Exhibit 10.1

7,770,000 Shares

Common Stock

PLACEMENT AGENCY AGREEMENT

April 5, 2005

CIBC World Markets Corp.
Leerink Swann & Co.
As Placement Agents
c/o CIBC World Markets Corp.
300 Madison Avenue
New York, New York 10017

Ladies and Gentlemen:

Avanir Pharmaceuticals, a California corporation (the “Company”), proposes,
subject to the terms and conditions contained herein, to issue and sell
7,770,000 shares (the “Shares”) of common stock, no par value (the “Common
Stock”), directly to certain investors (collectively, the “Investors”). The
Company desires to engage you as its placement agents (the “Placement Agents”)
in connection with such issuance and sale. The Shares are more fully described
in the Registration Statement (as hereinafter defined).

The Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and the published
rules and regulations thereunder (the “Rules”) adopted by the Securities and
Exchange Commission (the “Commission”) a Registration Statement (as hereinafter
defined) on Form S-3 (No. 333-114389), which became effective as of April 28,
2004 (the “Effective Date”) including a base prospectus relating to the Shares
(the “Base Prospectus”), and such amendments and supplements thereto as may have
been required to the date of this Agreement. Copies of such Registration
Statement (including all amendments and supplements thereto) and of the related
Base Prospectus have heretofore been delivered by the Company to you. The term
“Registration Statement” as used in this Agreement means the initial
registration statement (including all exhibits, financial schedules and all
documents and information deemed to be a part of the Registration Statement
through incorporation by reference or otherwise), as amended and/or supplemented
to the date of this Agreement, including the Base Prospectus. If the Company has
filed an abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Rules (the “462(b) Registration Statement”),
then any reference herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement. The prospectus supplement relating
to the Shares in the form in which it will be filed with the Commission pursuant
to and in accordance with Rule 424(b) under the Securities Act is hereinafter
referred to as the “Prospectus Supplement.” The term “Prospectus” as used in
this Agreement means the Base Prospectus together with the Prospectus
Supplement. As used herein, the terms “Base Prospectus,” “Prospectus,”
“Registration Statement,” “Rule 462 Registration Statement,” and “Prospectus
Supplement” shall include any documents incorporated by reference therein, and
any reference to any amendment or supplement to the Registration Statement or
the Prospectus shall be deemed to refer to and include any document filed under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the
date of the Base Prospectus by the Company with the Commission and on or before
the Closing Date, which documents are deemed to be incorporated therein by
reference.

In connection with their duties as Placement Agents, the Company hereby confirms
that the Placement Agents are authorized to distribute the Prospectus (as from
time to time amended or supplemented if the Company furnishes amendments or
supplements thereto to the Placement Agents).

1. Agreement to Act as Placement Agent; Delivery and Payment. On the basis of
the representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:

(a) The Placement Agents agree to act as the Company’s exclusive placement
agents in connection with the issuance and sale, on a reasonable-efforts basis,
by the Company of the Shares to the Investors. The Placement Agents shall have
no authority to bind the Company. The Company acknowledges and agrees that the
Placement Agents’ engagement hereunder is not an agreement by the Placement
Agents or any of their affiliates to underwrite or purchase any securities or
otherwise provide any financing. As compensation for their services hereunder,
the Company agrees to pay on the Closing Date (as defined below) the Placement
Agents by wire transfer of immediately available funds six percent (6%) of the
proceeds received by the Company from the sale of the Shares (the “Transaction
Fee”). CIBC World Markets Corp. shall be entitled to retain sixty-seven percent
(67%) of the Transaction Fee, and shall pay Leerink Swan & Co. shall be entitled
to retain sixty thirty-three percent (33%) of the Transaction Fee in accordance
with customary syndicate settlement procedures.

(b) Payment of the purchase price for, and delivery of the Shares shall be made
at a closing (the “Closing”) at the offices of Heller Ehrman LLP, located at
4350 La Jolla Village Drive, 7th Floor, San Diego, California, 92122-1246, at
9:00 a.m., California time, on the Closing Date to take place on the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act after
the determination of the public offering price of the Shares (such time and date
of payment and delivery being herein called the “Closing Date”). All actions
taken at the Closing shall be deemed to have occurred simultaneously.

(c) Payment of the purchase price for the Shares shall be made to or upon the
order of the Company by wire transfer in Federal (same day) funds to the
Company, upon delivery the Shares, through the facilities of The Depository
Trust Company, to such persons, and shall be registered in such name or names
and shall be in such denominations, as the Placement Agents may request at least
one business day before the Closing Date. Payment of the purchase price for the
Shares shall be made on the Closing Date by the Investors directly to the
Company or as the Placement Agents otherwise direct.

