuance costs of $2,239


40,435,448



49,760











































Issuance of warrants to purchase common stock in connection with
    Series D financing in November 2004


























91























91Compensation expense related to consultant stock options


























40























40Compensation expense related to employee stock option
    modifications


























19























19Amortization of deferred stock compensation


































1















1Unrealized loss on investments






































(41
)










(41
)Net loss










































(16,625
)






(16,625
)Balance at December 31, 2004 (carried forward)


79,856,703


$
107,194






$




1,539,606


$



$
1,417


$



$



$
(45
)

$
(44,768
)

$



$
(43,396
)    68




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


in


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-in


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2004 (brought forward)


79,856,703


$
107,194






$




1,539,606


$



$
1,417


$



$



$
(45
)

$
(44,768
)

$



$
(43,396
)Issuance of common stock upon exercise of options $0.22, $0.99,
    $1.10, per share


















380,508







357























357Compensation expense related to consultant stock options


























195























195Deferred stock compensation, net of $4 reversal in connection
    with employee terminations


























3,329







(3,329
)














Amortization of deferred stock compensation,


































404















404Variable compensation expense


























442























442Unrealized gain on investments






































15











15Net loss










































(32,402
)






(32,402
)Balance at December 31, 2005 (carried forward)


79,856,703


$
107,194






$




1,920,114


$



$
5,740


$



$
(2,925
)

$
(30
)

$
(77,170
)

$



$
(74,385
)    69




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


in


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-in


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2005 (brought forward)


79,856,703


$
107,194






$




1,920,114


$



$
5,740


$



$
(2,925
)

$
(30
)

$
(77,170
)

$



$
(74,385
)Issuance of common stock for cash and shares upon exercise of
    options at a weighted average price of $1.28 per share


















159,446







195























195Issuance of common stock for cash under the Companys
    Employee Stock Purchase Plan


















131,682







896























896Issuance of common stock for shares upon exercise of warrant


















85,359































Issuance of common stock for cash, net of offering costs of
    $2,156


















6,325,000



1



44,901























44,902Conversion of convertible preferred stock into common stock


(79,856,703
)


(107,194
)










15,197,712



1



107,193























107,194Purchase of noncontrolling interest by Symphony Allegro, Inc,
    preferred shareholders














































36,463



36,463Compensation expense related to consultant stock options


























145























145Compensation expense related to fair value of employee share
    based awards issued after January 1, 2006


























1,601























1,601Amortization of deferred stock compensation


































727















727Reversal of deferred stock compensation in connection with
    employee terminations


























(495
)






495















Variable compensation expense


























(442
)






















(442
)Issuance of warrant to Symphony Allegro Holdings LLC


























10,708























10,708Unrealized gain on investments






































39











39Net loss










































(41,806
)


(1,720
)


(43,526
)Balance at December 31, 2006 (carried forward)





$







$




23,819,319


$
2


$
170,442


$



$
(1,703
)

$
9


$
(118,976
)

$
34,743


$
84,517    70




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


In


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-In


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2006 (brought forward)





$







$




23,819,319


$
2


$
170,442


$



$
(1,703
)

$
9


$
(118,976
)

$
34,743


$
84,517Issuance of common stock for cash and shares upon exercise of
    options at a weighted average price of $1.28 per share


















204,423







432























432Issuance of common stock for cash under the Companys
    Employee Stock Purchase Plan


















205,870







1,405























1,405Issuance of common stock upon vesting of restricted stock units


















8,245































Issuance of common stock for cash, net of offering costs of
    $4,743


















6,900,000



1



65,981























65,982Compensation expense related to consultant stock options


























75























75Compensation expense related to fair value of employee share
    based awards issued after January 1, 2006


























2,733























2,733Amortization of deferred stock compensation


































577















577Reversal of deferred stock compensation in connection with
    employee terminations


























(387
)






387















Unrealized gain on investments






































132











132Net loss










































(45,119
)


(10,791
)


(55,910
)Balance at December 31, 2007(carried forward)





$







$




31,137,857


$
3


$
240,681


$



$
(739
)

$
141


$
(164,095
)

$
23,952


$
99,943    71




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


In


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-In


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2007 (brought forward)





$







$




31,137,857


$
3


$
240,681


$



$
(739
)

$
141


$
(164,095
)

$
23,952


$
99,943Issuance of common stock and common stock warrant for cash


















1,250,000







9,840























9,840Issuance of common stock for cash upon exercise of options at a
    weighted average price of $1.55 per share


















104,428







161























161Issuance of common stock for cash under the Companys
    Employee Stock Purchase Plan


















305,146







1,172























1,172Issuance of common stock upon vesting of restricted stock units


















23,443































Compensation expense related to consultant stock options


























22























22Compensation expense related to fair value of employee share
    based awards issued after January 1, 2006


























4,633























4,633Amortization of deferred stock compensation


































437















437Reversal of deferred stock compensation in connection with
    employee terminations


























(83
)






83















Unrealized loss on investments






































(113
)










(113
)Net loss










































(58,450
)


(18,591
)


(77,041
)Balance at December 31, 2008





$







$




32,820,874


$
3


$
256,426


$



$
(219
)

$
28


$
(222,545
)

$
5,361


$
39,054    72




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
    CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY 
    (Continued)
  Alexza Pharmaceuticals, Inc. StockholdersDeficit


NoncontrollingAccumulated


InterestConvertible














Additional


Stockholder


Deferred


Other


During the


In


TotalPreferred Stock


Preferred Stock


Common Stock


Paid-In


Note


Stock


Comprehensive


Development


Symphony


StockholdersShares


Amount


Shares


Amount


Shares


Amount


Capital


Receivable


Compensation


(Loss) Income


Stage


Allegro, Inc.


