June 19, 2008 / 1:02 PM / 10 years ago

UPDATE 2-Discovery Labs delays Surfaxin response to FDA

(Recasts; adds analyst comment; updates share movement)

BANGALORE, June 19 (Reuters) - Discovery Laboratories Inc DSCO.O delayed its response to the U.S. Food and Drug Administration’s concerns on an experimental lung drug for infants by nearly two months to September, sending shares down 28 percent.

In early May, the company had said it expected to file a response to the FDA’s “approvable letter” for the drug, Surfaxin, in six to eight weeks, which would have been around early July.

“In my opinion, the company’s timeline projections for Surfaxin are a best-case scenario... Execution risk remains my forefront concern,” Pacific Growth Equities analyst Kimberly Lee said in an email.

Lee kept a “neutral” rating on the company and said it has enough cash to sustain operations through September. According to Discovery Labs’ latest first-quarter earnings release, it had cash and marketable securities of $41.5 million as of March 31.

Discovery Labs said its FDA response could be classified as a Class 1 resubmission, which usually has a review period of 60 days.

The Warrington, Pennsylvania-based company also said the FDA did not require any additional clinical trials on the drug, and that the required information could be obtained from “existing scientific literature.”

Surfaxin treats respiratory distress syndrome, in which prematurely born infants have difficulty breathing. It has orphan drug designation from the FDA -- a status given to therapies being developed for rare conditions.

Shares of the company were down 61 cents at $1.55 in morning trade on Nasdaq. (Reporting by Varsha Tickoo in Bangalore; Editing by Anil D‘Silva)

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