(d) The purchases of the Shares by the Investors shall be evidenced by the
execution of a purchase agreement substantially in the form attached hereto as
Exhibit A.

(e) Prior to the earlier of (i) the date on which this Agreement is terminated
and (ii) the Closing Date, the Company shall not, without the prior written
consent of CIBC World Markets Corp., solicit or accept offers to purchase shares
of its Common Stock or other equity linked securities (other than pursuant to
the exercise of options or warrants to purchase shares of Common Stock that are
outstanding at the date hereof) otherwise than through the Placement Agents.

2. Representations and Warranties of the Company. The Company represents and
warrants to each Placement Agent as of the date hereof and as of the Closing
Date, as follows:

(a) The Company meets the requirements for use of Form S-3 under the Securities
Act. On the Effective Date, the Registration Statement complied, and on the date
of the Prospectus, the date any post-effective amendment to the Registration
Statement becomes effective, the date any supplement or amendment to the
Prospectus is filed with the Commission and the Closing Date, the Registration
Statement and the Prospectus (and any amendment thereof or supplement thereto)
will comply, in all material respects, with the requirements of the Securities
Act and the Rules and the Exchange Act and the rules and regulations of the
Commission thereunder. The Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. The Prospectus, as of its date, the date any
supplement or amendment is filed with the Commission and the Closing Date will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Prospectus delivered to the Placement Agents for use in
connection with this offering was identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply to statements
in, or omissions from, the Registration Statement or the Prospectus made in
reliance upon, and in conformity with, information herein or otherwise furnished
in writing by the Placement Agents for use in the Registration Statement or the
Prospectus. With respect to the preceding sentence, the Company acknowledges
that the only information furnished in writing by the Placement Agent for use in
the Registration Statement or the Prospectus is the statements contained under
the caption “Plan of Distribution” in the Prospectus Supplement.

(b) The Registration Statement is effective under the Securities Act and no stop
order preventing or suspending the effectiveness of the Registration Statement
or suspending or preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted or are
threatened under the Securities Act. Any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules has been or will be
made in the manner and within the time period required by such Rule 424(b).

(c) The documents incorporated by reference in the Registration Statement and
the Prospectus, at the time they became effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and any further documents so filed and incorporated by reference in
the Registration Statement and the Prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.

(d) The financial statements of the Company (including all notes and schedules
thereto) included or incorporated by reference in the Registration Statement and
Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders’ equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; and such financial
statements and related schedules and notes thereto, and the unaudited financial
information filed with the Commission as part of the Registration Statement,
comply as to form with the applicable accounting requirements under the
Securities Act and have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved. The
summary and selected financial data included in the Prospectus present fairly
the information shown therein as at the respective dates and for the respective
periods specified and have been presented on a basis consistent with the
consolidated financial statements set forth in the Prospectus and other
financial information.

(e) Deloitte & Touche LLP, whose reports are filed with the Commission as a part
of the Registration Statement, are and, during the periods covered by their
reports, were independent registered public accountants as required by the
Securities Act and the Rules.

(f) The Company and each of its subsidiaries is duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation or organization. The Company and each of its subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it requires
such qualification, except for such jurisdictions where the failure to so
qualify individually or in the aggregate would not have a material adverse
effect on the assets, properties, condition, financial or otherwise, or in the
capitalization, results of operations, business affairs or business prospects of
the Company and its subsidiaries considered as a whole (a “Material Adverse
Effect”); and to the Company’s knowledge, no proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification.

(g) The Company and each of its subsidiaries has all requisite corporate power
and authority, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or regulatory
bodies or any other person or entity (collectively, the “Permits”), to own,
lease and license its assets and properties and conduct its business, all of
which are valid and in full force and effect, except where the lack of such
Permits, individually or in the aggregate, would not have a Material Adverse
Effect. The Company and each of its subsidiaries has fulfilled and performed in
all material respects all of its material obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no other Permits
are required to enter into, deliver and perform this Agreement and to issue and
sell the Shares.

