Discovery Laboratories (DSCO) Soars 45% On FDA News
Discovery Labs (DSCO) held a teleconference on September 29, 2009 with the U.S. Food and Drug Administration (FDA). The meeting established an approach to potentially resolve the remaining primary issue that Discovery Labs must address to gain U.S. marketing approval of Surfaxin(R) (lucinactant) for the prevention of Respiratory Distress Syndrome (RDS) in premature infants. The meeting focused on Discovery Labs’ plans regarding optimization and final method validation of its fetal rabbit Biological Activity Test (BAT, a quality control and stability release test) and a proposed limited Surfaxin clinical trial design, which would simultaneously employ the newly-optimized BAT.
At the meeting, the FDA indicated that Discovery Labs’ proposed program to optimize and validate the BAT is reasonable. The program is intended, among other things, to confirm that the BAT can adequately distinguish change in Surfaxin biological activity over time. As a result of the meeting, Discovery Labs believes that it has reached an understanding with the FDA and is confident that it will be able to optimize the BAT to the satisfaction of the FDA. Discovery Labs intends to employ the optimized BAT in conjunction with all of Discovery Labs’ KL4 surfactant pipeline programs, including the potential limited Surfaxin clinical trial.
In addition, Discovery Labs received guidance from the FDA on its proposed limited clinical trial design. The trial design is intended to primarily assess a pharmacodynamic (PD) response following Surfaxin administration in preterm infants with RDS. This design was selected to address FDA requirements for Surfaxin approval while limiting trial expense and duration. The FDA indicated that a PD-based approach is consistent with their expectation for a limited clinical trial and also provided direction regarding trial design specifics. The final clinical trial design will be subject to FDA review following submission of a formal protocol. Discovery Labs expects to finalize a protocol and anticipates submitting it to the FDA in mid-fourth quarter of 2009.
The shares are up 45% to $1.11
Douglas A. McIntyre
Discovery Labs setback exacerbated by potential cash crunch (DSCO)
Discovery Laboratories Inc . (Nasdaq: DSCO) shares are down 50% on roughly 5 times normal volume after the company said its Surfaxin candidate targeting respiratory distress syndrome (RDS) was not likely to get FDA approval soon — particularly disappointing news for a company facing a potential pending cash crunch.
The news follows an FDA decision in April in which the agency declined to approve Surfaxin to treat RDS in premature infants.
Discovery Labsended the first quarter with about $19 million in cash and securities. Given its current burn rate, that might not be enough to last the company until the fourth quarter without the need for a cash infusion from a partner, or from some sort of offering.
Discovery labs does have access to a credit facility, but it is only accessible if the company’s stock price stays above 60 cents; it’s currently near 50 cents a share.
The low stock price may complicate efforts to raise capital using its stock.
The FDA suggested that additional studies be run on Surfaxin for RDS, but Discovery Labs plans to focus on earlier stage programs including its Phase II trial of Surfaxin LS.
It appears that the FDA unexpectedly changed the rules on Discovery Labs’ trial. The company said it believed data already submitted to the FDA supported its approval. Yet the agency is now applying a newly defined standard that would require the company to demonstrate the same relative changes over time it already showed in previous research.
If resources were unlimited, perhaps Discovery Laboratories would continue with its Surfaxin trial in RDS. But given the cash situation, that doesn’t appear to be the case — Mike Tarsala.
Discovery Labs… Lessons of FDA Changes For Others To Heed (DSCO)
Discovery Laboratories, Inc. (NASDAQ: DSCO) is getting crushed on FDA actions. This was already a small company, but a 50% share price hit now has this trading around $0.50 and has the market cap now under $55 million. While we normally focus on more broad or more crucial issues, the lessons here are crucial for any small biotech and small drug development companies to asses as risk when dealing with the Food and Drug Administration.
The company received written minutes from the FDA with the results of its June 2, 2009 meeting with the FDA. It followed the FDA’s April 17 complete response letter for Surfaxin for the prevention of Respiratory Distress Syndrome in premature infants. The meeting was convened to discuss resolution of the remaining primary issue necessary for marketing approval of Surfaxin. It focused on the Surfaxin fetal rabbit biological activity test, specifically whether data that had been previously submitted to the FDA and generated using both the BAT and a well-established preterm lamb model of RDS adequately supports the comparability of Surfaxin clinical drug product to commercial drug product, and whether the BAT can adequately distinguish change in Surfaxin biological activity over time.
At the recent June 2 meeting, Discovery Labs learned that the FDA is now going to apply a newly-defined standard to determine whether Discovery Labs has adequately demonstrated comparability of Surfaxin clinical to commercial drug product. In short, this could send everything back to the drawing board and could delay endlessly an approval or make an approval much harder to reach.
This new standard represents a significant hurdle for approval of Surfaxin. Discovery Labs said that it believes that the information provided to the FDA for the meeting demonstrates comparability and supports Surfaxin approval. But… Considering the FDA’s newly-defined standard, the company now believes that it is unlikely to satisfy this requirement with existing pre-clinical comparability data and gain Surfaxin approval in the near term.
In short, this takes just about all the wind out of the company’s sails.
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