Aradigm Corp. got off to a good start in 2007 following a year of cutbacks, asset sales and other events that eventually led to the delisting of its stock.

The Hayward, Calif.-based company completed a public offering of 33 million shares at 95 cents per share, raising gross proceeds of $31.35 million. Underwriters have an option to purchase up to 9.95 million additional shares to cover overallotments. Aradigm is applying its AERx inhalation delivery technology to existing drugs to develop improved formulations for treating severe respiratory diseases.

"We view this offering almost as a rebirth," Thomas Chesterman, senior vice president and chief financial officer at Aradigm, told BioWorld Today. "We previously were a drug delivery technology company that sought to partner the technology with pharmaceutical companies, and we enjoy the legacy of that" through potential milestone and royalty payments down the road.

"At this point we're an emerging specialty pharmaceutical company. We intend to develop and commercialize a portfolio a drugs delivered by inhalation for the treatment of severe respiratory diseases."

Most of the proceeds from the offering will go toward further development of Aradigm's ARD-3100 product for the treatment of cystic fibrosis. Other funds will be earmarked for completion of its next-generation AERx pulmonary drug delivery device, and rest for other programs and general corporate purposes.

ARD-3100 is an aerosolized, inhaled liposomal formulation of ciprofloxacin in preclinical development. The formulation of the anti-infective agent gained orphan status from the FDA last year for the management of cystic fibrosis, and last week for the management of bronchiectasis.

Chesterman said Phase I/IIa trials of ARD-3100 are expected to begin in the first half of this year.

ARD-1100, also liposomal ciprofloxacin, is in preclinical development for treating and preventing infection from inhaled anthrax, in a program being supported by Defence R&D Canada.

Aradigm's most advanced program now is fully in the hands of Bagsvaerd, Denmark-based-Novo Nordisk A/S. Novo is in Phase III trials with the inhalable insulin product AERx iDMS for the treatment of diabetes. Novo previously said the launch could be in 2010. Aradigm has estimated its royalties would average about 5 percent.

Novo has all rights to the AERx technology in insulin applications, while Aradigm has rights in other indications.

In August, Aradigm sold its needle-free Intraject delivery technology platform to start-up company Zogenix Inc., of Hayward, Calif. The lead product from that program was a formulation of sumatriptan for treating migraine that Chesterman said was Phase III-ready at the time of the sale. Aradigm is eligible for a milestone payment upon approval and royalties on sales, as well as royalties on any ensuing products.

Aradigm also is working with United Therapeutics Corp., of Silver Spring, Md., to develop improved formulations of UTC's Remodulin (treprostinil), which is marketed for treatment of pulmonary arterial hypertension. Aradigm is eligible for milestone and royalty payments from that deal.

In November, Aradigm and partner APT Pharmaceuticals Inc., of Tucson, Ariz., said a Phase IIa trial of inhaled hydroxychloroquine in asthma patients did not meet efficacy endpoints. That program remained under review.

In May of last year, Aradigm cut more than 30 percent of its work force to leave it with fewer than 70 employees at the time.

And the firm's stock was delisted from Nasdaq in November, and now trades on the Over-the-Counter Bulletin Board. The shares (ARDM) gained 5 cents Thursday to close at $1. It reported $32.M in cash as of Sept. 30, to which it now added $31.35 million. It has about 48.7 million shares outstanding.

Chesterman said the financing would bring Aradigm back into Nasdaq compliance in terms of the balance sheet, but not in terms of share price.

"We do not plan at this time to do a reverse stock split," he said, adding that shareholders would prefer to see the share price rise naturally.

Punk, Ziegel & Co. is sole book runner and lead managing underwriter for the offering. Merriman Curhan Ford & Co. is co-manager.