SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
March
13, 2009
Date of
Report (Date of earliest event reported)
Discovery
Laboratories, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
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000-26422
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94-3171943
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification
Number)
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2600
Kelly Road, Suite 100
Warrington,
Pennsylvania 18976
(Address
of principal executive offices)
(215)
488-9300
(Registrant's
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02.
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Results
of Operations and Financial Condition.
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On March
13, 2009, Discovery Laboratories, Inc. (the “Company”) issued a press release
announcing financial results for the year and quarter ended December 31,
2008. The press release is attached as Exhibit 99.1
hereto.
In
accordance with General Instruction B.2 of Form 8-K, the information in Item
2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall
not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933, as amended, or the Exchange Act,
except as expressly set forth by specific reference in any such
filings.
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Item
8.01.
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Other
Events.
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In connection with the release of its
earnings for the quarter and year ended December 31, 2008, the Company provides
an estimate of the anticipated net cash outflows for the first quarter of 2009
of approximately $7.0 - $8.0 million. Until the U.S. Food and Drug
Administration (FDA) has completed its review of the new drug application (NDA)
for Surfaxin®
(lucinactant) for the prevention of Respiratory Distress Syndrome (RDS), which
is anticipated in April 2009, the Company plans to conserve its financial
resources by rigorously managing limited investments in research and development
activities and other programs, while taking other actions, including potentially
drawing down on its Committed Equity Financing Facilities (CEFFs).
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Item
9.01.
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Financial Statements
and Exhibits.
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(d) Exhibits
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99.1
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Press
release dated March 13, 2009
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Cautionary
Note Regarding Forward-looking Statements:
To the
extent that statements in this Current Report on Form 8-K are not strictly
historical, including statements as to business strategy, outlook, objectives,
future milestones, plans, intentions, goals, future financial conditions, future
collaboration agreements, the success of the Company’s product development or
otherwise as to future events, such statements are forward-looking, and are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements contained in this Current
Report are subject to certain risks and uncertainties that could cause actual
results to differ materially from the statements made. Such risks and others are
further described in the Company's filings with the Securities and Exchange
Commission including the most recent reports on Forms 10-K, 10-Q and 8-K, and
any amendments thereto.
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| Discovery Laboratories, Inc. | |||
|
|
By:
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/s/ Robert J. Capetola | |
| Name: Robert J. Capetola, Ph.D. | |||
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Title: President
and Chief Executive Officer
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|||
Date: March
13, 2009
3
Exhibit
99.1
Discovery Labs Reports Fourth Quarter 2008 Financial Results
Warrington, PA — March 13, 2009 —
Discovery Laboratories, Inc. (Nasdaq: DSCO) today announced financial results for
the fourth quarter ended December 31, 2008.
For the
quarter ended December 31, 2008, the Company reported a net loss of $8.5 million
(or $0.08 per share) on 100.5 million weighted average common shares outstanding
compared to a net loss of $12.0 million (or $0.14 per share) on 88.5
million weighted average common shares outstanding for the same period in
2007. Net cash burn for the fourth quarter of 2008 was $6.7 million,
reflecting $7.6 million used for operating activities and $0.9 million
used for debt service, offset by aggregate proceeds of $1.8 million
received from the issuance of 1.4 million shares of common stock pursuant to
financings under the Company’s Committed Equity Financing Facilities
(CEFFs).
As of
December 31, 2008, the Company had cash and marketable securities of $24.8
million. Additionally, the Company has the ability (subject to
certain conditions, including price and volume limitations) to raise capital
under its existing CEFFs to support its business plans. As of
December 31, 2008, there were approximately 15.0 million shares (not to exceed
an aggregate of $25.0 million) remaining available for issuance under the
December 2008 CEFF, approximately 15.6 million shares (not to exceed an
aggregate of $54.9 million) under the May 2008 CEFF, and approximately 4.5
million shares under the 2006 CEFF, which will expire in May 2009. As
of March 12, 2009, a maximum of $34 million is available to the Company after
giving effect to applicable discounts. The Company had 101.3 million
common shares outstanding as of December 31, 2008.
