Natural Lung Surfactants
Surfactant and Respiratory Diseases
KL4-Surfactant: Discovery's Solution for SRT

Natural Lung Surfactants Surfactants are protein/lipid compositions that are produced naturally in the lungs and are critical to the lungs’ ability to absorb oxygen. They cover the entire alveolar surface of the lungs and the terminal conducting airways leading to the alveoli. Surfactants facilitate respiration by continually modifying the surface tension of the fluid normally present within the alveoli. In the absence of sufficient surfactant, or should the surfactant degrade, the alveoli tend to collapse and the lungs do not absorb sufficient oxygen. By lowering the surface tension of the terminal conducting airways, surfactant maintains patency — keeps airways open. Loss of patency leads to compromised pulmonary function. Human surfactants primarily contain: phospholipids, the major one being dipalmitoyl phosphatidyl-choline (DPPC), and four surfactant proteins, A, B, C and D with surfactant protein B (SP-B) being essential for respiratory function. Pulmonary surfactant has additional properties, such as: Physical barrier to inhaled particles and noxious agents Enhancement of particle clearance Host defense against infection Anti-inflammatory properties

Surfactant and Respiratory Diseases There is a large body of literature associating the loss or lack of endogenous surfactant function with respiratory diseases. Clinically, all of these diseases are characterized by one or more symptoms such as, shortness of breath, chest tightening, and loss of pulmonary function as measured by FEV1, FVC, PO2, and PCO2. Studies demonstrate that SRT would be a viable pharmacological approach for patients suffering from respiratory diseases. KL4-Surfactant: Discovery's Solution for Surfactant Replacement Therapy (SRT) Our  surfactant product candidates, including Surfaxin®, are precision-engineered versions of natural human lung surfactant. The technology was invented at The Scripps Research Institute in La Jolla, California, and Discovery obtained an exclusive worldwide license from Johnson & Johnson in late 1996. Over 30 patents have been issued or are pending worldwide covering the composition of matter, formulation, manufacturing and uses, including pulmonary lavage techniques, of Discovery's proprietary precision-engineered surfactants. The precision-engineered surfactant product candidates are based on the proprietary peptide KL4 (also known as sinapultide) designed to precisely mimic the essential attributes of human surfactant protein B (SP-B), the protein in natural pulmonary surfactant known to be the most important surfactant protein for surface tension lowering and promoting oxygen exchange. Chemically, KL4 consists of 21 amino acid residues where “K” is the amino acid lysine and “L” is the amino acid leucine. KL4-surfactant is an aqueous suspension consisting of KL4, the lipids DPPC and palmitoyl-oleoyl phosphatidylglycerol (POPG), plus the fatty acid, palmitic acid (PA). The qualities of KL4-surfactant include: Consistent production of a pharmaceutical grade product in large quantities Ability to formulate as an instillate, wet aerosol or dry powder aerosol Highly active peptide-mimic of human surfactant protein B, physiologically the most important surfactant protein Demonstrable anti-inflammatory capability More resistant to proteolytic degradation and oxidation No potential transmission of animal-derived diseases Broad, global patent protection To date, hundreds of subjects have been treated with KL4-surfactant with demonstrable safety and efficacy. Additionally, a wealth of scientific and clinical literature, including those on KL4-surfactant, have been published on the pharmacology, safety and efficacy of surfactants for treating respiratory diseases. Discovery’s lead product, Surfaxin, formulated as a liquid, for Respiratory Distress Syndrome (RDS) in premature infants has received an Approvable Letter from the U.S. Food and Drug Administration (FDA). Surfaxin is also being developed for the prevention and treatment of Bronchopulmonary Dysplasia (BPD, also known as Chronic Lung Disease) in premature infants. We have recently completed a Phase 2 clinical trial using our Surfactant Lavage to address Acute Respiratory Distress Syndrome. Discovery has developed KL4-surfactant formulations for aerosol use that have the following important characteristics: Retention of pharmacological properties of a functioning surfactant for restoration of lung function and maintaining airway patency Particle size distribution necessary for deep lung deposition Delivery rate to achieve therapeutic dosing in a timely fashion for patient compliance Ability to formulate to be compatible with a variety of aerosolization technologies Ability to formulate with anti-inflammatory and antimicrobial agents To further the Company’s commitment to potentially address the range of neonatal respiratory failures in the NICU, we have completed a pilot Phase 2 clinical trial using Aerosurf™, our aerosolized SRT delivered via nCPAP. We believe that this approach represents a non-invasive surfactant-based therapy for premature infants and has the potential to reduce the need for and complications associated from mechanical ventilation, including lowering the risk of infection. We are developing aerosol formulations of SRT to address Acute Lung Injury (ALI), cystic fibrosis, and other respiratory conditions.  We believe our technology provides the potential to grow the utility of SRT into larger market opportunities.