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As filed with the Securities and Exchange Commission on December 21, 2017

File No. 333-221352

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Amendment No. 1

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

ARADIGM CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

California		2834		94-3133088
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

3929 Point Eden Way

Hayward, CA 94545

(510) 265-9000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Igor Gonda

President and Chief Executive Officer

3929 Point Eden Way

Hayward, CA 94545

(510) 265-9000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Jon Layman, Esq. Hogan Lovells US LLP 3 Embarcadero Center San Francisco, CA 94111 (415) 374-2300		Michael D. Maline, Esq. Seo Salimi, Esq. Goodwin Procter LLP 620 Eighth Avenue New York, NY 10018 (212) 813-8800

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☐  (Do not check if a smaller reporting company)		Smaller reporting company		☒
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Proposed Maximum Aggregate Offering Price (1)		Amount of Registration Fee (2)
Common Stock, no par value		$28,750,000		$3,580

(1)

This amount represents the proposed maximum offering price of the securities registered hereunder that may be sold by the registrant. Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes shares subject to the underwriters’ option to purchase additional shares. Pursuant to Rule 416 under the Securities Act of 1933, as amended, the shares being registered hereunder include such indeterminate number of shares of common stock as may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends, or similar transactions. No additional registration fee is being paid for these shares.

(2)	$2,490 of the registration fee was previously paid on November 3, 2017 in connection with the initial filing of this registration statement.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale of these securities is not permitted.

 

Subject to Completion, Dated December 21, 2017

PRELIMINARY PROSPECTUS

 

                Shares of Common Stock

 

 

We are offering                  shares of common stock. Our common stock is listed on the Nasdaq Capital Market under the trading symbol “ARDM.” On December 20, 2017, the last reported sale price of our common stock was $5.24 per share.

 

 

Investing in shares of our common stock involves a high degree of risk. See “Risk Factors” beginning on page 7 of this prospectus and the risks and uncertainties described in our most recent annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q with the Securities and Exchange Commission that are incorporated in this prospectus by reference for certain risks and uncertainties relating to an investment in our securities.

 

		Per Share				Total
Public offering price		$				$
Underwriting discounts and commissions(1)		$				$
Proceeds, before expenses, to us		$				$

 

(1)	See “Underwriting” for additional disclosure regarding underwriting discounts, commissions and estimated offering expenses, including expenses for which we have agreed to reimburse the underwriters.

We have granted the underwriters an option for a period of 30 days to purchase an additional                  shares of our common stock. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $        , and the total proceeds to us, before expenses, will be $        .

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

Delivery of the shares of common stock is expected to be made on or about             , 2018.

 

 

Sole Book-running Manager

Ladenburg Thalmann

Co-lead Managers

H.C. Wainwright & Co.		Roth Capital Partners

This prospectus is dated             , 2018.

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TABLE OF CONTENTS

 

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS			1
SUMMARY			2
RISK FACTORS			7
USE OF PROCEEDS			9
MARKET PRICE OF OUR COMMON STOCK AND RELATED SHAREHOLDER MATTERS			10
DILUTION			11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			13
CAPITALIZATION			15
PRINCIPAL SHAREHOLDERS			17
DESCRIPTION OF COMMON STOCK			19
UNDERWRITING			21
LEGAL MATTERS			24
EXPERTS			24
INFORMATION INCORPORATED BY REFERENCE			24
WHERE YOU CAN FIND MORE INFORMATION		25

 

 

You should read this prospectus, including the information incorporated by reference herein, and any related free writing prospectus that we have authorized for use in connection with this offering.

You should rely only on the information that we have included or incorporated by reference in this prospectus and any related free writing prospectus that we may authorize to be provided to you. Neither we nor the underwriters have authorized any person to give any information or to make any representation other than those contained or incorporated by reference in this prospectus or any related free writing prospectus that we may authorize to be provided to you. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus or any related free writing prospectus. This prospectus and any related free writing prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do this prospectus or any related free writing prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.

You should not assume that the information contained in this prospectus or any related free writing prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference herein or therein is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus or any related free writing prospectus is delivered, or securities are sold, on a later date.

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States.

This prospectus contains or incorporates by reference summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed or have been incorporated by reference as exhibits to the registration statement of which this prospectus forms a part, and you may obtain copies of those documents as described in this prospectus under the heading “Where You Can Find More Information.”

 

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and the documents we have filed with the SEC that are incorporated by reference contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include all statements that are not historical facts and can generally be identified by the words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “seek,” “would,” “project,” “plan,” “expect,” “intend,” or the negative thereof, and similar expressions that convey uncertainty of future events or outcomes.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described and incorporated by reference under the heading “Risk Factors” and elsewhere in this prospectus, in any free writing prospectus we may authorize for use in connection with a specific offering and in our most recent annual report on Form 10-K, as updated by our annual, quarterly and other reports and documents that are incorporated by reference into this prospectus. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this prospectus and the information incorporated by reference in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this prospectus, together with the documents we have filed with the SEC that are incorporated by reference and any free writing prospectus we have authorized for use in connection with this specific offering, completely and with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. We qualify all of the forward-looking statements in the foregoing documents (including, but not limited to, this prospectus) by these cautionary statements.

 

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RISK FACTORS

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below and the risks set forth in the “Risk Factors” section of our most recent Annual Report on Form 10-K filed with the SEC, as revised or supplemented by our Quarterly Reports on Form 10-Q filed with the SEC since our most recent Annual Report on Form 10-K, each of which is incorporated by reference into this prospectus. You should also carefully consider the other information included or incorporated by reference in this prospectus before making an investment decision. Our business, financial condition, results of operations and cash flows could be materially adversely affected by any of these risks. The market or trading price of our common stock could decline due to any of these risks. In addition, please read “Disclosure Regarding Forward-Looking Statements” in this prospectus, where we describe additional uncertainties associated with our business and the forward-looking statements included or incorporated by reference in this prospectus. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.

Risks Related to this Offering

Management will have broad discretion as to the use of the net proceeds from this offering, and we may not use these proceeds effectively.

Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. Accordingly, you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our products and cause the price of our common stock to decline.

You will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase.

Since the public offering price for our common stock in this offering is substantially higher than the net tangible book value per share of our common stock outstanding prior to this offering, you will suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering. See the section titled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase shares in this offering.

Issuances of shares of common stock or securities convertible into or exercisable for shares of common stock following this offering, as well as the exercise of convertible securities outstanding, will dilute your ownership interests and may adversely affect the future market price of our common stock.

