UNITED STATES
             SECURITIES AND EXCHANGE COMMISSION
                    Washington, DC  20549
                              
                          FORM 10-Q
                              
(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
     THE SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended June 30, 1997

                             OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934

     For the transition period from ________ to ________
                              
               Commission File Number 0-28402
                              
                     ARADIGM CORPORATION
   (Exact name of registrant as specified in its charter)

California                         94-3133088
(State or other     (I.R.S. Employer Identification No.)
jurisdiction of
incorporation or
organization)
                              
                              
         26219 Eden Landing Road, Hayward, CA  94545
 (Address of principal executive offices including zip code)
                              
                              
                       (510) 783-0100
    (Registrant's telephone number, including area code)
                              

     Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.     Yes  X      No



     Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.

Common Stock, no par value         10,205,245 shares
      (Class)                 Outstanding at July 31, 1997)


                     ARADIGM CORPORATION
                              
                              
                            INDEX
                              
                PART I. FINANCIAL INFORMATION
                              

ITEM 1.   FINANCIAL STATEMENTS                      Page No.
                                                    
Statements of Operations (Unaudited)                
                                                        
      Three months ended June 30, 1997 and 1996              3
                                                        
Six months ended June 30, 1997 and 1996 and period         
from January 30, 1991 (inception) through June 30,      
1997                                                         4
                                                        
Balance Sheets
                                                        
      June 30, 1997 (Unaudited) and                     
          December 31, 1996                                  5
                                                        
Statements of Cash Flows (Unaudited)                    
                                                        
Six months ended June 30, 1997 and 1996 and period         
from January 30, 1991 (inception) through June 30,      
1997                                                         6
                                                        
Notes to Unaudited Financial Statements                      7
                                                    
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF            
          FINANCIAL CONDITION AND RESULTS OF            
          OPERATIONS                                         9
                                                        


                 PART II.  OTHER INFORMATION
                              
                              
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF                 
          SECURITY HOLDERS                                  12
                                                        
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                  14
                                                        
      Signatures                                            15
                                                        
      Exhibits                                              16

PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS


                            
                     ARADIGM CORPORATION
                (A development stage company)
                              
                  STATEMENTS OF OPERATIONS
                         (Unaudited)
                              
                              
                              
                           Three months ended
                                June 30,
                          1997            1996
Contract revenues     $   169,540    $    86,250
                      
Expenses:                            
  Research and          3,273,692      1,549,732
    development
  General and           1,527,162        788,616
    administrative
Total expenses          4,800,854      2,338,348
                                     
Loss from operations   (4,631,314)    (2,252,098)
                                     
Interest income           341,574        142,013
Interest expense          (21,549)       (12,035)
Net loss              $(4,311,289)   $(2,122,120)
                     
                                     
Net loss per share    $     (0.42)    $    (0.44)
                      
                                     
Shares used in                       
  computation          
  of net loss per
  share                 10,201,495      4,833,993  
                              
                              
                              
                              
                   See accompanying notes.

                              
                     ARADIGM CORPORATION
                (A development stage company)
                              
                  STATEMENTS OF OPERATIONS
                         (Unaudited)
                              
                                                     Period from
                                                     January 30,
                                                        1991
                                                     (inception)
                          Six months ended             through
                              June 30,                June 30,
                        1997           1996             1997
Contract revenues   $  739,557     $   172,500      $  1,749,557
                    
Expenses:                                           
  Research and             
    development      5,798,351       2,788,908        21,082,296
  General and              
    administrative   2,441,850       1,379,768        10,630,990
Total expenses       8,240,201       4,168,676        31,713,286
                                                    
Loss from                                           
  operations        (7,500,644)     (3,996,176)      (29,963,729)
                                                    
Interest income        723,684         289,226         2,167,295
Interest expense       (35,836)        (22,918)         (167,056)
Net loss           $(6,812,796)    $(3,729,868)     $(27,963,490)
                   
                                                                 
Net loss per share  $    (0.67)     $    (0.80)                   
                   
                                                                 
Shares used in                                                   
  computation of 
  net loss per
  share             10,205,370       4,634,227
                              
                   See accompanying notes.
                              
