Discovery Laboratories, Inc. Announces 1998 Third Quarter Results.

DOYLESTOWN, Pa.--(BUSINESS WIRE)--Nov. 16, 1998--Discovery Laboratories, Inc. (Discovery) (NASDAQ: DSCO, DSCOU) announced today results for the third quarter ended September 30, 1998. The Company reported a net loss of approximately $(1,222,000), or $(0.28) per share for the quarter ended September 30, 1998 as compared to a net loss of approximately $(1,148,000) or $(0.43) per share for the quarter ended September 30, 1997. There were 4,356,000 and 2,625,000 weighted average common shares outstanding for the third quarters of 1998 and 1997, respectively.

Discovery's lead product is Surfaxin(TM) for the treatment of acute respiratory distress syndrome (ARDS), meconium aspiration syndrome (MAS), and infant (idiopathic) respiratory distress syndrome (IRDS). Surfaxin(TM) is a novel, peptide-containing lung surfactant invented at the Scripps Research Institute. The peptide is sinapultide (KL4-Surfactant), a 21 amino acid peptide modeled after human surfactant protein B (SP-B). SP-B is considered to be the most important and functional protein of the human surfactant system. Lung surfactants are protein-lipid complexes that coat the airsacs of the lung and facilitate oxygen exchange with blood. ARDS and acute lung injury (ALI) are generalized inflammatory diseases of the lung affecting approximately 250,000 persons per year in the US and have an associated mortality rate of approximately 50%.

Surfaxin(TM) is being studied in a pivotal Phase 2/3 clinical trial in the US for the treatment of ARDS. Discovery Laboratories recently completed a Phase 2a trial in MAS and is planning to commence a Phase 3 trial in IRDS during 1999, subject to the receipt of regulatory approvals.

"We believe that Surfaxin shows great promise for fulfilling a significant unmet medical need," said Discovery's CEO Dr. Robert Capetola. "We will aggressively pursue our clinical trials and hope to submit a new drug application to the FDA as soon as possible."

Discovery is a bio-pharmaceutical company whose mission is to develop and commercialize medically novel therapeutics for critical care. In addition to Surfaxin(TM), Discovery is developing SuperVent(TM), its aerolosized formulation of tyloxapol for cystic fibrosis. More information about Discovery is available on the company's web site at: www.discoverylabs.com.

To the extent that statements in this press release are not strictly historical, including statements as to future financial conditions, events conditioned on stockholder or other approval, or otherwise as to future events, such statements are forward-looking, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. The forward-looking statements contained in this release are subject to certain risks and uncertainties that could cause actual results to differ materially from the statements made. Among the factors which could affect the company's actual results and could cause results to differ from those contained in the forward-looking statements contained herein are the risk that financial conditions may change, risks relating to the progress of the company's research and development and the development of competing therapies and/or technologies by other companies. Those associated risks and others are further described in the company's filings with the Securities and Exchange Commission. -0-

              Discovery Laboratories, Inc. and Subsidiary
                 Consolidated Statements of Operations
                              (Unaudited)

                                          Three Months Ended
                                             September 30,
                                           1998          1997
                                       -----------    -----------

Interest income                        $   127,000    $   288,000
                                       --------------------------

Expenses:
   Research and development                846,000      1,246,000
   General and administrative              503,000        190,000

            Total expenses               1,349,000      1,436,000
                                        -------------------------

                                       $(1,222,000)   $(1,148,000)

Net loss                               $(1,222,000)   $(1,148,000)
                                        -------------------------

Net loss per share -
 basic and diluted                     $     (0.28)   $     (0.43)

Weighted average number of common
 shares outstanding                      4,356,000      2,625,000