EXHIBIT 99.1
DISCOVERY LABORATORIES REPORTS FIRST QUARTER 2004 FINANCIAL
RESULTS
DOYLESTOWN, PA -- MAY 6, 2004 -- DISCOVERY LABORATORIES, INC. (NASDAQ: DSCO),
today announced financial results for the first quarter of 2004. The company
will host a conference call today at 10:30 AM EDT. THE CALL IN NUMBER IS
800-665-0669.
For the quarter ended March 31, 2004, the Company reported a net loss of $8.9
million, or $0.20 per share, on approximately 43.3 million weighted average
shares outstanding, compared to a net loss of $4.5 million, or $0.14 per share,
on approximately 32.9 million weighted average shares outstanding for the same
period in 2003. As of March 31, 2004, the Company had cash of approximately
$23.6 million, a decrease of approximately $5.9 million from the previous
quarter. On April 2, 2004, the Company completed an underwritten public offering
of 2.2 million shares of common stock resulting in net proceeds of approximately
$22.7 million.
The change in the net loss primarily reflects increased operating expenses for:
(i) manufacturing activities, of which $1.4 million is included in research and
development, to support the production of clinical and commercial drug supply of
the Company's Surfactant Replacement Therapies (including Surfaxin(R)) in
conformance with current Good Manufacturing Practices (cGMPs); (ii) pre-launch
commercialization activities for Surfaxin for the treatment of Respiratory
Distress Syndrome (RDS) in premature infants, of which approximately $936,000
and $200,000 for the three months ended March 31, 2004 and 2003, respectively,
are included in general and administrative costs; (iii) development and
regulatory efforts for the Phase 3 clinical trials for Surfaxin for the
treatment of RDS in premature infants for which a New Drug Application (NDA) was
filed with the U.S. Food and Drug Administration (FDA) in April 2004; (iv)
development activities for the Phase 2 clinical trial for Surfaxin for the
treatment of Acute Respiratory Distress Syndrome (ARDS) in adults; and (v)
research and development activities of aerosolized formulations of the Company's
Surfactant Replacement Therapy (SRT) technology in preparation for the
initiation of Phase 2 clinical trials (anticipated in the second half of 2004)
for DSC-104 to potentially treat patients with severe, acute asthma and for
aerosolized Surfaxin administered via nasal CPAP (continuous positive airway
pressure) to potentially treat premature infants in the Neonatal Intensive Care
Unit (NICU) suffering from Respiratory Dysfunction.
The decrease in cash of approximately $5.9 million from the previous quarter is
primarily due to approximately $8.6 million of cash used for operating
activities offset by (i) the use of approximately $279,000 from an existing
credit line with General Electric Capital Corporation to support manufacturing
and other capital expenditures; (ii) the use of approximately $829,000 from an
existing credit line in connection with a collaboration agreement with PharmaBio
Development Inc., a subsidiary of Quintiles Transnational Corp., to support
pre-launch commercialization activities for Surfaxin for RDS; and (iii)
approximately $2.3 million received from the exercise of certain options and
warrants. As of March 31, 2004, approximately $1.4 million was outstanding under
the Company's $4 million capital lease financing arrangement with General
Electric Capital Corporation. As of March 31, 2004, approximately $3.3 million
was outstanding under the Company's secured revolving credit facility of $8.5 to
$10 million with PharmaBio Development Inc., and approximately $5.7 million was
available for borrowing.
As of March 31, 2004 and 2003, there were approximately 43,915,000 and
32,818,000 common shares issued and outstanding, respectively. After the public
financing of April 2, 2004, there were approximately 46,115,000 common shares
outstanding.
Robert J. Capetola, Ph.D., President and Chief Executive Officer of the Company,
commented, "Discovery's mission is to advance to market a pipeline of Surfactant
Replacement Therapies which we believe will revolutionalize the treatment of
respiratory diseases. Our strategy is to build a therapeutic portfolio that
addresses the range of respiratory disorders treated in the NICU, critical care
and hospital settings. We significantly advanced our mission by the recent
filing of an NDA for Surfaxin, our lead product, for the treatment of RDS and an
opportunistic financing with three high quality life sciences institutional
investors to improve our financial resources. This now positions us to address
the commercial requirements for Surfaxin, if approved, and continue to optimize
our manufacturing capabilities."
