Aradigm Corp Shares Rise on Exclusive License Deal with Grifols

Aradigm Corp Shares Rise on Exclusive License Deal with Grifols

By: Dylan Sikes - AllPennyStocks.com News

Tuesday, May 21, 2013

Pulmonary diseases, or abnormal conditions that affect the lungs and respiratory tract, vary widely. Some acute obstructive respiratory diseases in the category include asthma and chronic bronchitis while infectious diseases include pneumonia and tuberculosis. Chronic obstructive pulmonary disease, or COPD, is another that is widely publicized on television commercials through the efforts to sell the drugs Singulair, made by Merck & Co. (NYSE:MRK), and Symbicort, manufactured by AstraZeneca PLC (NYSE:AZN). A junior entrenched in the pulmonary disease industry is Aradigm Corp. (OTCBB:ARDM). The emerging specialty pharmaceutical company has product candidates addressing the treatment of bronchiectasis, cystic fibrosis, inhalation tularemia and anthrax infections, as well as for prevention of respiratory and other diseases in tobacco smokers through smoking cessation.


Like most junior biotechs, Aradigm doesn’t generate a lot of revenue, but unlike the vast majority of developmental drug makers, it actually makes some money. In 2009, the company inked a co-promotion agreement with Zogenix, Inc. (Nasdaq:ZGNX) and Astellas Pharma US, Inc. for the Sumavel DosePro (sumatriptan injection) needle-free delivery system for migraines. Aradigm received a $4 million milestone payment upon commercialization and still draws royalty payments for sale worldwide. In the first quarter of 2013, Aradigm collected $279,000 in royalties from Zogenix.

On Tuesday, the company reported that it is at it again with a new agreement with a Nasdaq company, this time Grifols, SA (Nasdaq:GRFS). The companies signed an exclusive worldwide licensing agreement for Pulmaquin and Lipoquin™, Aradigm’s proprietary formulations of inhaled ciprofloxacin for the treatment of severe respiratory diseases, including non-cystic fibrosis bronchiectasis, or “BE.” Aradigm has been granted orphan drug designation for BE by the FDA as it affects a small population of about 110,000 people in the U.S. There are currently no FDA-approved drugs for BE.

Based in Spain, Grifols sells more than 90 percent of its products outside the debt-riddled country. In the first quarter, Grifols reported profits that climbed 19 percent from the year prior quarter to 115.7 million euros ($149.37 million US) on revenue of 683.7 million euros ($882.6 million US).

Per the deal, Grifols is responsible for up to $65 million in development and clinical expenses for the BE indication. The companies have agreed to advance the formulations into Phase III clinical trials for BE. Aradigm is entitled to $25 million for achievements of milestones during development. Grifols will also be responsible for commercialization upon approvals and will make tiered royalty payments to Aradigm for worldwide sales thereafter.

Further, upon shareholder approval, Grifols will acquire 35-percent of Aradigm shares on a fully-diluted basis at a cost of 12.4 cents per share for an aggregate purchase of $26 million. Upon meeting all conditions, the transaction is expected to be closed in the second half of the year at which time Grifols will be allowed to appoint two directors to the Aradigm board.

Shares of ARDM closed Monday’s session at 10.4 cents. Shares gapped ahead to 11.5 cents at Tuesday’s opening bell and surged as high as 15.8 cents before settling back down to 13.2 cents for gains of about 27 percent on the day as the closing bell draws near.

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