Step 1: Alexander Fleming, while working on Staphylococci, observed that a mold, Penicillium notatum, inhibited bacterial growth, leading to the discovery of penicillin. Assertion (A) is true.
Step 2: However, Fleming did not commercially extract penicillin or establish its full potential. This was done later by Howard Florey and Ernst Chain, who developed penicillin into a usable drug. Reason (R) is false.
Step 3: Since (A) is true and (R) is false, the correct option is (C).
Thus, the correct answer is (C).