Document and Entity Information	9 Months Ended
Document and Entity Information	Jun. 30, 2015	Jul. 31, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Trading Symbol	ARWR
Entity Registrant Name	ARROWHEAD RESEARCH CORP
Entity Central Index Key	0000879407
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		59,500,862

Consolidated Balance Sheets (USD $)	Jun. 30, 2015	Sep. 30, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 87,252,813	$ 132,510,610
Prepaid expenses	3,499,324	588,626
Other current assets	654,924	48,502
Short term investments	23,280,640	21,653,032
TOTAL CURRENT ASSETS	114,687,701	154,800,770
Property and equipment, net	4,108,667	3,872,753
Intangible assets, net	25,262,886	1,013,473
Investments	1,085,282	23,088,346
Other assets	45,789	41,414
TOTAL ASSETS	145,190,325	182,816,756
CURRENT LIABILITIES
Accounts payable	4,862,263	2,579,478
Accrued expenses	1,726,449	1,399,486
Accrued payroll and benefits	884,373	3,268,506
Deferred revenue	71,875	103,125
Derivative liabilities	1,724,468	4,173,943
Capital lease obligation	216,653	213,991
Notes payable		50,000
Other current liabilities	46,407	58,495
TOTAL CURRENT LIABILITIES	9,532,488	11,847,024
LONG-TERM LIABILITIES
Capital lease obligation, net of current portion	595,516	758,340
Contingent consideration obligations	3,970,931	3,970,931
Other non-current liabilities	346,996	255,206
TOTAL LONG-TERM LIABILITIES	4,913,443	4,984,477
Commitments and contingencies
Arrowhead Research Corporation stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 15,652 and 18,300 shares issued and outstanding as of June 30, 2015 and September 30, 2014, respectively	16	18
Common stock, $0.001 par value; 145,000,000 shares authorized; 59,498,362 and 54,656,936 shares issued and outstanding as of June 30, 2015 and September 30, 2014, respectively	151,868	147,026
Additional paid-in capital	423,182,550	391,164,558
Accumulated other comprehensive income (loss)	(65,947)
Accumulated deficit	(291,968,905)	(224,771,159)
Total Arrowhead Research Corporation stockholders' equity	131,299,582	166,540,443
Noncontrolling interest	(555,188)	(555,188)
TOTAL STOCKHOLDERS’ EQUITY	130,744,394	165,985,255
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 145,190,325	$ 182,816,756

Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2015	Sep. 30, 2014
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	15,652	18,300
Preferred stock, shares outstanding	15,652	18,300
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	145,000,000	145,000,000
Common stock, shares issued	59,498,362	54,656,936
Common stock, shares outstanding	59,498,362	54,656,936

Consolidated Statements of Operations (unaudited) (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
REVENUE	$ 123,750	$ 43,750	$ 338,250	$ 131,250
OPERATING EXPENSES
Research and development	7,490,400	6,392,200	36,877,925	14,719,739
Acquired in-process research and development			10,142,786
Salaries and payroll-related costs	3,570,531	2,454,449	10,262,799	7,634,142
General and administrative expenses	1,829,393	1,582,465	5,612,219	3,865,845
Stock-based compensation	2,486,074	2,038,682	6,706,009	3,758,264
Depreciation and amortization	741,058	276,054	1,480,656	1,075,238
TOTAL OPERATING EXPENSES	16,117,456	12,743,850	71,082,394	31,053,228
OPERATING LOSS	(15,993,706)	(12,700,100)	(70,744,144)	(30,921,978)
OTHER INCOME (EXPENSE)
Equity in income (loss) of unconsolidated affiliates		78,702		(69,350)
Gain (loss) on sale of fixed assets, net			19,195	(58,878)
Interest income (expense), net	162,366	226,424	597,896	386,392
Change in value of derivatives	(104,713)	758,469	2,446,403	(5,712,335)
Other income (expense)		10,054	482,904	81,269
TOTAL OTHER INCOME (EXPENSE)	57,653	1,073,649	3,546,398	(5,372,902)
LOSS BEFORE INCOME TAXES	(15,936,053)	(11,626,451)	(67,197,746)	(36,294,880)
NET LOSS	(15,936,053)	(11,626,451)	(67,197,746)	(36,294,880)
Net loss attributable to noncontrolling interests		(2,468)		95,132
NET LOSS ATTRIBUTABLE TO ARROWHEAD	(15,936,053)	(11,628,919)	(67,197,746)	(36,199,748)
NET LOSS PER SHARE ATTRIBUTABLE TO ARROWHEAD SHAREHOLDERS - BASIC AND DILUTED:	$ (0.27)	$ (0.22)	$ (1.19)	$ (0.81)
Weighted average shares outstanding - basic and diluted	59,492,867	51,931,989	56,631,297	44,565,008
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign Currency Translation Adjustments	(1,982)		(65,947)
COMPREHENSIVE LOSS ATTRIBUTABLE TO ARROWHEAD	$ (15,938,035)	$ (11,628,919)	$ (67,263,693)	$ (36,199,748)

Consolidated Statement of Stockholders' Equity (unaudited) (USD $)	Total	Common stock issued @ $5.86	Common stock issued @ $18.95	Preferred stock issued at $1,000 per share	Common Stock Issued to Galloway	Issued To Novartis At Seven Dollar And Fifty Three Cents Per Share	Preferred Stock	Preferred Stock Preferred stock issued at $1,000 per share	Common Stock	Common Stock Common stock issued @ $5.86	Common Stock Common stock issued @ $18.95	Common Stock Common Stock Issued to Galloway	Common Stock Issued To Novartis At Seven Dollar And Fifty Three Cents Per Share	Additional Paid In Capital	Additional Paid In Capital Common stock issued @ $5.86	Additional Paid In Capital Common stock issued @ $18.95	Additional Paid In Capital Preferred stock issued at $1,000 per share	Additional Paid In Capital Common Stock Issued to Galloway	Additional Paid In Capital Issued To Novartis At Seven Dollar And Fifty Three Cents Per Share	Accumulated Other Comprehensive Income (loss)	Accumulated Deficit	Noncontrolling Interest
Beginning Balance Amount at Sep. 30, 2013	$ 25,734,789						$ 10		$ 124,859					$ 193,514,766							$ (166,140,969)	$ (1,763,877)
Beginning Balance Shares at Sep. 30, 2013							9,900		32,489,444
Exercise of warrants, Amount	10,148,044								2,911					10,145,133
Exercise of warrants									2,911,919
Stock options exercised, Amount	2,730,000								455					2,729,545
Stock options exercised	454,863								454,863
Stock-based compensation	5,696,173													5,696,173
Stock issuances		14,060,112	112,581,559	46,000,000	500,000			46		3,072	6,325	132			14,057,040	112,575,234	45,999,954	499,868
Stock issuances, Shares								46,000		3,071,672	6,325,000	131,579
Settlements related to derivative liability	5,956,079													5,956,079
Preferred stock converted to common stock, Amount							(38)		9,272					(9,234)
Preferred stock converted to common stock, Shares							(37,600)		9,272,459
Deconsolidation of Calando Pharmaceuticals, Inc.	1,303,911																					1,303,911
Net loss	(58,725,412)																				(58,630,190)	(95,222)
Ending Balance Amount at Sep. 30, 2014	165,985,255						18		147,026					391,164,558							(224,771,159)	(555,188)
Ending Balance Shares at Sep. 30, 2014							18,300		54,656,936
Exercise of warrants, Amount	270,625								54					270,571
Exercise of warrants									53,578
Stock options exercised, Amount	43,126								18					43,108
Stock options exercised	17,500								17,500
Stock-based compensation	6,706,009													6,706,009
Exercise of exchange rights, Amount	3,072								5					3,067
Exercise of exchange rights, Shares									5,250
Stock issuances						25,000,000							3,321						24,996,679
Stock issuances, Shares													3,321,383
Preferred stock converted to common stock, Amount							(2)		1,316					(1,314)
Preferred stock converted to common stock, Shares							(2,648)		1,316,215
Common stock-RSU vesting, Amount									128					(128)
Common stock-RSU vesting, Shares									127,500
Foreign Currency Translation Adjustments	(65,947)																			(65,947)
Net loss	(67,197,746)																				(67,197,746)
Ending Balance Amount at Jun. 30, 2015	$ 130,744,394						$ 16		$ 151,868					$ 423,182,550						$ (65,947)	$ (291,968,905)	$ (555,188)
Ending Balance Shares at Jun. 30, 2015							15,652		59,498,362

