WARRINGTON, Pa., March 16, 2015 /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 fourth
quarter ended December 31, 2014, as
well as recent business updates. The Company will host a conference
call on Tuesday, March 17, 2015 at 8:30 AM
ET. Conference call details are below.
Key Financial and Business Updates
The Company reported a net loss of $10.6
million ($0.12 per basic
share) on 85.4 million weighted-average common shares outstanding
for the quarter ended December 31,
2014, compared to a net loss of $11.7 million ($0.16 per basic share) on 73.1 million
weighted-average common shares outstanding for the comparable
period in 2013. Included in the net loss is the change in fair
value of certain common stock warrants that are classified as
derivative liabilities, resulting in non-cash income of
$1.8 million and non-cash expense of
$0.9 million for the quarters ended
December 31, 2014 and 2013,
respectively. For the quarter ended December
31, 2014, the Company reported an operating loss of
$11.2 million compared to
$10.3 million for the comparable
period in 2013.
Net cash outflows for the quarter ended December 31, 2014 were $10.2 million. As of December 31, 2014, the Company had cash and cash
equivalents of $44.7 million.
The Company is planning to restructure its business to focus on
the development of aerosolized KL4 surfactant for respiratory
diseases beginning with AEROSURF® for respiratory distress syndrome
(RDS) in premature infants. With respect to SURFAXIN® (lucinactant)
intratracheal suspension, the Company has made significant cash
investments to support manufacturing, quality systems, supply chain
and distribution, marketing, medical and commercial activities. In
2014, cash outflows in support of such operating activities for
SURFAXIN were approximately $19.0
million. The Company now believes that more of its capital
and resources than previously anticipated would have to be
allocated to SURFAXIN to achieve broad market acceptance within an
acceptable period. Therefore, the Company is actively pursuing,
with the intention of promptly implementing, a strategic
alternative for SURFAXIN. The preferred alternative would be a
potential strategic alliance or collaboration arrangement, but if
an alliance or collaboration arrangement cannot be implemented
promptly, the Company would plan to cease the commercialization of
SURFAXIN.
Enrollment in the ongoing AEROSURF phase 2a open label trial in
29 to 34 week GA infants (n=48) with respiratory distress syndrome
(RDS) is proceeding in the third and final dose group. Enrollment
in this phase 2a study is expected to be completed by the end of
the first quarter of 2015 or early second quarter of 2015 with
results communicated shortly thereafter. The goal of this study is
to assess: (1) the safety and tolerability of AEROSURF, (2)
physiological evidence of delivery of aerosolized KL4 surfactant in
the lung, and (3) performance of the Company's proprietary
aerosolization technology. Based on results to date in safety and
tolerability, evidence suggesting delivery of surfactant to the
lung, and performance of the aerosolization technology, the Company
has initiated work to prepare to advance to the next phase of
clinical evaluation to include 26 to 28 week GA infants, and has
initiated startup activities, site selection and investments in
devices and infrastructure to prepare for the planned phase 2b
study in 26 to 32 week GA infants. The phase 2b study is expected
to be a multicenter trial conducted in select medical centers both
within and outside the U.S. The primary objective of this trial
will be to determine the optimal dose(s) and define the expected
efficacy margin. The Company expects the phase 2b study to conclude
in 2Q 2016.
"Although we continue to believe that SURFAXIN has the potential
to become the market-leading surfactant, we believe our existing
capital is best used for the development of AEROSURF, which has the
potential to revolutionize the management of RDS and generate the
greatest value for our stakeholders," commented John G. Cooper, Discovery Labs' President and
Chief Executive Officer. "If successful with AEROSURF, we believe
that we may be able to develop a pipeline of other aerosolized KL4
surfactant products, potentially to address other respiratory
diseases where there are currently significant unmet medical
needs."
Select Additional Financial Results for the Fourth Quarter ended
December 31, 2014
During the fourth quarter of 2014, the Company recognized
$1.0 million in grant revenue -
$0.7 million of a $1.0 million award under a Small Business
Innovation Research (SBIR) Grant from the National Institutes of
Health (NIH) for up to $3.0 million
to support the development of the Company's aerosolized KL4
surfactant as a medical countermeasure to mitigate acute and
chronic/late-phase radiation-induced lung injury, and $0.3 million under a $1.9
million Fast Track SBIR Grant from the NIH to support for
the ongoing AEROSURF phase 2a clinical trial. Additionally, for the
fourth quarter of 2014, the Company recognized $136,000 in revenue for sales of SURFAXIN,
compared to $106,000 in recognized
revenue in the third quarter of 2014.