(h) The Company and each of its subsidiaries owns or possesses legally
enforceable rights to use all patents, patent rights, inventions, collaborative
research agreements, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, “Intangibles”) necessary to the
conduct of its business as described in the Registration Statement and the
Prospectus. Except as set forth in the Prospectus, (a) there are no material
rights of third parties to any such Intangibles; (b) there is no material
infringement by third parties of any such Intangibles; (c) there is no pending
or threatened action, suit, proceeding or claim by others challenging the
Company’s rights in or to any such Intangibles, and the Company and each
subsidiary is unaware of any facts which would form a reasonable basis for any
such claim; (d) to the knowledge of the Company, there is no pending or
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any such Intangibles, and the Company and each subsidiary is unaware
of any facts which would form a reasonable basis for any such claim; (e) to the
knowledge of the Company, there is no pending or threatened action, suit,
proceeding or claim by others that the Company or any subsidiary infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company and each subsidiary is unaware of
any other fact which would form a reasonable basis for any such claim; (f) to
the knowledge of the Company, there is no U.S. patent or published U.S. patent
application which contains claims that dominate or may dominate any Intellectual
Property described in the Prospectus as being owned by or licensed to the
Company or any subsidiary or that interferes with the issued or pending claims
of any such Intangibles; and (g) there is no prior art of which the Company or
any subsidiary is aware that may render any U.S. patent held by the Company
invalid or any U.S. patent application held by the Company or any subsidiary
unpatentable which has not been disclosed to the U.S. Patent and Trademark
Office.

(i) Except as set forth in the Prospectus, the Company and each of its
subsidiaries has good and marketable title in fee simple to all real property,
and good and marketable title to all other property owned by it, in each case
free and clear of all liens, encumbrances, claims, security interests and
defects, except such as would not have a Material Adverse Effect. Except as set
forth in the Prospectus, all property held under lease by the Company and its
subsidiaries is held by them under valid, existing and enforceable leases, free
and clear of all liens, encumbrances, claims, security interests and defects,
except such as would not have a Material Adverse Effect. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, (i) there has not been any Material Adverse Effect;
(ii) neither the Company nor any of its subsidiaries has sustained any loss or
interference with its assets, businesses or properties (whether owned or leased)
from fire, explosion, earthquake, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree which would have a Material Adverse
Effect; and (iii) since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the Prospectus,
neither the Company nor its subsidiaries has (A) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary course of
business, (B) entered into any transaction not in the ordinary course of
business or (C) declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital stock.

(j) There is no document, contract or other agreement required to be described
in the Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required by the
Securities Act or Rules. Each description of a contract, document or other
agreement in the Registration Statement and the Prospectus accurately reflects
in all material respects the terms of the underlying contract, document or other
agreement. Each contract, document or other agreement described in the
Registration Statement and Prospectus or listed in the Exhibits to the
Registration Statement or incorporated by reference is in full force and effect
and is valid and enforceable by and against the Company or its subsidiary, as
the case may be, in accordance with its terms. Neither the Company nor any of
its subsidiaries, if a subsidiary is a party, nor to the Company’s knowledge,
any other party, is in default in the observance or performance of any term or
obligation to be performed by it under any such agreement, and no event has
occurred which with notice or lapse of time or both would constitute such a
default, in any such case which default or event, individually or in the
aggregate, would have a Material Adverse Effect. No default exists, and no event
has occurred which with notice or lapse of time or both would constitute a
default, in the due performance and observance of any term, covenant or
condition, by the Company or its subsidiary, if a subsidiary is a party thereto,
of any other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which Company or its properties or business or a
subsidiary or its properties or business may be bound or affected which default
or event, individually or in the aggregate, would have a Material Adverse
Effect.

(k) Neither the Company nor any of its subsidiaries is in violation of any term
or provision of (i) its charter or by-laws or (ii) of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, except, with
respect to subsection (ii), where the consequences of such violation,
individually or in the aggregate, would not have a Material Adverse Effect.

(l) This Agreement has been duly authorized, executed and delivered by the
Company.

(m) Neither the execution, delivery and performance of this Agreement by the
Company nor the consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by the Company of the
Shares) will give rise to a right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or its subsidiaries
pursuant to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which either the Company or its subsidiaries or any of their
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its subsidiaries or violate any provision of the charter or by-laws of the
Company or any of its subsidiaries, except for such consents or waivers which
have already been obtained and are in full force and effect or that the failure
to obtain would not, individually or in the aggregate, have a Material Adverse
Effect.

