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Aradigm Announces Detailed Third Party Evaluation Results for Apulmiq (FDA)/Linhaliq (EMA)

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Aradigm Corporation (OTCQB:ARDM) ("Aradigm" or the "Company") today
announced specific, detailed results of an independent third party
evaluation (TPE) of the Phase 3 clinical trial results for Apulmiq.

As previously reported, Aradigm received a Complete Response Letter
(CRL) on 26 January 2018, from the US Food and Drug Administration (FDA)
regarding its New Drug Application (NDA) for Apulmiq as a treatment for
non-cystic fibrosis bronchiectasis (NCFBE) patients with chronic lung
infection with Pseudomonas aeruginosa (P. aeruginosa). The
CRL identified issues related to a manual re-review of patient-level
pulmonary exacerbation (PE) data conducted by Aradigm after errors were
discovered in the analyses performed by a contract research
organization. The CRL stated that an independent third party would need
to verify the results of the ORBIT-3 and ORBIT-4 Phase 3 trials before
the FDA could draw any conclusions regarding the safety and efficacy of
Apulmiq from these trials.

Aradigm believes the independent TPE results verify the significant
treatment effects of Apulmiq in ORBIT-4 for the pre-specified primary
endpoint and secondary endpoints as previously reported in the NDA
submitted on 26 July 2017. The TPE results also verify the already
reported non-significant primary and secondary PE endpoint results of
ORBIT-3. A meeting has been scheduled with the FDA to discuss these TPE
verified Phase 3 trial results.

Based on the TPE results, in ORBIT-4 the primary endpoint of median time
to first PE was 231 days in the Apulmiq group and 158 days in the
placebo group, a difference of 73 days. The treatment effect, based on a
stratified unweighted log-rank test (stratified by sex and previous
number of exacerbations in the past 12 months prior to randomization),
was statistically significant (HR: 0.70; 95% CI: 0.52-0.96; p = 0.024).
For the first secondary efficacy endpoint, there was a 37% reduction in
the frequency of PEs over the 48-week treatment period in the Apulmiq
treatment group as compared to the placebo group (negative binomial
model; RR: 0.63; 95% CI: 0.48-0.82). This result was statistically
significant (p=0.0007). In the analysis of the second secondary
endpoint, a statistically significant 61% reduction in the frequency of
severe PEs in the Apulmiq group compared with placebo was found (using
the negative binomial model; RR: 0.39 (95% CI: 0.21-0.72; p=0.0024).

In ORBIT-3 the median time to first PE was 214 days in the Apulmiq
treatment group as compared to 136 days in the placebo group. This
increase of 78 days in the median time to first PE was similar to
ORBIT-4 but was not statistically significant (HR: 0.97; 95% CI:
0.70-1.34; p = 0.84). For the first secondary efficacy endpoint, there
was a 15% reduction in the frequency of all PEs over the 48-week
treatment period in the Apulmiq treatment group as compared to the
placebo group but it was not statistically significant (RR: 0.85 95% CI:
0.65-1.12; p=0.26). In the analysis of the second secondary endpoint, a
statistically non-significant 19% reduction in the frequency of severe
PEs in the Apulmiq group compared with placebo was found (p=0.51).

In ORBIT-3 and ORBIT-4, randomization of patients was stratified by the
number of PEs treated with antibacterials in the 12 months prior to
randomization: 2 to 3, 4 to 7, and more than 7 PEs. As agreed by the FDA
and the EMA, due to the low number of subjects enrolled in the "more
than 7" prior PE stratum, a combined single stratum of frequent
exacerbators (4 or more prior PEs) was used for the purpose of the
statistical analyses of the two Phase 3 trials. This trial subpopulation
of frequent exacerbators accounts for approximately 22% of the overall
trial population in ORBIT-3 and ORBIT-4 and is part of a well-defined
and identifiable clinical phenotype (Chalmers, 2018*). This
subpopulation has a particularly rare prevalence with more extensive and
serious disease, increased risk of future PEs and higher mortality as
compared to the overall Phase 3 trial population of NCFBE patients with
chronic lung infection with P. aeruginosa.

Although the analyses had low statistical power, due to the relatively
small size of the frequent exacerbator group (22% of the overall trial
population) the primary and secondary PE results for the frequent
exacerbators in both trials were concordant and demonstrated clinically
meaningful outcomes in favor of Apulmiq. In ORBIT-4, for the frequent
exacerbators the median time to first PE was 211 days in the Apulmiq
group and 163 days in the placebo group, a difference of 48 days. In
ORBIT-3 the median time to first PE was 163 days in the Apulmiq group
and 74 days in the placebo group, a difference of 89 days. The treatment
effect, based on the stratified unweighted log-rank test was also very
similar in both trials (ORBIT-4 RR: 0.66; 95% CI: 0.35-1.24; p = 0.19
and ORBIT-3: RR: 0.66; 95% CI: 0.37-1.18; p = 0.16).