Consolidated Statements of Cash Flows (unaudited) (USD $)	9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (67,197,746)	$ (36,294,880)
Net loss attributable to noncontrolling interests		95,132
NET LOSS ATTRIBUTABLE TO ARROWHEAD	(67,197,746)	(36,199,748)
(Gain) loss on disposal of fixed assets	(19,195)	58,878
Change in value of derivatives	(2,446,403)	5,712,335
Acquired in-process research and development	10,142,786
Stock-based compensation	6,706,009	3,758,264
Depreciation and amortization	1,480,656	1,075,238
Amortization of note premiums	945,114	416,291
Noncash gain in equity investment		(87,197)
Non-controlling interest		(95,132)
Changes in operating assets and liabilities:
Receivables		75,000
Other receivables	(620,395)	(517,986)
Other current assets	(2,902,368)	(138,650)
Accounts payable	2,328,360	990,929
Accrued expenses	(2,155,033)	459,691
Other	31,639	(4,480)
NET CASH USED IN OPERATING ACTIVITIES	(53,687,381)	(24,496,567)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions	(10,000,000)
Purchases of property and equipment	(1,135,651)	(1,251,987)
Proceeds from sale of fixed assets	500
Purchase of marketable securities		(46,365,528)
Proceeds from sale of marketable securities	19,411,146	6,590,824
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	8,275,995	(41,026,691)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases and notes payable	(160,162)	(257,178)
Proceeds from issuance of common stock and preferred stock, net		172,641,720
Proceeds from the exercise of warrants and stock options	313,751	12,374,005
NET CASH PROVIDED BY FINANCING ACTIVITIES	153,589	184,758,547
NET INCREASE (DECREASE) IN CASH	(45,257,797)	119,235,289
CASH AT BEGINNING OF PERIOD	132,510,610	19,114,444
CASH AT END OF PERIOD	87,252,813	138,349,733
Supplementary disclosures:
Interest paid	11,153	21,478
Common stock issued to Novartis for asset acquisition	$ 25,000,000