                              
                              
                              
                              
                              
                     ARADIGM CORPORATION
                (A development stage company)
                              
                       BALANCE SHEETS
                              
                                June 30,      December 31,
                                  1997            1996
Assets                        (unaudited)           
Current assets:                               
  Cash and cash equivalents  $13,255,743      $18,553,831
  Short-term investments       6,935,060        6,977,331
  Other current assets           813,305          451,220
   Total current assets       21,004,108       25,982,382
Investments                            -        3,002,445
Property and equipment, net    2,722,033        1,452,968
Notes receivable from                         
  officers                       242,029          219,739
Other assets                      78,808           75,657
    Total assets             $24,046,978      $30,733,191
                                                          
Liabilities and shareholders'                             
  equity
Current liabilities:                                      
  Accounts payable            $1,144,736        $ 601,230
  Accrued clinical and other                  
    studies                            -          898,635
  Accrued compensation           898,140          279,985
  Other accrued liabilities      104,206          278,985
  Deferred revenue                40,032          169,500
  Current portion of capital                  
    lease obligations            290,356          268,514
    Total current                   
       liabilities             2,477,470        2,496,849
Noncurrent portion of capital                 
  lease obligations              323,118          350,171
Commitments                                   
Shareholders' equity:                         
  Preferred stock, no par                     
    value; 5,000,000 shares
   authorized; none issued                    
    or outstanding                     -                -
  Common stock, no par                        
    value, 40,000,000 shares
   authorized; issued and                     
    outstanding shares:
   June 30, 1997 -                            
    10,205,245; December 31,                  
    1996 - 10,214,054         49,841,759       49,821,157
                                              
Notes receivable from                         
  shareholders                  (421,699)        (482,805)
Deferred compensation           (205,803)        (308,239)
Deficit accumulated during                    
  development stage          (27,967,867)     (21,143,942)
    Total shareholders'                       
       equity                 21,246,390       27,886,171
    Total liabilities and                     
     shareholders' equity   $ 24,046,978     $ 30,733,191
                                                          
                              
                   See accompanying notes.
                              
                              
                              
                     ARADIGM CORPORATION
                (A development stage company)
                              
                  STATEMENTS OF CASH FLOWS
      Increase (decrease) in cash and cash equivalents
                         (Unaudited)
                              
                                                          Period from
                                                          January 30,
                                                              1991
                               Six months ended           (inception)
                                   June 30,                 through
                             1997            1996        June 30, 1997
Cash flows from                                          
operating activities
Net loss                 $(6,812,796)     $(3,729,866)    $(27,963,490)
Adjustments to                                                         
reconcile net loss to
net cash flow used in
operating activities                                                   
Depreciation and                                                       
    amortization             280,045          165,729          999,504
Amortization of                                                        
    deferred                                                           
    compensation             102,436           84,218          289,090
Accrued interest on                                                    
    note exchanged for                                                 
    preferred stock                -                -           32,622
Loss on disposal of                                                    
    property and                                                       
    equipment                      -                -           37,666
Loss on sale-                                                          
    leaseback                                                          
    transaction                    -                -           95,294
Changes in assets and                                                  
    liabilities
Contract receivable                -          260,000                -
Other current                                                          
     assets                 (362,085)        (112,569)        (813,305)
Other assets                  (3,151)          (6,964)         (78,808)
Accounts payable             543,506          907,402        1,144,736
Accrued liabilities         (455,259)         289,018        1,002,346
Deferred revenue            (129,468)        (172,500)          40,032
Net cash used in                                                       
  operating activities    (6,836,772)      (2,315,532)     (25,214,313)
Cash flows from                                                        
investing activities
Capital expenditures      (1,398,943)          (4,830)      (3,094,687)
Purchases of                                                           
   investments           (17,986,617)               -     (208,653,264)
Proceeds from maturities                                                
of investments                                                         
                           21,020,204               -      201,713,827
Net cash (used in)                                                     
  provided by investing                                                
  activities                1,634,644          (4,830)     (10,034,124)
Cash flows from                                                        
financing activities
Proceeds from issuance                                                 
   of notes payable to                                        
   shareholders                     -               -        2,111,395
Repayment of notes                                                     
   payable to                                                          
   shareholders                     -               -         (298,972)
Proceeds from issuance                                                 
   of preferred stock,                                                 
   net                              -               -       22,274,014          
Proceeds from issuance                                                 
   of common stock, net        29,982      24,796,878       24,740,955
Repurchase of common                                                   
   stock                            -               -           (6,574)
Proceeds from                                                          
   repayment of                                                        
   shareholder notes           51,726               -           51,726
Proceeds from sale of                                                  
   equipment in sale-                                                  
   leaseback                                                           
   transaction                      -               -          389,621
Notes receivable from                                                  
   officers                   (22,290)        (14,818)        (242,029)
Payments on lease                                                      
   obligations               (155,378)       (128,920)        (515,956)
Net cash (used in)                                                     
  provided by financing                                                
  activities                  (95,960)     24,653,140       48,504,180
Net (decrease) increase                                                
  in cash and cash                                                     
  equivalents              (5,298,088)     22,332,778       13,255,743
Cash and cash                                                          
  equivalents at                                                       
  beginning of period      18,553,831      12,117,355                -
Cash and cash                                                          
  equivalents at end of                                                
  period                  $13,255,743     $34,450,133      $13,255,743
                                                                       
