WARRINGTON, Pa., May 8, 2014 /PRNewswire/ -- Discovery
Laboratories, Inc. (Nasdaq: DSCO), a specialty biotechnology
company dedicated to advancing a new standard in respiratory
critical care, today announced financial results for the first
quarter ended March 31, 2014, as well
as recent business updates. The Company will host a conference call
today, May 8, 2014 at 9:00 AM ET.
Key highlights include:
- Reported an operating loss of $10.8
million and net cash outflows before financing activities of
$10.8 million for the first quarter
of 2014;
- Ended the first quarter of 2014 with cash and cash equivalents
of $75.9 million;
- Received Notices of Allowance for two patents, each covering
composition of matter and methods of manufacturing for lyophilized
KL4 surfactant, central to AEROSURF® program;
- Remained on track to announce in the third quarter of 2014 the
results from the AEROSURF® phase 2a clinical study assessing the
safety and tolerability of aerosolized KL4 surfactant in premature
infants 29 to 32 weeks gestational age receiving nasal continuous
positive airway pressure (nCPAP) for respiratory distress syndrome
(RDS); and
- Advanced the launch of SURFAXIN® (lucinactant), focusing on
achieving formulary acceptance at key hospitals representing
centers of excellence that convey regional and national
influence.
"The first quarter of 2014 was important as we began to position
our products and programs to transform the management of neonates
with respiratory distress syndrome, or RDS," commented John G. Cooper, President and Chief Executive
Officer at Discovery Labs. "We completed our first full quarter of
the SURFAXIN launch, and consistent with our measured approach, we
are communicating to hospitals the attributes of a scientifically
engineered, synthetic KL4 surfactant product - the only approved
alternative to the animal-derived surfactants that have been used
for the past decade to manage RDS. We also expect to announce the
first clinical data in the third quarter of 2014 from our ongoing
phase 2a clinical trial for AEROSURF, a product opportunity that
could generate a significant paradigm shift in the management of
infants at risk for RDS. As we introduce our RDS portfolio based on
our synthetic KL4 technology, we are developing important
relationships in key centers of influence across the U.S. as part
of our efforts to improve the standard of care for infants born at
risk of this condition."
Summary Financial Results for the First Quarter Ended
March 31, 2014
The Company reported a net loss of $11.5
million ($0.14 per share) on
84.7 million weighted-average common shares outstanding for the
quarter ended March 31, 2014,
compared to a net loss of $12.6 million ($0.29 per share) on 43.7 million weighted-average
common shares outstanding for the comparable period in 2013.
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 $0.4 million and $0.2
million for the quarters ended March
31, 2014 and 2013, respectively.
For the quarter ended March 31,
2014, the Company reported an operating loss of $10.8 million compared to $12.6 million for the comparable period in 2013.
For the first quarter of 2014, the Company recognized $28,000 in revenue for sales of SURFAXIN. The
Company currently uses the sell-through method for revenue
recognition, which means revenue is deferred until its specialty
distributor ships product to a hospital and all revenue recognition
criteria are met. The decrease in the operating loss compared to
the first quarter of 2013 is due to investments in 2013 associated
with the capillary aerosol generator (CAG) and the technology
transfer of the Company's lyophilized KL4 surfactant manufacturing
process to a contract manufacturing organization (CMO) to support
the AEROSURF phase 2 program.
Other income / expense for the quarter ended March 31, 2014 was $1.1
million and represents interest expense related to long-term
debt. Of the $1.1 million,
$0.6 million is cash interest expense
and $0.5 million is non-cash
amortization of the debt discount.
Net cash outflows before financing activities for the quarter
ended March 31, 2014 were
$10.8 million. As of
March 31, 2014, the Company had cash
and cash equivalents of $75.9
million. For the second quarter of 2014, the Company
anticipates operating cash outflows before financing activities of
approximately $11 million.
As of March 31, 2014, the Company
had $30 million of long-term debt
with principal payable in three equal annual installments beginning
in 2017 subject to a one year deferral of the amounts due in each
of 2017 and 2018 if certain financial milestones are achieved.
As of March 31, 2014, the Company
reported a common stock warrant liability of $4.7 million, predominantly related to five-year
warrants issued in February 2011. These warrants 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 Company had 85.1 million and 84.6 million shares of common
stock outstanding as of March 31,
2014 and December 31, 2013,
respectively.
Readers are referred to, and encouraged to read in its entirety,
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2014 to be filed with the
Securities and Exchange Commission on or before May 12, 2014, 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 Audio Webcast Details
The Company
will host a live teleconference and webcast at 9:00 a.m.
