By Mary Welch

Discovery Laboratories Inc. is starting one Phase III trial for its pulmonary surfactant, Surfaxin, for full-term infants with meconium aspiration syndrome (MAS) while halting a pivotal Phase II/III trial of Surfaxin for acute respiratory distress syndrome (ARDS).

"I wouldn't call stopping the trial a setback," said Robert Capetola, the company's CEO. "It's a restart. We had a clinical breakthrough in the manufacturing process that will reduce the risk of viscous exposure. So right now Surfaxin for MAS is our lead product but we're also gearing up for a Phase III trial of Surfaxin in premature babies as well."

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 product contains the peptide sinapultide (KL4) which is modeled after the human surfactant protein B (SP-B). SP-B is thought to aid in the spreading and stability of lung surfactant over the interior of the lung. Surfactant functions by regulating the surface tension of the air-liquid emulsion found in the lungs and preventing the alveoli - air sacs - from collapsing.

The new trial will involve 200 full-term babies who have a bowel movement (known as meconium) while still inside their mothers' uterus. About 13 percent of all babies - or 250,000 - have a bowel movement and about 10 percent of those inhale it below their vocal chords.

"It's not pleasant," Capetola said. "Essentially they get a bowel movement in their lungs and develop inflammations."

Those who do inhale the substance into their lungs often develop MAS, which is characterized by the presence of meconium, inflammatory cells, inflammatory mediators, edema fluid, protein, and other noxious debris in the lungs. Inhaled meconium can inactivate the infants' own natural surfactant and make breathing difficult. Many babies develop severe respiratory distress and are put on mechanical ventilation machines.

Half of the babies in the Phase III trial will be given the standard care, which is basically watching the baby, letting nature take its course and artificial ventilation, he said. The other 100 babies will be given Surfaxin-lavage, a lung wash, along with standard care. About 30 medical centers in the U.S. will participate in the trial that will last about 14 to 18 months.

The endpoint will be the number of days the babies are alive and on mechanical ventilation machines. There are numerous secondary endpoints as well, Capetola said.

"You can't wash the lungs with saline, for instance; it would kill the babies," he added. "But surfactant is meant to be in their lungs."

In the Phase II trial involving 22 babies, those who received Surfaxin-lavage had more rapid and more persistent improvements in oxygenation compared to the standard of care babies. Lavaged infants were, on average, weaned from mechanical ventilation three days sooner those the others.

Surfaxin was granted fast-track designation as well as orphan drug status for MAS.

Capetola said the Doylestown, Pa.-based company halted its Phase II/III trial of Surfaxin for ARDS for financial as well as manufacturing reasons.

"ARDS is similar to MAS except it's in adults," Capetola said. "There is a massive insult to the lungs, which is a principal reason why patients are put on mechanical ventilation. Our new manufacturing process allows us to be able to give higher concentrations to patients. We can now manufacture a less viscous formulation of Surfaxin."

The company plans to start again, with a smaller Phase II trial involving about 75 patients with ARDS as well as acute lung injury, but is looking for help in financing the trial.

"We were pretty happy with the Phase Ib trials. We know it's safe and we're trending in the right direction," Capetola said. "But we've got a Phase III under way now in MAS, and we're about to start one up in IRDS [idiopathic respiratory distress syndrome], which is in premature babies, and we're looking for a partner. We're in discussions with multiple partners and some are in the very advanced stages. We're also contemplating raising money to keep the products to ourselves."

Discovery's stock (NASDAQ:DSCO) closed Thursday at $5.875, down 12.5 cents.