Throwing in the towel, troubled antibiotic maker Aradigm files for Chapter 11
One year ago, a cash-strapped Aradigm let go of its CEO, CFO and CMO in a final attempt to revive the company following a devastating FDA rejection for its inhaled antibiotic. Despite executive chairman John Siebert’s best efforts, things seem to have gone downhill since then: Aradigm began the year with the acknowledgement that its stock has tumbled from the Nasdaq to an over-the-counter market. Today, it’s officially declaring bankruptcy to sell off what remains of its specialty pharma business.
Observers might have seen it coming. In last November’s quarterly report, Aradigm execs flagged a working capital of $700,000 — not enough to keep them afloat for another 12 months — as cause for “substantial doubt about the company’s ability to continue to operate as a going concern.” That’s not to mention the total shareholders’ deficit of $23.5 million.
While Aradigm says it “remains confident in the efficacy, safety and quality of Apulmiq (US)/Linhaliq (EMA)” and will continue to work toward its approval for non-cystic fibrosis bronchiectasis, they have evidently lost the confidence of their largest funder and partner, Grifols, which first infused $26 million into the company via a 2013 licensing pact and increased its stake to 48% over the years.
The Hayward, CA-based biotech has burned through $467.4 million trying to advance its inhaled formulations of ciprofloxacin, only to receive thumbs down from an outside panel of FDA experts and later a formal slapdown from the agency, which wanted a new Phase III trial.
Finding the money to produce evidence of the drug’s durability in preventing the frequency and severity of exacerbations — the co-primary endpoints — and satisfy regulators’ other demands, however, has proven impossible for Aradigm.
“Aradigm intends to commence a process to sell substantially all of its assets to an interested party, subject to Bankruptcy Court approval,” the company wrote in a terse statement. “The proceeds from the sale would be distributed to satisfy the claims of its creditors, also subject to Court approval. Remaining assets, if any, would then be distributed to the Company’s stockholders.”