Aradigm's Bronchiectasis Candidate Has Negative FDA Vote

Aradigm Corporation (NASDAQ:ARDM) announced that the FDA’s Antimicrobial Drugs Advisory Committee has voted against the approval (in the ratio of 12:3) of its lead candidate, Linhaliq (a mixture of liposome encapsulated and unencapsulated ciprofloxacin). Aradigm is looking to get Linhaliq approved for the treatment of non-cystic fibrosis bronchiectasis (NCFBE) patients suffering chronic lung infections with pseudomonas aeruginosa.

Although it is not mandatory, the FDA generally takes the recommendations of the advisory committee into account before approving a candidate. The regulatory body takes the latter’s advice into consideration for decision making. A response from the regulatory agency is expected on Jan 26, 2018.

Notably, the candidate is also under review in the EU for the aforementioned indication.

Aradigm’s share price shows that the company has significantly outperformed the industry in a year. The stock has soared 79.1% compared with the industry’s 11% gain.

A new drug application submitted by the company in December 2017 for Linhaliq was based on the positive efficacy and safety data from two phase III studies (ORBIT-3 and ORBIT-4) and one phase IIb program. Both phase III studies demonstrated a statistically significant reduction in pseudomonas aeruginosa density at Day 28, marking the end of the first on-treatment period.

Linhaliq was generally well-tolerated in both phase III studies. The phase IIb trial (ORBIT-2) also showed positive outcomes, meeting its primary efficacy endpoint of reduction of P. aeruginosa density at Day 28.

We remind investors that Linhaliq received an orphan drug designation from the FDA in June 2011 for the given indication. Additionally, the candidate was also granted a qualified infectious disease product designation for treating NCFBE in June 2014 followed by a Fast Track Designation in August 2014.

Per information provided by Aradigm, there is an unmet medical need for NCFBE with more than 150,000 people in the United States and over 200,000 people in Europe, affected by the severe, chronic and rare disease. Also, since there is absence of an approved drug for the treatment of NCFBE in the United States and the EU, the potential market opportunity for the candidate is huge in the above geographies.

However, the FDA panel’s negative recommendation is a major disappointment for Aradigms’ shareholders, banking on the approval of Linhaliq.

Going forward, we expect investors’ focus to remain on the regulatory updates provided by the company on Linhaliq.

Zacks Rank & Key Picks

Aradigm carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Exelixis, Inc. (NASDAQ:EXEL) , XOMA Corporation (NASDAQ:XOMA) and Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP) . While Exelixis and XOMA sport a Zacks Rank #1 (Strong Buy), Sucampo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Exelixis’ earnings per share estimates have been revised upward from 72 cents to 73 cents for 2018 over the last 60 days. The company pulled off a positive earnings surprise in each of the trailing four quarters with an average beat of 572.92%. Share price of the company has surged 59.8% in a year’s time.

XOMA’s loss per share estimates have narrowed from 99 cents to 42 cents for 2018 over the last 30 days. The company came up with an average beat of 47.92%. Share price of the company has skyrocketed 604.9% in the last 12 months.

Sucampo’s earnings per share estimates have moved north from $1.15 to $1.19 for 2018 in the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 15.63%. Share price of the company has jumped 45.8% in a year.

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