                                                                       
Supplemental investing                                                 
and financing
activities
Common stock issued in                                                 
   exchange for                                                        
   equipment             $          -      $         -       $   20,000
Common stock issued in                                                 
   exchange for notes                                                  
   receivable            $          -      $   286,581       $  513,385
Common stock canceled                                                  
   upon cancellation of                                                
   notes receivable      $      9,380      $         -       $    9,380
Preferred stock issued                                                 
   in exchange for debt  $          -      $         -       $1,812,423
Acquisition of                                                         
   equipment under                                                     
   capital leases        $    150,167      $   143,071       $1,129,430
                              
                              
                   See accompanying notes.
                              
                              
                              
                     ARADIGM CORPORATION
                (A development stage company)
                              
         NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
                        June 30, 1997


1.  Summary of Significant Accounting Policies

Organization and Description of Business
Aradigm Corporation (the "Company") was incorporated in  the
State  of  California on January 30, 1991.  Since inception,
the  Company  has  been engaged in the development  of  non-
invasive  pulmonary drug delivery products.   The  Company's
principal  activities to date have been conducting  research
and  development, recruiting personnel, focusing on business
development,   raising   capital   and   acquiring   assets.
Accordingly,  the Company is considered a development  stage
company.

Basis of Presentation
The financial information at June 30, 1997 and for the three-
and  six-month  periods ended June  30,  1997  and  1996  is
unaudited but includes all adjustments (consisting  only  of
normal  recurring  adjustments) that the  Company  considers
necessary for fair presentation of the financial position at
such date and the operating results and cash flows for those
periods.    Results  for  the  interim   periods   are   not
necessarily  indicative of the results for the entire  year.
The  accompanying  financial statements should  be  read  in
conjunction with the Company's audited financial  statements
for  the  year  ended  December 31, 1996,  included  in  the
Company's Form 10-K filed with the SEC on March 28, 1997.

Use of Estimates
The  preparation of financial statements in conformity  with
generally accepted accounting principles requires management
to  make  estimates and assumptions that affect the  amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

Cash Equivalents and Investments
The   Company   considers  all  highly  liquid   investments
purchased with an original maturity of three months or  less
to  be  cash equivalents.  The Company places its  cash  and
cash equivalents in money market funds, commercial paper and
corporate    master   notes.    The   Company's   short-term
investments  consist  of  corporate  notes  with  maturities
ranging  from 3 to 12 months. Other investments  consist  of
corporate notes with maturities greater than 12 months.
     
The Company classifies its investments as available-for-
sale.  Available-for-sale investments are recorded at fair
value with unrealized gains and losses reported in the
statement of shareholders' equity.  Fair values of
investments are based on quoted market prices, where
available.  Realized gains and losses, which have been
immaterial to date, are included in interest and other
income and are derived using the specific identification
method for determining the cost of investments sold.
Dividend and interest income is recognized when earned.

