Agreements

* On May 21, 2013, Grifols and Aradigm Corporation has announced the signing of an exclusive, worldwide license for Aradigm’s proprietary formulations of inhaled ciprofloxacin (Pulmaquin and Lipoquin™) for the treatment of severe respiratory diseases, including non-cystic fibrosis bronchiectasis (BE). Aradigm has completed Phase 2b clinical trials in BE patients with Pulmaquin and Lipoquin. Aradigm’s once-a-day novel inhaled formulations of ciprofloxacin are encapsulated in liposomes, allowing for a sustained release of the drug within the lung and improving airway tolerability. The formulations are to be used for chronic maintenance therapy as they achieve much higher antibiotic concentration at the site of infection and relatively low systemic antibiotic concentrations to minimize side-effects. Lipoquin is a liposomal formulation of ciprofloxacin. Pulmaquin is a dual release formulation that is a mixture of Lipoquin with unencapsulated ciprofloxacin.

Pulmaquin has been tested extensively in preclinical tests, as well as in the ORBIT-2 Phase 2b bronchiectasis study in which outstanding antimicrobial activity coupled with good safety and tolerability was found, and, most importantly, the positive impact on prevention of exacerbations compared to placebo was also observed. Pulmaquin is ready to begin Phase 3 clinical trials. Aradigm has been granted orphan drug designation for liposomal ciprofloxacin for cystic fibrosis in the U.S. and the E.U., and for the combination of liposomal ciprofloxacin and free ciprofloxacin for BE in the U.S. Aradigm’s inhaled ciprofloxacin has been also successfully tested in animal models of the bioterrorism infections inhalational tularemia, pneumonic plague and Q-fever.

Aradigm is entitled to receive cash payments of up to $25 million upon achievement of development milestones.

Grifols is responsible for all commercialization activities and will pay Aradigm tiered royalties on worldwide sales of products utilizing Aradigm’s proprietary inhaled ciprofloxacin formulations. Grifols will be granted an option to license Aradigm’s AERx® pulmonary drug delivery platform for use with another molecule.

In conjunction with the licensing agreement, Grifols will (upon receipt of Aradigm shareholders’ approval) acquire 35% of Aradigm’s common stock on a fully diluted basis at a price per share of $0.124 for a total investment of approximately $26 million.

Existing Aradigm shareholders, including Tavistock Life Sciences Company and accounts managed by First Eagle Investment Management, LLC, and new investors Great Point Partners, LLC will co-invest in the stock purchase transaction and purchase an additional approximately $15.4 million in Aradigm common stock.

 

* On July 16, 2013,  Aradigm Corporation has announced that the Company's shareholders approved all proposals at the Special Meeting of Shareholders held on July 15, 2013, including those related to the license agreement with Grifols, for Aradigm's proprietary formulations of inhaled ciprofloxacin (Pulmaquin® and Lipoquin®) for the treatment of severe respiratory diseases, including non-cystic fibrosis bronchiectasis (BE).

Aradigm shareholders also approved the amendment to the Company's Amended and Restated Articles of Incorporation to increase the number of authorized shares of Common Stock to allow the equity issuances contemplated by the collaboration transaction. In conjunction with the licensing agreement, Grifols will acquire 35% of Aradigm's common stock on a fully diluted basis at a price per share of $0.124 for a total investment of approximately $26 million. Existing Aradigm shareholders, including Tavistock Life Sciences Company and accounts managed by First Eagle Investment Management, LLC, and new investors Great Point Partners, LLC will co-invest in the stock purchase transaction and purchase an additional approximately $15.4 million in Aradigm common stock.

The transaction remains subject to certain closing conditions and is expected to close in the third quarter of 2013. At that point, Grifols will be entitled to designate two directors to serve on the Aradigm Board of Directors.