SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) October 12, 1999
Discovery Laboratories, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 000-26422 13-3711775
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
350 Main Street, Suite 307, Doylestown, Pennsylvania 18901
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (215) 340-4699
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(Former Name or Former Address, If Changed Since Last Report.)
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ITEM 5. Other Events.
Attached is an Interim Report to Shareholders dated October 1999
sent by Discovery Laboratories Inc, a Delaware Corporation (the "Registrant"),
to its shareholders, updating them on the Registrant's developments.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit Description
1 Interim Report to Shareholders, dated October 1999.
883253.1
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DISCOVERY LABORATORIES, INC.
By: /s/Robert Capetola
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Name: Robert Capetola
Title: President and Chief Executive
Officer
Date: October 15, 1999
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EXHIBIT INDEX Exhibit 1
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883253.1
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Interim Report to Shareholders
October 1999
Dear Discovery Laboratories, Inc. Investor:
I would like to take this opportunity to update you on developments at Discovery
Laboratories, Inc. 1999 has been a year of strong progress for your company in
which we released positive clinical results which set the basis for additional
Phase 3 trials of Surfaxin(R), as well as the initiation of a phase 2 trial of
SuperVentTM.
Status of Surfaxin(R)
Earlier this year, we released positive Phase 2 data on Surfaxin(R) for the
treatment of meconium aspiration syndrome (MAS). This data demonstrated the
safety and tolerability of Surfaxin(R), while showing a clinical benefit in the
treated patients' oxygenation index as compared to controls. In addition, a
savings of an average of 3 days on mechanical ventilation was seen in the babies
treated with Surfaxin(R) as compared to control patients. At an average cost
nationwide of $4,000 per day in the neonatal intensive care unit, this suggests
a strong pharmacoeconomic rationale for the use of Surfaxin(R).
During the summer, Discovery received a notice of allowance from the US patent
office for its surfactant lavage application. This patent covers the use of all
surfactants, including Surfaxin(R), for the novel lavage technique pioneered by
Discovery for treatment of pulmonary diseases. This technique can be best
described as a "lung wash" and is designed to remove inflammatory and infectious
infiltrates from patients' lungs, and restore their vital surfactant levels.
This complements Discovery's extensive patent portfolio both in the US and in
Europe.
Discovery currently has a new clinical protocol under review by the FDA. This
new trial is intended to be a pivotal Phase 3 study that would enable Discovery
to file an NDA in MAS upon its completion. Since there are currently no FDA
approved treatments for MAS, Discovery has been granted Fast Track status by the
FDA, which provides for an expedited review period of no more that 6 months.
In addition, Discovery has recently had its MAS Orphan Drug Grant expanded.
New IRDS Initiative
In addition to the MAS and ALI/ARDS development, Discovery is also planning a
pivotal Phase 3 trial in respiratory distress syndrome of premature infants
(IRDS). The study design is currently under review at the FDA. Although there
are animal derived products on the market to treat IRDS patients, we believe
that they are pharmaceutically inferior to Surfaxin(R) due to the relative lack
of protein B found in them. Protein B is the protein which gives mammalian
surfactants the majority of their surface-active properties by which they keep
alveoli expanded. Without it mammalian life can not exist. Surfaxin(R) was
engineered to be an excellent model of human surfactant protein B. Various
published transgenic-knockout studies demonstrate that surfactants work without
other surfactant proteins, but not without protein B. Further, there is a
well-documented condition of protein B mutations in which babies born without
protein B require lung transplants or else they die.
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Status of SuperVentTM
Discovery has recently begun its Phase 2 clinical trial of its aerosolized
product, SuperVentTM, for cystic fibrosis (CF). Discovery expects to have
results from this trial around the first quarter of 2000. Discovery is
developing SuperVentTM as a multidimensional therapy for cystic fibrosis and
chronic bronchitis. Preclinical tests have shown that tyloxapol, the active
ingredient in SuperVentTM Aerosol Solution, is a potent anti-oxidant and
anti-inflammatory agent that also reduces the viscosity of sputum. Further
studies have shown that tyloxapol is a potent inhibitor of the transcription
factor NF-(kappa)B, which is currently the subject of much pharmaceutical
research. In addition, Discovery has received a grant from the CF Foundation,
which will cover a significant portion of the costs associated with this trial.
If successful in CF, Discovery will begin to develop SuperVentTM for chronic
bronchitis, a much larger and unaddressed market.
The current stage of development for Discovery compounds is summarized below:
An Aggressive Program for Development
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COMPOUND INDICATION STAGE OF DEVELOPMENT
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Surfaxin(R) ARDS/ALI Phase 2/3 pivotal;
another clinical trial contemplated
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Surfaxin(R) MAS Phase 3 to begin shortly1
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Surfaxin(R) IRDS Phase 3 to begin shortly1
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SuperVentTM CF Phase 2 underway
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1 Dependant on outcome of discussion with FDA.
Potential Product Markets
The following table summarizes Discovery's current views about the potential
revenue stream from its products. These views are, of course, dependent on the
projected sale prices set forth in the table, which in turn are subject to
variation based on numerous factors (such as competition from animal-derived
surfactant replacement therapies and any other competing therapies that may be
developed). Nevertheless, it is believed that under any realistic scenario, the
potential market size for Surfaxin(R) is very substantial.
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INDICATION PATIENTS/YEAR PATIENTS/YEAR POTENTIAL
UNITED STATES REST OF WORLD MARKET SIZE
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MAS 25,000 30,000 $209,000,000
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IRDS 45,000 55,000 $220,000,000
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ARDS/ALI 222,000 263,000 $4,122,500,000
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CF 23,000 27,000 $365,000,000
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Total Potential Annual Market: $4,916,500,000
Building Blocks
Discovery was also very pleased to announce this year the completion of small
private placements totaling $3.45 million in proceeds primarily from one of the
premier biotech institutional investors, OrbiMed of New York City, as well as
several existing Discovery investors. In addition, Discovery completed its first
corporate partnership with YuYu Industrial of Korea for its vitamin D analog,
DSC-103, for the treatment of postmenopausal osteoporosis. Management continues
to work diligently towards completion of other licensing collaborations and has
retained Mr. Fred Frank, Sr. Vice Chairman of Lehman Brothers to assist with
this effort.
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Discovery's management believes very strongly in the value of its products under
development and to demonstrate this, members continue to invest a significant
amount of their private funds towards open market purchases of Discovery common
stock.
As we progress into the next millenium, we intend to continue the aggressive
development of our lifesaving products. The year 2000 provides a fitting
backdrop for our technology that will revolutionize the way critically ill
patients will be cared for, further solidifying Discovery's role as an innovator
in the critical care arena.
In conclusion, I would like to thank you on behalf of myself, your Board of
Directors, the management and the employees of Discovery, for your past and
continued support.
Sincerely,
Robert Capetola, Ph.D.
President and Chief Executive Officer
To the extent that statements in this letter are not strictly historical,
including statements as to future financial conditions or otherwise as to future
events, such statements are forward-looking, and are made pursuant to the safe
harbor provisions of the Securities Litigation Reform Act of 1995. The
forward-looking statements contained in this release are subject to certain
risks and uncertainties that could cause actual results to differ materially
from the statements made. Among the factors which could affect the company's
actual results and could cause results to differ from those contained in the
forward-looking statements contained herein, are the risk that financial
conditions may change, risks relating to the progress of the company's research
and development and the development of competing therapies and/or technologies
by other companies. Those associated risks and others are further described in
the company's filings with the Securities and Exchange Commission.
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