UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13G

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Rule 13d-1(b)

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Rule 13d-1(c)

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Rule 13d-1(d)

CUSIP No. 042797100

1.

Names of Reporting Persons.

David M. Knott

I.R.S. Identification Nos. of above persons (entities only)

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)

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(b)

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3.

SEC Use Only

4.

Citizenship or Place of Organization

United States of America

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power

3,803,481

6.

Shared Voting Power

200,500

7.

Sole Dispositive Power

4,049,581

8.

Shared Dispositive Power

53,300

9.

Aggregate Amount Beneficially Owned by Each Reporting Person

4,102,881

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o

11.

Percent of Class Represented by Amount in Row (9)

12.06%

12.

Type of Reporting Person (See Instructions)

IN

CUSIP No. 042797100

1.

Names of Reporting Persons.

Dorset Management Corporation

I.R.S. Identification Nos. of above persons (entities only)

11-2873658

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)

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(b)

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3.

SEC Use Only

4.

Citizenship or Place of Organization

New York

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power

3,803,481

6.

Shared Voting Power

200,500

7.

Sole Dispositive Power

4,049,581

8.

Shared Dispositive Power

53,300

9.

Aggregate Amount Beneficially Owned by Each Reporting Person

4,102,881

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o

11.

Percent of Class Represented by Amount in Row (9)

12.06%

12.

Type of Reporting Person (See Instructions)

CO

Item 1.

(a)

Name of Issuer

Arrowhead Research Corporation

(b)

Address of Issuer’s Principal Executive Offices

1118 East Green Street
Pasadena, California 91106

Item 2.

(a)

Name of Person(s) Filing

David M. Knott; Dorset Management Corporation

(b)

Address of Principal Business Office or, if none, Residence

485 Underhill Boulevard, Suite 205
Syosset, New York 11791

(c)

Citizenship

David M. Knott—United States of America
Dorset Management Corporation—New York

(d)

Title of Class of Securities

Common Stock, $0.001 par value

(e)

CUSIP Number

042797100

Item 3.

If this statement is filed pursuant to §§240.13d-1(b) or 240.13d-2(b) or (c), check whether the person filing is a:

(a)

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Broker or dealer registered under section 15 of the Act (15 U.S.C. 78o).

(b)

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Bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c).

(c)

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Insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c).

(d)

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Investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C 80a-8).

(e)

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An investment adviser in accordance with §240.13d-1(b)(1)(ii)(E);

(f)

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An employee benefit plan or endowment fund in accordance with §240.13d-1(b)(1)(ii)(F);

(g)

o

A parent holding company or control person in accordance with § 240.13d-1(b)(1)(ii)(G);

(h)

o

A savings associations as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);

(i)

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A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3);

(j)

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Group, in accordance with §240.13d-1(b)(1)(ii)(J).

See Row 12 of pages 2 and 3 (“Type of Reporting Person”) for the Reporting Persons.

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If this statement is filed pursuant to Rule 13d-1(c), check this box

Item 4.

Ownership

Provide the following information regarding the aggregate number and percentage of the class of securities of the issuer identified in Item 1.

(a)

Amount beneficially owned:

The responses of the Reporting Persons to Rows 5-9 on pages 2 and 3 are incorporated herein by reference.  In addition, the Reporting Persons hold warrants to purchase an aggregate of 357,143 shares of Common Stock.  The warrants are exercisable on July 25, 2006.

(b)

Percent of class:

The responses of the Reporting Persons to Row 11 on pages 2 and 3 are incorporated herein by reference.

(c)

Number of shares as to which the person has:

(i)

Sole power to vote or to direct the vote   

(ii)

Shared power to vote or to direct the vote    

(iii)

Sole power to dispose or to direct the disposition of   

(iv)

Shared power to dispose or to direct the disposition of   

The responses of the Reporting Persons to Rows 5-8 on pages 2 and 3 are incorporated herein by reference.

Item 5.

Ownership of Five Percent or Less of a Class

If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than five percent of the class of securities, check the following   o.

Not applicable

Item 6.

Ownership of More than Five Percent on Behalf of Another Person

Persons, other than the Reporting Persons hereunder, have the right to receive or the power to direct the receipt of dividends, or the proceeds from the sale, of the securities reported herein.

Item 7.

Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on By the Parent Holding Company or Control Person

Not applicable

Item 8.

Identification and Classification of Members of the Group

Not applicable

Item 9.

Notice of Dissolution of Group

Not applicable

Item 10.

Certification

By signing below, I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.

Dated: February 1, 2006

/s/ David M. Knott

Signature

Dated: February 1, 2006

DORSET MANAGEMENT CORPORATION

By: /s/ David M. Knott

Signature

David M. Knott, President

Name/Title