WARRINGTON, Pa., Nov. 12, 2013 /PRNewswire/ -- Discovery
Laboratories, Inc. (Nasdaq: DSCO), a specialty biotechnology
company dedicated to advancing a new standard in respiratory
critical care, today announced financial results for the third
quarter ended September 30, 2013, as
well as recent business updates. The Company will host a conference
call Wednesday morning, November 13,
2013 at 10:00 AM ET.
Conference call details are below.
Key updates include:
- SURFAXIN®: On October
4, 2013, the U.S. Food and Drug Administration (FDA) agreed
to the Company's updated product specifications for SURFAXIN
(lucinactant) Intratracheal Suspension. SURFAXIN is the first
FDA-approved synthetic, peptide containing surfactant available for
the prevention of respiratory distress syndrome (RDS) in premature
infants and the only approved alternative to animal-derived
surfactants currently available today in the U.S. On November 8, 2013, the Company announced that it
has initiated the commercial introduction of SURFAXIN in the
U.S.
- AEROSURF®: In October
2013, the Company submitted an investigational new drug
(IND) application to the FDA to initiate its AEROSURF phase 2
clinical program. The FDA has completed its review and
cleared the IND, and the Company can now proceed with its phase 2
clinical program. AEROSURF is a novel investigational
drug-device combination product being developed to deliver the
Company's KL4 surfactant in aerosolized form to premature infants
with RDS. AEROSURF could potentially provide neonatologists
with the ability to avoid invasive procedures and thereby enable
the treatment of a significantly greater number of premature
infants who could benefit from surfactant therapy and currently are
not treated. The Company anticipates results from the first
phase of its AEROSURF phase 2 clinical program in mid-2014.
- Financial Update: As of September
30, 2013, the Company reported cash and cash equivalents of
$21.2 million. In November 2013, the Company completed a public
offering of its common stock that resulted in net proceeds,
including amounts expected from an over-allotment recently
exercised by the underwriters, of approximately $54 million. Additionally, with the
initiation of the commercial launch of SURFAXIN, the Company became
eligible under its secured loan facility with Deerfield Management
Co., L.P. (Deerfield) to receive
an additional advance of $20 million,
which is expected in early December
2013.
"With the commercial introduction of SURFAXIN, initiation of our
clinical program for AEROSURF and our strengthened financial
position, we are a much stronger company and better positioned to
implement our business plan and achieve our vision of advancing a
new standard of care for premature infants with RDS," commented
John G. Cooper, President and Chief
Executive Officer at Discovery Labs.
Summary Financial Results for the Third Quarter Ended
September 30, 2013
For the quarter ended September 30,
2013, the Company reported a net loss of $12.2 million ($0.22 basic net loss per share) on 54.8 million
weighted-average common shares outstanding, compared to a net loss
of $13.3 million ($0.31 basic net loss per share) on 43.4 million
weighted-average common shares outstanding for the same period in
2012. Included in the net loss is the change in fair value of
certain common stock warrants that are classified as derivative
liabilities, resulting in a non-cash loss of $1.1 million and $3.3
million in 2013 and 2012, respectively.
The Company reported an operating loss of $10.8 million for the quarter ended September 30, 2013 compared to an operating loss
of $10.0 million for the same period
in 2012. Net cash outflows before financing activities for
the quarter ended September 30, 2013
were $10.1 million compared to
$9.9 million for the same period in
2012. The operating loss for the quarter ended September 30, 2013 includes a $1.3 million investment to prepare for the
AEROSURF phase 2 clinical trials.
As of September 30, 2013, the
Company had cash and cash equivalents of $21.2 million. On November
5, 2013, the Company completed a public offering of 25
million shares of common stock at a price of $2.00 per share, resulting in net proceeds to the
Company (after underwriting discount and anticipated expenses) of
approximately $46.8 million.
The Company also granted the underwriters a 30-day option to
purchase up to an additional 3.75 million shares of common stock at
an offering price of $2.00 to cover
over-allotments, if any. On November
8, 2013, the underwriter notified the Company that it has
exercised its over-allotment option to purchase 3.75 million
additional shares of common stock. The exercise of the option
is expected to close on or about November
14, 2013 and result in net proceeds (after underwriting
discount) of approximately $7.1
million.
Additionally, with the commercial introduction of SURFAXIN, the
Company became eligible under its $30 million secured loan
facility with Deerfield to receive
the final $20 million advance, which
is expected on or about December 3,
2013. The initial $10 million
was advanced in February 2013 upon
execution of the facility agreement. In connection with the
$20 million advance, Deerfield will receive a transaction fee equal
to 1.5% of the advance, and warrants to purchase approximately 4.7
million shares of common stock at an exercise price of $2.81 per share.
In October 2013, the Company
initiated an offering under its at-the-market (ATM) Program with
Stifel, Nicolaus & Company, Incorporated and issued 713,920
shares of common stock at an average price per share of
$2.75, resulting in net proceeds
(after a 3% commission) of approximately $1.9 million. Following this offering,
approximately $23.1 million remains
available under the Company's ATM Program.
