x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
|
94-3171943
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
Number)
|
|
2600
Kelly Road, Suite 100
|
||
Warrington,
Pennsylvania 18976-3622
|
||
(Address
of principal executive offices)
|
Page
|
||||
Item
1. Financial Statements
|
1
|
|||
CONSOLIDATED
BALANCE SHEETS
|
||||
As
of June 30, 2007 (unaudited) and December 31, 2006
|
1
|
|||
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
||||
For
the Three Months Ended June 30, 2007 and 2006
|
||||
For
the Six Months Ended June 30, 2007 and 2006
|
2
|
|||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
|
||||
For
the Six Months Ended June 30, 2007 and 2006
|
3
|
|||
Notes
to Consolidated Financial Statements
|
4
|
|||
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
9
|
|||
Item
3. Quantitative and Qualitative Disclosures about Market Risk
|
24
|
|||
Item
4. Controls and Procedures
|
25
|
|||
PART
II - OTHER INFORMATION
|
||||
Item
1. Legal Proceedings
|
25
|
|||
Item
1A. Risk Factors
|
26
|
|||
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
|
26
|
|||
Item
3. Defaults Upon Senior Securities
|
26
|
|||
Item
4. Submission of Matters to a Vote of Security Holders
|
26
|
|||
Item
5. Other Information
|
27
|
|||
Item
6. Exhibits
|
27
|
|||
Signatures
|
28
|
· |
the
risk that we may not successfully develop and market our products,
and
even if we do, we may not become
profitable;
|
· |
risks
relating to the progress of our research and
development;
|
· |
risks
relating to significant, time-consuming and costly research and
development efforts, including pre-clinical studies, clinical trials
and
testing, and the risk that clinical trials may be delayed, halted
or fail;
|
· |
risks
relating to the rigorous regulatory approval process required for
any
products that we may develop, independently, with our development
partners
or pursuant to collaboration arrangements;
|
· |
the
risk that changes in the national or international political and
regulatory environment may make it more difficult to gain FDA or
other
regulatory approval of our drug product
candidates;
|
· |
risks
that the FDA or other regulatory authorities may not accept any
applications we file;
|
· |
risks
that the FDA or other regulatory authorities may withhold or delay
consideration of any applications that we file
or
limit such applications to particular indications or apply other
label
limitations
;
|
· |
risks
that, after acceptance and review of applications that we file, the
FDA or
other regulatory authorities will not approve the marketing and sale
of
our drug product candidates;
|
· |
risks
that we will not timely and successfully resolve the Chemistry,
Manufacturing and Controls (CMC) and current Good Manufacturing
Practices-related matters at our manufacturing operations in Totowa,
NJ
with respect to Surfaxin and our other Surfactant Replacement Therapies
(SRT) presently under development, including those identified in
connection with our process validation stability failures and matters
that
were noted by the FDA in its inspectional reports on Form FDA
483;
|
· |
risks
that the CMC section of our NDA will not satisfy the FDA;
|
· |
risks
relating to our own drug manufacturing operations and the drug
manufacturing operations of our third-party suppliers and contract
manufacturers;
|
· |
risks
relating to the ability of our development partners and third-party
suppliers of materials, drug substance and aerosolization systems
and
related components to provide us with adequate supplies and expertise
to
support manufacture of drug product for initiation and completion
of our
clinical studies;
|
· |
risks
relating to the transfer of our manufacturing technology to third-party
contract manufacturers;
|
· |
risks
relating to our ability and the ability of our collaborators and
development partners to develop and successfully manufacture and
commercialize products that combine our drug products with innovative
aerosolization technologies;
|
· |
risks
that financial market conditions may change, additional financings
could
result in equity dilution, or we will be unable to maintain the Nasdaq
Global Market listing requirements, causing the price of our shares
of
common stock to decline;
|
· |
the
risk that we will not be able to raise additional capital or enter
into
additional strategic alliances and collaboration arrangements (including
strategic alliances in support of our aerosol and other SRT;
|
· |
the
risk that recurring losses, negative cash flows and the inability
to raise
additional capital could threaten our ability to continue as a going
concern;
|
· |
risks
relating to our ability to develop or otherwise provide for a successful
sales and marketing organization in a timely manner, if at
all;
|
· |
the
risk that we or our marketing partners will not succeed in developing
market awareness of our products;
|
· |
the
risk that we or our development partners, collaborators or marketing
partners will not be able to attract or maintain qualified
personnel;
|
· |
risks
relating to the maintenance, protection and expiry of the patents
and
licenses related to our SRT and the potential development of competing
therapies and/or technologies by other
companies;
|
· |
risks
relating to the impact of securities, product liability, and other
litigation or claims that have been and may be brought against us
and our
officers and directors
;
|
· |
risks
relating to reimbursement and health care reform; and
|
· |
other
risks and uncertainties detailed in “Risk Factors” and in the documents
incorporated by reference in this
report.