(Deficit) Equity(In thousands, except share and per share amounts)Balance at December 31, 2008 (brought forward)





$







$




32,820,874


$
3


$
256,426


$



$
(219
)

$
28


$
(222,545
)

$
5,361


$
39,054Issuance of common stock


















135,041































Issuance of common stock and common stock warrants for cash


















8,107,012



1



18,989























18,990Issuance of common stock and common stock warrants for the
    purchase of noncontrolling interest in Symphony Allegro,
    Inc.


















10,000,000



1



36,084























36,085Deemed dividend for purchase of noncontrolling interest in
    Symphony Allegro, Inc.


























(61,566
)


















8,626



(52,940
)Issuance of common stock for cash upon exercise of options at a
    weighted average price of $1.20 per share


















69,708







84























84Issuance of common stock for cash under the Companys
    Employee Stock Purchase Plan


















439,252







599























599Issuance of common stock upon vesting of restricted stock units


















839,469































Compensation expense related to consultant stock options


























53























53Compensation expense related to fair value of employee share
    based awards issued after January 1, 2006


























6,860























6,860Amortization of deferred stock compensation


































183















183Reversal of deferred stock compensation in connection with
    employee terminations


























(36
)






36















Unrealized loss on investments






































(29
)










(29
)Net loss










































(42,078
)


(13,987
)


(56,065
)Balance at December 31, 2009





$







$




52,411,356


$
5


$
257,493


$



$



$
(1
)

$
(264,623
)

$



$
(7,126
)  73




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC
    (a development stage company)CONSOLIDATED STATEMENTS OF CASH FLOWS Period fromDecember 19,2000(Inception) toYear Ended December 31,


December 31,2009


2008


2007


2009(In thousands)Cash flows from operating activities:Net loss

$
(56,065
)

$
(77,041
)

$
(55,910
)

$
(309,712
)Adjustments to reconcile net loss to net cash used in operating
    activities:Share-based compensation expense


7,096



5,092



3,385



18,935Change in fair value of contingent consideration liability


7,983











7,983Extinguishment of officer note receivable














2,300Issuance of common stock for intellectual property














92Charge for acquired in-process research and development














3,916Amortization of assembled workforce














222Amortization of debt discount and deferred interest


29



38



49



391Amortization of discount on
    available-for-sale
    securities


126



(797
)


(929
)


(601
)Depreciation


4,850



5,294



4,016



21,609Loss on disposal of property and equipment


43



17



23



126Changes in operating assets and liabilities:Other receivables


(1,406
)


12,055



(12,055
)


(1,406
)Prepaid expenses and other current assets


326



247



(114
)


(798
)Other assets






(24
)


42



(2,625
)Accounts payable


(2,223
)


(278
)


(727
)


2,576Accrued clinical trial expense and other accrued liabilities


(2,715
)


111



898



84Deferred revenues


(9,514
)


(486
)


10,000



Other liabilities


(1,678
)


701



15,494



19,098Net cash used in operating activities


(53,148
)


(55,071
)


(35,828
)


(237,810
)Cash flows from investing activities:Purchase of
    available-for-sale
    securities


(13,259
)


(47,111
)


(62,466
)


(338,172
)Maturities of
    available-for-sale
    securities


18,158



74,329



51,064



332,307Purchase of
    available-for-sale
    securities held by Symphony Allegro, Inc.














(49,975
)Maturities of
    available-for-sale
    securities held by Symphony Allegro, Inc.


16,436



18,131



10,507



45,093Decrease (increase) in restricted cash






204







(400
)Purchases of property and equipment


(1,189
)


(2,732
)


(19,059
)


(41,346
)Proceeds from disposal of property and equipment






25







28Cash paid for merger














(250
)Net cash provided by (used in) investing activities


20,146



42,846



(19,954
)


(52,715
)Cash flows from financing activities:Proceeds from issuance of common stock and exercise of stock
    options and stock purchase rights


19,673



11,173



67,819



145,158Repurchase of common stock














(8
)Proceeds from issuance of convertible preferred stock














104,681Proceeds from repayment of stockholder note receivable














29Proceeds received from purchase of the noncontrolling interest
    in Symphony Allegro, Inc.


4,882











4,882Proceeds from purchase of non controlling interest by preferred
    shareholders in Symphony Allegro, Inc., net of fees














47,171Proceeds from equipment term loans










5,814



18,932Payments of equipment term loans and leases


(4,139
)


(4,249
)


(3,546
)


(16,870
)Net cash provided by financing activities


20,416



6,924



70,087



303,975Net increase (decrease) in cash and cash equivalents


(12,586
)


(5,301
)


14,305



13,450Cash and cash equivalents at beginning of period


26,036



31,337



17,032



Cash and cash equivalents at end of period

$
13,450


$
26,036


$
31,337


$
13,450Supplemental disclosures of cash flow informationCash paid for interest

$
467


$
935


$
1,003


$
3,732Non cash investing and financing activities:Conversion of convertible preferred stock to common stock

$



$



$



$
107,194Issuance of shares and warrants, net of warrant cancellation in
    conjunction with Symphony Allegro purchase

$
36,085


$



$



$
36,085Issuance of contingent consideration liability

$
16,855


$



$



$
16,855Issuance of warrants in conjunction with establishment of
    Symphony Allegro

$



$



$



$
10,708    74




---



##### Table of Contents



ALEXZA
    PHARMACEUTICALS, INC.
    (a development stage company)
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    The
    Company and Basis of Presentation  Business
      Basis
    of Consolidation
    Registered
    Direct Equity Issuance
      Unregistered
    Direct Equity Issuance
   75




