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
November
4, 2009
Date of
Report (Date of earliest event reported)
Discovery
Laboratories, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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000-26422
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94-3171943
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(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:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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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
November 4, 2009, Discovery Laboratories, Inc. (the “Company”) issued a press
release announcing financial results for the quarter ended September 30,
2009. The press release is attached as Exhibit 99.1
hereto.
For the
three and nine months ended September 30, 2009, the Company reported a net loss
of $7.2 million (or $0.06 per share) and $24.1 million (or $0.22 per share),
respectively on 120.0 million and 111.7 million weighted average common shares
outstanding, respectively. As of September 30, 2009, the Company had
cash and marketable securities of $17.7 million. In October
2009, the Company received an additional $4.3 million of aggregate proceeds from
the issuance of 4.6 million shares of common stock under the Company’s Committed
Equity Financing Facilities (CEFFs).
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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Also on
November 4, 2009, the Company issued a press release providing a business and
pipeline development status update. The second press release is
attached as Exhibit 99.2 hereto.
As of
September 30, 2009, the Company had $10.4 million outstanding under its loan
with Novaquest, a strategic investment group of Quintiles Transnational
Corp. The outstanding principal and all accrued interest is due and
payable on April 30, 2010. The Company’s plans to seek a potential
strategic restructuring of this loan with Novaquest and is assessing alternative
means of financing its payment; however, there can be no assurance that any such
restructuring will occur or financing alternatives will be
obtained.
The
Company has taken steps to conserve its financial resources, predominantly by
curtailing investments in its pipeline programs. As a result of these
efforts, the Company anticipates that its estimated net cash outflow for the
fourth quarter of 2009 will be $2.7 million ($7.0 million of cash outflow for
operating activities and debt service offset by $4.3 million aggregate proceeds
received from the CEFF financings in October), before taking into account any
further use of the CEFFs, any strategic alliances or other financing
alternatives.
Estimates
of H1N1 infection and hospitalization rates included in the press release are
based in part on information obtained from the World Health Organization website
(at http://www.who.int/csr/don/2009_10_30/en/index.html)
and the U.S. Government Center for Disease Control (at
http:/www/cdc.gov/h1n1/images/qa_hospitalizaitons.gif). Estimates of
RDS market size and business opportunities included in the press release are
based on the Company’s analysis of data derived from the following sources,
among others: IMS Midas Data MAT, September 2008 (IMS Data); Vermont Oxford
Network Data, 2005/2006 (VON Data); Soll, Cochrane Database of Systematic
Reviews, 1997, Issue 4 (SC Data); CDC National Vital Statistics, 2005 (CDC NVS);
UNICEF Online Data Set, 2005 (UNICEF Data); ZD Associates Primary Market
Research, 2009 (ZDA Research); Gdovin, J Peds Pharm &
Therapuetics, 2006 (PP&T). In addition, the Company’s
analysis and assumptions take into account estimated patient populations,
expected adoption rates of our products, current pricing, economics and
anticipated potential pharmaco-economic benefits of the Company’s drug products,
if approved.
The
Company’s top priority is to secure sources of capital, preferably through
strategic alliances, to advance its KL4 surfactant
pipeline for respiratory diseases and support its future financial
condition. The Company is actively evaluating several potential
strategic and financial alternatives. To further extend its
resources, the Company has also taken operational steps to conserve existing
capital. Although the Company is presently actively engaged in
discussions regarding several potential strategic alliances, there can be no
assurance that any such strategic alliance or other financing alternatives can
be successfully concluded.
The
Company’s lead KL4 surfactant
pipeline programs (Surfaxin, Surfaxin LS™ and Aerosurf®) are
intended to
address the most significant respiratory conditions affecting pediatric
populations. Surfaxin LS is a lyophilized (dry powder) formulation of
KL4
surfactant intended to improve product ease of use for healthcare practitioners,
eliminate the need for cold-chain storage, and potentially further improve
product clinical performance. Discovery Labs is planning to meet with
U.S. and European regulatory authorities to present a development program
entailing the conduct of a single Phase 3 clinical trial for global
registration. Discovery Labs intends to initiate the Surfaxin LS
clinical program upon securing appropriate strategic alliances and necessary
capital.
