Market Overview

Aradigm Announces First Quarter 2018 Financial Results


Aradigm Corporation (NASDAQ:ARDM) (the "Company") today
announced financial results for the first quarter and three months ended
March 31, 2018.

First Quarter 2018 Financial Results

The Company recorded $1.5 million in revenue in the first quarter of
2018 compared with $1.7 million in revenue in the first quarter of 2017.
The Company recognized $1.3 million in contract revenue – related party,
$29,000 in government contract revenue and $129,000 in government grant
revenue for the first quarter of 2018, as compared to $1.6 million in
contract revenue – related party, $39,000 in government contract revenue
and $31,000 in government grant revenue for the first quarter of 2017.

Total operating expenses for the first quarter of 2018 were $5.3
million, compared with total operating expenses of $4.5 million for the
first quarter of 2017. The increase in expenses was related to the FDA
Advisory Committee Meeting. General and administrative costs were
unchanged. Research and development expenses increased $800,000. In the
first quarter of 2018, our research and development expenses were higher
due to higher consulting costs related to the FDA meeting and the
submission fees for our MAA application as well as severance expenses.
This increase in expenses was offset by lower costs for clinical expense
and lower employee related expenses due to a reduction in headcount. The
receipt of a tax incentive in Australia offset a portion of the research
and development expenses in the first quarter of 2017.

Net loss for the first quarter of 2018 was $4.8 million or $0.32 per
share, compared with a net loss of $3.7 million or $0.25 per share in
the first quarter of 2017. The increase in net loss resulted primarily
from an increase in operating expenses of $800,000 related to the FDA
meeting in January and the submission of the MAA to EMA in March for
approval of Linhaliq. A decrease in revenue of $200,000 and an increase
in interest expense of $100,000 related to the convertible notes was

Liquidity and Capital Resources and Related Matters

As of March 31, 2018, the Company's cash and cash equivalents totaled
$1.4 million.

In January, Aradigm received a Complete Response Letter (CRL) from the
FDA regarding the New Drug Application (NDA) for Linhaliq as a treatment
for non-cystic fibrosis bronchiectasis (NCFBE) patients with chronic
lung infections with Pseudomonas aeruginosa (P. aeruginosa).

The CRL states that the FDA has determined that it cannot approve the
NDA in its present form and provides specific reasons for this action
along with recommendations needed for resubmission; the areas of concern
include clinical data, human factor validation study and product quality.

The Aradigm Board of Directors approved temporary measures on February
9, 2018 intended to preserve the Company's cash resources.

In April Aradigm raised $2.0 million through the issuance of bridge
notes and obtained commitments for additional monthly funding through
September of 2018 totaling $5 million. This $7.0 million along with the
cash balance of $1.4 million will be sufficient to fund operations
through the third quarter of 2018.

Aradigm is pursuing potential alternatives to resolve our cash position
in the short term as well as developing strategic options that would
provide for our long term viability. We feel it is very important to
bring Linhaliq to commercialization in as many geographies as possible
to allow patients suffering from non-cystic fibrosis bronchiectasis
(NCFBE) to receive the benefits of Linhaliq. Patients, patient advocacy
groups and key opinion leaders have expressed support as we work towards
this goal. The MAA was filed in early March and validated for review in
late March and that is the first step in achieving regulatory approval
in Europe.

About Non-Cystic Fibrosis Bronchiectasis

NCFBE is a severe, chronic and rare disease characterized by abnormal
dilatation of the bronchi and bronchioles, frequently associated with
chronic lung infections. It is often a consequence of a vicious cycle of
inflammation, recurrent lung infections, and bronchial wall damage.
NCFBE represents an unmet medical need with high morbidity and mortality
that affects more than 150,000 people in the U.S. and over 200,000
people in Europe. There is currently no drug approved for the treatment
of this condition.

About Aradigm

Aradigm is an emerging specialty pharmaceutical company focused on the
development and commercialization of drugs for the prevention and
treatment of severe respiratory diseases. Aradigm has completed two
Phase 3 trials with Linhaliq, an investigational proprietary formulation
of ciprofloxacin for inhalation for the treatment of non-cystic fibrosis
BE and submitted an NDA to the FDA for this indication. Aradigm's
inhaled ciprofloxacin formulations include Linhaliq and Lipoquin which
are also product candidates for treatment of patients with cystic
fibrosis and non-tuberculous mycobacteria, and for the prevention and
treatment of high threat and bioterrorism infections, such as inhaled
tularemia, pneumonic plague, melioidosis, Q fever and inhaled anthrax.

More information about Aradigm can be found at

Forward-Looking Statements

Except for the historical information contained herein, this news
release contains forward-looking statements that involve risk and
uncertainties, including the risk that Linhaliq may not receive
regulatory approval or be successfully commercialized, as well as the
other risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission (SEC), including the Company's Annual
Report on Form 10-K for the year ended December 31, 2017 filed with the
SEC on March 23, 2018, and the Company's Quarterly Reports on Form 10-Q.

Aradigm and the Aradigm Logo are registered trademarks of Aradigm
Corporation. Linhaliq is a registered trademark of Grifols, S.A.

(In thousands, except per share data)
  Three months ended
March 31,
2018   2017
Revenues $ 1,473     $ 1,693  
Operating expenses:
Research and development 3,568 2,774
General and administrative 1,714 1,678
Total operating expenses   5,282       4,452  
Loss from operations (3,809 ) (2,759 )
Interest income 15 28
Interest expense (1,004 ) (953 )
Other income (expense), net (4 ) 6
Net loss and comprehensive loss $ (4,802 )   $ (3,678 )
Basic and diluted net loss per common share $ (0.32 )   $ (0.25 )
Shares used in computing basic and diluted net loss per common share   15,049       14,800  
(In thousands)
  March 31,   December 31,
2018 2017
(Unaudited)   *
Current assets:
Cash and cash equivalents $ 1,395 $ 7,095
Restricted cash - -
Receivables 183 200
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