Discovery Laboratories, Inc. (NASDAQ:DSCO) Loses Some Ground on the Charts

[[tagnumber 0]][[tagnumber 1]]The stock of Discovery Laboratories, Inc. (NASDAQ:DSCO) has been on a downtrend for more than four weeks now and the latest 10–Q filing has failed to change that. And neither have the company‘s most recent press releases regarding the results of its AEROSURF phase 2a clinical trial. [[tagnumber 2]]When we draw the line, we see a 35% flop since Apr. 20.[[tagnumber 3]] [[tagnumber 0]]Discovery Laboratories, Inc. is a biotech focused on developing medical solutions for treating respiratory distress syndrome (RDS) – a breathing disorder that affects prematurely born infants. The company is currently in the process of carrying out a clinical trial for its synthetic KL4 surfactant. Upon successful completion of the trial, Discovery‘s drug candidate will be used to offset the deficiency of naturally–produced surfactant in infants‘ lungs and alveoli.[[tagnumber 3]] [[tagnumber 0]][[tagnumber 7]]DSCO closed the latest trading session at $0.8337 per share, up 0.45% from the preceding day. The bare minimum in terms of improvement, especially when we take into account the stock‘s $1.30+ quotes prior to the 10–Q report. Having come out on May 11, the latter showed revenue of a modest $191 thousand, which, when you factor in all accompanying expenses, morphs into a net loss of more than $12 million, the biggest for the last four quarters on record. The company‘s average net loss for the last three calendar years amounts to a whopping $37 million. Considering that the 2a phase of the AEROSURF clinical trial will not be completed until Q4, the prospects of a positive net result for 2015 appear to be gloomy at best.[[tagnumber 3]] [[tagnumber 0]]On the flip side, Discovery‘s cash reserves of $35 million are big enough to more than repay the company‘s total long–term debt (if necessary), thus guaranteeing the smooth development of the current trial phase throughout 2015. The main challenge here is that cash is melting away at a steady pace. For the biotech had twice as much cash last June, which makes for a burn rate of some $11 million per quarter. Come 2016, DSCO‘s management will have to think about raising additional capital in order to carry on with phases 3 and 4, of course based on a positive end result of the trial.[[tagnumber 3]]