SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 6, 2002
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 (Commission File Number) (IRS Employer
of incorporation) Identification Number)
350 Main Street, Suite 307
Doylestown, Pennsylvania 18901
(Address of principal executive offices)
(215) 340-4699
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Item 5. Other Events
On March 7, 2002, Discovery Laboratories, Inc., a Delaware corporation
("Discovery"), issued a press release to announce that it had entered into a
collaboration arrangement (the "Collaboration") effective as of March 6, 2002,
with Laboratorios Del Dr. Esteve, S.A. ("Esteve"). This collaboration
arrangement supersedes the existing sublicense and supply agreements between
Discovery and Esteve and expands the territory covered by those original
agreements to all of Europe, including the Russian Federation, and Central
America and South America. In connection with this transaction, Discovery raised
$4.5 million in gross proceeds and issued 821,862 shares of its common stock,
par value $.001 per share ("Common Stock"). After payment of fees and associated
expenses, Discovery intends to use the net proceeds of approximately $4.455
million, for working capital and general corporate purposes, including further
development of Discovery's platform technology, based on humanized lung
surfactants, in an effort to develop potential novel respiratory therapies, such
as an aerosol spray for the treatment of asthma, and pulmonary drug delivery
products with the potential to deliver other pharmaceutical products to the
lungs.
Transaction Overview
In connection with the Collaboration, Discovery entered into a series of
agreements with Esteve, which include a sublicense and collaboration agreement
(the "Collaboration Agreement"), a supply agreement (the "Supply Agreement") and
a common stock purchase agreement (the "Purchase Agreement"). As further
discussed below and subject to the terms and conditions set forth in these
agreements, Esteve agreed to provide certain commercialization services
throughout Europe, Central America and South America for Discovery's lead
product candidate, Surfaxin(R), for the treatment of idiopathic respiratory
distress syndrome in premature infants ("IRDS"), meconium aspiration syndrome in
full-term infants ("MAS"), acute respiratory distress syndrome in adult patients
("ARDS") and acute lung injury in adult patients ("ALI", ARDS and ALI are
sometimes referred to herein collectively as "ALI/ARDS"). Discovery and Esteve
have agreed to an exclusive supply agreement which provides that Esteve will
purchase all of its Surfaxin drug product requirements from Discovery at an
established transfer price based on sales of Surfaxin by Esteve and/or its
sublicensee(s). Esteve has also agreed to sponsor certain clinical trial costs
related to obtaining European Agency for Medicinal Products (EMEA) approval for
commercialization of Surfaxin in Europe for the ALI/ARDS indications. In
addition to a $4.0 million equity investment in Discovery, Esteve also agreed to
pay to Discovery an up-front license fee of $500,000 and to make certain
milestone payments to Discovery upon the attainment of certain corporate
milestones that are discussed in greater detail below.
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Collaboration Arrangements
Pursuant to the Collaboration Agreement, Esteve will provide
commercialization services for the promotion of Surfaxin for IRDS, MAS and
ALI/ARDS throughout Europe, including the Russian Federation, Central America
and South America and will pay for certain clinical trial costs. The
commercialization services to be provided by Esteve will include customary
pre-launch, launch and post-launch marketing activities including retaining
marketing and sales personnel for commercialization of Surfaxin in the
aforementioned territory. Under the Supply Agreement, Discovery will manufacture
Surfaxin for distribution and sale by Esteve in the territory covered by the
Collaboration. Subject to the approval of Discovery and certain limitations and
requirements set forth in the Collaboration Agreement, Esteve may sublicense its
commercialization rights to third parties. Esteve has agreed to pay certain
clinical trial costs related to obtaining EMEA approval for commercialization of
Surfaxin for the ALI/ARDS indications. In general, Discovery will be responsible
for regulatory activities relating to Surfaxin, including with respect to EMEA
filings, however, Esteve will be responsible for regulatory activities relating
to specific countries in the territory covered by the Collaboration.