We may choose to raise additional capital subject to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If additional capital is raised through the sale of equity or convertible debt securities, or perceptions that those sales could occur, the issuance of these securities could result in further dilution to investors purchasing our common stock in this offering or result in downward pressure on the price of our common stock, and our ability to raise capital in the future.

In addition, we have a significant number of securities convertible into shares of our common stock outstanding, including options, convertible notes and warrants. If these securities are exercised, you may incur further dilution. Moreover, to the extent that we issue additional securities convertible into or exchangeable for shares of our common stock in the future and those options, warrants or other securities are exercised, converted or exchanged, you may experience further dilution.

 

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A large number of shares issued in this offering may be sold in the market following this offering, which may depress the market price of our common stock.

A large number of shares issued in this offering may be sold in the market following this offering, which may depress the market price of our common stock. Sales of a substantial number of shares of our common stock in the public market following this offering could cause the market price of our common stock to decline. If there are more shares of common stock offered for sale than buyers are willing to purchase, then the market price of our common stock may decline to a market price at which buyers are willing to purchase the offered shares of common stock and sellers remain willing to sell the shares. All of the securities issued in the offering will be freely tradable without restriction or further registration under the Securities Act.

 

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USE OF PROCEEDS

We estimate that the net proceeds of this offering will be approximately $             million, assuming the sale of                  shares of common stock at an assumed public offering price of $5.24 per share, the last reported sale price of our common stock on the Nasdaq Capital Market on December 20, 2017, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed public offering price of $5.24 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on December 20, 2017, would increase (decrease) the net proceeds to us from this offering by $             million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares of common stock offered by us would increase (decrease) the net proceeds to us from this offering by $             million, assuming that the assumed public offering price remains the same.

We currently intend to use the net proceeds from the sale of the shares of our common stock offered by us hereunder for working capital needs, capital expenditures, and other general corporate purposes in pursuit of advancing our commercial, clinical, and preclinical efforts. Our management will have broad discretion in the application of our net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of these proceeds.

 

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MARKET PRICE OF OUR COMMON STOCK AND RELATED SHAREHOLDER MATTERS

Market Information

Since June 11, 2014, our common stock has traded on the Nasdaq Capital Market under the symbol “ARDM.” The following table sets forth the high and low sale prices for our common stock for the periods indicated as reported on the Nasdaq Capital Market. The prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

 

		High				Low
Year Ended December 31, 2015:
First Quarter		$	7.95			$	6.26
Second Quarter		$	7.67			$	6.33
Third Quarter		$	7.67			$	6.78
Fourth Quarter		$	7.22			$	3.61
Year Ended December 31, 2016:
First Quarter		$	4.44			$	2.65
Second Quarter		$	5.13			$	4.18
Third Quarter		$	6.88			$	4.13
Fourth Quarter		$	6.82			$	1.59
Year Ended December 31, 2017:
First Quarter		$	2.08			$	1.54
Second Quarter		$	1.59			$	0.80
Third Quarter		$	4.20			$	1.13
Fourth Quarter (through December 20, 2017)		$	5.82			$	3.30

Shareholders

As of December 18, 2017, there were 15,170,200 shares of common stock issued and outstanding, which shares were held by 71 shareholders of record. A greater number of holders of common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

Dividends

We have never declared or paid any cash dividend on our common stock, nor do we currently intend to pay any cash dividend on our common stock in the foreseeable future. We expect to retain our earnings, if any, for the growth and development of our business.

 

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DILUTION

If you invest in our common stock, your interest will be diluted to the extent of the difference between the public offering price per share and the as adjusted net tangible book value per share of our common stock after this offering.

As of September 30, 2017, our net tangible book value was $(9.2) million, or $(0.61) per share. Net tangible book value is total tangible assets less total liabilities divided by the total number of outstanding shares of common stock.

After giving effect to the sale of                      shares of common stock in this offering at an assumed public offering price of $5.24 per share, which was the closing price of our common stock as reported on Nasdaq Capital Market on December 20, 2017, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value as of September 30, 2017, would have been $             million, or $             per share. This represents an immediate increase in as adjusted net tangible book value of $             per share to our existing shareholders and immediate dilution in net tangible book value of $             per share to investors participating in this offering. The following table illustrates this dilution per share to investors participating in this offering:

 

Assumed public offering price per share						$
Net tangible book value per share as of September 30, 2017		$	(0.61	)
Increase in net tangible book value per share attributable to new investors in this offering
As adjusted net tangible book value per share after giving effect to this offering
Dilution in net tangible book value per share to new investors in this offering						$

Each $1.00 increase (decrease) in the assumed public offering price of $5.24 per share would increase (decrease) our as adjusted net tangible book value after this offering by $         million, or $         per share, and the dilution per share to new investors by $         per share, assuming that the number of shares of common stock offered by us, as set forth above, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares of common stock we are offering from the assumed number of shares of common stock set forth above. An increase (decrease) of 1.0 million shares of common stock in the number of shares of common stock offered by us from the assumed number of shares of common stock set forth above would increase (decrease) our as adjusted net tangible book value after this offering by $         million, or $         per share, and the dilution per share to new investors by $         per share, assuming that the assumed public offering price remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

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The number of shares of our common stock to be outstanding after this offering is based on 15,112,078 shares of our common stock outstanding as of September 30, 2017, and excludes:

 

•

2,790,033 shares of our common stock issuable upon the exercise of stock options outstanding as of September 30, 2017 at a weighted-average exercise price of $4.94 per share;

 

•

2,604,734 shares of common stock reserved for future issuance under our 2015 Equity Incentive Plan;

 

•

658,056 shares of common stock reserved for future issuance upon vesting of restricted stock and restricted stock units granted under our 2015 Equity Incentive Plan;

 

•

247,666 shares of common stock reserved for future issuance under our Employee Stock Purchase Plan; and

 

•

4,678,024 shares of common stock reserved for issuance upon the exercise of warrants outstanding and the conversion of notes outstanding.

The information discussed above is illustrative only and will adjust based on the actual public offering price, the actual number of shares that we offer in this offering, and other terms of this offering determined at pricing. In addition, the information discussed above assumes no exercise of the underwriters’ overallotment option.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following includes a summary of transactions since January 1, 2014 in which we have been a participant, or any proposed transaction, in which the amount involved in the transaction exceeded the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change of control and other arrangements, which are described under “Executive Compensation” in our Annual Report on Form 10-K (which incorporates such information by reference from the section captioned “Compensation” in our definitive Proxy Statement on Schedule 14A filed on April 19, 2017), which report is incorporated by reference in this prospectus.

