Discovery Laboratories, Inc. and Laboratorios del Dr. Esteve S.A. (Esteve) have restructured their strategic alliance for the development, marketing and sales of Discovery's products in Europe and Latin America.

Under the revised collaboration, Discovery has regained full commercialization rights in key European markets, Central America and South America for its Surfactant Replacement Therapies (SRT), including Surfaxin for Respiratory Distress Syndrome (RDS) in premature infants and Acute Respiratory Distress Syndrome (ARDS) in adults. Esteve will focus on the key Southern European markets, and now has development and marketing rights to a broader portfolio of Discovery's potential SRT products. This restructured collaboration supersedes the existing sublicense and supply agreements between Discovery and Esteve entered into in March 2002, the company release said here.

On December 3, 2004 Discovery and Esteve agreed to restructure their business arrangements by entering into amended collaboration, supply and common stock agreements.

Discovery issued 500,000 shares of its common stock to Esteve at no cost to Esteve. Discovery will pay Esteve 10 per cent of cash up-front and milestone fees that Discovery may receive in connection with any future strategic collaborations for the development and commercialization of Surfaxin for RDS, ARDS or certain of its SRT products in the territory previously licensed to Esteve. The total amount of such cash payments by Discovery to Esteve shall not exceed $20 million, according to the agreement.

Esteve is one of the largest pharmaceutical-chemical corporations in Southern Europe, with an international presence through subsidiaries in Italy and Portugal and worldwide licensees and distributors.