Operating expenses for the fourth quarter ended December 31, 2014 were $12.4 million. Approximately $4.5 million of this amount were expenditures to
support manufacturing, quality, medical affairs and
commercialization activities to support SURFAXIN. Included in
research and development costs were: (1) activities to conduct our
AEROSURF phase 2a clinical program and manufacture of capillary
aerosol generator (CAG) devices and related components for
preparation for the AEROSURF phase 2b clinical program; (2)
investments associated with the Battelle collaboration to prepare
our CAG and related aerosol technologies for AEROSURF phase 3
studies and, if successful, commercialization; (3) investments in
clinical, medical, and aerosolization device expertise to manage
the AEROSURF clinical program and pipeline development; and (4)
activities to support the NIH-funded study using aerosolized
KL4 surfactant in radiation-induced lung injury.
Other expense for the quarter ended December 31, 2014 was $1.2
million which represents interest expense related to
long-term debt. Of the $1.2 million,
$0.7 million is cash interest expense
and $0.5 million is non-cash
amortization of the debt discount.
As of December 31, 2014, the
Company had $30 million of long-term
debt with principal payable in three equal annual installments
beginning in February 2017, subject
to a potential one-year deferral of all amounts due in each of 2017
and 2018 if certain financial milestones are achieved.
As of December 31, 2014, the
Company reported common stock warrant liability of $1.3 million, related to five-year warrants
issued in February 2011.These warrants are not subject to cash
settlement, but 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 85.6 million and 84.6 million shares of common
stock outstanding as of December 31,
2014 and December 31, 2013,
respectively.
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 Annual
Report on Form 10-K for the quarter and year ended December 31, 2014 filed with the Securities and
Exchange Commission on March 16,
2015, which include discussions about the Company's business
plans and operations, financial condition and results of
operations.
Conference Call and Audio Webcast Details
The Company
will host a live teleconference and webcast at 8:30 a.m.
Eastern Time on Tuesday,
March 17, 2015. During the conference
call, Discovery Labs' management will discuss the 2014 fourth
quarter financial results along with other business
updates.
The press release and the live webcast of the conference call
will be available via Discovery Labs' corporate website at
www.discoverylabs.com. The webcast will be made available on the
events page. An archive will be available after the call at
the same address until Tuesday,
March 31, 2015.
To participate in the live conference call, please dial (888)
346-0767 (domestic) or (412) 902-4251 (international). After
placing the call, please ask to be joined into the Discovery Labs
conference call. The conference call replay number is (877)
344-7529 (domestic) or (412) 317-0088 (international); please use
10061701 as the replay passcode.
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 currently are not treated. Discovery Labs is
conducting a phase 2a clinical trial to evaluate the safety and
tolerability of aerosolized KL4 surfactant drug product
administered in escalating inhaled doses in premature infants 29 to
34 weeks gestational age who are receiving nasal continuous
positive airway pressure (nCPAP) for respiratory distress syndrome
(RDS), compared to infants receiving nCPAP alone.
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. 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,
including AEROSURF®, if approved, 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.
SURFAXIN® (lucinactant) Intratracheal Suspension, Discovery Labs'
first synthetic KL4 surfactant, is the only available non-animal
derived surfactant approved by the U.S. Food and Drug
Administration (FDA). Full prescribing information can be found at
http://www.surfaxin.com.
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: the
risk that Discovery Labs may be unable in the near term to secure
on acceptable terms, or at all, a strategic alliance or
collaboration agreement to support the commercialization of
SURFAXIN in the U.S., which would require Discovery Labs to
negotiate a lease extension for its manufacturing facility in
Totowa, NJ (Totowa Facility) and
may require it to seek consent under a secured loan (Deerfield Loan) from affiliates of Deerfield
Management Company, L.P. In such event, Discovery Labs would
be exposed to risks associated with ceasing its commercialization
activities for SURFAXIN and termination of manufacturing activities
at the Totowa Facility; 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 Discovery Labs' development programs,
including in particular the AEROSURF development program, with
time-consuming and expensive pre-clinical studies and clinical
trials, which may be subject to potentially significant delays or
regulatory holds, or fail; 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, 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; and 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.