(n) The Company has authorized and outstanding capital stock as set forth under
the caption “Capitalization” in the Prospectus, and since such date there has
been no change in the capital stock of the Company except for issuances pursuant
to employee benefit plans described in the Prospectus or upon exercise of
outstanding warrants described in the Prospectus. The certificates evidencing
shares of Common Stock are in due and proper legal form. All of the issued and
outstanding shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable. There are no statutory preemptive or other similar
rights to subscribe for or to purchase or acquire any shares of Common Stock of
the Company or any of its subsidiaries or any such rights pursuant to its
Articles of Incorporation or by-laws or any agreement or instrument to or by
which the Company or any of its subsidiaries is a party or bound. The Shares,
when delivered by the Company pursuant to this Agreement, will be duly and
validly issued, fully paid and nonassessable and none of them will be issued in
violation of any preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and there is no commitment,
plan or arrangement to issue, any share of stock of the Company or any of its
subsidiaries or any security convertible into, or exercisable or exchangeable
for, such stock. The Common Stock and the Shares conform in all material
respects to all statements in relation thereto contained in the Registration
Statement and the Prospectus. All outstanding shares of capital stock of each of
the Company’s subsidiaries have been duly authorized and validly issued, and are
fully paid and nonassessable and are owned directly by the Company or by another
wholly-owned subsidiary of the Company free and clear of any security interests,
liens, encumbrances, equities or claims, other than those described in the
Prospectus.

(o) Except as set forth in the Company’s Current Report on Form 8-K filed
March 14, 2005, no holder of any security of the Company has any right, which
has not been waived, to have any security owned by such holder included in the
Registration Statement or to demand registration of any security owned by such
holder for a period of 90 days after the date of this Agreement. Each director
and executive officer of the Company and other Company shareholders listed on
Schedule I has delivered to the Placement Agents his enforceable written lock-up
agreement in the form attached to this Agreement as Exhibit B hereto (“Lock-Up
Agreement”).

(p) All necessary corporate action has been duly and validly taken by the
Company to authorize the execution, delivery and performance of this Agreement
and the issuance and sale of the Shares by the Company. This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes and will constitute legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as rights to indemnity under Section 6 of the Agreement may be
limited by applicable law and as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles.

(q) Neither the Company nor any of its subsidiaries is involved in any labor
dispute or, to the knowledge of the Company, is any such dispute threatened,
which dispute would have a Material Adverse Effect. The Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
principal suppliers or contractors which would have a Material Adverse Effect.
The Company is not aware of any threatened or pending litigation between the
Company or its subsidiaries and any of its executive officers or directors
which, if adversely determined, could have a Material Adverse Effect nor is the
Company aware of any plan of any such officers or directors to leave the
employment of the Company.

(r) No transaction has occurred between or among the Company and any of its
officers or directors, shareholders or any affiliate or affiliates of any such
officer or director or shareholder that is required to be described in and is
not described in the Registration Statement and the Prospectus.

(s) The Company has not taken, nor will it take, directly or indirectly, any
action designed to or which might reasonably be expected to cause or result in,
or which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock or any
security of the Company to facilitate the sale or resale of any of the Shares.

(t) The Company and each of its subsidiaries has filed all Federal, state, local
and foreign tax returns which are required to be filed through the date hereof,
which returns are true and correct in all material respects or has received
timely extensions thereof, and has paid all taxes shown on such returns and all
assessments received by it to the extent that the same are material and have
become due. There are no tax audits or investigations pending, which if
adversely determined would have a Material Adverse Effect; nor are there any
material proposed additional tax assessments against the Company or any of its
subsidiaries.

(u) The Shares have been duly authorized for quotation on the American Stock
Exchange, subject to official Notice of Issuance.

(v) The Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act or
the quotation of the Common Stock on the American Stock Exchange, nor has the
Company received any notification that the Commission or the American Stock
Exchange is contemplating terminating such registration or quotation,
respectively.

(w) The books, records and accounts of the Company and its subsidiaries
accurately and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the Company
and its subsidiaries. The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

(x) The Company and its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are customary in the businesses in which they are engaged or propose to engage
after giving effect to the transactions described in the Prospectus; all
policies of insurance and fidelity or surety bonds insuring the Company or any
of its subsidiaries or the Company’s or its subsidiaries’ respective businesses,
assets, employees, officers and directors are in full force and effect; the
Company and each of its subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and neither the Company nor
any subsidiary of the Company has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that is not materially greater than the current cost. To
the Company’s knowledge, neither the Company nor any of its subsidiaries has
been denied any insurance coverage which it has sought or for which it has
applied.

(y) Each approval, consent, order, authorization, designation, declaration or
filing of, by or with any regulatory, administrative or other governmental body
necessary in connection with the execution and delivery by the Company of this
Agreement and the consummation of the transactions herein contemplated required
to be obtained or performed by the Company (except such additional steps as may
be necessary to qualify the Shares under the state securities or Blue Sky laws)
has been obtained or made and is in full force and effect.

