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
8, 2010
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:
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 9, 2010, Discovery
Laboratories, Inc. (the “Company”) issued a press release highlighting the
results of operations for the quarter ended September 30, 2010. 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
relating to the announcement of the results of operations for the quarter ended
September 30, 2010 and all other matters except for those discussed under the
heading “Restatement of Financial Statements” 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.
Item
4.02. Non-Reliance on Previously Issued Financial
Statements or a Related Audit Report or Completed Interim Review.
In
connection with a review of the Company’s Annual Report on 2009 Form 10-K among
the Audit Committee of the Company’s Board of Directors (the “Audit Committee”),
and the Company’s management, with the assistance of Ernst &
Young LLP (“Ernst & Young”), the Company’s independent registered public
accounting firm, and the Company’s outside legal advisors, the Audit Committee
has reassessed the accounting classification of certain warrants issued by
the Company in May 2009 and February 2010 with respect to ASC 815 “Derivatives
and Hedging — Contracts in Entity’s Own Equity” (“ASC 815,” formerly known as
Emerging Issues Task Force Issue 00-19, “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own
Stock”). The review was conducted to respond to certain comments
raised by the Staff of the Securities and Exchange Commission (“SEC”) following
its periodic review of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2009.
The
warrants under review are:
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·
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Warrants
to purchase 7,000,000 shares of common stock issued in May 2009 in
connection with a registered equity offering. The
warrants expire in May 2014 and are exercisable, subject to an aggregate
share ownership limitation, at an exercise price of $1.15 per share;
and
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·
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Warrants to purchase 13,750,000
shares of our common stock issued in February 2010 in connection with a
registered equity offering. The warrants expire in February
2015 and are exercisable, subject to an aggregate share ownership
limitation, at a price of $0.85 per
share.
|
The
Company has historically accounted for its warrants, which prior to May 2009
were issued in private transactions, as equity instruments. The
Company’s warrants generally provide that, in the event the related registration
statement or an exemption from registration is not available for the issuance or
resale of the warrant shares, the holder may exercise the warrant on
a cashless basis. However, notwithstanding the availability of
cashless exercise, ASC 815, as interpreted, appears to establish a presumption
that, in the absence of express language to the contrary, registered warrants
may be subject to net cash settlement, as it is not within the absolute control
of the Company to provide freely-tradable shares in all
circumstances. After extensive discussion, the Company’s management,
Ernst & Young, and the Company’s outside legal advisors concluded that,
although the interpretation and applicability of ASC 815 as it relates to
registered warrants is complex and subject to varying interpretations, it should
be applied based on a strict reading of the authoritative literature without
respect to any evaluation of remoteness or probability.
2
Applying
such a strict reading, the Audit Committee, together with management and in
consultation with Ernst & Young and the Company’s outside legal advisors,
determined that, notwithstanding the highly–remote and theoretical possibility
of net cash settlement, the warrants identified above should have been recorded
as liabilities, measured at fair value on the date of issue, with changes in the
fair values recognized in the Company’s quarterly statement of operations in its
quarterly financial reports. Accordingly, the Audit Committee has
also concluded on November 8, 2010 that the Company’s previously-filed
consolidated financial statements for the fiscal year ended December 31, 2009 on
Form 10-K; Ernst & Young’s reports on the financial statements and the
effectiveness of internal control over financial reporting for the fiscal year
ended December 31, 2009; each of the consolidated financial statements included
in the Company’s Quarterly Reports on Form 10-Q for the periods ended June 30,
2009, September 30, 2009, March 31, 2010 and June 30, 2010; and all related
earnings releases and similar communications issued by the Company with respect
to the foregoing, should no longer be relied upon. The
Company’s management and the Audit Committee are assessing the effect of
the pending restatements on the Company’s internal control over financial
reporting and its disclosure controls and procedures.
