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
April
27, 2005
Date of
Report (Date of earliest event reported)
Discovery
Laboratories, Inc.
(Exact
name of Registrant as specified in its charter)
|
Delaware |
000-26422 |
94-3171943 |
|
(State
or other jurisdiction of
incorporation) |
(Commission
File Number) |
(IRS
Employer Identification
Number) |
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)) |
|
Item
2.02 |
Results
of Operations and Financial
Condition |
On April
27, 2005, Discovery Laboratories, Inc. (the “Registrant”), issued a news release
announcing financial results for the quarter ended March 31, 2004, and providing
selected updates on the Registrant’s progress since the end of fiscal year 2004
(the “2005 First Quarter Financial Results News Release”). A copy of the press
release is furnished pursuant to this Item 2.02 as Exhibit 99.1 to this
Current
Report on Form
8-K.
|
Item
9.01 |
Financial
Statements and Exhibits |
|
(c) |
Exhibits:
| |
|
99.1 |
The
2005 First Quarter Financial Results News
Release. |
The
information in this Current Report on Form 8-K and the exhibit 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 may be expressly set forth in any such filings.
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: | /s/ Robert J. Capetola, | |
|
Name: Robert J. Capetola, Ph.D. | ||
| Title: President and Chief Executive Officer | ||
| Date: April 28, 2005 | ||
3
Exhibit
99.1
Discovery
Labs Reports First Quarter 2005 Financial Results
and
Business Progress
Warrington,
PA, April 27, 2005 — Discovery Laboratories, Inc. (Nasdaq:
DSCO), today
announced financial
results for the three months ended March 31, 2005. The Company will host a
conference call today at 4:30 PM EDT. The
call in number is 866-332-5218.
For the
quarter ended March 31, 2005, the Company reported a net loss of $9.3 million,
or $0.18 per share, on 50.8 million weighted average common shares outstanding,
compared to a net loss of $8.9 million, or $0.20 per share, on 43.3 million
weighted average shares outstanding for the same period in 2004. The Company
currently has 53.5 million shares outstanding.
As of
March 31, 2005, the Company had cash and marketable securities of $51.8 million.
In February 2005, the Company received net proceeds of $27.5 million from a
registered direct public offering of 5,060,000 shares of the Company’s common
stock. Excluding proceeds from this public offering, net cash used in the first
quarter was $8.4 million. Cash used in operating and investing activities during
the quarter was $11.0 million, offset by $2.6 million accessed under the
Company’s secured credit facility.
As of
March 31, 2005, the Company had $67.8 million available under the Committed
Equity Financing Facility (CEFF), subject to certain conditions. Additionally,
the Company had $2.5 million outstanding under the Company’s $9.0 million
capital lease financing arrangement with General Electric Capital Corporation.
In February 2005, the Company accessed the remaining $2.6 million available
under the credit facility with PharmaBio Development Inc., Quintiles strategic
investment group, and currently the entire $8.5 million is outstanding and is
due in December 2006.
Selected
Updates on Discovery’s progress in the first quarter of
2005:
| § |
Surfaxin®
for Respiratory Distress Syndrome (RDS) in Premature
Infants
In
February 2005, the Company received an Approvable Letter from the FDA for
Surfaxin for the prevention of RDS in premature infants. The FDA has not
requested any additional preclinical or clinical trials for final
approval, however, the Company must primarily address manufacturing issues
raised by the FDA and finalize labeling details for the product. The
Company anticipates resolving the manufacturing issues by July 2005 and
launching Surfaxin in the first quarter of 2006.
|
Scientific
information pertaining to Surfaxin (lucinactant) for RDS has recently been
published in the following publications:
Pediatrics (2005)
115:1018-1029;
A Multicenter, Randomized, Masked, Comparison Trial of Lucinactant, Colfosceril
Palmitate, and Beractant for the Prevention of Respiratory Distress Syndrome
Among Very Preterm Infants; Moya Fernando R., Gadzinowski Janusz, Bancalari
Eduardo, et
al.
1
Pediatrics (2005)
115:1030-1038;
A Multicenter, Randomized, Controlled Trial of Lucinactant Versus Poractant Alfa
Among Very Premature Infants at High Risk for Respiratory Distress Syndrome;
Sinha Sunil K., Lacaze-Masmonteil Thierry, Valls i Soler Adolf, et
al.
Expert
Opinion on Investigational Drugs (2005)
14(3):329-334;
Lucinactant: A Novel Synthetic Surfactant for the Treatment of Respiratory
Distress Syndrome; Donn Steven M.
Treat
Respir Med (2005)
4(2):139-145;
Lucinactant in Neonatal Respiratory Distress Syndrome; Moen Marit D., Perry
Caroline M., Wellington Keri.
