Aradigm Announces Fourth Quarter 2012 and Full Year Financial Results

  Aradigm Announces Fourth Quarter 2012 and Full Year Financial Results

Business Wire

HAYWARD, Calif. -- March 26, 2013

Aradigm Corporation (OTC BB: ARDM.OB) (the “Company”)  today announced
financial results for the fourth quarter and full year ended December 31,
2012.

Fourth Quarter 2012 Results

The Company recorded $223,000 in revenue in the fourth quarter of 2012
compared with $183,000 in revenue in the fourth quarter of 2011. Total
operating expenses for the fourth quarter of 2012 were $2.4 million, compared
with total operating expenses of $1.3 million for the fourth quarter of 2011.
The increase in operating expenses was primarily due to higher research and
development expenses related to the inhaled ciprofloxacin program. The
Company’s net loss for the fourth quarter of 2012 was $2.5 million, or $0.01
per share, compared with a net loss of $1.5 million, or $0.01 per share, for
the same period in 2011.

Full Year Results

Revenues for the year ended December 31, 2012 were $1.0 million, compared with
revenues of $0.8 million in 2011. The increase in revenue was due to higher
royalty payments from Zogenix, Inc. for the SUMAVEL® DosePro™ (sumatriptan
injection) needle-free delivery system.

Total operating expenses for 2012 were $7.7 million, compared with total
operating expenses of $9.3 million in 2011. Research and development expenses
decreased by $1.2 million and general and administrative expenses decreased by
$0.4 million. The decrease in research and development expenses reflects the
completion of the ORBIT-1 bronchiectasis clinical trial of the Company’s
inhaled ciprofloxacin product candidate. The decrease in general and
administrative expenses was primarily due to lower executive bonus expense.

The net loss for the year ended December 31, 2012 was $8.2 million, or $0.04
per share, compared with a net loss of $9.3 million, or $0.05 per share, in
2011. The net loss reduction was primarily due to the increase in royalty
revenue and the reduction in operating expenses, partially offset by higher
interest expense from the royalty financing transaction.

As of December 31, 2012, cash, cash equivalents and short-term investments
totaled $7.6 million.

2012 Highlights

  *December 2012: closed the private placement raising $6 million in
    aggregate proceeds. On December 12, 2012, the Company announced that it
    entered into a definitive agreement for the sale of common stock to two
    existing shareholders, including accounts managed by First Eagle
    Investment Management LLC, in a private placement for aggregate gross
    proceeds of $6 million. Under the terms of the agreement, the Company
    agreed to sell an aggregate of 50,000,000 shares of common stock at a
    price of $0.12 per share. After deducting for fees and expenses, the net
    proceeds from the sale of the shares of common stock were approximately
    $5.5 million.
  *November 2012: UK scientists report on the efficacy of Lipoquin against
    pneumonic plague. On November 19, 2012, the Company announced that
    scientists from the UK Defence Science and Technology Laboratory reported
    in a preliminary study that they have demonstrated that a single dose of
    the liposomal ciprofloxacin formulation Lipoquin administered 24 hours
    after exposure to a lethal dose of the bacterium Yersinia pestis provided
    full protection in a murine model of pneumonic plague. In comparison, a
    single dose of oral ciprofloxacin administered 24 hours post-exposure
    provided no protection.
  *October 2012: Virginia Commonwealth University scientists report on the
    anti-inflammatory effects of Aradigm’s inhaled liposomal ciprofloxacin. On
    October 16, 2012, scientists from the Virginia Commonwealth University
    School of Pharmacy reported findings about the anti-inflammatory effects
    of inhaled liposomal ciprofloxacin in human bronchial lung cells
    stimulated by the lipopolysaccharide produced by Pseudomonas aeruginosa –
    one of the most significant bacterial pathogens in patients with cystic
    fibrosis, bronchiectasis and severe COPD.
  *September 2012: UK scientists report the successful testing of Aradigm’s
    inhaled liposomal ciprofloxacin against Q Fever. On September 20, 2012,
    the Company announced that scientists from the UK Defence Science and
    Technology Laboratory (Dstl) and the Health Protection Agency (HPA)
    reported the successful testing of inhaled liposomal ciprofloxacin in a
    mouse model of this virulent infection. This work was conducted as part of
    the collaborative consortium that Aradigm formed with HPA and Dstl to
    evaluate the efficacy of Aradigm’s inhaled liposomal ciprofloxacin against
    high threat microbial agents.
  *September 2012: third patent issued for Pulmaquin. On September 18, 2012,
    the Company announced that the United States Patent and Trademark Office
    (USPTO) issued an important new composition of matter patent covering
    formulations of liposomal and free ciprofloxacin, including its lead
    product candidate, Pulmaquin. The Company expects that the patent will
    provide new coverage for Lipoquin and extends protection for Pulmaquin
    until February 11, 2031.
  *September 2012: additional patent issued for smoking cessation. On
    September 5, 2012, the Company announced that the United States Patent and
    Trademark Office (USPTO) issued an important method of treatment patent
    covering Systems and Methods for Effecting Cessation of Tobacco Use. The
    Company expects that the patent will provide exclusivity for specific
    systems utilizing inhaled nicotine formulations until January 7, 2024.
  *March 2012: received clearance from the FDA for BE IND. On March 12, 2012,
    the Company announced that  its Investigational New Drug Application (IND)
    to conduct a pivotal Phase 3 clinical trial of Pulmaquin (dual release
    ciprofloxacin for inhalation) in non-cystic fibrosis bronchiectasis (BE)
    was cleared by the U.S. Food and Drug Administration (FDA).
  *February 2012: second patent issued for Pulmaquin. On February 21, 2012,
    the Company announced that the United States Patent and Trademark Office
    (USPTO) issued an important composition of matter patent covering
    formulations of liposomal and free ciprofloxacin, including its lead
    product candidate, Pulmaquin. The Company expects that the patent will
    provide exclusivity for Pulmaquin until October 22, 2028.