On or
before November 15, 2010, the Company anticipates filing an amended Annual
Report on Form 10-K for the fiscal year ended December 31, 2009 and amended
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2010
and June 30, 2010, each with restated financial statements reflecting the
reclassification of the warrants identified above, together with the Quarterly
Report on Form 10-Q for the period ended September 30, 2010. The
Company does not expect to amend its previously-filed Quarterly Reports on Form
10-Q for the periods ended June 30, 2009 and September 30, 2009.
The
restatements that are being implemented will reflect the reclassification of the
warrants from equity to a liability in an amount equal to the fair value of the
warrants, as of the dates of issuance, calculated using the Black Scholes option
pricing model. The restatements will have no impact on amounts
previously reported for Assets; Revenues; Operating Expenses; Cash Flows; Loans,
Equipment Loan and Accounts Payables; and Contractual
Obligations. The restatements will have no effect on the Company’s
development programs, including Surfaxin®, anticipated development milestones,
or business strategy.
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Item
8.01.
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Other
Events.
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On November 9, 2010, the Company issued
a press release announcing the restatement and related matters referred to
in Item 4.02 to this Current Report on Form 8-K. Subject to the note relating to
the press release in Item 2.02 to this Current Report on Form 8-K, the press
release is attached as Exhibit 99.1 hereto.
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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 9,
2010
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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.
3
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. | |||
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By:
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/s/ John G. Cooper | |
| Name: | John G. Cooper | ||
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Title:
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President, Chief Financial Officer and Treasurer | ||
Date: November
9, 2010
4
Discovery
Labs Provides a Third Quarter 2010 Business and
Financial
Update
Warrington, PA — November 9, 2010 —
Discovery Laboratories, Inc. (Nasdaq: DSCO), a biotechnology company
developing its novel, synthetic, peptide-containing surfactant and related
aerosolization technologies as first in class therapies for severe respiratory
diseases, today provides an update on key pipeline and business initiatives and
a financial update for the third quarter ended September 30, 2010. The Company
will host a conference call this morning at 10:00 AM EST. The call-in number is
866-332-5218.
Selected
highlights, discussed in greater detail below, include:
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Surfaxin®
(lucinactant) –
Discovery Labs has now completed studies proposed to the FDA relating to
its comprehensive preclinical program intended to gain regulatory approval
for Surfaxin for the prevention of respiratory distress syndrome (RDS) in
premature infants. In conducting the preclinical program,
Discovery Labs has taken into account guidance from the U.S. FDA and
anticipates further FDA feedback in advance of filing a complete
response. The Company believes it remains on track for the
potential filing of a complete response in the first quarter of
2011.
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Surfaxin Phase 2 Acute
Respiratory Failure (ARF) Trial – New analyses from this trial
demonstrate that, based on patient stratification by severity of lung
injury, Surfaxin treatment significantly reduced time on
mechanical ventilation in the least severe patient segment (p <
0.01). Furthermore, the data demonstrated that Surfaxin
intervention reduced the need for a second dose (p < 0.05),
suggesting a decrease in disease severity following surfactant
treatment.
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Aerosolized KL4 Surfactant (lucinactant) for
Cystic Fibrosis (CF) – results from the recently-completed Phase
2a, investigator-initiated trial concluded that aerosolized KL4
surfactant delivery to CF patients was feasible, generally safe and well
tolerated, and demonstrated evidence of pharmacologic response via
improvement in mucociliary clearance (MCC) versus patient
baseline. Additionally, the FDA recently granted orphan drug
designation to Discovery Labs’ KL4
surfactant for the treatment of CF.
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3Q10 Financial Update -
cash burn from operations was $5.0 million, before financings and debt
service. Additionally, the Company paid $4.0 million to fully
satisfy its loan obligations with PharmaBio. Discovery Labs
ended the third quarter of 2010 with cash and cash equivalents of $14.7
million. In addition, the Company’s 2010 Committed Equity Financing
Facility (2010 CEFF) may, subject to certain conditions and limitations,
allow the Company to raise additional capital. For the fourth
quarter of 2010, Discovery projects a net cash burn of $4.0 million. The
Company recently received a non-dilutive grant to advance the aerosolized
KL4
surfactant program for prevention of neonatal RDS awarded under the
Patient Protection and Affordable Care Act of
2010.
