AVANIR Announces Cost Reduction Initiatives and Provides Update on Zenvia for IEED

San Diego, Calif., November 9, 2006 -- Avanir Pharmaceuticals (NASDAQ: AVNR) announced today that it has taken several steps intended to significantly reduce on-going operating expenses.  Effective immediately the Company has suspended all commercial initiatives focused on Zenvia™ for the treatment of involuntary emotional expression disorder (IEED) and has reduced research and development expenses including placing on hold activities associated with the selective cytokine inhibitor clinical development program.  These actions have led to a 16% reduction in the Company's current workforce.  The Company has implemented these changes to reduce its cash burn rate to a goal of approximately $10 million per quarter, before estimated severance costs of approximately $800,000.     


These actions were taken following receipt of an Approvable Letter from the U.S. Food and Drug Administration (FDA) for Zenvia.  Since that time, the Company has assembled a team of professionals dedicated to addressing the Agency's concerns.  The Company has added to Dr. Randall Kaye's responsibilities by appointing him as the new head of clinical development.  Dr. Kaye, Vice President of Medical Affairs, and his team are dedicated to developing a comprehensive plan intended to address the concerns expressed by the FDA in its Approvable Letter.  Once prepared, the Company will request a formal meeting with the FDA to ascertain the appropriate next steps required to pursue marketing approval for Zenvia.  The Company currently believes that this meeting will most likely take place within the next 60 days. 

"Over the last few days we have had to take steps to improve the cash position and reduce the cash burn rate for the Company.  The decisions we had to make were difficult but necessary.  These cost reduction actions and the recently announced financing will provide financial flexibility for the Company while determining the future opportunity for Zenvia," said Eric K. Brandt, President and Chief Executive Officer of Avanir. "We believe in the therapeutic potential of Zenvia to provide relief for this unmet medical condition.  I have personally had the pleasure of talking to IEED patients and their care givers about the life changing effect the drug candidate Zenvia has had on patients' lives in our clinical trials.  We will provide an update on this program once we process the feedback from our planned meeting with the FDA."

About Zenvia

Zenvia is a combination of two well-characterized compounds, the active ingredient dextromethorphan, and the enzyme inhibitor quinidine, which serves to increase the bioavailability of dextromethorphan.  The first-in-class drug candidate is believed to help regulate excitatory neurotransmission in two ways, through presynaptic inhibition of glutamate release via sigma-1 receptor agonist activity, and through postsynaptic glutamate response modulation via uncompetitive, low-affinity NMDA antagonist activity. 

About Avanir

Avanir Pharmaceuticals is focused on developing, acquiring and commercializing novel therapeutic products for the treatment of chronic diseases.  Avanir's products and product candidates address therapeutic markets that include the central nervous system, cardiovascular disorders, inflammation and infectious diseases.  Avanir currently markets FazaClo®, the only orally-disintegrating formulation of clozapine for the management of severely ill schizophrenic patients who fail to respond adequately to standard schizophrenic drug treatments.  FazaClo is also indicated for reducing the risk of suicidal behavior in patients with schizophrenic or schizoaffective disorder.  For full prescribing information and important safety information regarding FazaClo, please visit www.fazaclo.com.  Zenvia™, Avanir's lead product candidate for the treatment of involuntary emotional expression disorder, is the subject of an approvable letter from the FDA and future development plans for this product candidate are under consideration.  Additionally, Avanir has initiated a Phase III clinical trial with Zenvia as a potential treatment for patients with painful diabetic neuropathy.  Avanir has active collaborations with two international pharmaceutical companies: Novartis International Pharmaceutical Ltd. for the treatment of inflammatory disease and AstraZeneca for the treatment of cardiovascular disease.  The Company's first commercialized product, abreva®, is marketed in North America by GlaxoSmithKline Consumer Healthcare and is the leading over-the-counter product for the treatment of cold sores.  Further information about Avanir can be found at www.avanir.com.

Forward Looking Statement

Statements in this press release that are not historical facts, including statements that are preceded by, followed by, or that include such words as "estimate", "intend", "anticipate", "believe", "plan", or "expect", or similar statements, are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from the future results expressed or implied by such statements.  There can be no assurance that the Company will continue the clinical development of Zenvia after meeting with the FDA or that Zenvia will receive FDA regulatory approval.  If such regulatory approval is received, there can be no assurance that Avanir will be able to market Zenvia successfully.  Final review decisions made by the FDA and other regulatory agencies concerning clinical trial results are often unpredictable and outside the influence and control of the Company.  Risks and uncertainties also include the risks set forth in Avanir's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, in the Company's Current Report on Form 8-K filed with the SEC on November 3, 2006,  and from time-to-time in other publicly available information regarding the Company.  Copies of this information are available from Avanir upon request.  Avanir disclaims any intent to update these forward-looking statements.

Avanir Pharmaceuticals Contacts:

Patrick O'Brien
949-389-6789
pobrien@avanir.com                                          

Nov 09, 2006