11411

250000

0.10

600000 200000 500000 2500000 600000 200000 2500000 140000000 1000000 8100000 26310 9100000

2500000

2.76

114000

706800

24000 2850000 600000

15317

47485

15644158

2.20

2.26 500000 0.5 2000000

50226

2000000

7375000

20838

1077333

964000 850667 1928000

143122

5400000

23200000

7054

200000 200000

10504

310000

250000 560000

8000

5.00 2400 200000 60000 24788 12870 68000000

132462

688802

2950 500000

194444

972222

329649

1419762

468000

4680

-95238

1510320

10.00 0.01

11227149

1363155

13645

-2624192

1777699

12059997

10.00 2.00 10.90 15.00 15.00 10.00 10.00

28026657

2798419

27997

-9479110

1899190

35578580

15.00 10.00 39.80

31605644

3414359

34156

-28476319

934438

59113369

59.10 48.80 38.40 35.00 51.70

26456577

3861042

38622

-58407437

152609

84672783

57.80 37.70

12302609

4293452

42950

-85496467

97756126

18.00 28.30 29.50 21.80 21.90 27.20

9149

46662

64227

398209

636699 5574

4857937

27777

186111

5641177

56428

-104968819

110070327

-300000

5.50 5.20 3.00

8078295

6847162

10.62

812334

1973019

5.00 390625 1562.5

2408522

7172014

71734

-110742867

-967406

119716834

6.30 13.12

77020

145000000

12564168

195649

944980

5000000

1731211

2581949

110818

2272868

-113871752

15888563

7507389

285266

9.03

-226938

729096

1649748

365801

6001952

15888563

8642286

86423

742446

161125

187000

606786

0.001

864511

25437

8642286

634585

9861174

1608382

900000

0.001

340364

127476435

12791106

1731211

135660

576809

0 3515 1731211 1300000 1600000

-1149000

85000

1255000

21000

15000000

161125

944980

634585

7507389

6854

161125

907233

30892

8642286

86422

3.80

-113871752

-226938

127476435

-900000

634585

7507389

161125

944980

3.80

0.001

41 50000

0.001

1000

7.96

69623

145000000

256846

8808909

40900000

1127219

210579

150000000

647213

4116147

5000000

4784569

484785

5327888

250000

618130

2500000

240000

256846

37500

-134997680

16527818

3377288

323376

40900000

1497259

470154

6.01

256846

9375

-1203733

363864

300000

3117322

1910794

6461435

5064830

256846

300000

16527818

13579185

150835

75900000

108354

1692394

811214

2391021

280261

445921

2749409

839421

250000

1000000

434229

0.001

214801

730775

4895652

356672

13579185

106500

280000

6567336

173621

2649723

9930

173621

300000

1016000

256846

0.001

107200000

1565783

2446113

145917968

10012642

1667247

1282458

269142

457961

877986

0 3319027 350000 4784569 0

0.64

0.79

3100000 0.76 0.08

0.03

547000

-2039000

2070000

0.23

31000

0.19

1965860

153200

1767894

1965860

153200

250250

647213

173621

106500

3377288

P36M 15000000 3738217 63250 10645

250250

626195

10372

13579185

108354

3.70

-134997680

-1203733

145917968

-1016000

94897

70.60

P4Y7M6D

386400

20.00

P10M24D

322150

1.38

P3Y2M12D

461024

5.09

P2Y2M12D

1000

4.16

P4Y2M12D

1155023

5.00

P2Y2M12D

1695654

3.25

P3Y10M24D

0.20

106500

3377288

250250

647213

173621

5268814

432709

7215206

6264

414122

1570072

1174935

84935

P90D 50000 5133879 0.03

2088686

29332

23500000

2172387

113033

2000000

88686

2172387

6.34

315457

944935

5.11 4.00 6.23 3.80 3.70 1000 2.76

1288158

1-for-10

275782

1458917

10000 2500000 2500000 200000 2500000 2.00 2500000

138158

525000.0

2497500

675000

1015

1015000

2260869

6200000

3.25 0.75

13000

P5Y 0.03 80000

2013-02-01

4300000

1900000 300000

7409286

1130161

-46890162

15851555

359375

250000

1642775

103213

-153653005

742500

42618748

250000

-1677000

1579365

280688

13581468

-75877796

3377288

481099

616000000

-3329726

303440

-117216013

-42838054

790625

3313609

129474972

196606

-134833720

6401062

-100040

10150000

-110814951

62954

31353215

10529594

2750444

121354847

4138834

1452

3281404

-18819285

-50773

4708588

-60542

4045309

-963407

741632

-963407

-46003787

18575915

-1206465

-110814951

18888265

2000000

2543142

4125485

26392130

-47546642

720909

498310

106253011

432687

762954

-42838054

2516467

1642775 2497300 18819285 1576107 306344 2292800 20902100

315457

-95238

168000

1680

300000

3000

-95238

1678320

168000

1680000

3000

168000

508513

-6733427

50000

230087

1250

1381289

13813

2500

50226

502

-6854918

121491

508513

49988

230087

20705522

24975

1999498

20719335

25000

2000000

-19961961

341537

1369478

11579

116

2536

20485

205

1500

559000

5590

20838

208

-18997209

-964752

341421

1369478

149975

999795

57585

19539410

1077125

150000

1000000

57600

19545000

1077333

-30712947

434727

2175544

2401394

18616

186

284945

2849

143122

1431

-29931118

-781829

434541

2175544

2401394

15149366

5398569

15152215

5400000

-19308392

2000000

2676170

16297

205839

2059

222222

2222

919664

9197

-19308392

-163960

2000000

2676170

163960

16297

2120250

1131617

1156111

2749796

-300000

300000

2120250

1133676

1158333

2758993

-6957038

7631

1582149

300000

1066050

122000

26400

688

225189

2250

508343

5083

659299

6593

122000

1220

15318

153

-5774048

-1182990

54655

200

159447

1282

7624

1582149

245345

1063600

3217813

3692078

-160667

-1435

-300000

3222896

3698671

-300000

0.0111

2699

267978

15751

2265284

0.74

-18473

-3492399

742500

5.10

20000

13884

3277760

7181121

250000

1700398

105000

3666

1376921

5.86

-7655993

660227

-99005

43000000

-175385

-9830266

5292609

1404640

-0.44

1534687

6226321

-3128885

1045258

21.32

-8785008

100539

-261219

3795380

1.00

86530

10126405

296139

-7938

0.0290

254275

1133127

-1618509

-363514

3919213

43279

9674

-163180

193885

-163180

241808

2265284

1376921

-8785008

736253

1408366

1373396

452843

4.70

157079

4507389

-1.18

-261218

5292609

363514 120000 27519 162000 1718932 93004 1973019

2900000

515000

-709000

1161000 746000 -31000 705000

P5Y6M

P6Y3M

33870

618500

0.72

P2Y3M18D

457375

0.0040

1.00

-1501289

P4Y2M12D

0.0090

100650

1.00

-69758

P6Y3M18D

0.0130

2700

8656

4500000

1458917

14574

-3128885

-363514

254275

849707

13857

1404640

-1618509

43192

-849707

900000

4629110

-900000

4643684

-751255

15000

175653

991318

7500

70553

706

600

7500

15000

163

356

35623

660879

6609

47500

475

50000

500

-2528954

1777699

14925

175653

991318

-151175

5994

14925

162587

533988

9906573

474525

499500

96500

-150469

6000

15000

162750

534344

9913182

475000

500000

96500

-27241639

290027

3187397

10536

106

386399

3867

7055

10505

105

1500

11416

114

5000

-27089030

-152609

289921

3187397

1720962

6956718

199929

309895

32685

249886

135950

1720962

6960585

200000

310000

32700

250000

136000

FY No 2012 10-K 2012-09-30 0000879407 No --09-30 ARWR ARROWHEAD RESEARCH CORP Yes false Smaller Reporting Company

0.009

85334

<div> Nature of Business and Going Concern Arrowhead Research Corporation is a clinical stage targeted therapeutics company with development programs in oncology, obesity, and chronic hepatitis B virus infection. Our novel delivery technologies have the potential to enable revolutionary new classes of drugs, such as RNAi interference and peptide drug conjugates, for a broad range of unmet medical needs. Our pipeline of targeted therapeutics are designed to have increased effectiveness through guided delivery and decreased toxicity through reduction of side effects associated with unwanted exposure in healthy cells and tissues. </div>

4883

1748975

<div> Minority Equity Investments—The Company’s minority equity investment in Leonardo, a privately held biotechnology company, has been recorded in Other Assets, however, an impairment charge has been recorded in 2012, and its net book value at September 30, 2012 is zero. This investment has been accounted for under the cost method of accounting. </div>

882296

<div> Concentration of Credit Risk—The Company maintains checking accounts for Arrowhead and separate accounts for each Subsidiary at any of three financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institution in which these deposits are held. </div>

<div> NOTE 3. INTANGIBLE ASSETS Intangible assets consist of in-process research and development (IPR&D) not subject to amortization, and patents and other intangible assets subject to amortization, which were capitalized as a part of a 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, we 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 we would record an impairment loss. Intangible assets subject to amortization include patents capitalized as part of a business combination as well as license agreements capitalized as part of a business combination from the acquisition of Roche Madison. The license agreements are being amortized over the estimated life remaining at the time of acquisition which was 4 years. Patents are amortized over a period of three years to twenty years. The weighted average original amortization period is twelve years. Amortization of license agreements and patents is expected to be approximately $300,000 for fiscal years 2013, 2014, and 2015, $250,000 in 2016, $240,000 in 2017 and $280,000 thereafter. We review amounts capitalized as in-process research and development for impairment at least annually in the fourth quarter, and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In the event the carrying value of the assets is not expected to be recovered, the assets are written down to their estimated fair values. We continue to test our indefinite-lived IPR&D assets for potential impairment until the projects are completed or abandoned. The below table provides details on our intangible asset balances:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="84%" align="center"> <tr> <td width="58%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Intangible assets not subject to amortization</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Intangible assets subject to amortization</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total Intangible assets</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,973,019</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,973,019</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Amortization </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(241,808</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(241,808</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,731,211</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,731,211</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Additions – Madison acquisition </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">944,935</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">230,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,174,935</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Additions – Alvos acquisition </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,172,387</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,172,387</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Amortization </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(293,964</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(293,964</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,117,322</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,667.247</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">4,784,569</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> NOTE 12. RELATED PARTY TRANSACTIONS Christopher Anzalone, Arrowhead’s President and CEO, owns 1,395,900 shares of Nanotope, Inc. common stock or approximately 14.2% of Nanotope’s outstanding voting securities. Dr. Anzalone does not hold options, warrants or any other rights to acquire securities of Nanotope. Dr. Anzalone has the right to appoint a representative to the board of directors of Nanotope. Dr. Anzalone currently serves on the Nanotope board in a seat reserved for Nanotope’s CEO, and another individual holds the seat designated by Dr. Anzalone. Dr. Anzalone has served as President and Chief Executive Officer of Nanotope since its formation and continues to serve in these capacities. Dr. Anzalone has not received any compensation for his work on behalf of Nanotope since joining the Company on December 1, 2007. Dr. Anzalone has also waived his right to any unpaid compensation accrued for work done on behalf of Nanotope before he joined the Company. In August 2010, the Company retained Mr. Vincent Anzalone, the brother of Arrowhead’s Chief Executive Officer, as a consultant for the Company, focusing on business development and market analysis, with a monthly remuneration of $10,000 per month. Mr. Vincent Anzalone was paid $120,000 during the fiscal years ended September 30, 2012, and 2011. </div>

-280

16000

1642775

6853

-22110723

5.20

1229500

<div> NOTE 14. SUBSEQUENT EVENTS In December 2012, the Company sold 1.9 million units at a price of $2.26 per unit in a public offering. Each unit consisted of one share of Common Stock and a warrant to purchase 0.5 share of Common Stock, exercisable at $2.20. Gross proceeds from the offering were $4.3 million, which included a $500,000 promissory note due February 1, 2013. Commissions and other offering expenses are expected to be approximately $300,000. </div>

