FDA Awards Orphan Products Development Grant To Discovery Laboratories, Inc.

DOYLESTOWN, Pa.--(BW HealthWire)--Oct. 12, 1998--

Agency Funds Clinical Investigation of Novel Treatment

for Life-threatening Illness of Newborn Infants

Discovery Laboratories, Inc. (NASDAQ: DSCO) announced today that the FDA Office of Orphan Products Development has awarded a renewable Orphan Products Development Grant that will range from $194,390 for the first year to $583,170 over three years, contingent upon meeting certain goals. The grant will be used to finance a clinical investigation of the company's product SurfaxinTM as a treatment for meconium aspiration syndrome (MAS). The multicenter, randomized, controlled, Phase 2 clinical trial of Discovery's Acute Therapeutics division will compare the effectiveness and safety of Surfaxin (lucinactant, formerly known as KL4-surfactant) to standard of care for treatment of MAS in 30 full-term newborn infants.

"We are extremely pleased to receive this support from the FDA, which recognizes the critical need to find a treatment for MAS," said Discovery's medical monitor, Dr. Thomas Wiswell. "We believe that Surfaxin shows great promise for saving the lives of many newborns. We will aggressively pursue our clinical trials and hope to submit a new drug application to the Agency as soon as possible."

Meconium aspiration syndrome is a severe disease of newborn infants caused by contaminated amniotic fluid taken into the lungs by the fetus. This contaminated fluid inflames the respiratory system and inactivates naturally occurring surfactants, a liquid substance that lines the lungs and helps to keep them expanded. As a result, newborns suffering from MAS are born with severe respiratory problems.

Currently, there is no specific therapy for MAS, which affects more than 25,000 infants in the U.S. annually, with as many as 1,000 dying from the condition. Current rescue procedures for infants suffering from MAS are costly and invasive, and are associated with a high degree of morbidity.

Investigators in the Phase 2 clinical trial will insert an endotracheal tube into the lungs of patients through which meconium and other contaminants are washed out and replaced with Surfaxin. This helps the lungs to reopen and improves oxygenation. This unique lavage or "lung wash" technique with dilute Surfaxin has produced dramatic results in animal studies. In human newborns, Surfaxin may potentially reduce the need for prolonged mechanical ventilation and rescue therapies that are associated with high morbidity. Following completion of the Phase 2 clinical trial, Discovery Laboratories will actively pursue additional studies.

Discovery is a bio-pharmaceutical company whose mission is to develop and commercialize medically novel therapeutics for critical care. Presently, Discovery is developing proprietary pharmaceuticals to treat direct acute respiratory distress syndrome (ARDS), meconium aspiration syndrome (MAS), idiopathic respiratory distress syndrome (IRDS) and 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.