Aradigm Announces First Quarter 2008 Financial Results

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May 14, 2008

Aradigm Announces First Quarter 2008 Financial Results

Aradigm Announces First Quarter 2008 Financial Results

HAYWARD, Calif., May 14, 2008 (BUSINESS WIRE) -- Aradigm Corporation (OTCBB:ARDM) (the "Company") today announced financial results for the first quarter ended March 31, 2008.

The Company reported no revenues for the three months ended March 31, 2008, compared with revenues of $416,000 for the same period in 2007. The decrease in revenue is primarily due to the Company's focus on proprietary development programs in the first quarter of 2008, versus partnered programs in the prior year.

Total operating expenses for the first quarter of 2008 were $5.9 million, compared with total operating expenses of $5.5 million for the first quarter 2007. The increase in operating expenses is primarily related to increased research and development activity associated with the Company's lead product candidates, ARD-3100 and ARD-3150, inhaled liposomal ciprofloxacin for the treatment of cystic fibrosis and bronchiectasis, respectively. The net loss for the first quarter of 2008 was $5.6 million, or $0.10 per share, compared with a net loss of $4.6 million, or $0.11 per share, for the same period in 2007.

As of March 31, 2008, cash, cash equivalents and short-term investments totaled $34.3 million. This included advance payments received for partnered collaborations of $440,000 during the first quarter of 2008. Revenue recognition related to these payments will be deferred until the appropriate accounting criteria for revenue recognition are met.

Recent Highlights

-- In April 2008, initiated bridging clinical trial in conjunction with our agreement with Lung Rx, Inc., a wholly-owned subsidiary of United Therapeutics Corporation, to evaluate lung distribution, pharmacokinetics and safety of inhaled treprostinil delivered by the AERx Essence® system versus delivery with the Nebu-Tec OPTINEB(1)-ir nebulizer. Lung Rx, Inc. used the latter device in the recently concluded Phase 3 TRIUMPH (TReprostinil Sodium Inhalation Used in the Management of Pulmonary Arterial Hypertension) study of inhaled treprostinil in patients with Pulmonary Arterial Hypertension (PAH).

-- Announced that a review of clinical data by Novo Nordisk revealed no occurrence of primary lung cancer in patients inhaling insulin using the AERx® insulin Diabetes Management System (iDMS); the review included 2,307 patients treated with AERx iDMS and 1,218 patients treated with comparator treatments.

"We are excited about our clinical programs for cystic fibrosis (CF) and, in partnership with Lung Rx, PAH treatment in which we are testing innovative solutions for these patients with the view to substantially improve their quality of life. We expect to report on the Phase 2a cystic fibrosis trial results this quarter. After the current confirmatory studies of treprostinil with the AERx Essence inhaler, Lung Rx and Aradigm will be meeting with the regulatory authorities in the following months to reach agreement on the path to approval of this new tool for PAH treatment," said Igor Gonda, Ph.D., the Company's President and CEO.

About Aradigm

Aradigm is an emerging specialty pharmaceutical company focused on the development and commercialization of a portfolio of drugs delivered by inhalation for the treatment and prevention of severe respiratory diseases by pulmonologists. Current activities include partnered and self-initiated development programs addressing the treatment of cystic fibrosis, bronchiectasis, pulmonary hypertension, inhalation anthrax infections and smoking cessation. More information about Aradigm can be found at

Except for the historical information contained herein, this news release contains forward-looking statements that involve risk and uncertainties, including the potential for new products, the execution of the Company's strategy and the timing and successful completion of studies and clinical trials, as well as the other risks detailed from time to time in Aradigm Corporation's Securities and Exchange Commission (SEC) filings, including the Company's Annual Report on Form 10-K, and quarterly reports on Form 10-Q.

Aradigm, AERx and AERx Essence are registered trademarks and the Aradigm Logo is a trademark of Aradigm Corporation. (1)Other names and brands may be claimed as the property of others.

                         ARADIGM CORPORATION
             (In thousands, except per share information)

                                                    Three months ended
                                                        March 31,
                                                      2008      2007
                                                    --------- --------

Revenues                                             $    --  $   416
                                                    --------- --------
Operating expenses:
   Research and development                            4,329    3,407
   General and administrative                          1,549    1,987
   Restructuring and lease exit activities                22       98
                                                    --------- --------
   Total operating expenses                            5,900    5,492
                                                    --------- --------
Loss from operations                                  (5,900)  (5,076)

Interest income                                          361      637
Interest expense                                         (98)     (96)
Other expense                                             (1)     (31)
                                                    --------- --------
Net loss                                             $(5,638) $(4,566)
                                                    ========= ========
Basic and diluted net loss per common share          $ (0.10) $ (0.11)
                                                    ========= ========
Shares used in computing basic and diluted net loss
 per common share(a)                                  54,007   40,820
                                                    ========= ========

(a)All share and per share data reflects a 1 for 5 reverse stock split
 effective January 4, 2006 and approved by Aradigm shareholders in
 January 2006.

                         ARADIGM CORPORATION
                       CONDENSED BALANCE SHEETS
                            (In thousands)

                                               March 31,  December 31,
                                                 2008         2007
                                              (Unaudited)     (a)
Current assets:
 Cash and cash equivalents                     $  30,702    $  29,964
 Short-term investments                            3,591       10,546
 Receivables                                          77          500
 Restricted cash                                     155          152
 Prepaid and other current assets                    868          971
                                              ----------- ------------
   Total current assets                           35,393       42,133
 Property and equipment, net                       4,007        3,223
 Notes receivable from officers and employees         33           33
 Restricted cash                                     153          153
 Other assets                                        265          271
                                              ----------- ------------
   Total assets                                $  39,851    $  45,813
                                              =========== ============
Current liabilities:
 Accounts payable                              $   1,702    $   1,658
 Accrued clinical and cost of other studies          411          789
 Accrued compensation                              1,085        1,252
 Deferred revenue                                    930          880
 Facility lease exit obligation                      376          376
 Other accrued liabilities                           513          584
                                              ----------- ------------
   Total current liabilities                       5,017        5,539
 Deferred rent                                       264          283
 Facility lease exit obligation                    1,278        1,373
 Other non-current liabilities                       245          248
 Note payable and accrued interest to related
  party                                            8,167        8,071
                                              ----------- ------------
   Total liabilities                              14,971       15,514
                                              ----------- ------------
 Commitments and contingencies
 Shareholders' equity:
 Preferred stock, 2,950,000 shares
  authorized, none outstanding
 Common stock, no par value; authorized
  shares: 100,000,000 at March 31, 2008 and
  December 31, 2007; issued and outstanding
  shares: 54,776,455 at March 31, 2008;
  54,772,705 at December 31, 2007                342,568      342,355
 Accumulated other comprehensive income               16           10
 Accumulated deficit                            (317,704)    (312,066)
                                              ----------- ------------
   Total shareholders' equity                     24,880       30,299
                                              ----------- ------------
   Total liabilities and shareholders' equity  $  39,851    $  45,813
                                              =========== ============

(a)The balance sheet at December 31, 2007 has been derived from the
 audited financial statements at that date.

SOURCE: Aradigm Corporation

Investor Relations:
Aradigm, 510-265-8850/9370
Lippert/Heilshorn & Associates
Don Markley or Bruce Voss, 310-691-7100

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