23833

5391463

1.00

11129766

<div> NOTE 11. INCOME TAXES The Company utilizes the guidance issued by the FASB for accounting for income taxes which requires the recognition of deferred 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 year-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 tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. For the years ended September 30, 2012 and 2011, the Company had consolidated net book losses of $22.4 million and $3.5 million, respectively. The losses result in a deferred income tax benefit which is offset by a deferred tax provision for the valuation allowance for a net deferred provision of zero. Since the Company is a development stage company, management has provided a 100% valuation allowance against its deferred tax assets until such time as management believes that its projections of future profits as well as expected future tax rates make the realization of these deferred tax assets more-likely-than-not. Significant judgment is required in the evaluation of deferred tax benefits and differences in future results from our estimates could result in material differences in the realization of these assets. As of September 30, 2012, the Company has available gross federal net operating loss (NOL) carry forwards of $107.2 million and gross state NOL carry forwards of $75.9 million which expire at various dates through 2032. As of September 30, 2012, the deferred tax assets were $40.9 million. The Company has recorded a full valuation allowance of $40.9 million related to federal and state net operating loss carry forwards. The Company has performed an assessment of positive and negative evidence regarding the realization of the net deferred tax asset in accordance with FASB ASC 740-10, “Accounting for Income Taxes.” This assessment included the evaluation of scheduled reversals of deferred tax liabilities, the availability of carry forwards and estimates of projected future taxable income.   The Company has adopted guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the years ended September 30, 2012 and 2011, respectively, and $0 for the period from May 7, 2003 (date of inception) through September 30, 2012. The Company files income tax returns with the Internal Revenue Service (“IRS”), the state of California and certain other taxing jurisdictions. For jurisdictions in which tax filings are prepared, the Company is no longer subject to income tax examinations by state tax authorities for years through fiscal 2007, and by the IRS for the years through fiscal 2008. Our review of prior year tax positions using the criteria and provisions presented by the FASB did not result in a material impact on the Company’s financial position or results of operations. The provision for income taxes differs from the federal statutory rate due to state income taxes and changes in the valuation allowance for deferred income tax assets. </div>

<div> In-Process Research & Development (IPR&D) – IPR&D assets represent capitalized on-going research projects that Arrowhead 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. Based on early adoption of ASU 2012-02, 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 is 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. </div>

<div> 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. </div>

P6Y7M6D

<div> NOTE 10. FAIR VALUE MEASUREMENTS & DERIVATIVE INSTRUMENTS 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 September 30, 2012 and September 30, 2011 for assets and liabilities measured at fair value on a recurring basis: September 30, 2012:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="63%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash and cash equivalents </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,377,288</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,377,288</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Marketable securities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">106,500</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">106,500</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Derivative assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">250,250</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">250,250</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Derivative liabilities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">647,213</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">647,213</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="top"> September 30, 2011: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash and cash equivalents </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7,507,389</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7,507,389</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Marketable securities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">634,585</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">634,585</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Derivative assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">161,125</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">161,125</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Derivative liabilities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">944,980</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">944,980</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table> As part of the sale of proceeds from the sale of Unidym in January 2011, Arrowhead received a bond from Wisepower in the face amount of $2.5 million. The bond is convertible to Wisepower common stock at a price of $2.00 per share. The conversion feature is subject to derivative accounting as prescribed under ASC 815. Accordingly, the fair value of the conversion feature on the date of issuance was estimated using an option pricing model and recorded on the Company’s consolidated balance sheet as a derivative asset. The fair value of the conversion feature is estimated at the end of each reporting period and the change in the fair value of the conversion feature is recorded as a nonoperating gain/loss as change in value of derivatives in Company’s Consolidated Statement of Operations. A portion of the bond is owed to a third party, as such the company records a derivative asset for the entire conversion feature and records a derivative liability for the portion related to the third party. The original fair value of the derivative relating to the third party was $26,310; the fair value at September 30, 2011 was $6,854, and the fair value at September 30, 2012 was $10,645. The gain from the change in value of the derivative asset, net of the derivative liability, for the year ended September 30, 2012 was $85,334, and is reflected in the change in value of derivatives in the Company’s consolidated statement of operations. During the year ended September 30, 2012, the Company recorded a gain from the change in fair value of the derivative asset of $89,125. The assumptions used in valuing the derivative asset as of September 30, 2012 and 2011 were as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2012 </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2011 </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk free interest rate </td> <td valign="bottom">  </td> <td valign="bottom">    0.23%</td> <td valign="bottom">  </td> <td valign="bottom">    0.4%</td> </tr> <tr> <td valign="top"> Expected life </td> <td valign="bottom">  </td> <td valign="bottom">    1.3 Years</td> <td valign="bottom">  </td> <td valign="bottom">    2.3 Years</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom">    none</td> <td valign="bottom">  </td> <td valign="bottom">    none</td> </tr> <tr> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom">    72%</td> <td valign="bottom">  </td> <td valign="bottom">    72%</td> </tr> </table> The following is a reconciliation of the derivative asset for the years ended September 30, 2012 and 2011:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">618,500</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(457,375</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at October 1, 2011 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">161,125</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Increase in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">89,125</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net settlements </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">250,250</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   As part of the equity financing on June 17, 2010, Arrowhead issued warrants to acquire up to 329,649 shares of Common Stock (the “Warrants”) which contain a mechanism to adjust the strike price upon the issuance of certain dilutive equity securities. If during the term of the Warrants, the Company issues Common Stock at a price lower than the exercise price of the Warrants, the exercise price of the Warrants would be reduced to the amount equal to the issuance price of the Common Stock. As a result of this feature, 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 nonoperating gain or loss in the Company’s consolidated statement of operations. During the year ended September 30, 2012, the Company recorded a non-cash loss from the change in fair value of the derivative liability of $281,038. The assumptions used in valuing the derivative liability as of September 30, 2012 and 2011 were as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2012 </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2011 </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk free interest rate </td> <td valign="bottom">  </td> <td valign="bottom">    0.31%  </td> <td valign="bottom">  </td> <td valign="bottom">    0.9%</td> </tr> <tr> <td valign="top"> Expected life </td> <td valign="bottom">  </td> <td valign="bottom">    3.2 Years  </td> <td valign="bottom">  </td> <td valign="bottom">    4.2 Years</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom">    none</td> <td valign="bottom">  </td> <td valign="bottom">    none</td> </tr> <tr> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom">    100%  </td> <td valign="bottom">  </td> <td valign="bottom">    100%</td> </tr> </table> The following is a reconciliation of the derivative liability related to these warrants for the years ended September 30, 2012 and 2011:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,408,522</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,501,289</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">907,233</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(281,038</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net settlements </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">626,195</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> In conjunction with the financing of Ablaris during the year ended September 30, 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 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 (as adjusted for a subsequent reverse stock split). 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 during the year ended September 30, 2011, and remain outstanding at September 30, 2012. 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 nonoperating gain or loss in the Company’s Consolidated Statement of Operations. During the year ended September 30, 2012, the Company recorded a non-cash loss from the change in fair value of the derivative liability of $20,520. The assumptions used in valuing the derivative liability as of September 30, 2012 and 2011 were as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2012 </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2011 </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk free interest rate </td> <td valign="bottom">  </td> <td valign="bottom">    0.62%</td> <td valign="bottom">  </td> <td valign="bottom">    1.3%</td> </tr> <tr> <td valign="top"> Expected life </td> <td valign="bottom">  </td> <td valign="bottom">    5.3 Years</td> <td valign="bottom">  </td> <td valign="bottom">    6.3 Years</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom">    none</td> <td valign="bottom">  </td> <td valign="bottom">    none</td> </tr> <tr> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom">    100%</td> <td valign="bottom">  </td> <td valign="bottom">    100%</td> </tr> </table> The following is a reconciliation of the derivative liability related to these exchange rights for the years ended September 30, 2012 and 2011:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="87%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Issuance of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">100,650</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(69,758</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">30,892</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Issuance of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(20,520</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net settlements </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">10,372</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   During the year ended September 30, 2012, contingent consideration was recorded upon the acquisitions of Roche Madison, Inc. and Alvos Therapeutics, Inc., totaling $173,621. The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs. The fair value of contingent consideration obligations is based on a discounted cash flow model using a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on our own assumptions and experience. Estimating timing to complete the development, and obtain approval of products is difficult, and there are inherent uncertainties in developing a product candidate, such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals. In determining the probability of regulatory approval and commercial success, we utilize data regarding similar milestone events from several sources, including industry studies and our own experience. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense we record in any given period. Changes in the fair value of the contingent consideration obligations are recorded in our consolidated statement of operations. There were no changes in contingent consideration fair value as of September 30, 2012.   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="87%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Purchase price contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration payments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Change in fair value of contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> 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. </div>

<div> Summarized financial information for Nanotope, Inc. is as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="13%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="13%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">September 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">31,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">21,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Non-current assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">85,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,070,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,255,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Equity </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,039,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,149,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> </table>     <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="62%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Revenue </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">515,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Operating expenses </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">808,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,161,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net Loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(890,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(709,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash flows used in operating activities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(831,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(705,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Cash flows provided by (used in) investing activities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">61,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(31,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash flows provided by financing activities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">784,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">746,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table> </div>

2013-11-26

<div> The assumptions used to value stock options are as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="67%"></td> <td valign="bottom" width="3%"></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="3" align="center">Year ended September 30,</td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">2012</td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">2011</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom" align="center">—  </td> <td valign="bottom">  </td> <td valign="bottom" align="center">—  </td> </tr> <tr> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom" align="center">0.9% to 1.7%</td> <td valign="bottom">  </td> <td valign="bottom" align="center">1.11% to 2.90%</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom" align="center">90% -100%</td> <td valign="bottom">  </td> <td valign="bottom" align="center">100%</td> </tr> <tr> <td valign="top"> Expected life (in years) </td> <td valign="bottom">  </td> <td valign="bottom" align="center">5.5 to 6.25</td> <td valign="bottom">  </td> <td valign="bottom" align="center">5.5 to 6.25</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Weighted average grant date fair value per share of options granted </td> <td valign="bottom">  </td> <td valign="bottom" align="center">$3.32</td> <td valign="bottom">  </td> <td valign="bottom" align="center">$4.70</td> </tr> </table> </div>

-121033

<div> Principles of Consolidation—The consolidated financial statements include the accounts of Arrowhead and its Subsidiaries, Arrowhead Madison, Alvos, Calando, Ablaris, Tego, Agonn, and until its disposition in January 2011, Unidym. Prior to April 2008, Arrowhead’s Subsidiaries included Insert Therapeutics, Inc. (“Insert”), which was merged with Calando in April 2008. The merged entity is majority-owned by Arrowhead and continues to operate under the name of Calando. In January 2011, Arrowhead sold its interests in Unidym to Wisepower, and in December 2009, Tego completed a sale of its assets to Luna Innovations, Inc. Unidym and Tego results are included in the Income (Loss) from Discontinued Operations. Income (Loss) from Discontinued Operations also includes Aonex Technologies, Inc., sold in May 2008, and Nanotechnica, Inc., dissolved in June 2005. All significant intercompany accounts and transactions are eliminated in consolidation, and noncontrolling interests are accounted for in the Company’s financial statements. </div>