|
June
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
21,495
|
$
|
26,173
|
|||
Restricted
cash
|
647
|
829
|
|||||
Available-for-sale
marketable securities
|
18,611
|
--
|
|||||
Prepaid
expenses and other current assets
|
779
|
565
|
|||||
Total
Current Assets
|
41,532
|
27,567
|
|||||
Property
and equipment, net
|
5,618
|
4,794
|
|||||
Deferred
financing costs and other assets
|
1,924
|
2,039
|
|||||
Total
Assets
|
$
|
49,074
|
$
|
34,400
|
|||
LIABILITIES
& STOCKHOLDERS’ EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
6,184
|
$
|
5,953
|
|||
Capitalized
leases and note payable, current portion
|
1,758
|
2,015
|
|||||
Total
Current Liabilities
|
7,942
|
7,968
|
|||||
Loan
payable, non-current portion, including accrued interest
|
9,268
|
8,907
|
|||||
Capitalized
leases and note payable, non-current portion
|
2,487
|
2,687
|
|||||
Other
liabilities
|
966
|
516
|
|||||
Total
Liabilities
|
20,663
|
20,078
|
|||||
Stockholders’
Equity:
|
|||||||
Common
stock, $0.001 par value; 180,000 shares authorized;
84,947
and 69,871 shares issued; and 84,634 and 69,558 shares
outstanding
at June 30, 2007 and December 31, 2006, respectively.
|
85
|
70
|
|||||
Additional
paid-in capital
|
298,361
|
265,604
|
|||||
Accumulated
deficit
|
(266,992
|
)
|
(248,298
|
)
|
|||
Treasury
stock (at cost); 313 shares
|
(3,054
|
)
|
(3,054
|
)
|
|||
Other
comprehensive income
|
11
|
--
|
|||||
Total
Stockholders’ Equity
|
28,411
|
14,322
|
|||||
Total
Liabilities & Stockholders’ Equity
|
$
|
49,074
|
$
|
34,400
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Expenses:
|
|||||||||||||
Research
and development
|
6,794
|
5,911
|
12,216
|
13,524
|
|||||||||
General
and administrative
|
3,465
|
4,024
|
6,219
|
12,706
|
|||||||||
Restructuring
charge
|
--
|
4,805
|
--
|
4,805
|
|||||||||
Total
expenses
|
10,259
|
14,740
|
18,435
|
31,035
|
|||||||||
Operating
loss
|
(10,259
|
)
|
(14,740
|
)
|
(18,435
|
)
|
(31,035
|
)
|
|||||
Other
income / (expense):
|
|||||||||||||
Interest
and other income
|
559
|
377
|
865
|
1,177
|
|||||||||
Interest
and other expense
|
(684
|
)
|
(332
|
)
|
(1,124
|
)
|
(632
|
)
|
|||||
Other
income / (expense), net
|
(125
|
)
|
45
|
(259
|
)
|
545
|
|||||||
Net
loss
|
$
|
(10,384
|
)
|
$
|
(14,695
|
)
|
$
|
(18,694
|
)
|
$
|
(30,490
|
)
|
|
Net
loss per common share -
Basic
and diluted
|
$
|
(0.12
|
)
|
$
|
(0.24
|
)
|
$
|
(0.24
|
)
|
$
|
(0.50
|
)
|
|
Weighted
average number of common
shares
outstanding - basic and diluted
|
83,825
|
61,652
|
76,907
|
61,411
|
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2007
|
2006
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(18,694
|
)
|
$
|
(30,490
|
)
|
|
Adjustments
to reconcile net loss to net cash used
in
operating activities:
|
|||||||
Depreciation
and amortization
|
781
|
448
|
|||||
Stock-based
compensation and 401(k) match
|
2,589
|
3,757
|
|||||
Loss
on disposal of property and equipment
|
3
|
--
|
|||||
Changes
in:
|
|||||||
Prepaid
expenses and other assets
|
(222
|
)
|
212
|
||||
Accounts
payable and accrued expenses
|
231
|
(337
|
)
|
||||
Other
assets
|
(159
|
)
|
1
|
||||
Other
liabilities and accrued interest on loan payable
|
811
|
440
|
|||||
Net
cash used in operating activities
|
(14,660
|
)
|
(25,969
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Purchase
of property and equipment
|
(1,326
|
)
|
(709
|
)
|
|||
Restricted
cash
|
182
|
(15
|
)
|
||||
Purchases
of marketable securities
|
(20,483
|
)
|
(4,631
|
)
|
|||
Proceeds
from sales or maturity of marketable securities
|
1,883
|
7,884
|
|||||
Net
cash (used in) / provided by investing activities
|
(19,744
