Discovery Laboratories, Inc held a teleconference on September 29, 2009 with the US Food and Drug Administration (FDA). The meeting established an approach to potentially resolve the remaining primary issue that Discovery Labs must address to gain US marketing approval of Surfaxin (lucinactant) for the prevention of Respiratory Distress Syndrome (RDS) in premature infants.

The meeting focused on Discovery Labs' plans regarding optimization and final method validation of its fetal rabbit Biological Activity Test (BAT, a quality control and stability release test) and a proposed limited Surfaxin clinical trial design, which would simultaneously employ the newly-optimized BAT.

At the meeting, the FDA indicated that Discovery Labs' proposed programme to optimize and validate the BAT is reasonable. The programme is intended, among other things, to confirm that the BAT can adequately distinguish change in Surfaxin biological activity over time. As a result of the meeting, Discovery Labs believes that it has reached an understanding with the FDA and is confident that it will be able to optimize the BAT to the satisfaction of the FDA. Discovery Labs intends to employ the optimized BAT in conjunction with all of Discovery Labs' KL4 surfactant pipeline programs, including the potential limited Surfaxin clinical trial.

In addition, Discovery Labs received guidance from the FDA on its proposed limited clinical trial design. The trial design is intended to primarily assess a pharmacodynamic (PD) response following Surfaxin administration in preterm infants with RDS. This design was selected to address FDA requirements for Surfaxin approval while limiting trial expense and duration. The FDA indicated that a PD-based approach is consistent with their expectation for a limited clinical trial and also provided direction regarding trial design specifics. The final clinical trial design will be subject to FDA review following submission of a formal protocol. Discovery Labs expects to finalize a protocol and anticipates submitting it to the FDA in mid-fourth quarter of 2009.

W Thomas Amick, chairman of the Board and chief executive officer of Discovery Labs, commented, "We are pleased with the guidance received and outcomes obtained from our interaction with the FDA. This guidance provides a viable option for Surfaxin and meaningfully supports advancing our pipeline initiatives to potentially address a broad range of respiratory diseases such as RDS, Acute Respiratory Failure, Acute Lung Injury and Cystic Fibrosis. We look forward to continued productive dialogue with the FDA."

"Our most advanced programs from our KL4 surfactant pipeline, Surfaxin, Surfaxin LS and Aerosurf, have the potential to greatly improve the management of RDS and to redefine the RDS market. Our top priority is to secure strategic alliance partners and access capital to advance our pipeline and build shareholder value. As we move forward, we will take into account further interaction with the FDA and make strategic assessment, together with existing and potential new partners to determine the appropriate level and timing of Surfaxin investment and to maximize the value of our KL4 pipeline for RDS."

Discovery Lab is a biotechnology company developing Surfactant Therapies for respiratory diseases. Surfactants are produced naturally in the lungs and are essential for breathing. Discovery Labs' novel proprietary KL4 Surfactant Technology produces a synthetic, peptide-containing surfactant that is structurally similar to pulmonary surfactant and is being developed in liquid, aerosol or lyophilized formulations.