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
3, 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
November 3, 2005, Discovery Laboratories, Inc. (the “Company”) issued a press
release announcing financial results for the quarter ended September 30,
2005,
and providing selected updates on the Company’s progress since the end of the
second fiscal quarter in 2005. The full text of the press release is set
forth
in Exhibit 99.1 hereto.
Item
9.01. Financial
Statements and Exhibits
| |
99.1
|
Press
release dated November 3, 2005.
|
The
information in this 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 expressly
set forth by specific reference in any such filings.
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.
|
|
|
|
| |
By: |
/s/ Robert
J. Capetola |
| |
Name: Robert J. Capetola, Ph.D.
Title: President and Chief Executive
Officer
|
| |
|
| Date: November 3, 2005 |
|
| |
|
Exhibit
99.1
Discovery
Labs’ Reports Third Quarter 2005 Financial Results and Business
Progress
Warrington,
PA, November 3, 2005 — Discovery Laboratories, Inc. (Nasdaq: DSCO), today
announced financial results for the three and nine months ended September 30,
2005 and other business progress. The Company will host a conference call on
Thursday, November 3, 2005 at 10:00 AM EST. The
call
in number is 866-332-5218.
For
the
quarter ended September 30, 2005, the Company reported a net loss of $10.4
million, or $0.19 per share, on 54.5 million weighted average common shares
outstanding, compared to a net loss of $8.4 million, or $0.18 per share, on
47.0
million weighted average shares outstanding for the same period in 2004. For
the
nine months ended September 30, 2005, the Company reported a net loss of $29.5
million, or $0.56 per share, on 52.8 million weighted average common shares
outstanding, compared to a net loss of $26.2 million, or $0.57 per share, on
45.7 million weighted average shares outstanding for the same period in 2004.
As
of
September 30, 2005, the Company had cash and marketable securities of $50.3
million, an increase of $7.4 million from the prior quarter. Cash used in
operating and investing activities during the quarter was $10.0 million, offset
by $0.4 million received in proceeds from the exercise of stock options and
warrants. In September 2005, the Company completed a financing pursuant to
its
Committed Equity Financing Facility (CEFF) resulting in proceeds of $17.0
million from the issuance of approximately 3.0 million shares of common stock
at
an average price of $5.64 per share ($6.27 per share less the applicable
discount rate provided for by the CEFF). The Company intends to use these
proceeds to acquire a dedicated manufacturing operation as a strategic
investment for the manufacture of Surfaxin®
and the
development of its Surfactant Replacement Therapy (SRT) pipeline or for general
corporate purposes.
As
of
September 30, 2005, the Company had $50.8 million available under the CEFF,
subject to certain conditions. Additionally, the Company had a $9.0 million
capital lease financing arrangement with General Electric Capital Corporation,
of which $5.2 million remains available for use and $2.6 million is outstanding.
The Company’s $8.5 million credit facility with PharmaBio Development Inc.,
Quintiles strategic investment group, is fully outstanding and repayment is
due
in December 2006.
Additionally,
on October 26, 2005, Laboratorios del Dr. Esteve S.A. (Esteve), the Company’s
partner in Southern Europe, agreed to purchase 650,000 shares of the Company’s
common stock, at a price per share of $6.88, for an aggregate purchase price
of
approximately $4.5 million. After taking into account this transaction and
the
financing from the CEFF, the Company currently has 57.5 million shares
outstanding.
Robert
J.
Capetola, Ph.D., President and Chief Executive Officer of Discovery, commented,
“Surfaxin, our lead product with an FDA Approvable Letter, is now under a six
month review by the FDA that began on October 5, 2005. We are preparing our
organization for the potential approval of Surfaxin in April 2006, followed
by
the commercial launch in the second quarter of 2006. Surfaxin is the cornerstone
of our precision-engineered
Surfactant Replacement Therapy pipeline that promises to revolutionize the
treatment of respiratory diseases prevalent in the neonatal intensive care
unit,
critical care, and hospital settings. We believe that with the potential of
our
SRT pipeline it is strategically important to manage our own manufacturing
and
commercial operations and we are making steady progress towards achieving this
goal.”