---



##### Table of Contents



2.
    Need to
    Raise Additional Capital    3.
    Summary
    of Significant Accounting Policies  Use of
    Estimates
    Fair
    Value of Financial Instruments
    
    Level 1  Quoted prices in active markets for
    identical assets or liabilities.
    Level 2  Inputs other than Level 1 that are
    observable, either directly or indirectly, such as quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets or liabilities. 76




---



##### Table of Contents



December 31, 2009

Level 1


Level 2


Level 3


TotalAssetsMoney market funds

$
10,421


$



$



$
10,421Government-sponsored enterprises






5,217







5,217Corporate debt securities






3,500







3,500Total

$
10,421


$
8,717


$



$
19,138LiabilitiesContingent consideration liability

$



$



$
24,838


$
24,838Total

$



$



$
24,838


$
24,838   December 31, 2008

Level 1


Level 2


Level 3


TotalAssetsMoney market funds

$
19,350


$



$



$
19,350Money market funds held by Symphony Allegro, Inc.


21,318











21,318Corporate debt securities






9,649







9,649Government securities






1,505







1,505Government-sponsored enterprises






6,620







6,620Total

$
40,668


$
17,774


$



$
58,442   Contingent
    consideration liability
  Staccato Staccato
     77




---



##### Table of Contents



AmountAcquisition date fair value measurement 
    August 26, 2009

$
16,855Adjustments to fair value measurement


7,983Ending balance  December 31, 2009

$
24,838   Concentration
    of Credit Risk
    Cash
    Equivalents and Marketable Securities
      available-for-sale available-for-sale
      Property
    and Equipment
    Restricted
    Cash
   78




---



##### Table of Contents



Impairment
    of Long-Lived Assets
    Revenue
    Recognition
  Revenue Recognition
    in Financial Revision of Topic 13
      Research
    and Development
      Income
    Taxes
     79




---



##### Table of Contents



Comprehensive
    Loss Attributable to Alexza Common Stockholders
    Period fromDecember 19,2000(Inception) toDecember 31,2009


2008


2007


2009Net loss

$
(56,065
)

$
(77,041
)

$
(55,910
)

$
(309,712
)Change in unrealized (loss) on marketable securities, net of
    taxes


(29
)


(113
)


132



(1
)Comprehensive loss


(56,094
)


(77,154
)


(55,778
)


(309,713
)Comprehensive loss attributable to noncontrolling interest in
    Symphony Allegro. Inc., net of taxes


13,987



18,591



10,791



45,089Comprehensive loss attributable to Alexza common stockholders

$
(42,107
)

$
(58,563
)

$
(44,987
)

$
(264,624
)   Share-Based
    Compensation
      Employee
    Share-Based Awards Granted Prior to January 1,
    2006
    Employee
    Share-Based Awards Granted On or Subsequent to January 1,
    2006
    Stock
    Options, Stock Purchase Rights and Restricted Stock
    Units
   80




---



##### Table of Contents



Year Ended December 31,2009


2008


2007Stock Option PlansWeighted-average expected term


5.0 years



5.0 years



6.1 yearsExpected volatility


86
%


67
%


73
%Risk-free interest rate


1.76
%


3.14
%


4.72
%Dividend yield


0
%


0
%


0
%Employee Stock Purchase PlanWeighted-average expected term


1.90 Years



1.65 years



1.42 yearsExpected volatility


74
%


71
%


53
%Risk-free interest rate


2.55
%


2.68
%


4.31
%Dividend yield


0
%


0
%


0
%   Weighted-Average Expected Term
    Volatility
  Risk-Free Interest Rate.
  Dividend Yield
  Forfeiture Rate
  Restricted Stock Units
   81




---



##### Table of Contents



Recently
    Adopted Accounting Standards
  Accounting
    Standards Codification Topic No. 810 (ASC
    810)
      Recently
    Issued Accounting Standards
  Accounting
    Standards Update
    No. 2010-13
    (ASU
    2010-13)
  2010-13, 2010-13
  4.
    Net Loss
    per Share Attributable to Alexza Common Stockholders      Year Ended December 31,2009

2008

2007Outstanding stock options


4,570



3,710



2,927Unvested restricted stock units


706



123



58Warrants to purchase common stock


5,091



2,324



2,016  82




---



##### Table of Contents



5.
    Cash,
    Cash Equivalents, and Marketable Securities    UnrealizedDecember 31, 2009

Amortized Cost


Fair Value


Gain/(Loss)Cash

$
778


$
778


$
Money market funds


10,421



10,421



Government-sponsored enterprises


5,218



5,217



(1
)Corporate debt securities


3,500



3,500



Total

$
19,917


$
19,916


$
(1
)   UnrealizedDecember 31, 2008

Amortized Cost


Fair Value


Gain/(Loss)Cash

$
432


$
432


$
Money market funds


19,350



19,350



Money market fund held by Symphony Allegro, Inc.


21,318



21,318



Corporate debt securities


9,633



9,649



16Government securities


1,505



1,505



Government-sponsored enterprises


6,608



6,620



12Total

$
58,846


$
58,874


$
28     December 31,2009


2008Cash and cash equivalents

$
13,450


$
26,036Investments held by Symphony Allegro, Inc.