We are party to the License Agreement with Grifols, one of our large shareholders, under which we licensed to Grifols the Licensed Products on an exclusive, world-wide basis. For more information on the License Agreement, see “Summary–Aradigm Overview.”

Under the License Agreement, Grifols funded $65,000,000 for certain development expenses (which includes allocations for our internal, fully-burdened expenses). During the years ended December 31, 2016, December 31, 2015 and December 31, 2014, we recognized $40,000, $23,400,000 and $33,000,000, respectively, in contract revenue relating to services performed and costs incurred during the period under the License Agreement. We have utilized the full amount of the $65,000,000 of Grifols-funded budget provided under the License Agreement and will not be recognizing any future revenue related to the $65,000,000 Grifols-funded budget.

We are also party to a registration rights agreement with Grifols and a governance agreement with Grifols, or the Governance Agreement, which, among other things, grants certain rights to Grifols to maintain a target level of ownership in our company and certain preemptive rights to participate in future issuances of our capital stock. For more information on each of these agreements, see “Description of Common Stock.”

Private Placement

On April 21, 2016, we entered into a Purchase Agreement with various purchasers, including two entities who are beneficial owners of more than 5% of our common stock (Grifols and First Eagle), in connection with the private placement of $23,000,000 in aggregate principal amount of convertible senior notes issued pursuant to an indenture of the same date with the same purchasers and associated warrants.

 

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Other Transactions

In 2016 we engaged the law firm Hogan Lovells US LLP, or Hogan Lovells, to provide legal services to the Company. An immediate family member of Virgil Thompson, one of our directors and our former Chairman, is a partner at Hogan Lovells. We incurred $590,988 for services performed by Hogan Lovells during the year ended December 31, 2016. We anticipate that the value of services to be performed by Hogan Lovells during the current fiscal year will exceed $120,000.

Review, Approval or Ratification of Transactions with Related Persons

The Board has adopted, in writing, a policy and procedures for the review of related person transactions. Any related person transaction we propose to enter into must be reported to our Chief Financial Officer and, unless otherwise reviewed and approved by the Board, shall be reviewed and approved by the Audit Committee in accordance with the terms of the policy, prior to effectiveness or consummation of any related person transaction, whenever practicable. The policy defines a “related person transaction” as any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness), or any series of similar transactions, arrangements or relationships in which (i) we were or are to be a participant, (ii) the amount involved exceeds $120,000 and (iii) a Related Person (as defined therein) had or will have a direct or indirect material interest. In addition, any related person transaction previously approved by the Audit Committee or otherwise already existing that is ongoing in nature shall be reviewed by the Audit Committee annually to ensure that such related person transaction has been conducted in accordance with the previous approval granted by the Audit Committee, if any, and that all required disclosures regarding the related person transaction are made. Transactions involving compensation of executive officers shall be reviewed and approved by the Compensation Committee in the manner specified in the charter of the Compensation Committee. As appropriate for the circumstances, the Audit Committee shall review and consider the Related Person’s interest in the related person transaction, the approximate dollar value of the amount involved in the related person transaction, the approximate dollar value of the amount of the Related Person’s interest in the transaction without regard to the amount of any profit or loss, whether the transaction was undertaken in the ordinary course of business, whether the transaction with the Related Person is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party, the purpose of, and the potential benefits to us of the transaction and any other information regarding the related person transaction or the Related Person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.

 

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CAPITALIZATION

The following table shows our cash, cash equivalents and restricted cash, and our capitalization as of September 30, 2017 on:

 

•

an actual basis; and

 

•

an as adjusted basis, giving effect to the sale by us of                shares of common stock in this offering at the assumed public offering price of $5.24 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on December 20, 2017, after deducting the underwriting discount and offering expenses payable by us.

 

		As of September 30, 2017
		Actual				As Adjusted(1)
		(Unaudited)				(Unaudited)
		(in thousands, except share and per share data)
Cash and cash equivalents		$	12,594			$
Long-term debt		$	14,537			$
Shareholders’ equity (deficit):
Preferred stock, no par value, 5,000,000 shares authorized, no shares issued and outstanding, actual and as adjusted			—				—
Common stock, no par value, 35,045,765 shares authorized, 15,112,078 shares issued and outstanding, actual;                 shares issued and outstanding, as adjusted			441,826
Accumulated deficit			(450,994	)
Total shareholders’ equity (deficit)		($	9,168	)		$

 

(1)

Each $1.00 increase (decrease) in the assumed public offering price of $5.24 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on December 20, 2017, would increase (decrease) each of cash, cash equivalents and restricted cash and total capitalization by $        million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares of common stock offered by us would increase (decrease) each of cash, cash equivalents and restricted cash and total capitalization by $        million, assuming that the assumed public offering price remains the same, and after deducting the underwriting discount. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

 

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The number of shares of our common stock to be outstanding after this offering is based on 15,112,078 shares of our common stock outstanding as of September 30, 2017, and excludes:

 

•

2,790,033 shares of our common stock issuable upon the exercise of stock options outstanding as of September 30, 2017 at a weighted-average exercise price of $4.94 per share;

 

•

2,604,734 shares of common stock reserved for future issuance under our 2015 Equity Incentive Plan;

 

•

658,056 shares of common stock reserved for future issuance upon vesting of restricted stock and restricted stock units granted under our 2015 Equity Incentive Plan;

 

•

247,666 shares of common stock reserved for future issuance under our Employee Stock Purchase Plan; and

 

•

4,678,024 shares of common stock reserved for issuance upon the exercise of warrants outstanding and the conversion of notes outstanding.

 

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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the ownership of our common stock as of December 18, 2017 by: (i) each current director of our company; (ii) each of our named executive officers; (iii) all current executive officers and directors of our company as a group; and (iv) all those persons known by us to be beneficial owners of more than five percent (5%) of our common stock.

Beneficial ownership is determined according to the rules of the Securities and Exchange Commission and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including options that are currently exercisable or exercisable within 60 days of December 18, 2017. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown that they beneficially own.

Our calculation of the percentage of beneficial ownership prior to this offering is based on 15,170,200 shares of our common stock outstanding as of December 18, 2017. We have based our calculation of the percentage of beneficial ownership after this offering assuming the sale and issuance of                  shares of our common stock in this offering.