Review
of
Operating Results - Three and Nine Months Ended September 30, 2005
The
Company reported a net loss of $10.4 million and $29.5 million for the three
and
nine months ended September 30, 2005, respectively, an increase of $2.0 million
and $3.4 million compared to the same prior year periods. The change in the
net
loss is primarily due to:
| (i) |
sales,
marketing and medical affairs activities (included in general and
administrative expenses) related to the Company building its own specialty
pulmonary United States commercial organization to focus initially
on the
commercial and medical promise of its SRT to address respiratory therapies
for the Neonatal Intensive Care Unit (NICU). Expenditures are for the
pre-launch activities in anticipation of the potential approval and
launch
of Surfaxin for Respiratory Distress Syndrome (RDS) in the second quarter
of 2006. For the three and nine months ended September 30, 2005, costs
associated with pre-launch commercialization activities were $2.7 million
and $7.2 million, respectively, an increase of $1.4 million and $3.9
million compared to the same prior year periods;
|
| (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 and nine months ended
September 30, 2005, costs associated with these manufacturing activities
were $3.0 million and $7.0 million, respectively, an increase of $1.9
million and $2.4 million compared to the same prior year period.
Expenditures in 2005 for manufacturing activities include, but are
not
limited to, the implementation of enhancements to quality controls,
process assurances and documentation requirements that support the
clinical and commercial production process at the Company’s contract
manufacturer, Laureate Pharma, Inc., in response to the FDA 483
inspectional observations;
|
| (iii) |
research
and development activities related to the advancement of the Company’s SRT
pipeline. For the three and nine months ended September 30, 2005, costs
associated with these activities, excluding manufacturing activities,
were
$2.7 million and $9.7 million, respectively, a decrease of $1.9 million
and $4.5 million compared to the same prior year period. The decrease
is
primarily due to costs in 2004 associated with clinical and regulatory
activities for Surfaxin for RDS, principally the NDA filing, a related
milestone payment for the license of Surfaxin, and follow-up clinical
activity for the related two Phase 3 clinical trials. For the three
and
nine months ended September 30, 2005, research and development activities
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
Acute
Respiratory Distress Syndrome (ARDS) in adults, Chronic Lung Disease
(CLD,
also known as Bronchopulmonary Dysplasia) in premature infants, and
Aerosurf™ for Neonatal Respiratory
Failures;
|
| (iv) |
general
and administrative activities in preparation for managing a
fully-integrated commercial biotechnology organization. For the three
and
nine months ended September 30, 2005, costs associated with these
activities, excluding sales and marketing activities, were $2.1
million
and $6.0 million respectively, an increase of $0.5 million and $0.9
million compared to the same prior year period. These expenditures
include
financial and information technology capabilities, business development
activities related to potential strategic collaborations, legal activities
related to the preparation and filing of patents in connection with
the
expansion of our SRT pipeline, facilities expansion activities to
accommodate existing and future growth, and corporate governance
initiatives to comply with the Sarbanes-Oxley Act; and
|
| (v) |
the
restructuring, in December 2004, of the strategic alliance with Esteve
to
develop, market and sell Surfaxin in Southern Europe. Revenues from
this
alliance decreased by $0.2 million and $1.0 million for the three and
nine
months ended September 30, 2005, respectively, compared to the same
prior
year period.
|
Selective
Updates on Discovery’s SRT Programs
Surfaxin
for RDS
| · |
The
U.S. Food and Drug Administration (FDA) accepted the Company’s
resubmission of October 5, 2005 as a complete response to the Approvable
Letter for Surfaxin for the prevention of RDS in premature infants.
The
FDA has established April 2006 as its target to complete its review
of the
Surfaxin NDA.
|
Additionally,
at the European Society for Paediatric Research 46th
Annual
Meeting in September, the Company presented the results from a comparative
pharmacoeconomic analysis of Surfaxin versus leading animal-derived surfactants
(Survanta®
and
Curosurf®)
in the
prevention of RDS in premature infants. Conclusions indicated that babies
treated with Surfaxin showed a reduction in overall cost of care, spent fewer
days in the NICU, and fewer total days on mechanical ventilation as compared
to
the animal-derived surfactants.
Surfaxin
for CLD
| · |
In
October, the Office of Orphan Products Development of the FDA granted
orphan drug designation to Surfaxin, for the treatment of Bronchopulmonary
Dysplasia in premature infants.
|
Currently
the Company is conducting a Phase 2 trial to determine the safety and
tolerability of administering up to 5 total doses of Surfaxin in the first
10
days of life as a therapeutic approach for the prevention and treatment of
CLD.
The Company has recently amended the protocol associated with conducting this
trial and now anticipates results in the third quarter of 2006.
Aerosurf
for Neonatal Respiratory Failures
| · |
In
September, the Company completed its first pilot Phase 2 feasibility
study
of Aerosurf™, the
Company’s precision-engineered aerosolized SRT administered via nasal
continuous positive airway pressure (nCPAP) intended to treat premature
infants at risk for RDS.
