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Discovery Laboratories details recent developments(Science Letter Via Thomson Dialog NewsEdge) Discovery Laboratories details recent developments. This trend article is an immediate alert from NewsRx to identify the most recent news developments at Discovery Laboratories. Report 1: Discovery Laboratories, Inc. (DSCO) announced the restructuring of its $8.5 million loan with PharmaBio Development, Inc., the strategic partnering group of Quintiles Transnational Corp. (Quintiles). Payment of the $8.5 million loan principal that was originally due December 31, 2006 has now been extended as a lump sum payment due on April 30, 2010. John G. Cooper, executive vice president and chief financial officer of Discovery, commented, "Restructuring this arrangement to long-term status is a key component of our current financial strategy. Having this capital available allows us to further progress our key Surfactant Replacement Therapy pipeline programs, specifically Surfaxin and Aerosurf. Importantly, restructuring this obligation better positions us as we evaluate strategic alternatives intended to enhance the future growth of the company." The restructured loan provides that, in addition to the extended principal payment term, interest payments that were previously paid quarterly will now accrue annually and are payable at the loan's maturing in April 2010. Additionally, the loan's interest rate has been reduced and Discovery may repay the loan, in whole or in part, at any time. In connection with the restructuring, Discovery enhanced the loan's collateral pledge and issued a warrant to PharmaBio to purchase up to 1.5 million shares of Discovery common stock at an exercise price of $3.58 per share. PharmaBio may exercise the warrant for cash or a reduction of the then outstanding loan balance. The term of the warrant is 7 years. In connection with the issuance of the warrant, Discovery expects to recognize deferred financing costs as an intangible asset of approximately $1.9 million, to be amortized to interest expense ratably over the extended term of the loan. Report 2: Discovery Laboratories, Inc. (DSCO) announced that the Office of Orphan Products Development of the United States Food and Drug Administration (FDA) has granted orphan drug designation to Discovery's lead product, Surfaxin, for the prevention of bronchopulmonary dysplasia (BPD, also known as chronic lung disease) in premature infants. Surfaxin, a precision-engineered lung surfactant replacement therapy, has previously received orphan drug designation for the treatment of BPD, as well as fast track designation for both the prevention and treatment of BPD. Robert J. Capetola, PhD, president and chief executive officer of Discovery, commented, "Market exclusivity under this designation would mean that Surfaxin, as a precision-engineered surfactant, has the potential to become the dominant surfactant in the neonatal intensive care unit for the next decade. If Surfaxin is the first product to receive marketing authorization in the United States for the treatment of bronchopulmonary dysplasia, orphan status would block any similar synthetic surfactant products for this indication throughout the United States market for a significant period of time." Discovery recently concluded its Phase 2 double-blind, placebo-controlled trial early, enrolling approximately 130 very low birth weight premature infants born at risk for developing BPD. The purpose of the trial was to determine the safety and tolerability of administering Surfaxin as a therapeutic approach for the prevention and treatment of BPD. Premature infants in this study received a treatment regime of up to 5 Surfaxin doses beginning within the first 3-10 days of life, in addition to the surfactant they received on day 1 of life for RDS. Report 3: Discovery Laboratories, Inc. (DSCO) announced that it has reduced the number of employees and reorganized corporate management in order to lower its cost structure and appropriately align Discovery's operations with business priorities. Discovery is taking these actions based upon its current expectations of the financial impact of a delay in the regulatory approval and commercial launch of Surfaxin for respiratory distress syndrome (RDS) in premature infants. The company is reducing its workforce by 55 employees which represents approximately 34% of its workforce. The reduction is across all functions of the company with a primary emphasis on the commercial infrastructure which is no longer in Discovery's near-term plans. In April 2006, Discovery received a second Approvable Letter from the FDA relating to its NDA for Surfaxin for RDS. Issues contained in the second Approvable Letter primarily focused on the Chemistry, Manufacturing and Controls (CMC) section of the