|
)
|
2,529
|
||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from issuance of securities, net of expenses
|
30,183
|
2,783
|
|||||
Equipment
financed through capital lease obligation
|
4,245
|
1,036
|
|||||
Principal
payments under capital lease obligation
|
(4,702
|
)
|
(762
|
)
|
|||
Net
cash provided by financing activities
|
29,726
|
3,057
|
|||||
Net
decrease in cash and cash equivalents
|
(4,678
|
)
|
(20,383
|
)
|
|||
Cash
and cash equivalents - beginning of period
|
26,173
|
47,010
|
|||||
Cash
and cash equivalents - end of period
|
$
|
21,495
|
$
|
26,627
|
|||
Supplementary
disclosure of cash flows information:
|
|||||||
Interest
paid
|
$
|
344
|
$
|
619
|
|||
Non-cash
transactions:
|
|||||||
Unrealized
gain/(loss) on marketable securities
|
11
|
2
|
June
30, 2007
|
June
30, 2006
|
||||||
Expected
volatility
|
97
|
%
|
101
|
%
|
|||
Expected
term
|
4
& 5 years
|
5
years
|
|||||
Risk-free
rate
|
4.6
|
%
|
5.0
|
%
|
|||
Expected
dividends
|
--
|
--
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Research
& Development
|
$
|
555
|
$
|
516
|
$
|
789
|
$
|
903
|
|||||
General
& Administrative
|
1,182
|
1,038
|
1,607
|
2,311
|
|||||||||
Total
|
$
|
1
,737
|
$
|
1,554
|
$
|
2,396
|
$
|
3,214
|
· |
the
issuance of equity and debt
financings;
|
· |
payments
from potential strategic collaborators, including license fees and
sponsored research funding;
|
· |
sales
of Surfaxin, if approved;
|
· |
sales
of our other product candidates, if
approved;
|
· |
capital
lease financings; and
|
· |
interest
earned on invested capital.
|
· |
actions
intended to gain regulatory approval to market and sell Surfaxin
for the
prevention of RDS in premature infants in the United States, including
(i)
finalizing and submitting our response to the April 2006 Approvable
Letter, which focused on the Chemistry, Manufacturing and Controls
(CMC)
portion of our NDA; and (ii) completing analysis and remediation of
manufacturing
issues related to the April 2006 process validation stability
failure;
|
· |
continued
investment in the development of our SRT pipeline programs,
including
Surfaxin
for neonatal and pediatric conditions and Aerosurf, which uses the
aerosol-generating technology rights that we have licensed through
a
strategic alliance with Chrysalis Technologies, a division of Philip
Morris USA Inc. (Chrysalis);
|
· |
continued
investment in enhancements to our quality systems and our manufacturing
capabilities, including our operations in Totowa, NJ (which we acquired
in
December 2005). We plan to (i) produce surfactant drug products to
meet
the anticipated pre-clinical, clinical and potential future commercial
needs of Surfaxin and our other SRT product candidates, and (ii)
potentially develop new and enhanced formulations of Surfaxin and
our
other SRT product candidates. Our long-term manufacturing strategy
includes potentially building or acquiring additional manufacturing
capabilities for the production of our precision-engineered SRT drug
products; and
|
· |
seeking
investments of additional capital and potentially entering into
collaboration agreements and strategic partnerships for the development
and commercialization of our SRT product candidates. We continue
to
evaluate a variety of strategic transactions intended to enhance
the
future growth potential of our SRT pipeline and maximize shareholder
value, including, but not limited to, potential business alliances,
commercial and development partnerships, financings and other similar
opportunities, although we cannot assure you that we will enter into
any
specific actions or transactions.