Shares of our common stock subject to stock options currently exercisable or exercisable within 60 days of December 18, 2017, are deemed to be outstanding for computing the percentage ownership of the person holding these options and the percentage ownership of any group of which the holder is a member but are not deemed outstanding for computing the percentage of any other person.

 

		Beneficial Ownership before this offering(1)								Beneficial Ownership after this offering(1)
		Number of Shares				Percentage of Total (%)				Number of Shares				Percentage of Total (%)
5% Stockholders
Grifols, S.A.(2) Avinguda de la Generalitat, 152-158 Parc de Negocis Can Sant Joan Sant Cugat del Valles 08174, Barcelona, Spain			9,073,538				47.8	%
First Eagle Investment Management, LLC(3) 1345 Avenue of the Americas New York, NY 10105			4,689,662				29.8	%
Boxer Capital(4)     11682 El Camino Real, Suite 320     San Diego, CA 92130			900,000				5.9	%
Laurence W. Lytton(5)     467 Central Park West     New York, NY 10025			769,328				5.1	%
Executive Officers and Directors
Igor Gonda(6)			424,974				2.8	%
Nancy Pecota(7)			280,806				1.8	%
Juergen K. Froehlich(8)			302,445				2.0	%
Virgil D. Thompson(9)			159,622				1.0	%
John M. Siebert(10)			146,789				1.0	%
David Bell(11)			—					*
Frederick M. Hudson(12)			121,748					*
All officers, directors and nominees as a group (7 persons)(13)			1,436,384				8.9	%

 

*	Less than one percent.

 

(1)

This table is based upon information supplied by officers, directors and principal shareholders and information contained in Forms 3 and 4, Schedules 13D and 13G and Form 13F filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 15,170,200 shares of our common stock outstanding on December 18, 2017. Beneficial

 

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ownership is determined in accordance with SEC rules. In computing the number of shares beneficially owned by an entity or person and the percentage of ownership of that entity or person, shares of our common stock (a) that would be issued upon the conversion of our outstanding senior convertible notes due 2021, or the Notes, as of September 30, 2017 (except as otherwise noted), (b) that would be issued upon the exercise of our outstanding warrants, and (c) subject to options held by that person that will be vested and exercisable within 60 days of December 18, 2017 are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each person on this table is c/o Aradigm Corporation, 3929 Point Eden Way, Hayward, California, 94545.

(2)

Based upon information contained in a Schedule 13D/A filed with the SEC on April 4, 2017. Grifols holds sole voting power and sole dispositive power over 5,244,363 shares of common stock. Grifols shares voting power and dispositive power over 3,829,175 shares of common stock with Grifols Worldwide Operations Limited, a company organized under the laws of Ireland and a wholly-owned subsidiary of Grifols. The aggregate amount of shares of common stock shown includes 3,829,175 shares of common stock issuable upon conversion of Notes held by Grifols Worldwide Operations Limited. The address of the principal office of Grifols is Avinguda de la Generalitat, 152-158, Parc de Negocis Can Sant Joan, Sant Cugat del Valles 08174, Barcelona, Spain, and of Grifols Worldwide is Grange Castle Business Park, Grange Castle, Clondalkin, Dublin 22, Ireland.

(3)

Based upon information contained in a Schedule 13D/A filed with the SEC on December 6, 2016. First Eagle Investment Management, LLC, or FEIM (formerly Arnhold and S. Bleichroeder Advisors, LLC), an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is deemed to beneficially own 4,689,662 shares of our common stock, as a result of acting as investment advisor to various clients. Clients of FEIM have the right to receive and the ultimate power to direct the receipt of dividends from, or the proceeds of the sale of, such securities. First Eagle Value in Biotechnology Master Fund, Ltd., a Cayman Islands company for which FEIM acts as investment adviser, may be deemed to beneficially own 2,217,899 of these 4,689,662 shares. In addition, 21 April Fund Ltd., a Cayman Islands company for which FEIM acts as an investment adviser, may be deemed to beneficially own 1,554,141 of these 4,689,662 shares. The aggregate amount of shares of common stock shown includes (a) 383,877 shares of common stock issuable upon the conversion of Notes and 172,745 shares issuable upon the exercise of warrants held by 21 April Fund, Ltd and (b) 191,939 shares of common stock issuable upon the conversion of Notes and 86,372 shares issuable upon the conversion of warrants held by First Eagle Value in Biotechnology Master Fund, Ltd.

(4)

Based upon information contained in a Schedule 13G filed with the SEC on December 11, 2017. The shares of our common stock shown as beneficially owned by Boxer Capital are beneficially owned by Boxer Capital, LLC, or Boxer Capital, Boxer Asset Management Inc., or Boxer Management, a Bahamas corporation which is the managing member and majority owner of Boxer Capital, and Joe Lewis, who is the sole indirect beneficial owner of, and controls, Boxer Management. Each of Boxer Capital, Boxer Management and Joe Lewis reports that, as of November 30, 2017, such reporting person had shared voting power and shared dispositive power over all 900,000 of the shares of our common stock shown. The principal business address of Boxer Capital is 11682 El Camino Real, Suite 320, San Diego, CA 92130. The principal business address of each of Boxer Management and Mr. Lewis is c/o Cay House, EP Taylor Drive N7776, Lyford Cay, New Providence, Bahamas.

(5)	Based on information contained in a Schedule 13G filed with the SEC on June 12, 2017. Includes 10,799 shares of common stock issuable upon conversion of Notes (as of May 31, 2017), and 4,319 shares of common stock issuable upon exercise of warrants.

(6)	Includes 270,674 stock options which are exercisable within 60 days of December 18, 2017.

(7)	Includes 157,068 stock options which are exercisable within 60 days of December 18, 2017.

(8)	Includes 186,967 stock options which are exercisable within 60 days of December 18, 2017.

(9)	Includes 134,373 stock options which are exercisable within 60 days of December 18, 2017.

(10)	Includes 134,248 stock options which are exercisable within 60 days of December 18, 2017.

(11)	Mr. Bell serves as Corporate Vice President of Grifols S.A. and General Counsel of Grifols Inc. Mr. Bell disclaims any beneficial ownership in shares of our common stock owned by Grifols, S.A.

(12)	Includes 121,748 stock options which are exercisable within 60 days of December 18, 2017.

(13)	See footnotes (6) through (12) above.