Pediatric
Pulmonology (2005)
39:167-177;
Interaction of an Artificial Surfactant in Human Pulmonary Epithelial Cells;
Romero Edgar J., Moya Fernando R., et
al.
| § |
Surfactant
Replacement Therapies (SRT) in the Neonatal Intensive Care Unit
(NICU)
The
Company broadened its SRT pipeline of therapeutic programs to address the
most prevalent respiratory disorders with significant unmet medical needs
for the neonatal community. In January 2005, a Phase 2 clinical trial was
initiated to assess the safety and efficacy of delivering multiple doses
of Surfaxin during the first two weeks of life for the prevention of
Bronchopulmonary Dysplasia (BPD), a serious, chronic lung disease of
newborn infants. Results from this trial are expected to be available in
the first quarter of 2006. Also in January 2005, a Phase 2 pilot study was
initiated to evaluate aerosolized SRT administered through nasal
continuous positive airway pressure (nCPAP) as a non-invasive means to
potentially treat the broad range of Neonatal Respiratory Failures that
occur in the NICU. Results from this trial are expected to be available in
the third quarter of 2005. |
Robert J.
Capetola, Ph.D., President and Chief Executive Officer of Discovery, commented,
“Discovery’s mission is to advance to market a pipeline of Surfactant
Replacement Therapies that will revolutionize the treatment of respiratory
diseases prevalent in the neonatal intensive care unit, critical care, and
hospital settings. Surfaxin is the cornerstone of our SRT pipeline and
potentially sets a new standard for the prevention of RDS. With regards to the
Approvable Letter we received from the FDA for Surfaxin, we are working
diligently with our drug product contract manufacturer to address the
manufacturing matters raised by the FDA. Due to our collaborative efforts, we
remain on schedule to submit a Complete Response Letter to the FDA by July 2005.
Our organization is committed to the anticipated commercial launch of our first
precision-engineered surfactant product in the first quarter of
2006.”
2
Review
of Operating Results - First Quarter 2005
The
Company reported a net loss of $9.3 million and $8.9 million for the three
months ended March 31, 2005 and 2004 respectively, an increase of $0.4 million
compared to the same prior year period. This increase in the net loss is
primarily due to:
| (i) |
the
Company building its own specialty pulmonary United States sales and
marketing organization to focus initially on the commercial and medical
promise of its SRT to address respiratory therapies for the NICU.
Investments include pre-launch commercialization activities (included in
general and administrative expenses) to support the potential approval and
launch of Surfaxin for RDS including, without limitation, sales and
marketing management and medical affairs as well as medical science
liaisons. For the three months ended March 31, 2005, costs associated with
pre-launch commercialization activities were $2.4 million, an increase of
$1.4 million compared to the same prior year period;
|
| (ii) |
manufacturing
activities (included in research and development) to support the
production of clinical and commercial drug supply for the Company’s SRT
programs, including Surfaxin, in conformance with current Good
Manufacturing Practices (cGMPs). For the three months ended March 31,
2005, costs associated with these manufacturing activities were $1.4
million, a decrease of $0.3 million compared to the same prior year
period; |
| (iii) |
research
and development activities related to the advancement of the Company’s SRT
pipeline. For the three months ended March 31, 2005, costs associated with
these activities, excluding manufacturing activities, were $3.7 million, a
decrease of $1.2 million compared to the same prior year period. The costs
for the first quarter of 2005 primarily reflect regulatory activities
associated with Surfaxin for RDS (specifically the U.S. FDA Approvable
Letter and the Marketing Authorization Application with the European
Medicines Evaluation Agency) and clinical activities related to the Phase
2 clinical trials for ARDS in adults, BPD in premature infants and
aerosolized SRT administered through nCPAP for Neonatal Respiratory
Failures. For the three months ended March 31, 2004, research and
development activities were primarily associated with clinical and
regulatory activities for Surfaxin for RDS (principally the NDA filing)
and investment in the Company’s SRT pipeline, including development of the
aerosol SRT programs. |
| (iv) |
general
and administrative activities including financial and information
technology capabilities in preparation for the potential approval and
launch of Surfaxin for RDS, executive management and support
infrastructure, legal activities related to the preparation and filing of
patents in connection with the expansion of our SRT pipeline, facilities
related costs to accommodate current and prepare for future growth, and
corporate governance initiatives to comply with the Sarbanes-Oxley Act.
For the three months ended March 31, 2005, costs associated with these
related activities were $1.9 million, an increase of $0.6 million compared
to the same period the prior year. |
3
About
Discovery Labs
Discovery
Laboratories, Inc. is a biopharmaceutical company developing its proprietary
surfactant technology as Surfactant Replacement Therapies (SRT) for respiratory
diseases. Surfactants are produced naturally in the lungs and are essential for
breathing. Discovery’s technology produces a precision-engineered surfactant
that is designed to closely mimic the essential properties of natural human lung
surfactant. Discovery believes that through its technology, pulmonary
surfactants have the potential, for the first time, to be developed into a
series of respiratory therapies for patients in the neonatal intensive care
unit, critical care unit and other hospital settings, where there are few or no
approved therapies available.
