A year after a major knockback from the FDA for its lead inhaled antibiotic product and protracted efforts to try to resurrect the program, Aradigm has filed for bankruptcy.
The California biotech had been hoping to raise additional funding for the inhaled ciprofloxacin drug for serious lung infections but says it determined a few days ago that without confirmation of additional cash it “would not have enough funds to meet all of their future financial obligations.”
That means the program—developed under the Apulmiq brand name in the U.S. and as Linhaliq in Europe—will have to be put up for sale along with other company assets, with the proceeds going to creditors and, if there’s any left over, the company’s shareholders.
The main backers for Aradigm have been Spanish drugmaker Grifols, which first bought into the inhaled ciprofloxacin program in 2013, and investment group First Eagle, which together own around 75% of its stock. It seems that they are reluctant to bankroll the company any further.
Aradigm’s long drive to get Apulmiq to market hit the buffers last January when the FDA said in a complete response letter that the company would have to run a new and expensive two-year trial before it could refile the drug. The verdict came after a negative advisory committee meeting and alongside a shopping list of other recommendations, including a third-party assessment of its phase 3 data in non-cystic fibrosis bronchiectasis patients (NCFBE) with chronic Pseudomonas aeruginosa infections.
That was completed in December and—according to Aradigm—verified the trial findings. Meanwhile, the biotech filed for approval of the drug in the EU last March for the same indication and received a list of “day 120” questions from the EMA that it responded to last month. Despite the stepwise progress, it seems the clock has now run down.
Aradigm insists it “remains confident in the efficacy, safety and quality” of its drug and will continue to work toward approval in NCFBE-related P. aeruginosa infections, which it says result in “severe disease with frequent exacerbations, high morbidity and mortality, and no available treatment options.”
Biotechs don’t go bankrupt that often, somewhat surprisingly given the high-risk nature of the business, and it’s not unknown for companies to emerge from bankruptcy with a recapitalization deal in place. One example is KaloBios, which filed in 2015 but agreed to a recap a few months later that allowed it to survive, restock its pipeline, and eventually be reborn as Humanigen.
There seems little chance of that outcome for Aradigm, however, as in an SEC filing the company reveals that it has already terminated the employment of Chief Medical Officer Juergen Froehlich, M.D., and Chairman John Siebert, Ph.D., its two main executive officers, with four other directors resigning.
In its last quarterly results statement in November, Aradigm revealed that it had a total shareholders’ deficit of $23.5 million and working capital of just $700,000, and had accrued an accumulated deficit of just over $467 million.