Net Loss Per Share
Net  loss  per share is computed using the weighted  average
number  of  shares  of  common  stock  outstanding.   Common
equivalent  shares  from  stock  options  and  warrants  are
excluded   from   the  computation  as   their   effect   is
antidilutive,  except that, pursuant to the  Securities  and
Exchange  Commission Staff Accounting Bulletins, common  and
common   equivalent  shares  issued  at  prices  below   the
Company's June 20, 1996 initial public offering price during
the 12-month period prior to the offering have been included
in  the  calculation  as if they were  outstanding  for  all
periods  through  the  offering (using  the  treasury  stock
method and the initial public offering price).

As described above, the antidilutive effect of certain stock
options is included in the calculation of loss per share for
all  periods through June 20, 1996, but is excluded from the
calculation  after that date. Pro forma per  share  data  is
provided  to show the calculation on a consistent basis  for
1997 and 1996.  It has been computed as described above, but
includes the retroactive effect from the date of issuance of
the  conversion  of convertible preferred  stock  to  common
shares  upon  the  closing of the Company's  initial  public
offering.

Pro forma per share information calculated
on the above basis is as follows:

                                                        
                       Three Months Ended       Six Months Ended
                             June 30,                June 30,
                         1997       1996         1997       1996     
                                                                     
Pro forma net loss   
per share              $(0.42)     $(0.25)     $(0.67)     $(0.46)    
                                                                     
Shares used in                                                       
computation of pro                                        
forma net loss per                                        
share                 10,201,495  8,337,461   10,205,370  8,137,695


In  February 1997, the Financial Accounting Standards  Board
issued  Statement  No. 128, "Earnings Per Share",  which  is
required to be adopted on December 31, 1997.  At that  time,
the  Company will be required to change the method currently
used  to compute earnings per share and to restate all prior
periods.  Under the new requirements for calculating primary
earnings  per  share, the dilutive effect of  stock  options
will be excluded.  The impact is not expected to result in a
change in net loss per share for the periods ended June  30,
1997 and June 30, 1996 as the Company incurred net losses in
those  periods and, accordingly, the calculation of earnings
per  share for those periods excluded stock options as their
effect was antidilutive.



ITEM 2.      MANAGEMENT'S   DISCUSSION   AND   ANALYSIS   OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion of the financial condition and
results  of  operations of the Company  should  be  read  in
conjunction  with the Financial Statements and  the  related
Notes  thereto  included  in this  Form  10-Q.   Except  for
historical  information contained herein, the discussion  in
this section contains forward-looking statements, including,
without  limitation, statements regarding timing and results
of   clinical   trials,  the  establishment   of   corporate
partnering    arrangements,   the   anticipated   commercial
introduction of the Company's products and the timing of the
Company's  cash requirements.  The Company's actual  results
could  differ  materially from those  anticipated  in  these
forward-looking  statements as a result of certain  factors,
including,  but  not  limited to, those  discussed  in  this
section,  as well as in the section entitled "Risk  Factors"
and  elsewhere in the Company's Form 10-K filed with the SEC
on March 28, 1997.

      The Company's business is subject to significant risks
including,  but not limited to, the success of its  research
and   development  efforts,  its  dependence  on   corporate
partners for marketing and distribution resources, obtaining
and  enforcing patents important to the Company's  business,
clearing  the lengthy and expensive regulatory  process  and
possible  competition  from other  products.   Even  if  the
Company's  products appear promising at  various  stages  of
development  they may not reach the market  or  may  not  be
commercially  successful  for a  number  of  reasons.   Such
reasons  include, but are not limited to, the  possibilities
that  the potential products will be found to be ineffective
during clinical trials, fail to receive necessary regulatory
approvals, be difficult to manufacture on a large scale,  be
uneconomical  to market, be precluded from commercialization
by  proprietary  rights of third parties  or  may  not  gain
acceptance from health care professionals and patients.

