Welcome!

IoT User Interface Authors: Elizabeth White, Pat Romanski, Liz McMillan, Yakov Fain, John Basso

News Feed Item

Discovery Labs Reports Fourth Quarter 2012 Financial Results

WARRINGTON, Pa., March 13, 2013 /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, 2012 and also provides certain program updates.  The Company will host a conference call this morning at 10:00 AM ET.  Conference call details are below.

Selected Financial Information (further details provided in the summary financial results below):

  • For the fourth quarter of 2012, the Company reported an operating loss of $12.4 million. Excluding a one-time charge of $2.0 million, the operating loss was $10.4 million.  Net cash outflows for the quarter were $9.2 million.
  • As of December 31, 2012, the Company had cash and cash equivalents of $26.9 million.
  • In February 2013, the Company entered into two agreements that, collectively, may provide access to up to $55 million additional financing; a $30 million secured loan facility with Deerfield Management Company, L.P. (Deerfield); and an at-the-market equity sales program (ATM Program) with Stifel, Nicolaus & Company, Incorporated (Stifel), under which the Company may, at its discretion, from time to time, sell up to a maximum of $25 million of its shares of common stock to support its business plans.

"We believe that our RDS product portfolio has the potential to become the new standard of care for RDS and, over time, significantly expand the worldwide surfactant market.  With our recent financing transactions, we have strengthened the financial position of our Company and continue to advance our key priorities," commented John G. Cooper, President and Chief Executive Officer at Discovery Labs.  "As we anticipate the availability of SURFAXIN® drug product in the second quarter, our specialty field force has been focused primarily on securing hospital formulary acceptance for SURFAXIN, as well as adoption of AFECTAIR®.  We continue to make progress on our AEROSURF® development program and plan to initiate our phase 2 clinical program in the fourth quarter of 2013."

Selected Program Updates:

SURFAXIN: SURFAXIN (lucinactant) intratracheal suspension is the first synthetic, peptide-containing surfactant approved by the Food and Drug Administration (FDA) and provides healthcare practitioners an alternative to animal-derived surfactants to prevent respiratory distress syndrome (RDS) in premature infants.  In the third quarter of 2012, the Company determined that one of the analytical chemistry methods used to assess SURFAXIN drug product conformance to specifications required improvement and that an update to product specifications was needed. As a result, the Company delayed the commercial launch of SURFAXIN.  The Company proactively communicated these findings to the FDA, improved and validated the analytical chemistry method, and submitted updated product specifications to the FDA.  The planned activities remain on track, and, pending confirmation from the FDA regarding the updated product specifications; the Company believes that SURFAXIN will be available for commercial sale in the second quarter of 2013.  

AEROSURF:  The Company is developing AEROSURF as a drug/device combination product to potentially allow neonatal practitioners to deliver aerosolized KL4 surfactant to premature infants without the need for invasive endotracheal intubation.  If efforts are successful, AEROSURF could enable the treatment of a significantly greater number of premature infants at risk for RDS.  The Company is progressing with third-party medical device experts to optimize the design of its capillary aerosol generator (CAG).  Additionally, the Company plans to use a lyophilized dosage form of KL4 surfactant in the AEROSURF program and is working to complete the ongoing technology transfer of the manufacturing process to a contract manufacturing organization (CMO) that has expertise in lyophilization.  The Company anticipates completion of both of these activities in mid-2013, facilitating the initiation of the planned phase 2 clinical program in the fourth quarter of 2013.

AFECTAIR:  The Company is beginning the commercial introduction of its AFECTAIR aerosol-conducting airway connector for infants receiving aerosolized medication in neonatal or pediatric intensive care units with a user experience program that is being conducted in select U.S. critical care centers that represent approximately ten percent (10%) of target institutions.  This initial phase is intended to facilitate peer-to-peer exchange among physicians and respiratory therapists and enable discussion about the potential advantages and proper utilization of this novel device.  Upon anticipated completion of this phase in the second quarter of 2013, the Company will initiate a broader introduction of AFECTAIR.