|
(
in thousands)
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||
Research
and Development Expenses:
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Manufacturing
development
|
$
|
2,930
|
$
|
2,892
|
$
|
5,267
|
$
|
5,391
|
|||||
Unallocated
development - clinical and regulatory operations
|
2,307
|
2,007
|
4,335
|
4,537
|
|||||||||
Direct
pre-clinical and clinical program expenses
|
1,557
|
1,012
|
2,614
|
3,596
|
|||||||||
Total
Research & Development Expenses
|
$
|
6,794
|
$
|
5,911
|
$
|
12,216
|
$
|
13,524
|
· |
Completion
of pre-clinical and clinical trials of our SRT product candidates
with
scientific results that are sufficient to support further development
and/or regulatory approval;
|
· |
Receipt
of necessary regulatory approvals;
|
· |
Obtaining
adequate supplies of surfactant active drug substances on commercially
reasonable terms;
|
· |
Obtaining
capital necessary to fund our operations, including our research
and
development efforts, manufacturing requirements and clinical
trials;
|
· |
Performance
of our third-party collaborators and suppliers on whom we rely for
supply
of drug substances, medical device components and related services
necessary to manufacture our SRT drug product candidates, including
Surfaxin and Aerosurf;
|
· |
Timely
and successful resolution of the CMC and cGMP-related matters at
our
manufacturing operations in Totowa, NJ with respect to Surfaxin and
our
other SRT presently under development, including those matters identified
in connection with the April 2006 process validation stability failures
and those noted by the FDA in its 2005 and 2006 inspectional reports
on
Form FDA 483;
|
· |
Successful
manufacture at our manufacturing operations in Totowa, NJ of our
SRT drug
product candidates, including Surfaxin;
|
· |
Successful
development and implementation of a manufacturing strategy for the
Chrysalis aerosolization device and related materials to support
clinical
studies and commercialization of Aerosurf;
and
|
· |
Providing
for additional manufacturing capabilities, for which we presently
have
limited resources.
|
· |
Slow
patient enrollment;
|
· |
Long
treatment time required to demonstrate
effectiveness;
|
· |
Lack
of sufficient clinical supplies and
material;
|
· |
Adverse
medical events or side effects in treated
patients;
|
· |
Lack
of compatibility with complimentary
technologies;
|
· |
Lack
of effectiveness of the product candidate being tested;
and
|
· |
Lack
of sufficient funds.
|
In
order to address the most prevalent respiratory disorders affecting
infants in the NICU, we are conducting several NICU therapeutic programs
targeting respiratory conditions cited as some of the most significant
unmet medical needs for the neonatal community.
|
In
September 2005, we completed and announced the results of our first
pilot
Phase 2 clinical study of Aerosurf, which was designed as an open
label,
multicenter study to evaluate the feasibility, safety and tolerability
of
Aerosurf delivered using a commercially-available aerosolization
device
(Aeroneb Pro
®
)
via nCPAP for the prevention of RDS in premature infants administered
within 30 minutes of birth over a three hour duration. The study
showed
that it is feasible to deliver Aerosurf via nCPAP and that the treatment
was generally safe and well
tolerated.
