DSCO shares hit after hours following news Print E-mail
By Staff and Wire Reports   
Wednesday, 01 July 2009 16:17

Discovery Laboratories, Inc. (Nasdaq:DSCO) - Shares are down 38.68% after release of written minutes from its June 2, 2009 meeting with the FDA. This meeting followed the FDA's April 17 Complete Response Letter for Surfaxin(r) (lucinactant) for the prevention of Respiratory Distress Syndrome (RDS) in premature infants and was convened to discuss resolution of the remaining primary issue necessary for marketing approval of Surfaxin.

The meeting focused on the Surfaxin fetal rabbit biological activity test (BAT, a quality control stability and release 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 will now apply a newly-defined standard to determine whether Discovery Labs has adequately demonstrated comparability of Surfaxin clinical to commercial drug product. This new standard represents a significant hurdle for approval of Surfaxin. Discovery Labs believes that the information provided to the FDA for the meeting demonstrates comparability and supports Surfaxin approval. However, in light of the FDA's newly-defined standard, Discovery Labs now believes that it is unlikely to satisfy this requirement with existing preclinical comparability data and gain Surfaxin approval in the near term.

Robert J. Capetola, Ph.D., President and Chief Executive Officer of Discovery Labs, commented, "With agreement from the FDA, we have diligently pursued initiatives, including multiple preclinical experiments, that were expected to lead to Surfaxin approval for RDS. The totality of this work, along with the FDA's acknowledgment of the robustness of our Phase 3 clinical trial and the tremendous strides made in manufacturing and quality operations, led us to believe that we had comprehensively satisfied all of the FDA requirements. Per the June 2 meeting, the central remaining issue relates to whether data generated using the BAT and preterm lamb model of RDS supports the comparability of Surfaxin clinical to commercial drug product to the FDA's satisfaction. This comparability issue is limited to this New Drug Application and does not alter our existing clinical programs or development plans for our pipeline."

Discovery Labs will now focus on maximizing the inherent value of its novel KL4 surfactant and aerosolization platforms and will minimize development risk by leveraging Surfaxin's established proof-of-efficacy in RDS. The two highest priority pipeline programs are Surfaxin LS(tm) and Aerosurf(r) -- drugs that have the potential to greatly advance the management of RDS and treat more patients suffering from RDS, while creating a significant economic opportunity. The synthetic nature and formulation flexibility of Discovery Labs' KL4 surfactant platform also supports expansion into a wide range of respiratory disease conditions. Discovery Labs intends to pursue these opportunities through strategic alliances, although there can be no assurance that such alliances can be obtained.

Comparability of Surfaxin Clinical Drug Product to Commercial Drug Product

During Surfaxin's Phase 3 clinical trials, a leading academic neonatologist assessed the biological activity of the clinical batches by measuring respiratory compliance in a well-established preterm lamb model of RDS. After completing Surfaxin's Phase 3 clinical trials, in accordance with discussions with the FDA, Discovery Labs validated and implemented the BAT as a recurring quality control test to confirm biological activity for Surfaxin release and stability testing. Based on agreements reached in meetings with the FDA in 2006 and 2008, Discovery Labs conducted a series of preclinical experiments to establish comparability between Surfaxin drug product used in Phase 3 clinical trials and the Surfaxin drug product intended to be manufactured for commercial use. Accordingly, Discovery Labs initiated a series of side-by-side studies employing both the preterm lamb model of RDS and the BAT and believes that the correlated results demonstrate comparability and support approval of Surfaxin.

At the recent June 2 meeting, Discovery Labs presented a compilation of previously-submitted data from the preterm lamb model and BAT studies, together with a comprehensive statistical evaluation of such data, intended to establish to the satisfaction of the FDA comparability of clinical drug product to Surfaxin drug product to be manufactured for commercial use. The comprehensive statistical evaluation was a comparative regression analysis using an accepted FDA statistical method. Discovery Labs believes that the data and related statistical evaluation that it submitted to the FDA are highly supportive of the comparability of clinical drug product to commercial Surfaxin.

