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Aradigm Announces Second Quarter 2008 Financial Results

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Aug 08, 2008

Aradigm Announces Second Quarter 2008 Financial Results

Aradigm Announces Second Quarter 2008 Financial ResultsHAYWARD, Calif.--(BUSINESS WIRE)--Aug. 8, 2008--Aradigm Corporation (OTCBB:ARDM) (the "Company") today announced financial results for the second quarter and six months ended June 30, 2008.

Revenue for the second quarter was $54,000, compared with revenue of $297,000 for the second quarter of 2007. The revenue in the second quarter of 2008 was the result of expense reimbursement from a third party for the evaluation of the delivery of certain compounds using the AERx® delivery system. In addition, during the second quarter the Company received a contract payment of $242,000 from its collaboration with LungRx, which the Company has classified as deferred revenue. The Company will recognize this amount as revenue when the appropriate accounting criteria for revenue recognition are met in future quarters.

Total operating expenses for the second quarter of 2008 were $7.2 million, compared with total operating expenses of $6.5 million for the second 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 (inhaled liposomal ciprofloxacin for the treatment of cystic fibrosis) and ARD-3150 (inhaled liposomal ciprofloxacin for the treatment of bronchiectasis). The Company's net loss for the second quarter of 2008 was $7.1 million, or $0.13 per share, compared with a net loss of $5.5 million, or $0.10 per share, for the same period in 2007.

As of June 30, 2008, cash, cash equivalents and short-term investments totaled $27.4 million.

    Recent Highlights

    --  Initiated a multicenter Phase 2 clinical trial of the
        Company's inhaled liposomal ciprofloxacin in adult patients
        with non-cystic fibrosis bronchiectasis. The study is being
        conducted in leading bronchiectasis centers in the United
        Kingdom. Bronchiectasis is a chronic necrotizing infection of
        the bronchi and bronchioles that is associated with abnormal
        dilatation of the airways. It is frequently observed in
        patients with cystic fibrosis (CF). However, it is a condition
        also affecting approximately 110,000 non-cystic fibrosis
        people in the United States, and results from a cycle of
        inflammation, recurrent infection, and bronchial wall damage.
        There is currently no drug specifically approved for the
        treatment of this condition in the U.S. The Company was
        granted orphan drug designation for the treatment of
        bronchiectasis with inhaled liposomal ciprofloxacin.

    --  Announced positive results from an open-label, two week
        efficacy and safety study of the Company's once daily inhaled
        liposomal ciprofloxacin in patients with CF. The study,
        conducted at leading CF centers in Australia and New Zealand,
        enrolled a total of 22 patients. The primary efficacy endpoint
        in this Phase 2 study was the change from baseline in the
        sputum Pseudomonas Aeruginosa colony forming units (CFU), an
        objective measure of the reduction in pulmonary bacterial
        load. Data analysis in 21 patients who completed the study
        demonstrated that the Pseudomonas CFU decreased by a mean 1.43
        log over the 14-day treatment period (p less than 0.0001).
        Evaluation one week after study treatment was discontinued
        showed that the Pseudomonas bacterial density in the lung was
        still reduced by 1.02 log CFU from the baseline without
        additional antibiotic use. Pulmonary function testing as
        measured by the forced expiratory volume in one second (FEV 1)
        showed a significant mean increase of 6.86% from baseline
        after 14 days of treatment (p=0.04). The study drug was well
        tolerated, and there were no serious adverse events reported
        during the trial.

    --  Initiated a bridging clinical trial in conjunction with its
        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(R) 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).

"In the second quarter and recent weeks we have made significant progress in our clinical programs in cystic fibrosis and bronchiectasis, and in our collaboration with LungRx on Pulmonary Arterial Hypertension," said Igor Gonda, Ph.D., the Company's President and CEO. "In particular, we are very pleased with the Phase 2 data for cystic fibrosis. The trial results will enable Aradigm to advance the development of the liposomal ciprofloxacin product for cystic fibrosis in the U.S. and other geographical locations, as well as pursue our strategy for other disease indications, including bronchiectasis. While the Company has a number of additional promising opportunities, in order to preserve cash we are currently focusing on those activities that are most likely to generate value for our shareholders in the near-to-medium term. Simultaneously, we continue to explore financing alternatives, including partnering and the sale or out-licensing of our non-strategic assets. We have also applied for grants from government and non-government organizations."

About Aradigm

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

Aradigm, the Aradigm Logo, AERx and AERx Essence are registered trademarks of Aradigm Corporation.

(1) Other names and brands may be claimed as the property of others.

    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 advancement of product development, the ability to obtain financing, sell assets, secure grants and enter into partnering arrangements and the ability to successfully manage and preserve cash, 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 CORPORATION
                  CONDENSED STATEMENTS OF OPERATIONS
                (In thousands, except per share data)
                             (Unaudited)

                                Three months ended  Six months ended
                                     June 30,           June 30,
                                ------------------ -------------------
                                  2008      2007     2008      2007

Revenues                         $    54  $   297  $     54  $    713
                                ------------------ -------------------
Operating expenses:
Research and development           5,364    3,841     9,693     7,248
General and administrative         1,825    2,628     3,374     4,615
Restructuring and lease exit
 activities                           20        -        42        98

                                ------------------ -------------------
   Total operating expenses        7,209    6,469    13,109    11,961
                                ------------------ -------------------

Loss from operations              (7,155)  (6,172)  (13,055)  (11,248)

Interest income                      202      699       563     1,336
Interest expense                    (100)     (96)     (198)     (193)
Other income, net                      1       46         -        16

                                ------------------ -------------------
Net loss                         $(7,052) $(5,523) $(12,690) $(10,089)
                                ================== ===================
Basic and diluted net loss per
 common share                    $ (0.13) $ (0.10) $  (0.23) $  (0.21)
                                ================== ===================

Shares used in computing basic
 and diluted net loss per
 common share                     54,159   53,942    54,083    47,417
                                ================== ===================

                         ARADIGM CORPORATION
                       CONDENSED BALANCE SHEETS
                            (In thousands)

                                               June 30,   December 31,
                                                 2008         2007
                                              (Unaudited)     (a)
                                              ------------------------
                   ASSETS
Current assets:
   Cash and cash equivalents                      $26,200      $29,964
   Short-term investments                           1,231       10,546
   Receivables                                        218          500
   Restricted cash                                    232          152
   Prepaid and other current assets                   512          971

                                              ------------------------
   Total current assets                            28,393       42,133
Property and equipment, net                         5,219        3,223
Notes receivable from officers and employees           33           33
Restricted cash                                        79          153
Other assets                                          259          271

                                              ------------------------
        Total assets                              $33,983      $45,813
                                              ========================
    LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                 1,347        1,658
   Accrued clinical and cost of other studies       1,252          789
   Accrued compensation                             1,255        1,252
   Deferred revenue                                 1,168          880
   Facility lease exit obligation                     384          376
   Other accrued liabilities                          491          584
                                              ------------------------

   Total current liabilities                        5,897        5,539
Deferred rent                                         246          283
Facility lease exit obligation                      1,181        1,373
Other non-current liabilities                         169          248
Note payable and accrued interest to related
 party                                              8,265        8,071
Shareholders' equity                               18,225       30,299

                                              ------------------------
        Total liabilities and shareholders'
         equity                                   $33,983      $45,813
                                              ========================

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

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

SOURCE: Aradigm Corporation

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