Discovery Labs secures new Committed Equity Financing Facility with Kingsbridge

Jun 14 2010

Discovery Laboratories, Inc. (Nasdaq:DSCO), announced today that it has secured a new Committed Equity Financing Facility (2010 CEFF) with Kingsbridge Capital Limited, a private investment group, in which Kingsbridge has committed to provide up to $35 million of capital over a three-year period through the purchase of up to approximately 31.6 million newly-issued shares of Discovery Labs' common stock. Under the terms of the CEFF agreement, Discovery Labs will be able determine the exact timing and amount of any financings, subject to certain conditions and limitations. 

The 2010 CEFF represents a source of capital that will allow Discovery Labs, in its sole discretion, to access capital from time to time by requiring Kingsbridge to purchase a specified dollar amount of shares of Discovery Labs' common stock at pre-defined terms. Discovery Labs is not obligated to use any of the $35 million available under the 2010 CEFF. The 2010 CEFF does not restrict Discovery Labs' operating activities and does not prohibit Discovery Labs from entering into or completing debt or equity financings, other than those that would involve certain future-priced securities.

John G. Cooper, Executive Vice President and Chief Financial Officer of Discovery Labs, commented, "This CEFF provides us with an important financing option. The facility provides a competitive cost of capital and flexible structure and should further strengthen our position as we work to resolve the sole remaining issue necessary to potentially gain FDA approval for Surfaxin^® for the prevention of respiratory distress syndrome (RDS) in 2011 and advance the development of Surfaxin LS^(TM) and Aerosurf^®, which we believe hold the promise to significantly advance neonatal respiratory medicine."

In connection with the 2010 CEFF, Discovery Labs issued a warrant to Kingsbridge to purchase up to 1,250,000 shares of common stock at an exercise price of $0.4459 per share, which represents a 30% premium over the closing price of Discovery Labs' common stock on the date of issuance. The warrant will be exercisable beginning six months from the date of the agreement and will remain exercisable for five years.

The securities issuable in connection with the CEFF, the warrant and the shares issuable upon the exercise of the warrant issued to Kingsbridge have been registered under the Securities Act of 1933 pursuant to a registration statement previously declared effective by the Securities and Exchange Commission and a prospectus, forming a part of the effective registration statement.