Discovery Labs Shares Rise As Company Retains Investment Firm Jefferies to Explore Options

WARRINGTON, Pa. -- Shares of Discovery Laboratories Inc. skyrocketed Tuesday after the biotech drug maker said it retained an investment firm to explore strategies designed to improve the company's value.

Discovery Labs shares rose 34 cents, or 25 percent, to $1.68 in morning trading on the Nasdaq. Over the past 52 weeks, shares have dropped to a recent low of $1.16 from a year-ago high of $9.15.

The company hired Jefferies & Co. to explore potential alliances or partnerships, financing options, business combinations and other opportunities. Discovery Labs said it would not comment further unless there was a material development.

In the meantime, the company will focus on trying to get its lead product candidate Surfaxin approved by the Food and Drug Administration. Surfaxin is a synthetic surfactant, a substance that reduces surface tension, allowing lung tissue to absorb oxygen. The agency has already indicated the drug is approvable for premature infants who are born with little to no surfactant in their lungs.

However, the company has been plagued with delays and manufacturing difficulties. In April, the FDA further delayed a decision on Surfaxin, saying the company needed to address issues on how long the treatment can be stored before it degrades. Similar issues caused Discovery Labs to withdraw its marketing application for the treatment in Europe earlier this month.