Discovery Laboratories, Inc. Awarded $1 Million Fast-Track SBIR Grant by NIH to Develop Surfaxin.

Business/Health & Medical Writers

DOYLESTOWN, Pa.--(BW HealthWire)--Oct. 31, 2000

Discovery Laboratories, Inc. (NASDAQ Small Cap: DSCO) announced today that it has been awarded a $1 million Fast-Track Small Business Innovative Research (SBIR) grant by the US National Institutes of Health ("NIH") to develop Surfaxin(R) for acute respiratory distress syndromes including acute lung injury.

Funding under this NIH SBIR grant is to be provided in two consecutive phases, and the fast-track mechanism is meant to provide for no delay in funding between phases. The Phase 1 award, covering the first 6 months of work is for $128,000. Following successful completion of Phase 1, Phase 2 of the grant is intended to be funded at a level of $891,000 for up to two years. This grant is expected to cover a portion of the costs of research and development for Surfaxin(R) associated with protease inhibitors.

Dr. Robert Segal, Vice President of Clinical Research & New Drug Development for Discovery said, "Acute respiratory distress syndromes are some of the most deadly critical care problems and there are no available therapies to treat them. We are hopeful that Surfaxin(R) will provide a rapid and effective solution."

Robert Capetola, Ph.D., Chief Executive Officer of Discovery said, "We are delighted to have been selected by the US government to receive funding to continue to develop our Surfaxin(R) technology. The receipt of this prestigious award further supports our work with Surfaxin(R)."

Discovery is a bio-pharmaceutical company whose mission is to develop and commercialize medically novel therapeutics for critical care. Presently, Discovery is developing Surfaxin(R) to treat respiratory distress syndrome (RDS) in premature infants, meconium aspiration syndrome (MAS) in full-term babies, direct acute respiratory distress syndrome (ARDS), acute lung injury (ALI); and SuperVentTM to treat cystic fibrosis. Currently, Surfaxin(R) is the subject of a pivotal Phase 3 clinical trial in MAS. Surfaxin(R) was licensed by Discovery from Johnson and Johnson and was originally invented at The Scripps Research Institute. 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, future collaboration agreements, the success of the Company's product development, 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, the risk that the Company will not be able to raise additional capital or enter into additional collaboration agreements, 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 periodic filings with the Securities and Exchange Commission including the most recent reports on Form 10-KSB, 8-K and 10-QSB, and amendments thereto.