|
(i) |
Manufacturing
development activities (included in research and development expenses)
to
support the production of clinical and commercial drug supply for
our SRT
programs, including Surfaxin, in conformance with cGMPs. Expenses
associated with manufacturing development activities for the three
and six
months ended June 30, 2007 were $2.9 million and $5.3 million,
respectively, as compared to $2.9 million and $5.4 million for the
three
and six months ended June 30, 2006, respectively. Manufacturing
development expenses for 2007 primarily consist of (i) costs associated
with our manufacturing operations in Totowa, NJ to support the production
of clinical and anticipated commercial drug supply for our SRT programs;
(ii) continued investment in our quality assurance and analytical
chemistry capabilities including implementation of enhancements to
quality
controls, process assurances and documentation requirements that
support
the production process and expanding and upgrading our quality operations
to meet production needs for our SRT pipeline in accordance with
cGMP;
(iii) expenses associated with our comprehensive investigation of
the
April 2006 Surfaxin process validation stability failure and remediation
of our related manufacturing issues.; and (iv) activities to develop
additional formulations of our SRT; and
|
(ii) |
Research
and development activities, excluding manufacturing development
activities, associated with infrastructure development, including
clinical
trial management, regulatory compliance, data management and
biostatistics, and medical and scientific affairs activities as well
as
direct program expenses to advance our SRT pipeline. Expenses associated
with research and development activities for the three and six months
ended June 30, 2007 were $3.9 million and $6.9 million, respectively,
as
compared to $3.0 million and $8.1 million for the three and six months
ended June 30, 2006, respectively. Research and development expenses
for
2007 primarily include: (i) costs associated with developing data
and
other information necessary for our formal response to the Surfaxin
Approvable Letter; (ii) activities associated with the ongoing Phase
2
clinical trial of Surfaxin for ARF in children up to two years of
age; and
(iii) development activities related to Aerosurf™. The decrease in the six
months ended June 30, 2007 compared to the same period last year
primarily
reflects cost incurred in 2006 for: (i) clinical activities associated
with the Phase 2 clinical trials for BPD in premature infants and
ARDS in
adults; and (ii) personnel and related costs that were later reduced
as a
result of staff reductions anda reorganization of corporate management
that occurred immediately after the April 2006 Surfaxin process validation
stability failure.
|
· |
the
issuance of equity and debt financings;
|
· |
payments
from potential strategic collaborators, including license fees and
sponsored research funding;
|
· |
sales
of Surfaxin, if approved;
|
· |
sales
of our other product candidates, if
approved;
|
· |
capital
lease financings; and
|
· |
interest
earned on invested capital.
|
VWAP*
|
%
of VWAP (Applicable Discount)
|
||||||
Greater
than $10.50 per share
|
94
|
%
|
(6
|
)%
|
|||
Less
than or equal to $10.50 but greater than $7.00 per share
|
92
|
%
|
(8
|
)%
|
|||
Less
than or equal to $7.00 but greater than or equal to $2.00 per
share
|
90
|
%
|
(10
|
)%
|
|
For
|
Withheld
|
|||||
W.
Thomas Amick
|
67,587,117
|
8,569,843
|
|||||
Robert
J. Capetola, Ph.D.
|
70,813,504
|
5,343,456
|
|||||
Antonio
Esteve, Ph.D.
|
66,267,187
|
9,889,773
|
|||||
Max
Link, Ph.D.
|
67,252,163
|
8,904,797
|
|||||
Herbert
H. McDade, Jr.
|
71,314,702
|
4,842,258
|
|||||
Marvin
E. Rosenthale, Ph.D.
|
67,506,812
|
8,650,148
|
For
|
Against
|
Abstain
|
75,813,959
|
268,314
|
74,687
|
For
|
Against
|
Abstain
|
Non-Vote
|
24,804,201
|
11,800,932
|
136,377
|
39,415,450
|
Discovery
Laboratories, Inc.
