Updated from 3:05 p.m. EDT

Shares of Discovery Labs ( DSCO) were off by 9.5% after the Food and Drug Administration told Discovery it needs to submit more information regarding its lung treatment drug Surfaxin. Discovery previously submitted its response letter to the FDA's approvable letter for Surfaxin for the prevention of respiratory distress syndrome in premature infants in July. Discovery said that the FDA will send a formal letter regarding matters for which the FDA may be requesting additional information. The stock finished down 67 cents to $6.35.

Avanir Pharmaceuticals ( AVN) rose 2.9% in trading after posting higher revenue. The developer of novel therapeutic products reported a loss of $8.2 million, or 8 cents a share, on revenue of $3.3 million. This compares with a year-ago loss of $6.6 million, or 8 cents a share, on revenue of $591,000. Avanir said research and development expenses rose in the third quarter to $6.5 million from $5.1 million in the same period last year. The stock closed up 9 cents to $3.19.

Shares of America Oriental Bioengineering ( AOB) traded up 20.6% after the Chinese pharmaceutical distributor said it earned $3.4 million, or 8 cents a share, compared with $1.5 million, or 5 cents a share, a year ago. Revenue for the second quarter increased 98.2% to $11.9 million from $6 million last year. "Through the combination of new product initiatives and expanded sales and marketing activities and a strong balance sheet, we believe we are well-positioned to continue to generate strong organic growth and to selectively pursue accretive acquisitions," said CEO Tony (Shujun) Liu. The stock closed up 47 cents to $2.75.

Shares of Kosan Biosciences ( KOSN) were off more then 17% after the company said it and the National Cancer Institute would delay new enrollment in a trial of an anticancer drug after five patients showed EKG changes without clinically significant consequences after infusion of the experimental drug 17-AAG. With the new amended protocols, clinical investigators will obtain electrocardiograms prior to treatment and will also exclude patients with certain histories of cardiovascular disease and the use of certain medications. Patients who are currently receiving 17-AAG or DMAG may continue to receive treatment but further enrollment will be delayed until the new protocols are modified. The stock finished down $1.51 to $7.35.

Other health stocks in motion included Pfizer ( PFE - Get Report), which closed up 4 cents to $26.20; Elan ( ELN), up 11 cents to $8.24; Cryolife ( CRY - Get Report), up 60 cents to $7.25; and Bradley Pharmaceuticals ( BDY), up 70 cents to $11.90.