Aerosurf
holds the promise to significantly expand the use of KL4 surfactant
therapy by providing neonatologists with a novel means of administering
surfactant without invasive endotracheal intubation and mechanical
ventilation. Discovery Labs has met with and received guidance from
the FDA with respect to the design of its planned Phase 2 clinical program using
Aerosurf for RDS, and intends to initiate such program upon securing appropriate
strategic alliances and necessary capital.
Acute
Respiratory Failure is a severe respiratory disorder associated with lung
injury, often entailing surfactant dysfunction. ARF occurs after
patients have been exposed to serious respiratory infections, such as influenza
(including the type A serotype referred to as H1N1) or respiratory syncytial
virus (RSV). Hospitalization following influenza or other viral
infection is associated with high mortality, morbidity and significant
healthcare cost. No medications are currently approved for this
debilitating condition.
Aerosolized
KL4
surfactant is also being evaluated in an investigator-initiated Phase 2a clinical trial in CF patients.
The trial is being conducted at The University of North Carolina and is funded
primarily through a grant provided by the Cystic Fibrosis
Foundation. The trial has been designed to assess the safety,
tolerability and short-term effectiveness (via improvement in mucociliary
clearance) of aerosolized KL4 surfactant
in CF patients. The results from this trial are anticipated in the first half of
2010.
Surfaxin,
Surfaxin LS and Aerosurf are investigational drugs currently under development
and are subject to all of the risks and uncertainties associated with
development-stage drug product candidates, including whether regulatory
development and marketing approvals can be successfully
obtained. Examples of these and other risks and uncertainties are
included 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.
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Item
9.01.
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Financial Statements
and Exhibits.
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(d)
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Exhibits
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99.1
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Press
release dated November 4, 2009
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99.2
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Press
release dated November 4, 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,
market opportunities, 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.
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.
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Discovery
Laboratories, Inc.
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|||
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By:
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/s/ W. Thomas Amick | ||
| Name: | W. Thomas Amick | ||
| Title: | Chairman of the Board and Interim | ||
| Chief Executive Officer | |||
Date: November
4, 2009
Exhibit 99.1
Discovery
Labs’ Third Quarter 2009
Financial
Update
Warrington, PA — November 4, 2009 —
Discovery Laboratories, Inc. (Nasdaq: DSCO) is providing financial
results for the third quarter ended September 30, 2009. The Company
will host a conference call today at 4:00 PM EST. The call-in number is
866-332-5218.
For the
quarter ended September 30, 2009, the Company reported a net loss of $7.2
million (or $0.06 per share) on 120.0 million weighted average common shares
outstanding, compared to a net loss of $10.6 million (or $0.11 per share)
on 98.6 million weighted average common shares outstanding for the same period
in 2008. For the nine months ended September 30, 2009, the Company
reported a net loss of $24.1 million (or $0.22 per share) on 111.7 million
weighted average common shares outstanding compared to a net loss of
$30.6 million (or $0.31 per share) on 97.3 million weighted average common
shares outstanding for the same period in 2008.
As of
September 30, 2009, the Company had cash and marketable securities of
$17.7 million, representing a net decrease of $5.7 million from the
previous quarter ended June 30, 2009, primarily due to: (i) $6.6 million used
for operating activities and $0.7 million used for debt service, partially
offset by (ii) aggregate proceeds of $1.6 million from the issuance of 1.8
million shares of common stock pursuant to financings under the Company’s
Committed Equity Financing Facilities (CEFFs). During October 2009,
the Company received an additional $4.3 million of aggregate proceeds from the
issuance of 4.6 million shares of common stock under the CEFFs. The
Company had 121.7 million and 126.3 million common shares outstanding as of
September 30, 2009 and November 3, 2009, respectively.