 

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DESCRIPTION OF COMMON STOCK

The following description is a summary of the material terms and provisions of our common stock. For the complete terms of our common stock, please refer to our amended and restated articles of incorporation and amended and restated bylaws that are filed as exhibits to our reports incorporated by reference into the registration statement that includes this prospectus.

As of December 18, 2017, we had 15,170,200 shares of common stock outstanding. All outstanding shares of common stock are of the same class and have equal rights and attributes. The holders of common stock are entitled to one vote per share on all matters submitted to a vote of shareholders of the Company. All shareholders are entitled to share equally in dividends, if any, as may be declared from time to time by the board of directors out of funds legally available. In the event of liquidation, the holders of common stock are entitled to share ratably in all assets remaining after payment of all liabilities.

Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws discourage a party from acquiring, or make it more difficult for a third party to obtain control of us by replacing our board of directors. Since our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing shareholders or another party to effect a change in management. In addition, these provisions may have the effect of deterring hostile takeovers or delaying changes in our control or management. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our stock and, as a consequence, they also may inhibit fluctuations in the market price of our stock that could result from actual or rumored takeover attempts.

Section 1203 of the California Corporations Code, or the CCC, includes provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management of our company. Other provisions of the CCC could also make it more difficult for a third party to acquire a majority of our outstanding voting stock by discouraging a hostile bid, or delaying, preventing or deterring a merger, acquisition or tender offer in which our shareholders could receive a premium for their shares, or effect a proxy contest for control of the company or other changes in our management.

In September 2008, we adopted an amended and restated shareholder rights plan, which replaced the rights plan originally adopted in August 1998. Pursuant to the rights plan, as amended and restated, we distributed rights to purchase shares of Series A Junior Participating Preferred Stock as a dividend at the rate of one right for each share of common stock outstanding. Until such time as the rights plan is triggered by the acquisition, or public announcement of an intention to acquire, at least 15% of our outstanding common stock (which is not exempt under the provisions of our rights plan), the rights will trade with, and are not separable from, the Company’s common stock and are not exercisable. The rights are designed to guard against partial tender offers and other abusive and coercive tactics that might be used in an attempt to gain control of the Company or to deprive our shareholders of their interest in our long-term value. The shareholder rights plan seeks to achieve these goals by encouraging a potential acquirer to negotiate with our board of directors. The rights will expire at the close of business on September 8, 2018.

In connection with the License Agreement with Grifols, we entered into the Governance Agreement that sets forth certain rights and obligations of both parties concerning, among other things, certain corporate governance matters, certain limitations on future acquisitions of shares of common stock by Grifols and certain rights by Grifols to maintain a target level of ownership in the Company. The Governance Agreement also provides Grifols with certain preemptive rights to participate in future issuances of our common stock or equivalents of our common stock, or the right to acquire shares of our common stock from third parties or on the open market to maintain its target level of

 

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ownership in the Company. We entered into an amendment of the Governance Agreement to increase Grifols’ target level of ownership and a waiver of Grifols’ preemptive rights in connection with our offering of notes and warrants in 2016.

In connection with the sale of a total of 333,968,104 shares of our common stock pursuant to a Stock Purchase Agreement dated May 20, 2013 (with such total number of shares not giving effect to the forty to one reverse stock split that occurred on May 23, 2014), we also entered into a registration rights agreement, or the Grifols Registration Rights Agreement, pursuant to which we agreed to provide registration rights to Grifols with respect to the shares of our common stock to be acquired by Grifols. Under this agreement, Grifols is entitled to require us to file with the SEC certain registration statements under the Securities Act, with respect to the resale of our shares of common stock acquired by Grifols up to 3 times on a Form S-1 and up to 6 times on a Form S-3, and to include Grifols’ shares of common stock in any registration we propose for its own account or for the account of one or more of our shareholders. We entered into a waiver of the Grifols Registration Rights Agreement in connection with our offering of notes and warrants in 2016.

Our common stock is listed on the Nasdaq Capital Market under the trading symbol “ARDM.” The transfer agent and registrar for our common stock is ComputerShare Trust Company, N.A.

 

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UNDERWRITING

We have entered into an underwriting agreement dated             , 2018, with Ladenburg Thalmann & Co. Inc. which is acting as representative of the underwriters and joint lead managers of this offering. Subject to the terms and conditions of the underwriting agreement, each of the underwriters has agreed, severally and not jointly, to purchase the number of our securities set forth opposite its name below.

 

Underwriter		Number of Shares
Ladenburg Thalmann & Co. Inc.
H.C. Wainwright & Co., LLC
Roth Capital Partners, LLC
Total

We have been advised by the underwriters that they propose to offer the shares directly to the public at the public offering price set forth on the cover page of this prospectus. Any shares sold by the underwriters to securities dealers will be sold at the public offering price less a selling concession not in excess of             per share. The underwriters may allow, and these selected dealers may re-allow, a concession of not more than per share to other brokers and dealers. The underwriting agreement provides that the underwriters’ obligation to purchase the shares we are offering is subject to the terms and conditions described therein.

No action has been taken by us or the underwriters that would permit a public offering of the shares in any jurisdiction where action for that purpose is required. None of our shares included in this offering may be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sales of any of the shares offered hereby be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons who receive this prospectus are advised to inform themselves about and to observe any restrictions relating to this offering of shares and the distribution of this prospectus. This prospectus is neither an offer to sell nor a solicitation of any offer to buy the shares in any jurisdiction where that would not be permitted or legal.

The underwriters have advised us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.

Over-Allotment Option

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares from us at the public offering price set forth on the cover page of this prospectus, less the underwriting discount and commission. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares offered by this prospectus.

Underwriting Discount and Expenses

The following table shows the public offering price, underwriting discount and commission, and proceeds before expenses to us. The information assumes either no exercise or full exercise of the option we granted to the underwriters to purchase additional shares.

 

Total

Per Share

No Exercise

Full Exercise

Public offering price

$

$

$

Underwriting discounts and commissions

$

$

$

Proceeds, before expenses, to us

$

$

$

 

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We estimate expenses payable by us in connection with this offering, other than the underwriting discounts and commissions referred to above, will be approximately $                . We have agreed to reimburse the underwriters for expenses relating to this offering of up to $75,000.

