WARRINGTON, Pa., March 29, 2012 /PRNewswire/ -- Discovery Laboratories, Inc. (Nasdaq: DSCO), a specialty biotechnology company dedicated to advancing a new standard in respiratory critical care, today reports financial results for the fourth quarter ended December 31, 2011. The Company will host a conference call this morning at 10:00 AM ET. Conference call details are below.
Important recent milestones include:
- On March 6, 2012, the United States Food and Drug Administration (FDA) granted marketing approval for SURFAXIN® (lucinactant) for the prevention of respiratory distress syndrome (RDS) in premature infants at high risk for RDS. SURFAXIN is the first synthetic, peptide-containing surfactant approved for use in neonatal medicine.
- In February 2012, the initial AFECTAIR® device was registered with the FDA and is cleared to be marketed in the United States. AFECTAIR is a series of proprietary ventilator circuit / patient interface connectors that simplify delivery of aerosolized medications to patients requiring ventilator support.
- In the first quarter 2012, the Company received net proceeds of approximately $50.3 million from financings and the exercise of warrants to purchase shares of the Company's common stock. The Company currently has cash and cash equivalents of approximately $55 million.
"With two approved products and an improved financial position, we are a significantly stronger company and prepared to execute our business plan," said W. Thomas Amick, Chairman of the Board and Chief Executive Officer, Discovery Labs. "We believe that our KL4 surfactant and aerosol drug delivery technologies have the potential to significantly advance respiratory critical care, beginning with respiratory distress syndrome. Management is now focused on the U.S. commercial launch of SURFAXIN and AFECTAIR, targeted for Q4 2012, and advancing the development of and securing international strategic partners for our promising high value SURFAXIN LS and AEROSURF programs."
Summary Financial Results for the Fourth Quarter ended December 31, 2011 and Current Financial Position
For the quarter ended December 31, 2011, the Company reported a net loss of $4.3 million ($0.18 per share) on 24.3 million weighted-average common shares outstanding, compared to a net loss of $5.7 million ($0.42 per share) on 13.5 million weighted-average common shares outstanding for the comparable period in 2010. 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 $1.6 million and $38,000 for the quarters ended December 31, 2011 and 2010, respectively.
The Company reported an operating loss of $5.9 million for the quarter ended December 31, 2011 compared to an operating loss of $6.0 million for the quarter ended December 31, 2010. Excluding non-cash items related to depreciation and stock-based compensation, the operating loss was $5.2 million for the quarter ended December 31, 2011, compared to $5.3 million for the comparable period in 2010.
Operating cash outflows for the quarter ended December 31, 2011 were $5.5 million and net cash outflows for the fourth quarter were $5.2 million, after taking into consideration financing activities. For the first quarter 2012, the Company anticipates operating cash outflows of $5.8 million, before taking into account financing activities.
As of December 31, 2011, the Company had cash and cash equivalents of $10.2 million. In the first quarter of 2012, the Company raised $50.3 million consisting of (i) $42.1 million in net proceeds from a March 2012 public offering of 16.1 million shares of common stock at a price of $2.80 per share; and (ii) $6.7 million in proceeds from the exercise of warrants to purchase 2.3 million shares of common stock; and, (iii) $1.5 million net proceeds from the issuance of 350,374 shares of common stock in March 2012 under its "at-the-market" (ATM) Program.
The Company currently has 43.3 million shares of common stock outstanding and had 24.6 million shares of common stock outstanding as of December 31, 2011.
Additionally, (i) in conjunction with the March 2012 public offering, the Company granted the underwriters a 30-day option to purchase up to an additional 2.4 million shares of common stock to cover over-allotments, if any, at an offering price of $2.80 per share. The exercise of the underwriters' option could potentially result in additional net proceeds of $6.3 million if the full option were exercised; (ii) outstanding warrants to purchase 2.8 million shares of common stock at an exercise price of $2.94 expire on May 22, 2012. If the holders exercise these warrants, the Company may realize up to an additional $8.1 million in proceeds; (iii) the Company currently has $13.4 million available under its ATM Program, which may allow the Company, at its discretion, to raise additional capital to support its business plans; and (iv) the Company currently has 1.1 million shares available under its 2010 Committed Equity Financing Facility (CEFF) that, subject to certain conditions, including price and volume limitations, may allow the Company in the future to raise additional capital to support its business plans. In connection with the March 2012 public offering, the Company and its executive officers agreed, subject to certain exceptions, not to sell or otherwise dispose of shares of the Company's common stock for a period of 90 days, ending in June 2012.
As of December 31, 2011, the Company reported a common stock warrant liability of $7.0 million, of which $6.4 million is related to five-year warrants issued in February 2011. These warrants state that there is no circumstance in which the Company shall be required to effect a net 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 remaining balance of $0.6 million is related to warrants issued in May 2009 and February 2010. These warrants state that, in the event a related registration statement or an exemption from registration is not available for the issuance or resale of the warrant shares upon exercise of the warrant, the holder may exercise the warrant on a cashless basis. However, since these warrants do not expressly state that there is no circumstance in which the Company shall be required to settle the warrants in cash, the warrants have been classified as derivative liabilities in accordance with generally accepted accounting principles, regardless of the remote likelihood that an event would result in cash settlement.
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 year ended December 31, 2011 to be 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 Webcast Details
Discovery Labs will hold a conference call and webcast today at 10:00 AM ET to discuss the foregoing. The call in number is (877) 215-0093. The international call in number is (706) 679-3237. The passcode is 64962880. This audio webcast will be available through a live broadcast on the Internet at http://us.meeting-stream.com/discoverylaboratories_032912 and www.discoverylabs.com. The replay number to hear the conference call is (855) 859-2056 or (404) 537-3406 using the same conference call password listed above.
About Discovery Labs
Discovery Laboratories, Inc. is a specialty biotechnology company with one focus to advance a new standard in respiratory critical care. Discovery Labs' novel proprietary KL4 surfactant technology produces a synthetic, peptide-containing surfactant that is structurally similar to pulmonary surfactant and is being developed in liquid, lyophilized, and aerosolized dosage forms. Discovery Labs is also developing its proprietary drug delivery technologies to enable efficient delivery of aerosolized KL4 surfactant and other inhaled therapies. Discovery Labs believes that its proprietary technologies make it possible, for the first time, to develop a significant pipeline of products to address a variety of respiratory diseases for which there frequently are few or no approved therapies. For more information, please visit our website at www.Discoverylabs.com.