Summary Financial Results for the Fourth Quarter ended December 31, 2012

For the quarter ended December 31, 2012, the Company reported a net loss of $6.8 million ($0.16 per share) on 43.5 million weighted-average common shares outstanding, compared to a net loss of $4.3 million ($0.18 per share) on 24.3 million weighted-average common shares outstanding for the comparable period in 2011.  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 $5.6 million and $1.6 million for the quarters ended December 31, 2012 and 2011, respectively.

The Company reported an operating loss of $12.4 million for the quarter ended December 31, 2012 compared to an operating loss of $5.9 million for the comparable period in 2011.  The increase is primarily due to (i) investments in the Company's specialty commercial and medical affairs organizations, including a field sales force, national accounts and medical science liaison teams, which are currently focused on gaining hospital formulary acceptance for SURFAXIN and adoption of AFECTAIR;  (ii) investments in the technology transfer to a CMO of its manufacturing process for lyophilized KL4 surfactant and the optimization of its CAG device, both for use in the planned AEROSURF phase 2 clinical program; and (iii) a one-time $2.0 million charge associated with certain contractual severance obligations related to the resignation of its former Chief Executive Officer, including $0.8 million of non-cash stock-based compensation charges. 

Operating cash outflows for the quarter ended December 31, 2012 were $9.2 million.  For the first quarter of 2013, the Company anticipates operating cash outflows of approximately $10.5 million, before taking into account financing activities.

As of December 31, 2012, the Company had cash and cash equivalents of $26.9 million.  In February 2013, the Company secured access to up to $55 million in potential additional financing through a $30 million secured loan facility with Deerfield (Deerfield Facility) and a $25 million ATM Program with Stifel.  Under terms of the Deerfield Facility, Deerfield advanced to the Company $10 million upon execution of the agreement and agreed to advance an additional $20 million upon the first commercial sale of SURFAXIN.  Amounts outstanding under the Deerfield Facility accrue interest at 8.75% and principal repayments are payable on the fourth, fifth and sixth anniversary of the agreement except that, if certain revenue or market capitalization milestones are achieved, the fourth and fifth anniversary payments may be deferred for one year.  In conjunction with the $10 million advance, Deerfield received warrants to purchase approximately 2.3 million shares of common stock at an exercise price of $2.81.  Upon disbursement of the $20 million advance, Deerfield will receive additional warrants to purchase approximately 4.7 million shares of common stock at an exercise price of $2.81.  All of the warrants will expire on the sixth anniversary date of the Deerfield Facility.  Under the ATM Program, the Company may sell, at such times and amounts as it deems appropriate, up to $25 million of shares of common stock to support its business plans.  The Company is not required to sell any shares at any time during the term of the ATM Program.

The Company had 43.7 million and 24.6 million shares of common stock outstanding as of December 31, 2012 and 2011, respectively.

As of December 31, 2012, the Company reported a common stock warrant liability of $6.3 million, of which $6.2 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. 

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, 2012 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 Audio Webcast Details
Discovery Labs will hold a conference call and audio 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 20394319.  This audio webcast will be available at http://us.meeting-stream.com/discoverylaboratories_031313 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.  Discovery Labs is also developing its proprietary drug delivery technologies to enable efficient delivery of aerosolized KL4 surfactant and other inhaled therapies. 

Discovery Labs' strategy is initially focused on the development of its technologies to improve the management of respiratory distress syndrome (RDS) in premature infants.  SURFAXIN is the first synthetic, peptide-containing (KL4) surfactant approved by the FDA and the only alternative to animal-derived surfactants.  AEROSURF is a drug/device combination product being developed to enable efficient delivery of aerosolized KL4 surfactant.  If approved, AEROSURF potentially will provide neonatologists with the ability to deliver surfactant therapy using a less-invasive method and thereby enable the treatment of premature infants who could benefit from surfactant therapy but who are currently not treated.  Discovery Labs believes that its RDS product portfolio has the potential to become the new standard of care for RDS and, over time, significantly expand the current worldwide RDS market.

For more information, please visit www.Discoverylabs.com.