This pilot clinical trial serves as the first step in the development
of a
revolutionary technology that has the potential to treat infants with
a
wide array of respiratory failures who typically would require mechanical
ventilation.
|
About
Discovery Labs
Discovery
Laboratories, Inc. is a biotechnology 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. Our technology produces a precision-engineered surfactant that is
designed to closely mimic the essential properties of natural human lung
surfactant. We believe that through our technology, pulmonary surfactants have
the potential, for the first time, to address respiratory diseases where there
are few or no approved therapies available.
Our
SRT
pipeline is initially focused on the most significant respiratory conditions
prevalent in the neonatal intensive care unit. Our lead product,
SurfaxinÒ
(lucinactant), for the prevention of Respiratory Distress Syndrome (RDS) in
premature infants, has received an Approvable Letter from the U.S. Food and
Drug
Administration (FDA) and is under review for approval in Europe by the European
Medical Evaluation Agency (EMEA). Surfaxin is also being developed for the
treatment of Chronic Lung Disease (CLD, also known as Bronchopulmonary
Dysplasia) in premature infants. In addition, we are developing Aerosurf™,
aerosolized SRT administered through nasal continuous positive airway pressure
(nCPAP), for neonatal respiratory failures.
Our
SRT
technology is also being developed to address the various respiratory conditions
affecting pediatric, young adult and adult patients in the critical care and
other hospital settings. We are conducting a Phase 2 clinical trial to address
Acute Respiratory Distress Syndrome (ARDS) in adults, and are also developing
aerosol formulations of SRT to address Acute Lung Injury (ALI), asthma, Chronic
Obstructive Pulmonary Disorder (COPD), and other respiratory
conditions.
For
more
information, please visit our corporate website 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
|
Condensed
Consolidated Statement of Operations
(in
thousands, except per share data)
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
| |
|
September
30,
|
|
September
30,
|
|
| |
|
(unaudited)
|
|
(unaudited)
|
|
| |
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|
| |
|
|
|
|
|
|
|
|
|
|
Revenues
from collaborative agreements
|
|
$
|
20
|
|
$
|
236
|
|
$
|
105
|
|
$
|
1,075
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
5,676
|
|
|
5,673
|
|
|
16,660
|
|
|
18,757
|
|
|
General
and administrative
|
|
|
4,817
|
|
|
2,908
|
|
|
13,182
|
|
|
8,363
|
|
|
Total
expenses
|
|
|
10,493
|
|
|
8,581
|
|
|
29,842
|
|
|
27,120
|
|
|
Operating
loss
|
|
|
(10,473
|
)
|
|
(8,345
|
)
|
|
(29,737
|
)
|
|
(26,045
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income / (expense)
|
|
|
67
|
|
|
(37
|
)
|
|
189
|
|
|
(106
|
)
|
|
Net
loss
|
|
$
|
(10,406
|
)
|
$
|
(8,382
|
)
|
$
|
(29,548
|
)
|
$
|
(26,151
|
)
|
|
Net
loss per common share
|
|
$
|
(0.19
|
)
|
$
|
(0.18
|
)
|
$
|
(0.56
|
)
|
$
|
(0.57
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding
|
|
|
54,476
|
|
|
46,988
|
|
|
52,844
|
|
|
45,659
|
|
|
Condensed
Consolidated Balance Sheets
(in
thousands)
|
| |
|
September
30,
|
|
|
|
| |
|
2005
|
|
December
31,
|
|
| |
|
(unaudited)
|
|
2004
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash
and marketable securities
|
|
$
|
50,340
|
|
$
|
32,654
|
|
|
Prepaid
expenses and other current assets
|
|
|
723
|
|
|
688
|
|
|
Total
Current Assets
|
|
|
51,063
|
|
|
33,342
|
|
|
Property
and equipment, net
|
|
|
4,129
|
|
|
4,063
|
|
|
Other
assets
|
|
|
219
|
|
|
232
|
|
|
Total
Assets
|
|
$
|
55,411
|
|
$
|
37,637
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
7,878
|
|
$
|
8,823
|
|
|
Long-Term
Liabilities:
|
|
|
|
|
|
|
|
|
Credit
facility
|
|
|
8,500
|
|
|
5,929
|
|
|
Capitalized
leases and other long-term liabilities
|
|
|
1,616
|
|
|
1,788
|
|
|
Total
Liabilities
|
|
|
17,994
|
|
|
16,540
|
|
|
Stockholders'
Equity
|
|
|
37,417
|
|
|
21,097
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
$
|
55,411
|
|
$
|
37,637
|
|
