Alnylam Grants Calando a License to Develop and Commercialize an RNAi Therapeutic Product; Target-Specific License for RNAi Intellectual Property Granted under Alnylam's InterfeRx(TM) Program.

CAMBRIDGE, Mass., & PASADENA, Calif. -- Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics company, announced today that it has granted Calando Pharmaceuticals, a majority-owned subsidiary of Arrowhead Research Corporation (Nasdaq: ARWR), an InterfeRx(TM) license to discover, develop, and commercialize an RNAi therapeutic utilizing a synthetic siRNA, together exclusively with Calando's proprietary delivery technology, that is directed towards a cancer target. As part of the agreement, Calando also has an option to acquire an InterfeRx license for a second target gene. Detailed financial terms were not disclosed, but include upfront, annual, and milestone payments, and royalties on sales of any products covered by the licensing agreement.

"Alnylam established the InterfeRx licensing program to provide access to our leading intellectual property estate for disease targets in areas outside the scope of our current research. We are pleased to be granting this license to Calando to enable their efforts with Alnylam intellectual property, which we believe is critical for the development and commercialization of RNAi therapeutics," said John Maraganore, Ph.D., President and Chief Executive Officer of Alnylam. "Calando is the seventh licensee for RNAi therapeutics under Alnylam patents and the fourth company to participate in our InterfeRx program, which represents an important part of our overall strategy to create value today by leveraging our intellectual property portfolio in RNAi through collaborations. We expect the recent strengthening of our intellectual property estate, with the issuance of the '704 and '196 patents in the U.S. and the upheld grant of our '623 patent in Europe, to accelerate these and other business development activities."

"Calando is focused on designing, developing, and commercializing RNAi therapeutics to treat serious medical conditions, such as cancer, by combining effective siRNAs with our patented and proprietary systemic delivery technologies," said John Petrovich, President and Chief Executive Officer of Calando Pharmaceuticals. "This license from Alnylam is an important step in our efforts to develop and commercialize novel RNAi therapies for serious diseases and conditions requiring systemic delivery."

With the recognized potential of RNAi to become the basis for a whole new class of drugs to treat a broad range of human diseases, Alnylam has built a leading portfolio of issued or granted patents in the world's major pharmaceutical markets that broadly claim fundamental features for all RNAi therapeutics, including the structural and functional properties of synthetic RNAi therapeutic products. Alnylam created the InterfeRx licensing program to grant licenses under this intellectual property to biotechnology and pharmaceutical companies wishing to pursue RNAi therapeutics against specific targets outside Alnylam's core strategic interests. In addition to Calando, Alnylam's InterfeRx licensees include Nastech Pharmaceutical Company, GeneCare Research Institute Co., and, under an option agreement, Benitec Ltd.

About RNA Interference (RNAi)

RNA interference, or RNAi, is a naturally occurring mechanism within cells for selectively silencing and regulating specific genes. Since many diseases are caused by the inappropriate activity of specific genes, the ability to silence genes selectively through RNAi could provide a new way to treat a wide range of human diseases. RNAi is induced by small, double-stranded RNA molecules. One method to activate RNAi is with chemically synthesized small interfering RNAs, or siRNAs, which are double-stranded RNAs that are targeted to a specific disease-associated gene. The siRNA molecules are used by the natural RNAi machinery in cells to cause highly targeted gene silencing.

About Alnylam

Alnylam is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi. The company is applying its therapeutic expertise in RNAi to address significant medical needs, many of which cannot effectively be addressed with small molecules or antibodies, the current major classes of drugs. Alnylam is building a pipeline of RNAi therapeutics; its lead program is in Phase I human clinical trials for the treatment of respiratory syncytial virus (RSV) infection, which is the leading cause of hospitalization in infants in the U.S. The company's leadership position in fundamental patents, technology, and know-how relating to RNAi has enabled it to form major alliances with leading companies including Merck, Medtronic, and Novartis. The company, founded in 2002, maintains global headquarters in Cambridge, Massachusetts, and has an additional operating unit in Kulmbach, Germany. Alnylam is honored to be the "emerging/mid-cap" company recipient of the 2006 James D. Watson Helix Award, the biotechnology industry's award for outstanding achievement. For more information, visit www.alnylam.com.

