Nanotechnology Now - Press Release: Arrowhead CEO Provides Update on Nanotope, Inc.

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Abstract:
Arrowhead Research Corporation's (NASDAQ: ARWR) Chief Executive Officer announces an update to stockholders on its minority investment, Nanotope, Inc.:

Arrowhead CEO Provides Update on Nanotope, Inc.

PASADENA, CA | Posted on November 13th, 2008

Dear Stockholders,

In 2005, Dr. Samuel Stupp, Director of Northwestern University's Institute for Bionanotechnology in Medicine, and I co-founded Nanotope Inc., a regenerative medicine company. I strongly believed that medicine would be forever transformed if we could move beyond simply replacing failed body parts and shift the industry toward a less invasive method of regenerating damaged tissues. This would represent no less than a paradigm shift in healthcare, but, of course, identifying an opportunity is simple; the difficult challenge is to develop and scale an appropriate technology platform. Dr. Stupp had been working toward this vision and his work was well positioned to be the technology basis of a new regenerative medicine company.

Now in 2008, Nanotope is part of the Arrowhead family of companies and it has moved well beyond science and vision into productization and scale-up. Specifically, Nanotope has a spinal cord regeneration candidate that has been shown in multiple animal models to reverse paralysis associated with spinal cord injury (SCI). Nanotope and Arrowhead have both publicly presented very powerful video of formerly paralyzed animals walking after treatment. Nanotope also has a product candidate that has been shown to regenerate lost vasculature in animal models and is potentially applicable for treating Peripheral Artery Disease (PAD), a condition that is thought to afflict as many as 20% of Americans over the age of 70.

Nanotope has developed a technological platform that can be customized to regenerate specific tissues; including neuronal, vascular, bone, heart, and cartilage. These products are injectable compounds that work with surviving cells in and around the point of injury to initiate and support regeneration. Importantly, these are not stem cell based therapies. Rather, Nanotope's proprietary compounds work without any introduced cells and once regeneration is complete, the compounds are safely broken down and removed by the body. We believe that Nanotope's long-term value as a potentially transformational company is rooted in its ability to address many therapeutic markets via the flexibility of its core platform. However, a lack of focus can be an expensive and ultimately fatal mistake for a company, so Nanotope has built its platform by focusing on two primary products. These product candidates target spinal cord regeneration and treatment of PAD. Nanotope expects to file INDs with the FDA in 2009 to enable clinical work in these areas.

The humanitarian case for reversing paralysis associated with SCI is clear: curing paralysis would mean immeasurable improvement in quality of life for SCI victims. Less obvious are the economic impacts of SCI. Within the major pharmaceutical markets, over 700,000 individuals live with SCIs and there are over 34,000 new injuries each year. This is a significant target market, and it has been reported that SCIs cost the U.S. approximately $15 billion per year.

Nanotope, its partners, and contractors have conducted multiple animal trials for spinal cord regeneration in various models. In each, the spinal cord regeneration candidate has been injected directly into the cord within 48 hours after injury, a clinically relevant strategy. Upon injection, the liquid self assembles into a matrix of nanofibers, creating a bioactive gel that induces healing. It has been demonstrated in rodents that both motor and sensory neurons grow through the point of injury as a result of treatment.

Nanotope has also developed a compound that is capable of initiating the growth of new blood vessels. We believe this compound may be highly applicable for treatment of PAD, a condition that increases with advanced age and manifested by the loss of vasculature in the extremities. PAD is thought to be an under-diagnosed health problem: the prevalence of PAD has usually been cited as affecting 8 to 12 million people in the US, but new data suggest that total numbers could be as high as 20 million. The current product market for PAD is split with stents and angioplasty for the treatment of large artery stenoses, and oral medications for the improvement of blood flow through diseased microvasculature. However, to our knowledge, there are no FDA-approved treatments that enable the regeneration of lost microvasculature, and that is where Nanotope has focused its time and resources. Nanotope's PAD candidate is injected directly into ischemic tissue, where it self assembles into a network of bioactive nanofibers. It has been demonstrated in multiple animal models that treatment promotes the regeneration of new blood vessels.

Nanotope's product candidates are built on a single proprietary platform that is highly flexible. This platform is a class of molecules that exist as monomers in solution and self assemble into nanofibers upon injection into the body. The resulting matrix, or gel, of nanofibers provides three-dimensional scaffolding in which cells and tissues may grow. This allows for the injection of a liquid that becomes a gel-like solid scaffold in situ, potentially replacing invasive surgery with a simple injection. Importantly, a small region within each molecule enables the resulting scaffold to be bioactive, providing cues and direction to cells that are targeted for regeneration. This region is customizable, and the number of different cues that may be encoded is virtually limitless. It is this factor that allows Nanotope to (a) use the same core technology for regeneration of various tissues and (b) optimize regeneration within a single tissue. This technology provides a flexible and broad proprietary platform of "smart" material to elicit tissue regeneration and healing across diverse cell types.

While Nanotope is currently focusing on spinal cord regeneration and treatment of PAD, it also has a solid pipeline of follow-on products aimed at different tissues. Much of the work for later products has been done with Dr. Stupp and his colleagues. We believe this is an attractive way to focus Nanotope's resources on nearer-term products while continuing progress in new areas. Ongoing studies with promising preliminary results include: treatment of stroke and Parkinsonian traits in rodent models; bone regeneration in rodent models; cartilage regeneration in rodent and higher mammal models; and heart attack treatments in rodent and higher mammal models.

As we have discussed in the past, Arrowhead's model is to commercialize nanotechnology-enabled products via majority-owned subsidiaries. However, our subsidiaries need not start out as majority-owned, and Nanotope, Inc. is an excellent example of this. Earlier this year, Arrowhead invested $2mm into Nanotope and acquired the small equity position of a Nanotope shareholder. Together, these provided Arrowhead with a 23% stake in the Company, and we intend to increase our equity position over time with the goal of achieving majority-owned status. We believe it fits well into our portfolio of subsidiaries and that it is a potentially transformative company.
Sincerely,

Christopher Anzalone

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About Arrowhead Research Corporation
Arrowhead Research Corporation (www.arrowheadresearch.com) (NASDAQ:ARWR) is a publicly-traded nanotechnology company commercializing new technologies in the areas of life sciences, electronics, and energy. Arrowhead is building value for shareholders through the progress of majority owned subsidiaries. Currently, Arrowhead has four subsidiaries commercializing nanotech products and applications and investments in two minority-owned subsidiaries.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the future success of our scientific studies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for our future products, legislative, regulatory and competitive developments, the financial resources available to us, and general economic conditions. Arrowhead Research Corporation's Annual Report on Form 10-K and 10-K/A, recent and forthcoming Quarterly Reports on Form 10-Q and 10-Q/A, recent Current Reports on Forms 8-K and 8-K/A, our Registration Statements on Form S-3, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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Arrowhead Research Corporation
Virginia Dadey
212-541-3707

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