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W. Thomas
Amick, Chairman of the Board and Chief Executive Officer of Discovery Labs
commented, “We are at an important transition point for our Company and the
third quarter has been very productive for Discovery Labs. We have
solidified our Company’s leadership, significantly progressed the Surfaxin
complete response initiative and have begun to understand the potential role of
KL4
surfactant in two new disease targets – cystic fibrosis and acute respiratory
failure. As we move towards the end of 2010, Discovery Labs
will be focused on remaining activities to support the Surfaxin complete
response filing and ongoing strategic alliance initiatives while diligently
managing our financial resources.”
Selected Updates on
KL4 Surfactant Pipeline
Development
Surfaxin for Neonatal RDS: If
approved, Surfaxin would become the first synthetic, peptide-containing
surfactant for commercial use in neonatal medicine. The safety and efficacy of
Surfaxin for neonatal RDS has been previously demonstrated in a large,
multinational Phase 3 clinical program. Discovery Labs believes that the last
remaining step necessary to potentially gain FDA marketing approval for Surfaxin
for the prevention of RDS is to satisfy the FDA as to the final validation of an
important quality control release and stability test for Surfaxin, the fetal
rabbit biological activity test (BAT).
In this
respect, Discovery Labs conducted a comprehensive preclinical program intended
to satisfy the FDA. The comprehensive preclinical program, as
proposed to the FDA, involved the optimization and subsequent revalidation of
the BAT, which was then employed in a series of prospectively-designed,
side-by-side preclinical studies with the well-established preterm lamb model of
RDS. Discovery Labs has taken into account the FDA’s guidance in
conducting its comprehensive program. These proposed studies
were recently completed. The resulting dataset is undergoing final
review and compilation in preparation for submission to the FDA.
Throughout
this process, Discovery Labs has had multiple interactions with the FDA intended
to ensure that the comprehensive preclinical program satisfies the FDA as to the
final validation of the BAT and its ultimate appropriateness as a release and
stability test for Surfaxin, upon potential approval. Previously,
Discovery Labs provided additional analysis to the FDA regarding the
revalidation of the BAT intended to aid the FDA in its final determination of
whether the BAT is appropriately validated for use as an ongoing quality control
release and stability test for Surfaxin, if approved. Discovery Labs
is awaiting FDA feedback regarding this analysis and anticipates further
interactions in advance of the pending complete response. Such
interactions with the FDA could affect the ultimate timing, conduct and outcomes
of remaining steps necessary to gain Surfaxin approval, including the potential
filing of the complete response. Discovery Labs believes it remains
on track to submit a complete response to the FDA in the first quarter of 2011,
potentially leading to Surfaxin approval later in the year.
Surfaxin LS™ and Aerosurf® Neonatal RDS
Programs: Surfaxin LS (lyophilized lucinactant) is an
important life-cycle initiative, intended to further improve on the Surfaxin
product profile and provide access to international
markets. Discovery Labs has contracted with a leading pharmaceutical
contract manufacturing organization to establish a Surfaxin LS clinical supply
manufacturing capability that is compliant with current good manufacturing
practices (cGMP). Preparation for the manufacture of process
validation lots of lyophilized lucinactant has initiated in the fourth quarter
of 2010. Additionally, the Company intends to seek regulatory
guidance for its planned development program, first with the FDA in the fourth
quarter of 2010 and then with the EMA in early 2011.
