AVANIR Pharmaceuticals Reports First Quarter of Fiscal Year 2003 Results

SAN DIEGO, Feb. 12 /PRNewswire-FirstCall/ -- AVANIR Pharmaceuticals (Amex: AVN) today reported financial results for the first quarter of fiscal year 2003, ended December 31, 2002.

Revenues for the first quarter of fiscal year 2003 were $819,000, compared to $6.1 million in the same period a year ago. Revenues in the same period a year ago included the final $5 million milestone under the Abreva(R) license agreement with GlaxoSmithKline.

Total operating expenses for the first quarter of fiscal 2003 were $5.1 million, compared to $3.6 million in the same period a year ago. Expenditures on research and development (R&D) programs accounted for 71% and 65% of total operating expenses for the quarters ended December 31, 2002 and 2001, respectively.

AVANIR's increased R&D expenses in the first quarter of fiscal 2003 were related to continued progress in advancing several products in clinical trials, preclinical development and in drug discovery programs. Toxicology and other preclinical research related to AVANIR's lead compound for the treatment of allergy and asthma accounted for 29% of total R&D spending. The initiation of a Phase III clinical trial of Neurodex(TM) (formerly AVP-923) for the treatment of pseudobulbar affect in patients with multiple sclerosis accounted for 14% of total R&D spending. A Phase II clinical trial of Neurodex in the treatment of diabetic neuropathic pain was also underway during the quarter. The balance of R&D spending was for other programs, including drug discovery programs related to inflammation and cholesterol lowering compounds, and antibody research programs.

Net loss attributable to common shareholders for the first quarter of fiscal 2003 amounted to $4.2 million, or $0.07 per diluted share, compared with net income of $2.8 million, or $0.04 per diluted share for the same period a year ago.

As of December 31, 2002, AVANIR had cash and investments of $27.0 million and net working capital of $20.2 million, compared to cash and investments of $13.2 million and net working capital of $5.9 million as of September 30, 2002.

AVANIR Pharmaceuticals, based in San Diego, is a drug discovery and development company with a commercialized FDA-approved product (Abreva(R)) and a product in Phase III clinical trials (Neurodex(TM)). AVANIR is engaged in small molecule research to develop treatments for central nervous system disorders and inflammatory diseases. Through the use of its Xenerex(TM) technology, AVANIR also develops human monoclonal antibodies for therapeutic applications. Further information about AVANIR can be found at www.avanir.com .

Management will host a conference call with a simultaneous webcast today, February 12, 2003 at 11:00 a.m. Pacific/ 2:00 p.m. Eastern Standard Time, to discuss first fiscal quarter 2003 operating performance and outlook. The call/webcast will feature President and Chief Executive Officer Gerald J. Yakatan, Ph.D., and Vice President and Chief Financial Officer Gregory Hanson. The webcast will be available live via the Internet by accessing AVANIR's web site at www.avanir.com or CCBN's www.companyboardroom.com . Please go to either web site at least ten minutes early to register, download and install any necessary audio software. Replays of the webcast will be available for 90 days, or a phone replay will be available through February 19, 2003, by dialing 888-266-2086 or 703-925-2435 and entering the passcode 6412665.

Except for the historical information presented herein, matters discussed in this press release contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Statements that are not historical facts, including statements that are preceded by, followed by, or that include such words like "estimate," "anticipate," "believe," "intend," "plan," or "expect" or similar statements are forward-looking statements. In regard to financial projections, risks and uncertainties include risks associated with royalties earned on product sales of docosanol, and results of clinical trials or product development efforts, as well as risks shown in AVANIR's most recent annual report on Form 10-K and quarterly report on Form 10-Q and from time-to-time in other publicly available information regarding the company. Copies of such information are available from AVANIR upon request. Such publicly available information sets forth many risks and uncertainties related to AVANIR's business and technology. The company disclaims any intent or obligation to update these forward-looking statements.

For further information, please contact: Analyst/Investor, Tricia Ross, +1-310-407-6540, tross@webershandwick.com , of FRB|Weber Shandwick, for AVANIR Pharmaceuticals; or Media, Dennis Ellman of Beck Ellman Heald, +1-858-453-9600, dme@behmedia.com , for AVANIR Pharmaceuticals; or Investor Relations, Patrice Saxon of AVANIR Pharmaceuticals, +1-858-622-5202, psaxon@avanir.com .

                            AVANIR PHARMACEUTICALS
            Summary Consolidated Financial Information (Unaudited)

                                               Quarters ended December 31,
    Consolidated Statement
     of Operations Data:                           2002             2001

    Revenues                                    $819,106        $6,130,215
    Expenses
      Cost of product sales                        3,102                --
      Research and development                 3,611,622         2,346,859
      General and administrative               1,080,546           954,068
      Sales and marketing                        425,129           320,032
         Total operating expenses              5,120,399         3,620,959
    Income (loss) from operations             (4,301,293)        2,509,256
      Interest income                             68,022           187,915
      Other income                                 5,846            82,940
      Interest expense                           (10,574)          (14,602)
    Net income (loss)                        $(4,237,999)       $2,765,509
    Net income (loss) attributable
     to common shareholders                  $(4,248,858)       $2,754,650
    Net income (loss) per share:
       Basic                                      $(0.07)            $0.05
       Diluted                                    $(0.07)            $0.04
    Weighted average number of
     common shares outstanding:
       Basic                                  58,296,555        58,029,403
       Diluted                                58,296,555        61,455,499


    Consolidated Balance Sheet Data:           December 31,    September 30,
                                                   2002             2002

    Cash and cash equivalents                  $23,568,361       $8,630,547
    Short and long-term investments              3,440,514        4,538,460
    Net working capital                         20,217,253        5,918,083
    Total assets                                35,248,888       20,332,929
    Total liabilities                           24,837,517        5,752,259
    Redeemable convertible preferred stock         525,798          521,189
    Shareholders' equity                         9,885,573       14,059,481

SOURCE AVANIR Pharmaceuticals

CONTACT: Analyst/Investor, Tricia Ross, +1-310-407-6540, tross@webershandwick.com , of FRB|Weber Shandwick, for AVANIR Pharmaceuticals; or Media, Dennis Ellman of Beck Ellman Heald, +1-858-453-9600, dme@behmedia.com , for AVANIR Pharmaceuticals; or Investor Relations, Patrice Saxon of AVANIR Pharmaceuticals, +1-858-622-5202, psaxon@avanir.com