Discovery Labs Receives $30 Million Funding Commitment from Deerfield
WARRINGTON, Pa., Feb. 13, 2013
WARRINGTON, Pa., Feb. 13, 2013 /PRNewswire/ --Discovery Laboratories, Inc.
(NASDAQ: DSCO), a specialty biotechnology company dedicated to advancing a new
standard in respiratory critical care, today announced that it has entered
into a secured loan facility with Deerfield Management Company, L.P.
(Deerfield) for up to $30.0 million in financing. Deerfield is a leading
healthcare investment firm with more than $3.5 billion of assets currently
"We are encouraged by Deerfield's confidence in the potential of our
transformative technology and business strategy," commented John G. Cooper,
President and Chief Executive Officer at Discovery Labs. "After considering a
variety of financing options, we worked with Deerfield to structure a facility
that aligns with our near-and long-term strategy to achieve important
commercial, development and strategic milestones."
"We believe that SURFAXIN^® and AEROSURF^® could represent meaningful
improvements in the care of premature infants with respiratory distress
syndrome," commented William Slattery, Partner at Deerfield Management. "Our
goal with this facility is to strengthen Discovery Labs' financial position in
a minimally dilutive way, and build a long-term relationship that helps
advance these important programs for neonatal medicine."
Under terms of the facility, Deerfield committed to advance $30million in
2013: $10million immediately following execution of the facility agreement
and $20 million upon the first commercial sale of SURFAXIN. The loan matures
six years from the date of the facility agreement and may be prepaid in whole
or in part without penalty at any time. The principal amount of the loan is
payable in three equal annual installments on the fourth, fifth and sixth
anniversaries of the facility agreement, except that, if Discovery Labs
achieves certain revenue or market capitalization targets, the principal
payments due on the fourth and fifth anniversaries could be deferred for one
year. Accordingly, if the milestones are achieved, payment of the principal
amount could be deferred until the maturity date of the loan in 2019. The
outstanding principal amount of the loan at any time will accrue interest at a
rate of 8.75% per annum, payable quarterly in cash. The facility agreement
contains customary terms and conditions but does not require Discovery Labs to
meet minimum financial and revenue performance covenants. In connection with
each advance, Deerfield will receive a transaction fee equal to 1.5% of the
amount disbursed. In connection with the initial advance, Deerfield will
receive warrants to purchase 2.3 million shares of common stock, par value
$.001 per share (Common Stock), at an exercise price of $2.81 per share, which
represents a premium of 24% over the closing price of the Company's common
stock preceding the execution of the facility agreement. Upon disbursement of
the $20 million advance, Deerfield will receive warrants to purchase an
additional 4.7 million shares of Common Stock at the same exercise price per
share of Common Stock. All of the warrants will expire on the sixth
anniversary date of the facility agreement.
Additional information about the facility and the terms of the related
agreements is included in a Current Report on Form 8-K that is expected to be
filed today with the Securities and Exchange Commission.
This press release is neither an offer to sell nor a solicitation of an offer
to buy any of the securities discussed herein, nor shall there be any sale of
these securities in any state or other jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or qualification
under the securities laws of any state.
ABOUT DISCOVERY LABS
Discovery Laboratories, Inc. is a specialty biotechnology company with one
focus – to advance a new standard in respiratory critical care. Discovery
Labs' novel proprietary KL4 surfactant technology produces a synthetic,
peptide-containing surfactant that is structurally similar to pulmonary
surfactant. Discovery Labs is also developing its proprietary drug delivery
technologies to enable efficient delivery of aerosolized KL4 surfactant and
other inhaled therapies.
Discovery Labs' strategy is initially focused on the development of its
technologies to improve the management of respiratory distress syndrome (RDS)
in premature infants. SURFAXIN is the first synthetic, peptide-containing
(KL4) surfactant approved by the FDA and the only alternative to
AEROSURF is a drug/device combination product being developed to enable
efficient delivery of aerosolized KL4 surfactant. If approved, AEROSURF
potentially will provide neonatologists with the ability to deliver surfactant
therapy using a less-invasive method and thereby enable the treatment of
premature infants who could benefit from surfactant therapy but who are
currently not treated. Discovery Labs believes that its RDS product portfolio
has the potential to become the new standard of care for RDS and, over time,
to significantly expand the current worldwide RDS market.
For more information, please visit www.Discoverylabs.com.
Deerfield is committed to advancing healthcare through investment, information
For more information about Deerfield, please visit www.deerfield.com
IMPORTANT SAFETY INFORMATION
SURFAXIN (lucinactant) intratracheal suspension is intended for intratracheal
use only. The administration of exogenous surfactants, including SURFAXIN,
can rapidly affect oxygenation and lung compliance. SURFAXIN should be
administered only by clinicians trained and experienced with intubation,
ventilator management, and general care of premature infants in a highly
supervised clinical setting. Infants receiving SURFAXIN should receive
frequent clinical assessments so that oxygen and ventilatory support can be
modified to respond to changes in respiratory status.
Most common adverse reactions associated with the use of SURFAXIN are
endotracheal tube reflux, pallor, endotracheal tube obstruction, and need for
dose interruption. During SURFAXIN administration, if bradycardia, oxygen
desaturation, endotracheal tube reflux, or airway obstruction occurs,
administration should be interrupted and the infant's clinical condition
assessed and stabilized. SURFAXIN is not indicated for use in acute
respiratory distress syndrome (ARDS).
For more information about SURFAXIN, please visit www.surfaxin.com
To the extent that statements in this press release are not strictly
historical, all such statements are forward-looking, and are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from the
statements made. Examples of such risks and uncertainties, including without
limitation those related to the terms and conditions of the Deerfield
agreements, including the security agreement, the warrants, the related
registration rights agreement ("Transaction Documents"), Discovery Labs'
ability to comply with the terms and conditions of the Transaction Documents,
the anticipated U.S. commercial introduction of SURFAXIN, are described in
Discovery Labs' filings with the Securities and Exchange Commission including
the most recent reports on Forms 10-K, 10-Q and 8-K, and any amendments
thereto. Any forward-looking statement in this release speaks only as of the
date on which it is made. The Company assumes no obligation to update or
revise any forward-looking statements.
SOURCE Discovery Laboratories, Inc.
Contact: Investor Relations: Michael Rice, LifeSci Advisors - 646.597.6979,
John Tattory, Vice President of Finance, Discovery Labs - 215.488.9418; Media
Relations: Michael Parks, Pitch360 - 484.356.7105 or Michael@pitch360inc.com
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