Overview

      Since  its  inception  in 1991,  Aradigm  has  been  a
development  stage  company engaged in the  development  and
marketing  of pulmonary drug delivery systems.  As  of  June
30,  1997  the Company had an accumulated deficit  of  $28.0
million.   The Company has been unprofitable each  year  and
expects   to   incur  further  significant  and   increasing
operating  losses over the next several years primarily  due
to   the   expansion  of  research   efforts  and   to   the
establishment  of  manufacturing  capabilities  to   support
clinical trials and, if any of its products are successfully
developed   and  receive  necessary  regulatory   approvals,
commercialization  of such products.  To date,  Aradigm  has
not sold any products and, while the Company does expect  to
launch  its  first product in 1997, it does  not  anticipate
receiving  any significant revenue from products or  product
royalties in the current year.  The Company has not declared
or paid any cash dividends on its capital stock and does not
anticipate paying cash dividends in the foreseeable future.

      The Company anticipates that its results of operations
may  fluctuate  for the foreseeable future  due  to  several
factors,  including the timing of research  and  development
expenses  (including  clinical trial-related  expenditures),
actions  related to regulatory and third-party reimbursement
matters,  the Company's ability to manufacture its products,
if   any,   efficiently,   the   timing   of   new   product
introductions,  if any, and competition.  In  addition,  the
Company's  results  of operations will be  affected  by  its
ability to enter into corporate collaborations.

Results of Operations
                              
     Three and Six Months Ended June 30, 1997 and 1996
                              
     Contract Revenue.  Contract revenue for the three-month
period  ended  June  30,  1997 increased  to  $170,000  from
$86,000  for the same period in 1996.  Contract revenue  for
the  six-month  period  ended June  30,  1997  increased  to
$740,000  from $173,000 for the same period in 1996.   These
increases  resulted  from revenue recognized  on  additional
feasibility research contracts that were entered  into  late
in the fourth quarter of 1996 and the first quarter of 1997.

       Research  and  Development  Expenses.   Research  and
development expenses for the three-month period  ended  June
30, 1997 increased to $3.3 million from $1.5 million for the
same  period in 1996. Research and development expenses  for
the  six-month period ended June 30, 1997 increased to  $5.8
million  from  $2.8  million for the same  period  in  1996.
These increases were primarily due to increased staffing and
costs   associated  with  the  expansion  of  research   and
development efforts on the AERx system and the expansion  of
the  SmartMist system program. The Company expects  research
and  development spending to increase significantly over the
next  few  years  as  the  Company expands  its  development
efforts.

      General  and  Administrative  Expenses.   General  and
administrative  expenses  for the three-month  period  ended
June  30,  1997 increased to $1.5 million from $789,000  for
the same period in 1996. General and administrative expenses
for  the  six-month period ended June 30, 1997 increased  to
$2.4  million from $1.4 million for the same period in 1996.
These increases were primarily due to increases in staffing,
administrative  and facilities expenses related  to  general
corporate activities.  The Company expects to incur  greater
general  and  administrative expenses in the  future  as  it
expands  its  operations, increases its efforts  to  develop
collaborative  relationships  with  corporate  partners  and
meets its obligations as a public company.

      Interest  Income.  Interest income for the three-month
period  ended  June  30,  1997 increased  to  $342,000  from
$142,000  for the same period in 1996.  Interest income  for
the  six-month  period  ended June  30,  1997  increased  to
$724,000  from $289,000 for the same period in 1996.   These
increases  resulted  from  interest  income  earned  on  the
proceeds  received  from the sale of common  shares  in  the
initial public offering in June 1996.

     Interest Expense.  Interest expense for the three-month
period ended June 30, 1997 increased to $22,000 from $12,000
for  the same period in 1996.  Interest expense for the six-
month  period ended June 30, 1997 increased to $36,000  from
$23,000  for  the  same  period in  1996.   These  increases
resulted  from  higher  outstanding capital  lease  balances
under the Company's equipment line of credit.

