ARADIGM CORP (ARDM) SPO
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|Company Name||ARADIGM CORP|
|Company Address||3929 POINT EDEN WAY
HAYWARD, CA 94545
|CEO||John M. Siebert|
|Employees (as of 12/31/2016)||23|
|State of Inc||CA|
|Fiscal Year End||12/31|
|Shares Over Alloted||--|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||--|
We estimate that the net proceeds of this offering will be approximately $ million, assuming the sale of shares of common stock at an assumed public offering price of $5.24 per share, the last reported sale price of our common stock on the Nasdaq Capital Market on December 20, 2017, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each $1.00 increase (decrease) in the assumed public offering price of $5.24 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on December 20, 2017, would increase (decrease) the net proceeds to us from this offering by $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares of common stock offered by us would increase (decrease) the net proceeds to us from this offering by $ million, assuming that the assumed public offering price remains the same. We currently intend to use the net proceeds from the sale of the shares of our common stock offered by us hereunder for working capital needs, capital expenditures, and other general corporate purposes in pursuit of advancing our commercial, clinical, and preclinical efforts. Our management will have broad discretion in the application of our net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of these proceeds.
We are in a highly competitive industry. We compete with pharmaceutical and biotechnology companies, hospitals, research organizations, individual scientists and nonprofit organizations engaged in the development of drugs and other therapies for the respiratory disease indications we are targeting. Our competitors may succeed, and many have already succeeded, in developing competing products, obtaining FDA approval for products or gaining patient and physician acceptance of products before us for the same markets and indications that we are targeting. Many of these companies, and large pharmaceutical companies in particular, have greater research and development, regulatory, manufacturing, marketing, financial and managerial resources and experience than we have and many of these companies may have products and product candidates that are in a more advanced stage of development than our product candidates. If we are not “first to market” for a particular indication, it may be more difficult for us or our collaborators to enter markets unless we can demonstrate our products are clearly superior to existing therapies. There is no product currently approved in the United States specifically for the treatment of bronchiectasis (BE). However, Bayer HealthCare Pharmaceuticals Inc., or Bayer, is testing a ciprofloxacin dry powder inhaler for the management of BE in two Phase 3 studies and an experimental oral drug, BAY85-8501, which completed a Phase 2 study in BE patients. Bayer has obtained orphan drug status for their inhaled powder formulation of ciprofloxacin in the United States for the treatment of BE and in the United States and European Union for the treatment of CF. There are also a number of other inhaled products under development to treat respiratory infections in CF, including a nebulized levofloxacin by Raptor Pharmaceutical Corp. (acquired by Horizon Pharma Plc) and a nebulized liposomal amikacin by Insmed for the treatment of Mycobacterium avium (a PNTM infection). Currently marketed inhaled antibiotics for the management of infections associated with CF include several products containing tobramycin (nebulizer and dry powder formulations), marketed by multiple companies, and nebulized Cayston*, marketed by Gilead Sciences. Several of these products already have substantial current sales and long histories of effective and safe use. There are a number of additional product candidates in various stages of development for the treatment of respiratory infections that, if approved, could compete with any future products we may develop. We believe that our respiratory expertise and pulmonary delivery and formulation technologies provide us with an important competitive advantage for our potential products. We intend to compete by developing products that are safer, more efficacious, more convenient, less costly, earlier to market or cheaper to develop than existing products, or any combination of the foregoing.
We are an emerging specialty pharmaceutical company focused on the development and commercialization of products for the treatment and prevention of severe respiratory diseases. Over the last decade, we have focused our efforts and capital on the development of drug delivery technologies,
particularly the development of a significant amount of expertise in respiratory (pulmonary) drug delivery, including our AERx® pulmonary drug delivery platform and other proprietary technologies. The key assets resulting from these efforts are our inhaled ciprofloxacin candidate products, Linhaliq™ (ARD-3150), our lead product candidate, formerly known as Pulmaquin®, and Lipoquin® (ARD-3100). Linhaliq has completed two Phase 3 clinical trials, and in July 2017 we submitted a New Drug Application, or NDA, to the United States Food and Drug Administration, or FDA, for Linhaliq for non-cystic fibrosis bronchiectasis, or NCFBE, in patients who have chronic lung infections with Pseudomonas aeruginosa. The FDA has accepted the Linhaliq NDA for filing with a Prescription Drug User Fee Act, or PDUFA, goal date for completion of FDA review of January 26, 2018. We have not been profitable since inception and expect to incur additional operating losses over at least the foreseeable future as we continue with our efforts towards approval of Linhaliq. Linhaliq contains liposomally encapsulated ciprofloxacin, an antibiotic used to treat infections. Liposomes in Linhaliq are nanosize vesicles composed of biocompatible materials similar to the components of human lung surfactant and membranes in lung cells. The encapsulated ciprofloxacin is slowly released in the lung enabling once daily dosing and reducing the potential for airway irritation that has been observed previously with the administration of unencapsulated inhaled antibiotics. Liposomes are also able to penetrate into bacterial biofilms and treat intracellular infections, such as those caused by non-tuberculous mycobacteria, or NTM, and organisms that pose bioterrorism threats such as tularemia, pneumonic plague and inhalational anthrax. In August 2013, we partnered with Grifols S.A., or Grifols, one of our large shareholders, via a License and