Aerosurf
is a novel drug/device combination therapy intended to allow early
administration of aerosolized surfactant to address neonatal RDS. Aerosurf holds
the promise to significantly expand the use of surfactant therapy by providing
neonatologists with a less invasive means of delivering KL4 surfactant
without the current requirement of invasive endotracheal intubation and
mechanical ventilation. The Company is preparing to engage the FDA
and EMA in the first half of 2011 for regulatory guidance with respect to the
planned Aerosurf development program. Discovery Labs, working with a
leading technology company with expertise in biomedical device development, is
optimizing the design of the capillary aerosolization device to potentially
reduce development risk and satisfy regulatory and development requirements for
Aerosurf.
Surfaxin Phase 2 trial for
ARF: Discovery Labs recently completed a comprehensive
analysis of its Phase
2 clinical trial of Surfaxin in children with ARF, a critical condition often
caused in children by severe respiratory infections. The study was a
multicenter, randomized, masked trial that enrolled 165 children under the age
of two and compared Surfaxin treatment to standard of care alone. The
objective was to evaluate the safety and tolerability of intratracheal
administration of Surfaxin and to assess whether Surfaxin treatment could
decrease the duration of mechanical ventilation in children with ARF. The trial
was designed as an estimation trial, intended to evaluate multiple, potentially
clinically-relevant endpoints, as this was the first ever exposure of Surfaxin
in a pediatric ARF patient population. The previously reported preliminary
analysis indicated that Surfaxin treatment was generally safe and well tolerated
in the ARF patient population in this trial. Additionally, Surfaxin
treatment reduced time on mechanical ventilation by approximately 10% compared
with standard of care alone, although this observation was not statistically
significantly.
The
recently completed comprehensive analysis demonstrated that, based on patient
stratification by severity of lung injury, Surfaxin treatment significantly
reduced time on mechanical ventilation in the least severe patient segment
(p<0.01) when
compared with standard of care alone. Furthermore, the data
demonstrated that Surfaxin intervention reduced the need for a second dose
(p<0.05), suggesting
a decrease in disease severity following surfactant treatment. The
comprehensive analysis of the ARF trial has been submitted for presentation at
several medical congresses in 2011.
Data from
this trial are supportive of Discovery Labs belief that intervention with
aerosolized KL4 surfactant
earlier in the disease progression may provide for a better clinical outcome in
patients at risk for severe respiratory compromise. As a next step in
development, Discovery Labs has entered into a collaboration with a leading
academic center to evaluate the potential advantage of aerosolized KL4 surfactant
intervention in a pre-clinical model of acute lung injury and expects this study
to conclude in early 2011.
Aerosolized KL4 Surfactant (lucinactant) for
CF: Aerosolized KL4 surfactant
was evaluated in a Phase 2a investigator-initiated clinical trial as a single
center, pilot study to evaluate the effect of aerosolized KL4 surfactant
in patients with mild to moderate CF. The study was designed to assess the
safety, tolerability and preliminary effectiveness of short term administration
of aerosolized KL4 surfactant
on MCC.
Discovery
recently announced the completion of this study and that the trial was presented
at the 2010 North American Cystic Fibrosis Conference. Dr. Scott H.
Donaldson (University of North Carolina), the study’s principle investigator,
concluded that aerosolized KL4 surfactant
delivery to CF patients was feasible, generally safe and well tolerated, was not
associated with serious adverse events, and demonstrated evidence of
pharmacologic response via improvement in MCC versus patient
baseline. Discovery Labs believes that this Phase 2a trial
supports the rationale for further development of aerosolized KL4 surfactant
in CF and other diseases associated with mucociliary compromise and also
represents the first meaningful assessment of feasibility relating to the
therapeutic use of aerosolized KL4 surfactant
in an ambulatory setting.
Recently,
the Office of Orphan Products Development of the FDA granted orphan drug
designation to Discovery Labs’ KL4 surfactant
for the treatment of CF. Orphan designation provides for up to seven
years of U.S. market drug product exclusivity for the designated indication
following marketing authorization.
Surfaxin,
Surfaxin LS, Aerosurf and the Company’s other Aerosolized KL4 surfactant
drug product candidates are investigational products and are not approved by the
FDA or any other world health regulatory authority for use in
humans.