W. Thomas
Amick, the Company’s Chairman and interim Chief Executive Officer, commented,
“Our top priority is to secure sources of capital, preferably through strategic
alliances, to advance our KL4 surfactant
pipeline for respiratory diseases and to support our future financial
condition. We are
evaluating several potential strategic and financial alternatives.
Simultaneously, to further extend our resources, we have also taken operational
steps to conserve our existing capital. I am encouraged that active discussions
with several potential strategic and financial partners are continuing and, if
successful, will
allow us to advance our KL4 surfactant
pipeline, drive our company forward and maximize shareholder
value.”
Although
the Company is presently actively engaged in discussions regarding several
potential strategic alliances, there can be no assurance that any such strategic
alliance or other financing alternatives can be successfully
concluded. While pursuing such a transaction, the Company has taken
steps to conserve its financial resources, predominantly by curtailing
investments in its pipeline programs. As a result of these efforts,
the Company anticipates that its estimated net cash outflow for the fourth
quarter of 2009 will be $2.7 million ($7.0 million of cash outflow for operating
activities and debt service offset by $4.3 million aggregate proceeds received
from the CEFF financings in October), before taking into account any further use
of the CEFFs, any strategic alliances or other financing
alternatives.
The
Company currently has two CEFFs that (subject to certain conditions, including
price and volume limitations) may allow the Company to raise additional capital
to support its business plans. As of November 3, 2009, under the
December 2008 CEFF, there were approximately 7.1 million shares (not to exceed
an aggregate $17.7 million) available for issuance, provided that the
volume-weighted average price per share on each trading day in the draw-down
period must be at least equal to the greater of $0.60 or 90% of the closing
market price on the trading day immediately preceding the draw-down
period. As of November 3, 2009, under the May 2008 CEFF, there were
approximately 12.8 million shares (not to exceed an aggregate of $51.7 million)
available for issuance, provided that the average price on each trading day in
the draw-down period must be at least equal to the greater of $1.15 or 90% of
the closing market price on the trading day immediately preceding the draw-down
period.
As of
September 30, 2009, the Company had $10.4 million outstanding under its loan
with Novaquest, a strategic investment group of Quintiles Transnational Corp.
The outstanding principal and all accrued interest is due and payable on April
30, 2010. The Company’s plans include pursuing a potential strategic
restructuring of this loan with Novaquest and assessing alternative means of
financing its payment; however, there can be no assurance that any such
restructuring will occur or financing alternatives will be
obtained.
Debt
service for the third quarter 2009 was $0.7 million and will decrease to $0.3
million in the fourth quarter. As of September 30, 2009, the company had $0.8
million outstanding under its secured credit facility with GE Business Financial
Services Inc., and $0.4 million outstanding under the Machinery and Equipment
Loan Fund (MELF) with the Commonwealth of Pennsylvania Department of Community
and Economic Development. Of this $1.2 million outstanding debt, $0.7
million was classified as a current liability and $0.5 million as a long-term
liability. After giving effect to fourth quarter principal payments, the loan
balance outstanding with GE is expected to be $0.6 million at the end of
2009.
Readers
are referred to, and encouraged to read in its entirety, the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2009 to be filed with
the Securities and Exchange Commission, which includes further detail on the
Company’s business plans and operations, financial condition and results of
operations.
About
Discovery Labs
Discovery
Laboratories, Inc. is a biotechnology company developing Surfactant Therapies
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 and is being developed in liquid,
aerosol or lyophilized formulations. In addition, Discovery Labs’
proprietary Capillary Aerosolization Technology produces a dense aerosol, with a
defined particle size that is capable of potentially delivering aerosolized
KL4
surfactant to the deep lung without the complications currently associated with
liquid surfactant administration. Discovery Labs believes that its
proprietary technology platform makes it possible, for the first time, to
develop a significant pipeline of surfactant products to address a variety of
respiratory diseases for which there frequently are few or no approved
therapies. For more information, please visit our website at www.Discoverylabs.com.
