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
28, 2008
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
1.01. Amendment
of a Material Agreement.
On
March
28, 2008, Discovery Laboratories, Inc. (the “Company”) entered into an Amended
and Restated License Agreement (the “US License Agreement”) with Philip Morris
USA Inc., d/b/a Chrysalis Technologies (“Chrysalis”), to amend and restate the
December 9, 2005 Strategic Alliance Agreement (the “Original Alliance
Agreement”) with respect to the Company’s rights to Chrysalis’ proprietary
capillary aerosolization technology (the “Chrysalis/PMPSA Technology”) in the
United States. In addition, as Chrysalis has assigned to Philip Morris Products
S.A. (“PMPSA”) all rights outside of the United States (the “International
Rights”) in and to the Chrysalis/PMPSA Technology, effective March 28, 2008,
Discovery and PMPSA entered into a License Agreement with respect to the
International Rights (the “International License Agreement”, and together with
the US License Agreement, the “License Agreements”) on substantially the same
terms and conditions as the US License Agreement.
The
Company holds, under the US License Agreement, an exclusive license in the
United States and, under the PMPSA License Agreement, an exclusive license
to
the International Rights outside the United States, in and to the
Chrysalis/PMPSA Technology for use with pulmonary surfactants (alone or in
combination with any other pharmaceutical compound(s)) for all respiratory
diseases and conditions (the foregoing uses in each territory, the “Exclusive
Field”). In addition, under the US License Agreement, the Company holds, and the
Exclusive Field in the territory under the U.S. License Agreement includes,
a
license to use the Chrysalis/PMPSA Technology with other drugs to treat
specified target indications in specified target populations. Under the Original
Alliance Agreement, Chrysalis was primarily responsible for development
activities and the Company was responsible for aerosolized drug formulations,
clinical and regulatory activities, and the manufacturing and commercialization
of the combination drug-device products using the Chrysalis/PMPSA Technology
(“Licensed Products”). The Company’s exclusive license under each License
Agreement now includes the right to make and have made, to use and have used,
to
develop and have developed, to sell and have sold, to offer for sale and
have
offered for sale, to import and export and have imported and exported Licensed
Products in the Exclusive Field in the respective territory.
The
US
License Agreement provides that prior to June 30, 2008, Chrysalis shall complete
a technology transfer of the Chrysalis/PMPSA Technology to the Company in
scope
sufficient to permit the Company to practice the Chrysalis/PMPSA Technology.
The
License Agreements provide that the Company is solely responsible for future
development of the Chrysalis/PMPSA Technology; however, Chrysalis and the
Company have agreed that Chrysalis will provide continued development support
through, but in no event after, June 30, 2008. In addition, the US License
Agreement provides that Chrysalis shall provide transition assistance in
the
form of payments totaling $4.5 million, with respect to which the Company
expects to receive the last payment in the third quarter 2008.
Under
the
Original Alliance Agreement, the Company was obligated to pay Chrysalis
royalties based on a multi-tiered royalty structure (that escalated upon
attaining collaboration product revenues greater than $500 million and $1
billion). Under the License Agreements, the Company is now obligated to pay
royalties at a rate equal to a low single-digit percent of sales of products
sold in the Exclusive Field in the respective territory. In connection with
the
exclusive undertakings of Chrysalis and PMPSA not to exploit the Chrysalis/PMPSA
Technology in the Exclusive Field, the Company is obligated to pay royalties
on
all product sales, including sales of any aerosol devices and related components
sold by the Company in the Exclusive Field that are based on aerosolization
technology other than the Chrysalis/PMPSA Technology. In addition, the Company
is obligated in the future to pay minimum royalties, but is entitled to a
future
reduction of royalties in an amount equal to the excess of any minimum royalty
paid over royalties actually earned under the License Agreements.