Discovery
has received an Approvable Letter from the FDA for Surfaxin, the Company’s lead
product, for the prevention of Respiratory Distress Syndrome (RDS) in premature
infants, and has filed a Marketing Authorization Application with the EMEA for
clearance to market Surfaxin in Europe. Discovery is also conducting various
clinical programs to address Acute Respiratory Distress Syndrome (ARDS) in
adults, Bronchopulmonary Dysplasia (BPD) in premature infants, Neonatal
Respiratory Disorders in premature infants, severe asthma in adults, and
Meconium Aspiration Syndrome (MAS) in full-term infants.
More
information about Discovery is available on the Company's Web site at
www.DiscoveryLabs.com.
To
the extent that statements in this press release 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 Discovery’s product development, events
conditioned on stockholder or other approval, or otherwise as to future events,
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. Among
the factors which could affect Discovery’s actual results and could cause
results to differ from those contained in these forward-looking statements are
the risk that financial conditions may change, risks relating to the progress of
Discovery’s research and development, the risk that Discovery will not be able
to raise additional capital or enter into additional collaboration agreements
(including strategic alliances for our aerosol and Surfactant Replacement
Therapies), risk that Discovery will not be able to develop a successful sales
and marketing organization in a timely manner, if at all, risk that Discovery’s
internal sales and marketing organization will not succeed in developing market
awareness of Discovery’s products, risk that Discovery’s internal sales and
marketing organization will not be able to attract or maintain qualified
personnel, risk of delay in the FDA’s or other health regulatory authorities’
approval of any applications filed by Discovery, risks that any such regulatory
authority will not approve the marketing and sale of a drug product even after
acceptance of an application filed by Discovery for any such drug product, risks
relating to the ability of Discovery’s third party contract manufacturers to
provide Discovery with adequate supplies of drug substance and drug products for
completion of any of Discovery’s clinical studies, other risks relating to the
lack of adequate supplies of drug substance and drug product for completion of
any of Discovery’s clinical studies, and risks relating to the development of
competing therapies and/or technologies by other companies. Companies in the
pharmaceutical and biotechnology industries have suffered significant setbacks
in advanced clinical trials, even after obtaining promising earlier trial
results. Data obtained from tests are susceptible to varying interpretations,
which may delay, limit or prevent regulatory approval. Those associated risks
and others are further described in Discovery’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
Contacts:
John G.
Cooper, EVP and CFO
215-488-9490
Lisa
Caperelli, Investor Relations
215-488-9413
4
|
Condensed
Consolidated Statement of Operations
(in
thousands, except per share data) |
|||||||
|
Three
Months Ended |
|||||||
|
March
31, |
|||||||
|
(unaudited) |
|||||||
|
2005 |
2004 |
||||||
|
Revenues
from collaborative agreements |
$ |
61 |
$ |
142 |
|||
|
Operating
expenses: |
|||||||
|
Research
and development |
5,120
|
6,710
|
|||||
|
General
and administrative |
4,270
|
2,281
|
|||||
|
Total
expenses |
9,390
|
8,991
|
|||||
|
Operating
loss |
(9,329 |
) |
(8,849 |
) | |||
|
Other
income / (expense) |
13
|
(23 |
) | ||||
|
Net
loss |
$ |
(9,316 |
) |
$ |
(8,872 |
) | |
|
Net
loss per common share |
$ |
(0.18 |
) |
$ |
(0.20 |
) | |
|
Weighted
average number of common shares outstanding |
50,784
|
43,320
|
|||||
|
|
|||||||
|
Condensed
Consolidated Balance Sheets
(in
thousands) | |||||||
|
|
March
31, |
December
31, |
|||||
|
2005 |
2004 |
||||||
|
ASSETS |
|||||||
|
Current
Assets: |
|||||||
|
Cash
and marketable securities |
$ |
51,827 |
$ |
32,654 |
|||
|
Prepaid
expenses and other current assets |
739
|
688
|
|||||
|
Total
Current Assets |
52,566
|
33,342
|
|||||
|
Property
and equipment, net |
3,990
|
4,063
|
|||||
|
Other
assets |
220
|
232
|
|||||
|
Total
Assets |
$ |
56,776 |
$ |
37,637 |
|||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY |
|||||||
|
Current
Liabilities: |
|||||||
|
Accounts
payable and accrued expenses |
7,090
|
8,823
|
|||||
|
Credit
facility, non-current portion |
8,500
|
5,929
|
|||||
|
Capitalized
lease, non-current portion, and
deferred revenue |
1,702
|
1,788
|
|||||
|
Total
Liabilities |
17,292
|
16,540
|
|||||
|
Shareholders'
Equity |
39,484
|
21,097
|
|||||
|
Total
Liabilities and Shareholders' Equity |
$ |
56,776 |
$ |
37,637 |
|||
5