Forward-Looking
Statements
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, including without limitation, any relating to the
potential financial results for the current fiscal year, 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 Discovery Labs may
develop, including that: (a) Discovery Labs and the U.S. Food and Drug
Administration (FDA) or other regulatory authorities will not be able to agree
on the matters raised during regulatory reviews, or Discovery Labs may be
required to conduct significant additional activities to potentially gain
approval of its product candidates, if ever, (b) the FDA or other
regulatory authorities may not accept or may withhold or delay consideration of
any of Discovery Labs’ applications, or may not approve or may limit approval of
Discovery Labs’ products to particular indications or impose unanticipated label
limitations, and (c) 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 Discovery Labs’
research and development activities, including (i) 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, and (ii)
the need for sophisticated and extensive analytical methodologies, including an
acceptable biological activity test, if required, as well as other quality
control release and stability tests to satisfy the requirements of the
regulatory authorities; risks relating to Discovery Labs’ 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 Discovery Labs, 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 Discovery Labs’ development efforts and, if approved, commercialization;
the risk that Discovery Labs may be unable to identify potential strategic
partners or collaborators to develop and commercialize its products, if
approved, in a timely manner, if at all; the risk that Discovery Labs 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 Discovery Labs to fund its
activities, or that additional financings could result in substantial equity
dilution; the risk that Discovery Labs will not be able to access credit from
its committed equity financing facilities (CEFFs), or that the minimum share
price at which Discovery Labs may access the CEFFs from time to time will
prevent Discovery Labs from accessing the full dollar amount potentially
available under the CEFFs; the risk that Discovery Labs or its strategic
partners or collaborators will not be able to retain, or attract, qualified
personnel; the risk that Discovery Labs will be unable to maintain The Nasdaq
Global Market listing requirements, causing the price of Discovery Labs’ common
stock to decline; the risk that recurring losses, negative cash flows and the
inability to raise additional capital could threaten Discovery Labs’ ability to
continue as a going concern; the risks that Discovery Labs 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 Discovery Labs; 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 Discovery Labs’ 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.
Contact
Information:
Lisa
Caperelli, Investor Relations
215-488-9413
Condensed
Consolidated Statement of Operations
(in
thousands, except per share data)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
(unaudited)
|
(unaudited)
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|||||||||||||||
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2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenue
|
$ | -- | $ | 50 | $ | -- | $ | 4,600 | ||||||||
|
Operating
expenses: (1)
|
||||||||||||||||
|
Research
and development
|
4,530 | 6,724 | 15,189 | 21,395 | ||||||||||||
|
General
and administrative
|
2,417 | 3,726 | 8,105 | 13,307 | ||||||||||||
|
Total
expenses
|
6,947 | 10,450 | 23,294 | 34,702 | ||||||||||||
|
Operating
loss
|
(6,947 | ) | (10,400 | ) | (23,294 | ) | (30,102 | ) | ||||||||
|
Other
income / (expense)
|
(244 | ) | (239 | ) | (805 | ) | (466 | ) | ||||||||
|
Net
loss
|
$ | (7,191 | ) | $ | (10,639 | ) | $ | (24,099 | ) | $ | (30,568 | ) | ||||
|
Net
loss per common share
|
$ | (0.06 | ) | $ | (0.11 | ) | $ | (0.22 | ) | $ | (0.31 | ) | ||||
|
Weighted
average number of common shares outstanding
|
119,993 | 98,619 | 111,683 | 97,324 | ||||||||||||
|
(1) Expenses
include a charge for stock-based employee
compensation. For the three and nine months ended
September 30, 2009, the charges were $0.4 million ($0.1 million in R&D
and $0.3million in G&A) and $2.2 million ($0.5 million in R&D and
$1.7 million in G&A), respectively. For the three and nine
months ended September 30, 2008, the charges were $1.2 million ($0.4
million in R&D and $0.8 million in G&A) and $3.4 million ($1.1
million in R&D and $2.3 million in G&A),
respectively.