Lock-up Agreements

We and all of our executive officers and directors will agree, that for a period of 90 days after the date of this prospectus, or the lock-up period, subject to certain limited exceptions described below, we and they will not directly or indirectly, without the prior written consent of Ladenburg Thalmann & Co. Inc. offer for sale, contract to sell, sell, distribute, grant any option, right or warrant to purchase, pledge, hypothecate or otherwise dispose of, directly or indirectly, any shares of our common stock or any securities convertible into, or exercisable or exchangeable for, shares of our common stock. Certain limited transfers are permitted during the lock-up period if the transferee agrees to these lock-up restrictions. We have also agreed, in the underwriting agreement, to similar lock-up restrictions on the issuance and sale of our securities for 90 days following the closing of this offering, although we will be permitted to issue stock options or stock awards to directors, officers and employees under our existing equity incentive plans. Ladenburg Thalmann & Co. Inc. may, in its sole discretion and without notice, waive the terms of any of these lock-up agreements.

Stabilization

In connection with this offering, the underwriters may engage in stabilizing transactions and syndicate covering transactions and purchases to cover positions created by short sales.

 

•

Stabilizing transactions permit bids to purchase shares of common stock so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding a decline in the market price of the common stock while the offering is in progress.

 

•

Syndicate covering transactions involve purchases of common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared with the price at which they may purchase shares through exercise of the overallotment option. If the underwriters sell more shares than could be covered by exercise of the overallotment option and, therefore, have a naked short position, the position can be closed out only by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the shares in the open market that could adversely affect investors who purchase in the offering.

Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the security originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.

Indemnification

We have agreed to indemnify the underwriters and selected dealers against certain liabilities, including certain liabilities arising under the Securities Act, or to contribute to payments that the underwriter or selected dealers may be required to make for these liabilities.

Electronic Distribution

A prospectus in electronic format may be made available on websites maintained by the underwriters, or selling group members, if any, participating in this offering. The underwriters may agree to allocate a number of shares of our common stock for sale to its online brokerage account holders.

 

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Other Relationships

The underwriters and their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing, and brokerage activities. The underwriters and their affiliates may in the future perform various financial advisory, investment banking, and other services for us, for which they may receive customary fees and commissions. In addition, in the ordinary course of their various business activities, the underwriters and their affiliates may effect transactions for their own account or the accounts of customers, and hold on behalf of themselves or their customers long or short positions in our debt or equity securities or loans, and may do so in the future. The underwriters and their affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to their customers that they acquire, long or short positions in such securities and instruments.

Selling Restrictions

European Economic Area

In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive (each a Relevant Member State), an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

 

•

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

 

•

to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

 

•

in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or the underwriters of a prospectus pursuant to Article 3 of the Prospectus Directive, or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision: (i) the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State; (ii) the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State; and (iii) the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom

The underwriters have represented and agreed that:

 

•

they only communicated or caused to be communicated, and will only communicate or cause to be communicated, an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (FSMA)) received by them in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

 

•

they have complied and will comply with all applicable provisions of the FSMA with respect to anything done by them in relation to the shares of our common stock in, from, or otherwise involving the United Kingdom.

 

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LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus will be passed upon for us by Hogan Lovells US LLP, San Francisco, California. Goodwin Procter LLP, New York, New York is counsel for the underwriters in connection with this offering.

EXPERTS

OUM & Co. LLP, independent registered public accounting firm, has audited our consolidated financial statements as of December 31, 2016 and 2015. Our financial statements are incorporated by reference herein in reliance on OUM & Co. LLP’s reports, given on their authority as experts in accounting and auditing.

INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to incorporate information into this prospectus “by reference,” which means that we can disclose important information to you by referring you to another document that we file separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus. These documents contain important information about our financial condition, business and results.

We are incorporating by reference the filings listed below:

 

•

our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 30, 2017;

 

•

our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 filed with the SEC on May 10, 2016, August 11, 2017 and November 3, 2017, respectively;

 

•

our Current Reports on Form 8-K filed with the SEC on April 10, 2017, May 22, 2017, June 5, 2017, July 7, 2017 and December 12, 2017;

 

•

all documents filed by use with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of initial filing of the registration statement of which this prospectus forms a part and prior to the effectiveness of such registration statement; and

 

•

all documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this prospectus and before the offering of securities under this prospectus is terminated.

Information filed under Items 2.02 or 7.01 (or corresponding information furnished under Item 9.01 or included as an exhibit) in any past or future Current Report on Form 8-K that we file with the SEC, unless otherwise specified in such report, is not incorporated by reference into this prospectus.

 

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We will furnish without charge to you, on written or oral request, a copy of any or all of the documents incorporated by reference, including exhibits to these documents. You should direct any requests for documents to Aradigm Corporation, Attention: Corporate Secretary, 3929 Point Eden Way, Hayward, CA 94545; telephone: (510) 265-9000. In addition, copies of any or all of the documents incorporated herein by reference may be accessed at our website at www.aradigm.com. The information on our website is not a part of, or incorporated by reference in, this prospectus, the registration statement of which this prospectus is a part or any of our other filings with the SEC.

The most recent information that we file with the SEC automatically updates and supersedes older information. The information contained in any such filing will be deemed to be a part of this prospectus, commencing on the date on which such filing was made.

W HERE YOU CAN FIND MORE INFORMATION

We are subject to the reporting requirements of the Exchange Act and file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy these reports, proxy statements and other information at the SEC’s public reference facilities at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference facilities. SEC filings are also available at the SEC’s website at www.sec.gov.

This prospectus forms part of a registration statement on Form S-1, as amended, filed by us with the SEC under the Securities Act. As permitted by the SEC, this prospectus does not contain all the information in the registration statement filed with the SEC. For a more complete understanding of this offering, you should refer to the complete registration statement on Form S-1, as amended, including the exhibits thereto, that may be obtained as described above. Statements contained or incorporated by reference in this prospectus about the contents of any contract or other document are not necessarily complete. If we have filed any contract or other document as an exhibit to the registration statement or any other document incorporated by reference in the registration statement of which this prospectus forms a part, you should read the exhibit for a more complete understanding of the document or matter involved. Each statement regarding a contract or other document is qualified in its entirety by reference to the actual document.

 

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                 Shares of Common Stock

 

 

 

Sole Book-running Manager

Ladenburg Thalmann

Co-lead Managers

 

		H.C. Wainwright & Co.				Roth Capital Partners

 

 

This prospectus is dated             , 2018.

 

 

 

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PART II — INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13.

Other Expenses of Issuance and Distribution

The following table sets forth an estimate of the fees and expenses, other than the underwriting discounts payable by us in connection with the issuance and distribution of the securities being registered. All the amounts shown are estimates, except for the SEC registration fee, Nasdaq Capital Market fee, and the FINRA filing fee.