"We received a very enthusiastic response from leading neonatologists at the PAS
Annual Meeting to our commitment to addressing respiratory diseases in the NICU,
including Surfaxin and our planned Phase 2 program for aerosol SRT administered
by nasal CPAP. Additionally, our SRT programs for use in hospital settings are
progressing well. The ARDS program is now in full swing with the continued
manufacture of clinical drug supply and expansion of our clinical
infrastructure. For severe acute asthma, we expect to initiate a Phase 2
clinical trial for DSC-104 for the treatment of severe asthma. I believe, that
with these programs, we have one of the broadest respiratory pipelines in the
industry," continued Dr. Capetola.
Selected updates on the Company's programs and progress:
o SURFAXIN FOR RDS IN PREMATURE INFANTS
On April 13, 2004, the Company submitted an NDA to the FDA for clearance to
market Surfaxin for the prevention of RDS in premature infants. The NDA
filing is supported, in large part, by data from the Company's two positive
Phase 3 RDS clinical trials.
The Company is also preparing a Marketing Authorization Application (MAA)
to be filed with the European Medicines Evaluation Agency (EMEA) by the
middle of 2004 for Surfaxin for the prevention and treatment of RDS.
Recently, the Committee for Proprietary Medicinal Products (CPMP)
determined that Surfaxin qualified for evaluation through the Centralized
Procedure, a more streamlined European regulatory review process that
allows for a single application, evaluation and authorization for the
entire European Union.
On May 2, 2004, clinical trial results from the Company's two positive
Phase 3 clinical trials of Surfaxin for the prevention of RDS were
presented at the Pediatric Academic Societies' (PAS) Annual Meeting in San
Francisco. The Pediatric Academic Societies consists of the American
Pediatric Society, the Society for Pediatric Research and the Ambulatory
Pediatric Association. The PAS Annual Meeting is recognized as the largest,
most prestigious meeting dedicated to pediatric research and education in
the world and brings together physicians with expertise in all areas of
pediatrics. More than 5,000 pediatric healthcare providers, including
approximately 1,100 neonatologists attended.
o UNDERWRITTEN PUBLIC FINANCING
In April 2004, the Company completed an underwritten public offering of 2.2
million shares of common stock priced at $11.00 per share resulting in
gross and net proceeds to the Company of $24.2 million and approximately
$22.7 million, respectively. Bear, Stearns and Co. Inc., acted as the lead
manager of the offering. Three prominent healthcare/ biotechnology
institutional investors participated in the offering.
o SURFACTANT REPLACEMENT THERAPY FOR ACUTE RESPIRATORY DISTRESS SYNDROME
(ARDS) IN ADULTS
In February 2004, the FDA selected Surfaxin for the treatment of ARDS as
the only applicant within the Division of Pulmonary and Allergy Drug
Products to be included in its Continuous Marketing Application (CMA) Pilot
2 Program. Participation in this initiative is limited to one Fast Track
product for each review division within the Center for Drug Evaluation and
Research and Center for Biologics Evaluation and Research. This program was
established to study and document the benefits of more frequent FDA
feedback and interactions as a company moves through the various phases of
development, with the goal that such interactions will expedite the
development of Fast Track products.
Part B of this Phase 2 ARDS trial is ongoing and the Company expects to
complete this trial in the second half of 2004.
o MANUFACTURING
During the first quarter of 2004, the Company completed all steps required
for the production of clinical and commercial drug supply of its Surfactant
Replacement Therapies (including Surfaxin) in conformance with current Good
Manufacturing Practices (cGMPs) at Laureate Pharma, L.P. The Company is
presently producing Surfaxin to support its Phase 2 clinical trial for the
treatment of ARDS in adults.
o DSC-104 FOR ASTHMA
The Company recently completed a Phase 1b clinical trial to evaluate the
safety, tolerability and deposition of its humanized lung surfactant,
delivered as an inhaled aerosol (development name DSC-104) to treat
individuals who suffer from asthma. This masked, placebo-controlled,
randomized, Phase 1b study included six healthy subjects and eight
mild-persistent asthmatic patients. Results demonstrated that DSC-104 was
safe and well tolerated, did not induce bronchospasm and was deposited to
both the central and peripheral regions of the lungs in the mild-persistent
asthmatic group and the healthy volunteers. The Company is preparing a
Phase 2 dose escalation trial to be conducted at several leading asthma
clinics in the US and anticipates initiating this trial in the second half
of 2004.