21,318Marketable securities


6,466



11,520$
19,916


$
58,874     other-than-temporary other-than-temporary
 83




---



##### Table of Contents



6.
    Property
    and Equipment    December 31,2009


2008(In thousands)Lab equipment

$
11,702


$
11,019Computer equipment and software


4,755



4,885Furniture


1,060



1,123Leasehold improvements


19,255



19,135Construction in progress  manufacturing equipment


4,240



1,01941,012



37,181Less: accumulated depreciation


(17,414
)


(13,029
)$
23,598


$
24,152     7.
    Other
    Accrued Liabilities    December 31,2009


2008(In thousands)Accrued compensation

$
2,174


$
4,012Accrued professional fees


630



439Other


677



754$
3,481


$
5,205   8.
    Commitments  Equipment
    Financing Obligations
     84




---



##### Table of Contents



2010

$
2,0882011


427Total

$
2,515     Operating
    Leases
      month-to-month
    December 31,
  Lease


Sublease


NetPayments


Receipts


Payments2010

$
5,016


$
(500
)

$
4,5162011


5,138



(426
)


4,7122012


5,263



(438
)


4,8252013


4,919



(451
)


4,4682014


4,934



(74
)


4,860Thereafter


15,858







15,858Total minimum payments

$
41,128


$
(1,889
)

$
39,239    85




---



##### Table of Contents



Manufacturing
    and Supply Agreement
  Staccato
    9.
    License
    Agreements  Symphony
    Allegro, Inc.
  Staccato Staccato
   86




---



##### Table of Contents



87




---



##### Table of Contents



Description

Fair ValueFair value of consideration transferred:10,000,000 shares of Alexza common stock

$
28,000Warrant consideration, net


8,085Fair value of contingent cash payments to Allegro stockholders


16,855Total consideration transferred


52,940Add: Deficit of noncontrolling interest in Allegro


8,626Excess consideration transferred over the carrying value of the
    noncontrolling interest in Allegro

$
61,566       Warrant

WarrantIssued

CancelledNumber of Shares

5,000,000

2,000,000Expected term

5.0 years

2.3 yearsExpected volatility

89%

117%Risk-free interest rate

2.46%

1.06%Dividend yield

0%

0%   Endo
    Pharmaceuticals, Inc.
  Staccato Staccato
   88




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##### Table of Contents



10.
    Common
    Stock    Stock options outstanding


4,740,499Unvested restricted stock units outstanding


196,2702005 Equity Incentive Plan and 2005 Non Employee Director Stock
    Option Plan  shares available for issuance


534,179Employee Stock Purchase Plan  shares available for
    issuance


156,243Warrants outstanding


12,727,554Total


18,354,745   11.
    Warrants         89




---



##### Table of Contents



12.
    Equity
    Incentive Plans  2005
    Equity Incentive Plan
       90




---



##### Table of Contents



2005
    Non-Employee Directors Stock Option Plan
      Outstanding OptionsNumber of

Weighted AverageShares

Exercise PriceBalance as of January 1, 2007


2,611,042


$
5.23Options granted


1,054,656


$
9.10Options exercised


(204,423
)

$
2.11Options forfeited


(249,536
)

$
6.98Options cancelled


(4,875
)

$
6.60Balance as of December 31, 2007


3,206,864


$
6.56Options granted


1,472,171


$
5.26Options exercised


(104,428
)

$
1.55Options forfeited


(190,284
)

$
7.20Options cancelled


(200,975
)

$
7.81Balance as of December 31, 2008


4,183,348


$
6.14Options granted


1,394,632


$
2.48Options exercised


(69,708
)

$
1.20Options forfeited


(422,118
)

$
5.79Options cancelled


(345,655
)

$
6.08Balance as of December 31, 2009


4,740,499


$
5.17Options exercisable at:December 31, 2007


1,365,538


$
5.54December 31, 2008


1,950,662


$
6.02December 31, 2009


2,865,898


$
5.71    91




---



##### Table of Contents



Outstanding


ExercisableRemaining








RemainingContractual


Aggregate





Contractual


AggregateNumber


Life


Intrinsic


Number


Life


IntrinsicExercise Price

of Shares


(In Years)


Value


of Shares


(In Years)


Value$1.10  1.38


520,882



4.94


$
630,000



515,458



4.93


$
624,0001.69  2.37


775,724



9.66



139,000



127,523



9.17



40,0002.64  3.13


495,965



9.05







226,130



9.06



3.30  4.35


674,735



8.38







268,622



8.15



4.41  7.00


505,829



7.77







320,099



7.54



7.20  7.90


340,560



7.05







279,521



7.03



8.00  8.00


575,457



4.56







562,775



4.53



8.01  8.89


547,908



7.48







343,299



7.45



8.91  11.70


303,439



7.13







222,471



7.09



4,740,499



7.47


$
769,000



2,865,898



6.63


$
664,000       WeightedNumber


Averageof


Grant  DateShares


Fair ValueOutstanding at January 1, 2007


34,080



7.00Granted


74,575



8.89Released


(8,245
)


7.00Forfeited


(7,285
)


7.71Outstanding at December 31, 2007


93,125



8.42Granted


112,423



4.35Released


(23,443
)


8.33Forfeited


(10,151
)


7.00Outstanding at December 31, 2008


171,954



5.86Granted


965,643



2.19Released


(839,469
)


2.31Forfeited


(101,858
)


4.03Outstanding at December 31, 2009


196,270



3.90    92




---



##### Table of Contents



Year

Number of Shares2001


363,6362002


770,7322003


454,5452004


1,000,0002005


25,5442006


1,327,9902007


676,3862008


2,174,8402009


656,417       2005
    Employee Stock Purchase Plan
        13.
    Restructuring
    Charges  Staccato
  14.
    401(k)
    Plan   93




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##### Table of Contents



15.
    Income
    Taxes      Year Ended December 31,2009


2008


2007(In thousands)Federal tax benefit at statutory rate

$
(14,307
)

$
(19,873
)

$
(15,321
)State tax benefit net of federal effect


(2,385
)


(3,402
)


(2,629
)Research and development credits


(2,537
)