The FDA stated, for the first time, that the 2006 and 2008 agreement with Discovery Labs to establish comparability through these studies is unprecedented and the determination of whether Discovery Labs has adequately established comparability is solely within the FDA's discretion. The FDA now insists, for the first time, that data generated from the preterm lamb model and BAT studies must demonstrate, in a point-to-point analysis, the same relative changes in respiratory compliance between both models over time. Based on this newly-defined standard, the FDA indicated that to adequately establish comparability in this manner would be an extremely high hurdle and that, from the FDA's perspective, the data analysis provided by Discovery Labs did not meet that standard.

The FDA suggested that the comparability studies in the preterm lamb model and the BAT would not be necessary if the BAT had been implemented to assess Surfaxin drug product used in the Phase 3 clinical trials. Additionally, the FDA suggested that, to increase the likelihood of gaining Surfaxin approval and as an alternative to demonstrating comparability using the preterm lamb model and BAT, Discovery Labs could consider conducting a limited clinical trial employing only the BAT as a path forward to Surfaxin approval.

The BAT as a Quality Control Drug Product Release Assay

The BAT has been validated as a quality control test in accordance with current Good Manufacturing Practices and ICH guidelines and was implemented for Surfaxin release and stability testing as well as for Discovery Labs' other pipeline programs. The BAT is only one of numerous methods that Discovery Labs employs in an extensive quality surveillance program to assess quality and stability. These highly sophisticated tests monitor drug product quality at release and through shelf-life and represent very sensitive methods for detecting changes in quality over time.

At the June 2 meeting, the FDA commented that the data presented appears to confirm that the BAT can distinguish active from inactive drug product (although it had previously questioned whether the BAT, when compared to the preterm lamb model, could adequately monitor Surfaxin biological activity over time). Also at this meeting, Discovery Labs advised the FDA of ongoing efforts to further refine the BAT in accordance with Discovery Labs' continuing quality improvement initiatives.

Discovery Labs believes that the BAT, as an ICH validated method, represents an acceptable Quality Control test to assess biological activity. Accordingly, Discovery Labs is continuing to employ the BAT during the conduct of ongoing clinical trials addressing Acute Respiratory Failure and Cystic Fibrosis, consistent with guidance from the FDA, and plans to use the BAT in its pending clinical programs, Surfaxin LS and Aerosurf for RDS.

Discovery Labs Going Forward

As suggested by the FDA at the June 2 meeting, Discovery Labs could consider conducting a limited clinical trial to support comparability of clinical to commercial Surfaxin drug product and potentially gain approval. However, Discovery Labs believes that, given its strategic and financial priorities, it is more prudent to focus resources on the ongoing lyophilized and aerosolized surfactant development programs. Discovery Labs believes that the best way to address the global RDS patient population is to advance KL4 surfactant programs that are intended to gain worldwide commercial approvals and target both traditional endotracheal tube delivery and novel, less-invasive surfactant administration through aerosolization. Surfaxin LS, Discovery Labs' initial lyophilized product, and Aerosurf, its initial aerosolized surfactant product, may provide benefits that will greatly advance the management of RDS and represent a significant improvement from a medical and economic perspective.

With respect to ongoing regulatory activities for Surfaxin, Discovery Labs has submitted proposed corrections and additions to the formal FDA minutes. Following finalization of the meeting minutes, Discovery Labs will determine its next course of action, which may entail further interaction with the FDA to assess whether Surfaxin approval can be gained without additional clinical trials, or potentially exercising its right of appeal through the FDA's Formal Dispute Resolution process.

"We have worked diligently to satisfy the requirements of the FDA but will now limit investment to gain regulatory approval of Surfaxin in the United States. Our top priority at this time is to leverage the totality of our Surfaxin experience and established pharmacology of our KL4 surfactant to advance our robust pipeline. I firmly believe that the robust nature of our clinical experience and the tremendous progress that we have made in manufacturing and quality operations meaningfully reduces development risk in advancing our promising pipeline programs.

We are pioneering some of the most exciting science in the development of new surfactant applications to improve respiratory critical care medicine. We believe that our proprietary technology platform makes it possible, for the first time, to develop a significant pipeline of therapeutic surfactant products targeted to treat a wide range of respiratory conditions. Our pipeline programs, including Surfaxin LS and Aerosurf, are focused on addressing unmet medical needs and represent significant market opportunities. Investing in this pipeline, we believe, is the best strategic decision for our patients, medical practitioners and other stakeholders," commented Dr. Capetola.

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