Organization and Significant Accounting Policies	9 Months Ended
Organization and Significant Accounting Policies	Jun. 30, 2015
Accounting Policies [Abstract]
Organization and Significant Accounting Policies	NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business Arrowhead Research Corporation develops novel drugs to treat intractable diseases by silencing the genes that cause them. Using the broadest portfolio of RNA chemistries and efficient modes of delivery, Arrowhead therapies trigger the RNA interference mechanism to induce rapid, deep and durable knockdown of target genes. Arrowhead’s most advanced drug candidate in clinical development is ARC-520, which is designed to treat chronic hepatitis B infection by inhibiting the production of all HBV gene products. The goal is to reverse the immune suppression that prevents the body from controlling the virus and clearing the disease. Arrowhead’s second clinical candidate is ARC-AAT, a treatment for a rare liver disease associated with a genetic disorder that causes alpha-1 antitrypsin deficiency. Liquidity Historically, the Company’s primary source of financing has been through the sale of its securities. Research and development activities have required significant capital investment since the Company’s inception. We expect our operations to continue to require cash investment to pursue our research and development goals, including clinical trials and related drug manufacturing. Based upon the Company’s current cash resources and operating plan, the Company expects to have sufficient liquidity to fund operations for at least the next twelve months. At June 30, 2015, the Company had $87.3 million in cash to fund operations. In addition to its cash resources, the Company has invested excess cash in investment grade commercial bonds maturing in less than 24 months. These bonds provide a source of liquidity, though the Company plans to hold them until maturity. At June 30, 2015, the Company had invested $24.4 million in bonds. During the nine months ended June 30, 2015, the Company’s cash position decreased by $45.3 million which was primarily the result of cash outflows related to operating activities of $53.7 million, cash paid for the acquisition of certain RNAi assets from Novartis Institutes for Biomedical Research Inc. of $10.0 million (see footnote 2) and capital expenditures of $1.1 million, partially offset by maturities of fixed income investments totaling $19.4 million and proceeds from the exercise of warrants and options of $0.3 million. Summary of Significant Accounting Policies Principles of Consolidation—The consolidated financial statements include the accounts of Arrowhead and its Subsidiaries. Arrowhead’s primary operating subsidiary is Arrowhead Madison, which is located in Madison, Wisconsin, where the Company’s research and development facility is located. All significant intercompany accounts and transactions are eliminated in consolidation. Basis of Presentation and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Actual results could materially differ from those estimates. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Cash and Cash Equivalents—The Company considers all liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company had no restricted cash at June 30, 2015 and September 30, 2014. Concentration of Credit Risk—The Company maintains several bank accounts for its operations at two financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per institution. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held. Investments—The Company may invest excess cash balances in short-term and long-term marketable debt securities. Investments may consist of certificates of deposits, money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper. The Company accounts for its investment in marketable securities in accordance with FASB ASC 320, Investments – Debt and Equity Securities. This statement requires certain securities to be classified into three categories: Held-to-maturity—Debt securities that the entity has the positive intent and ability to hold to maturity are reported at amortized cost. Trading Securities—Debt and equity securities that are bought and held primarily for the purpose of selling in the near term are reported at fair value, with unrealized gains and losses included in earnings. Available-for-Sale—Debt and equity securities not classified as either securities held-to-maturity or trading securities are reported at fair value with unrealized gains or losses excluded from earnings and reported as a separate component of shareholders’ equity. The Company classifies its investments in marketable debt securities based on the facts and circumstances present at the time of purchase of the securities. At June 30, 2015, the Company classified all of its investments as held-to-maturity. Held-to-maturity investments are measured and recorded at amortized cost on the Company’s Consolidated Balance Sheet. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security. No gains or losses on investment securities are realized until they are sold or a decline in fair value is determined to be other-than-temporary. Property and Equipment—Property and equipment are recorded at cost, which may equal fair market value in the case of property and equipment acquired in conjunction with a business acquisition. Depreciation of property and equipment is recorded using the straight-line method over the respective useful lives of the assets ranging from three to seven years. Leasehold improvements are amortized over the lesser of the expected useful life or the remaining lease term. Long-lived assets, including property and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. Intangible Assets Subject to Amortization—At June 30, 2015, intangible assets subject to amortization include certain patents and license agreements. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. In-Process Research & Development (IPR&D)—IPR&D assets represent capitalized on-going research projects that were acquired through business combinations. Such assets are initially measured at their acquisition date fair values. The amounts capitalized are being accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of R&D efforts associated with the project. Upon successful completion of a project, Arrowhead will make a determination as to the then remaining useful life of the intangible asset and begin amortization. Arrowhead tests its indefinite-lived assets for impairment at least annually, through a two-step process. The first step is a qualitative assessment to determine if it is more likely than not that the indefinite lived assets are impaired. Arrowhead considers relevant events and circumstances that could affect the inputs used to determine the fair value of the intangible assets. If the qualitative assessment indicates that it is more likely than not that the intangible assets are impaired, a second step is performed which is a quantitative test to determine the fair value of the intangible asset. If the carrying amount of the intangible assets exceeds its fair value, an impairment loss is recorded in the amount of that excess. If circumstances determine that it is appropriate, the Company may also elect to bypass step one, and proceed directly to the second step. Contingent Consideration - The consideration for the Company’s acquisitions often includes future payments that are contingent upon the occurrence of a particular event. For example, milestone payments might be based on the achievement of various regulatory approvals or future sales milestones, and royalty payments might be based on drug product sales levels. The Company records a contingent consideration obligation for such contingent payments at fair value on the acquisition date. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at estimated fair value at the balance sheet date. Changes in the fair value of our contingent consideration obligations are recognized within the Company’s Consolidated Statements of Operations. Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flows from products upon commercialization, changes in the assumed achievement or timing of any development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval. These fair value measurements are based on significant inputs not observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. Revenue Recognition—Revenue from license fees are recorded when persuasive evidence of an arrangement exists, title has passed or services have been rendered, a price is fixed and determinable, and collection is reasonably assured. The Company may generate revenue from product sales, technology licenses, collaborative research and development arrangements, and research grants. Revenue under technology licenses and collaborative agreements typically consists of nonrefundable and/or guaranteed technology license fees, collaborative research funding and various milestone and future product royalty or profit-sharing payments. Payments under collaborative research and development agreements are recognized as revenue ratably over the relevant periods specified in the agreement, generally the period during which research and development is conducted. Revenue from up-front license fees, milestones and product royalties are recognized as earned based on the completion of the milestones and product sales, as defined in the respective agreements. Payments received in advance of recognition as revenue are recorded as deferred revenue. Allowance for Doubtful Accounts—The Company accrues an allowance for doubtful accounts based on estimates of uncollectible revenues by analyzing historical collections, accounts receivable aging and other factors. Accounts receivable are written off when all collection attempts have failed. Research and Development—Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with FASB ASC 730-10. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, overhead directly related to the Company’s research and development operations, and costs to acquire technology licenses. Earnings (Loss) per Share—Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of stock options and restricted stock units issued to employees and warrants to purchase Common Stock of the Company. All outstanding stock options, restricted stock units and warrants for the three and nine months ended June 30, 2015 and 2014 have been excluded from the calculation of Diluted earnings (loss) per share due to their anti-dilutive effect. Stock-Based Compensation—The Company accounts for share-based compensation arrangements in accordance with FASB ASC 718, which requires the measurement and recognition of compensation expense for all share-based payment awards to be based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. The Company uses historical data and other information to estimate the expected price volatility and the expected forfeiture rate. For performance-based stock awards, the value of the awards is measured at the grant date. Expense is recognized over the vesting period, commencing at the time the Company determines the achievement of such performance conditions is probable. This determination requires significant judgment by management. Derivative Assets and Liabilities – The Company accounts for warrants and other derivative financial instruments as either equity or assets/liabilities based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded as additional paid-in capital on the Company’s Consolidated Balance Sheet. Some of the Company’s warrants were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on the Company’s Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. The Company estimates the fair value of these assets/liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Income Taxes—The Company accounts for income taxes under the liability method, which requires the recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. The provision for income taxes, if any, represents the tax payable for the period and the change in deferred income tax assets and liabilities during the period.

Acquisitions

9 Months Ended

Jun. 30, 2015

Asset Acquisition [Abstract]

Acquisitions

NOTE 2. ACQUISITIONS

On March 3, 2015, the Company entered into an Asset Purchase and Exclusive License Agreement (the “RNAi Purchase Agreement”) with Novartis Institutes for BioMedical Research, Inc., a Delaware corporation (“Novartis”), pursuant to which the Company acquired Novartis’ RNAi assets and rights thereunder. Pursuant to the RNAi Purchase Agreement, the Company acquired or licensed certain patents and patent applications owned or controlled by Novartis related to RNAi therapeutics, assignment of a third-party license, rights to three pre-clinical RNAi candidates, and other related assets (collectively, the “Purchased Assets”). The acquisition of the Purchased Assets closed on March 3, 2015, concurrent with execution of the RNAi Purchase Agreement (the “Closing”).

In consideration for the Purchased Assets, the Company made certain payments to Novartis, including: (a) an initial payment of $10,000,000 in cash of which $7,000,000 was paid during the Company’s first fiscal quarter of 2015 to secure an exclusivity period whereby the Company was able to exclusively examine the Novartis RNAi assets prior to finalizing the purchase, and the remaining $3,000,000 was paid in April 2015, and 3,321,383 shares of the Company’s common stock (the “Shares”) which were issued during the Company’s second fiscal quarter; (b) escalating royalties in the single digits based upon annual net sales thresholds for certain RNAi products sold by the Company; and (c) milestone payments tied to the achievement of certain development and sales milestones for each target being developed by the Company.

Pursuant to the RNAi Purchase Agreement, prior to initiation of a phase 2 Clinical Trial for a given RNAi Product or Arrowhead RNAi Product directed to an Initial Target, Novartis has an exclusive right to negotiate a license under any Intellectual Property Rights owned or exclusively licensed to the Company to make, sell or otherwise commercially exploit such RNAi Product or Arrowhead RNAi Product (as such italicized terms are defined in the RNAi Purchase Agreement). After initiation of a phase 2 Clinical Trial for a given Arrowhead RNAi Product (“ROFN Candidate”), Novartis shall have a right of first negotiation on the ROFN Candidate developed by the Company and its affiliates relating to the purchased assets. If the Company proposes to out-license, or enters into substantive negotiations to out-license, any ROFN Candidate, the Company must give notice of the ROFN Candidate it proposes to out-license and negotiate exclusively and in good faith with Novartis for a period of time regarding the applicable out-license.

In addition to the consideration paid by the Company at the closing of the Transaction, the Company is obligated to make certain royalty and milestone payments to Novartis upon the occurrence of certain events. For sales of any RNAi Products for which Novartis and the Company do not enter into a licensing arrangement, the Company will be obligated to pay royalty rates ranging in the low to mid-single digits on Net Sales depending upon the type of RNAi Product provided that the royalty rate may be reduced or offset in certain circumstances. The obligation to pay royalties on such candidates will last until the later of (i) the expiration of the last to Valid Claim Covering such RNAi Product in such country and (ii) 11 years after the first commercial sale of such RNAi Product (as such italicized terms are defined in the RNAi Purchase Agreement).

