2. 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 Corporation

3. Aradigm 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

4. Benefits 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

5. Advanced Pulmonary Drug Delivery Advantages Large Surface Area Near Direct Access Natural Function Benefits Non-invasive Fast onset Broad applicability

6. Nozzle Area Blister Area AERx Particle Size Control Consistently small particles (1-3 microns) Point-of-use aerosol control Single use, disposable

7. AERx 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

8. AERx Platform

9. Liquid formulation Fast development Unit dose disposable packet Superior aerosol performance Breath control Consistent dose delivery Data capture Enhances therapy compliance The AERx Advantage

11. Eight partner funded programs

14. Diabetes Management Requirements AERx Diabetes Management System Achieve Reproducibility Tight control over particle size and breathing Adjustable Dosing One insulin unit increments Access to Insulin Novo Nordisk is the world leader in insulin

16. Pain Management Requirements AERx Pain Management System Rapid, Reproducible Comparable to intravenous delivery Minimize Misuse & Abuse Timed lockouts and secure access Access to Oncology/Pain Market SmithKline Beecham has a growing oncology franchise

18. Cystic Fibrosis Management Requirements AERx System with Dornase Alfa Fast and Simple 90% reduction in dosing time Improved Adherence with Therapy Convenience and electronic compliance monitoring Access to CF Market Genentech is a leader in Cystic Fibrosis therapy

19. Most biotech drugs are in stable liquid formulations AERx 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

20. Development Manufacturing Commercial Sales Aradigm Business Model- Pharma Profitability... Partner pays costs 10%-25% of product sales 40%-60% gross margins ARDM receives transfer price profit ARDM receives royalty …But With Lower Risk Profile

21. Historical Income Statements

22. Cash Summary

23. 2000 / 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