(2,693
)


(3,538
)Other permanent differences


(31
)


19



20Share-based compensation


1,112



1,450



274Adjustment to basis in subsidiary


3,180







Change in valuation allowance


14,662



24,567



21,193Other


306



(68
)


1Total

$



$



$
     December 31,2009


2008(In thousands)Federal and state net operating loss carryforwards

$
79,478


$
58,451Federal and state research and development credit carryforwards


11,840



10,210Accrued liabilities


9,410



2,736Capitalized research and development costs


25,675



23,216Other


49



42Total deferred tax assets


126,453



94,655Valuation allowance


(126,453
)


(94,655
)Net deferred tax assets

$



$
      94




---



##### Table of Contents



Balance at January 1, 2007

$
1,635Additions based on tax positions taken during a prior period


Reductions based on tax positions taken during a prior period


Additions based on tax positions taken during the current period


611Reductions based on tax positions taken during the current period


Reductions related to settlement of tax matters


Reductions related to a lapse of applicable statute of
    limitations


Balance at December 31, 2007

$
2,246Additions based on tax positions taken during a prior period


Reductions based on tax positions taken during a prior period


(1,067
)Additions based on tax positions taken during the current period


401Reductions based on tax positions taken during the current period


Reductions related to settlement of tax matters


Reductions related to a lapse of applicable statute of
    limitations


Balance at December 31, 2008

$
1,580Additions based on tax positions taken during a prior period


645Reductions based on tax positions taken during a prior period


Additions based on tax positions taken during the current period


385Reductions based on tax positions taken during the current period


Reductions related to settlement of tax matters


Reductions related to a lapse of applicable statute of
    limitations


Balance at December 31, 2009

$
2,610      95




---



##### Table of Contents



16.
    Subsequent
    Events  and/or
       96




---



##### Table of Contents



17.
    Quarterly
    Results (Unaudited)    Quarter EndedMarch 31

June 30

September 30

December 31Fiscal 2009Revenues

$
9,514


$



$



$
Loss from operations


(6,843
)


(16,835
)


(13,007
)


(11,022
)Net loss


(6,904
)


(16,969
)


(12,425
)


(19,767
)Net loss attributable to Alexza common stockholders


(1,714
)


(9,740
)


(72,423
)


(19,767
)Basic and diluted net loss per share attributable to Alexza
    common stockholders


(0.05
)


(0.29
)


(1.95
)


(0.39
)Shares used in computation of basic and diluted net loss per
    share attributable to Alexza common stockholders


32,967



33,136



37,060



51,272Fiscal 2008Revenues

$



$



$
69


$
417Loss from operations


(19,155
)


(20,500
)


(21,067
)


(17,998
)Net loss


(18,366
)


(20,013
)


(20,758
)


(17,904
)Net loss attributable to Alexza common stockholders


(14,609
)


(14,122
)


(14,692
)


(15,027
)Basic and diluted net loss per share attributable to Alexza
    common stockholders


(0.47
)


(0.43
)


(0.45
)


(0.46
)Shares used in computation of basic and diluted net loss per
    share attributable to Alexza common stockholders


31,225



32,532



32,610



32,821  97




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures:
      Managements
    Annual Report on Internal Control Over Financial
    Reporting:
  Rules 13a-15(f) 15d-15(f). Internal Control  Integrated Framework Form 10-K
 98




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 
    99




---



##### Table of Contents



Changes
    in Internal Control Over Financial Reporting:
    Item 9B.
    Other
    Information   PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Securities
    Authorized For Issuance Under Equity Compensation
    Plans
      (a)


(b)


(c)Number of Securities


Weighted-Average


Number of Securities Remainingto be Issued upon


Exercise Price of


Available for Future IssuanceExercise of


Outstanding


Under Equity CompensationOutstanding Options,


Options, Warrants


Plans (Excluding SecuritiesPlan Category

Warrants and Rights


and Rights


Reflected in Column (a))Equity compensation plans approved by security holders


4,936,769


$
3.66



690,422
(1)(2)Equity compensation plans not approved by security holders










Total


4,936,769


$
3.66



690,422  100




---



##### Table of Contents



(1)
    
    The 2005 Plan incorporates an evergreen formula pursuant to
    which on each January 1, the aggregate number of shares
    reserved for issuance under the 2005 Plan will increase by a
    number equal to the lesser of (i) 1,000,000 shares,
    (ii) 2% of the outstanding shares on December 31 of the
    preceding calendar year, or (iii) an amount determined by
    our Board.The Directors Plan incorporates an evergreen formula
    pursuant to which on each January 1, the aggregate number
    of shares reserved for issuance under the Directors Plan
    will increase by the number of shares subject to options granted
    during the preceding calendar year less the number of shares
    that revert back to the share reserve during the preceding
    calendar year.The ESPP incorporates an evergreen formula pursuant to which on
    each January 1, the aggregate number of shares reserved for
    issuance under the ESPP will increase by a number equal to the
    lesser of (i) 250,000 shares, (ii) 1% of the
    outstanding shares on December 31 of the preceding calendar
    year, or (iii) an amount determined by our Board.(2)
    
    Of these shares, 156,243 shares remain available for
    purchase under the ESPP.  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Financial Statements
    Financial Statement Schedules
    Exhibits
 101




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of Document3
.5

Restated Certificate of Incorporation(1)3
.7

Amended and Restated Bylaws(1)3
.8

Amendment to Amended and Restated Bylaws(5)4
.1

Specimen Common Stock Certificate(1)4
.2

Second Amended and Restated Investors Rights Agreement
    between Registrant and certain holders of Preferred Stock dated
    November 5, 2004(1)10
.2