The Company will also be obligated to make cash payments to Novartis upon the achievement of various milestones for any RNAi Products for which Novartis and the Company do not enter into a licensing arrangement. These milestones include the initiation of a phase 2 and 3 clinical trials, US and other regulatory approvals, and annual sales milestones. These milestone payments could amount to the mid to upper double digit millions of dollars.

The following table summarizes the estimated fair values of the assets acquired at the date of acquisition:

Intangible assets - patents	$	21,728,334
Intangible assets – license		3,128,880
Acquired in-process research and development - Pre-Clinical Candidates		10,142,786
Total purchase consideration	$	35,000,000

The purchase consideration was composed of the following:


Cash Paid	$	10,000,000
Value of Shares Issued		25,000,000
Total purchase consideration	$	35,000,000

The Company accounted for this transaction as an acquisition of RNAi assets, including patents, a third-party license and in process research and development for the pre-clinical candidates. The allocation of the purchase price to each asset was determined by estimating the relative fair value of each asset acquired and applying that to the total cost of the acquisition for the Company. The Company capitalized the patents and license acquired as Intangible Assets as they require no future development and will have alternative future uses as the Company expands its RNAi capabilities (see footnote 5 for additional discussion of the useful lives and amortization of these Intangible Assets). The Company expensed the portion of the purchase consideration allocated to the pre-clinical candidates as they will require future development in order to be commercialized. This expense is recorded in the “Acquired in-process research and development” line item of the Consolidated Statements of Operations.

Property and Equipment

9 Months Ended

Jun. 30, 2015

Property Plant And Equipment [Abstract]

Property and Equipment

NOTE 3. PROPERTY AND EQUIPMENT

The following table summarizes our major classes of property and equipment:


	June 30, 2015			September 30, 2014
Computers, office equipment and furniture	$	372,401		$	334,162
Research equipment		5,552,187			4,614,176
Software		110,428			69,623
Leasehold improvements		3,117,537			3,045,022
Total gross fixed assets		9,152,553			8,062,983
Less: Accumulated depreciation and amortization		(5,043,886	)		(4,190,230	)
Property and equipment, net	$	4,108,667		$	3,872,753

Investments

9 Months Ended

Jun. 30, 2015

Investments All Other Investments [Abstract]

Investments

NOTE 4. INVESTMENTS

The Company invests a portion of its excess cash balances in short-term and long-term debt securities. Investments at June 30, 2015 consisted of corporate bonds with maturities remaining of less than two years. The Company may also invest excess cash balances in certificates of deposit, money market accounts, US Treasuries, US government agency obligations, corporate debt securities, and/or commercial paper. The Company accounts for its investments in accordance with FASB ASC 320, Investments – Debt and Equity Securities. At June 30, 2015, all investments were classified as held-to-maturity securities.

The following tables summarize the Company’s short- and long-term investments as of June 30, 2015, and September 30, 2014.

	As of June 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial notes (due within one year)	$	23,280,640	$	—	$	(207,165	)	$	23,073,475
Commercial notes (due after one year through two years)	$	1,085,282		—	$	(30,412	)	$	1,054,870
Total	$	24,365,922	$	—	$	(237,577	)	$	24,128,345

	As of September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial notes (due within one year)	$	21,653,032	$	—	$	(189,830	)	$	21,463,202
Commercial notes (due after one year through two years)	$	23,088,346		—	$	(217,693	)	$	22,870,653
Total	$	44,741,378	$	—	$	(407,523	)	$	44,333,855

Intangible Assets

9 Months Ended

Jun. 30, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

NOTE 5. INTANGIBLE ASSETS

Intangible assets consist of in-process research and development (“IPR&D”) not subject to amortization, and patents and license agreements subject to amortization, which were capitalized as a part of an asset acquisition or business combination.

IPR&D represents projects that have not yet received regulatory approval and are required to be classified as indefinite assets until the successful completion or the abandonment of the associated R&D efforts. Accordingly, during the development period after the date of acquisition, these assets will not be amortized until approval is obtained in one or more jurisdictions which, individually or combined, are expected to generate a significant portion of the total revenue expected to be earned by an IPR&D project. At that time, the Company will determine the useful life of the asset, reclassify the asset out of IPR&D and begin amortization. If the associated R&D effort is abandoned the related IPR&D assets will likely be written off and the Company would record an impairment loss. Intangible assets not subject to amortization include IPR&D capitalized as part of a business combination from the acquisition of Roche Madison.

Intangible assets subject to amortization include patents and a license agreement capitalized as part of the Novartis RNAi asset acquisition and a business combination from the acquisition of Roche Madison. The license agreement associated with the Novartis RNAi asset acquisition is being amortized over the estimated life remaining at the time of acquisition which was 21 years, and the accumulated amortization of the asset is approximately $49,468. The license agreements associated with the acquisition of Roche Madison are being amortized over the estimated life remaining at the time of acquisition, which was 4 years, and the accumulated amortization of the assets is approximately $202,453. The patents associated with the Novartis RNAi asset acquisition are being amortized over the estimated life remaining at the time of acquisition which was 14 years, and the accumulated amortization of the assets is approximately $517,341. Amortization expense for the three and nine months ended June 30, 2015 was $438,770 and $607,801, respectively. Amortization expense for the three and nine months ended June 30, 2014 was $13,663 and $40,990, respectively. Amortization expense is expected to be approximately $438,771 for the remainder of fiscal year 2015, $1,714,313 in 2016, $1,700,429 in 2017, $1,700,429 in 2018, $1,700,429 in 2019, $1,700,429 in 2020, and $15,363,151 thereafter.

The following table provides details on the Company’s intangible asset balances:

	Intangible assets not subject to amortization			Intangible assets subject to amortization			Total Intangible assets
Balance at September 30, 2013	$	3,117,322		$	123,191		$	3,240,513
Impairment		(2,172,387	)		-			(2,172,387	)
Amortization		-			(54,653	)		(54,653	)
Balance at September 30, 2014	$	944,935		$	68,538		$	1,013,473
Acquisition of Novartis RNAi Assets		-			24,857,214			24,857,214
Amortization		-			(607,801	)		(607,801	)
Balance at June 30, 2015	$	944,935		$	24,317,951		$	25,262,886

Stockholders' Equity

9 Months Ended

Jun. 30, 2015

Equity [Abstract]

Stockholders' Equity

NOTE 6. STOCKHOLDERS’ EQUITY

At June 30, 2015, the Company had a total of 150,000,000 shares of capital stock authorized for issuance, consisting of 145,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per share.

At June 30, 2015, 59,498,362 shares of Common Stock were outstanding. Additionally, 15,652 shares of Series C Preferred Stock were outstanding, which are convertible into 2,670,990 shares of Common Stock. At June 30, 2015, 8,127,404 shares of Common Stock were reserved for issuance upon exercise of options and vesting of restricted stock units granted or available for grant under Arrowhead’s 2004 Equity Incentive Plan and 2013 Incentive Plan, as well as for inducement grants made to new employees.