Eastern Time today. During the conference call, Discovery Labs'
management will discuss the 2014 first quarter financial results
along with other business updates.
The press release and the live webcast of the conference call
will be available via Discovery Labs' corporate website at
www.discoverylabs.com. The webcast will be made available on
the events page. An audio archive will be available after the
call at the same address until Thursday June
5, 2014
To participate in the live conference call, please dial (877)
870-4263 (domestic) and (412) 317-0790 (international). After
placing the call, please use 10045704 as the passcode. The
conference call replay number is (877) 344-7529 (domestic) or (412)
317-0088 (international) using the same conference call password
listed above.
About SURFAXIN®
The U.S. Food and Drug
Administration (FDA) approved SURFAXIN® (lucinactant)
Intratracheal Suspension for the prevention of RDS in premature
infants who are at high risk for RDS. SURFAXIN is the first
synthetic, peptide-containing surfactant approved by the FDA and
the only alternative to animal derived surfactants.
IMPORTANT SAFETY INFORMATION
SURFAXIN is intended for
intratracheal use only. The administration of exogenous
surfactants, including SURFAXIN, can rapidly affect oxygenation and
lung compliance. SURFAXIN should be administered only by
clinicians trained and experienced with intubation, ventilator
management, and general care of premature infants in a highly
supervised clinical setting. Infants receiving SURFAXIN
should receive frequent clinical assessments so that oxygen and
ventilatory support can be modified to respond to changes in
respiratory status.
Most common adverse reactions associated with the use of
SURFAXIN are endotracheal tube reflux, pallor, endotracheal tube
obstruction, and need for dose interruption. During SURFAXIN
administration, if bradycardia, oxygen desaturation, endotracheal
tube reflux, or airway obstruction occurs, administration should be
interrupted and the infant's clinical condition assessed and
stabilized.
SURFAXIN is not indicated for use in acute respiratory distress
syndrome (ARDS).
For more information about SURFAXIN, please visit
www.surfaxin.com.
About AEROSURF®
AEROSURF is a novel
investigational drug-device combination product being developed to
deliver Discovery Labs' KL4 surfactant in aerosolized form to
premature infants with respiratory distress syndrome (RDS).
AEROSURF could potentially allow for the administration of KL4
surfactant to premature infants without invasive endotracheal
intubation, and may enable the treatment of a significantly greater
number of premature infants who could benefit from surfactant
therapy but are currently not treated. Discovery Labs has
initiated a phase 2a clinical study to evaluate the safety and
tolerability of aerosolized KL4 surfactant drug product
administered in escalating inhaled doses in premature infants 29 to
32 weeks gestational age who are receiving nasal continuous
positive airway pressure (nCPAP) for respiratory distress syndrome
(RDS), compared to infants receiving nCPAP alone.
About Discovery Labs
Discovery Laboratories, Inc. is a
specialty biotechnology company focused on advancing a new standard
in respiratory critical care. Discovery Labs' technology
platform includes its novel proprietary KL4 surfactant, a
synthetic, peptide-containing surfactant that is structurally
similar to pulmonary surfactant, and its proprietary drug delivery
technologies being developed to enable efficient delivery of
aerosolized KL4 surfactant. Discovery Labs' strategy is
initially focused on neonatology and improving the management of
respiratory distress syndrome (RDS) in premature infants. Discovery
Labs believes that its RDS product portfolio, including AEROSURF,
if approved, has the potential to become the new standard of care
for RDS and, over time, enable the treatment of a significantly
greater number of premature infants who could benefit from
surfactant therapy but are currently not treated.
For more information, please visit the Company's website at
www.Discoverylabs.com.
