By Mary Welch

Aradigm Corp., a developer of advanced pulmonary drug delivery systems, intends to sell 2.5 million shares of its stock. The company expect to net about $70.5 million, assuming an offering price of $30.25, the closing price on Monday.

Thursday, Aradigm¿s stock (NASDAQ:ARDM) closed at $39.875, up $5.125. At that price, the Haywood, Calif.-based company would raise about $100 million.

The underwriters will be given the option to purchase another 375,000 shares to cover overallotments. The offering will be 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.

The company intends to use the proceeds to increase its manufacturing capacity and to fund research and development efforts.

Founded in 1991, the company reported 1999 revenues of $16.8 million and a net loss of $23.6 million, or $1.66 per share. As of Dec. 31, it had 14.4 million shares outstanding and $9.4 million in cash on hand.

The AERx pulmonary delivery system is Aradigm¿s principal product. It is designed to create aerosols from liquid drug formulations for delivery locally to the lung or systemically through the lung.

The company has several collaborations, including one with South San Francisco-based Genentech Inc., to use AERx to deliver Genentech¿s cystic fibrosis drug, Pulmozyme. In addition, Aradigm is partnered with SmithKline Beecham plc, of London, in a $40 million deal to deliver morphine, and with NovoNordisk A/S, of Bagsvaerd, Denmark, in a $50 million deal to deliver insulin. (See BioWorld Today, May 27, 1999, p. 1; Oct. 2, 1997, p. 1; and June 4, 1998, p. 1.)

The company has tested 11 compounds in human trials, four of which are currently in Phase II development. It is also planning to develop AERx systems for the non-invasive delivery of certain other drugs, including proteins, peptides, gene vectors and small molecules.

A year ago, Aradigm raised $25.5 million in a private placement to fund the construction of a large-scale, 18,000-square-foot commercial manufacturing plant. (See BioWorld Today, March 16, 1999, p. 1.)