<div> NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business and Going Concern Arrowhead Research Corporation is a clinical stage targeted therapeutics company with development programs in oncology, obesity, and chronic hepatitis B virus infection. Our novel delivery technologies have the potential to enable revolutionary new classes of drugs, such as RNAi interference and peptide drug conjugates, for a broad range of unmet medical needs. Our pipeline of targeted therapeutics are designed to have increased effectiveness through guided delivery and decreased toxicity through reduction of side effects associated with unwanted exposure in healthy cells and tissues. Liquidity Arrowhead has historically financed its operations through the sale of securities of Arrowhead and its Subsidiaries. Development activities have required significant capital investment since the Company’s inception and we expect our current portfolio companies to continue to require cash investment in fiscal 2013 and beyond to continue development. At September 30, 2012, the Company had $3.4 million in cash to fund operations. During the year ended September 30, 2012, the Company’s cash position decreased by $4.1 million. The Company received cash from the issuance of equity of $11.0 million, cash from the sale of its holdings of stock in Wisepower Co. Ltd of $0.5 million, and cash collections from licensing revenue of $0.2 million. The company had cash outflow of $16.0 million related to its continuing operating activities and capital expenditures of $0.5 million. As a result of the sale of the Company’s subsidiary, Unidym, in January 2011, the Company received $2.5 million in stock of the acquirer, Wisepower Co. Ltd. (“Wisepower”) and a $2.5 million convertible bond from Wisepower, of which approximately $200,000 is owed to a third party who was a minority investor in Unidym. Following the divestiture, through the quarter ended December 31, 2011, the Company liquidated its position in Wisepower stock. The convertible bond has a face value of $2.5 million and can be redeemed for cash on January 17, 2013, and at which time could represent an additional source of liquidity for the company. In September 2011, the Company entered into an equity line facility whereby it has the ability to draw capital up to $15 million, subject to certain provisions, including maintaining a minimum stock price of $2.00 per share. Through September 30, 2012, the Company has drawn $1 million from this facility. In December 2012, the Company sold 1.9 million units at a price of $2.26 per unit in a public offering. Each unit consisted of one share of Common Stock and a warrant to purchase 0.5 share of Common Stock, exercisable at $2.20. Gross proceeds from the offering were $4.3 million, which included a $500,000 promissory note due February 1, 2013. On October 21, 2011, Arrowhead completed the acquisition of certain RNAi assets from Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd., including intellectual property and a research and development facility in Madison, Wisconsin. At the time of the acquisition, the facility had 41 employees. Due to the costs associated with maintaining and operating the facility, including personnel costs, rent, research and development expenses, and other costs, cash expenses have increased, and it is expected that the Company will incur higher cash expenses during the remainder of 2012 and beyond, relative to periods prior to the acquisition, as the Company accelerates its preclinical and clinical development efforts. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has experienced negative cash flows from operations since inception and has an accumulated deficit of approximately $135 million. The Company has funded its activities to date almost exclusively from equity financings.   The Company plans to fund its development activities as cash resources allow. However, the company is dependent on additional equity financing and/or the signing of collaboration/partnership arrangements to supply cash for future development. The Company cannot be certain that such funding will be available on acceptable terms or available at all. To the extent that the Company raises additional funds by issuing equity securities, its stockholders may experience significant dilution. If the Company is unable to raise funds when required or on acceptable terms, it may have to delay, scale back, or discontinue the development and/or commercialization of one or more product candidates, or relinquish or otherwise dispose of rights to technologies, product candidates, or products that it would otherwise seek to develop or commercialize itself and possibly cease operations. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company’s research and development will be successfully completed or that any product will be approved or commercially viable. The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with Food and Drug Administration (“FDA”) and other governmental regulations and approval requirements. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements were prepared under the assumption that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of that uncertainty. Although the Company has sources of liquidity, as described above, the Company anticipates that further equity financings, and/or asset sales and license agreements will be necessary to continue to fund operations in the future. Summary of Significant Accounting Policies Principles of Consolidation—The consolidated financial statements include the accounts of Arrowhead and its Subsidiaries, Arrowhead Madison, Alvos, Calando, Ablaris, Tego, Agonn, and until its disposition in January 2011, Unidym. Prior to April 2008, Arrowhead’s Subsidiaries included Insert Therapeutics, Inc. (“Insert”), which was merged with Calando in April 2008. The merged entity is majority-owned by Arrowhead and continues to operate under the name of Calando. In January 2011, Arrowhead sold its interests in Unidym to Wisepower, and in December 2009, Tego completed a sale of its assets to Luna Innovations, Inc. Unidym and Tego results are included in the Income (Loss) from Discontinued Operations. Income (Loss) from Discontinued Operations also includes Aonex Technologies, Inc., sold in May 2008, and Nanotechnica, Inc., dissolved in June 2005. All significant intercompany accounts and transactions are eliminated in consolidation, and noncontrolling interests are accounted for in the Company’s financial statements. Basis of Presentation and 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 accompanying financial statements. Significant estimates made in preparing these financial statements include valuing the stock of the Subsidiaries, assumptions to calculate stock-based compensation expense, allowance for doubtful accounts, deferred tax asset valuation allowance, derivative assets and liabilities, noncontrolling interest and useful lives for depreciable and amortizable assets. Actual results could differ from those estimates. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. Cash and Cash Equivalents—The Company considers all liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Concentration of Credit Risk—The Company maintains checking accounts for Arrowhead and separate accounts for each Subsidiary at any of three financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institution in which these deposits are held. 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 September 30, 2012, intangible assets subject to amortization included patents and certain 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 Arrowhead 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. Based on early adoption of ASU 2012-02, 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 is 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. Equity Investments—Arrowhead has a noncontrolling equity investment in Nanotope, a privately held biotechnology company, which is recorded in Other Assets. Historically, this investment was carried at cost less Arrowhead’s proportionate share of Nanotope’s operating loss for the period since investment. Based on the lack of significant progress in Nanotope’s research and development efforts, the investment has been fully reserved and is carried at a net book value of zero. Arrowhead utilizes the equity method of accounting as it owns more than 20% of the voting equity and has the ability to exercise significant influence over this company. Minority Equity Investments—The Company’s minority equity investment in Leonardo, a privately held biotechnology company, has been recorded in Other Assets, however, an impairment charge has been recorded in 2012, and its net book value at September 30, 2012 is zero. This investment has been accounted for under the cost method of accounting. Noncontrolling Interests in Majority-Owned Subsidiaries—Operating losses applicable to majority-owned Calando, Ablaris and, prior to its disposal, Unidym have periodically exceeded the noncontrolling interests in the equity capital of either Subsidiary. Such excess losses applicable to the noncontrolling interests have been and are borne by the Company as there is no obligation of the noncontrolling interests to fund any losses in excess of their original investment. There is also no obligation or commitment on the part of the Company to fund operating losses of any Subsidiary whether wholly-owned or majority-owned. The Company allocates the noncontrolling interest’s share of net loss in excess of the noncontrolling interest’s initial investment in accordance with FASB ASC 810-10, which was effective for the Company on October 1, 2009. When there is a change in the Company’s proportionate share of a development-stage Subsidiary resulting from additional equity transactions in a Subsidiary, the change is accounted for as an equity transaction in consolidation. To the extent that the increase in the calculated value of the Company’s interest in the equity of the Subsidiary exceeds the Company’s investment in the offering, that increase in value is referred to as the Company’s “increase in its proportionate share of the Subsidiary’s equity” and the amount is recorded as an increase in the Company’s Additional Paid-in Capital. 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. We 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. Revenue associated with research and development funding payments under collaborative agreements, is recognized ratably over the relevant periods specified in the agreement, generally the research and development period. 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. 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 issued to employees and consultants and warrants to purchase Common Stock of the Company.   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. We use the Black-Scholes option valuation model to estimate the fair value of our 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. We use historical data among other information to estimate the expected price volatility and the expected forfeiture 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. Recently Issued Accounting Standards In July 2012, the FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amended the guidance in ASU 2011-08 to simplify the testing of indefinite-lived intangible assets other than goodwill for impairment. ASU 2012-02 becomes effective for annual and interim impairment tests performed for fiscal years beginning on or after September 15, 2012 and earlier adoption is permitted. We adopted this standard in the third quarter of fiscal year 2012. We believe adoption did not have a material effect on our financial statements. In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment (ASU 2011-08), to allow entities to use a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If after performing the qualitative assessment an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step goodwill impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step goodwill impairment test. ASU 2011-08 is effective for us in fiscal 2013 and earlier adoption is permitted. The adoption of ASU 2011-08 is not anticipated to have any impact on our financial position, results of operations or cash flows. In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-04, Fair Value Measurement (“ASU 2011-04”), which amended ASC 820, Fair Value Measurements (“ASC 820”), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the disclosure requirements. ASU 2011-04 was effective for us beginning January 1, 2012. The adoption of ASU 2011-04 did not have a material effect on our consolidated financial statements or disclosures. In June 2010, the FASB issued ASU No. 2010-17, Revenue Recognition—Milestone Method (Topic 605): Milestone Method of Revenue Recognition. This ASU codifies the consensus reached in EITF Issue No. 08-9, “Milestone Method of Revenue Recognition.” The amendments to the Codification provide guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and nonsubstantive milestones, and each milestone should be evaluated individually to determine if it is substantive. This guidance was adopted effective October 1, 2010. The adoption of this guidance did not have a material impact on our consolidated financial statements. </div>

46269

<div> NOTE 7. STOCKHOLDERS’ EQUITY At September 30, 2012, 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, and 5,000,000 shares of Preferred Stock, par value $0.001. At September 30, 2012, 13,579,184 shares of Common Stock were outstanding; no shares of Preferred Stock were outstanding. At September 30, 2012, 153,200 shares and 1,965,860 shares were reserved for issuance upon exercise of options granted under Arrowhead’s 2000 Stock Option Plan and 2004 Equity Incentive Plan, respectively. On September 30, 2011, the Company sold 1,458,917 shares of Common Stock at a price of $3.80 per share. Cash proceeds received in fiscal 2011 were $4.5 million; the balance of $1 million is expected to be received in 2012. On October 4, 2011, the Company completed a second closing of the offering in which the Company sold 138,158 shares of Common Stock at a price of $3.80 per share. Cash proceeds were $525,000. On October 20, 2011, the Company and Lincoln Park Capital Fund, LLC, an Illinois limited liability company (“LPC”) entered into a $15 million purchase agreement (the “Purchase Agreement”), together with a registration rights agreement, whereby LPC agreed to purchase up to $15 million of Common Stock, subject to certain limitations, from time to time during the three-year term of the Purchase Agreement. Additionally, the Company filed a registration statement with the U.S. Securities & Exchange Commission covering the resale of the shares that may be issued to LPC under the Purchase Agreement. On January 30, 2012, the SEC declared the registration statement effective for the resale of such shares. The Company has the right, in its sole discretion, over a 36-month period to sell up to $15 million of Common Stock (subject to certain limitations) to LPC, depending on certain conditions as set forth in the Purchase Agreement. As of September 30, 2012, the Company had drawn $1 million from the facility. On October 21, 2011 and October 24, 2011, the Company entered into Subscription Agreements with certain accredited investors (the “Series A Purchasers”), pursuant to which the Company issued and sold an aggregate of 1,015 shares of Series A Preferred Convertible Stock, $0.001 par value per share, at a purchase price of $1,000 per share. The aggregate purchase price paid for the shares of Series A Preferred was $1,015,000. On February 16, 2012, upon approval by the Company’s shareholders, 1,015 shares of Arrowhead Series A Preferred Convertible Stock, $0.001 par value per share, were converted to 275,782 shares of Common Stock. On October 21, 2011, the Company entered into a Subscription Agreement with an accredited investor, pursuant to which the Company issued and sold an aggregate of 675,000 shares of Common Stock, $0.001 par value per share, at a purchase price of $3.70 per share. The aggregate purchase price paid by the purchaser for the shares of Common Stock is $2,497,500. On August 10, 2012 the Company sold 2,260,869 units at a price of $2.76 per unit. Each unit consisted of one share of common stock and a warrant to purchase 0.75 shares of common stock at an exercise price of $3.25. Gross proceeds from the offering were $6.2 million excluding offering fees and expenses. As of November 17, 2011, the Company effected a 1 for 10 reverse stock split. As a result of the reverse stock split, each ten shares of the Company’s Common Stock issued and outstanding immediately prior to the reverse stock split was combined into one share of Common Stock. Also, as a result of the reverse stock split, the per share exercise price, and the number of shares of Common Stock underlying Company stock options, warrants, and any Common Stock based equity grants outstanding immediately prior to the reverse stock split was proportionally adjusted, based on the one-for-ten split ratio, in accordance with the terms of such options, warrants or other Common Stock based equity grants as the case may be. No fractional shares of Common Stock were issued in connection with the reverse split. Stockholders received a cash payment in lieu of any fractional shares. All share and per share amounts in these financial statements have been retrospectively adjusted to reflect the reverse stock split. The following table summarizes information about warrants outstanding at September 30, 2012:   <table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE" align="center"> <tr> <td width="67%"></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap" align="center" style="border-bottom:1px solid #000000"> Exercise prices </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center" style="border-bottom:1px solid #000000">Number of Warrants</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center" style="border-bottom:1px solid #000000">Remaining Life in  Years</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $70.60 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">94,897</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.6</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr> <td valign="top"> $20.00 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">386,400</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.9</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $5.00 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,155,023</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr> <td valign="top"> $5.09 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">461,024</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $1.38 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">322,150</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr> <td valign="top"> $4.16 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,000</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $3.25 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,695,654</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.9</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr style="font-size:1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Total warrants outstanding </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,116,147</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="font-size:1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> </table> </div>

<div> NOTE 13. EMPLOYEE BENEFIT PLANS In January 2005, the Company began sponsoring a defined contribution 401(k) retirement savings plan covering substantially all of its employees. The Plan was administered under the “safe harbor” provision of ERISA. Under the terms of the plan, an eligible employee may elect to contribute a portion of their salary on a pre-tax basis, subject to federal statutory limitations. The plan allowed for a discretionary match in an amount up to 100% of each participant’s first 3% of compensation contributed plus 50% of each participant’s next 2% of compensation contributed. For the years ended September 30, 2012 and 2011, we recorded expenses under these plans of approximately $162,000 and $43,000, respectively and $616,000 since inception of the Company. In addition to the employee benefit plans described above, the Company participates in certain customary employee benefits plans, including those which provide health and life insurance benefits to employees. </div>

