WARRINGTON, Pa. ( TheStreet) -- Discovery Laboratories ( DSCO) shares jumped on a massive spike in volume Wednesday after the company reached an agreement with the Food and Drug Administration that clears a path for its experimental lung drug.

In a press release, Discovery Labs said that during a Tuesday meeting with the FDA over the company's Surfaxin drug, which is aimed at treating respiratory distress syndrome in premature infants, the FDA said a proposed program to optimize and validate the quality control and stability release test is "reasonable." Discovery Labs also received guidance from the FDA on its proposed limited clinical trial design.

Surfaxin has faced long delays due to the FDA regulatory process. During a Phase 3 clinical trial for Surfaxin, Discovery Labs employed an array of quality control tests, but did not employ the Biological Activity Test, or BAT, to evaluate biological activity of the Surfaxin clinical drug product.

Tuesday's meeting focused on Discovery Labs' plans regarding optimization and final method validation of its BAT and a proposed limited Surfaxin clinical trial design, which would simultaneously employ the newly-optimized BAT, the company said.

The final clinical trial design will be subject to FDA review following submission of a formal protocol, the company said. Discovery Labs expects to finalize a protocol and anticipates submitting it to the FDA in mid-fourth quarter of 2009.

Discovery Labs shares were rallying sharply higher on big volume, rising 34 cents, or 30.6%, to $1.45. Earlier, the stock touched an intraday high of $1.69. More than 62.8 million shares changed hands by 1:45 p.m. EDT Wednesday, compared to the stock's 50-day average daily volume of 6.1 million, according to the Nasdaq's Web site.

Discovery Labs has a 115.2 million-share float with a short interest float of 10.8% as of Sept. 10, according to Yahoo! Finance. Only 5.5% of the company's shares are held by insiders with another 36.7% owned by institutions.

Investor posts on Internet message boards Wednesday argued the stock could continue a steady climb above $3 a share leading up to FDA approval of Surfaxin. Others noted that Discovery Labs has had ample time to work with the FDA and that it should be preparing final results now, not by the mid-fourth quarter.

Other traders argued that Wednesday's action was short covering, not real buying, and that real buyers may not come until results on Surfaxin are released.

Read more about today's high-volume stocks like Versar and TerreStar in earlier "Pump Up the Volume" posts.

-- Written by Robert Holmes in New York.