Deerfield Announces $30 Million Investment in Discovery Labs

  Deerfield Announces $30 Million Investment in Discovery Labs

Business Wire

NEW YORK -- February 13, 2013

Deerfield Management Company, L.P. announced today that it has entered into a
secured loan facility with Discovery Laboratories, Inc. (NASDAQ: DSCO), for up
to $30.0 million in financing.

The financing provides Discovery with capital to commercialize its drug
SURFAXIN®, which has been approved by the FDA for the prevention of
Respiratory Distress Syndrome (RDS) in premature infants at high risk for RDS,
and its AFECTAIR ® airway connector for infants receiving aerosolized
medication in neonatal or pediatric intensive care units. The launch of these
products will enable Discovery to transition from a development- to a
commercial-stage company, and further develop its lead pipeline product,
AEROSURF^®. The financing was structured to provide funding over time as
needed and to avoid the dilution and potential discount of a public offering
of stock or convertible debt financing.

Under terms of the facility, Deerfield committed to advance $30million this
year: $10million upon execution of the facility agreement and $20 million
upon the first commercial sale of SURFAXIN. The loan matures in six years and
accrues interest at 8.75% per annum, payable quarterly in cash. Upon the
initial disbursement, Deerfield will receive warrants to purchase 2.3 million
shares of common stock at an exercise price of $2.81 per share. Upon
disbursement of the $20 million, 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. With each disbursement, Deerfield
will receive a transaction fee equal to 1.5% of the amount disbursed.

“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’s financial position in a
minimally dilutive way and build a long-term relationship that helps advance
these important programs for neonatal medicine.”

“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.”

ABOUT DISCOVERY LABS

Discovery Laboratories, Inc. is a specialty biotechnology company focused on
respiratory critical care, initially in the management of respiratory distress
syndrome in premature infants. 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.

For more information, please visit www.Discoverylabs.com.

About Deerfield Management Company

Deerfield is committed to advancing healthcare through investment, information
and philanthropy.

For more information about Deerfield, please visit www.deerfield.com

Contact:

Deerfield Management Company
Karen Arnone, 212-922-1349
karnone@deerfield.com
 
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