Nine months ended September 30, 2018
Total cash and cash equivalents decreased by approximately $4.1 million for the nine months ended September 30, 2018. The decrease
primarily resulted from the use of $11.1 million in cash to fund our ongoing operations in support of our Linhaliq program, offset by the receipt of $7 million from notes payable issued in the last five months.
Nine months ended September 30, 2017
Total cash and cash equivalents decreased by approximately $10.0 million for the nine months ended September 30, 2017. The decrease
primarily resulted from the use of cash to fund our ongoing operations in support of our Linhaliq program, offset by the receipt of $670,000 from the Australian Taxation Office related to the Australian research and development program and the
receipt of the $5.0 million milestone payment related to the submission of the U.S. NDA under the Grifols Contract.
Off-Balance Sheet Financings and Liabilities
Other than contractual obligations incurred in the
normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets or any obligation arising out
of a material variable interest in an unconsolidated entity. We have one inactive, wholly-owned subsidiary incorporated in Delaware, Aradigm Royalty Financing LLC, one active wholly-owned subsidiary domiciled in Australia and one inactive,
wholly-owned subsidiary domiciled in the UK.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The disclosures in this section are not required since the Company qualifies as a smaller reporting company.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on his evaluation as of the end of the period covered by this report, our Executive Chairman, Interim Principal Executive Officer and
Acting Principal Financial Officer has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended, or the Exchange Act, were effective as of the end of the period covered by this report to ensure that information that we are required to disclose in reports that management files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in SEC rules and forms.
Our disclosure controls and
procedures are designed to provide reasonable assurance of achieving their objectives, and our Executive Chairman, Interim Principal Executive Officer and Acting Principal Financial Officer has concluded that these controls and procedures are
effective at the reasonable assurance level. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal
Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our
most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II: OTHER INFORMATION
On May 1, 2017, the Company filed a post grant review, or a PGR, petition in the United States Patent and Trademark Office Patent Trial
and Appeal Board, or PTAB, challenging the validity of all 26 claims of U.S. Patent No.9,402,845 or the 845 Patent, assigned to Insmed Incorporated, or Insmed. The 845 Patent issued on August 2, 2016, and is entitled
Lipid-based compositions of antiinfectives for treating pulmonary infections and methods of use thereof.