 

SEC Registration Fee		$	3,580
Nasdaq Capital Market Fee		$
FINRA Filing Fee		$	4,813
Legal Fees and Expenses		$
Transfer Agent and Registrar Fees and Expenses		$
Printing and Miscellaneous Fees and Expenses		$
Total		$

 

Item 14.

Indemnification of Directors and Officers

Section 317 of the California General Corporation Law provides that a California corporation may indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as an officer, director, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. Section 317 of the California General Corporation Law further authorizes a corporation to purchase and maintain insurance on behalf of any indemnified person against any liability asserted against and incurred by such person in any indemnified capacity, or arising out of such person’s status as such, regardless of whether the corporation would otherwise have the power to indemnify such person under the California General Corporation Law.

As permitted by Section 204(a)(10) of the California General Corporation Law, our articles of incorporation, as amended, or our Articles, provide that the Company’s directors shall not be personally liable to the Company or its shareholders for monetary damages for breach of their fiduciary duties as a director, except for liability for any:

 

•

breach of the duty of loyalty to the Company or its shareholders;

 

•

act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

•

unlawful payment of dividends or redemption of shares; or

 

•

transaction from which the director derives an improper personal benefit.

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Our Articles authorize us to, and our bylaws provide that we must, indemnify our directors and officers to the fullest extent authorized by the California General Corporation Law and also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under this section or otherwise.

As permitted by the California General Corporation Law, we have entered into indemnification agreements with each of our directors and certain of our officers. These agreements require us to indemnify these individuals to the fullest extent permitted under California law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

We have an insurance policy covering our officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act and otherwise.

 

Item 15.

Recent Sales of Unregistered Securities

On April 21, 2016, we entered into a securities Purchase Agreement with certain securityholders in connection with the private placement conducted pursuant to Regulation D under the Securities Act, or the 2016 Private Placement, of $23 million in aggregate principal amount of 9.0% Senior Convertible Promissory Notes due 2021 to be issued pursuant to an indenture agreement with our trustee dated April 25, 2016, or the Indenture, and Warrants to purchase 263,436 shares of our common stock. We completed the first closing under the Purchase Agreement for the sale and issuance of $20 million in aggregate principal amount of the Notes and the Warrants on April 25, 2016. We completed the second closing of the additional $3 million in aggregate principal amount of the Notes and the Warrants pursuant to the Purchase Agreement on July 14, 2016. The Notes are senior unsecured obligations of the Company and bear interest at a fixed rate of 9.0% per annum, with a maturity date of May 1, 2021, and are convertible into 4,414,587 shares of common stock based upon an initial conversion price of $5.21 per share.

 

Item 16.

Exhibits and Financial Statement Schedules

The following exhibits are included herein or incorporated herein by reference.

EXHIBIT INDEX

 

Exhibit No.		Description
1.1*		Form of Underwriting Agreement
3.1(1)		Amended and Restated Articles of Incorporation of the Company.
3.2(3)		Certificate of Determination of Series A Junior Participating Preferred Stock.
3.3(4)		Amended and Restated Certificate of Determination of Preferences of Series A Convertible Preferred Stock.
3.4(3)		Certificate of Amendment of Amended and Restated Articles of Incorporation of the Company.
3.5(3)		Certificate of Amendment of Certificate of Determination of Series A Junior Participating Preferred Stock.
3.6(5)		Certificate of Amendment of Amended and Restated Articles of Incorporation of the Company.
3.7(5)		Certificate of Amendment of Certificate of Determination of Series A Junior Participating Preferred Stock.
3.8(6)		Certificate of Amendment of Amended and Restated Articles of Incorporation of the Company.

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3.9(14)		Certificate of Amendment of Amended and Restated Articles of Incorporation of the Company.
3.10(19)		Certificate of Amendment of Articles of Incorporation of the Company.
3.11(22)		Certificate of Amendment to Amended and Restated Articles of Incorporation of the Company.
3.12(2)		Amended and Restated Bylaws of the Company, as amended.
3.13(2)		Certificate of Amendment to the Amended and Restated Bylaws of the Company.
4.1		Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12 and 3.13.
4.2(1)		Specimen common stock certificate.
5.1*		Opinion of Hogan Lovells US LLP.
10.1(1)+		Form of Indemnity Agreement between the Company and each of its directors and officers.
10.2(1)+		Form of the Company’s Incentive Stock Option Agreement under the 2005 Equity Incentive Plan.
10.3(1)+		Form of the Company’s Non-statutory Stock Option Agreement under the 2005 Equity Incentive Plan.
10.4(1)+		1996 Non-Employee Directors’ Stock Option Plan.
10.5(1)+		Form of the Company’s Non-statutory Stock Option Agreement under the 1996 Non-Employee Directors’ Stock Option Plan.
10.6(1)+		Form of the Company’s Employee Stock Purchase Plan Offering Document.
10.7(6)+		Form of the Company’s Restricted Stock Bonus Agreement under the 2005 Equity Incentive Plan.
10.8(7)+		Employment Agreement, dated as of August 10, 2006, with Dr. Igor Gonda.
10.9(8)		Lease Agreement for the property located in Phase V of the Britannia Point Eden Business Park in Hayward, California, dated January  28, 1998, between the Company and Britannia Point Eden, LLC.
10.10(9)		Sublease between the Company and Mendel Biotechnology, Inc., dated July  11, 2007, under the Lease Agreement by and between the Company and Hayward Point Eden I Limited Partnership, a Delaware limited partnership, as successor-in-interest to Britannia Point Eden, LLC, as amended, for 3929 Point Eden Way, Hayward, California.
10.11(10)+		2005 Equity Incentive Plan, as amended.
10.12(11)+		Employee Stock Purchase Plan, as amended.
10.13(12)		Amended and Restated Rights Agreement, dated as of September 5, 2008 by and between the Company and ComputerShare Trust  Company, N.A.
10.14(13)+		Amended and Restated Executive Officer Severance Benefit Plan.
10.15(15)		Amended and Restated form of Change of Control Agreement entered into between the Company and certain of the Company’s senior officers.
10.16(15)		Amended and Restated Change of Control Agreement, dated as of April 5, 2011 by and between the Company and Igor Gonda.
10.17(15)		Amended and Restated Change of Control Agreement, dated as of April 5, 2011 by and between the Company and Nancy Pecota.
10.18(15)		Form of Indemnification Agreement.
10.19(16)		Securities Purchase Agreement, dated as of December 11, 2012 among the Company and the investors party thereto.
10.20(16)		Registration Rights Agreement, dated as of December 11, 2012 among the Company and the buyers party thereto.
10.21(17)		Form of License and Collaboration Agreement by and among the Company and Grifols, S.A.

