Based on the above sales estimate, Aradigm looks significantly undervalued. At the time of writing this article, the stock was down 3.35% to just under $9. Based on current sales, this translates to price-to-sales ratio of just around 8. If the sales estimate of Pulmaquin is taken into account and based on the existing price-to-sales multiple, Aradigm is valued at around $40 per share. Of course, Pulmaquin is still in Phase III, and there is always a risk of the clinical trial failing. Assuming a 50% discount to account for the risk, the fair value for Aradigm should be $20, more than double the level the stock is currently trading at. This valuation is only based on the potential of Pulmaquin in non-cystic fibrosis bronchiectasis. If the potential of Aradigm's other products in the pipeline is taken into consideration, then the valuation could be higher. The valuation, combined with Pulmaquin's potential, makes Aradigm not only set for upside, but also a potential takeover target. Grifols already has a 35% stake in Aradigm. It will be interesting to see if the company considers increasing its stake in the future

The second risk with Aradigm is the low trading activity of the stock. As I noted earlier, the stock trades on a daily average volume of just above 22,000. This means that it is susceptible to wild swings. However, it must be noted that Aradigm was promoted to the Nasdaq from OTC markets only three months ago. The listing on Nasdaq will improve the stock's visibility as we move forward, and as that happens, the liquidity will improve as well.

There are less than 15 million shares outstanding fully-diluted with no debt, one year of cash and several potential blockbusters in the pipeline with 90% insider/institutional ownership. Most of the other 10% is held by smaller shareholders who know the true value of this company and are not selling until something close to fair value is reached, which is least 10X the current share price assuming P3 is successful (see INSM for comparison). Until then a few funds trade the same shares back and forth among themselves to keep the price low and suck up cheap shares

i fully agree ernie1791. they also hire company's like Zacks to print funny PR's like the one today saying ARDM is overbought and rated a sell by them.

As for ARDM being oversold (This is why you cannot trust MM Blogs) tell that to Grifols and Insiders.

Zack's has no credibility . . .

After RS there are 14.73 million shares outstanding. Insiders hold 83.62% (12,373,000 shares) of that and no insiders are giving up those shares. Shorts have (need a laugh?) 2,760 shares average, or 0.018% of shares!?! The Beta is 0.43 which means there is going to be up and down . . . but... More

Sentiment: Strong Buy

Day traders hate ARDM and Grifols because . . .

They have a performance based agreement for clinical trials and regulatory, they are in Phase III and no one in their right mind is going to sell a huge block of shares. If you read the science and the "log kill" data, the ARDM formulation of liposome Cipro is 2 times more efficacious (kills more bacteria) than TOBI, Arikayce or Tobi Powder. Then there are the other follow-on antibiotics. An investor would have to be a "village idiot" not to stick it out until mid 2016 (the targeted completion date for the Phase III). I keep picking off 500 shares here and there.

Sorry m_r_r but you have missed the basis of the collaboration between ARDM and Grifols. I would guess that a peer reviewed abstract coming out of one of the big Med Center sites (there are 104 total) is really going to have a beneficial effect on SP. Let alone another Grifols milestone payment . . . like the end of the Phase III enrollment!?! Grifols is a multibillion dollar company in Spain where a lot of innovative multiple modality antibiotic therapy studies have been published in the last two years.

Connect the dots. Many investors have and believe sensitivity disks of inhalational Cipro will be on the test plates to select which antibiotic is most effective against some bacteria isolated from a sputum sample.