(z) Other than JP Morgan, a greater than 5% shareholder of the Company, there
are no known affiliations with the National Association of Securities Dealers,
Inc. (the “NASD”) among the Company’s officers, directors or any five percent or
greater shareholder of the Company, except as set forth in the Registration
Statement, otherwise disclosed in writing to the Placement Agents.

(aa) (i) Each of the Company and each of its subsidiaries is in compliance in
all material respects with all rules, laws and regulation relating to the use,
treatment, storage and disposal of toxic substances and protection of health or
the environment (“Environmental Law”) which are applicable to its business;
(ii) neither the Company nor its subsidiaries has received any notice from any
governmental authority or third party of an asserted claim under Environmental
Laws; (iii) each of the Company and each of its subsidiaries has received all
material permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and is in compliance with all
material terms and conditions of any such permit, license or approval; (iv) to
the Company’s knowledge, no facts currently exist that will require the Company
or any of its subsidiaries to make future material capital expenditures to
comply with Environmental Laws; and (v) no property which is or has been owned,
leased or occupied by the Company or its subsidiaries has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601, et.
seq.) (“CERCLA”) or otherwise designated as a contaminated site under applicable
state or local law. Neither the Company nor any of its subsidiaries has been
named as a “potentially responsible party” under CERCLA.

(bb) In the ordinary course of its business, the Company periodically reviews
the effect of Environmental Laws on the business, operations and properties of
the Company and its subsidiaries, in the course of which the Company identifies
and evaluates associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean up, closure of
properties or compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a Material Adverse Effect.

(cc) The Company is not and, after giving effect to the offering and sale of the
Shares and the application of proceeds thereof as described in the Prospectus,
will not be an “investment company” within the meaning of the Investment Company
Act of 1940, as amended (the “Investment Company Act”).

(dd) The Company or any other person associated with or acting on behalf of the
Company including, without limitation, any director, officer, agent or employee
of the Company or its subsidiaries, has not, directly or indirectly, while
acting on behalf of the Company or its subsidiaries (i) used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; (iv) made any other unlawful
payment; or (v) violated the Company’s code of ethics.

(ee) Except as described the Prospectus, the Company has not sold or issued any
shares of Common Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or
S of, the Securities Act, other than shares issued pursuant to employee benefit
plans, qualified stock options plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.

(ff) The Company has fulfilled its obligations, if any, under the minimum
funding standards of Section 302 of the U.S. Employee Retirement Income Security
Act of 1974 (“ERISA”) and the regulations and published interpretations
thereunder with respect to each “plan” as defined in Section 3(3) of ERISA and
such regulations and published interpretations in which its employees are
eligible to participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such regulations
and published interpretations. No “Reportable Event” (as defined in 12 ERISA)
has occurred with respect to any “Pension Plan” (as defined in ERISA) for which
the Company could have any liability.

(gg) None of the Company or its directors and officers has distributed and will
not distribute prior to the later of (i) the Closing Date, and (ii) completion
of the distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any preliminary prospectus and the
Prospectus.

(hh) The statistical, scientific and market-related data included in the
Prospectus are based on or derived from sources which the Company believes to be
reliable and accurate.

(ii) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the Exchange Act),
which (i) are designed to ensure that material information relating to the
Company is made known to the Company’s principal executive officer and its
principal financial officer by others within those entities, particularly during
the periods in which the periodic reports required under the Exchange Act are
being prepared; (ii) provide for the periodic evaluation of the effectiveness of
such disclosure controls and procedures as of the end of each of the Company’s
quarterly and annual fiscal periods; and (iii), as of the end of the periods
covered by each periodic report filed under the Exchange Act and incorporated by
reference into the Prospectus, were effective in all material respects to
perform the functions for which they were established. Based on the evaluation
of its disclosure controls and procedures, the Company is not aware of (i) any
significant deficiency in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data or any material weaknesses in internal controls; or
(ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls. Since
the date of the most recent evaluation of such disclosure controls and
procedures, there have been no changes that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting, including any corrective actions with regard to significant
deficiencies and material weaknesses.

(jj) There are no material off-balance sheet arrangements (as defined in
Item 303 of Regulation S-K) that have or are reasonably likely to have a
material current or future effect on the Company’s financial condition, revenues
or expenses, changes in financial condition, results of operations, liquidity,
capital expenditures or capital resources.