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10.22(17)		Form of Option Agreement by and among the Company and Grifols, S.A.
10.23(17)		Form of Governance Agreement by and among the Company and Grifols, S.A.
10.24(17)		Form of Registration Rights Agreement by and among the Company and Grifols, S.A.
10.25(17)		Form of Registration Rights Agreement by and among the Company and the buyers listed on the signature page thereto.
10.26(18)‡		Clinical Supply and Commercial Manufacturing Services Agreement, dated as of August 27, 2013, by and between SIGMA-TAU Pharmasource Inc. and the Company.
10.27(20)		Change of Control Agreement, dated November 5, 2013, by and between the Company and Dr. Juergen Froehlich.
10.28(20)		Offer Letter, dated November 5, 2013, between the Company and Dr. Juergen Froehlich.
10.29(21)		Assignment, Assumption, Waiver and Consent, effective February  28, 2014, by and among the Aradigm Royalty Financing LLC, the Company, R&D Bauer Ventures, LP and SG-PBS LLC.
10.30(23)		Form of Non-statutory Stock Option Agreement, by and between the Company and Igor Gonda.
10.31(24)		Board Observer Rights Agreement, dated September 1, 2015, between the Company and Grifols, S.A.
10.32(25)+		Aradigm Corporation 2015 Equity Incentive Plan.
10.33(28)+		Form of Stock Option Agreement pursuant to Aradigm Corporation 2015 Equity Incentive Plan.
10.34(25)+		Aradigm Corporation Employee Stock Purchase Plan.
10.35(26)		Securities Purchase Agreement, dated April 21, 2016.
10.36(26)		Indenture, dated April 25, 2016.
10.37(26)		Form of 9.0% Senior Convertible Note due May 1, 2021 (included in Exhibit 10.36).
10.38(26)		Form of Warrant (included in Exhibit 10.35).
10.39(26)		Escrow Agreement, dated April 25, 2016.
10.40(26)		Amendment to Governance Agreement, dated April 21, 2016.
21.1(27)		List of Subsidiaries of the Company.
23.1		Consent of OUM & Co. LLP, Independent Registered Public Accounting Firm.
23.2		Consent of Hogan Lovells US LLP (included in Exhibit 5.1).
24.1		Power of Attorney (signature page).

 

*	To be filed by amendment

+	Represents a management contract or compensatory plan or arrangement.

‡	Portions of this exhibit have been omitted pursuant to a request for confidential treatment and the non-public information has been filed separately with the Securities and Exchange Commission.

(1)	Incorporated by reference to the Company’s Form S-1 (No. 333-04236) filed on June 11, 1996, as amended.

(2)	Incorporated by reference to the Company’s Form 10-Q (No. 000-28402) filed on August 14, 1998.

(3)	Incorporated by reference to the Company’s Form 10-K (No. 333-72037) filed on March 29, 2002.

(4)	Incorporated by reference to the Company’s Form S-3 (No. 333-76584) filed on January 11, 2002, as amended.

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(5)	Incorporated by reference to the Company’s Form 10-Q (No. 333-72037) filed on August 13, 2004.

(6)	Incorporated by reference to the Company’s Form 10-K (No. 000-28402) filed on March 31, 2006.

(7)	Incorporated by reference to the Company’s Form S-1 (No. 333-138169) filed on October 24, 2006, as amended.

(8)	Incorporated by reference to the Company’s Form 10-K (No. 000-28402) filed on March 24, 1998, as amended.

(9)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on July 24, 2007.

(10)	Incorporated by reference to the Company’s Form S-8 (No. 333-187947) filed on April 16, 2013

(11)	Incorporated by reference to the Company’s Form 8-K (000-28402) filed on May 21, 2009.

(12)	Incorporated by reference to the Company’s Form 10-Q (No. 000-28402) filed on November 12, 2008.

(13)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on January 8, 2009.

(14)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on September 20, 2010.

(15)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on April 18, 2011.

(16)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on December 13, 2012.

(17)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on May 24, 2013.

(18)	Incorporated by reference to the Company’s Form 10-Q (No. 000-28402) filed on October 28, 2013.

(19)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on February 4, 2014.

(20)	Incorporated by reference to the Company’s Form S-1 (No. 333-193751) filed on February 4, 2014, as amended.

(21)	Incorporated by reference to the Company’s Form 8-K (No. 000-28402) filed on March 10, 2014.

(22)	Incorporated by reference to the Company’s Form 10-Q (No. 001-36480) filed on May 14, 2015.

(23)	Incorporated by reference to the Company’s Form 10-K (No. 001-36480) filed on March 13, 2014.

(24)	Incorporated by reference to the Company’s Form 10-Q (No. 001-36480) filed on November 12, 2015.

(25)	Incorporated by reference to the Company’s Proxy Statement (No. 001-36480) filed on March 19, 2015.

(26)	Incorporated by reference to the Company’s Form 8-K/A (No. 001-36480) filed on April 28, 2016.

(27)	Incorporated by reference to the Company’s Form 10-K (No. 001-36480) filed on March 18, 2015.

(28)	Incorporated by reference to the Company’s Form S-8 (No. 333-187947) filed on July 10, 2015.

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Item 17.

Undertakings.

(a)    The undersigned registrant hereby undertakes:

(1)    To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)    To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii)    To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)    To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that subparagraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those subparagraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange Act, that are incorporated by reference in the registration statement.

(2)    That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)    To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(5)    That, for the purpose of determining liability under the Securities Act to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(b)    The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Exchange Act), that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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(h)    Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Hayward, State of California, on December 21, 2017.

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature				Title		Date
/s/ Igor Gonda				President, Chief Executive Officer and Director (Principal Executive Officer)		December 21, 2017
Igor Gonda
/s/ Nancy Pecota				Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)		December 21, 2017
Nancy Pecota
* John Siebert				Director		December 21, 2017
* David Bell				Director		December 21, 2017
* Frederick Hudson				Director		December 21, 2017
* Virgil D. Thompson				Director		December 21, 2017
*By:		/s/ Nancy Pecota Nancy Pecota, Attorney-in-Fact