Arrowhead Announces $19.6 Million Investment by York Capital Management and Knott Partners

PASADENA, California – (BUSINESS WIRE) – Jan. 13, 2006 – Arrowhead Research Corporation, (NASDAQ: ARWR) a diversified nanotechnology company, today announced a definitive agreement to sell 5,590,000 shares of restricted common stock to York Capital Management and Knott Partners, LP. This infusion of capital is expected to accelerate Arrowhead's growth and strengthen its strategic position within the emerging field of nanotechnology.

"We think Arrowhead's innovative and scalable business model will position it well in this growth industry. We are delighted to partner with Bruce, Leon and the Arrowhead team, helping them to accelerate their plans for investment and growth," stated Alexander Klabin, Senior Vice President of York Capital. John Schneller of Knott Partners, an existing shareholder, added, "We are excited to increase our ownership position to approximately 12.50% from 9.50% in this promising emerging growth company."

"We are extremely pleased to partner with well-established institutions of this caliber," stated Leon Ekchian, President of Arrowhead. "This capital infusion enables Arrowhead to expand its existing subsidiaries and make additional strategic investments and acquisitions, as appropriate."

Under the terms of the deal, York will purchase 4,161,429 shares of restricted common stock and Knott will purchase 1,428,571 shares of restricted common stock at $3.50 per share. Additionally, York and Knott will receive, in the aggregate, warrants to purchase an additional 1,397,500 shares of restricted common stock at $5.04 per share. The agreement is subject to final approval of the listing of the shares by NASDAQ.

About Arrowhead Research Corporation

Arrowhead Research Corporation (www.arrowheadresearch.com) is a publicly-traded nanotechnology company commercializing new technologies in the areas of life sciences, electronics, and energy. Arrowhead is building value for shareholders through the progress of majority owned subsidiaries founded on nanotechnologies originally developed at universities. The company works closely with universities to source early stage deals and to generate rights to intellectual property covering promising new nanotechnologies. Currently, Arrowhead has four subsidiaries commercializing nanotech products and applications, including anti-cancer drugs, RNAi therapeutics, carbon-based electronics and compound semiconductor materials.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the recent economic slowdown affecting technology companies, the future success of our scientific studies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for our future products, legislative, regulatory and competitive developments and general economic conditions. Our Annual Report on Form 10-K and 10-K/A, recent and forthcoming Quarterly Reports on Form 10-Q and 10-Q/A, recent Current Reports on Forms 8-K and 8-K/A, our Registration Statement on Form S-3, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Contacts

Virginia Dadey; Vice President, Investor Relations
Telephone: 212.541.3707
Email: vdadey@arrowres.com