For the fourth quarter of 2013, the Company anticipates
operating cash outflows before financing activities of $10.5 million, and approximately $85 million in cash and cash equivalents at
December 31, 2013.
As of September 30, 2013, the
Company reported a common stock warrant liability of $4.7 million, predominantly related to five-year
warrants issued in February 2011. These warrants are not
subject to cash settlement; however, they have been classified as
derivative liabilities in accordance with generally accepted
accounting principles because they contain anti-dilution provisions
that adjust the exercise price of the warrants in certain
circumstances.
The Company had 54.9 and 43.7 million shares of common stock
outstanding as of September 30, 2013
and December 31, 2012, respectively.
The Company currently has 80.7 million shares of common stock
outstanding, not including 3.75 million shares to be issued upon
closing of underwriters' over-allotment option.
Readers are referred to, and encouraged to read in their
entirety the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2013
filed with the Securities and Exchange Commission, which includes
further detail on the above-referenced transactions and the
Company's business plans and operations, financial condition and
results of operations.
Conference Call and Audio Webcast Details
Discovery Labs will hold a conference call and audio webcast on
Wednesday, November 13, 2013 at
10:00 AM ET to discuss the foregoing.
To access the conference call and participate in the
question-and-answer session, the number for domestic callers is
(877) 870-4263 and for international callers (412) 317-0790.
The conference call replay number is (877) 344-7529 or (412)
317-0088. The passcode for the replay is 10036729.
The audio webcast of the conference call will be available at
http://bit.ly/1962IVM and the Discovery Labs website at
www.discoverylabs.com. It is recommended that participants
log onto the audio webcast at least 15 minutes prior to the
call. A replay of the audio webcast will be available
after the call at the Company's website.
About SURFAXIN®
The U.S. Food and Drug
Administration (FDA) approved SURFAXIN® (lucinactant)
Intratracheal Suspension for the prevention of RDS in premature
infants who are at high risk for RDS. SURFAXIN is the first
synthetic, peptide-containing surfactant approved by the FDA and
the only alternative to animal derived surfactants.
IMPORTANT SAFETY INFORMATION
SURFAXIN is
intended for intratracheal use only. The administration of
exogenous surfactants, including SURFAXIN, can rapidly affect
oxygenation and lung compliance. SURFAXIN should be
administered only by clinicians trained and experienced with
intubation, ventilator management, and general care of premature
infants in a highly supervised clinical setting. Infants
receiving SURFAXIN should receive frequent clinical assessments so
that oxygen and ventilatory support can be modified to respond to
changes in respiratory status.
Most common adverse reactions associated with the use of
SURFAXIN are endotracheal tube reflux, pallor, endotracheal tube
obstruction, and need for dose interruption. During SURFAXIN
administration, if bradycardia, oxygen desaturation, endotracheal
tube reflux, or airway obstruction occurs, administration should be
interrupted and the infant's clinical condition assessed and
stabilized.
SURFAXIN is not indicated for use in acute respiratory distress
syndrome (ARDS).
For more information about SURFAXIN, please visit
www.surfaxin.com.
About AEROSURF®
AEROSURF is a novel
investigational drug-device combination product being developed to
deliver Discovery Labs' KL4 surfactant in aerosolized form to
premature infants with respiratory distress syndrome (RDS).
AEROSURF could potentially allow for the administration of KL4
surfactant to premature infants without invasive endotracheal
intubation, and may enable the treatment of a significantly greater
number of premature infants who could benefit from surfactant
therapy but are currently not treated.
About Discovery Labs
Discovery Laboratories, Inc. is
a specialty biotechnology company focused on advancing a new
standard in respiratory critical care. Discovery Labs'
technology platform includes its novel proprietary KL4 surfactant,
a synthetic, peptide-containing surfactant that is structurally
similar to pulmonary surfactant, and its proprietary drug delivery
technologies being developed to enable efficient delivery of
aerosolized KL4 surfactant and other inhaled therapies.
Discovery Labs' strategy is initially focused on neonatology
and improving the management of respiratory distress syndrome (RDS)
in premature infants. Discovery Labs believes that its RDS product
portfolio has the potential to become the new standard of care for
RDS and, over time, enable the treatment of a significantly greater
number of premature infants who could benefit from surfactant
therapy but are currently not treated.