“In the last year, we were issued several important patents that strengthened
our intellectual property portfolio and will allow us to extend exclusivity
around our lead product candidate, Pulmaquin, and our inhaled nicotine
program,” said Igor Gonda, the Company’s president and chief executive
officer. “We have also leveraged our collaborations with university and
government scientists to report exciting research findings using our product
candidates against significant bacterial pathogens and high threat microbial
agents.”

About inhaled ciprofloxacin (Pulmaquin™ and Lipoquin™)

Ciprofloxacin is a widely prescribed antibiotic to treat infections of the
lung frequently experienced by cystic fibrosis (CF) and non-cystic fibrosis
bronchiectasis (BE) patients. It is often preferred because of its
broad-spectrum anti-bacterial action. The available oral and intravenous
formulations of the drug are used to treat episodes of acute exacerbations of
lung infections in CF patients. The Company’s once-a-day novel inhaled
formulations of ciprofloxacin are encapsulated in liposomes, allowing for a
sustained release of the drug within the lung and improving airway
tolerability. The formulations are to be used for chronic maintenance therapy
as they are expected to achieve higher antibiotic concentration at the site of
infection and relatively low systemic antibiotic concentrations to minimize
side-effects. Lipoquin is a liposomal formulation of ciprofloxacin. Pulmaquin
is a dual release formulation that is a mixture of Lipoquin with
unencapsulated ciprofloxacin. Pulmaquin has been tested extensively in
preclinical tests, as well as in the ORBIT-2 Phase 2b bronchiectasis study in
which outstanding antimicrobial activity coupled with good safety and
tolerability was found, and, most importantly, the positive impact on
prevention of exacerbations compared to placebo was also observed. The Company
previously reported positive results in Phase 2a studies of 22 CF patients and
36 BE patients who received Lipoquin once-a-day for 2 (CF) or 4 (BE) weeks,
respectively. Additionally, Aradigm is developing these formulations as a
potential medication for the prevention and treatment of high threat and
bioterrorism infections, such as inhaled anthrax, tularemia and Q fever.
Aradigm has been granted orphan drug designation for liposomal ciprofloxacin
for cystic fibrosis in the U.S. and the E.U., and for inhaled ciprofloxacin
and for liposomal ciprofloxacin for BE in the U.S.

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.
The Company has product candidates addressing the treatment of bronchiectasis,
cystic fibrosis, inhalation tularemia and anthrax infections, and smoking
cessation.

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 statements regarding extending patent exclusivity, 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, 2011 filed with the SEC on
March 28, 2012, and the Company’s Quarterly Reports on Form 10-Q.

Aradigm, Pulmaquin, Lipoquin and the Aradigm Logo are registered trademarks of
Aradigm Corporation.

ARADIGM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)
                                                  
                         Three months ended          Year ended

                         December 31,                December 31,
                           2012         2011          2012         2011
                                                                   
Revenue                  $ 223       $ 183        $ 1,007     $ 791     
Operating expenses:
Research and               1,477         651           3,781         5,007
development
General and                887           679           3,896         4,274
administrative
Restructuring and          8             9             34            39
asset impairment
                                                              
Total operating           2,372      1,339       7,711      9,320   
expenses
                                                                   
Loss from operations       (2,149  )     (1,156  )     (6,704  )     (8,529  )
                                                                   
Interest income            1             5             10            14
Interest expense           (395    )     (370    )     (1,530  )     (798    )
Other income              -          2           (2      )   4       
(expense), net
Net loss                 $ (2,543  )  $ (1,519  )   $ (8,226  )  $ (9,309  )
Change in unrealized
gains (losses) on          -             -             (1      )     -
available-for-sale
securities
Comprehensive loss       $ (2,543  )  $ (1,519  )   $ (8,227  )  $ (9,309  )
Basic and diluted net    $ (0.01   )  $ (0.01   )   $ (0.04   )  $ (0.05   )
loss per common share
                                                                   
Shares used in
computing basic and       210,137    197,833     201,310    183,419 
diluted net loss per
common share
                                                                             

ARADIGM CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)
                                                               
                                                   December 31,   December 31,

                                                   2012           2011
                                                                
ASSETS
Current assets:
Cash and cash equivalents                          $  7,414       $   2,148
Short-term investments                                203             6,516
Receivables                                           41              36
Prepaid and other current assets                      106             161
                                                                
Total current assets                                  7,764           8,861
Property and equipment, net                           727             1,113
Notes receivable                                      -               29
Other assets                                          475             553
                                                                
Total assets                                       $  8,966     $   10,556
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable                                      330             196
Accrued clinical and cost of other studies            500             247
Accrued compensation                                  184             195
Facility lease exit obligation                        144             120
Other accrued liabilities                            127          86
                                                                  
Total current liabilities                             1,285           844
Deferred rent, non-current                            144             132
Facility lease exit obligation, non-current           465             609
Other non-current liabilities                         -               75
Note payable and accrued interest                     8,513           8,207
Shareholders' equity (deficit)                        (1,441  )       689
                                                                
Total liabilities and shareholders' equity         $  8,966     $   10,556
(deficit)

Contact:

Aradigm Corporation
Nancy Pecota, Chief Financial Officer, 510-265-8800
 
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