Exhibit 99.1
DISCOVERY MAKES STRATEGIC MOVES TO PIONEER MEDICAL AND COMMERCIAL
OPPORTUNITIES OF SURFACTANT REPLACEMENT THERAPY
FOR NEONATOLOGY
BUILDING SPECIALTY U.S. SALES AND MARKETING ORGANIZATION - QUINTILES
COLLABORATION IS RESTRUCTURED --
COMMERCIALIZATION AGREEMENTS TERMINATED
INITIATING TWO PHASE 2 CLINICAL TRIALS -- SURFAXIN(R) FOR BRONCHOPULMONARY
DYSPLASIA AND AEROSOLIZED SURFACTANT TO
TREAT NEONATAL RESPIRATORY FAILURES
DOYLESTOWN, PA -- NOVEMBER 4, 2004 -- DISCOVERY LABORATORIES, INC. (NASDAQ:
DSCO) has undertaken a strategic initiative to optimize the inherent medical
benefits and commercial promise of its Surfactant Replacement Therapy (SRT) to
address the unmet need for respiratory therapies for the Neonatal Intensive Care
Unit (NICU). Discovery is today announcing the restructuring of its business
arrangements with Quintiles Transnational Corp., including the mutual
termination of the related commercialization arrangements. Discovery is building
its own specialty pulmonary United States sales and marketing organization to
focus initially on opportunities in the NICU and, as products are developed, to
expand to critical care and hospital settings. This strategic initiative, led by
the anticipated launch of Surfaxin(R), is intended to allow Discovery to fully
control its own sales and marketing operation, establish a strong presence in
the NICU, and optimize company economics.
To enhance the potential commercial and medical value of SRT by addressing the
most prevalent respiratory disorders in the NICU, Discovery is adjusting and
broadening its pipeline of NICU therapeutic programs. Discovery is initiating a
Phase 2 clinical trial for Neonatal Respiratory Failures utilizing aerosolized
SRT administered through nasal continuous positive airway pressure (nasal CPAP)
to reduce the need for invasive and costly mechanical ventilation and a Phase 2
clinical trial using Surfaxin to prevent Bronchopulmonary Dysplasia (BPD), a
form of chronic lung disease. These respiratory conditions are cited as some of
the most significant unmet medical needs for the neonatal community.
Additionally, Discovery is focusing its efforts on its prophylactic approach to
address meconium aspiration syndrome (MAS) which is being evaluated in a Phase 2
clinical trial and is discontinuing its Phase 3 clinical trial for the treatment
of severe MAS.
THE COMPANY WILL HOST A CONFERENCE CALL TODAY AT 11:00 AM EST. THE CALL IN
NUMBER IS 800-665-0669.
Robert J. Capetola, Ph.D., President and Chief Executive Officer of Discovery,
commented, "Our proprietary surfactant technology represents a new paradigm that
we believe will revolutionize the treatment of respiratory diseases. For the
first time, medical practitioners in the NICU can envision surfactant products
that are precisely engineered to address various life-threatening respiratory
diseases -- and a company capable of fulfilling a commitment to this community."
"We believe our NICU pipeline could serve an addressable market estimated to be
in excess of $500 million per year in potential revenue to the Company. Starting
with potential financial resources of approximately $120 million, we are
prepared to undertake this commitment while also advancing our critical care and
hospital programs, notably led by our ARDS and aerosol programs," continued Dr.
Capetola.
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DISCOVERY BUILDING ITS OWN SALES AND MARKETING CAPABILITY -- BUSINESS
ARRANGEMENTS WITH QUINTILES ARE RESTRUCTURED AND COMMERCIALIZATION AGREEMENTS
TERMINATED
On November 3, 2004, Discovery and Quintiles mutually agreed to restructure
their business arrangements and terminate the commercialization agreements for
Surfaxin in the United States. The terms are as follows:
o Discovery will now have full commercialization rights for Surfaxin in the
United States. Under the agreement signed in 2001, Quintiles would have
provided commercialization services for seven years post-launch, with an
obligation to fund such services up to $10 million per year. Discovery's
obligation to pay a commission on net sales in the United States of
Surfaxin for the treatment of respiratory distress syndrome (RDS) and MAS
for 10 years following launch is terminated.
o In connection with obtaining full commercialization rights for Surfaxin,
Discovery has issued 850,000 warrants to PharmaBio Development Inc.,
Quintiles' strategic investment group, to purchase shares of Discovery
common stock at an exercise price equal to $7.19 per share. The warrants
have a 10-year term and shall be exercisable for cash only with expected
total proceeds to Discovery if exercised equal to approximately $6
million. Discovery expects to take a charge against earnings equal to
approximately $4 million for the fourth quarter of 2004 in connection with
the issuance of such warrants.
o The existing secured revolving credit facility of $8.5 million with
PharmaBio, will remain available to Discovery and the original maturity
date of December 10, 2004, is now extended until December 31, 2006.
Amounts to be drawn down under the credit facility will remain available
up to the date of the commercial launch of Surfaxin.
o Discovery and Quintiles have entered into a limited preferred-provider
arrangement.
Mark G. Osterman, Senior Vice President of Sales and Marketing of Discovery,
commented, "Discovery intends to create a premier pulmonary specialty sales and
marketing organization capable of delivering on the promise of SRT and with a
strong commitment to the neonatal medical community. We begin with Surfaxin,
which if approved, represents the first precision engineered surfactant with the
potential to become a new worldwide standard of care for the prevention and
treatment of RDS. Data from our Phase 3 RDS clinical trials demonstrated a
highly significant reduction in RDS related mortality and an improvement in
survival of infants without BPD. We plan to follow with novel, potentially
first-in-class, engineered Surfactant Replacement Therapies for areas of
critical unmet need."