The Preferred Stock is convertible to Common Stock by its holder at its stated conversion price, though it is not convertible to the extent the holder would beneficially own more than 9.99% of the number of shares of outstanding Common Stock immediately after the conversion. The holders of Preferred Stock are eligible to vote with the Common Stock of the Company on an as-converted basis, but only to the extent they are eligible for conversion without exceeding the 9.99% ownership limitation. The Preferred Stock does not carry a coupon, but it is entitled to receive dividends on a pari passu basis with Common Stock, when and if declared. In any liquidation or dissolution of the Company, the holders of Preferred Stock are entitled to participate in the distribution of the assets, to the extent legally available for distribution, on a pari passu basis with the Common Stock.

On October 11, 2013, the Company sold 3,071,672 shares of Common Stock, at a price of $5.86 per share, and 46,000 shares of Series C Preferred Stock, at a price of $1,000 per share. The Preferred Shares are convertible into shares of common stock at a conversion price of $5.86. The aggregate purchase price paid by the purchasers for the Common Stock and Series C Preferred Stock was $64,000,000 and the Company received net proceeds of approximately $60,000,000, after advisory fees and offering expenses.

On February 24, 2014, the Company sold 6,325,000 shares of Common Stock, at a public offering price of $18.95 per share. Net proceeds were approximately $112.6 million after underwriting commissions and discounts and other offering expenses.

The following table summarizes information about warrants outstanding at June 30, 2015:

Exercise prices		Number of Warrants		Remaining Life in Years
$	70.60		94,897		1.9
$	5.00		390,625		1.0
$	5.09		239,534		1.0
$	1.38		24,324		0.5
$	4.16		1,000		1.5
$	3.25		334,347		1.1
$	2.12		75,000		2.5
$	1.83		277,284		2.5
Total warrants outstanding			1,437,011

Commitments and Contingencies

9 Months Ended

Jun. 30, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 7. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases office space for its corporate headquarters in Pasadena, California. In March 2014, the Company signed a lease addendum to expand its corporate headquarters, and the new space became available in September 2014. The leases for the expansion space and the current space will expire in September 2019. Rental costs, including the expansion space, are approximately $23,000 per month, increasing approximately 3% annually.

The Company’s research facility in Madison, Wisconsin is leased through February 28, 2019. Monthly rental expense is approximately $26,000. Other monthly rental expenses include common area maintenance and real estate taxes totaling approximately $18,000 per month. Utilities costs are approximately $16,000 per month. Total monthly costs are approximately $79,000 per month, including monthly payments recorded under a capital lease of approximately $19,000.

Facility rent expense for the three and nine months ended June 30, 2015 was $182,000 and $544,000, respectively. Facility rent expense for the three and nine months ended June 30, 2014 was $138,000 and $403,000, respectively.

As of June 30, 2015, future minimum lease payments due in fiscal years under capitalized leases are as follows:

2015 (remainder of)	$	57,105
2016		228,420
2017		228,420
2018		228,420
2019		95,175
2020 and thereafter		-
Less interest		(25,371	)
Principal		812,169
Less current portion		(216,653	)
Noncurrent portion	$	595,516

As of June 30, 2015, future minimum lease payments due in fiscal years under operating leases are as follows:

2015 (remainder of)	$	146,060
2016		596,877
2017		613,664
2018		637,897
2019		459,633
2020 and thereafter		-
Total	$	2,454,131

Litigation

The Company, its Chief Executive Officer and its Chief Operating Officer have been named as defendants in two securities class actions filed in the United States District Court for the Central District of California regarding certain public statements in connection with the Company’s hepatitis B drug research. Both actions assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seek damages in an unspecified amount. Two actions with similar claims under California State law are currently pending in Los Angeles Superior Court. Additionally, three putative stockholder derivative actions have been filed in the United States District Court for the Central District of California, alleging breach of fiduciary duty by the Company’s Board of Directors in connection with the facts underlying the securities claims. Each of these seven suits seeks damages in unspecified amounts and some seek various forms of injunctive relief.

The Company and two of its former executives have been named as defendants in a complaint filed by William Marsh Rice University (“Rice University”) currently pending in the United States District Court for the Southern District of Texas relating to alleged breaches of a license agreement between Rice University and the Company’s former subsidiary, Unidym, Inc. The plaintiff has alleged that the Company and its former executives acted fraudulently with respect to Unidym’s license from Rice University and seeks injunctive relief, damages, including unspecified compensatory and punitive damages, and attorneys’ fees.

The Company believes it has meritorious defenses and intends to vigorously defend itself in each of the above matters. The Company makes provisions for liabilities when it is both probable that a liability has been incurred and the amount can be reasonably estimated. No such liability has been recorded related to these matters. The Company does not expect these matters to have any material effect on its Consolidated Financial Statements. With regard to legal fees, such as attorney fees related to these matters or any other legal matters, the Company’s accounting policy is to recognize such cost as incurred.

Purchase Commitments

In the normal course of business, we enter into various purchase commitments for the manufacture of drug components, toxicology studies, and for clinical studies. As of June 30, 2015, these future commitments were approximately $51 million, of which approximately $13 million is expected to be incurred in the remainder of fiscal 2015, and $38 million is expected to be incurred beyond fiscal 2015.

Technology License Commitments

The Company has licensed from third parties the rights to use certain technologies that it uses in its research and development activities, as well as in any products the Company may develop using these licensed technologies. These agreements and other similar agreements often require milestone and royalty payments. Milestone payments, for example, may be required as the research and development process progresses through various stages of development, such as when clinical candidates enter or progress through clinical trials, upon NDA and upon certain sales level milestones. These milestone payments could amount to the mid to upper double digit millions of dollars. In certain agreements, the Company may be required to make mid to high single digit percentage royalty payments based on a percentage of the sales of the relevant products.

Stock-Based Compensation

9 Months Ended

Jun. 30, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

NOTE 8. STOCK-BASED COMPENSATION

Arrowhead has two plans that provide for equity-based compensation. Under the 2004 Equity Incentive Plan and 2013 Incentive Plan, as of June 30, 2015, 2,543,268 and 5,094,314 shares, respectively, of Arrowhead’s Common Stock are reserved for the grant of stock options, stock appreciation rights, restricted stock awards and performance unit/share award to employees, consultants and others. No further grants may be made under the 2004 Equity Incentive Plan. As of June 30, 2015, there were options granted and outstanding to purchase 2,543,268 and 2,316,802 shares of Common Stock under the 2004 Equity Incentive Plan and the 2013 Incentive Plan, respectively, and there were 1,017,500 restricted stock units granted and outstanding under the 2013 Incentive Plan. Also, as of June 30, 2015, there were 547,322 shares reserved for options and 70,000 restricted stock units issued as inducement grants to new employees outside of equity compensation plans. During the three months ended June 30, 2015, no options were granted under the 2004 Equity Incentive Plan, 61,000 options and 0 restricted stock units were granted under the 2013 Incentive Plan, and no options and restricted stock units were granted as inducement awards to new employees outside of equity incentive plans. During the nine months ended June 30, 2015, no options were granted under the 2004 Equity Incentive Plan, 1,550,000 options and 675,000 restricted stock units were granted under the 2013 Incentive Plan, and 120,000 options and 30,000 restricted stock units were granted as inducement awards to new employees outside of equity incentive plans. Additionally, the Company’s 2000 Stock Option Plan and 38,000 stock options that were outstanding under the 2000 Stock Option Plan expired during the nine months ended June 30, 2015.