For more information, please visit the Company's 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, including projections of future cash balances and
anticipated cash outflows, to differ materially from the statements
made. Examples of such risks and uncertainties include: risks
relating to efforts to commercialize SURFAXIN and AFECTAIR,
including (1) whether Discovery Labs' commercial and medical
affairs organizations will succeed in introducing the products, (2)
whether the products will be approved by hospitals and will gain
market acceptance and be preferred by healthcare providers over
current products, (3) whether the products will generate
revenues sufficient to fund Discovery Labs' research and
development activities and support its operations, and (4) whether
Discovery Labs will successfully develop a planned second vial size
for SURFAXIN and follow-on AFECTAIR devices; risks related to
development programs, including in particular the AEROSURF
development program, including time-consuming and expensive
pre-clinical studies and clinical trials, which may be subject to
potentially significant delays or regulatory holds, or fail; risks
that Discovery Labs will be unable to secure significant additional
capital as needed, and may be unable in a timely manner, if at all,
to identify potential strategic partners to support product
development and, if approved, commercialize products in markets
outside the U.S., or to access debt or equity financings, which
could result in substantial equity dilution; risks related to
technology transfers to contract manufacturers and problems or
delays encountered by Discovery Labs, contract manufacturers or
suppliers in manufacturing drug products, drug substances,
aerosol-conducting airway connectors, CAG devices and other
materials on a timely basis and in sufficient amounts; risks
relating to rigorous regulatory requirements, including that: (i)
the FDA or other regulatory authorities may not agree with
Discovery Labs on matters raised during regulatory reviews, may
require significant additional activities, or may not accept or may
withhold or delay consideration of applications, or may not approve
or may limit approval of Discovery Labs' products,
and (ii) changes in the national or international
political and regulatory environment may make it more difficult to
gain regulatory approvals; other risks, including those related to
(1) continued compliance with The Nasdaq Capital Market
listing requirements, (2) Discovery Labs' efforts to maintain and
protect the patents and licenses related to its products, (3)
whether it or its strategic partners will be able to attract and
retain qualified personnel, (3) other companies' competing
products, (3) legal proceedings, and (4) 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.
Condensed
Consolidated Statement of Operations
(in thousands, except per share data)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Revenue from
collaborative arrangement and grants
|
$
60
|
|
$
–
|
|
$
315
|
|
$
–
|
|
Operating expenses:
(1)
|
|
|
|
|
|
|
|
|
Research and
development
|
6,574
|
|
5,743
|
|
21,909
|
|
15,482
|
|
Selling, general and
administrative
|
4,299
|
|
4,255
|
|
12,648
|
|
9,912
|
|
Total
expenses
|
10,873
|
|
9,998
|
|
34,557
|
|
25,394
|
|
Operating
loss
|
(10,813)
|
|
(9,998)
|
|
(34,242)
|
|
(25,394)
|
|
Change in fair value
of common stock warrant liability
|
(1,059)
|
|
(3,309)
|
|
1,627
|
|
(5,063)
|
|
Interest and other
income / (expense), net
|
(352)
|
|
(39)
|
|
(871)
|
|
(43)
|
|
Net loss
|
$
(12,224)
|
|
$
(13,346)
|
|
$
(33,486)
|
|
$
(30,500)
|
|
Net loss per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.22)
|
|
$
(0.31)
|
|
$
(0.68)
|
|
$
(0.80)
|
|
Diluted
|
$
(0.22)
|
|
$
(0.31)
|
|
$
(0.69)
|
|
$
(0.80)
|
|
Weighted avg. common
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
54,792
|
|
43,444
|
|
49,235
|
|
38,061
|
|
Diluted
|
54,792
|
|
43,444
|
|
50,377
|
|
38,061
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes non-cash
charges for depreciation and stock-based compensation of $0.8
million ($0.4 million in R&D and $0.4 million in SG&A)
for each of the three months ended September 30, 2013 and
2012; and for the nine months ended September 30, 2013 and 2012,
$2.1 million ($1.1 million in R&D and $1.0 million in SG&A)
and $2.1 million ($1.2 million in R&D and $0.9 million in
SG&A), respectively.
|
Discovery
Laboratories, Inc
|
Condensed
Consolidated Balance Sheets (in thousands)
|
|
September
30,
|
|
December
31,
|
|
2013
|
|
2012
|
ASSETS
|
(Unaudited)
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
21,177
|
|
$
26,892
|
Inventory
|
117
|
|
195
|
Prepaid expenses and
other current assets
|
418
|
|
719
|
Total current
assets
|
21,712
|
|
27,806
|
Property and
equipment, net
|
1,417
|
|
1,737
|
Restricted cash and
other assets
|
502
|
|
400
|
Total
Assets
|
$
23,631
|
|
$
29,943
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
1,489
|
|
$
1,166
|
Accrued
expenses
|
5,071
|
|
4,159
|
Common stock warrant
liability
|
4,678
|
|
6,305
|
Equipment loan and
capitalized leases, current portion
|
72
|
|
69
|
Total Current
Liabilities
|
11,310
|
|
11,699
|
Long-Term
Liabilities:
|
|
|
|
Long-term debt, net
of discount of $3.7 million at September 30, 2013 and $0 at
December 31, 2012, respectively
|
6,326
|
|
–
|
Equipment loan,
non-current portion & other liabilities
|
520
|
|
591
|
Total
Liabilities
|
18,156
|
|
12,290
|
Stockholders'
Equity:
|
5,475
|
|
17,653
|
Total Liabilities and
Stockholders' Equity
|
$
23,631
|
|
$
29,943
|
|
|
|
|
|
|
SOURCE Discovery Laboratories, Inc.