Five Months After Approval, DSCO Needs a Partnership; Gains From Upgrade Likely Temporary

Discovery Laboratories (NASDAQ:DSCO) has moved up 28% on trading momentum following a Buy rating on the 24th. The company’s lead product, Surfaxin, was approved by the FDA in March for the prevention of Respiratory Distress Syndrome (RDS) in infants. Now that the company has an approved product ready for commercialization, investors will be looking for evidence of revenue growth. The company guides for a product launch in the fourth quarter of 2012 for Surfaxin as well as its Afectair ventilator medication device. A commercialization partner for the products, however, has yet to be found. In its 2Q earnings report, management stated that they are actively seeking, and in discussion with, potential collaborators, which will help secure DSCO’s future through milestone and royalty revenue. The company raised $42MM through a share offering in March and, according to management, hopes to avoid further shareholder dilution. (more…)