The following tables summarize information about stock options:

	Number of Options Outstanding		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance At September 30, 2013		3,419,285	$	4.68
Granted		1,039,000		14.05
Cancelled		(152,582)		6.05
Exercised		(454,863)		6.00
Balance At September 30, 2014		3,850,840		6.99
Granted		1,670,000		6.36
Cancelled		(95,948)		12.03
Exercised		(17,500)		2.46
Balance At June 30, 2015		5,407,392	$	6.72		8.1 years	$	10,487,890
Exercisable At June 30, 2015		2,416,134	$	6.03		7.1 years	$	5,894,091

Stock-based compensation expense related to stock options for the three and nine months ended June 30, 2015 was $1,289,037 and $3,469,327, respectively and for the three and nine months ended June 30, 2014 was $1,070,631 and $2,186,653, respectively. The Company does not recognize an income tax benefit as the Company is currently operating at a loss and an actual income tax benefit may not be realized. For non-qualified stock options, the loss creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance.

The fair value of the options granted by Arrowhead for the three and nine months ended June 30, 2015 is estimated at $285,828 and $7,100,339, respectively, and for the three and nine months ended June 30, 2014 was estimated at $1,176,000 and $8,295,600, respectively.

The intrinsic value of the options exercised during the three and nine months ended June 30, 2015 was $0 and $113,728, respectively, and for the three and nine months ended June 30, 2014 was $371,334 and $3,606,061, respectively.

As of June 30, 2015, the pre-tax compensation expense for all outstanding unvested stock options in the amount of approximately $12,721,864 will be recognized in our results of operations over a weighted average period of 2.9 years.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. The determination of the fair value of each stock option is affected by our stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

The assumptions used to value stock options are as follows:

	Nine months ended June 30,
	2015	2014
Dividend yield	—	—
Risk-free interest rate	1.46 – 1.88%	1.8 – 2.5%
Volatility	75%	69%
Expected life (in years)	6 - 6.25	6.25 – 9.72
Weighted average grant date fair value per share of options granted	$4.25	$8.92

The dividend yield is zero as the Company currently does not pay a dividend.

The risk-free interest rate is based on the U.S. Treasury bond.

Volatility is estimated based on volatility average of the Company’s Common Stock price.

Restricted Stock Units

Restricted Stock Units (RSUs) were granted under the Company’s 2013 Incentive Plan and as inducement grants granted outside of the Plan. During the three and nine months ended June 30, 2015, the Company issued 0 and 705,000 restricted stock units, respectively, to certain members of management and during the three and nine months ended June 30, 2014, the Company issued 470,000 and 470,000 restricted stock units, respectively. Of the restricted stock units granted during the nine months ended June 30, 2015 and 2014, 30,000 and 0, respectively, were granted outside of the Plan as an inducement grant to a new employee. At vesting, each RSU will be exchanged for one share of the Company’s Common Stock. Restricted stock unit awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain performance targets.

The following table summarizes the activity of the Company’s Restricted Stock Units:

	Number of RSUs			Weighted- Average Grant Date Fair Value
Unvested at September 30, 2013		—		$	—
Granted		510,000			14.58
Vested		—			—
Forfeited		—			—
Unvested at September 30, 2014		510,000		$	14.58
Granted		705,000			7.41
Vested		(267,500	)		14.54
Forfeited		—			—
Unvested at June 30, 2015		947,500		$	9.26

The Company recorded $1,197,037 and $3,236,682 of expense relating to restricted stock units during the three and nine months ended June 30, 2015, respectively, and $968,051 and $1,571,611 during the three and nine months June 30, 2014, respectively. Such expense is included in stock-based compensation expense in the Company’s Consolidated Statement of Operations.

As of June 30, 2015, the pre-tax compensation expense for all unvested restricted stock units in the amount of approximately $4,950,083 will be recognized in the Company’s results of operations over a weighted average period of 1.7 years.

Fair Value Measurements

9 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 9. FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

Level 1—Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3—Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following table summarizes fair value measurements at June 30, 2015 and September 30, 2014 for assets and liabilities measured at fair value on a recurring basis:

June 30, 2015:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	87,252,813	$	—	$	—	$	87,252,813
Derivative liabilities	$	—	$	—	$	1,724,468	$	1,724,468
Acquisition-related contingent consideration obligations	$	—	$	—	$	3,970,931	$	3,970,931

September 30, 2014:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	132,510,610	$	—	$	—	$	132,510,610
Derivative liabilities	$	—	$	—	$	4,173,943	$	4,173,943
Acquisition-related contingent consideration obligations	$	—	$	—	$	3,970,931	$	3,970,931

The Company invests its excess cash balances in short- and long-term corporate bonds, generally with remaining maturities of less than two years. At June 30, 2015, the Company had short-term investments of $23,280,640, and long-term investments of $1,085,282, for a total of $24,365,922. The fair value of its investment at June 30, 2015 was $24,128,345. The Company expects to hold such investments until maturity, and thus unrealized gains and losses from the fluctuations in the fair value of the securities are not likely to be realized.

As part of an equity financing in June 2010, Arrowhead issued warrants to purchase up to 329,649 shares of Common Stock (the “2010 Warrants”), of which 24,324 warrants were outstanding at June 30, 2015. Similarly, as part of a financing in December 2012, Arrowhead issued warrants to purchase up to 912,543 shares of Common Stock (the “2012 Warrants”) of which 265,161 warrants were outstanding at June 30, 2015. Further, as part of a financing in January 2013, Arrowhead issued warrants to purchase up to 833,530 shares of Common Stock (the “2013 Warrants” and, together with the 2010 Warrants and the 2012 Warrants, the “Warrants”) of which 12,123 warrants were outstanding at June 30, 2015. Each of the Warrants contains a mechanism to adjust the strike price upon the issuance of certain dilutive equity securities. If during the terms of the Warrants, the Company issues Common Stock at a price lower than the exercise price for the Warrants, the exercise price would be reduced to the amount equal to the issuance price of the Common Stock. As a result of these features, the Warrants are subject to derivative accounting as prescribed under ASC 815. Accordingly, the fair value of the Warrants on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability. The fair value of the Warrants is estimated at the end of each reporting period and the change in the fair value of the Warrants is recorded as a non-operating gain or loss as change in value of derivatives in the Company’s Consolidated Statement of Operations. During the three and nine months ended June 30, 2015, the Company recorded a non-cash gain/(loss) from the change in fair value of the derivative liability of $(102,763) and $2,268,798, respectively. During the three and nine months ended June 30, 2014, the Company recorded a non-cash gain/(loss) of $737,072 and $(5,680,540), respectively.