NDA and product labeling. In April, Discovery also announced that it anticipates a potentially significant delay in Surfaxin U.S. regulatory approval due to the failure of certain stability parameters for process validation batches that were previously manufactured as a requirement for regulatory approval. This delay does not arise out of any issues related to the clinical data from our multinational SELECT Study, which demonstrates that Surfaxin was significantly more effective in the prevention of RDS and also improved survival (continuing through at least one year of life) and other outcomes versus comparator surfactants. Robert J. Capetola, PhD, president and chief executive officer of Discovery, commented, "Based on recent events, we have taken steps to control costs and maintain the human and capital resources to focus on the programs that potentially allow patients to experience the benefit of this important new class of respiratory medicine. Our highest priority is the actions necessary to gain Surfaxin regulatory approval. We are focused on investigating and remediating the Surfaxin manufacturing issues and maintaining the clinical and commercial manufacturing infrastructure for Surfaxin and our SRT pipeline. "Just as important is the development of our pipeline of SRT products, primarily our potentially revolutionary aerosolized SRT, Aerosurf for neonatal respiratory disorders, as well as exploring opportunities for strategic partnerships." Discovery recently reduced its personnel from 160 to 105 employees. Affected employees are eligible for certain severance payments and continuation of benefits. The company expects to realize annual expense savings of approximately $8.0 million from the reduction in work force and related operating expenses. Additionally, sales and marketing program expenses totaled approximately $5.0 million over the past two fiscal quarters (Q4 '05 and Q1 '06), and these expenses will no longer be incurred. The company expects to take a one-time restructuring charge of approximately $4.5 to $5.0 million in the second quarter ending June 30, 2006 related to the staff reductions and the wind down of certain commercial programs. In connection with the reorganization, which includes the discontinuance of the commercial infrastructure, three senior executives will be leaving Discovery: Christopher J. Schaber, PhD, executive vice president and chief operating officer; Deni M. Zodda, PhD, senior vice president of business development; and Mark G. Osterman, senior vice president of sales and marketing. Capetola added, "We wish our departing colleagues the best in their future endeavors. Our departing colleagues are highly talented and dedicated people, but this restructuring was necessary. We have an attractive SRT pipeline, an adaptable business model, and this reorganization reduces our cost structure while maintaining the outstanding capabilities of the organization." Capetola will now have the direct responsibility for the following additional functions. Supporting Dr. Capetola will be: - Manufacturing - Charles F. Katzer, senior vice president of manufacturing operations. Katzer joined Discovery in January 2006 and brings over 30 years of broad functional experience in all aspects of manufacturing operations with major pharmaceutical companies. Most recently he was vice president of manufacturing at Medimmune Vaccines, Inc. where he was responsible for worldwide vaccine manufacturing operations. - Regulatory - Marjorie Hurley, PharmD, vice president of regulatory affairs. Hurley joined Discovery in 2006 and has over 20 years of regulatory experience in the biotechnology and pharmaceutical industry. - Clinical and Medical - Robert Segal, MD, FACP, the company's senior vice president and chief medical officer, has been with Discovery since 2000. Previously Segal was director of clinical research at Merck Research Laboratories. Supporting the company's research and development are Dr. Russell Clayton, Thomas Hoffman, MD, PhD, Jan Mazela, MD, PhD, Carlos Guardia, MD, and Timothy Gregory, PhD. This team has a wealth of medical experience in neonatology, pediatrics, pulmonology, aerosolization, and respiratory care. - Aerosolization Development - the company's California operations are managed by Mark Johnson, PhD. who has been with the company for over two years and received his PhD in chemical engineering from Massachusetts Institute of Technology. - Business Development - The role of business development will be shared among Capetola, John Cooper, executive vice president and chief financial officer and David Lopez, CPA, Esq., executive vice president and general counsel. This article was prepared by Science Letter editors from staff and other reports. Copyright 2007, Science Letter via NewsRx.com. Copyright 2007 Science Letter via NewsRx.com |