Liquidity and Capital Resources

     The Company has financed its operations since inception
primarily  through  public  and private  placements  of  its
capital  stock,  proceeds from the  financing  of  equipment
acquisitions,  contract  revenue  and  interest  earned   on
investments.  As of June 30, 1997, the Company had  realized
approximately  $48.8  million  in  net  proceeds  from   the
issuance  of  its  capital stock. The Company  is  currently
concluding negotiations for a $5 million equipment  line  of
credit  to replace the expired availability of credit  under
its existing $1.75 million equipment line of credit.  As  of
June  30,  1997, the Company had cash, cash equivalents  and
investments of approximately $20.2 million.

     Net cash used in operating activities in the six months
ending  June  30,  1997, was $6.8 million compared  to  $2.3
million  in 1996.  The increase resulted primarily from  the
increase  in the net loss of $3.1 million, net decreases  in
accrued liabilities and increases in current assets.

      Net  cash provided by investing activities in the  six
months  ending June 30, 1997, was $1.6 million  compared  to
$5,000  used in 1996.  The increase resulted primarily  from
the  Company's  net  receipt of investment  maturities  less
expenditures made for capital equipment.

     Net cash used in financing activities in the six months
ending  June  30, 1997, of $96,000 resulted  primarily  from
increased   payments  on  capital  lease  obligations   less
receipts  from  repayment of shareholder  notes.   Net  cash
provided  by  financing activities in the six months  ending
June  30,  1996 of $24.7 million was primarily  due  to  the
receipt  of  proceeds  from  the  Company's  initial  public
offering.

      The  Company  expects that its cash requirements  will
increase  as  a  result  of expected increases  in  expenses
related to research and development activities, the scale up
of  manufacturing  processes and increases  in  general  and
administrative  costs. The Company's cash requirements  will
also  be  affected by the extent and duration of the foreign
and domestic regulatory approval processes for its potential
products.  Although  there  can be  no  assurance  that  the
Company  will  receive regulatory approval for  any  of  its
products, if the Company does so, its cash requirements  may
increase  due  to  the significant expenses associated  with
initial  commercial production and marketing efforts.  These
expenses  include,  but  are not limited  to,  increases  in
personnel  and related costs, capital expenditures,  product
prototype  development expenses and the costs of  facilities
expansion.

     The   Company   expects  that  its   existing   capital
resources,   existing  contract  research  and   development
revenue,  interest income and equipment financing capability
will  enable  the  Company to maintain current  and  planned
operations  through  the first half of 1998.  The  Company's
cash  requirements, however, may vary materially from  those
now  planned  because of results of research and development
efforts,  including capital expenditures and the funding  of
preclinical  and  clinical  trials,  manufacturing   process
development in connection with the commercialization of  the
SmartMist    system,   and   manufacturing   capacity    for
preclinical,   clinical   and   full   scale   manufacturing
requirements  of  the  AERx system.  The  Company  may  seek
additional funding through collaborations or through  public
or private equity or debt financing. The Company has not yet
established  any  corporate development  collaborations  and
there  can be no assurance that it will be able to do so  on
reasonable terms, or at all. Nor can there be any  assurance
that  additional  financing can be  obtained  on  acceptable
terms,  or at all. If additional funds are raised by issuing
equity  securities, dilution to shareholders may result.  If
adequate  funds  are  not  available,  the  Company  may  be
required  to delay, to reduce the scope of, or to  eliminate
one or more of its research and development programs, or  to
obtain   funds   through  arrangements  with   collaborative
partners  or other sources that may require the  Company  to
relinquish rights to certain of its technologies or products
that the Company would not otherwise relinquish.




PART II   OTHER INFORMATION

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
          HOLDERS
          
          (a)  The Annual Meeting of Shareholders of Aradigm
               Corporation was held on May 20, 1997.

          (b)  Richard P. Thompson, Lester John Lloyd, Reid M.
               Rubsamen, Jared A. Anderson, Ross A. Jaffe, Burton J.
               McMurtry, Gordon W. Russell, Fred E. Silverstein and Virgil
               D. Thompson were elected to the Board of Directors to hold
               office until the next Annual Meeting of Shareholders and
               until their successors are elected and qualified.

