Discovery Laboratories Inc. is raising $24.2 million in gross proceeds from the sale of 2.2 million shares of common stock at $11 per share.
The underwritten offering, expected to close Friday, stems from a shelf registration statement that was filed in late December and went into effect Jan. 7. Bear, Stearns & Co. Inc., of New York, acted as the lead manager of the offering.
Doylestown, Pa.-based Discovery Labs is applying humanized lung surfactant technology to develop novel respiratory therapies and products.
Of the financing, John Cooper, Discovery Lab's executive vice president and chief financial officer, told BioWorld Today the deal was fast and included "three very prestigious, quality biotechnology investor institutions that see the value in surfactant replacement therapies."
The investors were not disclosed.
Discovery Labs ended 2003 with $29.4 million in cash and a burn rate of $6.5 million in the last quarter. Following this round, the firm will have 45 million outstanding shares.
Proceeds will be spent on preparations to commercialize the firm's lead candidate, Surfaxin, a proposed treatment for respiratory distress syndrome (RDS) in premature infants. The firm is poised to file the Surfaxin new drug application in April.
The NDA will be based on successful studies including a pivotal trial of 1,294 patients designed to demonstrate Surfaxin's superiority to London-based GlaxoSmithKline plc's Exosurf, an approved, non-protein product containing synthetic surfactant. Survanta, a cow-derived surfactant made by Abbott Park, Ill.-based Abbott Laboratories, served as the reference arm in the trial. Meanwhile, the supportive, multinational Phase III trial included 252 patients and was designed as a non-inferiority trial comparing Surfaxin to Curosurf, a pig-derived surfactant made by Dey LP, of Napa, Calif. (See BioWorld Today, June 6, 2003, and Nov. 26, 2003.)
According to Discovery Labs, statistical significance was achieved in favor of Surfaxin over Exosurf for the co-primary endpoints of RDS-related mortality through 14 days of life and the incidence of RDS at 24 hours of life. The supportive trial suggested that Surfaxin is favorable compared to Curosurf.
Cooper described the Surfaxin data as "extremely compelling in both primary and secondary endpoints."
Beyond supporting commercialization of Surfaxin in premature infants, Cooper said funds raised in the financing also will support the firm's ongoing development of the product in other indications.
For example, the company's pipeline is expanding as aerosolized formulations of the Surfactant Replacement Therapy enter the clinic. In the second half of 2004, the company expects to start a Phase II trial using the inhaled aerosol in severe asthma patients. Discovery Labs is planning to initiate Phase II trials using the aerosol version to treat premature infants suffering from respiratory dysfunctions.
In February, the FDA selected Surfaxin in the treatment of acute RDS as the only applicant within the Division of Pulmonary and Allergy Drug Products to be included in its Continuous Marketing Applications Pilot 2 Program. The program was established to study and document the benefits of more frequent FDA feedback and interactions as a company moves through the various phases of development with fast-track products. (See BioWorld Today, Feb. 10, 2004.)
For Surfaxin sales, Discovery Labs has a marketing agreement with Quintiles Transnational Corp., of Research Triangle Park, N.C., for the U.S., and with Laboratories Del Dr. Esteve SA, of Barcelona, Spain, in Europe.
Discovery Lab's stock (NASDAQ:DSCO) closed Tuesday at $11.40, down 9 cents.