1241404

4.40

-15340090

-4130101

338531

<div> NOTE 4. INVESTMENT IN SUBSIDIARIES In addition to 100% ownership interest in Arrowhead Madison, Inc. and Alvos Therapeutics, Inc., Arrowhead also maintains majority ownership in Calando Pharmaceuticals, Ablaris Therapeutics, Inc., and minority investments in Nanotope, Inc. and Leonardo Biosystems, Inc. Calando Pharmaceuticals, Inc. Calando is a clinical stage RNAi therapeutics company. On April 17, 2008, Calando merged with and into Insert, with Insert as the surviving company. Prior to the merger, Arrowhead invested an aggregate of $23.2 million in Calando through equity and debt financings. As a condition of the merger, the Preferred Stock of each of Calando and Insert was converted into common stock and the loans were converted to equity. As a result of the merger, shares of Insert common stock were issued to the stockholders of the former Calando, and Insert changed its name to Calando Pharmaceuticals, Inc. On November 26, 2008, Calando entered into Unsecured Convertible Promissory Note Agreements (“Notes”) for $2.5 million with accredited investors and Arrowhead, which invested $200,000 in the Notes offering. Arrowhead subsequently invested an additional $600,000 in the same offering. Except for one Note in the principal amount of $500,000, all Notes and accrued interest were converted into a total of 2,950 shares of Calando Series A Preferred Stock on June 23, 2009. The remaining Note is due November 26, 2013; see Note 4 for further information. In fiscal 2010, Arrowhead issued 122,000 shares of its Common Stock in exchange for shares of Calando common stock, with several minority stockholders of Calando. In conjunction with this exchange, Arrowhead also issued 26,400 warrants to purchase Arrowhead Common Stock in exchange for warrants to purchase Calando common stock. In January 2011, Arrowhead invested $9.1 million, through a cash investment of $1.0 million and the conversion of $8.1 million intercompany debt, acquiring newly issued Calando Series B and Series C preferred stock. As of September 30, 2012, Calando owed to Arrowhead $3.1 million under a series of 8% simple interest notes and advances. It is expected that these loans will either be repaid or converted to equity in the future. The balance of the notes and advances is eliminated in consolidation. As of September 30, 2012, Arrowhead owned 79% of the outstanding shares of Calando and 76% on a fully diluted basis. Ablaris Therapeutics, Inc. Ablaris was formed and began operations in the first quarter of fiscal 2011, based on the license of certain anti-obesity technology developed at the MD Anderson Cancer Center at the University of Texas. During the year ended September 30, 2011, Ablaris raised $2.9 million in cash, of which $1.3 million was invested by Arrowhead and $1.6 million was invested by outside investors, through the issuance of Ablaris Series A Preferred stock. As of September 30, 2012, Arrowhead owned 64% of the outstanding shares of Ablaris and 64% on a fully diluted basis. Nanotope, Inc. Nanotope’s primary areas of focus include development of treatments for spinal cord injuries, cartilage regeneration and wound healing. As of September 30, 2012, Arrowhead owned 23% of the outstanding shares of Nanotope, and 19% on a fully diluted basis. Arrowhead accounts for its investment in Nanotope using the equity method of accounting. During the quarter ended June 30, 2012, Nanotope closed its R&D operations at its facility in Skokie, Illinois, and moved R&D operations to the laboratories of Northwestern University under the direction of Dr. Samuel Stupp, the Company’s founder. Development work will be performed by personnel in Dr. Stupp’s lab, and Nanotope terminated the employment of its staff. The company’s research equipment was sold to Arrowhead, to be utilized at its research facility in Madison, Wisconsin. Certain components of Nanotope’s intellectual property portfolio continue to be maintained at Arrowhead’s expense, potentially allowing Nanotope to benefit from successful developments. These circumstances required Arrowhead to examine its investment in Nanotope, as well as its receivable from Nanotope, for impairment. Upon review, it was determined that the remaining book value of its investment exceeded its fair value as determined by discounted future cash flows. As a result, upon completion of the assessment, management recorded a non-cash impairment charge of $1.4 million during the year ended September 30, 2012 to reduce the carrying value of the investment to $0. Additionally, the company recorded a full reserve against its receivable from Nanotope in the amount of the $1.9 million. Summarized financial information for Nanotope, Inc. is as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="13%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="13%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">September 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">31,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">21,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Non-current assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">85,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,070,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,255,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Equity </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,039,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,149,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> </table>     <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="62%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Revenue </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">515,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Operating expenses </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">808,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,161,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net Loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(890,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(709,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">For the year ended September 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash flows used in operating activities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(831,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(705,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Cash flows provided by (used in) investing activities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">61,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(31,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash flows provided by financing activities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">784,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">746,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table> Leonardo Biosystems, Inc. Leonardo is developing a drug-delivery platform technology based on novel methods of designing porous silicon microparticles that selectively accumulate in tumor vasculature. Arrowhead accounts for its investment in Leonardo using the cost method of accounting. As of September 30, 2012, Leonardo owed to Arrowhead $547,000, included in other receivables. Although it is expected to be repaid or converted to equity, the Company has provided a full reserve against the receivable from Leonardo. As of September 30, 2012, Arrowhead’s ownership interest in Leonardo was 3%. </div>

162000000

440644

-21089211

-80

1241404

<div> NOTE 8. LEASES In May 2012, the Company signed a lease for new office space for its corporate headquarters, and moved into the new location in August 2012. The lease has a five-year term; rental costs are approximately $13,000 per month, increasing 3% annually. The Company’s research facility in Madison, Wisconsin is leased through February 28, 2019. Monthly rental expense is approximately $22,000. Other monthly rental expenses include common area maintenance and real estate taxes totaling approximately $13,000 per month. Utilities costs are approximately $16,000 per month. Including monthly payments recorded under a capital lease of approximately $21,000, total monthly costs are approximately $72,000 per month. Facility and equipment rent expense, related to continuing operations, for the year ended September 30, 2012 and 2011 was $480,000 and $162,000, respectively. From inception to date, rent expense was $4,125,485. Rent expense related to Unidym, until its disposal in January 2011, is included as a part of income/loss from discontinued operations. As of September 30, 2012, future minimum lease payments due in fiscal years under capitalized leases are as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2015 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2016 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2018 and thereafter </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">363,864</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Less interest </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(150,835</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Principal </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,497,259</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Less current portion </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(214,801</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Noncurrent portion </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,282,458</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> As of September 30, 2012, future minimum lease payments due in fiscal years under operating leases are as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">356,672</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">434,229</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2015 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">445,921</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2016 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">457,961</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">470,154</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2018 and thereafter </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">484,785</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,649,723</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

Company effected a 1 for 10 reverse stock split

<div> Liquidity Arrowhead has historically financed its operations through the sale of securities of Arrowhead and its Subsidiaries. Development activities have required significant capital investment since the Company’s inception and we expect our current portfolio companies to continue to require cash investment in fiscal 2013 and beyond to continue development. At September 30, 2012, the Company had $3.4 million in cash to fund operations. During the year ended September 30, 2012, the Company’s cash position decreased by $4.1 million. The Company received cash from the issuance of equity of $11.0 million, cash from the sale of its holdings of stock in Wisepower Co. Ltd of $0.5 million, and cash collections from licensing revenue of $0.2 million. The company had cash outflow of $16.0 million related to its continuing operating activities and capital expenditures of $0.5 million. As a result of the sale of the Company’s subsidiary, Unidym, in January 2011, the Company received $2.5 million in stock of the acquirer, Wisepower Co. Ltd. (“Wisepower”) and a $2.5 million convertible bond from Wisepower, of which approximately $200,000 is owed to a third party who was a minority investor in Unidym. Following the divestiture, through the quarter ended December 31, 2011, the Company liquidated its position in Wisepower stock. The convertible bond has a face value of $2.5 million and can be redeemed for cash on January 17, 2013, and at which time could represent an additional source of liquidity for the company. In September 2011, the Company entered into an equity line facility whereby it has the ability to draw capital up to $15 million, subject to certain provisions, including maintaining a minimum stock price of $2.00 per share. Through September 30, 2012, the Company has drawn $1 million from this facility. In December 2012, the Company sold 1.9 million units at a price of $2.26 per unit in a public offering. Each unit consisted of one share of Common Stock and a warrant to purchase 0.5 share of Common Stock, exercisable at $2.20. Gross proceeds from the offering were $4.3 million, which included a $500,000 promissory note due February 1, 2013. On October 21, 2011, Arrowhead completed the acquisition of certain RNAi assets from Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd., including intellectual property and a research and development facility in Madison, Wisconsin. At the time of the acquisition, the facility had 41 employees. Due to the costs associated with maintaining and operating the facility, including personnel costs, rent, research and development expenses, and other costs, cash expenses have increased, and it is expected that the Company will incur higher cash expenses during the remainder of 2012 and beyond, relative to periods prior to the acquisition, as the Company accelerates its preclinical and clinical development efforts. </div>

-1.90

P8Y2M12D

509009

10769625

196606

<div> NOTE 6. NOTES PAYABLE On November 26, 2008, Calando entered into Unsecured Convertible Promissory Note Agreements (“Notes”) for $2.5 million with accredited investors and Arrowhead, which invested $200,000 in the Notes offering. Arrowhead subsequently invested an additional $600,000 in the same offering. Except for one Note in the principal amount of $500,000, all Notes and accrued interest were converted into a total of 2,950 shares of Calando Series A Preferred Stock on June 23, 2009. The remaining Note had a 10% interest rate, matured on November 26, 2010, and was renegotiated and extended until November 26, 2013. The terms of the new note include a 10% interest rate and require two times principal payment upon certain events as defined in the note and at maturity. At September 30, 2012, The Note is reflected on the balance sheet at the maturity amount of $1,000,000 less a discount of $210,579. </div>

<div> As of September 30, 2012, future minimum lease payments due in fiscal years under operating leases are as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">356,672</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">434,229</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2015 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">445,921</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2016 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">457,961</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">470,154</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2018 and thereafter </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">484,785</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,649,723</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

-21125928

-1021432

-162855

<div> 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. We 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. Revenue associated with research and development funding payments under collaborative agreements, is recognized ratably over the relevant periods specified in the agreement, generally the research and development period. 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. </div>

11.77

-22110643

42919

-58091

0.90

6439323

<div> The following tables summarize information about stock options:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="61%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Number of Options Outstanding</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Weighted- Average Exercise Price Per Share</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">Weighted- Average Remaining Contractual Term</td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">Aggregate Intrinsic Value</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance At September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">812,334</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">10.62</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.86</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cancelled </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(100,539</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21.32</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Exercised </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,699</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> </table>     <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="62%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Number of Options Outstanding</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Weighted- Average Exercise Price Per Share</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Weighted- Average Remaining Contractual Term</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Aggregate Intrinsic Value</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance At September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">729,096</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9.03</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,229,500</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.40</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cancelled </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(42,919</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">11.77</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Exercised </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(4,883</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.20</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance At September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,910,794</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">6.01</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8.2 years</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Exercisable At September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">811,214</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7.96</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6.6 years</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> The following table summarizes information about warrants outstanding at September 30, 2012:   <table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE" align="center"> <tr> <td width="67%"></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap" align="center" style="border-bottom:1px solid #000000"> Exercise prices </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center" style="border-bottom:1px solid #000000">Number of Warrants</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center" style="border-bottom:1px solid #000000">Remaining Life in  Years</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $70.60 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">94,897</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.6</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr> <td valign="top"> $20.00 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">386,400</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.9</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $5.00 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,155,023</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr> <td valign="top"> $5.09 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">461,024</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $1.38 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">322,150</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr> <td valign="top"> $4.16 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,000</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.2</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> $3.25 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,695,654</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.9</td> <td nowrap="nowrap" valign="bottom">  </td> </tr> <tr style="font-size:1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Total warrants outstanding </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,116,147</td> <td nowrap="nowrap" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="font-size:1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> </table> </div>

<div> The following table summarizes fair value measurements at September 30, 2012 and September 30, 2011 for assets and liabilities measured at fair value on a recurring basis: September 30, 2012:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="63%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash and cash equivalents </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,377,288</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,377,288</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Marketable securities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">106,500</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">106,500</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Derivative assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">250,250</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">250,250</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Derivative liabilities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">647,213</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">647,213</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="top"> September 30, 2011: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cash and cash equivalents </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7,507,389</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7,507,389</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Marketable securities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">634,585</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">634,585</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Derivative assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">161,125</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">161,125</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Derivative liabilities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">944,980</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">944,980</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table> </div>

