Aradigm fourth quarter revenue is $144,000 for 2010

Mar 24 2011

Aradigm Corporation (OTCBB:ARDM) (the "Company") today announced financial results for the fourth quarter and full year ended December 31, 2010.

The Company recorded $144,000 in revenue in the fourth quarter of 2010 compared with no revenue in the fourth quarter of 2009. Total operating expenses for the fourth quarter of 2010 were $3.2 million, compared with total operating expenses of $3.3 million for the fourth quarter of 2009. The decrease in operating expenses was due to expense reduction efforts. The Company's net loss for the fourth quarter of 2010 was $2.4 million, or $0.01 per share, compared with a net loss of $3.4 million, or $0.03 per share, for the same period in 2009.

Full Year Results

Revenues for the year ended December 31, 2010 were $4.4 million, compared with revenues of $4.9 million in 2009. The decrease in revenue was due to the fact that revenue from milestone and development payments received during the collaboration with United Therapeutics Corporation and previously recorded as deferred revenue were recognized in 2009 as revenue upon the termination of the collaboration. Revenues in 2010 represented milestone and royalty payments from Zogenix, Inc. for the SUMAVEL® DosePro™ (sumatriptan injection) needle-free delivery system.

Total operating expenses for 2010 were $14.7 million, compared with total operating expenses of $18.3 million in 2009. Research and development expenses decreased by $1.2 million, general and administrative expenses decreased by $0.5 million, and restructuring and asset impairment expenses decreased by $1.8 million. The decrease in research and development expenses and in general and administrative expenses was consistent with the Company's ongoing expense reduction efforts, including reductions in headcount and other operating expenses, even as the total direct cost of the clinical trials associated with the Company's lead product candidates, ARD-3100 and ARD-3150 (inhaled liposomal ciprofloxacin), increased significantly between 2009 and 2010 due to the ORBIT-1 and ORBIT-2 bronchiectasis clinical trials. The decrease in restructuring and asset impairment expenses is the result of the one-time charge in 2009 for the impairment of fixed assets following the termination of the collaboration with United Therapeutics Corporation.

The gain from the extinguishment of debt in 2010 of $4.4 million represents the net gain from the equity for debt transaction with Novo Nordisk A/S in which $9.1 million of debt was extinguished in exchange for 26 million shares of Aradigm common stock. The net loss for the year ended December 31, 2010 was $5.4 million, or $0.04 per share, compared with a net loss of $13.8 million, or $0.15 per share, in 2009.

As of December 31, 2010, cash, cash equivalents and short-term investments totaled $5.5 million.