Selected Financial Results
for the Quarter Ended September 30, 2010
For the
quarter ended September 30, 2010, the Company reported a net operating loss of
$6.2 million (or $0.03 per share) on 194.2 million weighted average common
shares outstanding. For the nine months ended September 30, 2010, the Company
reported a net operating loss of $19.5 million (or $0.12 per share) on 164.3
million weighted average common shares outstanding. As of September
30, 2010, the Company had 198.9 million common shares outstanding.
For the
third quarter of 2010, net cash burn from ongoing operating activities (before
financing and debt service activities) was $5.0
million. Additionally, the Company made $4.0
million of repayments under its previously restructured $10.6 million loan with
PharmaBio Development Inc. (PharmaBio), the former strategic investing
subsidiary of Quintiles Transnational Corp. (Quintiles). As of
September 30, 2010, all amounts owed under this loan obligation have been paid
in full. During September 2010, the Company received aggregate
proceeds of $0.6 million from the issuance of 3.1 million shares of common stock
pursuant to a financing under the 2010 CEFF.
As of
September 30, 2010, the Company had cash and cash equivalents of $14.7
million. Additionally, under the
2010 CEFF, there were approximately 28.5 million shares (not to exceed an
aggregate of $34.4 million) available for issuance, (subject to certain
conditions and limitations, including a minimum share price requirement of
$0.20) which may allow the Company to raise additional capital to support its
business plans.
The
Company anticipates that its net cash burn for the fourth quarter of 2010 will
be approximately $4.0 million consisting of $5.5 million of cash used primarily
for operating activities offset by cash inflows to date in the fourth quarter
from the following financing activities:
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·
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The
Company has been awarded a grant of $244,479, administered through the
U.S. Internal Revenue Service’s Qualifying Therapeutic Discovery Project,
to advance its project for aerosolized KL4
surfactant for prevention of neonatal RDS. The award payments
are expected in the fourth quarter of 2010 and will provide non-dilutive
capital to support the program based on expenditures made in
2009.
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·
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PharmaBio
invested an incremental $0.5 million to advance Surfaxin LS and Aerosurf
regulatory and development activities. Discovery issued to
PharmaBio approximately 2.4 million shares of the Company’s common stock
and warrants to purchase approximately 1.2 million shares of common
stock.
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·
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The
Company received aggregate proceeds of approximately $0.8 million from the
issuance of 4.7 million shares of common stock pursuant to financings
under the 2010 CEFF.
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Restatement of Financial
Statements
In
connection with a review of our Annual Report on 2009 Form 10-K by the Audit
Committee of the Company’s Board of Directors (the “Audit Committee”), and the
Company’s management, conducted with the assistance of Ernst & Young LLP
(“Ernst & Young”), the Company’s independent registered public accounting
firm, and the Company’s outside legal advisors, the Audit Committee has
reassessed the accounting classification of certain warrants issued by the
Company in May 2009 and February 2010 with respect to ASC 815 “Derivatives and
Hedging — Contracts in Entity’s Own Equity” (“ASC 815,” formerly known as
Emerging Issues Task Force Issue 00-19, “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own
Stock”). The review was conducted to respond to certain comments
raised by the Staff of the Securities and Exchange Commission (“SEC”) following
its periodic review of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2009.
The
warrants under review are:
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|
·
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Warrants
to purchase 7,000,000 shares of common stock issued in May 2009 in
connection with a registered equity offering. The warrants
expire in May 2014 and are exercisable, subject to an aggregate share
ownership limitation, at an exercise price of $1.15 per share;
and
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·
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Warrants
to purchase 13,750,000 shares of our common stock issued in February 2010
in connection with a registered equity offering. The warrants
expire in February 2015 and are exercisable, subject to an aggregate share
ownership limitation, at a price of $0.85 per
share.
