Alexza Pharmaceuticals Inc said it will explore options including sale of assets, strategic business combination, or partnerships.
The company has also given a 60-day notice of layoffs to all its employees to conserve cash to support operations.
Alexza expects to significantly reduce its work force as it continues to pursue FDA approval of ADASUVE - its experimental anti-agitation therapeutic delivered via the company's Staccato inhaler to treat schizophrenia - and pursue its marketing authorization application work with the European Medicines Agency.
Recently, an advisory panel narrowly recommended U.S. approval of ADASUVE and called for restrictions on how the drug is used.
Three injectable drugs, Bristol-Myers Squibb's Abilify, Eli Lilly's Zyprexa and Pfizer's Geodon, are already approved to calm patients with mental illnesses, but Alexza's drug would be the first that is inhaled.
In October, the Alexza entered into a marketing partnership with privately held Barcelona, Spain-based Grupo Ferrer International for the drug.
Alexza said it has retained Lazard to assist in exploring strategic options.
Shares of the Mountain View, California-based company closed down nearly 3 percent at 66 cents on Friday on Nasdaq. The stock has lost more than three-quarters of its value since last October.