The
decrease in net loss for the fourth quarter of 2008 as compared to the fourth
quarter of 2007 is primarily due to the Company’s efforts during the fourth
quarter of 2008 to conserve financial resources by limiting program development
activities as we await April 17, 2009, the U.S. Food and Drug Administration’s
(FDA) target action date to complete its review of the NDA for Surfaxin®
(lucinactant) for the prevention of Respiratory Distress Syndrome (RDS)
in premature infants. Additionally, in the fourth quarter of 2007,
the Company incurred significant expenses related to the development of its
Capillary Aerosolization Technology for the delivery of aerosolized KL4
Surfactant.
Robert J.
Capetola, Ph.D., President and Chief Executive Officer of Discovery Labs,
commented, “We believe our KL4 Surfactant
and Capillary Aerosolization Technology Platform has the potential to address
multiple respiratory problems in a range of patient populations from premature
infants to adults. Our top priority is to gain potential FDA
marketing approval for Surfaxin for
the prevention of RDS in premature infants. As we await the FDA’s decision, we
plan to continue to conserve our financial resources while simultaneously
preparing to build a significant pediatric respiratory franchise around our lead
pipeline programs, Surfaxin and Aerosurf®.”
Selected
Key Priorities for 2009 include:
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·
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We
are focused on potentially gaining FDA approval for Surfaxin for the
prevention of RDS in premature infants. The FDA has established April 17,
2009 as its target action date to complete its review. If approved,
Surfaxin will represent the first synthetic, peptide-containing surfactant
for use in pediatric medicine and the first product from our technology
platform.
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·
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Initiate
our Phase 2 clinical program for Aerosurf®,
our proprietary KL4
Surfactant in aerosolized form, which we are developing using our
Capillary Aerosolization Technology, initially for premature infants at
risk for RDS. Aerosurf will potentially provide the neonatal
medical community, for the first time, an ability to treat premature
infants at risk for RDS without the risks generally associated with
invasive endotracheal intubation and mechanical ventilation. We
believe that Aerosurf holds the promise to significantly expand the use of
surfactants in pediatric medicine.
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·
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Advance
our ongoing Phase 2 trial of Surfaxin for children up to 2 years of age
with Acute Respiratory Failure, continue our support of a sponsor
initiated Phase 2a trial at University of North Carolina that is using our
aerosolized KL4
surfactant in patients with Cystic Fibrosis, and continue
development of our novel lyophilized KL4
Surfactant, Surfaxin LS, which is manufactured in a dry powder form and
reconstituted as a liquid just prior to administration. Surfaxin LS, among
other things, may potentially simplify storage requirements and methods of
administering surfactant.
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·
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Following
the potential approval of Surfaxin, we plan to establish our own specialty
pulmonary commercial organization that will focus on creating a
significant presence in the neonatal and pediatric intensive care units.
Alternatively, we would also consider a strategic alliance or
collaboration, assuming such a potential transaction would meet our
business and strategic
requirements.
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·
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Secure
strategic alliances to strengthen our financial position, support
development and commercialization of our pediatric respiratory franchise
in international markets and support development and commercialization of
our adult respiratory programs in worldwide
markets.
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Readers
are referred to, and encouraged to read in its entirety, the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, which includes
full details on the Company’s business plans and operations, financial condition
and results of operations. The Company’s audited financial statements
for the year ending December 31, 2008, are accompanied by an unqualified audit
opinion from Ernst & Young LLP, the Company’s independent public accounting
firm, which includes a “going concern” explanatory statement. The
Company is providing this information to comply with Nasdaq Marketplace Rule
4350(b)(1)(B), which requires an issuer that receives an audit report containing
a going concern explanatory statement to make a public announcement through the
news media disclosing the receipt of such statement.
Additional Financial
Information
For the
year ended December 31, 2008, the Company reported a net loss of $39.1 million
(or $0.40 per share) on 98.1 million weighted average common shares outstanding
compared to a net loss of $40.0 million (or $0.49 per share) on 81.7
million weighted average common shares outstanding for the same period in
2007.
As of
December 31, 2008, the Company had $10.1 million outstanding under its long-term
loan with PharmaBio Development Inc. d/b/a Novaquest (a strategic investment
group of Quintiles Transnational Corp.). The outstanding principal, together
with all accrued and unpaid interest is due and payable on April 30,
2010. Also, as of December 31, 2008, the Company had $3.0 million
outstanding under its secured credit facility with GE Business Financial
Services Inc. and $0.5 million outstanding under the Machinery and Equipment
Loan with the Commonwealth of Pennsylvania Department of Community and Economic
Development.
