Discovery Labs Provides Commercial Update for SURFAXIN and AFECTAIR: Method to Assess Conformance Needs Improvment

Discovery Laboratories, Inc.

, a specialty biotechnology company dedicated to advancing a new standard in respiratory critical care, today reports a commercial update for SURFAXIN^® and AFECTAIR.  The Company has initiated commercial launch activities for both products by training and deploying its newly-formed commercial and medical affairs organizations with the goal of securing hospital formulary acceptance for SURFAXIN, expected to be commercially available in the second quarter of 2013, and adoption of AFECTAIR with an anticipated product availability in December 2012. As the Company continues to make progress in its launch readiness efforts, Discovery Labs has: o Held its first national meeting to welcome and complete the training of its newly-hired field sales force, national accounts team and medical science liaison team, o Deployed its field force with the primary objective of gaining hospital formulary acceptance for SURFAXIN and adoption of AFECTAIR,  o Executed or is finalizing group purchasing organization and national account contracts, o Continues to manufacture SURFAXIN at a commercial scale as it has for several years, o Established supply chain distribution and warehouse arrangements, o Enhanced its quality control and assurance infrastructure with additional hiring of highly-qualified scientific, technical and analytical personnel and systems implementation.  During a recent review of the results and processes related to the analytical testing and quality control of SURFAXIN drug product, Discovery Labs determined that one of its analytical chemistry methods used to assess its drug product's conformance to specifications requires improvement and that an update to product specifications will be necessary.  Discovery Labs has proactively communicated its findings regarding this analytical method to the U.S. Food and Drug Administration (FDA), has initiated a plan to improve and validate its analytical method, and plans to submit updated product specifications to the FDA.  Based on the anticipated time required to improve the method, submit updated specifications, and await confirmation from the FDA, Discovery Labs anticipates that, if its plan is successful, the availability of SURFAXIN drug product will be delayed until early in the second quarter of 2013.  This is not expected to have a material adverse effect on the Company's business or financial position, in part, because the Company's commercial launch plan for SURFAXIN during this period has always been to focus initially on formulary acceptance.