Forward-Looking Statements
To the extent
that statements in this press release are not strictly historical,
all such statements are forward-looking, and are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results, including projections of future cash balances and
anticipated cash outflows, to differ materially from the statements
made. Examples of such risks and uncertainties include: risks
that Discovery Labs will be unable to secure significant additional
capital as needed, and may be unable in a timely manner, if at all,
to identify potential strategic partners to support product
development and, if approved, commercialize products in markets
outside the U.S., or to access debt or equity financings, which
could result in substantial equity dilution; risks related to
development programs, including the AEROSURF development program,
which may involve time-consuming and expensive pre-clinical studies
and clinical trials that may be subject to potentially significant
delays or regulatory holds, or fail; risks relating to efforts to
commercialize SURFAXIN, including (1) whether Discovery Labs'
commercial and medical affairs organizations will succeed in
introducing the products, (2) whether the products will be approved
by hospitals and will gain market acceptance and be preferred by
healthcare providers over current products, (3) whether the
products will generate revenues sufficient to fund Discovery Labs'
research and development activities and support its operations, and
(4) whether Discovery Labs will successfully develop a planned
second vial size for SURFAXIN; risks related to technology
transfers to contract manufacturers and problems or delays
encountered by Discovery Labs, contract manufacturers or suppliers
in manufacturing drug products, drug substances, aerosol-conducting
airway connectors, CAG devices and other materials on a timely
basis and in sufficient amounts; risks relating to rigorous
regulatory requirements, including that: (i) the FDA or other
regulatory authorities may not agree with Discovery Labs on matters
raised during regulatory reviews, may require significant
additional activities, or may not accept or may withhold or delay
consideration of applications, or may not approve or may limit
approval of Discovery Labs' products,
and (ii) changes in the national or international
political and regulatory environment may make it more difficult to
gain regulatory approvals; and other risks, including those related
to (1) continued compliance with The Nasdaq Capital Market®
listing requirements, (2) Discovery Labs' efforts to maintain and
protect the patents and licenses related to its products, (3)
whether it or its strategic partners will be able to attract and
retain qualified personnel, (3) other companies' competing
products, (3) legal proceedings, and (4) health care reform; and
other risks and uncertainties described in Discovery Labs' 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.
Discovery
Laboratories, Inc.
Condensed
Consolidated Statement of Operations
(in thousands, except per share data)
|
|
Three Months
Ended
|
|
March 31,
|
|
(unaudited)
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
Product
sales
|
$
28
|
|
$
–
|
Grant
revenue
|
3
|
|
72
|
|
31
|
|
72
|
Operating expenses:
(1)
|
|
|
|
Cost of product
sales
|
781
|
|
–
|
Research and
development
|
5,590
|
|
8,472
|
Selling, general and
administrative
|
4,423
|
|
4,220
|
Total
expenses
|
10,794
|
|
12,692
|
Operating
loss
|
(10,763)
|
|
(12,620)
|
Change in fair value
of common stock warrant liability (1)
|
378
|
|
162
|
Other income /
(expense), net
|
(1,091)
|
|
(177)
|
Net loss
|
$
(11,476)
|
|
$
(12,635)
|
Net loss per common
share
|
$
(0.14)
|
|
$
(0.29)
|
|
|
|
|
Weighted avg. common
shares outstanding
|
84,728
|
|
43,657
|
|
|
(1)
|
Material non-cash
items include the change in fair value of certain outstanding
warrants accounted for as derivative liabilities, and in operating
expenses, depreciation and stock-based compensation. For the
three months ended March 31, 2014 and 2013, the charges for
depreciation and stock-based compensation were $0.9 million ($0.4
million in R&D and $0.5 million in S,G&A) and $0.6 million
($0.4 million in R&D and $0.2 million in S,G&A),
respectively.
|
Discovery
Laboratories, Inc.
Condensed
Consolidated Balance Sheets
(in thousands, except per share data)
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
ASSETS
|
|
(Unaudited)
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
75,942
|
|
$
86,283
|
Accounts
receivable
|
|
–
|
|
67
|
Inventory
|
|
173
|
|
112
|
Prepaid expenses and
other current assets
|
|
702
|
|
777
|
Total current
assets
|
|
76,817
|
|
87,239
|
Property and
equipment, net
|
|
2,007
|
|
1,656
|
Restricted
cash
|
|
325
|
|
325
|
Other
assets
|
|
349
|
|
97
|
Total
Assets
|
|
$
79,498
|
|
$
89,317
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
6,304
|
|
$
6,218
|
Deferred
revenue
|
|
85
|
|
139
|
Common stock warrant
liability
|
|
4,672
|
|
5,425
|
Equipment loan and
capitalized leases, current portion
|
|
74
|
|
73
|
|
|
|
|
|
Total Current
Liabilities
|
|
11,135
|
|
11,855
|
|
|
|
|
|
Long-term debt, net
of discount of $11,207 at March 31, 2014 and $11,646 at
December 31, 2013
|
|
18,793
|
|
18,354
|
Equipment loans,
non-current portion
|
|
49
|
|
69
|
Other
liabilities
|
|
714
|
|
538
|
Stockholders'
Equity
|
|
48,807
|
|
58,501
|
Total Liabilities and
Stockholders' Equity
|
|
$
79,498
|
|
$
89,317
|
SOURCE Discovery Laboratories, Inc.