Form of Director/Officer Indemnification Agreement entered into
    between Registrant and each of its directors and officers(9)*10
.3

Form of Change of Control Agreement*(18)10
.4

2005 Equity Incentive Plan(8)*10
.5

Form of Option Grant Notice, Form of Option Agreement and Form
    of Notice of Exercise to 2005 Equity Incentive Plan(1)*10
.6

2005 Non-Employee Directors Stock Option Plan(1)10
.7

Form of Option Grant Notice, Form of Option Agreement and Form
    of Notice of Exercise to 2005 Non-Employee Directors Stock
    Option Plan(1)10
.8

2005 Employee Stock Purchase Plan(1)*10
.9

Form of Offering Document to 2005 Employee Stock Purchase
    Plan(1)*10
.13

Development Agreement between Registrant and Autoliv ASP, Inc.
    dated October 3, 2005(1)10
.14

Loan and Security Agreement between Registrant and Silicon
    Valley Bank dated March 20, 2002, as amended on
    January 7, 2003, September 3, 2003, March 18,
    2004 and May 16, 2005(1)10
.15

Master Security Agreement between Registrant and General
    Electric Capital Corporation dated May 17, 2005, as amended
    on May 18, 2005(1)10
.16

Promissory Note between Registrant and General Electric Capital
    Corporation dated June 15, 2005(1)10
.17

Promissory Note between Registrant and General Electric Capital
    Corporation dated August 24, 2005(1)10
.20

Warrant to Purchase shares of Series B Preferred Stock
    issued to Silicon Valley Bank dated March 20, 2002(1)10
.21

Warrant to Purchase shares of Series C Preferred Stock
    issued to Silicon Valley Bank dated January 7, 2003, as
    amended on March 4, 2003(1)10
.22

Warrant to Purchase shares of Series C Preferred Stock
    issued to Silicon Valley Bank dated September 19, 2003(1)10
.23

Warrant to Purchase shares of Series C Preferred Stock
    issued to Silicon Valley Bank dated April 7, 2004(1)10
.24

Lease Agreement between the Brittania, LLC and the Registrant
    dated August 25, 2006(2)10
.26

Purchase Option Agreement by and among Symphony Allegro Holdings
    LLC and Symphony Allegro, Inc. and Registrant dated
    December 1, 2006(2)10
.29

Amended and Restated Research and Development Agreement by and
    among Symphony Allegro Holdings LLC and Symphony Allegro, Inc.
    and Registrant dated December 1, 2006(2)10
.30

Registration Rights Agreement between Symphony Allegro Holdings
    LLC and Registrant dated December 1, 2006(2)10
.31

Novated and Restated Technology License Agreement by and among
    Symphony Allegro Holdings LLC and Symphony Allegro, Inc. and
    Registrant dated December 1, 2006(2)10
.32

Confidentiality Agreement by and among Symphony Allegro Holdings
    LLC and Symphony Allegro, Inc. and Registrant dated
    December 1, 2006(2)10
.33

2007 Performance Bonus Program*(2)10
.34

First Amendment to Lease between Britannia Hacienda VIII LLC and
    the Registrant dated May 4, 2007(3) 102




---



##### Table of Contents



ExhibitNumber

Description of Document10
.35

Second Amendment to Lease between Britannia Hacienda VIII LLC
    and the Registrant dated August 28, 2007(4)10
.36

Manufacturing and Supply Agreement between Registrant and
    Autoliv ASP, Inc., dated November 2, 2007(5)10
.38

Offer Letter between the Registrant and Michael Simms, dated
    January 23, 2008(5)10
.39

Stock and Warrant Purchase Agreement between Registrant and
    Biomedical Investment Fund Pte Ltd., dated March 26,
    2008(6)10
.40

Warrant to Purchase shares of Common Stock issued to Biomedical
    Investment Fund Pte Ltd. dated March 27, 2008(6)10
.41

Common Stock Purchase Agreement between Registrant and Azimuth
    Opportunity Ltd. dated March 31, 2008(7)10
.42

Form of Notice of Grant of Award and Stock Unit Award Agreement
    to 2005 Equity Incentive Plan(18)10
.43

2006 Performance Bonus Program*(10)10
.44

2008 Performance Bonus Program*(11)10
.45

2009-2010
    Performance Based Incentive Program*(12)10
.46

Severance Agreement and Release Agreement between the Registrant
    and Anthony Tebbutt, dated February 6, 2009 and
    February 17, 2009, respectively(13)10
.47

Amended and Restated Purchase Option Agreement by and among the
    Company, Holdings and Symphony Allegro dated June 15,
    2009*(14)10
.48

Warrant Purchase Agreement between the Company and Holdings
    dated June 15, 2009(14)10
.49

Amended and Restated Registration Rights Agreement between the
    Company and Holdings dated June 15, 2009(14)10
.50

Form of Amendment to Change of Control Agreement*(15)10
.51

Form of Warrants to Purchase Shares of Common Stock, dated
    August 26, 2009(16)10
.52

Letter Agreement among the Company, Symphony Allegro Holdings
    LLC, Symphony Capital Partners, L.P. and Symphony Strategic
    Partners, LLC, dated August 26, 2009(16)10
.53

Securities Purchase Agreement by and among Alexza and the
    purchasers identified therein, dated September 29, 2009(17)10
.54

Form of Warrants to Purchase shares of Common Stock, dated
    October 5, 2009(17)10
.55u

Biovail Collaboration and License Agreement, dated
    February 9, 201010
.56u

Biovail Manufacture and Supply Agreement dated February 9,
    201014
.1

Alexza Pharmaceuticals, Inc. Code of Business Conduct for
    Employees, Executive Officers and Directors(2)21
.1u

