Nanotope enters agreement with Smith & Nephew to develop cartilage regeneration product

Arrowhead Research Corporation (NASDAQ: ARWR) today announced that its portfolio company, Nanotope, Inc., has entered into an agreement with Smith & Nephew, Inc., a member of the Smith & Nephew plc group (LSE: SN; NYSE: SNN) to develop a cartilage regeneration product for human healthcare markets using a subset of its proprietary regenerative medicine technology. Under the agreement, Nanotope and Smith & Nephew will work together to optimize a cartilage regeneration product based on Nanotope's proprietary platform. Smith & Nephew will conduct and assume costs associated with preclinical tests required to support clinical trials, purchase preclinical material from Nanotope, and assume all clinical trial costs. Nanotope will potentially receive up to $26.55 million in milestone payments plus sales royalties if all milestones are met.

“Smith & Nephew is ideal for the commercialization of Nanotope's cartilage repair technology given its global reach in orthopedics and potential synergies of a new cartilage regeneration capability with its suite of existing orthopedic products”

This represents Nanotope's first commercial transaction and is in line with its strategy to leverage larger companies' development and distribution capabilities within individual target markets. Nanotope's broad proprietary platform is flexible and may be customized to support the regeneration of many diverse tissues. As such, it could lead to the development of a large number of therapeutics. Nanotope's model is to establish many highly focused partnerships incorporating portions of its technology for use in specific indications or tissue types. This is intended to maximize the number of product candidates entering the clinic, increase speed to market, and deploy Nanotope resources efficiently. As a global leader in orthopedics and sports medicine, Smith & Nephew is well positioned to help bring an advanced cartilage repair product to market to provide effective treatment to a condition with large economic and quality of life costs.

"Smith & Nephew is ideal for the commercialization of Nanotope's cartilage repair technology given its global reach in orthopedics and potential synergies of a new cartilage regeneration capability with its suite of existing orthopedic products," said Dr. Christopher Anzalone, Arrowhead's President and Chief Executive Officer. "Smith & Nephew has a solid track record of bringing innovative new products to market, and we view this agreement as a validation of Nantope's technology and business strategy. This deal also represents the achievement of a key milestone Arrowhead has articulated for the last quarter of calendar 2010."

Mark Augusti, President of Smith & Nephew's Biologics and Spine Business unit, commented on the agreement: "We are always searching for alliances with businesses whose technologies address the major unmet needs of our market. Cartilage repair is a clear area of interest to us and we are very pleased to be partnering with Nanotope in this area."

Nanotope's technological platform was first developed at Northwestern University by Dr. Samuel I. Stupp, Professor of Materials Science & Engineering, Chemistry and Medicine and Director of the Institute for BioNanotechnology in Medicine (IBNAM). Nanotope continues to develop a suite of products, each customized to regenerate specific tissues; including neuronal, vascular, bone, and myocardial. The product candidates, as well as that which is subject to the Smith & Nephew agreement, are injectable compounds that work with surviving cells in and around the point of damage to initiate and support tissue regeneration and growth. Nanotope's other lead products include neuron regeneration for prevention or reversal of paralysis associated with spinal cord injury, advanced wound healing, and the treatment of peripheral artery disease. Nanotope intends to pursue additional partnerships in these and other indications.