          (c)  The matters voted upon at the meeting and the voting of
               the shareholders with respect thereto were as follows:

               (i)  The election of Richard P. Thompson as a Director to
                    hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:   8,136,030     Withheld:   29
               
               (ii)      The election of Lester John Lloyd as a Director to
                    hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:   8,135,980     Withheld:   79
               
               (iii)     The election of Reid M. Rubsamen as a Director to
                    hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:   8,136,030     Withheld:   29
               
               (iv)      The election of Jared A. Anderson as a Director to
                    hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:  8,136,030      Withheld:   29
               
               (v)  The election of Ross A. Jaffe as a Director to hold
                    office until the next Annual Meeting of Shareholders and
                    until his successor is elected and qualified:
                    For:  8,136,030      Withheld:   29
               
               (vi)      The election of Burton J. McMurtry as a Director
                    to hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:  8,136,030      Withheld:   29
               
               (vii)     The election of Gordon W. Russell as a Director to
                    hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:  8,136,030      Withheld:   29
               
               (viii)    The election of Fred E. Silverstein as a Director
                    to hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:   8,136,030     Withheld:   29
               
               (ix)      The election of Virgil D. Thompson as a Director
                    to hold office until the next Annual Meeting of Shareholders
                    and until his successor is elected and qualified:
                    For:   8,116,230 Withheld:   19,829
               
               (x)  Ratification of the selection of Ernst & Young LLP as
                    independent auditors of the Company for its fiscal year
                    ending December 31, 1997:
                    For: 7,982,759    Withheld:   2,800
                    Abstain:                    150,500
                    Broker Non-Votes:                 0
               
                
                    
          


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

          (a) Exhibits
          
          11.1      Statement Regarding Computation of Net Loss Per
                    Share
          27.1      Financial Data Schedule
          
          (b) Reports on Forms 8-K.
               The Company filed no reports on Form 8-K
               during  the quarter ended June 30, 1997.








                          SIGNATURE
                              
                              
                              
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.

Dated:  August 12, 1997

                              ARADIGM CORPORATION
                              (Registrant)



                              /s/Mark A. Olbert
                              Mark A. Olbert
                              Vice President, Finance and
                              Administration and Chief
                              Financial Officer

                              
                     ARADIGM CORPORATION
                          FORM 10-Q
                      INDEX TO EXHIBITS
                              
                              

Exhibit Number      Description

11.1                Statement Regarding Computation of Net
                    Loss Per Share

27.1                Financial Data Schedule



                                                EXHIBIT 11.1
                                                            
                                                            
                              
                     ARADIGM CORPORATION
    STATEMENT REGARDING COMPUTATION OF NET LOSS PER SHARE



                     Three Months Ended             Six Months Ended
                          June 30,                      June 30,
                     1997          1996            1997          1996
                                                             
Net loss         $(4,311,289)  $(2,122,120)     $(6,812,796)  $(3,729,868)
                                                             
                                                             
Shares used in                                               
computation of
net loss per
share:
                                                             
 Weighted                                                    
  average Common                                             
  shares                                                     
  outstanding     10,201,495     2,146,038       10,205,370     1,946,272
 Shares                                                      
  related to SAB                                             
  Nos. 55, 64,                                               
  and 83                   -     2,687,955                -     2,687,955
 Shares used in
  computing net 
  loss per share  10,201,495     4,833,993       10,205,370     4,634,227

                                                             
Net loss per                                                 
share              $    (.42)    $    (.44)       $    (.67)    $    (.80)
                                                 
Shares used in                                               
computation of
pro forma net
loss per share:                                                             
                                                             
 Shares used in                                              
  computing net                                              
  loss per share  10,201,495     4,833,993       10,205,370     4,634,227
 Adjustment to                                               
  reflect effect
  of assumed
  conversion
  of preferred                                               
  stock from                                                 
  date of                                                    
  issuance                 -     3,503,468                -     3,503,468
 Shares used in                                              
  computing pro
  forma net loss
  per share       10,201,495     8,337,461       10,205,370     8,137,695
                                                             
Pro forma net                                                
loss per share     $    (.42)    $    (.25)       $    (.67)    $    (.46)