This presentation, and its accompanying commentary, contains forward-looking

statements.

Aradigm Corporation’s actual results may differ materially from those suggested

here today.

Additional information concerning factors that would cause such a difference is

contained in the Company’s 1999 Annual Report on Form 10-K.

This presentation, and its accompanying commentary, contains forward-looking

statements.

Aradigm Corporation’s actual results may differ materially from those suggested

here today.

Additional information concerning factors that would cause such a difference is

contained in the Company’s 1999 Annual Report on Form 10-K.

Aradigm CorporationAradigm Corporation

Aradigm at a GlanceAradigm at a Glance

· A Leader in Pulmonary Drug Delivery

· Technology platform is applicable to many therapeutic areas

· Partnered with industry leaders– Novo Nordisk,

SmithKline Beecham and Genentech

– $55M invested to date· AERx hand-held device

is convenient, simple to use and designed to prevent errors in dosing

Benefits of AERx Pulmonary DeliveryBenefits of AERx Pulmonary Delivery· Time to peak morphine concentration as

fast as intravenous injection

· Faster reduction of glucose levels with insulin than with injection

· 90% reduction in dosing time in Cystic Fibrosis

· Achieves therapeutic levels of biotech drugs,non-invasively

Advanced Pulmonary Drug DeliveryAdvanced Pulmonary Drug Delivery

Advantages· Large Surface

Area· Near Direct

Access· Natural

Function

Benefits· Non-invasive· Fast onset· Broad

applicability

Nozzle AreaNozzle Area

Blister AreaBlister Area

AERx Particle Size ControlAERx Particle Size Control

· Consistently small particles (1-3 microns)

· Point-of-use aerosol control

· Single use, disposable

· Consistently small particles (1-3 microns)

· Point-of-use aerosol control

· Single use, disposable

AERx Control of Patient InhalationAERx Control of Patient Inhalation

· Device actively guides patient to breathe correctly

· Automatically delivers drug at right time

· Eliminates patient breathing as a source of error

AERx PlatformAERx Platform

Liquid formulation Fast development

Unit dose disposable packetSuperior aerosol performance

Data capture Enhances therapy compliance

The AERx AdvantageThe AERx Advantage

Breath control Consistent dose delivery

Local Lung DeliverySystemic Delivery

Small Molecule

Macro-molecule

Pulmonary Delivery ApplicationsPulmonary Delivery Applications

• The most broadly applicable technology

• Eight partner funded programs• Four phase II programs

Undisclosed Phase IMorphine-Phase IIUndisclosed-Phase I

Insulin-Phase IIGene Therapy-preclinicalUndisclosed-preclinical

Dornase alfa-Phase IIUndisclosed-Phase IIGene Therapy-preclinical

Leading Partner EndorsementsLeading Partner Endorsements

AERx Diabetes Management System

AERx Pain Management System

AERx Respiratory Management System

Plus five more unannounced programs

Achieve Reproducibility

Requirements

AERx Diabetes Management System

Tight control over particle size and breathing

One insulin unit increments

Novo Nordisk is the world leader in insulin

Diabetes ManagementDiabetes Management

Adjustable Dosing

Access to Insulin

Rapid, Reproducible

Requirements

AERx Pain Management System

Comparable to intravenous delivery

Timed lockouts and secure access

SmithKline Beecham has a growing oncology franchise

Pain ManagementPain Management

Minimize Misuse & Abuse

Access to Oncology/

Pain Market

Fast and Simple

Requirements

AERx System with Dornase Alfa

90% reduction in dosing time

Convenience and electronic compliance monitoring

Genentech is a leader in Cystic Fibrosis therapy

Cystic Fibrosis ManagementCystic Fibrosis Management

Improved Adherence with

Therapy

Access to CF Market

Most biotech drugs are in stable liquid formulations

Most biotech drugs are in stable liquid formulations

AERx Well Positioned for Future OpportunitiesAERx Well Positioned for Future Opportunities

· Chronic bronchitis and emphysema drugs

· Antibodies

· Gene therapies

· Asthma drugs

· Hematopoetic factors

· Human growth factors

· Anti-obesity drugs

· Migraine drugs

· Anti-Parkinson’s drugs

· Interleukins

· Interferons

· Antibiotics

Commercial Sales

Manufacturing

Development

Aradigm Business Model- Pharma Profitability...

Aradigm Business Model- Pharma Profitability...

10%-25% ofproduct

sales

40%-60% gross

margins

…But With Lower Risk Profile

Partner pays costs

ARDM receives transfer price

profit

ARDM receives royalty

(Dollars in Millions)

1997 1998 1999Contract and License Revenues 3.7$ 17.5$ 16.8$ Operating Expenses:

Research and Development 12.7 25.5 33.6 General and Administrative 6.7 8.7 7.8

Total Expenses 19.5 34.2 41.5 Loss From Operations (15.8) (16.7) (24.7)

Historical Income StatementsHistorical Income Statements

(Amounts In Millions)

Cash, Cash Equivalents Q1 2000 25.7$ Follow-on Offering Q2 2000 43.4$ Cash Burn per Month (approx) 2.5$ 2000 Capital Requirements (approx) 15.0$

Cash Summary Cash Summary

2000 / Early 2001 Milestones2000 / Early 2001 Milestones

· Advances in intellectual property position

· Phase II insulin data at American Diabetes Association meeting (June 2000)

· Potential feasibility and long-term partnerships

· Initiation of Phase IIb morphine

· Initiation of Phase IIb dornase alfa

· Initiation of pivotal insulin studies