When analyzing the frequency of PEs in the frequent exacerbators, using
the negative binomial model, clinically meaningful and statistically
significant results in favor of Apulmiq were observed in ORBIT-4, with
an estimated risk reduction of 49% for all PEs (RR = 0.51; 95% CI:
0.31-0.85; p = 0.0094). In ORBIT-3, the risk reduction for all PEs was
34% and of borderline significance (RR = 0.66; 95% CI: 0.43-1.00; p =
0.052). While the frequency analyses of severe PEs had large variability
due to small sample size, the analyses for the frequency of moderate and
severe PEs showed a consistent risk reduction between 55% in ORBIT-4 and
35% in ORBIT-3. In the frequent exacerbators with 4 or more PEs per
year, the observed risk reductions of PEs translates to about 2 fewer
PEs per patient per year. Such a reduction is of important clinical
relevance because each individual PE may be an irreversible event, and
frequent PEs have been shown to increase morbidity in NCFBE patients
(Chalmers, 2018*).

There are no approved treatment options for the prevention or reduction
of PEs in NCFBE patients with chronic lung infection with P.
aeruginosa
. We believe that frequency of PEs is a more appropriate
endpoint for measuring treatment effectiveness as compared to time to
first PE, and based on an FDA Workshop on 26 June 2018 we believe the
FDA and clinical NCFBE experts agree with this position.

Aradigm has a meeting with the FDA scheduled for 25 January 2019 to
discuss these TPE results and to seek agreement for a resubmission of
the Apulmiq NDA. Aradigm is currently also addressing the other issues
identified in the CRL, following FDA guidance provided in a Type C
meeting. A complete in vitro release method development report has been
submitted for FDA review, a new Human Factor study is underway and work
to address the product quality deficiencies is nearing completion.

Aradigm remains confident in the efficacy, safety and quality of Apulmiq
and is committed to continue working toward the approval of Apulmiq for
NCFBE patients with chronic lung infection with P. aeruginosa,
who have very severe disease with high morbidity and mortality and no
available treatment options.

About Aradigm

Aradigm is an emerging specialty pharmaceutical company focused on the
development and commercialization of drugs for the prevention and
treatment of severe respiratory diseases. Aradigm is currently in Phase
3 development of Apulmiq (an investigational proprietary formulation of
ciprofloxacin for inhalation) for the treatment of patients with NCFBE
and chronic lung infection with P. aeruginosa. Aradigm's inhaled
ciprofloxacin formulations are also product candidates for treatment of
patients with cystic fibrosis and non-tuberculous mycobacteria, and for
the prevention and treatment of high threat and bioterrorism infections,
such as inhaled tularemia, pneumonic plague, melioidosis, Q fever and
inhaled anthrax.

About Non-Cystic Fibrosis Bronchiectasis

NCFBE is a severe, chronic and rare disease characterized by abnormal
dilatation of the bronchi and bronchioles, frequently associated with
chronic lung infections. It is often a consequence of a vicious cycle of
inflammation, recurrent lung infections, and bronchial wall damage.
NCFBE represents an unmet medical need with high morbidity and mortality
that affects more than 150,000 people in the U.S. and over 200,000
people in Europe. There is currently no drug approved for the treatment
of this condition.

Forward-Looking Statements

Except for the historical information contained herein, this news
release contains forward-looking statements that involve risk and
uncertainties, including the risk that Apulmiq may not receive
regulatory approval or be successfully commercialized, as well as the
other risks detailed from time to time in the Company's filings with the
Securities Exchange Commission (SEC), including the Company's Annual
Report on Form 10-K for the year ended December 31, 2017 filed with the
SEC on March 23, 2018, and the Company's Quarterly Reports on Form 10-Q.

More information about Aradigm can be found at www.aradigm.com.

* Chalmers JD, Aliberti S, Filonenko A, et al. Characterization of the
"frequent exacerbator phenotype" in bronchiectasis. Am J Respir Crit
Care Med. 2018;197(11):1410-20.

Aradigm and the Aradigm Logo are registered trademarks of Aradigm
Corporation. Apulmiq is a registered trademark of Grifols, S.A.

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