By Mary Welch
Discovery Laboratories Inc. entered into definitive agreements to raise about $18.5 million through private placements, the proceeds of which should underwrite the company's Phase III trials of Surfaxin in neonatal indications.
Discovery, based in Doylestown, Pa., will sell about 2.8 million shares of common stock and 570,000 warrants. The closing should take place today.
"This allows us to take our Surfaxin product through Phase III trials and into commercialization for neonatology indications," said Robert Capetola, the company's CEO. "It also gives us more flexibility in dealing with potential partners throughout the world and maybe even in the United States. We have a partner for Surfaxin in southern Europe and we are working on a strategy for northern Europe. It is not partnered in the U.S., which is what we wanted."
Investors in the offering included PIMCO Equity Advisors, of Newport Beach, Calif.; The Lincoln Fund; Royal Bank of Canada, of Toronto; The Keys Foundation; Albert Fried and Co., of New York; and Credito Privato Comerciale. Paramount Capital Inc., of New York, served as the placement agent.
Earlier this year, Discovery started a pivotal Phase II/III trial for its pulmonary surfactant, Surfaxin, for full-term infants with meconium aspiratin syndrome (MAS). Surfaxin (lucinactant), which contains sinapultide, a peptide mimic of the human surfactant protein B, was invented at The Scripps Research Institute in La Jolla, Calif.
The trial involves 200 full-term babies who have a bowel movement while still inside their mothers' uterus. About 13 percent of all babies have a bowel movement, and about 10 percent of those inhale it below their vocal chords. The trial should last about 14 to 18 months. (See BioWorld Today, Jan. 28, 2000, p. 1.)
In addition, the company is in discussions with the FDA for a Phase III trial using Surfaxin for idiopathic respiratory distress syndrome (IRDS), which occurs in premature babies.
Earlier this year the company halted a Phase II/III trial for Surfaxin for acute respiratory distress syndrome (ARDS) in adults. That trial involved 405 patients who had severe difficulty in breathing requiring mechanical ventilation as a result of damage to and inflammation of the lung's epithelia caused by diseases and injuries such as pneumonia, aspiration of gastric contents or near-drowning. (See BioWorld Today, July 15, 1998, p. 1.)
The company also plans a large Phase II trial using Surfaxin in adults with ARDS and acute lung injury.
The company also completed a small Phase IIa trial with SuperVent (tyloxapol), an aerosolized therapy for cystic fibrosis.
Discovery is also developing DSC-103 as an oral treatment for postmenopausal osteoporosis. Phase Ia and Ib trials have been completed.
The company's fourth-quarter and year-end 1999 financials have not been released. However, Capetola said the company had about $6 million in cash and 17 million shares outstanding.
Discovery's stock (NASDAQ:DSCO) closed Monday at $8.75, down 56.2 cents.