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Aradigm Announces Third Quarter 2018 Financial Results

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Aradigm Corporation (NASDAQ:ARDM) (the "Company") today
announced financial results for the third quarter and nine months ended
September 30, 2018.

Third Quarter 2018 Financial Results

The Company recorded $282,000 in revenue in the third quarter of 2018
compared with $2.7 million in revenue in the third quarter of 2017. The
Company recognized $170,000 in contract revenue - related party, $52,000
in government contract revenue and $60,000 in government grant revenue
for the third quarter of 2018, as compared to $2.7 million in contract
revenue - related party, $6,000 in government contract revenue and
$13,000 in government grant revenue for the third quarter of 2017.

Total operating expenses for the third quarter of 2018 were $2.8
million, compared with total operating expenses of $5.7 million for the
third quarter of 2017. The decrease in research and development expenses
of $2.0 million was due to a lower regulatory spend in support of
Linhaliq during the ongoing EMA review process of the validated MAA
submission and our ongoing interaction with the FDA to address the
issues raised in their complete response letter dated 26 January 2018.
The decrease in research and development expenses for the quarter was
also due to lower employee related expenses from a reduction in
headcount. The decrease in general and administrative expenses of $0.9
million was primarily related to lower legal expenses, lower consulting
expenses and lower employee-related expenses due to a reduction in
headcount.

Net loss for the third quarter of 2018 was $3.6 million or $(0.24) per
share, compared with a net loss of $3.9 million or $(0.26) per share in
the third quarter of 2017. For the quarter ended September 30, 2018, the
net loss decreased by $0.3 million primarily from a decrease in
operating expenses of $2.9 million offset by a decrease in revenue of
$2.4 million and an increase of $0.2 million in other interest expense.

Liquidity and Capital Resources and Related Matters

As of September 30, 2018, the Company reported cash and cash equivalents
of $2.9 million. During the second and third quarters of 2018 Aradigm
raised an aggregate of approximately $7.0 million through the issuance
and sale of promissory notes. In October 2018, Aradigm entered into an
additional note purchase agreement for the issuance and sale of
approximately $4 million in promissory notes, of which $2.0 million of
promissory notes were issued and sold on October 25, 2018. Subject to
the satisfaction of certain conditions, the Company anticipates that an
additional closing for the issuance and sale of $2.0 million of
promissory notes will occur prior to December 31, 2018. The Company
believes that the $2.0 million received in October along with the cash
balance of $2.9 million will be sufficient to fund operations through
the fourth 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.
However, no assurance can be given that we will be successful in raising
such additional capital on favorable terms or at all. Not achieving such
funding on a timely basis would materially harm our business, financial
condition and results of operations and could require us to delay or
reduce the scope of all or a portion of our development programs,
dispose of our assets or technology or to cease operations entirely.

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 US. 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 (now named Apulmiq for the FDA), an
investigational proprietary formulation of ciprofloxacin for inhalation
for the treatment of NCFBE and submitted a New Drug Application (NDA) to
the FDA on July 27, 2017 for this indication. Our goal is to
commercialize Linhaliq in as many countries as possible to allow
patients suffering from NCFBE to receive the benefits of Linhaliq.
Patients, patient advocacy groups and key opinion leaders have expressed
support for regulatory approval of Linhaliq as we work towards this
goal. However, in January 2018, Aradigm received a Complete Response
Letter (CRL) from the FDA regarding the NDA. We are currently working on
addressing all issues raised in the CRL with the FDA. We are committed
to continuing to work on obtaining regulatory approval of Apulmiq in the
US. On March 8, 2018 Aradigm submitted a MAA to the EMA for the same
indication. The MAA is validated and under review according to standard
timelines. 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 www.aradigm.com.

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, the risk that we
may not be able to raise additional capital on acceptable terms or at
all, 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. Aplumiq and Linhaliq are registered trademarks of Grifols,
S.A.

 

ARADIGM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS

(In thousands, except per share data)

(Unaudited)

 
    Three months ended

September 30,

  Nine months ended

September 30,

2018   2017 2018   2017
 
Revenues $ 282     $ 2,728   $ 2,011     $ 12,096  
Operating expenses:
Research and development 1,545 3,543 6,715 10,111
General and administrative 1,246 2,133 4,348 5,722
           
Total operating expenses   2,791       5,676     11,063       15,833  
 
Loss from operations (2,509 ) (2,948 ) (9,052 ) (3,737 )
 
Interest income 7 23 27 73
Interest expense (1,130 ) (970 ) (3,172 ) (2,882 )
Other income (expense) (4 ) 9 (43 ) 17
           
Net loss and comprehensive loss $ (3,636 )   $ (3,886 ) $ (12,240 )   $ (6,529 )
Basic and diluted net loss per common share $ (0.24 )   $ 0.26   $ (0.81 )   $ (0.44 )
Shares used in computing basic and diluted net loss per common share   15,186       14,860     15,135       14,836  
 
 

ARADIGM CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 
    September 30,

2018

  December 31,

2017

(Unaudited)   *
ASSETS
Current assets:
Cash and cash equivalents $ 2,946 $ 7,095
Receivables 118 200
Prepaid and other current assets 412 389
     
Total current assets 3,476 7,684
Property and equipment, net 190 289
Other assets 92 92
     
Total assets $ 3,758     $ 8,065  
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable 323 903
Accrued clinical and cost of other studies 14 274
Accrued compensation 761 1,643
Deferred revenue – related party, current 415 1,900
Deferred revenue – other 209 183
Other accrued liabilities   1,099       563  
 
Total current liabilities 2,821 5,466
Deferred rent 57 32
Deferred revenue – related party, non-current 33 90
Debt – non-current, net of discount 1,003 -
Debt – related party, non-current, net of discount 5,905 -
Convertible debt – non-current, net of discount 2,615 2,382
Convertible debt – related party, non-current, net of discount   14,786       12,626  
Total liabilities   27,220       20,596  
Shareholders' deficit (23,462 ) (12,531 )
     
Total liabilities and shareholders' deficit $ 3,758     $ 8,065  
 
 
* The balance sheet at December 31, 2017 has been derived from the
audited financial statements at that date.
 

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