Discovery Laboratories shares dive on FDA delay

NEW YORK - Shares of Discovery Laboratories Inc. fell to their lowest point in a decade Thursday after the company said a Food and Drug Administration review standard places the approval of Surfaxin in doubt.

The stock plunged 50 cents, or 48 percent, to reach 55 cents in afternoon trading, but earlier fell as low as 46 cents, marking a 10-year low point.

Late Wednesday, the company said the respiratory drug candidate Surfaxin will likely face a difficult obstacle with the FDA after the agency said it would use a new standard to review the drug application. Warrington, Pa.-based Discovery Laboratories is still deciding its next move, but said current data in the drug application would likely not meet the FDA's new standard.

The company has been trying to gain approval for Surfaxin, aimed at treating respiratory distress syndrome in infants. The FDA has made several requests for more information, with the last focused on the test used to determine the drug's shelf-life and whether the commercial product would be comparable to the product used in the studies.

Discovery Laboratories said it would shift focus and resources to aerosolized treatments for respiratory distress syndrome.

Wedbush Morgan analyst Kimberly Lee downgraded shares to "Sell" from "Hold", and said the Surfaxin respiratory distress syndrome is "dead."

"As we anticipated, issues in the Complete Response Letter (FDA request) were not able to be fully addressed at the end-of-review meeting with the FDA on June 2," she said, in a note to investors.

Funding remains an issue for the company, she added, and expects management to explore potential partnerships or alliances to stay afloat.

"In addition, we view the remaining pipeline as early stage with inherent significant development risks," she said.

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