|
The
Company has historically accounted for its warrants, which prior to May 2009
were issued in private transactions, as equity instruments. The
Company’s warrants generally provide that, in the event the related registration
statement or an exemption from registration is not available for the issuance or
resale of the warrant shares, the holder may exercise the warrant on a cashless
basis. However, notwithstanding the availability of cashless
exercise, ASC 815, as interpreted, appears to establish a presumption that, in
the absence of express language to the contrary, registered warrants may be
subject to net cash settlement, as it is not within the absolute control of the
Company to provide freely-tradable shares in all circumstances. After
extensive discussion, the Company’s management, Ernst & Young, and the
Company’s outside legal advisors concluded that, although the interpretation and
applicability of ASC 815 as it relates to registered warrants is complex and
subject to varying interpretations, it should be applied based on a strict
reading of the authoritative literature without respect to any evaluation of
remoteness or probability.
Applying
such a strict reading, the Audit Committee, together with management and in
consultation with Ernst & Young and the Company’s outside legal advisors,
determined that, notwithstanding the highly–remote and theoretical possibility
of net cash settlement, the warrants identified above should have been recorded
as liabilities, measured at fair value on the date of issue, with changes in the
fair values recognized in the Company’s quarterly statement of operations in its
quarterly financial reports. Accordingly, the Audit Committee has
also concluded on November 8, 2010 that the Company’s previously-filed
consolidated financial statements for the fiscal year ended December 31, 2009 on
Form 10-K; Ernst & Young’s reports on the financial statements and the
effectiveness of internal control over financial reporting for the fiscal year
ended December 31, 2009; each of the consolidated financial statements included
in the Company’s Quarterly Reports on Form 10-Q for the periods ended June 30,
2009, September 30, 2009, March 31, 2010 and June 30, 2010; and all related
earnings releases and similar communications issued by the Company with respect
to the foregoing, should no longer be relied upon. The Company’s
management and the Audit Committee are assessing the effect of the pending
restatements on the Company’s internal control over financial reporting and its
disclosure controls and procedures.
On or
before November 15, 2010, the Company anticipates filing an amended Annual
Report on Form 10-K for the fiscal year ended December 31, 2009 and amended
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2010
and June 30, 2010, each with restated financial statements reflecting the
reclassification of the warrants identified above, together with the Quarterly
Report on Form 10-Q for the period ended September 30, 2010. The
Company does not expect to amend its previously-filed Quarterly Reports on Form
10-Q for the periods ended June 30, 2009 and September 30, 2009.
The
restatements that are being implemented will reflect the reclassification of the
warrants from equity to a liability in an amount equal to the fair value of the
warrants, as of the dates of issuance, calculated using the Black Scholes option
pricing model. The restatements will have no impact on amounts
previously reported for Assets; Revenues; Operating Expenses; Cash Flows; Loans,
Equipment Loan and Accounts Payables; and Contractual
Obligations. The restatements will have no effect on the Company’s
development programs, including Surfaxin, anticipated development milestones, or
business strategy.
Readers
are referred to, and encouraged to read in their entirety, the Forms 8-K
regarding the matters referred to herein, including any exhibits attached
thereto, and the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2010 to be filed with the Securities and Exchange Commission,
which includes further detail on above-referenced transactions and the Company’s
business plans and operations, financial condition and results of
operations.
Conference
Call Details
Discovery
Labs will hold a conference call on Tuesday November 9, 2010 at 10:00 AM EST to
further discuss the foregoing. The call in number is
866-332-5218. The international call in number is
706-679-3237. This audio webcast will be available through a live
broadcast on the Internet at http://us.meeting-stream.com/discoverylabs_110910 and
www.discoverylabs.com. The
replay number to hear the conference call is 800-642-1687 or
706-645-9291. The passcode is 22279770.
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 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 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 regain
compliance with The Nasdaq Capital Market listing requirements prior to the
expiration of the additional grace period currently in effect, which could cause
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 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:
Media
relations:
Michelle
Linn, Linnden Communications
508-362-3087
Investor
relations:
John G.
Cooper, President and Chief Financial Officer
215-488-9490