Subsidiaries of Registrant23
.1u

Consent of Independent Registered Public Accounting Firm24
.1u

Power of Attorney included on the signature pages hereto31
.1u

Section 302 Certification of CEO.31
.2u

Section 302 Certification of CFO.32
.1u

Section 906 Certifications of CEO and CFO.     *
    
    Management contract or compensation plan or arrangement.u
    
    Filed herein
    
    Confidential treatment has been granted with respect to certain
    portions of this exhibit. This exhibit omits the information
    subject to this confidentiality request. Omitted portions have
    been filed separately with the SEC.
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. This exhibit omits the
    information subject to this confidentiality request. Omitted
    portions have been filed separately with the SEC. 103




---



##### Table of Contents



(1)
    
    Incorporated by reference to exhibits to our Registration
    Statement on
    Form S-1
    filed on December 22, 2005, as amended (File
    No. 333-130644).(2)
    
    Incorporated by reference to our Annual Report on
    Form 10-K
    (File
    No. 000-51820)
    as filed with the SEC on March 29, 2007.(3)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on August 13, 2007.(4)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on November 1, 2007.(5)
    
    Incorporated by reference to our Annual Report on
    Form 10-K
    (File
    No. 000-51820)
    as filed with the SEC on March 17, 2008.(6)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on March 17, 2008.(7)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on March 31, 2008.(8)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on May 30, 2008.(9)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on July 14, 2008.(10)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on June 5, 2006.(11)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on April 16, 2008.(12)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on February 24, 2009.(13)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on May 11, 2009.(14)
    
    Incorporated by reference to our Current Report on
    Form 8-K/A
    (File
    No. 000-51820)
    as filed with the SEC on June 26, 2009.(15)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on August 5, 2009.(16)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on August 26, 2009.(17)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on September 30, 2009.(18)
    
    Incorporated by reference to our Current Report on Form
    10-K (File
    No.
    000-51820)
    as filed with the SEC on March 10, 2009. 104




---



##### Table of Contents



SIGNATURES      By:
    /s/  THOMAS
    B. KING     Dated:
    March 9, 2010
  POWER OF
    ATTORNEY
      Signature

Title/s/  THOMAS
    B. KINGThomas
    B. King

President, Chief Executive Officer and Director (Principal
    Executive Officer)/s/  AUGUST
    J. MORETTIAugust
    J. Moretti

Senior Vice President and Chief Financial Officer (Principal
    Financial and Accounting Officer)/s/  HAL
    V. BARRONHal
    V. Barron

Director/s/  ANDREW
    L. BUSSERAndrew
    L. Busser

Director/s/  SAMUEL
    D. COLELLASamuel
    D. Colella

Director/s/  ALAN
    D. FRAZIERAlan
    D. Frazier

Director 105




---



##### Table of Contents



Signature

Title/s/  DEEPIKA
    R. PAKIANATHANDeepika
    R. Pakianathan

Director/s/  J.
    LEIGHTON READJ.
    Leighton Read

Director/s/  GORDON
    RINGOLDGordon
    Ringold

Director/s/  ISAAC
    STEINIsaac
    Stein

Director  106




---



##### Table of Contents



EXHIBIT INDEX  ExhibitNumber

Description of Document3
.5

Restated Certificate of Incorporation(1)3
.7

Amended and Restated Bylaws(1)3
.8

Amendment to Amended and Restated Bylaws(5)4
.1

Specimen Common Stock Certificate(1)4
.2

Second Amended and Restated Investors Rights Agreement
    between Registrant and certain holders of Preferred Stock dated
    November 5, 2004(1)10
.2

Form of Director/Officer Indemnification Agreement entered into
    between Registrant and each of its directors and officers(9)*10
.3

Form of Change of Control Agreement*(18)10
.4

2005 Equity Incentive Plan(8)*10
.5

Form of Option Grant Notice, Form of Option Agreement and Form
    of Notice of Exercise to 2005 Equity Incentive Plan(1)*10
.6

2005 Non-Employee Directors Stock Option Plan(1)10
.7

Form of Option Grant Notice, Form of Option Agreement and Form
    of Notice of Exercise to 2005 Non-Employee Directors Stock
    Option Plan(1)10
.8

2005 Employee Stock Purchase Plan(1)*10
.9

Form of Offering Document to 2005 Employee Stock Purchase
    Plan(1)*10
.13

Development Agreement between Registrant and Autoliv ASP, Inc.
    dated October 3, 2005(1)10
.14

Loan and Security Agreement between Registrant and Silicon
    Valley Bank dated March 20, 2002, as amended on
    January 7, 2003, September 3, 2003, March 18,
    2004 and May 16, 2005(1)10
.15

Master Security Agreement between Registrant and General
    Electric Capital Corporation dated May 17, 2005, as amended
    on May 18, 2005(1)10
.16

Promissory Note between Registrant and General Electric Capital
    Corporation dated June 15, 2005(1)10
.17

Promissory Note between Registrant and General Electric Capital
    Corporation dated August 24, 2005(1)10
.20

Warrant to Purchase shares of Series B Preferred Stock
    issued to Silicon Valley Bank dated March 20, 2002(1)10
.21

Warrant to Purchase shares of Series C Preferred Stock
    issued to Silicon Valley Bank dated January 7, 2003, as
    amended on March 4, 2003(1)10
.22

Warrant to Purchase shares of Series C Preferred Stock
    issued to Silicon Valley Bank dated September 19, 2003(1)10
.23

Warrant to Purchase shares of Series C Preferred Stock
    issued to Silicon Valley Bank dated April 7, 2004(1)10
.24

Lease Agreement between the Brittania, LLC and the Registrant
    dated August 25, 2006(2)10
.26