Under
the
License Agreements, the Company generally owns the intellectual property
created
or reduced to practice by the Company in the performance of the License
Agreements or exercise of the licenses granted thereunder, except such
inventions that relate primarily, in each instance, to the Chrysalis/PMPSA
Technology (the “Chrysalis/PMPSA Technology Improvements”). The Company is
obligated to assign to Chrysalis and PMPSA all such Chrysalis/PMPSA Technology
Improvements and all such inventions are then made subject to the rights
of the
Company under each License Agreement. The License Agreements also contain
provisions related to the calculation and payment of royalties, record-keeping
and audit rights, and prosecution of patents, and include customary
representations, warranties and indemnities. Each License Agreement, unless
terminated earlier will expire as follows as to each Licensed Product in
each
country in the respective territory, on a country-by-country basis, upon
the
latest of: (a) the tenth anniversary of the date of the first commercial
sale of
the Licensed Product; (b) the date on which the sale of such Licensed Product
ceases to be covered by a claim of an issued and unexpired patent in such
country, or (c) the date a generic form of the product is introduced in
such
country. The License Agreements may be terminated, by Chrysalis or PMPSA,
as
appropriate, in the event that the Company fails to make the payment of
the
minimum royalties, as provided therein, or by the Company, in whole or
in part,
initially upon payment of a termination fee. In addition, either party
to each
License Agreement may terminate upon a material breach by the other party
(subject to a specified cure period).
On
April
2, 2008, the Company issued a press release announcing the amendments to
the
Original Alliance Agreement, which is filed as Exhibit 99.1 to this report
and
incorporated herein by reference.
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.
In
addition, the restatement of the Original Alliance Agreement and the entering
into of the two License Agreements are potentially subject to additional
risks
and uncertainties, including:
The
Company, which now has responsibility for the development of the Chrysalis/PMPSA
Technology and will not have development support from Chrysalis after June
30,
2008, may not be able to complete the development of the initial prototype
aerosolization device, if at all, on a timely basis and such inability
may delay
or prevent initiation of the Company’s planned Phase 2 clinical trials;
The
Company requires sophisticated engineering expertise to continue the development
of the Chrysalis/PMPSA Technology. Although the Company is building its
own
internal medical device engineering expertise and has recently begun working
with a leading engineering and design firm that has a successful track
record of
developing innovative devices for major companies in the medical and
pharmaceutical industries, there is no assurance that the Company’s efforts will
be successful or that the Company will be able to identify other potential
collaborators to complete the development of the next-generation aerosolization
system and enter into agreements with such collaborators on terms and conditions
that are favorable to the Company, and, if the Company is unable to
identify or retain design engineers and medical device experts to support
its
development program, this could impair the Company’s ability to commercialize or
develop it’s aerosolized drug products;
PMPSA
and
Chrysalis are no longer affiliated entities; as such, there is a risk that,
if
the Company were to require the consent of PMPSA and Chrysalis under the
License
Agreements, they may not agree on the appropriate course and the Company
may be
forced to develop the Chrysalis/PMPSA Technology in the two territories
under
different circumstances. Such inconsistencies could have an adverse effect
on
the Company’s ability to develop the Chrysalis/PMPSA Technology or to
successfully commercialize the Licensed Products in one or both of the
territories; and
The
Company has additional rights under the US License Agreement that are
not
provided under the International License Agreement. Although the International
License Agreement provides for the potential expansion of rights with
the
consent of PMPSA, there can be no assurance that PMPSA would agree to
any such
expansion and, as a result, the Company may be unable to develop and
commercialize Licensed Products under its expanded rights outside the
United
States markets.
The
risks
and uncertainties related to the development and commercialization of the
Company’s products, including combination drug-device products, as well as other
risks and uncertainties associated with the Company’s business 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.
Item
9.01. Financial
Statements and Exhibits.
(d)
Exhibits:
99.1 Press
Release of Discovery Laboratories, Inc., dated April 2, 2008.
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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 | |
|
Robert
J. Capetola, Ph.D.
President
and Chief Executive Officer
|
||
| Date: April 3, 2008 | ||
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