About Alnylam Intellectual Property (IP)

Alnylam's IP estate includes issued or granted fundamental patents in the world's major pharmaceutical markets that claim the broad structural and functional properties of synthetic RNAi therapeutic products. As it applies to the U.S. and Europe, these include:

--The Tuschl II '704 patent (U.S. Patent No. 7,056,704) issued in June 2006, which broadly covers methods of making siRNAs to silence any and all disease targets;

--The Tuschl II '196 patent (U.S. Patent No. 7,078,196) issued in July 2006, which broadly covers methods of making siRNAs with or without chemical modifications;

--The Kreutzer-Limmer I '623 patent (EP 1144623) granted in August 2002, and upheld in June 2006, covering methods, medicaments, and uses of siRNAs having, among other structural features, a length of 15-21 base pairs;

--The Kreutzer-Limmer I '945 patent (EP 1214945) granted in June 2005, covering compositions, methods, and uses of siRNAs with a length between 15 and 49 nucleotides;

--Additional fundamental patents and patent applications licensed to Alnylam on an exclusive or non-exclusive basis, including those of Crooke (U.S. Patent Nos. 5,898,031 and 6,107,094), Fire and Mello (U.S. Patent No. 6,506,559), and Glover et al. (EP 1230375); and,

--Several divisional patent applications pending of the aforementioned issued or granted patents and additional patent applications pending including Tuschl I.

In addition, Alnylam has a broad worldwide license for RNAi therapeutics from Isis Pharmaceuticals, Inc. for more than 150 issued patents pertaining to specific chemical modification of oligonucleotides used to introduce drug-like properties in siRNAs. These include:

--Phosphorothioate and 2'-O-methyl modifications (Buhr, U.S. Patent No. 6,476,205); and,

--2'-Fluoro modifications (Cook, U.S. Patent Nos. 5,670,633; 6,005,087; and 6,531,584).

Alnylam invites interested licensees to view issued or granted claims for these and other key Alnylam patents at www.alnylam.com/patent-estate.

About Calando

Calando Pharmaceuticals Inc., a majority-owned subsidiary of Arrowhead Research Corporation (Nasdaq: ARWR), is using its proprietary technologies to design and create new, targeted siRNA therapeutics. Calando combines proprietary technologies in targeted polymeric delivery systems and siRNA design to create therapeutics that solve the systemic delivery problem when using RNAi products. The company is pursuing this goal through its internal research and development and also through collaborations and partnerships with pharmaceutical and biotechnology companies. For more information, visit www.calandopharma.com.

Calando Technology

Calando's cyclodextrin-containing polymers form the foundation for its two-part siRNA delivery system. The first component is a linear, cyclodextrin-containing polycation that, when mixed with small interfering RNA (siRNA), binds to the anionic "backbone" of the siRNA. The polymer and siRNA self-assemble into nanoparticles of approximately 50-75 nm diameter that fully protect the siRNA from nuclease degradation in serum to eliminate the need for chemically modified siRNAs. The second component stabilizes the nanoparticles for in vivo use and provides the targeting ligand. The siRNA delivery system has been designed for intravenous injection and can deliver siRNAs without immune stimulation. Upon delivery to the target cell, the targeting ligand binds to receptors on the cell surface and the RNA-containing nanoparticle is taken into the cell by endocytosis. There, chemistry built into the polymer functions to unpackage the siRNA from the delivery vehicle.

Alnylam Forward-Looking Statements

Various statements in this release concerning our future expectations, plans and prospects, including our views with respect to the pace of our business development activities and the importance and scope of our intellectual property rights, constitute forward-looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including risks related to: our approach to discover and develop novel drugs, which is unproven and may never lead to marketable products; obtaining, maintaining and protecting intellectual property utilized by our products; our ability to enforce our patents against infringers and to defend our patent portfolio against challenges from third parties; our ability to obtain additional funding to support our business activities; our dependence on third parties for development, manufacture, marketing, sales and distribution of products; the successful development of our product candidates, all of which are in early stages of development; obtaining regulatory approval for products; competition from others using technology similar to ours and others developing products for similar uses; our dependence on collaborators; and our short operating history; as well as those risks more fully discussed in the "Risk Factors" section of our most recent quarterly report on Form 10-Q on file with the Securities and Exchange Commission. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.