<div> NOTE 5. DISCONTINUED OPERATIONS Unidym, Inc. Founded by Arrowhead in 2005, Unidym is developing electronic applications of carbon nanotubes. Arrowhead sold its ownership interest in Unidym to Wisepower, a Korean corporation, in January 2011. The consideration included $2.5 million in Wisepower stock, a convertible bond with a face value of $2.5 million, a percentage of certain revenue streams, as well as contingent payments up to $140 million based on revenue milestones over a ten-year period. The consideration received in the form of Wisepower stock has been liquidated. The consideration received in the form of a bond is currently held as a current asset. The bond which bears no interest, became convertible on January 17, 2012, is redeemable in cash on January 17, 2013, and becomes due on January 17, 2014. In conjunction with the disposition of Unidym, the gain on the sale and the results of historical operations are recorded as discontinued operations in the Company’s Statements of Operations. Additionally, the cash flows from Unidym are reflected separately as cash flows from discontinued operations in the Company’s Consolidated Statement of Cash Flows. Any future cash flows as discussed above will also be reflected as a part of cash flows from discontinued operations. Tego Biosciences, Inc. On April 20, 2007, Tego, a wholly-owned subsidiary of Arrowhead, acquired the assets of C Sixty, Inc., a Texas-based company developing protective products based on the anti-oxidant properties of fullerenes. In December 2009, Tego completed the sale of all of its intellectual property assets to Luna Innovations, Inc. The consideration included an upfront purchase price of $350,000 and reimbursements of patent and license expenses of $80,000, as well as contingent payments based on milestones and royalties for each fullerene product developed by Luna and covered by Tego intellectual property. Due to the sale of substantially all of Tego’s assets, the operations of Tego ceased and the gain on the sale and the results of historical operations are recorded as discontinued operation in the Company’s Statements of Operations. Additionally, the cash flows from Tego are reflected separately as cash flows from discontinued operations. Any future cash flows as discussed above will be reflected as a part of cash flows from discontinued operations in the Company’s Consolidated Statements of Cash Flows. </div>

200000

<div> 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. </div>

35966

21236086

1000000

146875

9390

0.017

P12Y

<div> NOTE 9. STOCK-BASED COMPENSATION Arrowhead has two plans that provide for equity-based compensation. Under the 2000 Stock Option Plan, 153,200 shares of Arrowhead’s Common Stock are reserved for issuance upon exercise of non-qualified stock options. No further grants can be made under the 2000 Stock Option Plan. The 2004 Equity Incentive Plan reserves 1,965,860 shares for the grant of stock options, stock appreciation rights, restricted stock awards and performance unit/share awards by the Board of Directors to employees, consultants and others. As of September 30, 2012, there were options granted and outstanding to purchase 153,200 and 1,767,894 shares of Common Stock under the 2000 Stock Option Plan and the 2004 Equity Incentive Plan, respectively. During the year ended September 30, 2012, 988,300 options were granted under the 2004 Equity Incentive Plan, and 251,200 options were granted outside of Equity Incentive plans as inducement stock options to new employees, hired in conjunction with the Company’s acquisition of its Madison research facility in October 2011. All share and per share data in this footnote has been adjusted to reflect the 1 for 10 reverse stock split effected on November 17, 2011. The following tables summarize information about stock options:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="61%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Number of Options Outstanding</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Weighted- Average Exercise Price Per Share</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">Weighted- Average Remaining Contractual Term</td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">Aggregate Intrinsic Value</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance At September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">812,334</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">10.62</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.86</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cancelled </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(100,539</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21.32</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Exercised </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,699</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> </tr> </table>     <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="62%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Number of Options Outstanding</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Weighted- Average Exercise Price Per Share</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Weighted- Average Remaining Contractual Term</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Aggregate Intrinsic Value</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance At September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">729,096</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9.03</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,229,500</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.40</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Cancelled </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(42,919</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">11.77</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Exercised </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(4,883</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.20</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance At September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,910,794</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">6.01</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8.2 years</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Exercisable At September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">811,214</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7.96</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6.6 years</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Stock-based compensation expense for the year ended September 30, 2012 and 2011 was $1,241,404 and $1,376,921, respectively. For the years ended September 30, 2012 and 2011, $0 and $27,519, respectively, of this expense is included in discontinued operations. There is no income tax benefit as the company is currently operating at a loss and an actual income tax benefit may not be realized. 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 years ended September 30, 2012 and 2011 is estimated at $4,091,117 and $93,004, respectively. The aggregate fair value of options granted by Calando during the years ended September 30, 2012 and 2011 is estimated at $33,690 and $33,870, respectively. The intrinsic value of the options exercised during the years ended September 30, 2012 and 2011 was $0 and $3,666, respectively. As of September 30, 2012, the pre-tax compensation expense for all unvested stock options at Arrowhead in the amount of approximately $3,738,217 will be recognized in our results of operations over a weighted average period of 3.1 years. As of September 30, 2012, the pre-tax compensation expense for all unvested stock options at Calando in the amount of approximately $63,250 will be recognized in our results of operations over a weighted average period of 2.6 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:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="67%"></td> <td valign="bottom" width="3%"></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="3" align="center">Year ended September 30,</td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">2012</td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center">2011</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom" align="center">—  </td> <td valign="bottom">  </td> <td valign="bottom" align="center">—  </td> </tr> <tr> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom" align="center">0.9% to 1.7%</td> <td valign="bottom">  </td> <td valign="bottom" align="center">1.11% to 2.90%</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom" align="center">90% -100%</td> <td valign="bottom">  </td> <td valign="bottom" align="center">100%</td> </tr> <tr> <td valign="top"> Expected life (in years) </td> <td valign="bottom">  </td> <td valign="bottom" align="center">5.5 to 6.25</td> <td valign="bottom">  </td> <td valign="bottom" align="center">5.5 to 6.25</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Weighted average grant date fair value per share of options granted </td> <td valign="bottom">  </td> <td valign="bottom" align="center">$3.32</td> <td valign="bottom">  </td> <td valign="bottom" align="center">$4.70</td> </tr> </table> 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. </div>

386892

-984795

-23747

50406

479710

281038

-240154

<div> 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. We use the Black-Scholes option valuation model to estimate the fair value of our 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. We use historical data among other information to estimate the expected price volatility and the expected forfeiture rate. </div>

<div> As of September 30, 2012, future minimum lease payments due in fiscal years under capitalized leases are as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2015 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2016 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">256,846</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2018 and thereafter </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">363,864</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Less interest </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(150,835</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Principal </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,497,259</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Less current portion </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(214,801</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Noncurrent portion </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,282,458</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

11000000

-240154

293964

<div> 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. </div>

-280

-1079377

1241404

-22110643

938179

6414921

-80

<div> 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 issued to employees and consultants and warrants to purchase Common Stock of the Company. </div>

<div> The following is a reconciliation of the derivative asset for the years ended September 30, 2012 and 2011:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">618,500</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(457,375</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at October 1, 2011 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">161,125</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Increase in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">89,125</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net settlements </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">250,250</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> Intangible Assets subject to amortization—At September 30, 2012, intangible assets subject to amortization included patents and certain 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. </div>

<div> The below table provides details on our intangible asset balances:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="84%" align="center"> <tr> <td width="58%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Intangible assets not subject to amortization</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Intangible assets subject to amortization</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total Intangible assets</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,973,019</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,973,019</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Amortization </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(241,808</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(241,808</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,731,211</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,731,211</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Additions – Madison acquisition </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">944,935</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">230,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,174,935</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Additions – Alvos acquisition </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,172,387</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,172,387</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Amortization </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(293,964</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(293,964</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,117,322</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,667.247</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">4,784,569</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

186369

3.32

<div> Equity Investments—Arrowhead has a noncontrolling equity investment in Nanotope, a privately held biotechnology company, which is recorded in Other Assets. Historically, this investment was carried at cost less Arrowhead’s proportionate share of Nanotope’s operating loss for the period since investment. Based on the lack of significant progress in Nanotope’s research and development efforts, the investment has been fully reserved and is carried at a net book value of zero. Arrowhead utilizes the equity method of accounting as it owns more than 20% of the voting equity and has the ability to exercise significant influence over this company. </div>

291876

10958231

<div> 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. </div>

<div> Cash and Cash Equivalents—The Company considers all liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. </div>

<div> NOTE 2. ACQUISITIONS Roche Madison On October 21, 2011, the Company entered into a Stock and Asset Purchase Agreement (the “RNAi Purchase Agreement”) with Hoffmann-La Roche Inc. and F Hoffmann-La Roche Ltd (collectively, “Roche”), pursuant to which the Company purchased from Roche (i) all of the outstanding common stock of Roche Madison Inc. (“Roche Madison”) and (ii) the intellectual property rights then held by Roche related to its RNAi business and identified in the RNAi Purchase Agreement (the “Transaction”). In consideration for the purchase of Roche Madison and the Roche RNAi assets, the Company issued to Roche a promissory note with a principal value of $50,000 and 901,702 shares of Common Stock (as adjusted for the 1-for-10 reverse stock split on November 17, 2011). Subsequently, as required by the RNAi Purchase Agreement, the Company issued an additional 386,456 shares of Common Stock. The acquisition provides additional technology, particularly related to RNAi delivery, and provided a state-of-the-art lab facility.   Pursuant to the RNAi Purchase Agreement, Roche has a right of first negotiation on certain product candidates 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 Clinical Candidate or Existing Candidate (as such terms are defined in the RNAi Purchase Agreement), the Company must give notice of the Candidate it proposes to out-license and negotiate exclusively and in good faith with Roche for 90 days regarding the applicable out-license. This right of first negotiation applies to all Existing Candidates (as defined in the RNAi Purchase Agreement) and the first five Clinical Candidates for which the Company delivers notice to Roche and subsequently enters into an out-license. In addition to the consideration paid by the Company as per the closing terms, the Company is obligated to make certain royalty and milestone payments to Roche upon the occurrence of certain events. For certain product candidates that are developed by the Company or its affiliates and that are covered by a valid claim by the patent rights transferred in the Transaction for which the Company and Roche do not enter into a licensing arrangement, the Company will be obligated to pay a 3% royalty on Net Sales (as defined in the RNAi Purchase Agreement), 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 expire patent right related to such product candidate that was transferred in the Transaction and (ii) ten years after the first commercial sale of such product candidate. The Company will also be obligated to make cash payments to Roche upon the achievement of various milestones, including the first regulatory approval of an Existing Candidate in certain jurisdictions and upon certain annual sales milestones for Existing Candidates that may receive regulatory approval. The potential payments range from $2,500,000 to $6,000,000 per milestone. Based on the Company’s estimate of future payments, a net present value of $84,935 was calculated as contingent consideration, and is recorded as a part of other noncurrent liabilities. The following table summarizes the estimated fair values at the date of acquisition:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">432,709</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Property and equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,215,206</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Intangible assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,174,935</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Other noncurrent assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,264</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(414,122</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Noncurrent liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,570,072</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Gain on purchase </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,576,106</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,268,814</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> The purchase consideration was composed of the following:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Promissory note due Roche </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">84,935</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Shares issued to Roche </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,133,879</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,268,814</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> We estimated the fair value of the assets and liabilities acquired through various valuation techniques including a market approach and an income approach. Because the net identifiable tangible and intangible assets and liabilities were in excess of the purchase price, a gain on the purchase of $1.6 million was recorded. The most significant assets capitalized were research equipment and certain in-process research and development. We believe that we were able to acquire these assets at a reasonable purchase price and generate a gain on the transaction due in part from the seller’s desire to exit the relatively early stage of the RNAi business, as compared to the seller’s other business operations, as well as the seller’s desire to dispose of certain on-going costs associated with the facility, primarily lease costs and personnel costs, which were synergistic to the Company’s strategy to establish a research facility to advance development efforts for its drug product candidates. Alvos Therapeutics On April 5, 2012, the Company entered into a Stock Purchase Agreement to purchase all of the outstanding shares of Alvos Therapeutics, Inc., (“Alvos”), a privately held company that licensed a large platform of proprietary human-derived homing peptides, and the method for their discovery, from MD Anderson Cancer Center. In conjunction with the acquisition, Arrowhead hired one employee from Alvos, and retained one employee on a consulting basis. In exchange for all of the outstanding shares of Alvos, Arrowhead issued an upfront payment of 315,467 shares of Common Stock. The former Alvos stockholders are also eligible to receive additional issuances of stock valued at up to $23.5 million at the time of issuance based on the future achievement of clinical, regulatory and sales milestones. Based on the Company’s estimate of future payments, a net present value of $88,686 was calculated as contingent consideration, and is recorded as a part of other noncurrent liabilities. The Alvos acquisition provided key technology in targeted therapeutics.   The following table summarizes the estimated fair values at the date of acquisition:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">29,332</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> In-process R&D </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,172,387</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(113,033</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,088,686</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> The purchase consideration was comprised solely of shares of Arrowhead Common Stock issued to the former shareholders of Alvos Therapeutics, Inc.   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Shares issued </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">315,457</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Price per share </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">6.34</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Share consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,000,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">88,686</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,088,686</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

290312

500000

<div> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="87%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Purchase price contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration payments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Change in fair value of contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">173,621</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