(kk) The Company’s Board of Directors has validly appointed an audit committee
whose composition satisfies the requirements of the American Stock Exchange
Company Guide and the Board of Directors and/or the audit committee has adopted
a charter that satisfies the requirements of the American Stock Exchange Company
Guide. The audit committee has reviewed the adequacy of its charter within the
past twelve months.

(ll) There is and has been no failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such, to comply with any
provision of the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Sarbanes Oxley Act”), including
Section 402 related to loans and Sections 302 and 906 related to certifications.

(mm) The Company is not a party to any contract, agreement or understanding with
any person that would give rise to a valid claim against the Company or the
Placement Agents for a brokerage commission, finder’s fee or like payment in
connection with the offering and sale of the Shares

(nn) The operations of the Company are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as amended, the
money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending or, to the best knowledge
of the Company, threatened.

(oo) The Company nor, to the knowledge of the Company, any director, officer,
agent, employee or affiliate of the Company is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently subject to
any U.S. sanctions administered by OFAC.

(pp) Neither the Company nor, to the best of the Company’s knowledge, any
employee or agent of the Company, has made any contribution or other payment to
(i) any official of, or candidate for, any federal, state or foreign office in
violation of any law or of the character required to be disclosed in the
Prospectus or (ii) any clinical researcher in violation of any federal, state or
foreign law or any rule or policy of the Food and Drug Administration (“FDA”).

(qq) The Company’s auditors, Deloitte & Touche USA LLP, have performed the
procedures set out in Statement on Auditing Standards No. 101 (“SAS 101”) for a
review of interim financial information and there has nothing that has come to
the Company’s attention that would prevent the auditors from providing the
report as described in SAS 101 on the financial statements for the quarter ended
December 31, 2004 (the “Quarterly Financial Statements”).

(rr) The consolidated financial statements incorporated by reference in the
Registration Statement (i) comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the Exchange Act,
and the related rules and regulations adopted by the Commission, (ii) were
prepared in accordance with GAAP, and (iii) are, for the financial information
contained therein, consistent with the audited and unaudited financial
statements of the Company.

Any certificate signed by any officer of the Company and delivered to the
Placement Agents or their counsel in connection with the offering of the Shares
shall be deemed a representation and warranty by the Company, as to matters
covered thereby, to each Placement Agent.

3. [RESERVED]

4. Conditions of the Placement Agent’s Obligations. The obligations of the
Placement Agents under this Agreement are several and not joint. The respective
obligations of the Placement Agents are subject to each of the following terms
and conditions:

(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a) of this Agreement.

(b) No order preventing or suspending the use of any preliminary prospectus or
the Prospectus shall have been or shall be in effect and no order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the Commission
and the Placement Agents.

(c) The representations and warranties of the Company contained in this
Agreement and in the certificates delivered pursuant to Section 4(d) shall be
true and correct when made and on and as of the Closing Date as if made on such
date. The Company shall have performed, in all material respects, all covenants
and agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before the Closing Date.

(d) The Placement Agents shall have received on the Closing Date a certificate,
addressed to the Placement Agents and dated the Closing Date, of the chief
executive or chief operating officer and the chief financial officer or chief
accounting officer of the Company to the effect that: (i) the representations,
warranties and agreements of the Company in this Agreement were true and correct
when made and are true and correct as of the Closing Date; (ii) the Company has
performed all covenants and agreements and satisfied, in all material respects,
all conditions contained herein; (iii) they have carefully examined the
Registration Statement and the Prospectus and, in their opinion (A) as of the
Effective Date, the Registration Statement did not, and as of its date, the
Prospectus did not, include any untrue statement of a material fact and did not
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (B) since the Effective Date no event has occurred
which should have been set forth in a supplement or otherwise required an
amendment to the Registration Statement or the Prospectus; and (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued
and, to their knowledge, no proceedings for that purpose have been instituted or
are pending under the Securities Act.

(e) The Placement Agents shall have received on the Closing Date a signed letter
from Deloitte & Touche LLP addressed to the Placement Agents and dated the
Closing Date, in the form set forth on Exhibit F attached hereto, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.

(f) The Placement Agents shall have received on the Closing Date from Heller
Ehrman LLP, counsel for the Company, an opinion, addressed to the Placement
Agents and dated the Closing Date, in the form set forth on Exhibit C attached
hereto.

(g) All proceedings taken in connection with the sale of the Shares as herein
contemplated shall be reasonably satisfactory in form and substance to the
Placement Agents, and their counsel and the Placement Agents shall have received
from Wilson Sonsini Goodrich & Rosati, a Professional Corporation, a favorable
opinion, addressed to the Placement Agent and dated the Closing Date, covering
such matters as are customarily covered in transactions of this type, and the
Company shall have furnished to Wilson Sonsini Goodrich & Rosati such documents
as they may reasonably request for the purpose of enabling them to pass upon
such matters.

