By Lisa Seachrist

Washington Editor

Pulmonary drug delivery specialist Aradigm Corp. raised $46 million in public offering of 2.5 million shares of common stock.

The company sold the shares for $16 each, and the underwriters opted to exercise the overallotment of 375,00 shares. After underwriting discounts and commission, Aradigm netted $43.355 million. With the close of the offering, Hayward, Calif.-based Aradigm has approximately 17.2 million common shares outstanding.

When the company announced the offering in early March, its stock (NASDAQ:ARDM) was trading at $39.875 a share. At that price Aradigm was looking at the offering generating about $100 million. However, March wasn¿t friendly to the biotech sector in general, or Aradigm in particular. The company¿s stock closed Wednesday at $18.00, down 6.25 cents.

¿Even with the drop in the markets during March, we¿re still up 100 percent for the year,¿ said Richard Thompson, president and CEO of Aradigm. ¿We¿re pleased to have sold the overallotments. I actually feel the markets have been pretty kind to us.¿

The offering was managed by Credit Suisse First Boston, of New York, and co-managed by SG Cowen Securities Corp., Warburg Dillon Read LLC and Invemed Associates Inc., all of New York.

Thompson said the funds from the offering are earmarked for building the company¿s new manufacturing facility.

The AERx pulmonary delivery system is Aradigm¿s principal product. The system creates aerosols from liquid drug formulations in order to deliver the drugs either locally to the lungs or systemically throughout the body.

Aradigm has several collaborations, including one with South San Francisco-based Genentech Inc. to use AERx technology to deliver Genentech¿s cystic fibrosis drug, Pulmozyme. In addition, Aradigm has a $40 million deal with SmithKline Beecham plc, of London, to develop an inhaled delivery vehicle for morphine. (See BioWorld Today, May 27, 1999, p. 1; and Oct. 2, 1997, p. 1.)

The company¿s $50 million deal with NovoNordisk A/S, of Bagsvaerd, Denmark, is the impetus for the new manufacturing facility. That deal, struck in June 1998, is to develop an inhaled delivery method for insulin, a product that could trigger a high demand. (See BioWorld Today, June 4, 1998, p. 1.)

Thompson said the product would not only provide a method for diabetics to avoid injecting themselves, but also would offer diabetics better blood sugar control because inhaled insulin is faster acting than injected insulin. As a result, a patient could administer insulin when he or she eats rather than 30 to 45 minutes before eating.

All three of these products are expected to be in Phase III development in 2001, Thompson said. Aradigm intends to develop the AERx systems for non-invasive delivery of other drugs including proteins, peptides, gene vectors and small molecules.

¿We expect the biotech industry is going to be a rich environment for our drug delivery technology,¿ Thompson said.

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