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||||||||||||||||||||||||||||||||||||||||
Condensed
Consolidated Balance Sheets
(in
thousands)
|
September
30,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
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ASSETS
|
(unaudited)
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|||||||
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Current
Assets:
|
||||||||
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Cash
and marketable securities
|
$ | 17,683 | $ | 24,792 | ||||
|
Receivables,
prepaid expenses and other current assets
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272 | 625 | ||||||
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Total
Current Assets
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17,955 | 25,417 | ||||||
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Property
and equipment, net
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4,960 | 5,965 | ||||||
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Restricted
Cash
|
400 | 600 | ||||||
|
Other
assets
|
494 | 907 | ||||||
|
Total
Assets
|
$ | 23,809 | $ | 32,889 | ||||
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
$ | 1,559 | $ | 2,111 | ||||
|
Accrued
expenses
|
4,319 | 5,313 | ||||||
|
Loan
payable, including accrued interest (2)
|
10,375 | - | ||||||
|
Equipment
loan and other liabilities
|
690 | 2,442 | ||||||
|
Total
Current Liabilities
|
16,943 | 9,866 | ||||||
|
Long-Term
Liabilities:
|
||||||||
|
Loan
payable, including accrued interest
|
- | 10,128 | ||||||
|
Equipment loan and other liabilities
|
1,242 | 1,962 | ||||||
|
Total
Liabilities
|
18,185 | 21,956 | ||||||
|
Stockholders'
Equity
|
5,624 | 10,933 | ||||||
|
Total
Liabilities and Stockholders' Equity
|
$ | 23,809 | $ | 32,889 | ||||
(2) The
loan from NovaQuest is due and payable on April 30, 2010.
Exhibit 99.2
Discovery
Labs Provides Business and Pipeline Development Update
Conference Call today at 4:00 PM
EST
Warrington, PA — November 4, 2009 —
Discovery Laboratories, Inc. (Nasdaq: DSCO) is providing an update on its
strategic business activities and its KL4 surfactant
pipeline clinical development programs. Discovery Labs is developing its
proprietary KL4 surfactant
technology platform to potentially significantly improve the medical outcomes of
patients, from premature infants to adults, suffering debilitating respiratory
diseases and conditions. Discovery Labs is actively assessing various
strategic and financial alternatives to secure the necessary capital to
potentially advance its development programs.
W. Thomas
Amick, Discovery Labs Chairman and interim Chief Executive Officer, commented,
“We are developing a robust pipeline of KL4 surfactant
products to potentially address a broad range of respiratory diseases, such as
respiratory distress syndrome (RDS), acute respiratory failure, acute lung
injury and cystic fibrosis. Our most advanced
pipeline programs, Surfaxin®,
Surfaxin LS™ and Aerosurf®, have
the potential to greatly improve the management of RDS and represent the
opportunity, over time, to expand the current RDS estimated worldwide annual
market of $200 million to a $1 billion opportunity. Our efforts with
potential strategic and financial partners are centered on building an RDS
franchise for the U.S. and international markets.
We are
encouraged that discussions, related due diligence activities and valuation
assessments are progressing with several interested strategic and financial
parties. Our Board of Directors and management are focused on securing the
strategic resources necessary to potentially advance our KL4 surfactant
pipeline, drive our company forward and maximize shareholder
value.”
Although
Discovery Labs believes that it will be successful in securing strategic
partners and capital to support its ongoing research and development activities
and its future financial condition, there can be no assurance that any strategic
alliance or other financing alternatives will be successfully concluded.
Furthermore, until any such strategic alliances or other financing alternatives
are successfully secured, Discovery Labs will continue to conserve its financial
resources by predominantly curtailing investments in its pipeline
programs.
The
following are selected updates on Discovery Labs’ KL4 surfactant
pipeline.
