Aradigm Corporation (OTC BB: ARDM.OB) (the "Company") today announced financial results for the first quarter and three months ended March 31, 2014.
Total revenue was $6.6 million for the first quarter of 2014, compared with $0.3 million in revenue for the first quarter of 2013. The increase in revenue was due to the recognition of revenue from the Grifols collaboration arrangement as the Company is being reimbursed for Pulmaquin® project-related costs, as well as the revenue recognized from work being conducted under NIH grants.
Total operating expenses for the first quarter of 2014 were $7.5 million, compared with total operating expenses of $3.2 million for the first quarter of 2013. The increase in operating expenses was primarily due to higher R&D expenses from the preparation for the start of the Pulmaquin Phase III clinical trials which resulted in higher costs in contract manufacturing and testing as well as higher clinical trial expenses.
As of March 31, 2014, cash and cash equivalents totaled $41.7 million.
As had previously been disclosed, on March 4, 2014, the Company executed an Assignment Agreement that transferred the rights for all future royalty payments payable on sales of Zogenix, Inc.'s Sumavel* DosePro* to the royalty financing lenders, effective February 28, 2014, in full and complete satisfaction of the Company's obligations under the loan agreement entered into in connection with the royalty financing. Under the Assignment Agreement, the parties agreed that the value of the Assigned Interest is $5.8 million. The Company valued the assignment of the royalty rights at $5.8 million, which was recorded as a gain on assignment of royalty interests. The balance of the note payable and accrued interest extinguished in the transaction offset by deferred loan costs and unamortized debt discount as of the assignment date less the fair value of the royalty rights resulted in a gain from extinguishment of debt of $3.0 million. As a result of these one-time, non-cash gains the Company's net income for the first quarter of 2014 was $7.8 million, or $0.01 per share, compared with a net loss of $3.3 million, or $0.01 per share, for the same period in 2013.
"With the completion of the assignment of future royalty rights for the Zogenix DosePro product to the lenders in the first quarter we have removed all debt from our balance sheet," said Nancy E. Pecota, Aradigm's Chief Financial Officer.
"I am very pleased that following the dosing of the first U.S. patient with Pulmaquin in our ORBIT-3 Phase III study last month, there are many more sites being activated in the U.S. and overseas. We anticipate that ORBIT-4 will be ready for enrollment before the end of Q2 2014," said Igor Gonda, Aradigm's Chief Executive Officer.