Welcome!

AJAX & REA Authors: Elizabeth White, Plutora Blog, Liz McMillan, Carmen Gonzalez, Pat Romanski

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
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
Advanced Persistent Threats (APTs) are increasing at an unprecedented rate. The threat landscape of today is drastically different than just a few years ago. Attacks are much more organized and sophisticated. They are harder to detect and even harder to anticipate. In the foreseeable future it's going to get a whole lot harder. Everything you know today will change. Keeping up with this changing landscape is already a daunting task. Your organization needs to use the latest tools, methods and ex...
Building low-cost wearable devices can enhance the quality of our lives. In his session at Internet of @ThingsExpo, Sai Yamanoor, Embedded Software Engineer at Altschool, provided an example of putting together a small keychain within a $50 budget that educates the user about the air quality in their surroundings. He also provided examples such as building a wearable device that provides transit or recreational information. He then reviewed the resources available to build wearable devices at ...
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, de...
Mobile commerce traffic is surpassing desktop, yet less than 20% of sales in the U.S. are mobile commerce sales. In his session at 15th Cloud Expo, Dan Franklin, Segment Manager, Commerce, at Verizon Digital Media Services, defined mobile devices and discussed how next generation means simplification. It means taking your digital content and turning it into instantly gratifying experiences.
“DevOps is really about the business. The business is under pressure today, competitively in the marketplace to respond to the expectations of the customer. The business is driving IT and the problem is that IT isn't responding fast enough," explained Mark Levy, Senior Product Marketing Manager at Serena Software, in this SYS-CON.tv interview at DevOps Summit, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
IBM has announced software that allows people to hide or anonymize their personal information on the Web, ensuring protection from identity theft and other misuse. Developed by researchers at IBM's laboratory in Zurich, Switzerland, the software – called Identity Mixer – will enable consumers to purchase goods and services on the Internet without disclosing personal information. As consumers hand over personal details in exchange for downloading music or subscribing to online newsletters, they...
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
Cloud services are the newest tool in the arsenal of IT products in the market today. These cloud services integrate process and tools. In order to use these products effectively, organizations must have a good understanding of themselves and their business requirements. In his session at 15th Cloud Expo, Brian Lewis, Principal Architect at Verizon Cloud, outlined key areas of organizational focus, and how to formalize an actionable plan when migrating applications and internal services to the ...
Software AG and Wipro Ltd. have announced a joint solution platform for streaming analytics that provides real-time actionable intelligence for the Internet of Things (IoT) market. “The key to successfully addressing the IoT market is the ability to rapidly build and evolve apps that tap into, analyze and make smart decisions on fast, big data”, said John Bates, Global Head of Industry Solutions and CMO, Software AG. To address the huge market potential created by streaming analytics in conj...
"Verizon Digital Media Services is responsible for the broadcast, video and content delivery network that accelerates, scales and helps our customers reach end users with all kinds of video and web content," stated James Segil, CMO of Verizon Digital Media Services, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Axios Systems on Tuesday announced it has selected CenturyLink Cloud as the hosting platform for Axios Systems’ IT Service Management (ITSM) solutions in Canada. CenturyLink, a global provider of communications and IT services, joins other leading technology providers across North America, Europe and APAC to help Axios’ international customers drive efficiencies and innovation across their service management provision. The arrangement with CenturyLink enables Axios to further strengthen its pres...
Docker is becoming very popular--we are seeing every major private and public cloud vendor racing to adopt it. It promises portability and interoperability, and is quickly becoming the currency of the Cloud. In his session at DevOps Summit, Bart Copeland, CEO of ActiveState, discussed why Docker is so important to the future of the cloud, but will also take a step back and show that Docker is actually only one piece of the puzzle. Copeland will outline the bigger picture of where Docker fits a...
The Internet of Things is a misnomer. That implies that everything is on the Internet, and that simply should not be - especially for things that are blurring the line between medical devices that stimulate like a pacemaker and quantified self-sensors like a pedometer or pulse tracker. The mesh of things that we manage must be segmented into zones of trust for sensing data, transmitting data, receiving command and control administrative changes, and peer-to-peer mesh messaging. In his session a...
The speed of product development has increased massively in the past 10 years. At the same time our formal secure development and SDL methodologies have fallen behind. This forces product developers to choose between rapid release times and security. In his session at DevOps Summit, Michael Murray, Director of Cyber Security Consulting and Assessment at GE Healthcare, examined the problems and presented some solutions for moving security into the DevOps lifecycle to ensure that we get fast AND ...
“We are a managed services company. We have taken the key aspects of the cloud and the purposed data center and merged the two together and launched the Purposed Cloud about 18–24 months ago," explained Chetan Patwardhan, CEO of Stratogent, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Disruptive macro trends in technology are impacting and dramatically changing the "art of the possible" relative to supply chain management practices through the innovative use of IoT, cloud, machine learning and Big Data to enable connected ecosystems of engagement. Enterprise informatics can now move beyond point solutions that merely monitor the past and implement integrated enterprise fabrics that enable end-to-end supply chain visibility to improve customer service delivery and optimize sup...