(h) The Placement Agents shall have received copies of the Lock-up Agreements
executed by each person listed on Schedule I hereto.

(i) The Shares shall have been approved for quotation on the American Stock
Exchange and listed and admitted and authorized for trading on the American
Stock Exchange, subject only to official notice of issuance. Satisfactory
evidence of such actions shall have been provided to the Placement Agents.

(j) The Placement Agents shall have received on the Closing Date from Heller
Ehrman LLP, special regulatory counsel for the Company, an opinion, addressed to
the Placement Agents and dated the Closing Date, stating in effect the matters
set forth on Exhibit D hereto.

(k) The Placement Agents shall have received on the Closing Date from Knobbe
Martens Olson & Bear LLP, special intellectual property counsel for the Company,
an opinion, addressed to the Placement Agents and dated the Closing Date,
stating in effect the matters set forth on Exhibit E hereto.

(l) The Company shall have furnished or caused to be furnished to the Placement
Agents such further certificates or documents as the Placement Agents shall have
reasonably requested.

5. Covenants of the Company.

(a) The Company covenants and agrees as follows:

(i) The Company shall prepare the Prospectus in a form approved by the Placement
Agent and file such Prospectus pursuant to Rule 424(b) under the Securities Act
not later than the Commission’s close of business on the second business day
following the execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by the Rules.

(ii) The Company shall promptly advise the Placement Agents in writing (A) when
any post-effective amendment to the Registration Statement shall have become
effective or any supplement to the Prospectus shall have been filed, (B) of any
request by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the institution or threatening of any proceeding for that purpose
and (D) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose. The Company
shall not file any amendment of the Registration Statement or supplement to the
Prospectus or any document incorporated by reference in the Registration
Statement unless the Company has furnished each Placement Agent a copy for its
review prior to filing and shall not file any such proposed amendment or
supplement to which the Placement Agents reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.

(iii) If, at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act and the Rules, any event occurs as a result
of which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company promptly
shall prepare and file with the Commission, subject to the second sentence of
paragraph (ii) of this Section 5(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect such
compliance.

(iv) The Company shall make generally available to its security holders and to
the Placement Agents as soon as practicable an earnings statement which shall
satisfy the provisions of Section 11(a) of the Securities Act or Rule 158 of the
Rules.

(v) The Company shall furnish to the Placement Agents and counsel for the
Placement Agent, without charge, signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof) and, so long as delivery
of a prospectus by a Placement Agent or dealer may be required by the Securities
Act or the Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements thereto as the Placement
Agents may reasonably request. If applicable, the copies of the Registration
Statement and Prospectus and each amendment and supplement thereto furnished to
the Placement Agents will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

(vi) The Company shall cooperate with the Placement Agents and their counsel in
endeavoring to qualify the Shares for offer and sale in connection with the
offering under the laws of such jurisdictions as the Placement Agents may
designate and shall maintain such qualifications in effect so long as required
for the distribution of the Shares; provided, however, that the Company shall
not be required in connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business in any
jurisdiction.

(vii) The Company, during the period when the Prospectus is required to be
delivered under the Securities Act and the Rules or the Exchange Act, will file
all reports and other documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods
required by the Exchange Act and the regulations promulgated thereunder.

(viii) Without the prior written consent of CIBC World Markets Corp., for a
period of 60 days after the date of this Agreement, the Company shall not issue,
sell or register with the Commission (other than on Form S-8 or on any successor
form), or otherwise dispose of, directly or indirectly, any equity securities of
the Company (or any securities convertible into, exercisable for or exchangeable
for equity securities of the Company), except for: (i) the issuance of the
Shares pursuant to the Registration Statement; (ii) the issuance of shares
pursuant to the Company’s existing employee benefit plans or upon exercise of
outstanding warrants as described in the Registration Statement and the
Prospectus; (iii) any corporate strategic development transaction; provided that
in each of cases (iii) none of these securities may be transferred within such
60-day period and the Company shall enter stop transfer instructions with its
transfer agent and registrar with respect to any such securities; or (iv) the
registration with the Commission of 2,000,000 shares of Class A common stock
issued to IriSys, Inc. on March 8, 2005. In the event that during this period
any shares are issued to any person identified on Schedule I hereto, such shares
shall be subject to the Lock-Up Agreement executed by such person.