2
About
Discovery Labs
Discovery
Laboratories, Inc. is a biotechnology company developing Surfactant Replacement
Therapies (SRT) for respiratory diseases. Surfactants are produced
naturally in the lungs and are essential for breathing. Discovery
Labs’ novel proprietary KL4 Surfactant
Technology produces a synthetic, peptide-containing surfactant that is
structurally similar to pulmonary surfactant. In addition, our
proprietary capillary aerosol generating technology produces a dense aerosol
with a defined particle size, to potentially deliver our aerosolized KL4 Surfactant
to the deep lung. Discovery Labs believes that its proprietary
technology platform makes it possible, for the first time, to develop a
significant pipeline of surfactant products targeted to address a variety of
respiratory diseases affecting neonatal, pediatric and adult
patients.
Discovery
Labs’ lead product from its KL4 Surfactant
pipeline is SURFAXIN® for the
prevention of Respiratory Distress Syndrome in premature infants. The U.S. Food
and Drug Administration (FDA) has established April 17, 2009 as its target
action date to complete its review of this new drug application (NDA) and
potentially grant marketing approval for SURFAXIN. SURFAXIN is also
being developed for other neonatal and pediatric indications. AEROSURF®,
Discovery Labs’ aerosolized KL4
Surfactant, is being developed to potentially obviate the need for intubation
and conventional mechanical ventilation and holds the promise to significantly
expand the use of surfactants in respiratory medicine. For more
information, please visit our website at www.Discoverylabs.com.
To the extent that statements in
this press release are not strictly historical, all such statements are
forward-looking, and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from the statements
made. Examples of such risks and uncertainties are: risks relating to
the rigorous regulatory requirements required for approval of any drug or
drug-device combination products that the Company may develop, including that
(i) the Complete Response to the May 2008 Approvable Letter for Surfaxin that
the Company submitted to the U. S. Food and Drug Administration (FDA) in October
2008 will not satisfy the FDA, (ii) the FDA or other regulatory authorities may
not accept or may withhold or delay consideration of any of the Company’s
applications, or may not approve or may limit approval of the Company’s products
to particular indications or impose unanticipated label limitations, and (iii) that changes in the national or
international political and regulatory environment may make it more difficult to
gain FDA or other regulatory approval; risks relating to the Company’s research
and development activities, including time-consuming and expensive pre-clinical
studies, clinical trials and other efforts, which may be subject to potentially
significant delays or regulatory holds, or fail; risks relating to the Company’s
ability to develop and manufacture drug products and capillary aerosolization
systems for clinical studies, and, if approved, for commercialization of drug
and combination drug-device products, including risks of technology transfers to
contract manufacturers and problems or delays encountered by the Company, its
contract manufacturers or suppliers in manufacturing drug products, drug
substances and capillary aerosolization systems on a timely basis or in an
amount sufficient to support the Company’s development efforts and, if approved,
commercialization; risks that (a) market conditions, the competitive landscape
or otherwise, may make it difficult to launch and profitably sell products, (b)
the Company may be unable to build a successful sales and marketing organization
to market its products, if approved, in a timely manner, if at all, and (c) the
Company’s products will not gain market acceptance by physicians, patients,
healthcare payers and others in the medical community; the risk that the Company
or its strategic partners or collaborators will not be able to attract or
maintain qualified personnel; the risk that the Company will not be able in a
changing financial market to raise additional capital or enter into strategic
alliances or collaboration agreements, or that the ongoing credit crisis will
adversely affect the ability of the Company to fund its activities, or that
additional financings could result in substantial equity dilution; the risk that
the Company will not be able to access credit from its committed equity
financing facilities, or that the share price at which the Company may access
the facilities from time to time will not enable the Company to access the full
dollar amount potentially available under the facilities; the risk that the
Company will be unable to maintain The Nasdaq Global Market listing
requirements, causing the price of the Company’s common stock to decline; the
risk that recurring losses, negative cash flows and the inability to raise
additional capital could threaten the Company’s ability to continue as a going
concern; the risks that the Company may be unable to maintain and
protect the patents and licenses related to its products, or other companies may
develop competing therapies and/or technologies, or health care reform may
adversely affect the Company; risks of legal proceedings, including securities
actions and product liability claims; risks relating to reimbursement and health
care reform; and other risks and uncertainties described in the Company’s
filings with the Securities and Exchange Commission including the most recent
reports on Forms 10-K, 10-Q and 8-K, and any amendments
thereto.
