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Investment In Subsidiaries
 12 Months Ended
Sep. 30, 2011
Investment In Subsidiaries [Abstract]  
Investment In Subsidiaries

NOTE 2. INVESTMENT IN SUBSIDIARIES

Calando Pharmaceuticals, Inc. (formerly known as Insert Therapeutics, Inc.)

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. Subsequently, most of the Notes were converted to equity as described below. At September 30, 2011 and 2010, one Note for $500,000 remained outstanding. The Notes had a 10% interest rate and matured on November 26, 2010. The $500,000 remaining Note is convertible into Calando common stock and can be redeemed for two times their face value plus interest in the event of a sale of Calando or at maturity. To facilitate this investment in Calando, Arrowhead subordinated a series of 6% simple interest loans and advances totaling approximately $5.3 million of principal plus interest.

Effective June 23, 2009, to facilitate licensing transactions with a third party, holders (including Arrowhead) of an aggregate of $2.9 million of the Notes, including accrued but unpaid interest, converted the principal and accrued interest into newly authorized Calando Series A Preferred Stock. The non-voting Series A Preferred Stock has a liquidation preference of 2.5 times the Series A Original Issue Price of $1,000 per share and is convertible into common stock at a conversion price of $0.576647 per share. Arrowhead converted all of its Notes representing a principal balance of $800,000, plus accrued but unpaid interest, into 829 shares of Series A Preferred Stock. One third-party Note for $500,000 plus interest remains outstanding.

As of September 30, 2011, Arrowhead had a 10% simple-interest working promissory note and advances outstanding to Calando totaling $907,501, which are payable upon demand.

 

In fiscal 2010, Arrowhead issued 122,000 shares of its Common Stock in exchange for 3,050,000 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 660,000 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, 2011, Arrowhead owned 79% of the outstanding shares of Calando and 74% on a fully diluted basis.

Ablaris Therapeutics, Inc.

Ablaris was formed and began operations in the first quarter of fiscal 2011 through the licensing 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 Series A Preferred stock.

As of September 30, 2011, Arrowhead owned 64% of the outstanding shares of Ablaris and 64% on a fully diluted basis.

Nanotope, Inc.

Nanotope is developing advanced nanomaterials for the treatment of spinal cord injuries, cartilage regeneration and wound healing. In April 2008, Arrowhead acquired a 5.8% ownership interest in Nanotope. In July and September 2008, Arrowhead acquired 1,801,802 shares of Series B Preferred Stock of Nanotope for two payments of $1 million each, increasing Arrowhead's ownership interest in Nanotope to approximately 23%. Since inception, Nanotope's revenue has been negligible. Operating expenses for the twelve months ended September 30, 2011 were approximately $1,161,000. Nanotope's net loss for the twelve months ended September 30, 2011 was $709,000. Arrowhead accounts for its investment in Nanotope using the equity method of accounting. As of September 30, 2011, Nanotope had indebtedness to Arrowhead in the amount of $1,213,000, included in other receivables, which is expected to be repaid or converted to equity.

Summarized financial information for Nanotope, Inc. is as follows:

 

     September 30, 2011     September 30, 2010  

Current assets

    $ 21,000      $ 16,000   

Non-current assets

      85,000        130,000   

Liabilities

      1,255,000        585,000   

Equity

      (1,149,000 )      (439,000 ) 
     For the year ended
September 30, 2011		     For the year ended
September 30, 2010		  

Revenue

    $ 515,000      $ 9,000   

Operating expenses

      1,161,000        975,000   

Net Loss

    $ (709,000 )    $ (955,000 ) 
     For the year ended
September 30, 2011		     For the year ended
September 30, 2010		  

Cash flows used in operating activities

    $ (705,000 )    $ (329,000 ) 

Cash flows used in investing activities

      (31,000 )      (7,000 ) 

Cash flows provided by financing activities

      746,000        —     

Leonardo Biosystems, Inc.

Leonardo is developing a drug-delivery platform technology based on novel methods of designing spheroid porous silicon microparticles that selectively accumulate in tumor vasculature. In April 2008, Arrowhead acquired a 6.13% ownership interest in Leonardo. Arrowhead accounts for its investment in Leonardo using the cost method of accounting. As of September 30, 2011, Leonardo had indebtedness to Arrowhead in the amount of $396,000, included in other receivables, which is expected to be repaid or converted to equity. As of September 30, 2011, Arrowhead's ownership interest in Leonardo was 5%.