Discovery
Laboratories, Inc.
Condensed
Consolidated Statement of Operations
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Product
sales
|
|
$
136
|
|
$
–
|
|
$
312
|
|
$
–
|
|
Grant
revenue
|
|
1,048
|
|
74
|
|
2,523
|
|
388
|
|
Total
Revenue
|
|
1,184
|
|
74
|
|
2,835
|
|
388
|
Operating expenses:
(1)
|
|
|
|
|
|
|
|
|
|
Cost of product
sales
|
|
902
|
|
517
|
|
2,671
|
|
517
|
|
Research and
development
|
|
7,771
|
|
5,752
|
|
26,690
|
|
27,661
|
|
Selling, general and
administrative
|
|
3,737
|
|
4,070
|
|
16,732
|
|
16,718
|
|
Total
expenses
|
|
12,410
|
|
10,339
|
|
46,093
|
|
44,896
|
Operating
loss
|
|
(11,226)
|
|
(10,265)
|
|
(43,258)
|
|
(44,508)
|
|
Change in fair value
of common stock warrant liability (1)
|
|
1,792
|
|
(867)
|
|
3,791
|
|
761
|
|
Other
income/(expense), net
|
|
(1,201)
|
|
(597)
|
|
(4,591)
|
|
(1,468)
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
(10,635)
|
|
$ (11,729)
|
|
$
(44,058)
|
|
$
(45,215)
|
Net loss per common
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.12)
|
|
$
(0.16)
|
|
$
(0.52)
|
|
$
(0.82)
|
|
Diluted
|
|
$
(0.15)
|
|
$
(0.16)
|
|
$
(0.56)
|
|
$
(0.82)
|
Weighted avg. common
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
85,358
|
|
73,129
|
|
85,095
|
|
55,258
|
|
Diluted
|
|
85,560
|
|
73,129
|
|
86,025
|
|
55,258
|
(1)
|
Material non-cash
items include the change in fair value of certain outstanding
warrants accounted for as derivative liabilities, and in operating
expenses, depreciation and stock-based compensation. For both
of the three months ended December 31, 2014 and 2013, the charges
for depreciation and stock-based compensation were $0.8 million
($0.4 million in R&D and $0.4 million in S,G&A). For
the twelve months ended December 31, 2014 and 2013, the charges for
depreciation and stock-based compensation were $3.7 million ($1.8
million in R&D and $1.9 million in S,G&A) and $2.9 million
($1.4 million in R&D and $1.5 million in S,G&A),
respectively.
|
|
|
|
|
|
|
Discovery
Laboratories, Inc.
Condensed
Consolidated Balance Sheet
(in thousands, except
per share data)
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2014
|
|
2013
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
44,711
|
|
$
86,283
|
|
Accounts
receivable
|
|
–
|
|
67
|
|
Inventory
|
|
27
|
|
112
|
|
Prepaid expenses and
other current assets
|
|
821
|
|
777
|
|
Total current
assets
|
|
45,559
|
|
87,239
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
1,637
|
|
1,656
|
|
Restricted
cash
|
|
225
|
|
325
|
|
Other
assets
|
|
78
|
|
97
|
|
Total
Assets
|
|
$ 47,499
|
|
$
89,317
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$ 6,
466
|
|
$
6,218
|
|
Deferred
revenue
|
|
43
|
|
139
|
|
Common stock warrant
liability
|
|
1,258
|
|
5,425
|
|
Equipment loans,
current portion
|
|
62
|
|
73
|
|
Total Current
Liabilities
|
|
7,829
|
|
11,855
|
|
|
|
|
|
|
Long-Term
Liabilities:
|
|
|
|
|
|
Long-term debt, net
of discount of $9,698 and
|
|
|
|
|
|
$11,646 at December
31, 2014 and 2013, respectively
|
|
20,302
|
|
18,354
|
|
Equipment loan,
non-current portion
|
|
–
|
|
69
|
|
Other
liabilities
|
|
169
|
|
538
|
|
Total
Liabilities
|
|
28,300
|
|
30,816
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
19,199
|
|
58,501
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
47,499
|
|
$
89,317
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/discovery-labs-reports-fourth-quarter-2014-financial-results-and-provides-update-on-surfaxin-lucinactant-intratracheal-suspension-and-aerosurf-program-300051367.html
SOURCE Discovery Laboratories, Inc.