Company
Contact:
Lisa
Caperelli, Investor Relations
215-488-9413
3
Condensed
Consolidated Statement of Operations
(in
thousands, except per share data)
|
Three
Months Ended
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||||||||||||||||
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December
31,
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Twelve
Months Ended
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|||||||||||||||
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(unaudited)
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December
31,
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|||||||||||||||
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2008
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2007
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2008
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2007
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|||||||||||||
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Revenue
from collaborative arrangement and grants
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$ | - | $ | - | $ | 4,600 | $ | - | ||||||||
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Operating
expenses: (1)
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||||||||||||||||
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Research
and development
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5,170 | 7,800 | 26,566 | 26,200 | ||||||||||||
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General
and administrative
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3,121 | 4,381 | 16,428 | 13,747 | ||||||||||||
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Total
expenses
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8,281 | 12,181 | 42,994 | 39,947 | ||||||||||||
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Operating
loss
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(8,291 | ) | (12,181 | ) | (38,394 | ) | (39,947 | ) | ||||||||
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Other
income / (expense)
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(246 | ) | 217 | (712 | ) | (58 | ) | |||||||||
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Net
loss
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$ | (8,537 | ) | $ | (11,964 | ) | $ | (39,106 | ) | $ | (40,005 | ) | ||||
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Net
loss per common share
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$ | (0.08 | ) | $ | (0.14 | ) | $ | (0.40 | ) | $ | (0.49 | ) | ||||
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Wghtd.
Avg. number of common shares outstanding
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100,474 | 88,469 | 98,116 | 81,731 | ||||||||||||
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(1)
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Expenses
include a charge for stock-based employee compensation in accordance with
the provisions of FAS 123(R). For the three and twelve
months ended December 31, 2008, the charges associated with FAS 123(R)
were $1.2 million ($0.4 million in R&D and $0.8 million in G&A)
and $4.6 million ($1.5 million in R&D and $3.1 million in G&A),
respectively. For the three and twelve months ended December
31, 2007, the charges associated with FAS 123(R) were $1.8 million ($0.6
million in R&D and $1.2 million in G&A) and $5.2 million ($1.7
million in R&D and $3.5 million in G&A),
respectively.
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Condensed
Consolidated Balance Sheets
(in
thousands)
|
December
31,
|
December
31,
|
|||||||
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2008
|
2007
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|||||||
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ASSETS
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||||||||
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Current
Assets:
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||||||||
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||||||||
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Cash
and marketable securities
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$ | 24,792 | $ | 53,007 | ||||
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||||||||
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Receivables,
prepaid expenses and other current assets
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625 | 611 | ||||||
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Total
Current Assets
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25,417 | 53,618 | ||||||
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Property
and equipment, net
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5,965 | 7,069 | ||||||
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Restricted
Cash
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600 | 600 | ||||||
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Other
assets
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907 | 1,457 | ||||||
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Total
Assets
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$ | 32,889 | $ | 62,744 | ||||
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LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||
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Current
Liabilities:
|
||||||||
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Accounts
payable
|
$ | 2,111 | $ | 757 | ||||
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Accrued
expenses
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5,313 | 7,087 | ||||||
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Equipment
loan and other liabilities
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2,442 | 2,625 | ||||||
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Total
Current Liabilities
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9,866 | 10,469 | ||||||
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Long-Term
Liabilities:
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||||||||
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Loan
payable, including accrued interest
|
10,128 | 9,633 | ||||||
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Equipment
loan and other liabilities
|
1,962 | 3,861 | ||||||
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Total
Liabilities
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21,956 | 23,963 | ||||||
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Stockholders'
Equity
|
10,933 | 38,781 | ||||||
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Total
Liabilities and Stockholders' Equity
|
$ | 32,889 | $ | 62,744 | ||||
4