* FDA declines to approve lung drug for infants

* Says FDA has questions on drug's stability test

* Says starts Q2 with $20 million in cash

* Says has 2 committed equity financing facilities

* Shares sink 61 pct (Adds details from conference call, updates share movement)

By Anand Basu

BANGALORE, April 20 (Reuters) - Discovery Laboratories Inc (DSCO.O: Quote, Profile, Research) said U.S. health regulators declined to approve the marketing application for its drug to treat respiratory illness in infants, sending its shares down as much as 61 percent to a lifetime low.

The delay is a further setback for the company, which had failed to win marketing approval for the drug Surfaxin in several previous attempts since 2004, and it was banking on the drug to bail itself out of "going concern" doubts raised by its auditors.

"They do need cash, and I think the floor price may be too low to draw down on any credit facility now. It will be harder to obtain any exclusive U.S. partnership for this drug," Kimberly Lee, analyst at Wedbush PacGrow LifeSciences, told Reuters by phone.