-1.90

Two times principal payment upon certain events

-58091

-80

<div> Noncontrolling Interests in Majority-Owned Subsidiaries—Operating losses applicable to majority-owned Calando, Ablaris and, prior to its disposal, Unidym have periodically exceeded the noncontrolling interests in the equity capital of either Subsidiary. Such excess losses applicable to the noncontrolling interests have been and are borne by the Company as there is no obligation of the noncontrolling interests to fund any losses in excess of their original investment. There is also no obligation or commitment on the part of the Company to fund operating losses of any Subsidiary whether wholly-owned or majority-owned. The Company allocates the noncontrolling interest’s share of net loss in excess of the noncontrolling interest’s initial investment in accordance with FASB ASC 810-10, which was effective for the Company on October 1, 2009. When there is a change in the Company’s proportionate share of a development-stage Subsidiary resulting from additional equity transactions in a Subsidiary, the change is accounted for as an equity transaction in consolidation. To the extent that the increase in the calculated value of the Company’s interest in the equity of the Subsidiary exceeds the Company’s investment in the offering, that increase in value is referred to as the Company’s “increase in its proportionate share of the Subsidiary’s equity” and the amount is recorded as an increase in the Company’s Additional Paid-in Capital. </div> <div> Basis of Presentation and 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 accompanying financial statements. Significant estimates made in preparing these financial statements include valuing the stock of the Subsidiaries, assumptions to calculate stock-based compensation expense, allowance for doubtful accounts, deferred tax asset valuation allowance, derivative assets and liabilities, noncontrolling interest and useful lives for depreciable and amortizable assets. Actual results could differ from those estimates. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included. </div> 1.00 1642775 2497300 984795 120000 1576107 0 January 17, 2013 480000 <div> The assumptions used in valuing the derivative asset as of September 30, 2012 and 2011 were as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2012 </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2011 </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk free interest rate </td> <td valign="bottom">  </td> <td valign="bottom">    0.23%</td> <td valign="bottom">  </td> <td valign="bottom">    0.4%</td> </tr> <tr> <td valign="top"> Expected life </td> <td valign="bottom">  </td> <td valign="bottom">    1.3 Years</td> <td valign="bottom">  </td> <td valign="bottom">    2.3 Years</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom">    none</td> <td valign="bottom">  </td> <td valign="bottom">    none</td> </tr> <tr> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom">    72%</td> <td valign="bottom">  </td> <td valign="bottom">    72%</td> </tr> </table> </div> 72000 Later of (i) the expiration of the last to expire patent right related to such product candidate that was transferred in the Transaction and (ii) ten years after the first commercial sale of such product candidate. 13000 1.00 P10Y 8000 4091117 P7Y <div> Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has experienced negative cash flows from operations since inception and has an accumulated deficit of approximately $135 million. The Company has funded its activities to date almost exclusively from equity financings.   The Company plans to fund its development activities as cash resources allow. However, the company is dependent on additional equity financing and/or the signing of collaboration/partnership arrangements to supply cash for future development. The Company cannot be certain that such funding will be available on acceptable terms or available at all. To the extent that the Company raises additional funds by issuing equity securities, its stockholders may experience significant dilution. If the Company is unable to raise funds when required or on acceptable terms, it may have to delay, scale back, or discontinue the development and/or commercialization of one or more product candidates, or relinquish or otherwise dispose of rights to technologies, product candidates, or products that it would otherwise seek to develop or commercialize itself and possibly cease operations. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company’s research and development will be successfully completed or that any product will be approved or commercially viable. The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with Food and Drug Administration (“FDA”) and other governmental regulations and approval requirements. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements were prepared under the assumption that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of that uncertainty. Although the Company has sources of liquidity, as described above, the Company anticipates that further equity financings, and/or asset sales and license agreements will be necessary to continue to fund operations in the future. </div>

2950

-890000

808000 0 784000 61000 831000 1400000 0.142 1900000 1395900

500000

988300

251200

P5Y6M

P3Y

P6Y3M

P7Y

P20Y

0.02

1.00

0.50

0.03

P3Y1M6D

20520

0.06 0.01 0.02 0.03 0.04 675000 33690 P2Y7M6D

89125

0.72

P1Y3M18D

-89125

0.0023

<div> The following is a reconciliation of the derivative liability related to these warrants for the years ended September 30, 2012 and 2011:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,408,522</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,501,289</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">907,233</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Receipt of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(281,038</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net settlements </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">626,195</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

1.00

-281038

P3Y2M12D

0.0031

<div> The assumptions used in valuing the derivative liability as of September 30, 2012 and 2011 were as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2012 </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2011 </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk free interest rate </td> <td valign="bottom">  </td> <td valign="bottom">    0.31%  </td> <td valign="bottom">  </td> <td valign="bottom">    0.9%</td> </tr> <tr> <td valign="top"> Expected life </td> <td valign="bottom">  </td> <td valign="bottom">    3.2 Years  </td> <td valign="bottom">  </td> <td valign="bottom">    4.2 Years</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom">    none</td> <td valign="bottom">  </td> <td valign="bottom">    none</td> </tr> <tr> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom">    100%  </td> <td valign="bottom">  </td> <td valign="bottom">    100%</td> </tr> </table> </div>

<div> The following is a reconciliation of the derivative liability related to these exchange rights for the years ended September 30, 2012 and 2011:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="87%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Value at September 30, 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Issuance of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">100,650</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(69,758</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">30,892</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Issuance of instruments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Change in value </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(20,520</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net settlements </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Value at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">10,372</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

1.00

-20520

P5Y3M18D

0.0062

<div> The assumptions used in valuing the derivative liability as of September 30, 2012 and 2011 were as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> <td valign="bottom" width="3%"></td> <td width="15%"></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2012 </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="center"> September 30, 2011 </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk free interest rate </td> <td valign="bottom">  </td> <td valign="bottom">    0.62%</td> <td valign="bottom">  </td> <td valign="bottom">    1.3%</td> </tr> <tr> <td valign="top"> Expected life </td> <td valign="bottom">  </td> <td valign="bottom">    5.3 Years</td> <td valign="bottom">  </td> <td valign="bottom">    6.3 Years</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom">    none</td> <td valign="bottom">  </td> <td valign="bottom">    none</td> </tr> <tr> <td valign="top"> Volatility </td> <td valign="bottom">  </td> <td valign="bottom">    100%</td> <td valign="bottom">  </td> <td valign="bottom">    100%</td> </tr> </table> </div>

4583

131

15511

275782

276

1000000

1217159

9332

97831

100000

1000

83211

138158

1382

675000

6750

68926

689

2260869

2261

-21125928

-984795

8000

-1015

-1

1015

23788

1241404

50390

-275

6138498

499904

399000

499918

523618

2241000

-689

1014999

5809979

-100000

-16000

1015

2014-01-17

January 17, 2013 2012-01-17

P4Y

22000

386456

1576106 901702 21000

<div> The following table summarizes the estimated fair values at the date of acquisition:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">29,332</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> In-process R&D </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,172,387</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(113,033</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,088,686</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

2172387 315467 <div> The purchase consideration was comprised solely of shares of Arrowhead Common Stock issued to the former shareholders of Alvos Therapeutics, Inc.   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Shares issued </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">315,457</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Price per share </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">6.34</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Share consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,000,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">88,686</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,088,686</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

230000

1174935

<div> The following table summarizes the estimated fair values at the date of acquisition:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current assets </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">432,709</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Property and equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,215,206</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Intangible assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,174,935</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Other noncurrent assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,264</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Current liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(414,122</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Noncurrent liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,570,072</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Gain on purchase </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,576,106</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,268,814</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> The purchase consideration was composed of the following:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="85%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Promissory note due Roche </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Contingent consideration </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">84,935</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Shares issued to Roche </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,133,879</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total purchase consideration </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,268,814</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