DISCOVERY ADJUSTS AND BROADENS ITS PIPELINE FOR THE NICU
Dr. Fernando Moya, Richard W. Mithoff Professor of Pediatrics, Division of
Neonatal-Perinatal Medicine at The University of Texas Medical School at
Houston, a leading authority in neonatal medicine, stated, "Above and beyond the
treatment of RDS with animal-derived surfactants, the neonatal medical community
has long been challenged with means to adequately treat an array of other
respiratory problems that beset fragile premature infants. These include chronic
lung disease - also known as Bronchopulmonary Dysplasia (BPD), bronchiolitis,
transient tachypnea, pneumonia, and a range of other conditions that lead to
respiratory failure."
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"Surfaxin, a precisely engineered surfactant with the most essential attributes
of natural human lung surfactant, has demonstrated clinical results that are
extremely encouraging for the medical community. Not only does this
peptide-based technology hold the promise of improving the standard of care for
treating RDS around the world, the medical community is clamoring to apply this
technology to help these very vulnerable babies," continued Dr. Moya.
Jay Greenspan, M.D., Professor & Vice Chairman of Pediatrics, Thomas Jefferson
University, commented, "BPD remains a significant medical problem and
demonstration that a surfactant therapy provides meaningful benefit for this
population would be an important medical advance. Additionally, an aerosolized
surfactant based therapy could transform the way surfactant is currently used.
No currently available surfactants address these unmet needs."
Discovery is adjusting its NICU pipeline in an effort to develop therapies that
address the most prevalent respiratory disorders in the NICU and enhance the
potential commercial and medical value of SRT in the following ways:
o Conducting a Phase 2 clinical trial for Surfaxin for the prevention
of Bronchopulmonary Dysplasia (BPD), a serious form of chronic lung
disease for which there is presently no approved drugs. This trial
is expected to be initiated in the first quarter of 2005. Surfaxin,
in its pivotal, landmark, multinational Phase 3 RDS prevention
clinical trial, was the first surfactant to show statistical benefit
in the reduction of BPD compared with another approved surfactant.
BPD is a costly syndrome that is associated with the prolonged use
of mechanical ventilation and oxygen supplementation. BPD babies
suffer from abnormal lung development and typically have a need for
respiratory assistance -- oftentimes, for many months, as well as
comprehensive care spanning years. According to the 1998 Division of
Lung Disease and Office of Prevention Education and Control, the
overall cost of treating infants with BPD in the United States is
approximately $2.4 billion. There are estimated to be between 10,000
to 25,000 babies that suffer from BPD per year in the United States
alone, with the treatment of each patient costing up to $250,000.
o Initiating a Phase 2 clinical trial for Neonatal Respiratory
Failures utilizing aerosolized SRT via nasal CPAP in late fourth
quarter of 2004. We believe that this approach represents a
non-invasive surfactant-based therapy for premature infants and has
the potential to reduce the need for and complications from
mechanical ventilation, including lowering the risk of infection.
For the range of respiratory disorders experienced in the NICU for
which limited treatments exist, neonatologists make every effort to
avoid mechanically ventilating these patients. There is growing
recognition by the neonatal medical community for the potential
utility of a non-invasive method of delivering SRT to treat
premature infants suffering from respiratory disorders including
BPD, bronchiolitis, acute hypoxia, pneumonia, and transient
tachypnea.
o Continuing our on-going Phase 2 prophylactic trial of Surfaxin for
the treatment of MAS in full-term infants and discontinuing our
Phase 3 clinical trial for Surfaxin for the treatment of MAS.
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We believe an effective and affordable surfactant prophylactic
therapy could significantly lower the risk to meconium-stained
infants of chronic respiratory conditions and reduce the need for
costly and invasive mechanical ventilation.
ABOUT DISCOVERY LABORATORIES
Discovery Laboratories, Inc. is a biopharmaceutical company developing its
proprietary surfactant technology as Surfactant Replacement Therapies (SRT) for
respiratory diseases. Surfactants are produced naturally in the lungs and are
essential for breathing. Discovery's technology produces a precisely engineered
surfactant that is designed to closely mimic the essential properties of natural
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 patients in the neonatal intensive care
unit, critical care unit and other hospital settings, where there are few or no
approved therapies available.
Discovery has filed a New Drug Application with the FDA and a Marketing
Authorization Application with the EMEA for clearance to market Surfaxin, the
Company's lead product, for the prevention and treatment of RDS in premature
infants. Discovery is also conducting various clinical programs to address ARDS
in adults, BPD, a form of chronic lung disease in infants, Neonatal Respiratory
Failures in premature infants, severe asthma in adults, and MAS in full-term
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 that the
Company will not be able to develop a successful sales and marketing
organization in a timely manner, if at all, risk that the Company's internal
sales and marketing organization will not succeed in developing market awareness
of the Company's products, risk that the Company's internal sales and marketing
organization will not be able to attract or maintain qualified personnel, risk
of delay in the FDA's or other health regulatory authorities' approval of any
applications filed by the Company, risks that any such regulatory authority will
not approve the marketing and sale of a drug product even after acceptance of an
application filed by the Company for any such drug product, 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
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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
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