Collaboration Agreement, or the License Agreement, and granted to Grifols an exclusive, world-wide license to our inhaled liposomal ciprofloxacin product candidates for the indication of NCFBE and other indications (excluding Bio-Defense Aradigm Products, as defined in the agreement), or the Licensed Products. The license permits Grifols to commercialize the Licensed Products throughout the world. We are responsible for obtaining regulatory approval of the first indication for the product candidates in the U.S. and the EU. Grifols is responsible to use diligent efforts to commercialize the Licensed Products in countries where regulatory approval has been obtained. Under the License Agreement, Grifols pays development milestones and royalties on future commercial sales of Licensed Products. We develop the Licensed Products for NCFBE. Under the License Agreement, Grifols makes development milestone payments of up to $25,000,000 upon the achievement of specified events. As of December 2017, we have earned and collected a total of $10 million in milestone payments for certain development-related events. Up to a total of $15 million in milestone payments may be paid to us in the future, subject to the achievement of regulatory approval milestones in specified geographic regions. In addition, Grifols makes royalty payments on net sales of Licensed Products on a country-by-country basis for so long as there is a valid patent claim or orphan drug designation (or, if longer, 10 years after the first commercial sale) in such country. The royalty rate applicable at any time is determined as follows (subject to adjustment as described below): • The royalty rate is 12.5% if worldwide (rather than country-by-country) aggregate net sales were less than or equal to $300,000,000 at the time the relevant portion of net sales was made in that country, on a year-to-date basis. • The royalty rate is 20% if worldwide aggregate net sales were above $300,000,000 at the time the relevant portion of net sales was made in that country, on a year-to-date basis. Royalty payments will be reduced by 50% on a country-by-country basis (1) during such time, if any, that another inhaled liposomal product containing ciprofloxacin is being sold in that country for an indication for which we have regulatory approval or (2) if we have no valid patent claim or orphan drug protection in that country (these reductions may not be combined and the maximum reduction in royalties under the License Agreement is 50%). Pulmonary delivery by inhalation is an effective, widely used and well-accepted method of administration of a variety of drugs for the treatment of respiratory and other diseases. Compared to other routes of administration, inhalation provides local delivery of the drug to the respiratory tract which offers a number of potential advantages, including rapid onset of action, less drug required to achieve the desired therapeutic effect, and reduced side effects because the rest of the body has lower exposure to the drug. We believe that there are significant unmet medical needs in severe respiratory diseases, as well as opportunities to replace some of the existing therapies with products that are more efficacious, safe and convenient for patients to use. In selecting our proprietary development programs, we primarily seek drugs approved by the FDA that can be reformulated for both existing and new indications in respiratory disease. Our intent is to use our pulmonary delivery methods and formulations to improve their efficacy, safety and convenience of administration to patients. We believe that this strategy allows us to reduce cost, development time and risk of failure when compared to the discovery of new drugs. Our lead development candidates are proprietary formulations of the potent antibiotic ciprofloxacin (Linhaliq (ARD-3150) and Lipoquin (ARD-3100)) that are delivered by inhalation for the management of infections associated with the severe respiratory diseases of cystic fibrosis, or CF, and NCFBE. The formulations differ in the proportion of rapidly available and slow release ciprofloxacin. Linhaliq uses the slow release liposomal formulation (Lipoquin) mixed with a smaller amount of ciprofloxacin dissolved in an aqueous medium. We received orphan drug designations for Lipoquin for both of these indications in the United States and for CF in the EU. We have been granted orphan drug designation from the FDA for ciprofloxacin for inhalation for the management of bronchiectasis. We may seek orphan drug designation for other eligible product candidates we develop. In May 2014, the FDA designated Linhaliq as a Qualified Infectious Disease Product, or QIDP. The QIDP designation, granted for the treatment of NCFBE patients with chronic lung infections with Pseudomonas aeruginosa, makes Linhaliq eligible to benefit from certain incentives for the development of new antibiotics provided under the Generating Antibiotic Incentives Now Act, or GAIN Act. These incentives include priority review and eligibility for fast-track status, which the FDA granted to Linhaliq for NCFBE patients with chronic lung infections with Pseudomonas aeruginosa. In March 2016, we announced that the European Medicines Agency, or EMA, had approved our request to review Linhaliq under the Centralised Authorisation Procedure drug review process; this procedure results in a single marketing authorization that is valid in all 28 European Union countries, as well as three European Economic Area countries. We requested, and were granted, the centralized pathway on the basis that Linhaliq represents a significant technical innovation for the potential treatment of NCFBE associated with chronic Pseudomonas aeruginosa infection. In December 2016, we announced top-line results for the Phase 3 studies for Linhaliq in NCFBE, which consisted of the two worldwide, double-blind, placebo-controlled pivotal trials, ORBIT-3 and ORBIT-4, that were identical in design except for a pharmacokinetics sub-study that was conducted in one of the trials. We held pre-NDAmeetings with the FDA in December 2016 and March 2017 to discuss our Phase 3 study results. --- We were incorporated in California in 1991. Our principal executive offices are located at 3929 Point Eden Way, Hayward, California 94545, and our main telephone number is (510) 265-9000. Our website: www.aradigm.com.
|Auditor||OUM & Co. LLP|
|Company Counsel||Hogan Lovells US LLP|
|Lead Underwriter||Ladenburg Thalmann & Co. Inc.|
|Transfer Agent||Computershare Trust Company, N.A|
|Underwriter||H.C. Wainwright & Co., LLC|
|Underwriter||Roth Capital Partners, Inc|
|Underwriter Counsel||Goodwin Procter LLP|
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