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Aradigm Announces Third Quarter 2007 Financial Results

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Nov 18, 2007

Aradigm Announces Third Quarter 2007 Financial Results

Aradigm Announces Third Quarter 2007 Financial ResultsHAYWARD, Calif.--(BUSINESS WIRE)--Nov. 8, 2007--Aradigm Corporation (OTCBB:ARDM) (the "Company") today announced financial results for the third quarter and nine months ended September 30, 2007.

The Company reported revenues for the three months ended September 30, 2007 of $230,000, compared with $1.13 million for the same period in 2006. Total operating expenses for the third quarter were $7.7 million, including an asset impairment charge of $2.1 million, of which $1.6 million was non-cash. This compares with total operating expenses of $8.4 million for the same period in 2006. The asset impairment charge was the result of the Company's previously announced sublease of its facilities in Hayward, California, which will result in a lower quarterly operating expense for the remaining term of the facility lease.

The net loss for the third quarter of 2007 was $6.9 million, or $0.13 per share, compared with net income of $13.1 million, or $0.82 per share on a fully diluted basis, for the same period in 2006. The third quarter 2006 results reflect a $20.0 million gain from the sale of patents and future royalty interest to Novo Nordisk related to the Company's AERx® insulin Diabetes Management System (iDMS).

As of September 30, 2007, cash, cash equivalents and short-term investments totaled approximately $47 million.

    Third Quarter and Recent Highlights

    --  Successfully completed a Phase 1 clinical trial with inhaled
        liposomal ciprofloxacin. The Company will proceed to conduct a
        Phase 2a efficacy trial in patients with cystic fibrosis.

    --  Announced results of the first human clinical trial
        demonstrating rapid pulmonary absorption following inhalation
        of water solutions of nicotine salt from the AERx Essence(R)
        system paralleled by reduction in cravings for cigarettes - a
        finding that may lead to a new type of treatment for tobacco
        smoking cessation.

    --  Entered into a sublease agreement with Mendel Biotechnology,
        Inc. for approximately 67% of the Company's facilities in
        Hayward, California, which will result in a substantial
        operating expense reduction for the remaining term of the
        facility lease.

    --  Entered into an agreement with Lung Rx, Inc., a wholly-owned
        subsidiary of United Therapeutics, to develop their pulmonary
        arterial hypertension (PAH) drug treprostinil in Aradigm's
        AERx Essence inhalation delivery system.

    --  Entered a collaboration agreement with Cydex Inc. to develop
        new approaches to combination products for the treatment of
        asthma and chronic obstructive pulmonary disease.

"Our recent clinical trial results and collaborative development agreements demonstrate significant progress in the execution of our new strategy to become a leading company in the prevention and treatment of severe respiratory disease," said Igor Gonda, Ph.D., Aradigm's President and CEO. "These accomplishments strengthen our financial position, broaden and improve our program portfolio, and reflect the advantages of our formulation and device technologies."

Year-to-Date Results

Revenues for the nine months ended September 30, 2007 were $943,000, compared with $4.0 million for the same period in 2006. Revenues in the first nine months of 2007 were derived primarily from collaboration and product development contract payments related to our inhalation anthrax program. Total operating expenses for the first nine months of 2007 were $19.7 million, compared with $32.4 million for the same period in 2006. The net loss for the first nine months of 2007 was $17.0 million, or $0.34 per share, compared with a net loss of $7.6 million, or $0.52 per share, for the same period in 2006. The 2006 nine-month results reflect a $20.0 million gain recognized in the third quarter of that year from the sale of patents and future royalty interests to Novo Nordisk related to the AERx iDMS program.

The Company's quarterly report on Form 10-Q is expected to be filed Wednesday, November 14, 2007.

The Company will host a conference call and question and answer session today at 4:30 pm Eastern Time, 1:30 pm Pacific Time, to discuss these financial results. Dial toll free 1 (800) 323-0845, or for International callers, dial +1 (706) 634-8407. The passcode for participation is 21379983. For those unable to listen to the live broadcast, a replay will be available under the Investors section of the company website or by dialing 1 (800) 642-1687 (U.S. domestic) or +1 (706) 645-9291 (international) and entering in the conference ID 21379983 beginning approximately one hour after the completion of the call.

