The President and Chief Executive Officer of Arrowhead Research Corporation, Christopher Anzalone issued the following letter to the Company's shareholders, � It has now been almost three months since our last earnings call, and I wanted to provide our shareholders with a broad strategic and operational update. Following this letter will be individual updates of specific subsidiaries over the next several weeks. We are proud of what we have achieved, where our businesses are right now, and are optimistic about our near- and long-term prospects. I look forward to describing some of this optimism and providing some context to it. Calando Pharmaceuticals Inc. is our other lead subsidiary that we are focusing on for near-term value growth. Calando is a clinical stage drug delivery company that had developed two drug delivery platforms: one for delivering traditional small molecule drugs; and one for delivering siRNA, or short interfering RNA molecules. Running two clinical programs is an expensive endeavor, and given the extreme softness of the capital markets we determined that the best course of action was to focus our resources on a single program and partner the other. We chose to continue development of the siRNA delivery program and partner the small molecule delivery program along with its associated drug candidate IT-101. We have ceased all pipeline R&D activities and are allocating resources only to our remaining siRNA clinical program. We believe that focusing resources solely on the clinic is an extremely efficient use of capital and will enable us to move most rapidly and cost-effectively to an attractive partnership or sale, assuming continued positive clinical results. We believe that Calando was the first company to initiate a clinical trial using siRNA against cancer and the first to use a delivery vehicle for the systemic delivery of siRNA in humans. Because we are at the leading edge of a field of intense interest to large pharmaceutical companies, Calando has focused its resources on continuing its siRNA clinical program with the ultimate goal of selling or partnering the platform. We have some very exciting data from the clinical trial that support our confidence that CALAA-01 and the broader RONDEL platform have significant value and may be attractive acquisition targets. Nanotope, Inc. and Leonardo Biosystems are both minority Arrowhead holdings; however, we see compelling opportunities for both companies and intend to explore opportunities to increase our equity positions. With very little current investment, Arrowhead's downside exposure is limited to amounts already invested, but it has upside potential as the companies grow.�

On September 30, 2009, Thomas Haag resigned as chief patent officer and general counsel of Arrowhead Research Corp. in order to return to private practice. The company expects that Haag will provide counsel to the company through the future engagement of his law firm.

On September 15, 2009, Arrowhead Research Corporation received a staff deficiency letter from the NASDAQ Stock Market indicating that, based on the Company�s closing bid price for the last 30 consecutive business days, the Company does not comply with the minimum bid price of $1.00 per as set forth in NASDAQ Marketplace Rule 5550(a)(2). NASDAQ had previously implemented a temporary suspension of this listing requirement on October 16, 2008. The temporary suspension was lifted on July 31, 2009. During the period of the temporary suspension the Company was not considered to be out of compliance with this continued listing requirement. NASDAQ Marketplace Rule 5810(c)(3)(A) provides the Company with a 180 day grace period, until March 15, 2010 to regain compliance. If the Company does not regain compliance by the end of the 180-day grace period, the Company will be notified by NASDAQ that it has not regained compliance and the Company�s common stock will be subject to delisting. Under NASDAQ rules, the Company may be eligible for an additional grace period beyond the initial 180 days.