- Company Name
- Aradigm Corporation
- Stock Symbol
- Class Period
- July 27, 2017 to January 8, 2018
- Motion Deadline
- March 12, 2018
- Northern District of California
The complaint charges Aradigm and certain of its officers with violations of the Securities Exchange Act of 1934. Aradigm develops novel pulmonary drug delivery systems that are designed to enhance the delivery and effectiveness of a number of existing and developmental stage drugs and reduce the need for injectable drug therapy. Among Aradigm’s lead product candidates is Linhaliq, a proprietary formulation of the antibiotic ciprofloxacin that is delivered by inhalation for the management of infections associated with severe respiratory diseases.
On July 27, 2017, Aradigm submitted a New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for U.S. marketing approval for Linhaliq for the treatment of non-cystic fibrosis bronchiectasis (or “NCFB”) patients with chronic lung infections.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and or failed to disclose adverse facts regarding the Company’s business and prospects. Specifically, defendants made false and misleading statements and/or failed to disclose that the methodology underlying Aradigm’s Linhaliq Phase III clinical trials was not well tailored to yield consistent efficacy findings or to provide data sufficient to account for discordant efficacy findings, and the endpoint of the Phase III trials – namely, delaying the time to first exacerbation on study therapy compared to placebo over approximately one year of observation – was unlikely to demonstrate a clinically meaningful benefit with respect to a patient population that would likely be taking the drug for a longer duration. Accordingly, these studies were unlikely to support FDA approval of the Linhaliq NDA. As a result of defendants’ false statements and/or omissions, the price of Aradigm common stock was artificially inflated to a high of $7.05 per share during the Class Period.
Then on January 9, 2018, the FDA released a briefing document for its January 11, 2018 Antimicrobial Drugs Advisory Committee meeting during which it was to discuss Aradigm's Linhaliq NDA. The FDA explained in the briefing document that “[r]easons for the discordance in efficacy findings between trials cannot be explained based on the information collected in the two trials” underlying the Linhaliq NDA, and that, with respect to the clinical trials’ endpoint, “it is unclear that delaying the time to first exacerbation on study therapy compared to placebo over approximately one year of observation translates into a clinically meaningful benefit for a patient population that would most likely be on this therapy for long durations.” On this news, the price of Aradigm stock fell $2.28 per share, or more than 38%, to close at $3.70 per share on January 9, 2018. On January 11, 2018, Aradigm announced that the “Antimicrobial Drugs Advisory Committee (ADAC) of the US Food and Drug Administration (FDA) did not recommend approval for Linhaliq™ as a treatment for [NCFB],” causing the price of Aradigm stock to decline another 34%.