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Discovery Labs Provides Business Update And Reports Third Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Discovery Laboratories, Inc. (Nasdaq: DSCO), a specialty

biotechnology company focused on

developing aerosolized

surfactant therapies for respiratory diseases, today provided a business update and financial results for the third quarter ended September 30, 2015.

Key Highlights

The Company continued to make progress in its AEROSURF

phase 2 clinical program:

The Company recently completed enrollment in the phase 2a expansion trial in 32 premature infants 29 to 34 week gestational age (GA) receiving nasal continuous posit ive airway pressure (nCPAP) for RDS, the primary purpose of which was to assess safety and tolerability of higher doses of aerosolized KL

surfactant administered to two dose groups (60 and 90 minutes), compared to nCPAP alone.

This trial expands upon the knowledge gained in the initial phase 2a clinical trial in 48 premature infants 29 to 34 week GA receiving nasal continuous positive airway pressure (nCPAP) for RDS, which assessed the safety and tolerability of a single exposure of aerosolized KL

surfactant administered to three dose groups (15, 30 and 45 minutes), compared to nCPAP alone. All key objectives in the initial trial were met, including establishment of proof of concept based on physiological data suggesting that aerosolized KL

surfactant appears to be delivered into the lungs of premature infants.

The Company has now completed its planned phase 2a clinical trials in premature infants 29 to 34 GA. The Company is finalizing its analysis of the expansion trial data and plans to release top-line results of the overall phase 2a clinical trials of premature infants 29 to 34 week GA and hold an investor conference call on November 12, 2015.

The Company expects to initiate a phase 2b clinical trial in up to 250 premature infants 26 to 32 week GA in the fourth quarter of 2015. The trial is designed to evaluate premature infants receiving aerosolized KL

surfactant (including the ability for infants to receive repeat doses) compared to nCPAP alone. Two dose groups will be evaluated. The primary objective of the trial is to demonstrate evidence of efficacy and, if successful, inform the design of a phase 3 clinical program. The phase 2b trial will begin with enrollment of premature infants 29 to 32 week GA, followed by enrollment of premature infants 26 to 28 week GA after completion of the phase 2a trial in this age group. Enrollment for the phase 2b clinical trial is expected to be completed in mid – 2016.

The Company has initiated a phase 2a clinical trial in 32 premature infants 26 to 28 week GA receiving nCPAP for RDS, the primary purpose of which is to assess safety and tolerability of aerosolized

surfactant (including the ability for infants to receive repeat doses) compared to nCPAP alone. Two dose groups will be evaluated (30 and 45 minutes). The Company anticipates releasing top-line results of this phase 2a trial in the first quarter of 2016.

John G. Cooper, Discovery Labs' President and Chief Executive Officer commented, “Our goal with AEROSURF is to provide neonatal medical practitioners with a means to administer aerosolized KL

surfactant without invasive endotracheal intubation and, if we are successful, potentially transform the management of premature infants with RDS. The continued advancement of the AEROSURF clinical program and the steps taken in the third quarter to strengthen the Company’s financial position represent important milestones towards achieving our goal.”

As of September 30, 2015, the Company had cash and cash equivalents of $46.3 million. During the third quarter of 2015, the Company strengthened its financial position as follows:

In July 2015, entered into amendments to the $30 million loan agreement with affiliates of Deerfield Management Company, L.P. (Deerfield) to (i) prepay $5.0 million of the outstanding principal amount of the loan, and (ii) adjust the remaining principal installments under the loan to eliminate the amounts due in February 2017 and increase the amounts due in each of February 2018 and February 2019 from $10 million to $12.5 million. The Company believes these changes better align its payment obligations under the loan with anticipated AEROSURF development milestones.

Also in July 2015, completed a public offering of common stock, warrants and pre-funded warrants, resulting in net proceeds of approximately $37.6...


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