Our proprietary capillary aerosol generator (CAG) produces aerosolized KL₄ surfactant that can be used with our novel ventilator circuit/patient interface connectors (AFECTAIR^®). The CAG technology has the potential to enable upper respiratory, airway, or alveolar delivery of aerosolized medications for either local or system-wide pulmonary applications. The CAG initially has been designed to produce high volume, low-velocity aerosolized KL₄ surfactant for intra-pulmonary delivery for the prevention and/or treatment of RDS in premature infants. We believe that the CAG also has potential application in other areas of respiratory critical care.

We hold worldwide, exclusive licenses from Philip Morris USA, Inc. (PMUSA) and a former affiliate of PMUSA, Philip Morris Products, S.A., to the CAG technology for use with pulmonary surfactants, alone or in combination with any other pharmaceutical compound, for all respiratory disorders and conditions. In addition, we hold exclusive rights in the United States to the CAG technology for use with certain other (non-surfactant) drugs to treat a range of pediatric and adult respiratory disorders.

Our initial focus has been to create a robust, low-velocity surfactant aerosol for deep lung delivery. By Introducing the KL₄ surfactant drug formulation through the heated capillary of the CAG, the surfactant is converted to a vapor state. Upon exiting the capillary, the vapor stream quickly cools and slows in velocity, yielding a dense, surfactant aerosol with a defined particle size.

With our CAG technology, we believe that we may precisely control and adjust the particle size of the aerosol through device modifications and drug formulation changes. In addition, because KL₄ surfactant has been designed to functionally coat the entire surface area of the distal respiratory tree, we believe that aerosolized KL₄ surfactant may be used in combination with other drugs (small or large molecules) to potentially improve delivery and enhance the desired therapeutic effect of the ‘payload’ drug.

In a series of studies using our prototype CAG to aerosolize KL₄ surfactant, we have generated a surfactant aerosol that:

• Retains the surfactant chemical composition of our liquid KL₄ surfactant
• Retains the surface-tension lowering properties of a functioning surfactant
• Has a drug particle size believed to be suitable for deposition in the most distal portion of the lungs
• Is produced at rates that can deliver therapeutic dosages in a clinically reasonable time period, with a consistent, reproducible output rate.

In vitro studies comparing our CAG to commercially available aerosol devices indicate that the CAG generated as much as a 10-fold higher aerosol output rate compared with the other devices studied (Discovery Labs’ data on file). In vivo studies demonstrating the efficacy of aerosolized KL₄ surfactant in the well-established preterm lamb model of RDS has been presented at several international medical conferences.