ABOUT DISCOVERY LABORATORIES
Discovery Laboratories, Inc. is a biopharmaceutical company developing its
proprietary surfactant technology as Surfactant Replacement Therapies for
respiratory diseases. Surfactants are compositions produced naturally in the
lungs and essential for breathing. Discovery's technology produces an engineered
version of natural human lung surfactant that is designed to closely mimic the
essential properties of human lung surfactant. Discovery believes that through
its technology, pulmonary surfactants have the potential, for the first time, to
be developed into a series of respiratory therapies for critical care and other
hospitalized patients where there are few or no approved therapies available.
Discovery has filed a New Drug Application with the FDA for clearance to market
Surfaxin, the Company's lead product, for the prevention of Respiratory Distress
Syndrome in premature infants. Discovery is also conducting a Phase 2 clinical
trial for Acute Respiratory Distress Syndrome in adults, Phase 3 and Phase 2
clinical trials for Meconium Aspiration Syndrome in full-term infants and (with
aerosolized surfactant) is preparing to initiate a Phase 2 trial for asthma
(development name DSC-104) and a Phase 2 trial for Respiratory Dysfunction in
premature infants.
More information about Discovery is available on the Company's Web site at
WWW.DISCOVERYLABS.COM.
To the extent that statements in this press release 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,
events conditioned on stockholder or other approval, 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 release 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 the Company'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, risks relating to the progress of the Company's research
and development, the risk that the Company will not be able to raise additional
capital or enter into additional collaboration agreements (including strategic
alliances for our aerosol and Surfactant Replacement Therapies), risk of delay
in the Company's preparation and filing of applications for regulatory approval,
risk of delay in the FDA's approval of any applications filed by the Company,
risks of rejection of any applications filed by the Company, risks relating to
the ability of the Company's third party contract manufacturers to provide the
Company with adequate supplies of drug substance and drug products for
completion of any of the Company's clinical studies, other risks relating to the
lack of adequate supplies of drug substance and drug product for completion of
any of the Company's clinical studies, and risks relating to the development of
competing therapies and/or technologies by other companies. Companies in the
pharmaceutical and biotechnology industries have suffered significant setbacks
in advanced clinical trials, even after obtaining promising earlier trial
results. Data obtained from tests are susceptible to varying interpretations,
which may delay, limit or prevent regulatory approval. Those associated 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.
COMPANY CONTACTS:
John G. Cooper, EVP and CFO
Kori Beer, IR & Communications
215-340-4699
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
March 31,
(unaudited)
2004 2003
----------- -----------
Revenues from collaborative agreements 142 $ 393
Operating expenses:
Research and Development 6,710 3,844
General and Administrative 2,281 1,167
----------- -----------
Total expenses 8,991 5,011
Operating loss (8,849) (4,618)
Other income and expense (23) 113
----------- -----------
Net loss $ (8,872) $ (4,505)
=========== ===========
Net loss per common share $ (0.20) $ (0.14)
Weighted average number of common 43,320 32,857
shares outstanding
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31 December 31
2004 2003
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 23,564 $ 29,422
Prepaid expenses and other current assets 560 668
----------- -----------
Total current assets 24,124 30,090
Property and equipment, net of depreciation 2,878 2,414
Other assets 211 211
----------- -----------
Total assets $ 27,213 $ 32,715
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Credit facility with corporate partner $ 3,265 $ 2,436
Other current liabilities 4,809 4,593
----------- -----------
Total current liabilities 8,074 7,029
Deferred revenue 538 672
Capitalized lease 833 711
----------- -----------
Total liabilities 9,445 8,412
----------- -----------
Stockholders' equity 17,768 24,303
----------- -----------
Total liabilities and stockholders' Equity $ 27,213 $ 32,715
----------- -----------