(Registrant)
|
||
|
|
|
Date: August 9, 2007 | By: | /s/ Robert J. Capetola |
Robert
J. Capetola, Ph.D.
President
and Chief Executive Officer
|
Exhibit
No.
|
Description
|
Method
of Filing
|
||
3.1
|
Restated
Certificate of Incorporation of Discovery, dated September 18,
2002.
|
Incorporated
by reference to Exhibit 3.1 to Discovery’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2002, as filed with the SEC on
March
31, 2003.
|
||
3.2
|
Amended
and Restated By-Laws of Discovery.
|
Incorporated
by reference to Exhibit 3.2 to Discovery’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2003, as filed with the SEC on
March
15, 2004.
|
||
3.3
|
Certificate
of Designations, Preferences and Rights of Series A Junior Participating
Cumulative Preferred Stock of Discovery, dated February 6,
2004.
|
Incorporated
by reference to Exhibit 2.2 to Discovery’s Form 8-A, as filed with the SEC
on February 6, 2004.
|
||
3.4
|
Certificate
of Amendment to the Certificate of Incorporation of Discovery, dated
as of
May 28, 2004.
|
Incorporated
by reference to Exhibit 3.1 to Discovery’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2004, as filed with the SEC on August
9,
2004.
|
||
3.5
|
Certificate
of Amendment to the Restated Certificate of Incorporation of Discovery,
dated as of July 8, 2005.
|
Incorporated
by reference to Exhibit 3.1 to Discovery’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2004, as filed with the SEC on August
8,
2005.
|
||
4.1
|
Shareholder
Rights Agreement, dated as of February 6, 2004, by and between Discovery
and Continental Stock Transfer & Trust Company.
|
Incorporated
by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on February 6, 2004.
|
||
4.2
|
Form
of Unit Purchase Option issued to Paramount Capital, Inc.
|
Incorporated
by reference to Exhibit 4.4 to Discovery’s Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1999, as filed with the SEC
on
March 30, 2000.
|
||
4.3
|
Form
of Class A Investor Warrant.
|
Incorporated
by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on June 20, 2003.
|
||
4.4
|
Class
B Investor Warrant dated July 7, 2004, issued to Kingsbridge Capital
Limited.
|
Incorporated
by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K as
filed with the SEC on July 9, 2004.
|
||
4.5
|
Warrant
Agreement, dated as of November 3, 2004, by and between Discovery
and
QFinance, Inc.
|
Incorporated
by reference to Exhibit 4.1 of Discovery’s Quarterly Report on Form 10-Q,
as filed with the SEC on November 9,
2004.
|
|
||||
4.6
|
Class
C Investor Warrant, dated April 17, 2006, issued to Kingsbridge Capital
Limited
|
Incorporated
by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on April 21, 2006.
|
||
4.7
|
Registration
Rights Agreement, dated as of July 7, 2004, by and between Kingsbridge
Capital Limited and Discovery.
|
Incorporated
by reference to Exhibit 10.2 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on July 9, 2004.
|
||
4.8
|
Registration
Rights Agreement, dated as of April 17, 2006, by and between Kingsbridge
Capital Limited and Discovery.
|
Incorporated
by reference to Exhibit 10.2 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on April 21, 2006.
|
||
4.9
|
Second
Amended and Restated Promissory Note, dated as of October 25, 2006,
issued
to PharmaBio Development Inc. (“PharmaBio”)
|
Incorporated
by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on October 26, 2006.
|
||
4.10
|
Warrant
Agreement, dated as of October 25, 2006, by and between Discovery
and
PharmaBio
|
Incorporated
by reference to Exhibit 4.2 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on October 26, 2006.
|
||
4.11
|
Warrant
Agreement, dated November 22, 2006
|
Incorporated
by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on November 22, 2006.
|
||
10.1
|
Credit
and Security Agreement, dated as of May 21, 2007, by and between
Discovery
Laboratories, Inc. and Merrill Lynch Capital, a division of Merrill
Lynch
Business Financial Services, Inc.
|
Incorporated
by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on May 24, 2007.
|
||
10.2
|
Discovery
Laboratories, Inc. 2007 Long Term Incentive Plan
|
Incorporated
by reference to Exhibit 1.1 to Discovery’s Current Report on Form 8-K, as
filed with the SEC on June 28, 2007.
|
||
10.3
|
Form
of Discovery Laboratories, Inc. 2007 Long-Term Incentive Plan Stock
Option
Agreement
|
Filed
herewith
|
||
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange
Act.
|
Filed
herewith.
|
||
31.2
|
Certification
of Chief Financial Officer and Principal Accounting Officer pursuant
to
Rule 13a-14(a) of the Exchange Act.
|
Filed
herewith.
|
||
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
Filed
herewith.
