AVANIR's Docosanol 10% Cream Approved for Marketing in Israel

SAN DIEGO, May 31, 2002 /PRNewswire-FirstCall via COMTEX/ -- AVANIR Pharmaceuticals (Amex: AVN) today announced that the Ministry of Health in Israel has approved the Company's docosanol 10% cream for marketing as a topical treatment for cold sores. Docosanol 10% cream will be marketed in Israel by CTS Chemical Industries under an exclusive license agreement that provides royalties to AVANIR on wholesale product sales. CTS has reported that it expects to begin marketing the product, which it will sell under the trade name "Abrax", in October 2002. The AVANIR-developed product received non-prescription status, which allows the product to be sold over-the-counter (OTC). In addition to Israel, the topical treatment for cold sores has been approved for marketing in the U.S., Canada and Korea and is pending a decision in Europe.

"This is the third OTC marketing approval for docosanol 10% cream that we have received this month," said Gerald J. Yakatan, Ph.D., President and CEO of AVANIR Pharmaceuticals. "We are very pleased that CTS and our other licensees were successful in obtaining OTC status. The ability of consumers to have direct access to the product should allow for faster and more effective treatment for cold sore sufferers. This approval is another step in our strategy to enhance shareholder value by expanding our docosanol franchise and increasing our revenue stream."

Sold in the U.S. consumer market as Abreva(TM) by AVANIR's licensee, GlaxoSmithKline, docosanol 10% cream is the only cold sore product approved by the U.S. Food and Drug Administration (FDA) for the OTC market. During its first year on the market, Abreva has captured the number one position in dollar sales and the number three position in unit sales for lip remedies in the over-the-counter market. Abreva's sales performance contributed to A.C. Neilson naming it as one of the top ten consumer product launches of 2001.

AVANIR has docosanol license agreements in place in the United States, Canada, Korea, Israel, and selected Middle-Eastern countries and recently submitted a new drug application seeking marketing approval of the drug in Sweden. AVANIR intends to pursue the mutual recognition process in Europe with Sweden as the lead country.

To further develop its docosanol franchise, AVANIR is evaluating in pre- clinical studies the efficacy and safety of new topical formulations of docosanol that could be used to treat genital herpes. AVANIR was recently awarded $1.2 million in grants from the National Institutes of Health and from the California Trade, Technology and Commerce Agency for development of a potential genital herpes product. Additionally, AVANIR and Shanghai New Asiatic Pharmaceutical Company, Ltd., a division of the largest state-owned pharmaceutical conglomerate in the People's Republic of China, entered into a research and development agreement to explore the commercialization opportunities for docosanol 10% cream as a treatment for cold sores, genital herpes and herpes zoster, also known as shingles.

CTS Chemical Industries, Ltd. is the healthcare division of CTS Ltd. The CTS group of companies is a privately held concern formed in 1921. The group is principally engaged in the fields of pharmaceuticals, agriculture, medical and hospital supplies, veterinary products, toiletries, audio-visual, imaging and microfilm equipment.

AVANIR Pharmaceuticals, based in San Diego, is a biopharmaceutical drug discovery and development company. AVANIR is engaged in research, discovery, development and licensing of innovative drug products and, through its subsidiary Xenerex Biosciences, antibody generation services. The Company's next potential product, Neurodex, is currently in a Phase II/III clinical trial. The Company's website is http://www.Avanir.com .

The information contained in this press release, including any forward- looking statements contained herein, should be reviewed in conjunction with the company's most recent Annual Report on Form 10-K and other publicly available information regarding the company. Copies of such information are available from the company upon request. Such publicly available information sets forth many risks and uncertainties related to the company's business and technology. Forward-looking statements often contain such words like "estimate," "anticipate," "intend," "plan" or "expect." Preliminary research findings are not always supportable by the scale-up of commercial operations, and many known and unknown risks and uncertainties could cause actual results to differ materially from those indicated in these forward-looking statements. The Company can give no assurance that product launch will be timely for docosanol 10% cream. Further, market acceptance for docosanol and other drug products is unpredictable and substantially outside of the influence and/or control of the Company.

SOURCE AVANIR Pharmaceuticals

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