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.

In addition, Aradigm's AERx iDMS, which has been licensed to Novo Nordisk for development and commercialization in return for royalties, is in Phase 3 testing for Type 1 and Type 2 diabetes. Under the agreements with Novo Nordisk, Novo Nordisk is responsible for all further clinical, manufacturing and commercial development, while Aradigm and Novo Nordisk continue to cooperate and share in technology development, as well as intellectual property development and defense. More information about Aradigm can be found at www.aradigm.com.

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 new strategy and future operating expense reductions, 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.

                         ARADIGM CORPORATION
                  CONDENSED STATEMENTS OF OPERATIONS
             (In thousands, except per share information)
                             (Unaudited)

                                 Three months
                                     ended          Nine months ended
                                 September 30,        September 30,
                               -----------------   -------------------
                                 2007     2006       2007      2006

Contract and milestone
 revenues                      $   230  $ 1,126    $    943  $  4,006
                               -------- --------   --------- ---------
Operating expenses:
Research and development         3,899    4,547      11,147    17,645
General and administrative       1,757    3,514       6,470     9,051
Restructuring and asset
 impairment                      2,059      347       2,059     5,717

                               -------- --------   --------- ---------
     Total operating expenses    7,715    8,408      19,676    32,413
                               -------- --------   --------- ---------

Loss from operations            (7,485)  (7,282)    (18,733)  (28,407)

Gain on sale of patent and
 royalty interest                    -   20,000           -    20,000
Interest income                    684      459       2,020       839
Interest expense                  (101)     (95)       (293)     (101)
Other income (expense)               -       (7)         16        26

                               -------- --------   --------- ---------
Net (loss) income              $(6,902) $13,075    $(16,990) $ (7,643)
                               ======== ========   ========= =========
Basic net (loss) income per
 common share                  $ (0.13) $  0.89    $  (0.34) $  (0.52)
                               ======== ========   ========= =========
Diluted net (loss) income per
 common share                  $ (0.13) $  0.82    $  (0.34) $  (0.52)
                               ======== ========   ========= =========
Shares used in computing
Basic net (loss) income per
 common share (a)               53,948   14,660      49,617    14,625
                               ======== ========   ========= =========
Diluted net (loss) income per
 common share (a)               53,948   15,982      49,617    14,625
                               ======== ========   ========= =========


(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)

                                                 September    December
                                                     30,         31,
                                                    2007        2006
                                                 (Unaudited)    (b)
                                                 -----------  --------
                       ASSETS
Current assets:
  Cash and cash equivalents                          $34,512  $27,013
  Short-term investments                              12,509      501
  Restricted cash                                         74        -
  Receivables                                            302      643
  Prepaid expenses and other current assets              812    1,002

                                                 -----------  --------
  Total current assets                                48,209   29,159
Property and equipment, net                            3,055    2,592
Notes receivable from officers and employees              32       31
Restricted cash                                          228        -
Other assets                                             276      444

                                                 -----------  --------
       Total assets                                  $51,800  $32,226
                                                 ===========  ========
 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND
         SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                                     1,080    1,151
  Accrued cost of clinical and other studies             734      278
  Accrued compensation                                 1,639    1,814
  Facility lease exit obligation                         377        -
  Other accrued liabilities                              366      511
                                                 -----------  --------

  Total current liabilities                            4,196    3,754
Deferred revenue                                         440        -
Deferred rent                                            301    1,035
Facility lease exit obligation                         1,467        -
Other accrued liabilities                                325       29
Note payable and accrued interest to related
 party                                                 7,973    7,686
Convertible preferred stock                                -   23,669
Shareholders' equity (deficit)                        37,098   (3,947)

                                                 -----------  --------
       Total liabilities, convertible preferred
        stock, and shareholders' equity
        (deficit)                                    $51,800  $32,226
                                                 ===========  ========


(b) The balance sheet at December 31, 2006 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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