Shares in US biotechnology company Discovery Labs plunged nearly 10% yesterday after the US Food and Drug Administration asked for more information before it would approve the firm’s treatment for premature infants.

Discovery’s shares closed at $6.35 dollars - well down from a level of over $9 at the beginning of August - after the FDA said the company had still not submitted sufficient information to support the approval of Surfaxin (lucinactant), a pulmonary surfactant used to help premature babies breathe unaided.

The agency said in February that the product was approvable for the prevention of respiratory distress syndrome (RDS) in these patients, but asked the company to finalise labelling and correct certain manufacturing issues. Despite the submission by the company of new data in July, the FDA still feels the dossier is incomplete.

"Based upon the thoroughness of our response letter, we are optimistic that the FDA's issues will centre on a few select items that are capable of being addressed in an as timely and efficient manner as possible," said Robert Capetola, Discovery’s chief executive, in a statement. Analysts suggested that the delay in approval might only be a matter of months, as the FDA has not asked for additional clinical data. The agency is sending its formal letter later this week.

For its part, Discovery Labs claims that Surfaxin, which is an engineered protein B fragment, has advantages over currently used surfactants derived from animals, including a reduced risk of animal-borne disease transmission or adverse immunological reactions.

Animal-derived surfactants on the market include Ross Laboratories‚ Survanta (beractant) and Curosurf (poractant alfa) from Chiesi. Meanwhile, GlaxoSmithKline sells a synthetic surfactant called Exosurf (colfosceril palmitate). Discovery believes that if it can secure approval for Surfaxin in RDS and follow-up indications, the product will address a market estimated at more than $1.5 billion.

RDS in premature infants is a breathing disorder in which the lungs of infants do not stay open due to an insufficient amount of surfactant, which is produced naturally as lungs mature.