By Brady Huggett
Aradigm Corp. completed a $14.6 million private placement and simultaneously issued warrants for the purchase of common stock, money Aradigm will spend on launch preparations and trials.
The Hayward, Calif.-based company sold about 3.6 million shares at $4 per share. The warrants issued to investors allow for the purchase of 363,929 shares at $5.41, a 15 percent premium to market price on the closing date. Exercise of all warrants would bring in an additional $1.97 million.
Aradigm¿s stock (NASDAQ:ARDM) fell 40 cents Thursday to close at $4.26.
¿Principally, we will use [the proceeds] to expand our manufacturing capability, which we need to launch our pulmonary insulin and opioid products,¿ said Richard Thompson, CEO and president of Aradigm.
As of June 30, Aradigm had about $20.8 million in cash, cash equivalents and short-term investments. After the placement, Thompson said Aradigm has about 23.5 million shares outstanding. Aradigm pulled in about $8.5 million in contract revenue for the second quarter, compared to $4.8 million for the same period in 2000. But its net loss increased, too, to about $9.2 million, or 47 cents per share, for the three-month period, up from roughly $8.5 million, or 48 cents per share, in 2000¿s second quarter.
Thompson said that while Aradigm is burning through about $2.5 million to $2.7 million per month, it will face $10 million to $12 million in capital expenditures before the year¿s end.
Aradigm develops aerosol-based drug delivery alternatives to injectable therapeutics. Its current development programs focus on diabetes, pain management and the pulmonary delivery of other biotech therapeutics.
It has a Phase IIb trial under way for its AERx Pain Management System, a system designed to allow patients to self-administer electronic pulmonary-delivered opioid analgesics at home. Aradigm took back control of the trial from its London-based partner, at the time called Smith-Kline Beecham plc, in December, amid a trial delay while SmithKline negotiated its merger with Glaxo Welcome plc. It was a power move for Aradigm.
¿GlaxoSmithKline remains our partner and has all the rights to the product,¿ Thompson told BioWorld Today. ¿They lost focus due to their merger, and that is the reason why we took back control. As part of that, we got a termination right to that program. While they are our partner, they will remain so only if we remain satisfied with their progress. As it stands now, we will keep them as a partner ¿ we are looking forward to working with them on Phase III.¿ Thompson added that if Aradigm keeps the relationship with Glaxo, then Glaxo will open its wallet for Phase III trials.
Aradigm is on the verge of Phase III with its AERx insulin Diabetes Management System, partnered with Novo Nordisk A/S, of Bagsvaerd, Denmark.
¿We haven¿t started it yet, but we will start by the end of this year or early next year,¿ Thompson said. ¿This [funding] will be used to finish preparations to begin Phase III, but most of [Phase III funding] is provided by Novo.¿
Thompson said that the company also is working on four more partnered programs. In each case, the partner pays Aradigm to evaluate a molecule in combination with Aradigm¿s technology. It¿s a financially efficient way to conduct research.
¿We do that at the partner¿s expense,¿ he said.
The institutional investors in the placement included New Enterprise Associates, of Menlo Park, Calif.; International Biotechnology Trust plc, of New York; RAM Capital, of New York; and Vertical Ventures, also of New York. SG Cowen Securities Corp., of New York, acted as placement agent for the transaction.