2010 Highlights

• February 2010: announced the receipt of the $4.0 million milestone payment from Zogenix based upon the first commercial sale in the U.S. of SUMAVEL™ DosePro™ (sumatriptan injection) needle-free delivery system. The Company will receive quarterly royalty payments on all SUMAVEL DosePro sales. In 2006, the Company sold all assets related to the Intraject™ needle-free injector technology (now rebranded as DosePro) to Zogenix in exchange for milestone and royalty payments. SUMAVEL DosePro is being marketed in the U.S. by Zogenix and its co-marketing partner Astellas Pharma US Inc.
• May 2010: received clearance from the FDA for CF IND. On May 5, 2010: the Company announced that clearance was received from the U.S. Food and Drug Administration for the Company's inhaled liposomal ciprofloxacin (ARD- 3100) Investigational New Drug (IND) application for the management of cystic fibrosis (CF). The first trial planned under this IND is a Phase 1/2a study in pediatric CF patients.
• June 2010: closed the private placement raising $5 million in aggregate proceeds. On June 21, 2010, the Company closed a private placement in which it sold 34,702,512 shares of common stock and warrants to purchase an aggregate of 7,527,214 shares of common stock to accredited investors under the terms of a securities purchase agreement that was entered into with accredited investors (which included three existing significant investors) on June 18, 2010. At the closing of this private placement, the Company received approximately $4.1 million in aggregate gross proceeds from the sale of the common stock and the warrants. After deducting for fees and expenses, the aggregate net proceeds from the sale of the common stock and the warrants were approximately $3.7 million. The warrants had an exercise price of $0.1184 per share and were exercisable after the Company called and held a special meeting of its shareholders to vote on a proposal to approve an amendment to the Company's Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock and received the requisite shareholder approval for the shareholder proposal. On September 23, 2010, following the receipt of shareholder approval to increase the number of authorized shares, the Company received proceeds of approximately $891,000 from the exercise of all of the warrants that were issued in the private placement that closed on June 21, 2010.
• September 2010: closed the equity for debt transaction with Novo Nordisk A/S. At the closing, the Company issued 26 million shares of the Company's common stock to Novo Nordisk A/S in a private placement as consideration for the termination of a promissory note in favor of Novo Nordisk A/S under which approximately $9.1 million was outstanding on July 30, 2010, representing an effective price per share of $0.3505. The promissory note that was terminated at closing represented a loan that was made by Novo Nordisk A/S to the Company in 2006 in the principal amount of $7.5 million, with interest accruing at 5% per annum.
• October 2010: announced positive top line data from the ORBIT-2 study. Statistical significance was achieved in the primary endpoint - the mean change in Pseudomonas aeruginosa density in sputum from baseline to day 28. In the full analysis population (full analysis set includes all patients who were randomized, received at least one dose and provided samples for at least two time points), there was a significant mean reduction of 4.2 log₁₀ units in the ARD-3150 group, reflecting an almost sixteen-thousand fold decrease in bacterial load, versus a very small mean decrease of 0.1 log₁₀ units in the placebo group>
• November 2010: received over $733K in government grants. On November 2, 2010 the Company received notification from the U.S. Internal Revenue Service (IRS) that it was approved to receive three grants in the amount of $244,479.25 each for qualified investments in three qualifying therapeutic discovery projects. In July 2010, the Company applied for grants for three projects under the Qualifying Therapeutic Discovery Project. The three projects were: 1) ARD-3150 Liposomal Ciprofloxacin for the Treatment of Non-CF Bronchiectasis, 2) ARD-3100 Liposomal Ciprofloxacin for the Treatment of Non-CF Bronchiectasis and 3) ARD-3100 Liposomal Ciprofloxacin for the Treatment of Cystic Fibrosis. After a determination by U.S. Department of Health and Human Services (HHS) that all three projects met the definition of a "qualifying therapeutic discovery project", the IRS certified the qualifying investment and approved the award amount of $244,479 per project, for a total of $733,438 in awards to the Company. The qualified investments represent 2009 research and development expenses; there are no future performance obligations related to these grants.
• November 2010: appointed Tamar Howson to the Board of Directors. On November 4, 2010, the Company announced that it appointed Tamar D. Howson to its board of directors. Ms. Howson brings significant business development and life sciences industry expertise developed through her career as a senior professional at several leading pharmaceutical companies and as an advisor to several investor funds. She served as Senior Vice President of Corporate and Business Development and was a member of the executive committee at Bristol-Myers Squibb Company (Bristol-Myers) from 2001 until 2007. During her tenure at Bristol-Myers, Ms. Howson was responsible for leading the company's efforts in external alliances, licensing and acquisitions. From 1991 to 2000, Ms. Howson served as Senior Vice President and Director of Business Development at SmithKline Beecham plc, a global pharmaceutical company. She also managed SR One Ltd., a venture capital fund of SmithKline Beecham, plc. From 1990 to 1991, Ms. Howson held the position of Vice President, Venture Investments at Johnston Associates, Inc., and from 1987 to 1990, she served as Director of Worldwide Business Development and Licensing for Squibb Corporation. She previously served as Executive Vice President of Corporate Development for Lexicon Pharmaceuticals, Inc. and on the boards of Ariad Pharmaceuticals, Inc., SkyePharma, plc, NPS Pharmaceuticals, Inc., Targacept, Inc., and the Healthcare Businesswomen's Association. Ms. Howson received her MBA in finance and international business from Columbia University. She holds a MS from the City College of New York and a BS from Technion in Israel.

• December 2010: announced that Zogenix, Inc. received the first European approval of the Marketing Authorization Application ("MAA") for SUMAVEL DosePro (sumatriptan injection) needle-free delivery system by the Danish Medicines Agency of Denmark. Denmark is the first country in Europe to grant marketing authorization for SUMAVEL DosePro for the acute treatment of migraine attacks, with or without aura, and the acute treatment of cluster headache. Subsequently, Zogenix announced additional SUMAVEL approvals in the United Kingdom and Germany, representing two of the largest pharmaceutical markets in the European Union. Aradigm is entitled to 3% royalty on net sales of SUMAVEL.

"In the last year, we completed several important transactions, including the equity for debt transaction with Novo Nordisk and the June 2010 private placement, that strengthened our balance sheet, eliminated our debt and allowed us to continue to advance our lead product candidates, ARD-3100 and ARD-3150, inhaled liposomal ciprofloxacin for the management of infections associated with severe respiratory disease," said Nancy E. Pecota, the Company's Vice President and CFO. "We continued our efforts to generate non-dilutive capital for the Company, successfully applying for and receiving $0.7 million in grants under the Qualifying Therapeutic Discovery Tax Credit Program in October 2010. In February 2010, we received the $4 million milestone payment from Zogenix upon the commercial launch of SUMAVEL DosePro and we began receiving quarterly royalty payments from the sales of this product. We anticipate receiving additional royalties following the European launch of the SUMAVEL product expected later this year."