About SURFAXIN
SURFAXIN (lucinactant) intratracheal suspension 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

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 and expected results, to differ materially from the statements made.  Examples of such risks and uncertainties include risks that: in addition to revenues from the sale of its commercial products, Discovery Labs will require significant additional capital to sustain its operations and development activities, including planned clinical programs; Discovery Labs may not meet the conditions for the $20 million disbursement under the Deerfield Facility, or be unable to access its ATM Program or committed equity financing facility (CEFF), or additional financings could result in substantial equity dilution, or may be unable to secure additional capital when needed, from strategic alliances; Discovery Labs may experience a significant delay beyond the second quarter of 2013 in the commercial introduction of SURFAXIN and AFECTAIR in the United States, or may not achieve the level of expected revenue; that Discovery Labs may be unable to identify potential strategic partners or collaborators or enter into strategic transactions to develop and commercialize its products, if approved, in a timely manner, if at all; Discovery Labs may be unable to manage its growth effectively and timely modify its business strategy as needed to respond to developments in its commercial operations, development activities, business and other factors; Discovery Labs' sales and marketing organization may be unable to effectively market SURFAXIN and AFECTAIR in the U.S. in a timely manner, if at all, and may not succeed in developing market awareness of its products or its product candidates will not gain market acceptance by physicians, patients, healthcare payers and others in the medical community; that Discovery Labs will not meet the rigorous regulatory requirements required for approval of any drug, drug-device combination or medical device products that Discovery Labs may develop, including that: (a) Discovery Labs and the U.S. Food and Drug Administration (FDA) or other regulatory authorities will not be able to agree on the matters raised during regulatory reviews, or Discovery Labs may be required to conduct significant additional activities to potentially gain approval of its product candidates, if ever, (b) the FDA or other regulatory authorities may not accept or may withhold or delay consideration of any of Discovery Labs' applications, or may not approve or may limit approval of Discovery Labs' products to particular indications or impose unanticipated label limitations, and (c) changes in the national or international political and regulatory environment may make it more difficult to gain FDA or other regulatory approval; Discovery Labs may be unable to develop and manufacture drug products, AFECTAIR® aerosol-conducting airway connectors and capillary aerosol generator (CAG) devices for clinical studies, and, if approved, for commercialization of drug and combination drug-device products and, if cleared for marketing, medical device products, including risks of technology transfers to contract manufacturers and problems or delays encountered by Discovery Labs, its contract manufacturers or suppliers in manufacturing drug products, drug substances and other materials and aerosol-conducting airway connectors and CAG devices on a timely basis or in an amount sufficient to support Discovery Labs' development efforts and, if approved, commercialization; Discovery Labs research and development activities may involve (i) time-consuming and expensive pre-clinical studies, clinical trials and other efforts, which may be subject to potentially significant delays or regulatory holds, or fail, and (ii) the need for sophisticated and extensive analytical methodologies; Discovery Labs or its strategic partners or collaborators will not be able to retain, or attract, qualified personnel; Discovery Labs may be unable to maintain compliance with The Nasdaq Capital Market listing requirements; Discovery Labs may be unable to maintain and protect the patents and licenses related to its products, or other companies may develop competing therapies and/or technologies, or health care reform may adversely affect Discovery Labs; Discovery Labs may be involved in legal proceedings, including securities actions and product liability claims; and health care reform may adversely affect Discovery Labs.  These and other risks and uncertainties are 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.

           




Condensed Consolidated Statement of Operations
(in thousands, except per share data)







 

Three Months Ended


Twelve Months Ended




December 31,


December 31




(unaudited)


(unaudited)




2012


2011


2012


2011












Revenue from collaborative arrangement and
grants


$              195


$                    –


$               195


$                582


Operating expenses: (1)










Research and development


6,088


4,014


21,570


17,230


Selling, general and administrative


6,532


1,889


16,444


7,864


Total expenses

12,620


5,903


38,014


25,094


Operating loss


(12,425)


(5,903)


(37,819)


(24,512)


 

Change in fair value of common stock warrant liability (1)


5,618


1,603


555


3,560


Other income / (expense), net


(8)


(1)


(51)


(13)


Net loss


$       (6,815)


$          (4,301)


$       (37,315)


$         (20,965)


Net loss per common share


$         (0.16)


$            (0.18)


$           (0.95)


$             (0.93)












Weighted avg. common shares outstanding


43,521


24,309


39,396


22,660


 

(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 and twelve months ended December 31, 2012, the charges for depreciation and stock-based compensation were $1.1 million ($0.1 million in R&D and $1.0 million in S,G&A) and $2.4 million ($0.5 million in R&D and $1.9 million in S,G&A), respectively.  Included in non-cash charges for the three and twelve months ended December 31, 2012 are one-time charges of $0.8 million associated with stock based compensation modification charges related to the severance agreement with its former CEO.  For the three and twelve months ended December 31, 2011, the charges for depreciation and stock-based compensation were $0.4 million ($0.1 million in R&D and $0.3 million in S,G&A) and $0.9 million ($0.3 million in R&D and $0.6 million in S,G&A), respectively. 

