Discovery Labs hit with fresh setback on PhII Surfaxin failure

Discovery Labs (NASDAQ: DSCO) says preliminary data shows that its troubled lead drug Surfaxin failed a Phase II study. In fact, Surfaxin looked very much like a placebo in a trial that was aimed at demonstrating the lung drug's ability to reduce the amount of time children with acute respiratory failure spend on mechanical ventilation. Its badly mauled shares dropped even deeper into the cellar as a result, with the stock price falling by about a third--dropping 17 cents to 33 cents.

The patients taking Surfaxin required an average of 3.8 days on mechanical ventilation, versus 4.1 days for the placebo group. The trial showed that the drug was safe and well tolerated, but the difference in duration wasn't statistically significant from the placebo.

"The comprehensive data set from this Phase II trial is being further analyzed with the study Steering Committee as we evaluate next steps," says CMO Robert Segal. "These data are important as we are assessing, for the first time, the safety, tolerability and efficacy of intratracheally administered Surfaxin in the ARF patient population."

Just a few weeks ago, Discovery said it had been able to validate a test of the quality and stability of Surfaxin. A little more than a year ago, the FDA rejected Surfaxin as a treatment for an infant respiratory ailment, questioning the test's ability to check on the quality changes that could occur over the course of the drug's shelf life. The agency sent the company back to do preclinical work on the test. If it's successful, Discovery will be on track to file a complete response in early 2011.

- here's the Discovery press release
- here's the story from the Philadelphia Business Journal