Purchase Option Agreement by and among Symphony Allegro Holdings
    LLC and Symphony Allegro, Inc. and Registrant dated
    December 1, 2006(2)10
.29

Amended and Restated Research and Development Agreement by and
    among Symphony Allegro Holdings LLC and Symphony Allegro, Inc.
    and Registrant dated December 1, 2006(2)10
.30

Registration Rights Agreement between Symphony Allegro Holdings
    LLC and Registrant dated December 1, 2006(2)10
.31

Novated and Restated Technology License Agreement by and among
    Symphony Allegro Holdings LLC and Symphony Allegro, Inc. and
    Registrant dated December 1, 2006(2)10
.32

Confidentiality Agreement by and among Symphony Allegro Holdings
    LLC and Symphony Allegro, Inc. and Registrant dated
    December 1, 2006(2)10
.33

2007 Performance Bonus Program*(2)10
.34

First Amendment to Lease between Britannia Hacienda VIII LLC and
    the Registrant dated May 4, 2007(3) 107




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##### Table of Contents



ExhibitNumber

Description of Document10
.35

Second Amendment to Lease between Britannia Hacienda VIII LLC
    and the Registrant dated August 28, 2007(4)10
.36

Manufacturing and Supply Agreement between Registrant and
    Autoliv ASP, Inc., dated November 2, 2007(5)10
.38

Offer Letter between the Registrant and Michael Simms, dated
    January 23, 2008(5)10
.39

Stock and Warrant Purchase Agreement between Registrant and
    Biomedical Investment Fund Pte Ltd., dated March 26,
    2008(6)10
.40

Warrant to Purchase shares of Common Stock issued to Biomedical
    Investment Fund Pte Ltd. dated March 27, 2008(6)10
.41

Common Stock Purchase Agreement between Registrant and Azimuth
    Opportunity Ltd. dated March 31, 2008(7)10
.42

Form of Notice of Grant of Award and Stock Unit Award Agreement
    to 2005 Equity Incentive Plan(18)10
.43

2006 Performance Bonus Program*(10)10
.44

2008 Performance Bonus Program*(11)10
.45

2009-2010
    Performance Based Incentive Program*(12)10
.46

Severance Agreement and Release Agreement between the Registrant
    and Anthony Tebbutt, dated February 6, 2009 and
    February 17, 2009, respectively(13)10
.47

Amended and Restated Purchase Option Agreement by and among the
    Company, Holdings and Symphony Allegro dated June 15,
    2009*(14)10
.48

Warrant Purchase Agreement between the Company and Holdings
    dated June 15, 2009(14)10
.49

Amended and Restated Registration Rights Agreement between the
    Company and Holdings dated June 15, 2009(14)10
.50

Form of Amendment to Change of Control Agreement*(15)10
.51

Form of Warrants to Purchase Shares of Common Stock, dated
    August 26, 2009(16)10
.52

Letter Agreement among the Company, Symphony Allegro Holdings
    LLC, Symphony Capital Partners, L.P. and Symphony Strategic
    Partners, LLC, dated August 26, 2009(16)10
.53

Securities Purchase Agreement by and among Alexza and the
    purchasers identified therein, dated September 29, 2009(17)10
.54

Form of Warrants to Purchase shares of Common Stock, dated
    October 5, 2009(17)10
.55u

Biovail Collaboration and License Agreement, dated February 9,
    201010
.56u

Biovail Manufacture and Supply Agreement dated February 9,
    201014
.1

Alexza Pharmaceuticals, Inc. Code of Business Conduct for
    Employees, Executive Officers and Directors(2)21
.1u

Subsidiaries of Registrant23
.1u

Consent of Independent Registered Public Accounting Firm24
.1u

Power of Attorney included on the signature pages hereto31
.1u

Section 302 Certification of CEO.31
.2u

Section 302 Certification of CFO.32
.1u

Section 906 Certifications of CEO and CFO.     *
    
    Management contract or compensation plan or arrangement.u
    
    Filed herein
    
    Confidential treatment has been granted with respect to certain
    portions of this exhibit. This exhibit omits the information
    subject to this confidentiality request. Omitted portions have
    been filed separately with the SEC.
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. This exhibit omits the
    information subject to this confidentiality request. Omitted
    portions have been filed separately with the SEC. 108




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##### Table of Contents



(1)
    
    Incorporated by reference to exhibits to our Registration
    Statement on
    Form S-1
    filed on December 22, 2005, as amended (File
    No. 333-130644).(2)
    
    Incorporated by reference to our Annual Report on
    Form 10-K
    (File
    No. 000-51820)
    as filed with the SEC on March 29, 2007.(3)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on August 13, 2007.(4)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on November 1, 2007.(5)
    
    Incorporated by reference to our Annual Report on
    Form 10-K
    (File
    No. 000-51820)
    as filed with the SEC on March 17, 2008.(6)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on March 17, 2008.(7)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on March 31, 2008.(8)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on May 30, 2008.(9)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on July 14, 2008.(10)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on June 5, 2006.(11)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on April 16, 2008.(12)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on February 24, 2009.(13)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on May 11, 2009.(14)
    
    Incorporated by reference to our Current Report on
    Form 8-K/A
    (File
    No. 000-51820)
    as filed with the SEC on June 26, 2009.(15)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q
    (File
    No. 000-51820)
    as filed with the SEC on August 5, 2009.(16)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on August 26, 2009.(17)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    (File
    No. 000-51820)
    as filed with the SEC on September 30, 2009.(18)
    
    Incorporated by reference to our Current Report on Form
    10-K (File
    No.
    000-51820)
    as filed with the SEC on March 10, 2009. 109