6147830

500002

400000

500001

425000

2247750

8000

1015000

5796240

0000879407 arwr:IssuedAtTwoDollarsAndSeventySixCentsPerShareMember 2011-10-01 2012-09-30 0000879407 arwr:PreferredStockIssuedAtThousandDollarsPerShareMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedToCalandoStockholdersInExchangeForCalandoSSharesMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndSeventyCentsPerShareMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtSixDollarsAndTwentyThreeCentsPerShareMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtFourDollarsPerShareMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtFiveDollarsAndElevenCentsPerShareMember 2011-10-01 2012-09-30 0000879407 us-gaap:EquityIssuedInBusinessCombinationMember 2011-10-01 2012-09-30 0000879407 arwr:RocheMadisonIncMember 2011-10-01 2012-09-30 0000879407 arwr:RocheMadisonMember 2011-10-01 2012-09-30 0000879407 arwr:AlvosTherapeuticsMember 2011-10-01 2012-09-30 0000879407 arwr:RocheMember 2011-10-01 2012-09-30 0000879407 us-gaap:LicensingAgreementsMember 2011-10-01 2012-09-30 0000879407 arwr:ConvertibleBondsMember 2011-10-01 2012-09-30 0000879407 us-gaap:SeriesAPreferredStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtTwoDollarsAndSeventySixCentsPerShareMemberarwr:SubscriptionsReceivableMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMemberarwr:SubscriptionsReceivableMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtTwoDollarsAndSeventySixCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:PreferredStockIssuedAtThousandDollarsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedUnderCommittedCapitalAgreementMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndSeventyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtSixDollarsAndTwentyThreeCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtFourDollarsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtFiveDollarsAndElevenCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 us-gaap:EquityIssuedInBusinessCombinationMemberus-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2011-10-01 2012-09-30 0000879407 arwr:PreferredStockIssuedAtThousandDollarsPerShareMemberus-gaap:PreferredStockMember 2011-10-01 2012-09-30 0000879407 us-gaap:PreferredStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedToCalandoStockholdersInExchangeForCalandoSSharesMemberus-gaap:NoncontrollingInterestMember 2011-10-01 2012-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2011-10-01 2012-09-30 0000879407 us-gaap:RetainedEarningsMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtTwoDollarsAndSeventySixCentsPerShareMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedUnderCommittedCapitalAgreementMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndSeventyCentsPerShareMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtSixDollarsAndTwentyThreeCentsPerShareMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtFourDollarsPerShareMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtFiveDollarsAndElevenCentsPerShareMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 us-gaap:EquityIssuedInBusinessCombinationMemberus-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 us-gaap:CommonStockMemberus-gaap:ScenarioForecastMember 2011-10-01 2012-09-30 0000879407 us-gaap:CommonStockMember 2011-10-01 2012-09-30 0000879407 arwr:ExchangeRightsMember 2011-10-01 2012-09-30 0000879407 us-gaap:WarrantMember 2011-10-01 2012-09-30 0000879407 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2011-10-01 2012-09-30 0000879407 arwr:UnidymIncMember 2011-10-01 2012-09-30 0000879407 arwr:CalandoPharmaceuticalsIncMember 2011-10-01 2012-09-30 0000879407 arwr:AblarisTherapeuticsMember 2011-10-01 2012-09-30 0000879407 arwr:ArrowheadMember 2011-10-01 2012-09-30 0000879407 arwr:EmployeeContributionsUpToThreePercentMember 2011-10-01 2012-09-30 0000879407 arwr:FiftyPercentageOfMatchingContributionMember 2011-10-01 2012-09-30 0000879407 arwr:DiscretionaryContributionsMember 2011-10-01 2012-09-30 0000879407 arwr:EmployeeContributionUpToFirstTwoPercentageMember 2011-10-01 2012-09-30 0000879407 us-gaap:PatentsMemberus-gaap:MaximumMember 2011-10-01 2012-09-30 0000879407 us-gaap:MaximumMember 2011-10-01 2012-09-30 0000879407 us-gaap:PatentsMemberus-gaap:MinimumMember 2011-10-01 2012-09-30 0000879407 us-gaap:MinimumMember 2011-10-01 2012-09-30 0000879407 arwr:TwoThousandsFourEquityIncentivePlanMember 2011-10-01 2012-09-30 0000879407 arwr:WisepowerMember 2011-10-01 2012-09-30 0000879407 arwr:NanotopeMember 2011-10-01 2012-09-30 0000879407 arwr:CalandoMemberus-gaap:SeriesAPreferredStockMember 2011-10-01 2012-09-30 0000879407 2011-10-01 2012-09-30 0000879407 arwr:IssuedAtTwentySevenDollarsAndTwentyCentsPerShareToRiceUniversityMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndNinetyCentsPerShareToUnidymForAcquisitionOfNanoconductionMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndEightyCentsPerShareMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyNineDollarsAndFiftyCentsPerShareToPurchaseMasaEnergyLlcMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyEightDollarsAndThirtyCentsPerShareToPurchaseSharesOfUnidymIncMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtApproximatelyEighteenDollarPerShareNetMember 2007-10-01 2008-09-30 0000879407 arwr:ArrowheadsIncreaseInProportionateShareOfInsertTherapeuticsEquityMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentySevenDollarsAndTwentyCentsPerShareToRiceUniversityMemberus-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndNinetyCentsPerShareToUnidymForAcquisitionOfNanoconductionMemberus-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndEightyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyNineDollarsAndFiftyCentsPerShareToPurchaseMasaEnergyLlcMemberus-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyEightDollarsAndThirtyCentsPerShareToPurchaseSharesOfUnidymIncMemberus-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtApproximatelyEighteenDollarPerShareNetMemberus-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 arwr:ArrowheadsIncreaseInProportionateShareOfInsertTherapeuticsEquityMemberus-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2007-10-01 2008-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2007-10-01 2008-09-30 0000879407 us-gaap:RetainedEarningsMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentySevenDollarsAndTwentyCentsPerShareToRiceUniversityMemberus-gaap:CommonStockMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndNinetyCentsPerShareToUnidymForAcquisitionOfNanoconductionMemberus-gaap:CommonStockMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndEightyCentsPerShareMemberus-gaap:CommonStockMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyNineDollarsAndFiftyCentsPerShareToPurchaseMasaEnergyLlcMemberus-gaap:CommonStockMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtTwentyEightDollarsAndThirtyCentsPerShareToPurchaseSharesOfUnidymIncMemberus-gaap:CommonStockMember 2007-10-01 2008-09-30 0000879407 arwr:IssuedAtApproximatelyEighteenDollarPerShareNetMemberus-gaap:CommonStockMember 2007-10-01 2008-09-30 0000879407 us-gaap:CommonStockMember 2007-10-01 2008-09-30 0000879407 2007-10-01 2008-09-30 0000879407 arwr:StockIssuanceCostChargedToAdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForMarketableSecuritiesAtTenDollarPerUnitMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForCashAtFifteenDollarPerUnitMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedAsStockIssuanceCostAtFifteenDollarPerUnitMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedAsGiftForTenDollarAndNinetyCentsPerShareMember 2003-10-01 2004-09-30 0000879407 arwr:ExercisedAtTwoDollarPerShareMember 2003-10-01 2004-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMember 2003-10-01 2004-09-30 0000879407 us-gaap:EquityIssuedInBusinessCombinationMember 2003-10-01 2004-09-30 0000879407 arwr:StockIssuanceCostChargedToAdditionalPaidInCapitalMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForMarketableSecuritiesAtTenDollarPerUnitMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForCashAtFifteenDollarPerUnitMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedAsStockIssuanceCostAtFifteenDollarPerUnitMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedAsGiftForTenDollarAndNinetyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:ExercisedAtTwoDollarPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 us-gaap:EquityIssuedInBusinessCombinationMemberus-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2003-10-01 2004-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2003-10-01 2004-09-30 0000879407 us-gaap:RetainedEarningsMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForMarketableSecuritiesAtTenDollarPerUnitMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedForCashAtFifteenDollarPerUnitMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedAsStockIssuanceCostAtFifteenDollarPerUnitMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 arwr:IssuedAsGiftForTenDollarAndNinetyCentsPerShareMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 arwr:ExercisedAtTwoDollarPerShareMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 us-gaap:EquityIssuedInBusinessCombinationMemberus-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 us-gaap:CommonStockMember 2003-10-01 2004-09-30 0000879407 2003-10-01 2004-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMember 2010-10-01 2011-09-30 0000879407 arwr:IssuanceOfCommonStockForSubscriptionMemberarwr:SubscriptionsReceivableMember 2010-10-01 2011-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2010-10-01 2011-09-30 0000879407 arwr:IssuanceOfCommonStockForSubscriptionMemberus-gaap:AdditionalPaidInCapitalMember 2010-10-01 2011-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2010-10-01 2011-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2010-10-01 2011-09-30 0000879407 us-gaap:RetainedEarningsMember 2010-10-01 2011-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMemberus-gaap:CommonStockMember 2010-10-01 2011-09-30 0000879407 us-gaap:CommonStockMember 2010-10-01 2011-09-30 0000879407 arwr:ExchangeRightsMember 2010-10-01 2011-09-30 0000879407 us-gaap:WarrantMember 2010-10-01 2011-09-30 0000879407 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2010-10-01 2011-09-30 0000879407 arwr:CalandoPharmaceuticalsIncMember 2010-10-01 2011-09-30 0000879407 us-gaap:MaximumMember 2010-10-01 2011-09-30 0000879407 us-gaap:MinimumMember 2010-10-01 2011-09-30 0000879407 arwr:NanotopeMember 2010-10-01 2011-09-30 0000879407 arwr:AblarisTherapeuticsMember 2010-10-01 2011-09-30 0000879407 2010-10-01 2011-09-30 0000879407 arwr:IssuedToUnidymStockholdersInExchangeForUnidymsSharesMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedAtThirteenDollarsAndTwelveCentsPerShareMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedAtSixDollarsAndThirtyCentsPerShareMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedToUnidymStockholdersInExchangeForUnidymsSharesMemberarwr:SubscriptionsReceivableMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedToUnidymStockholdersInExchangeForUnidymsSharesMemberus-gaap:AdditionalPaidInCapitalMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedToCalandoStockholdersInExchangeForCalandoSSharesMemberus-gaap:AdditionalPaidInCapitalMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedAtThirteenDollarsAndTwelveCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedAtSixDollarsAndThirtyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2009-10-01 2010-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedToUnidymStockholdersInExchangeForUnidymsSharesMemberus-gaap:NoncontrollingInterestMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedToCalandoStockholdersInExchangeForCalandoSSharesMemberus-gaap:NoncontrollingInterestMember 2009-10-01 2010-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2009-10-01 2010-09-30 0000879407 us-gaap:RetainedEarningsMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedToUnidymStockholdersInExchangeForUnidymsSharesMemberus-gaap:CommonStockMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedToCalandoStockholdersInExchangeForCalandoSSharesMemberus-gaap:CommonStockMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedAtThirteenDollarsAndTwelveCentsPerShareMemberus-gaap:CommonStockMember 2009-10-01 2010-09-30 0000879407 arwr:IssuedAtSixDollarsAndThirtyCentsPerShareMemberus-gaap:CommonStockMember 2009-10-01 2010-09-30 0000879407 us-gaap:CommonStockMember 2009-10-01 2010-09-30 0000879407 arwr:CalandoPharmaceuticalsIncMember 2009-10-01 2010-09-30 0000879407 2009-10-01 2010-09-30 0000879407 arwr:IssuedAtThreeDollarsPerShareMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndTwentyCentsPerShareToTelVenturesInExchangeForUnidymSSharesMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndFiftyCentsPerShareToUnidymStockholderInExchangeForUnidymSSharesMember 2008-10-01 2009-09-30 0000879407 arwr:ArrowheadsIncreaseInProportionateShareOfCalandosEquityMember 2008-10-01 2009-09-30 0000879407 arwr:SeriesDPreferredStockIssuedForSubscriptionInUnidymMemberarwr:SubscriptionsReceivableMember 2008-10-01 2009-09-30 0000879407 arwr:SeriesDPreferredStockIssuedForSubscriptionInUnidymMemberus-gaap:AdditionalPaidInCapitalMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtThreeDollarsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndTwentyCentsPerShareToTelVenturesInExchangeForUnidymSSharesMemberus-gaap:AdditionalPaidInCapitalMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndFiftyCentsPerShareToUnidymStockholderInExchangeForUnidymSSharesMemberus-gaap:AdditionalPaidInCapitalMember 2008-10-01 2009-09-30 0000879407 arwr:ArrowheadsIncreaseInProportionateShareOfCalandosEquityMemberus-gaap:AdditionalPaidInCapitalMember 2008-10-01 2009-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2008-10-01 2009-09-30 0000879407 us-gaap:RetainedEarningsMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtThreeDollarsPerShareMemberus-gaap:CommonStockMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndTwentyCentsPerShareToTelVenturesInExchangeForUnidymSSharesMemberus-gaap:CommonStockMember 2008-10-01 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndFiftyCentsPerShareToUnidymStockholderInExchangeForUnidymSSharesMemberus-gaap:CommonStockMember 2008-10-01 2009-09-30 0000879407 2008-10-01 2009-09-30 0000879407 arwr:IssuedForPurchaseOfCarbonNanotechnologiesIncAtThirtySevenDollarsAndSeventyCentsPerShareMember 2006-10-01 2007-09-30 0000879407 arwr:IssuedAtFiftySevenDollarsAndEightyCentsPerShareMember 2006-10-01 2007-09-30 0000879407 arwr:IssuedForPurchaseOfCarbonNanotechnologiesIncAtThirtySevenDollarsAndSeventyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2006-10-01 2007-09-30 0000879407 arwr:IssuedAtFiftySevenDollarsAndEightyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2006-10-01 2007-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2006-10-01 2007-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2006-10-01 2007-09-30 0000879407 us-gaap:RetainedEarningsMember 2006-10-01 2007-09-30 0000879407 