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Discovery Laboratories Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2009 04:19PM

Discovery Laboratories Inc. (DSCO) filed Quarterly Report for the period ended 2009-09-30. Discovery Laboratories, Inc., formerly known as Ansan Pharmaceuticals, Inc., is a development-stage pharmaceutical company that focuses on developing compounds to treat respiratory diseases that affect the ability of the lungs to absorb oxygen. It is initially developing its lead product candidate, Surfaxin, for use by newborn infants to treat two respiratory conditions in critical care units of hospitals. The second compound under development is SuperVent, which is intended to treat airway diseases such as cystic fibrosis (CF) and chronic bronchitis. Discovery Laboratories Inc. has a market cap of $97.03 million; its shares were traded at around $0.81 with and P/S ratio of 21.09. Discovery Laboratories Inc. had an annual average earning growth of 12.1% over the past 5 years.

Highlight of Business Operations:

As of September 30, 2009, we had cash and cash equivalents of $17.7 million. Also as of September 30, 2009, under our two CEFFs, we may potentially raise (subject to certain conditions, including minimum stock price and volume limitations) up to an aggregate of $73.8 million. However, as of November 4, 2009, the May 2008 CEFF was unavailable because our stock price was below the minimum price required to utilize it. (See “Liquidity and Capital Resources – Committed Equity Financing Facilities,” and “– Financings Pursuant to Common Stock Offerings”). Also, as of September 30, 2009, our $10.4 million loan with Novaquest is classified as a current liability, payable in April 2010. Our plans include pursuing a potential strategic restructuring of this loan, as well as assessing alternative means of financing its payment, although there can be no assurance that we will be successful in these efforts.

The net loss for the three and nine months ended September 30, 2009 was $7.2 million (or $0.06 per share) and $24.1 million (or $0.22 per share), respectively. The net loss for the three and nine months ended September 30, 2008 were $10.6 million (or $0.11 per share) and $30.6 million (or $0.31 per share), respectively.

Research and development expenses for the three and nine months ended September 30, 2009 were $4.5 million and $15.2 million, respectively. Research and development expenses for the three and nine months ended September 30, 2008 were $6.7 million and $21.4 million, respectively. These costs are charged to operations as incurred and are tracked by category, as follows:

Manufacturing development expenses included charges associated with stock-based employee compensation in accordance with the provisions of ASC Topic 718. For the three and nine months ended September 30, 2009, these charges were $44,000 and $0.3 million, respectively. For the three and nine months ended September 30, 2008, these charges were $0.2 million and $0.6 million, respectively.

Development operations expenses included charges associated with stock-based employee compensation in accordance with the provisions of ASC Topic 718. For the three and nine months ended September 30, 2009, these charges were $40,000 and $0.2 million, respectively. For the three and nine months ended September 30, 2008, these charges were $0.2 million and $0.5 million, respectively.

General and administrative expenses for the three and nine months ended September 30, 2009 were $2.4 million and $8.1 million, respectively. General and administrative expenses for the three and nine months ended September 30, 2008 were $3.7 million and $13.3 million, respectively. Additionally, general and administrative expenses included charges associated with stock-based employee compensation in accordance with the provisions of ASC Topic 718. For the three and nine months ended September 30, 2009, these charges were $0.3 million and $1.7 million, respectively. For the three and nine months ended September 30, 2008, these charges were $0.8 million and $2.3 million, respectively.

Read the The complete Report



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