The assumptions used in valuing the derivative liability were as follows:

2010 Warrants	June 30, 2015	September 30, 2014
Risk-free interest rate	0.11%	0.13%
Expected life	0.5 Years	1.2 Years
Dividend yield	None	None
Volatility	75%	69%

2012 Warrants	June 30, 2015	September 30, 2014
Risk-free interest rate	1.01%	1.07%
Expected life	2.5 Years	3.2 Years
Dividend yield	None	None
Volatility	75%	69%

2013 Warrants	June 30, 2015	September 30, 2014
Risk-free interest rate	1.01%	1.07%
Expected life	2.6 Years	3.3 Years
Dividend yield	None	None
Volatility	75%	69%

The following is a reconciliation of the derivative liability related to these warrants:

Value at September 30, 2013	$	4,091,797
Issuance of instruments		—
Change in value		5,821,796
Net settlements		(5,956,079	)
Value at September 30, 2014	$	3,957,514
Issuance of instruments		—
Change in value		(2,268,798)
Net settlements		—
Value at June 30, 2015	$	1,688,716

In conjunction with the financing of Ablaris in fiscal 2011, Arrowhead sold exchange rights to certain investors whereby the investors have the right to exchange their shares of Ablaris for a prescribed number of Arrowhead shares of Common Stock based upon a predefined ratio. The exchange rights have a seven-year term. During the first year, the exchange right allows the holder to exchange one Ablaris share for 0.06 Arrowhead shares. This ratio declines to 0.04 in the second year, 0.03 in the third year and 0.02 in the fourth year. In the fifth year and beyond the exchange ratio is 0.01. Exchange rights for 675,000 Ablaris shares were sold in fiscal 2011, and 500,000 remain outstanding at June 30, 2015. The exchange rights are subject to derivative accounting as prescribed under ASC 815. Accordingly, the fair value of the exchange rights on the date of issuance was estimated using an option pricing model and recorded on the Company’s Consolidated Balance Sheet as a derivative liability. The fair value of the exchange rights is estimated at the end of each reporting period and the change in the fair value of the exchange rights is recorded as a non-operating gain or loss in the Company’s Consolidated Statement of Operations. During the three and nine months ended June 30, 2015, the Company recorded a non-cash gain/(loss) from the change in fair value of the derivative liability of $(1,950) and $177,605, respectively. During the three and nine months ended June 30, 2014, the Company recorded a non-cash gain/(loss) of $21,397 and $(31,791), respectively.

The assumptions used in valuing the derivative liability were as follows:

	June 30, 2015	September 30, 2014
Risk-free interest rate	1.00%	1.07%
Expected life	2.5 Years	3.3 Years
Dividend yield	None	None
Volatility	75%	100%

The following is a reconciliation of the derivative liability related to these exchange rights:

Value at September 30, 2013	$	4,569
Issuance of instruments		—
Change in value		211,860
Net settlements		—
Value at September 30, 2014	$	216,429
Issuance of instruments		—
Change in value		(177,605	)
Net settlements		(3,072)
Value at June 30, 2015	$	35,752

The derivative assets/liabilities are estimated using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Changes in the assumptions used could have a material impact on the resulting fair value. The primary input affecting the value of our derivatives liabilities is the Company’s stock price. Other inputs have a comparatively insignificant effect.

As of June 30, 2015, the Company has a liability for contingent consideration related to its acquisition of Roche Madison Inc. The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs. The fair value of contingent consideration obligations is based on a discounted cash flow model using a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on the Company’s assumptions and experience. Estimating timing to complete the development and obtain approval of products is difficult, and there are inherent uncertainties in developing a product candidate, such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals. In determining the probability of regulatory approval and commercial success, the Company utilizes data regarding similar milestone events from several sources, including industry studies and its own experience. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. Changes in the fair value of the contingent consideration obligations are recorded in the Company’s Consolidated Statement of Operations.

The following is a reconciliation of contingent consideration fair value.

Value at September 30, 2013	$	1,595,273
Purchase price contingent consideration		—
Contingent consideration payments		—
Change in fair value of contingent consideration		2,375,658
Value at September 30, 2014	$	3,970,931
Purchase price contingent consideration		—
Contingent consideration payments		—
Change in fair value of contingent consideration		—
Value at June 30, 2015	$	3,970,931

The fair value of contingent consideration obligations is estimated through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at estimated fair value at the balance sheet date. Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flows from products upon commercialization, changes in the assumed achievement or timing of any development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval. Each of these assumptions can have a significant impact on the calculation of contingent consideration.

The carrying amounts of the Company’s other financial instruments, which include accounts receivable, accounts payable, and accrued expenses approximate their respective fair values due to the relatively short-term nature of these instruments. The carrying value of the Company’s debt obligations approximates fair value based on market interest rates.