Respiratory Distress
Syndrome (RDS) – RDS is one of the most common, potentially
life-threatening pediatric respiratory disorders, with more than 500,000
low-birth-weight premature infants at risk globally each year. However, today
fewer than 200,000 infants receive the currently-approved, animal-derived
surfactants. Discovery Labs’ portfolio of programs focusing on RDS
has the potential to redefine the management of RDS and expand the use of
surfactants in the neonatal intensive care unit (NICU). Discovery
Labs’ advanced-staged RDS programs include:
Surfaxin®
Surfaxin,
Discovery Labs’ first KL4 surfactant
product candidate, has demonstrated clinically meaningful survival and
morbidity-lessening advantages versus comparator surfactants (the current
standard of care). Discovery Labs participated in a September 29, 2009 meeting
with the FDA to discuss the key remaining issue that must be addressed to
potentially gain U.S. marketing approval of Surfaxin for the prevention of RDS
in premature infants, as well as Discovery Labs’ plans regarding optimization
and final method validation of its fetal rabbit Biological Activity Test (BAT, a
quality control and stability release test) and a proposed limited clinical
trial. The trial would be designed to primarily assess a
pharmacodynamic (PD) response following Surfaxin administration in premature
infants diagnosed with RDS. During the conduct of this trial, the
newly-optimized BAT would be employed as a quality test of the Surfaxin drug
product used in the proposed clinical trial. As a result of this meeting,
Discovery Labs believes that it has reached an understanding with the FDA and
that it will be able to optimize the BAT to the satisfaction of the
FDA. The FDA has indicated that a PD-based approach is consistent
with their expectation for a limited clinical trial and also provided direction
regarding trial design specifics. Discovery Labs has been
collaborating with leading academic neonatologists to finalize the clinical
trial design and remains on-track to submit the protocol to the FDA, for their
review and comment, in the mid-fourth quarter of 2009.
Surfaxin LS™
Surfaxin
LS is a lyophilized (dry powder) formulation of KL4 surfactant
intended to improve product ease of use for healthcare practitioners, eliminate
the need for cold-chain storage, and potentially further improve product
clinical performance. Discovery Labs is planning to meet with U.S. and European
regulatory authorities to present a development program entailing the conduct of
a single Phase 3 clinical trial for global registration. Discovery
Labs intends to initiate the Surfaxin LS clinical program upon securing
appropriate strategic alliances and necessary capital.
Aerosurf®
Aerosurf
holds the promise to significantly expand the use of KL4 surfactant
therapy by providing neonatologists with a novel means of administering
surfactant without invasive endotracheal intubation and mechanical ventilation.
Discovery Labs has met with and received guidance from the FDA with respect to
the design of its planned Phase 2 clinical program using Aerosurf for RDS, and
intends to initiate such program upon securing appropriate strategic alliances
and necessary capital.
Acute Respiratory Failure
(ARF) – ARF is a severe respiratory disorder associated with lung injury,
often entailing surfactant dysfunction. Patient management typically
includes prolonged critical care intervention, including mechanical ventilation.
No medications are currently approved for this debilitating condition. ARF
occurs after patients have been exposed to serious respiratory infections, such
as influenza (including the type A serotype referred to as H1N1) or respiratory
syncytial virus (RSV). Hospitalization following influenza or other
viral infection is associated with high mortality, morbidity and significant
healthcare cost.
Discovery
Labs is conducting a Phase 2 clinical trial to determine whether Surfaxin
improves lung function and reduces duration and related risk-exposure of
mechanical ventilation in children up to two years of age diagnosed with ARF.
Trial enrollment was conducted in the northern and southern hemispheres to track
with viral season peaks. As H1N1-influenza has spread to pandemic levels,
participating trial centers have observed an escalating frequency of this
specific diagnosis and H1N1-confirmed patients have been enrolled in this
trial. Presently, enrollment is approximately 90% complete with full
enrollment expected in the first quarter of 2010 and top-line results becoming
available shortly thereafter.