Moreover, subject to prior termination of this right as provided in the
Collaboration Agreement, Esteve has been granted a right of first negotiation
until March 6, 2009, regarding possible collaborative licenses or other suitable
arrangements that would provide for the clinical development and marketing of
other products that may be developed by Discovery, whether related to Surfaxin
or otherwise, in the territory covered by the Collaboration. In addition, the
Collaboration Agreement specifies that any such future collaborative agreements
would provide for suitable up-front cash payments and cash milestones and shared
responsibility for clinical development work and expenses related to the new
technology. Further, Esteve would be responsible for customary commercialization
activities and costs and Discovery would supply any such future products.
In addition to the monies received by Discovery in connection with
Esteve's equity investment in Discovery and payment of the up-front license fee
discussed in greater detail below, upon receipt of EMEA marketing regulatory
approval of Surfaxin for sale in Europe for each of the IRDS and MAS indications
and the first to be approved of the ARDS or ALI indications, Esteve has agreed
to make certain cash milestone payments to Discovery.
The management of the overall strategic relationship between Esteve and
Discovery and marketing and sales activities of Collaboration will be managed
and governed by a joint steering committee (the "Joint Steering Committee")
which will be comprised of representatives appointed by Esteve and Discovery. In
addition, a separate joint development committee (the "Joint Development
Committee") will be formed to oversee development of Surfaxin in the territory
covered by the Collaboration. The Joint Development Committee will be comprised
of four members consisting of two executives to be appointed by each of
Discovery and Esteve. Each committee will be chaired alternately by a
representative of Discovery and Esteve with each such chairperson serving for a
one-year period.
Equity Investment and Licensing Fee
Pursuant to the Purchase Agreement, Esteve purchased 821,862 shares of
Common Stock at a price of $4.867 per share, representing a total equity
investment of $4 million. In
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addition, Esteve paid to Discovery an up-front licensing fee of $500,000. Under
the Purchase Agreement, Esteve has agreed to certain limitations on its trading
of, and purchase of additional shares of, Common Stock, as well as certain
prescriptions regarding the voting of its shares.
The shares of Common Stock purchased by Esteve have not been registered
under the Securities Act of 1933 (the "1933 Act") and may not be offered or sold
in the United States absent registration or an applicable exemption from the
registration requirements of the 1933 Act. In addition, all such shares of
Common Stock are subject to certain restrictions on transfer as set forth in the
Purchase Agreement. Esteve will have up to two "demand" registration rights that
require Discovery to register shares of Common Stock held by Esteve for resale
under the 1933 Act. In addition, subject to certain limitations, Esteve has
customary "piggyback" rights to include such shares of Common Stock in other
registrations of securities filed by Discovery for resale under the 1933 Act.
A copy of the press release announcing the execution of the agreements
relating to the Collaboration is attached as an exhibit hereto. The descriptions
of the Collaboration contained in the attached press release and in this Item 5
do not purport to be complete and are qualified in their entirety by reference
to the agreements and instruments attached as exhibits hereto.
To the extent that statements in this report are not strictly historical,
including statements as to Discovery's business strategy, outlook, objectives,
plans, intentions, goals, future financial conditions, future collaboration
agreements, the success of Discovery'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 report 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 the
forward-looking statements contained herein are the risk that financial
conditions may change, the risk that Discovery will not be able to raise
additional capital or enter into additional collaboration agreements, risks that
any collaborators may not perform their obligations under any such agreements,
risks relating to the progress of Discovery's research and development and the
development of competing therapies and/or technologies by other companies. Those
associated risks and others are further described in Discovery's periodic
filings with the Securities and Exchange Commission including its reports on
Forms 10-KSB, 8-K and 10-QSB, and amendments thereto.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) Exhibits:
*10.1 Sublicense and Collaboration Agreement
*10.2 Supply Agreement
10.3 Common Stock Purchase Agreement
99.1 Press Release dated March 7, 2002.
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* Confidential treatment has been requested with respect to certain
portions of these exhibits. Such portions have been separately filed with the
Securities and Exchange Commission and redacted herein.
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
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Name: Robert J. Capetola, Ph.D.
Title: President and
Chief Executive Officer
Date: March 8, 2001
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