|
____________________ | |||
Date
|
|||
|
Participant
|
||
|
Address:
|
||
Print
name in exact manner
|
|||
it
is to appear on the
|
|||
stock
certificate:
|
|||
Address
to which certificate
|
|||
is
to be sent, if different
|
|||
from
address above:
|
|||
Social
Security Number:
|
|||
Employee
Number:
|
(i)
|
willful
misconduct or gross negligence in the performance of such person’s duties;
|
(ii)
|
willful
and continued failure or refusal to perform satisfactorily any duties
reasonably requested in the course of such person’s employment by, or
service to, the Company (other than a failure resulting from such
person’s
disability); or
|
(iii)
|
fraudulent,
dishonest or other improper conduct engaged in by such person that
causes,
or has the potential to cause, harm to the Company or any of its
Subsidiaries, or its or their business or reputation, including,
without
limitation, such person’s violation of any policies of the Company
applicable to the such person, such person’s violation of laws, rules or
regulations applicable to such person, criminal activity, habitual
drunkenness or use of illegal
drugs.
|
(i)
|
the
acquisition, directly or indirectly by any person or related group
of
persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the
Company),
of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing
more
than thirty-five percent (35%) of the total combined voting power
of the
Company’s outstanding securities;
|
(ii)
|
a
change in the composition of the Board over a period of thirty-six
(36)
consecutive months or less such that a majority of the Board ceases
to
consist of Incumbent Members, which term means members of the Board
on the
first day of such period and any person becoming a member of the
Board
subsequent to such date whose election or nomination for election
was
approved by two-thirds of the members of the Board who then comprised
the
Incumbent Directors; or
|
(iii)
|
the
Company combines with another company and is the surviving corporation
but, immediately after the combination, the shareholders of the Company
immediately prior to the combination hold, directly or indirectly,
by
reason of their being stockholders of the Company, fifty percent
(50%) or
less of the voting stock of the combined
entity.
|
(i)
|
if
the Shares are listed or admitted for trading on any United States
national securities exchange, or if actual transactions are otherwise
reported on a consolidated transaction reporting system, the last
reported
sale price of a Share on such exchange or reporting system, as reported
in
any newspaper of general circulation, or
|
(ii)
|
if
clause (i) is not applicable, the mean of the high bid and low asked
quotations for a Share as reported by the National Quotation Bureau,
Incorporated if at least two securities dealers have inserted both
bid and
asked quotations for the Shares on at least five of the 10 preceding
trading days; or
|
(iii)
|
if
the information set forth in clauses (i) through (ii) above is unavailable
or inapplicable to the Company (e.g., if the Shares are not then
publicly
traded or quoted), then the “Fair Market Value” of a Share shall be the
fair market value (i.e., the price at which a willing seller would
sell a
Share to a willing buyer when neither is acting under compulsion
and when
both have reasonable knowledge of all relevant facts) of a Share
on such
date as the Committee in its sole and absolute discretion shall determine
in a fair and uniform manner.
|
(i)
|
such
individual’s involuntary dismissal or discharge by the Company for reasons
other than Cause, or
|
(ii)
|
such
individual’s voluntary resignation following (A) a change in his or her
position with the Company (or Subsidiary employing such individual)
which
materially reduces such individual’s duties and responsibilities or the
level of management to which such individual reports, (B) a reduction
in
such individual’s level of compensation (including base salary, fringe
benefits and target bonus under any corporate performance-based bonus
or
incentive programs) by more than fifteen percent (15%) or (C) a relocation
of such individual’s place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by
the Company without such individual’s consent.
|
Date: August 9, 2007 | By: | /s/ Robert J. Capetola |
Robert J. Capetola, Ph.D. |
||
Title: President and Chief Executive Officer |
Date: August 9, 2007 | By: | /s/ John G. Cooper |
John G. Cooper |
||
Title: Executive Vice President and Chief Financial Officer |
Date: August 9, 2007 | By: | /s/ Robert J. Capetola |
Robert J. Capetola, Ph.D. |
||
Title: President and Chief Executive Officer |
Date: August 9, 2007 | By: | /s/ John G. Cooper |
John G. Cooper. |
||
Title: Executive Vice President and Chief Financial Officer |