Organization and Significant Accounting Policies (Policies)	9 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Nature of Business	Nature of Business Arrowhead Research Corporation develops novel drugs to treat intractable diseases by silencing the genes that cause them. Using the broadest portfolio of RNA chemistries and efficient modes of delivery, Arrowhead therapies trigger the RNA interference mechanism to induce rapid, deep and durable knockdown of target genes. Arrowhead’s most advanced drug candidate in clinical development is ARC-520, which is designed to treat chronic hepatitis B infection by inhibiting the production of all HBV gene products. The goal is to reverse the immune suppression that prevents the body from controlling the virus and clearing the disease. Arrowhead’s second clinical candidate is ARC-AAT, a treatment for a rare liver disease associated with a genetic disorder that causes alpha-1 antitrypsin deficiency.
Liquidity	Liquidity Historically, the Company’s primary source of financing has been through the sale of its securities. Research and development activities have required significant capital investment since the Company’s inception. We expect our operations to continue to require cash investment to pursue our research and development goals, including clinical trials and related drug manufacturing. Based upon the Company’s current cash resources and operating plan, the Company expects to have sufficient liquidity to fund operations for at least the next twelve months. At June 30, 2015, the Company had $87.3 million in cash to fund operations. In addition to its cash resources, the Company has invested excess cash in investment grade commercial bonds maturing in less than 24 months. These bonds provide a source of liquidity, though the Company plans to hold them until maturity. At June 30, 2015, the Company had invested $24.4 million in bonds. During the nine months ended June 30, 2015, the Company’s cash position decreased by $45.3 million which was primarily the result of cash outflows related to operating activities of $53.7 million, cash paid for the acquisition of certain RNAi assets from Novartis Institutes for Biomedical Research Inc. of $10.0 million (see footnote 2) and capital expenditures of $1.1 million, partially offset by maturities of fixed income investments totaling $19.4 million and proceeds from the exercise of warrants and options of $0.3 million.
Principles of Consolidation	Principles of Consolidation—The consolidated financial statements include the accounts of Arrowhead and its Subsidiaries. Arrowhead’s primary operating subsidiary is Arrowhead Madison, which is located in Madison, Wisconsin, where the Company’s research and development facility is located. All significant intercompany accounts and transactions are eliminated in consolidation.
Basis of Presentation and Use of Estimates	Basis of Presentation and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Actual results could materially differ from those estimates. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation.
Cash and Cash Equivalents	Cash and Cash Equivalents—The Company considers all liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company had no restricted cash at June 30, 2015 and September 30, 2014.
Concentration of Credit Risk	Concentration of Credit Risk—The Company maintains several bank accounts for its operations at two financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per institution. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held.
Investments	Investments—The Company may invest excess cash balances in short-term and long-term marketable debt securities. Investments may consist of certificates of deposits, money market accounts, government-sponsored enterprise securities, corporate bonds and/or commercial paper. The Company accounts for its investment in marketable securities in accordance with FASB ASC 320, Investments – Debt and Equity Securities. This statement requires certain securities to be classified into three categories: Held-to-maturity—Debt securities that the entity has the positive intent and ability to hold to maturity are reported at amortized cost. Trading Securities—Debt and equity securities that are bought and held primarily for the purpose of selling in the near term are reported at fair value, with unrealized gains and losses included in earnings. Available-for-Sale—Debt and equity securities not classified as either securities held-to-maturity or trading securities are reported at fair value with unrealized gains or losses excluded from earnings and reported as a separate component of shareholders’ equity. The Company classifies its investments in marketable debt securities based on the facts and circumstances present at the time of purchase of the securities. At June 30, 2015, the Company classified all of its investments as held-to-maturity. Held-to-maturity investments are measured and recorded at amortized cost on the Company’s Consolidated Balance Sheet. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security. No gains or losses on investment securities are realized until they are sold or a decline in fair value is determined to be other-than-temporary.
Property and Equipment	Property and Equipment—Property and equipment are recorded at cost, which may equal fair market value in the case of property and equipment acquired in conjunction with a business acquisition. Depreciation of property and equipment is recorded using the straight-line method over the respective useful lives of the assets ranging from three to seven years. Leasehold improvements are amortized over the lesser of the expected useful life or the remaining lease term. Long-lived assets, including property and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.
Intangible Assets subject to amortization	Intangible Assets Subject to Amortization—At June 30, 2015, intangible assets subject to amortization include certain patents and license agreements. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.
In-Process Research & Development (IPR&D)	In-Process Research & Development (IPR&D)—IPR&D assets represent capitalized on-going research projects that were acquired through business combinations. Such assets are initially measured at their acquisition date fair values. The amounts capitalized are being accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of R&D efforts associated with the project. Upon successful completion of a project, Arrowhead will make a determination as to the then remaining useful life of the intangible asset and begin amortization. Arrowhead tests its indefinite-lived assets for impairment at least annually, through a two-step process. The first step is a qualitative assessment to determine if it is more likely than not that the indefinite lived assets are impaired. Arrowhead considers relevant events and circumstances that could affect the inputs used to determine the fair value of the intangible assets. If the qualitative assessment indicates that it is more likely than not that the intangible assets are impaired, a second step is performed which is a quantitative test to determine the fair value of the intangible asset. If the carrying amount of the intangible assets exceeds its fair value, an impairment loss is recorded in the amount of that excess. If circumstances determine that it is appropriate, the Company may also elect to bypass step one, and proceed directly to the second step.
Contingent Consideration	Contingent Consideration - The consideration for the Company’s acquisitions often includes future payments that are contingent upon the occurrence of a particular event. For example, milestone payments might be based on the achievement of various regulatory approvals or future sales milestones, and royalty payments might be based on drug product sales levels. The Company records a contingent consideration obligation for such contingent payments at fair value on the acquisition date. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. Estimated payments are discounted using present value techniques to arrive at estimated fair value at the balance sheet date. Changes in the fair value of our contingent consideration obligations are recognized within the Company’s Consolidated Statements of Operations. Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flows from products upon commercialization, changes in the assumed achievement or timing of any development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval. These fair value measurements are based on significant inputs not observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period.
Revenue Recognition	Revenue Recognition—Revenue from license fees are recorded when persuasive evidence of an arrangement exists, title has passed or services have been rendered, a price is fixed and determinable, and collection is reasonably assured. The Company may generate revenue from product sales, technology licenses, collaborative research and development arrangements, and research grants. Revenue under technology licenses and collaborative agreements typically consists of nonrefundable and/or guaranteed technology license fees, collaborative research funding and various milestone and future product royalty or profit-sharing payments. Payments under collaborative research and development agreements are recognized as revenue ratably over the relevant periods specified in the agreement, generally the period during which research and development is conducted. Revenue from up-front license fees, milestones and product royalties are recognized as earned based on the completion of the milestones and product sales, as defined in the respective agreements. Payments received in advance of recognition as revenue are recorded as deferred revenue.
Allowance for Doubtful Accounts	Allowance for Doubtful Accounts—The Company accrues an allowance for doubtful accounts based on estimates of uncollectible revenues by analyzing historical collections, accounts receivable aging and other factors. Accounts receivable are written off when all collection attempts have failed.
Research and Development	Research and Development—Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with FASB ASC 730-10. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, overhead directly related to the Company’s research and development operations, and costs to acquire technology licenses.
Earnings (Loss) per Share	Earnings (Loss) per Share—Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of stock options and restricted stock units issued to employees and warrants to purchase Common Stock of the Company. All outstanding stock options, restricted stock units and warrants for the three and nine months ended June 30, 2015 and 2014 have been excluded from the calculation of Diluted earnings (loss) per share due to their anti-dilutive effect.
Stock-Based Compensation	Stock-Based Compensation—The Company accounts for share-based compensation arrangements in accordance with FASB ASC 718, which requires the measurement and recognition of compensation expense for all share-based payment awards to be based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. The Company uses historical data and other information to estimate the expected price volatility and the expected forfeiture rate. For performance-based stock awards, the value of the awards is measured at the grant date. Expense is recognized over the vesting period, commencing at the time the Company determines the achievement of such performance conditions is probable. This determination requires significant judgment by management.
Derivative Assets and Liabilities	Derivative Assets and Liabilities – The Company accounts for warrants and other derivative financial instruments as either equity or assets/liabilities based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded as additional paid-in capital on the Company’s Consolidated Balance Sheet. Some of the Company’s warrants were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on the Company’s Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. The Company estimates the fair value of these assets/liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate.
Income Taxes	Income Taxes—The Company accounts for income taxes under the liability method, which requires the recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. The provision for income taxes, if any, represents the tax payable for the period and the change in deferred income tax assets and liabilities during the period.

Acquisitions (Tables)

9 Months Ended

Jun. 30, 2015

Asset Acquisition [Abstract]

Summary of Estimated Fair Values at Date of Acquisition

The following table summarizes the estimated fair values of the assets acquired at the date of acquisition:

Intangible assets - patents	$	21,728,334
Intangible assets – license		3,128,880
Acquired in-process research and development - Pre-Clinical Candidates		10,142,786
Total purchase consideration	$	35,000,000

Summary of Purchase Consideration

The purchase consideration was composed of the following:


Cash Paid	$	10,000,000
Value of Shares Issued		25,000,000
Total purchase consideration	$	35,000,000

Property and Equipment (Tables)

9 Months Ended

Jun. 30, 2015

Property Plant And Equipment [Abstract]

Summary of Property and Equipment

The following table summarizes our major classes of property and equipment:


	June 30, 2015		September 30, 2014
Computers, office equipment and furniture	$	372,401	$	334,162
Research equipment		5,552,187		4,614,176
Software		110,428		69,623
Leasehold improvements		3,117,537		3,045,022
Total gross fixed assets