Leader in Carbon Nanotube Technology Announces Partnership with Continental Carbon Company

Arrowhead Research Corporation (Nasdaq:ARWR) announced that its Unidym, Inc. subsidiary, a leader in carbon nanotube (CNT) technology, and Continental Carbon Company ("CCC"), a global leader in carbon blacks, conductive blacks and carbon nanotubes, have entered into a partnership for CCC to take over Unidym's bulk CNT materials business.

Under the agreement, CCC will form a new subsidiary, Continental Carbon Nanotechnologies, Inc. ("CCNI"), that will exclusively supply Unidym with proprietary electronics-grade CNTs for its core markets and sell high quality CNTs directly into other, non-competing markets.

The transfer of assets will take place in two steps: the first involves the transfer of certain assets related to the materials business, including manufacturing equipment and select inventory; and the second will include the transfer of certain intellectual property and third party agreements necessary for the materials business as well as a supply agreement for CCNI to provide proprietary CNTs to Unidym. The upfront and royalty payments associated with the second closing are not yet finalized, but will be in addition to an earn-out of up to $26,500,000 based on meeting certain sales milestones. CCC will also have a three-year option to acquire shares of Unidym equivalent to 10% of the subsidiary's outstanding shares on a fully diluted basis.

The agreement is the latest in a series of steps taken by Unidym to accelerate the development of its CNT technology for application to the electronics industry and reduce its cost structure. It is intended to provide Unidym and its partners with a reliable and scalable source of high quality CNTs by leveraging CCC's deep experience manufacturing large quantities of carbon materials. In addition, it will allow Unidym to capture additional value from its extensive CNT patent portfolio by enabling CCNI to focus on end-markets that are not core to Unidym's business.

"This agreement is part of Unidym's efforts to better focus its operational strategy by establishing high quality partnerships," stated Dr. Christopher Anzalone, Arrowhead's President and CEO. "Working with CCC enables Unidym to focus on its core competencies while establishing ready access to large quantities of proprietary high quality CNTs manufactured by a leader in carbon materials. We believe this will accelerate Unidym's ability to penetrate the touch-screen and LCD markets and, longer term, its entrance into such diverse industries as solar energy and printable electronics. The partnership will also allow Unidym to monetize its CNT patents via markets that are not core to its electronics business."

Mark Tilley, CEO of Unidym, stated, "Continental Carbon's global manufacturing operations and expertise will be an integral component of our go-to-market strategy. We expect that demand from the touch panel, LCD and solar markets will require a significant ramp-up of CNT capacity in the coming years."

Kim Pan, President of Continental Carbon, said, "We are pleased to join forces with Unidym and look forward to expanding the market for CNTs. We will work exclusively with Unidym to support Unidym's transparent conductive films business, and expect to pursue several applications for these extraordinary materials beyond Unidym's core markets."

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