Discovery
Labs believes that its KL4 surfactant
technology, whether administered as a rescue therapy into the endotracheal tube
or as a less-invasive surfactant aerosol earlier in the course of respiratory
compromise to prevent the progression of disease, may provide for a series of
novel solutions for patients that require critical care intervention following
exposure to viral pathogens. As of last week, separate from typical annual
influenza, the World Health Organization reported more than 440,000 confirmed
H1N1 cases with more than 5,700 attributable deaths while acknowledging that its
reporting methodology underestimates true frequency. In the United States to
date, 45% of H1N1-related hospitalizations have occurred in the pediatric
population. Discovery Labs has met with U.S. Government officials to explore
whether funding can be obtained for programs to address respiratory disease
following exposure to viral pathogens.
Cystic Fibrosis
(CF)
Aerosolized
KL4
surfactant is being evaluated in an investigator-initiated Phase 2a clinical trial in CF patients.
The trial is being conducted at The University of North Carolina and is funded
primarily through a grant provided by the Cystic Fibrosis
Foundation. The trial has been designed to assess the safety,
tolerability and short-term effectiveness (via improvement in mucociliary
clearance) of aerosolized KL4 surfactant
in CF patients. The results from this trial are anticipated in the first half of
2010.
About
Discovery Labs
Discovery
Laboratories, Inc. is a biotechnology company developing Surfactant Therapies
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 and is being developed in liquid,
aerosol or lyophilized formulations. In addition, Discovery Labs’
proprietary Capillary Aerosolization Technology produces a dense aerosol, with a
defined particle size that is capable of potentially delivering aerosolized
KL4
surfactant to the deep lung without the complications currently associated with
liquid surfactant administration. Discovery Labs believes that its
proprietary technology platform makes it possible, for the first time, to
develop a significant pipeline of surfactant products to address a variety of
respiratory diseases for which there frequently are few or no approved
therapies. For more information, please visit our website at www.Discoverylabs.com.
Forward-Looking
Statements
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 Discovery Labs may develop, including
that: (a) Discovery Labs and the U.S. Food and Drug Administration (FDA) or
other regulatory authorities will not be able to agree on the matters raised
during regulatory reviews, or Discovery Labs may be required to conduct
significant additional activities to potentially gain approval of its product
candidates, if ever, (b) the FDA or other regulatory authorities may not
accept or may withhold or delay consideration of any of Discovery Labs’
applications, or may not approve or may limit approval of Discovery Labs’
products to particular indications or impose unanticipated label
limitations, and (c)
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 Discovery Labs’
research and development activities, including (i) 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, and (ii)
the need for sophisticated and extensive analytical methodologies, including an
acceptable biological activity test, if required, as well as other quality
control release and stability tests to satisfy the requirements of the
regulatory authorities; risks relating to Discovery Labs’ 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 Discovery Labs, 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 Discovery Labs’ development efforts and, if approved, commercialization;
the risk that Discovery Labs may be unable to identify potential strategic
partners or collaborators to develop and commercialize its products, if
approved, in a timely manner, if at all; the risk that Discovery Labs 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 Discovery Labs to fund its
activities, or that additional financings could result in substantial equity
dilution; the risk that Discovery Labs will not be able to access credit from
its committed equity financing facilities (CEFFs), or that the minimum share
price at which Discovery Labs may access the CEFFs from time to time will
prevent Discovery Labs from accessing the full dollar amount potentially
available under the CEFFs; the risk that Discovery Labs or its strategic
partners or collaborators will not be able to retain, or attract, qualified
personnel; the risk that Discovery Labs will be unable to maintain The Nasdaq
Global Market listing requirements, causing the price of Discovery Labs’ common
stock to decline; the risk that recurring losses, negative cash flows and the
inability to raise additional capital could threaten Discovery Labs’ ability to
continue as a going concern; the risks that Discovery Labs 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 Discovery Labs; 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 Discovery Labs’ 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.
Contact
Information:
Lisa
Caperelli, Investor Relations
215-488-9413