WARRINGTON, Pa., Nov. 10, 2011 /PRNewswire/ -- Discovery Laboratories, Inc. (Nasdaq: DSCO), a specialty biotechnology company dedicated to improving the standard of respiratory critical care, today reports financial results for the third quarter ended September 30, 2011, as well as the status of the SURFAXIN® and AFECTAIR programs. The Company will host a conference call this morning at 10:00 AM ET. Conference call details are below.
Selected third quarter highlights include:
- SURFAXIN® The U.S. Food and Drug Administration ("FDA") accepted the Company's Complete Response for SURFAXIN and has established March 6, 2012 as the target action date under the Prescription Drug User Fee Act (PDUFA) to complete its review and potentially grant U.S. marketing approval of SURFAXIN for the prevention of respiratory distress syndrome (RDS) in premature infants. If approved, SURFAXIN would represent the first synthetic, peptide-containing surfactant for use in neonatal medicine and provide a potential alternative to the currently approved, animal-derived surfactants that today are the standard of care to manage RDS in premature infants.
- AFECTAIR The Company introduced AFECTAIR as a new product candidate in the third quarter of 2011. AFECTAIR is intended to simplify the delivery of inhaled therapies for critical care patients requiring ventilatory support and was originally developed for the Aerosurf program. According to national health statistics and recent market assessment data, it is estimated that more than 1.3 million patients annually in the United States and European Union receive aerosolized medications while requiring ventilatory support. The Company is implementing a regulatory plan that will potentially allow for market introduction of the first AFECTAIR product in the United States in the first half of 2012 and in the European Union later in 2012. The Company believes that AFECTAIR has the potential to become a new standard of care for the delivery of inhaled therapies to critical care patients.
"We believe we have made significant progress this past quarter. We have filed a Complete Response and have a PDUFA date for SURFAXIN, and we have introduced a new product candidate, AFECTAIR. We believe that both of these products could be introduced commercially in 2012," said W. Thomas Amick, Chairman of the Board and Chief Executive Officer, Discovery Labs. "We also believe that these results have strengthened our company and potentially position us to realize our goal of improving the standard of respiratory critical care."
Summary Operating Results and Financial Position for the Quarter ended September 30, 2011
For the quarter ended September 30, 2011, the Company reported a net loss of $4.8 million ($0.20 per share) on 24.1 million weighted-average common shares outstanding, compared to a net loss of $6.6 million ($0.51 per share) on 12.9 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 $1.4 million for the quarter ended September 30, 2011 and non-cash expense of $0.4 million for the quarter ended September 30, 2010.
The Company reported an operating loss of $6.2 million for each of the quarters ended September 30, 2011 and 2010. Excluding non-cash items related to depreciation and stock-based compensation, the operating loss was $5.7 million for the quarter ended September 30, 2011, compared to $5.6 million for the quarter ended September 30, 2010. The operating loss for the third quarter of 2011 includes costs related to the completion of the comprehensive preclinical program to support the SURFAXIN Complete Response, which was filed in September, and a one-time charge of $0.4 million related to severance obligations to a former executive.
Net cash outflows for the third quarter of 2011 were $6.1 million. During the fourth quarter of 2011, the Company anticipates net cash outflows of approximately $5.4 million.
As of September 30, 2011, the Company had cash and cash equivalents of $15.4 million. Additionally, the Company currently has 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. During the fourth quarter to date, the Company has completed financings under the CEFF for net proceeds of approximately $343,000 through the issuance of 200,811 shares of common stock. Under the CEFF, there are currently 1.1 million shares available for potential future issuance that may allow the Company to raise an additional $1.7 million of capital at current market prices. Additionally, in connection with a public offering conducted in February 2011, the Company issued fifteen-month warrants (expiring May 2012) to purchase 5.0 million shares of common stock at an exercise price of $2.94. If the market price of the Company's common stock should exceed $2.94 at any time prior to May 2012, and all fifteen-month warrants are exercised,the Company may realize up to an additional $14.7 million in proceeds.
As of September 30, 2011, the Company reported a common stock warrant liability of $8.6 million, of which $7.4 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 $1.2 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.
The Company currently has 24.5 million shares of common stock outstanding and had 24.3 million and 24.2 million, shares of common stock outstanding as of September 30, 2011 and June 30, 2011, 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 to be filed with the Securities and Exchange Commission, which includes further detail on 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 EST to discuss the foregoing.
A live webcast of the conference call, including a slide presentation, is available at https://us.reg.meeting-stream.com/discoverylaboratories_111011 and www.discoverylabs.com. An archive of the webcast will be available on Discovery Labs Investor Relations web site for approximately 45 days.
For both "listen-only" participants and those who wish to take part in the question and answer portion of the call, the dial-in numbers are (877) 215-0093 (U.S.) or (706) 679-3237 (international). The passcode for the call is 22715326.
An audio replay of the conference call will be available two hours after the call's completion. The dial-in numbers for the replay are (855) 859-2056 or (404) 537-3406. The passcode for the replay is 22715326.
About Discovery Labs
Discovery Laboratories, Inc. is a specialty biotechnology company with one focus to create life-saving products for critical care patients with respiratory disease and improve the standard of care for pulmonary medicine. 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 formulations. Discovery Labs is also developing its proprietary drug delivery technologies to enable efficient, targeted upper-respiratory or alveolar 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.