arwr:IssuedForPurchaseOfCarbonNanotechnologiesIncAtThirtySevenDollarsAndSeventyCentsPerShareMemberus-gaap:CommonStockMember 2006-10-01 2007-09-30 0000879407 arwr:IssuedAtFiftySevenDollarsAndEightyCentsPerShareMemberus-gaap:CommonStockMember 2006-10-01 2007-09-30 0000879407 us-gaap:CommonStockMember 2006-10-01 2007-09-30 0000879407 2006-10-01 2007-09-30 0000879407 arwr:IssuedToPurchaseCalandoPharmaceuticalsIncAtFiftyOneDollarsAndSeventyCentsPerShareMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtThirtyFiveDollarsPerShareMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtThirtyEightDollarsAndFortyCentsPerShareMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtFortyEightDollarsAndEightyCentsPerShareMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtFiftyNineDollarsAndTenCentsPerShareMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedToPurchaseCalandoPharmaceuticalsIncAtFiftyOneDollarsAndSeventyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtThirtyFiveDollarsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtThirtyEightDollarsAndFortyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtFortyEightDollarsAndEightyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtFiftyNineDollarsAndTenCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2005-10-01 2006-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2005-10-01 2006-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2005-10-01 2006-09-30 0000879407 us-gaap:RetainedEarningsMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedToPurchaseCalandoPharmaceuticalsIncAtFiftyOneDollarsAndSeventyCentsPerShareMemberus-gaap:CommonStockMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtThirtyFiveDollarsPerShareMemberus-gaap:CommonStockMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtThirtyEightDollarsAndFortyCentsPerShareMemberus-gaap:CommonStockMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtFortyEightDollarsAndEightyCentsPerShareMemberus-gaap:CommonStockMember 2005-10-01 2006-09-30 0000879407 arwr:IssuedAtFiftyNineDollarsAndTenCentsPerShareMemberus-gaap:CommonStockMember 2005-10-01 2006-09-30 0000879407 us-gaap:CommonStockMember 2005-10-01 2006-09-30 0000879407 2005-10-01 2006-09-30 0000879407 arwr:IssuedToPurchaseInsertTherapeuticsShareAtThirtyNineDollarsAndEightyCentsPerShareMember 2004-10-01 2005-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMember 2004-10-01 2005-09-30 0000879407 arwr:ExercisedAtFifteenDollarPerShareMember 2004-10-01 2005-09-30 0000879407 arwr:IssuedToPurchaseInsertTherapeuticsShareAtThirtyNineDollarsAndEightyCentsPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2004-10-01 2005-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2004-10-01 2005-09-30 0000879407 arwr:ExercisedAtFifteenDollarPerShareMemberus-gaap:AdditionalPaidInCapitalMember 2004-10-01 2005-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2004-10-01 2005-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2004-10-01 2005-09-30 0000879407 us-gaap:RetainedEarningsMember 2004-10-01 2005-09-30 0000879407 arwr:IssuedToPurchaseInsertTherapeuticsShareAtThirtyNineDollarsAndEightyCentsPerShareMemberus-gaap:CommonStockMember 2004-10-01 2005-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMemberus-gaap:CommonStockMember 2004-10-01 2005-09-30 0000879407 arwr:ExercisedAtFifteenDollarPerShareMemberus-gaap:CommonStockMember 2004-10-01 2005-09-30 0000879407 us-gaap:CommonStockMember 2004-10-01 2005-09-30 0000879407 2004-10-01 2005-09-30 0000879407 arwr:StockIssuanceCostChargedToAdditionalPaidInCapitalMember 2002-10-01 2003-09-30 0000879407 arwr:IssuedForCashAtZeroPointZeroOneDollarsPerUnitMember 2002-10-01 2003-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMember 2002-10-01 2003-09-30 0000879407 arwr:StockIssuanceCostChargedToAdditionalPaidInCapitalMemberus-gaap:AdditionalPaidInCapitalMember 2002-10-01 2003-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMemberus-gaap:AdditionalPaidInCapitalMember 2002-10-01 2003-09-30 0000879407 us-gaap:RetainedEarningsMember 2002-10-01 2003-09-30 0000879407 arwr:IssuedForCashAtZeroPointZeroOneDollarsPerUnitMemberus-gaap:CommonStockMember 2002-10-01 2003-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMemberus-gaap:CommonStockMember 2002-10-01 2003-09-30 0000879407 2002-10-01 2003-09-30 0000879407 arwr:AlvosTherapeuticsMember 2012-03-01 2012-04-05 0000879407 2003-05-01 2012-09-30 0000879407 us-gaap:SubsequentEventMember 2012-12-01 2012-12-31 0000879407 2009-12-01 2009-12-31 0000879407 2012-08-01 2012-08-31 0000879407 2012-07-11 2012-08-10 0000879407 us-gaap:SeriesAPreferredStockMember 2011-10-01 2011-10-31 0000879407 us-gaap:SeriesAPreferredStockMemberarwr:SubscriptionAgreementMember 2011-10-01 2011-10-31 0000879407 arwr:SubscriptionAgreementMember 2011-10-01 2011-10-31 0000879407 us-gaap:CommonStockMember 2011-10-01 2011-10-31 0000879407 arwr:UnidymIncMember 2011-01-01 2011-01-31 0000879407 2011-01-01 2011-01-31 0000879407 2010-08-01 2010-08-31 0000879407 us-gaap:CommonStockMember 2011-09-01 2011-09-30 0000879407 us-gaap:SeriesAPreferredStockMember 2012-02-01 2012-02-29 0000879407 arwr:RocheMember 2011-10-22 2011-11-17 0000879407 arwr:RocheMember 2011-10-01 2011-10-21 0000879407 arwr:IssuedAtTwoDollarsAndSeventySixCentsPerShareMember 2012-09-30 0000879407 arwr:PreferredStockIssuedAtThousandDollarsPerShareMember 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndSeventyCentsPerShareMember 2012-09-30 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMember 2012-09-30 0000879407 arwr:IssuedAtSixDollarsAndTwentyThreeCentsPerShareMember 2012-09-30 0000879407 arwr:IssuedAtFourDollarsPerShareMember 2012-09-30 0000879407 arwr:IssuedAtFiveDollarsAndElevenCentsPerShareMember 2012-09-30 0000879407 arwr:RocheMadisonMember 2012-09-30 0000879407 arwr:AlvosTherapeuticsMember 2012-09-30 0000879407 arwr:RocheMember 2012-09-30 0000879407 us-gaap:FairValueMeasurementsRecurringMember 2012-09-30 0000879407 arwr:NanotopeMember 2012-09-30 0000879407 arwr:WarrantSevenMember 2012-09-30 0000879407 arwr:WarrantThreeMember 2012-09-30 0000879407 arwr:WarrantSixMember 2012-09-30 0000879407 arwr:WarrantFourMember 2012-09-30 0000879407 arwr:WarrantFiveMember 2012-09-30 0000879407 arwr:WarrantTwoMember 2012-09-30 0000879407 arwr:WarrantOneMember 2012-09-30 0000879407 arwr:SubscriptionsReceivableMember 2012-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2012-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2012-09-30 0000879407 us-gaap:RetainedEarningsMember 2012-09-30 0000879407 us-gaap:CommonStockMember 2012-09-30 0000879407 arwr:ExchangeRightsMember 2012-09-30 0000879407 us-gaap:WarrantMember 2012-09-30 0000879407 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2012-09-30 0000879407 arwr:UnidymIncMember 2012-09-30 0000879407 arwr:CalandoPharmaceuticalsIncMember 2012-09-30 0000879407 arwr:ArrowheadMember 2012-09-30 0000879407 us-gaap:LimitedLiabilityCompanyMember 2012-09-30 0000879407 us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember 2012-09-30 0000879407 us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember 2012-09-30 0000879407 us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember 2012-09-30 0000879407 arwr:TwoThousandsStockOptionPlanMember 2012-09-30 0000879407 arwr:TwoThousandsFourEquityIncentivePlanMember 2012-09-30 0000879407 arwr:TwoThousandStockOptionPlanMember 2012-09-30 0000879407 arwr:TwoThousandFourEquityIncentivePlanMember 2012-09-30 0000879407 arwr:NanotopeMember 2012-09-30 0000879407 arwr:LeonardoBiosystemsIncMember 2012-09-30 0000879407 arwr:CalandoPharmaceuticalsIncMember 2012-09-30 0000879407 arwr:AblarisTherapeuticsMember 2012-09-30 0000879407 2012-09-30 0000879407 us-gaap:SeriesAPreferredStockMember 2011-10-24 0000879407 arwr:RocheMember 2011-10-21 0000879407 2011-10-21 0000879407 us-gaap:CommonStockMember 2011-10-04 0000879407 arwr:IssuedAtThreeDollarsAndEightyCentsPerShareMember 2011-09-30 0000879407 us-gaap:FairValueMeasurementsRecurringMember 2011-09-30 0000879407 arwr:SubscriptionsReceivableMember 2011-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2011-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2011-09-30 0000879407 us-gaap:RetainedEarningsMember 2011-09-30 0000879407 us-gaap:CommonStockMember 2011-09-30 0000879407 arwr:ExchangeRightsMember 2011-09-30 0000879407 us-gaap:WarrantMember 2011-09-30 0000879407 us-gaap:DerivativeFinancialInstrumentsAssetsMember 2011-09-30 0000879407 arwr:UnidymIncMember 2011-09-30 0000879407 us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember 2011-09-30 0000879407 us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember 2011-09-30 0000879407 us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember 2011-09-30 0000879407 arwr:WisepowerMember 2011-09-30 0000879407 arwr:NanotopeMember 2011-09-30 0000879407 arwr:AblarisTherapeuticsMember 2011-09-30 0000879407 2011-09-30 0000879407 arwr:IssuedAtThirteenDollarsAndTwelveCentsPerShareMember 2010-09-30 0000879407 arwr:IssuedAtSixDollarsAndThirtyCentsPerShareMember 2010-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2010-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2010-09-30 0000879407 us-gaap:RetainedEarningsMember 2010-09-30 0000879407 us-gaap:CommonStockMember 2010-09-30 0000879407 us-gaap:WarrantMember 2010-09-30 0000879407 arwr:CalandoPharmaceuticalsIncMemberus-gaap:SeriesAPreferredStockMember 2010-09-30 0000879407 2010-09-30 0000879407 arwr:IssuedAtThreeDollarsPerShareMember 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndTwentyCentsPerShareToTelVenturesInExchangeForUnidymSSharesMember 2009-09-30 0000879407 arwr:IssuedAtFiveDollarsAndFiftyCentsPerShareToUnidymStockholderInExchangeForUnidymSSharesMember 2009-09-30 0000879407 arwr:SubscriptionsReceivableMember 2009-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2009-09-30 0000879407 us-gaap:RetainedEarningsMember 2009-09-30 0000879407 us-gaap:CommonStockMember 2009-09-30 0000879407 arwr:UnidymIncMemberus-gaap:SeriesDPreferredStockMember 2009-09-30 0000879407 2009-09-30 0000879407 arwr:UnidymIncMemberus-gaap:SeriesAPreferredStockMember 2009-09-28 0000879407 arwr:UnidymIncMemberus-gaap:SeriesCPreferredStockMember 2009-09-28 0000879407 arwr:UnidymIncMember 2009-09-28 0000879407 arwr:UnidymIncMemberus-gaap:SeriesAPreferredStockMember 2009-09-22 0000879407 arwr:IssuedAtTwentySevenDollarsAndTwentyCentsPerShareToRiceUniversityMember 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndNinetyCentsPerShareToUnidymForAcquisitionOfNanoconductionMember 2008-09-30 0000879407 arwr:IssuedAtTwentyOneDollarsAndEightyCentsPerShareMember 2008-09-30 0000879407 arwr:IssuedAtTwentyNineDollarsAndFiftyCentsPerShareToPurchaseMasaEnergyLlcMember 2008-09-30 0000879407 arwr:IssuedAtTwentyEightDollarsAndThirtyCentsPerShareToPurchaseSharesOfUnidymIncMember 2008-09-30 0000879407 arwr:IssuedAtApproximatelyEighteenDollarPerShareNetMember 2008-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2008-09-30 0000879407 us-gaap:RetainedEarningsMember 2008-09-30 0000879407 us-gaap:CommonStockMember 2008-09-30 0000879407 2008-09-30 0000879407 arwr:IssuedForPurchaseOfCarbonNanotechnologiesIncAtThirtySevenDollarsAndSeventyCentsPerShareMember 2007-09-30 0000879407 arwr:IssuedAtFiftySevenDollarsAndEightyCentsPerShareMember 2007-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2007-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2007-09-30 0000879407 us-gaap:RetainedEarningsMember 2007-09-30 0000879407 us-gaap:CommonStockMember 2007-09-30 0000879407 2007-09-30 0000879407 arwr:IssuedToPurchaseCalandoPharmaceuticalsIncAtFiftyOneDollarsAndSeventyCentsPerShareMember 2006-09-30 0000879407 arwr:IssuedAtThirtyFiveDollarsPerShareMember 2006-09-30 0000879407 arwr:IssuedAtThirtyEightDollarsAndFortyCentsPerShareMember 2006-09-30 0000879407 arwr:IssuedAtFortyEightDollarsAndEightyCentsPerShareMember 2006-09-30 0000879407 arwr:IssuedAtFiftyNineDollarsAndTenCentsPerShareMember 2006-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2006-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2006-09-30 0000879407 us-gaap:RetainedEarningsMember 2006-09-30 0000879407 us-gaap:CommonStockMember 2006-09-30 0000879407 2006-09-30 0000879407 arwr:IssuedToPurchaseInsertTherapeuticsShareAtThirtyNineDollarsAndEightyCentsPerShareMember 2005-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMember 2005-09-30 0000879407 arwr:ExercisedAtFifteenDollarPerShareMember 2005-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2005-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2005-09-30 0000879407 us-gaap:RetainedEarningsMember 2005-09-30 0000879407 us-gaap:CommonStockMember 2005-09-30 0000879407 2005-09-30 0000879407 arwr:IssuedForMarketableSecuritiesAtTenDollarPerUnitMember 2004-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMember 2004-09-30 0000879407 arwr:IssuedForCashAtFifteenDollarPerUnitMember 2004-09-30 0000879407 arwr:IssuedAsStockIssuanceCostAtFifteenDollarPerUnitMember 2004-09-30 0000879407 arwr:IssuedAsGiftForTenDollarAndNinetyCentsPerShareMember 2004-09-30 0000879407 arwr:ExercisedAtTwoDollarPerShareMember 2004-09-30 0000879407 arwr:ExercisedAtTenDollarPerShareMember 2004-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2004-09-30 0000879407 us-gaap:NoncontrollingInterestMember 2004-09-30 0000879407 us-gaap:RetainedEarningsMember 2004-09-30 0000879407 us-gaap:CommonStockMember 2004-09-30 0000879407 2004-09-30 0000879407 arwr:IssuedForCashAtZeroPointZeroOneDollarsPerUnitMember 2003-09-30 0000879407 arwr:IssuedForCashAtTenDollarPerUnitMember 2003-09-30 0000879407 us-gaap:AdditionalPaidInCapitalMember 2003-09-30 0000879407 us-gaap:RetainedEarningsMember 2003-09-30 0000879407 us-gaap:CommonStockMember 2003-09-30 0000879407 2003-09-30 0000879407 2010-06-17 0000879407 arwr:UnidymIncMemberus-gaap:SeriesCPreferredStockMember 2009-06-25 0000879407 arwr:CalandoPharmaceuticalsIncMember 2009-06-23 0000879407 arwr:UnidymIncMemberus-gaap:SeriesAPreferredStockMember 2009-06-11 0000879407 2012-03-31 0000879407 2010-03-31 0000879407 arwr:CalandoPharmaceuticalsIncMember 2010-02-28 0000879407 arwr:MsEnergyLlcMember 2008-04-29 0000879407 2008-04-23 0000879407 arwr:CalandoPharmaceuticalsIncMember 2008-04-17 0000879407 arwr:CarbonNanotechnologiesIncMemberus-gaap:SeriesEPreferredStockMember 2007-04-20 0000879407 arwr:CalandoPharmaceuticalsIncMember 2006-03-31 0000879407 arwr:InsertTherapeuticsIncMember 2005-03-23 0000879407 us-gaap:SubsequentEventMember 2012-12-31 0000879407 2012-12-21 0000879407 arwr:UnidymIncMemberus-gaap:SeriesCPreferredStockMember 2009-11-30 0000879407 arwr:CalandoPharmaceuticalsIncMember 2009-11-30 0000879407 2012-08-10 0000879407 arwr:ConvertibleBondsMember 2011-01-31 0000879407 arwr:PreferredClassBAndCMember 2011-01-31 0000879407 arwr:UnidymIncMember 2011-01-31 0000879407 arwr:CalandoPharmaceuticalsIncMember 2011-01-31 0000879407 2011-01-31 0000879407 arwr:CalandoPharmaceuticalsIncMember 2008-11-26 0000879407 2008-11-26 0000879407 arwr:NanoconductionIncMember 2008-08-08 shares iso4217:USD pure iso4217:USD shares iso4217:USD arwr:Warrant arwr:Employees