Aradigm and Lung Rx Agree to Develop AERx Essence(R) Technology for Use in Pulmonary Arterial Hypertension.

HAYWARD, Calif. -- Aradigm Corporation (OTCBB:ARDM) today announced it entered into an Exclusive License, Development and Commercialization Agreement (the "Agreement") with Lung Rx, Inc., a wholly-owned subsidiary of United Therapeutics Corporation (NASDAQ:UTHR), for inhaled treprostinil using Aradigm's AERx Essence[R] technology for the treatment of pulmonary arterial hypertension (PAH) and other potential therapeutic indications. AERx Essence inhalation delivery system is a palm-size, easy to use inhalation device that is expected to deliver medication to the patient in 2 to 4 breaths.

Under the terms of the Agreement, Aradigm will receive an upfront fee of $440,000 from Lung Rx, followed by an additional $440,000 four months after the signing date. Under the terms of the Agreement, Aradigm will initiate, and is responsible for conducting and funding, a study that includes a bridging clinical trial comparing the AERx Essence technology to the nebulizer used in an ongoing TRIUMPH (TReprostinil Sodium Inhalation Used in the Management of Pulmonary Arterial Hypertension) Phase 3 registration trial, a study of inhaled treprostinil in patients with severe PAH being conducted at approximately 42 centers in the United States and Europe. Aradigm expects the bridging clinical trial will be completed in 2008.

Following successful completion of the bridging study, Aradigm will receive from Lung Rx certain milestones and license fees. These fees are expected to be paid within three years of signing the Agreement and total up to $9.65 million. In addition, Lung Rx will purchase $3.47 million of Aradigm's common stock at the average closing price for the thirty day period prior to specified events. Under the terms of the Agreement, following successful completion of the bridging study Lung Rx will also pay for the remaining development costs to commercialize and be responsible for manufacturing inhaled treprostinil with AERx Essence technology.

Following commercialization of the product, the Agreement specifies that Aradigm will receive royalties from Lung Rx on a tiered basis of up to 10% of net sales of treprostinil with AERx Essence technology.

"We are delighted to be working with Lung Rx to bring to patients, as fast as possible, a much needed new treatment that should significantly reduce the burden of therapy in this debilitating and life-threatening pulmonary disease," said Igor Gonda, Ph.D., Aradigm's President and CEO.

"The Lung Rx Scientific Advisory Board is particularly excited about the potential of the AERx Essence device for pulmonary arterial hypertension," said Lewis J. Rubin, M.D., head of respiratory and critical care medicine at UCSD. "The treprostinil molecule has shown intriguing indications of pulmonary selectivity, a factor the AERx Essence device could nicely capitalize upon."

"I am excited about moving inhaled prostacyclin therapy into the realm of metered-dose inhalers," said Martine Rothblatt, Ph.D., President and CEO of Lung Rx, Inc. "After two years of evaluating numerous options, we are confident that the AERx Essence delivery system represents a promising approach to address the needs of physicians and patients managing pulmonary arterial hypertension as a chronic disease."

About Aradigm

Aradigm is an emerging specialty pharmaceutical company focused on the development and commercialization of a portfolio of drugs delivered by inhalation for the treatment of severe respiratory diseases by pulmonologists. Current activities include partnered and self-initiated development programs addressing the treatment of cystic fibrosis, bronchiectasis, pulmonary hypertension, inhalation anthrax infections and smoking cessation.

In addition, Aradigm's AERx[R] insulin Diabetes Management System (iDMS), which has been licensed to Novo Nordisk for development and commercialization in return for royalties, is in Phase 3 testing for Type 1 and Type 2 diabetes. Under the agreements with Novo Nordisk, Novo Nordisk is responsible for all further clinical, manufacturing and commercial development, while Aradigm and Novo Nordisk continue to cooperate and share in technology development, as well as intellectual property development and defense. More information about Aradigm can be found at www.aradigm.com.

About Lung Rx

Lung Rx is a biotechnology company focused on unmet medical needs in pulmonary medicine and pulmonary delivery of innovative therapeutic products.

Forward-Looking Statements

Except for the historical information contained herein, this news release contains forward-looking statements that involve risk and uncertainties, including the timing of clinical trials and the receipt of royalty and other payments as well as the other risks detailed in Aradigm Corporation's Securities and Exchange Commission (SEC) Filings, including Aradigm's Annual Report on Form 10-K, and quarterly reports on Form 10-Q.

Aradigm, AERx, and AERx Essence are registered trademarks and the Aradigm Logo is a trademark of Aradigm Corporation.

SOURCE: Aradigm