Discovery Laboratories Inc. has entered into an agreement to acquire the manufacturing operations of Laureate Pharma, Inc., a wholly-owned subsidiary of Safeguard Scientifics, Inc., in Totowa, New Jersey for $16 million.

The acquisition is intended to provide Discovery with operational control and improved economics for the potential commercial and clinical production of Discovery's lead product, Surfaxin, and its pipeline of precision-engineered Surfactant Replacement Therapy (SRT) products. The transaction is expected to close by year end, subject to customary closing conditions, and the acquired manufacturing operations will thereafter be dedicated to Discovery's programmes.

Robert J. Capetola, president and chief executive officer, Discovery, commented, "We are preparing our organisation for the anticipated approval of Surfaxin in April 2006 and its commercial launch in the second quarter. We believe our Surfactant Replacement Therapy pipeline, with Surfaxin as the cornerstone, holds the promise to revolutionise the treatment of respiratory diseases and it is strategically important to control key operations of a pharmaceutical business from the conduct of clinical trials to the quality of manufacturing to commercialising our products."

"For the continued development of our SRT portfolio, specifically life cycle management of Surfaxin for new indications, potential formulation enhancements, and expansion of our aerosol SRT products beginning with Aerosurf, we believe we gain flexibility and improved economics by managing our own operations," said Capetola.

In October 2003, Discovery and Laureate entered into a contract manufacturing arrangement, whereby Discovery's Surfaxin manufacturing know-how and dedicated equipment was transferred to this facility.

Transfer of the Surfaxin manufacturing process was completed in 2004 and, since that time, the facility has been predominantly dedicated to Surfaxin and the support of regulatory compliance requirements for Discovery's manufacturing operations.

Discovery's lead product, Surfaxin, for the prevention of respiratory distress syndrome (RDS) in premature infants, has received an approvable letter from the FDA and is under review for approval in Europe by the EMEA. The FDA has established April 2006 as its target timeframe to complete its review of the Surfaxin new drug application.

Additionally, Discovery is conducting a phase 2 clinical trial of Surfaxin for the prevention of chronic lung disease in premature infants, a phase 2 clinical trial of its SRT to address acute respiratory distress syndrome in adults, and is preparing to conduct multiple phase 2 pilot studies of Aerosurf), aerosolised SRT for the treatment of neonatal respiratory failure.

Discovery Laboratories Inc. is a biotechnology company developing its proprietary surfactant technology as Surfactant Replacement Therapies (SRT) for respiratory diseases.