 


Condensed Consolidated Balance Sheets
(in thousands)








December 31,


December 31,







2012


2011




ASSETS



(Unaudited)






Current Assets:









Cash and cash equivalents



$            26,892


$            10,189




Prepaid expenses and other current assets



914


442




Total current assets



27,806


10,631




Property and equipment, net



1,737


2,293




Other assets



400


400




Total Assets



$            29,943


$            13,324













LIABILITIES AND STOCKHOLDERS' EQUITY









Current Liabilities:









      Accounts payable



$                 1,166


$              1,111




      Accrued expenses



4,159


2,972




      Common stock warrant liability



6,305


6,996




      Equipment loan and capitalized leases, current portion



69


68




Total Current Liabilities



11,699


11,147




Long-Term Liabilities:









Equipment loan  and capitalized leases, non-current portion & other liabilities



591


913




Total Liabilities



12,290


12,060




Stockholders' Equity



17,653


1,264




Total Liabilities and Stockholders' Equity



$            29,943


$            13,324

































 

SOURCE Discovery Laboratories, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@CloudExpo Stories
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Is the ongoing quest for agility in the data center forcing you to evaluate how to be a part of infrastructure automation efforts? As organizations evolve toward bimodal IT operations, they are embracing new service delivery models and leveraging virtualization to increase infrastructure agility. Therefore, the network must evolve in parallel to become equally agile. Read this essential piece of Gartner research for recommendations on achieving greater agility.
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abil...
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
With over 720 million Internet users and 40–50% CAGR, the Chinese Cloud Computing market has been booming. When talking about cloud computing, what are the Chinese users of cloud thinking about? What is the most powerful force that can push them to make the buying decision? How to tap into them? In his session at 18th Cloud Expo, Yu Hao, CEO and co-founder of SpeedyCloud, answered these questions and discussed the results of SpeedyCloud’s survey.
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
To leverage Continuous Delivery, enterprises must consider impacts that span functional silos, as well as applications that touch older, slower moving components. Managing the many dependencies can cause slowdowns. See how to achieve continuous delivery in the enterprise.
Actian Corporation has announced the latest version of the Actian Vector in Hadoop (VectorH) database, generally available at the end of July. VectorH is based on the same query engine that powers Actian Vector, which recently doubled the TPC-H benchmark record for non-clustered systems at the 3000GB scale factor (see tpc.org/3323). The ability to easily ingest information from different data sources and rapidly develop queries to make better business decisions is becoming increasingly importan...
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
To paraphrase someone famous, "The definition of insanity is to do something the same way over and over again and expect a different result". Humans are creatures of habit and when it comes to storage, old habits die hard. Why do we continue to put our faith in legacy storage providers when they haven't invented anything new in decades. Sure, they re-badge their products every couple of years to make their messaging look modern, but ultimately, it's the same old stuff with a new coat of lipsti...
StarNet Communications Corp has announced the addition of three Secure Remote Desktop modules to its flagship X-Win32 PC X server. The new modules enable X-Win32 to safely tunnel the remote desktops from Linux and Unix servers to the user’s PC over encrypted SSH. Traditionally, users of PC X servers deploy the XDMCP protocol to display remote desktop environments such as the Gnome and KDE desktops on Linux servers and the CDE environment on Solaris Unix machines. XDMCP is used primarily on comp...
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
Using new techniques of information modeling, indexing, and processing, new cloud-based systems can support cloud-based workloads previously not possible for high-throughput insurance, banking, and case-based applications. In his session at 18th Cloud Expo, John Newton, CTO, Founder and Chairman of Alfresco, described how to scale cloud-based content management repositories to store, manage, and retrieve billions of documents and related information with fast and linear scalability. He addres...