(ix) On or before completion of this offering, the Company shall make all
filings required under applicable securities laws and by the American Stock
Exchange (including any required registration under the Exchange Act).

(x) Prior to the Closing Date, the Company will issue no press release or other
communications directly or indirectly and hold no press conference with respect
to the Company, the condition, financial or otherwise, or the earnings, business
affairs or business prospects of any of them, or the offering of the Shares
without the prior written consent of the Placement Agents unless in the judgment
of the Company and its counsel, and after notification to the Placement Agents,
such press release or communication is required by law.

(xi) The Company will apply the net proceeds from the offering of the Shares in
the manner set forth under “Use of Proceeds” in the Prospectus.

(b) The Company agrees to pay, or reimburse if paid by the Placement Agents,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the performance of
the obligations of the Company under this Agreement including those relating to:
(i) the preparation, printing, filing and distribution of the Registration
Statement including all exhibits thereto, any preliminary prospectus, the
Prospectus, all amendments and supplements to the Registration Statement and the
Prospectus and any document incorporated by reference therein, and the printing,
filing and distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares; (iii) the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 5(a)(vi), including the reasonable fees and
disbursements of counsel for the Placement Agents in connection with such
registration and qualification and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv) the
furnishing (including costs of shipping and mailing) to the Placement Agents of
copies of any preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in connection
with the offering and sale of the Shares; (v) if applicable, the filing fees of
the NASD in connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Placement Agents in
connection with such review; (vi) inclusion of the Shares for quotation on the
American Stock Exchange; (vii) the costs and expenses of the Company relating to
investor presentations in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the production
of slides and graphics, fees and expenses of any consultants engaged by the
Company in connection with the presentations, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered by the Company in connection with any investor
presentations and (viii) all transfer taxes, if any, with respect to the sale
and delivery of the Shares by the Company. Subject to the provisions of
Section 8, the Placement Agents agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the performance of the obligations of the Placement
Agents under this Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of counsel
for the Placement Agents.

6. Indemnification.

(a) The Company agrees to indemnify and hold harmless each Placement Agent and
each person, if any, who controls any Placement Agent within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, or in any Blue Sky application or other information or other documents
executed by the Company filed in any state or other jurisdiction to qualify any
or all of the Shares under the securities laws thereof (any such application,
document or information being hereinafter referred to as a “Blue Sky
Application”) or (ii) arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
such indemnity shall not inure to the benefit of any Placement Agent (or any
person controlling such Placement Agent) on account of any losses, claims,
damages or liabilities arising from the sale of the Shares if such untrue
statement or omission or alleged untrue statement or omission was made in any
preliminary prospectus, Registration Statement or the Prospectus, or such
amendment or supplement thereto, or in any Blue Sky Application in reliance upon
and in conformity with information furnished in writing to the Company by any
Placement Agent specifically for use therein. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.

(b) Each Placement Agent agrees to indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each director of the
Company, and each officer of the Company who signs the Registration Statement,
against any losses, claims, damages or liabilities to which such party may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon: (i) an untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto; (ii) arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (iii) any failure on the part of such Placement Agent
to timely deliver the Prospectus to the Investors pursuant to the requirements
of the Securities Act (and the rules and regulations promulgated thereunder).
Notwithstanding the forgoing, the obligation of each Placement Agent to
indemnify the Company (including any controlling person, director or officer
thereof) shall be limited:

(1) with respect to clauses (i) and (ii) of this Section 6(b), to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in any preliminary prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Placement
Agent expressly for use therein;

(2) with respect to clause (iii) of this Section 6(b), to the extent that (A)
the Company shall sustain the burden of proving that any such losses, claims,
damages or liabilities resulted directly from the fact that such Placement Agent
arranged for the sale of Securities to a person to whom such Placement Agent
failed to send or give, at or prior to the Closing Date, a copy of the final
Prospectus Supplement, (B) the Company had previously furnished copies thereof
(sufficiently in advance of the Closing Date to allow for distribution by the
Closing Date) to the Placement Agent and such final Prospectus Supplement was
required by law to be delivered at or prior to the written confirmation of sale
to such person, and (C) such failure to give or send a final Prospectus
Supplement by the Closing Date to the party or parties asserting such loss,
liability, claim, damage or expense would have constituted the sole defense to
the claim asserted by such person(s); and

(3) with respect to clauses (i), (ii) and (iii) of this Section 6(b), to the
amount of placement agent fees actually received by such Placement Agent
pursuant to this Agreement.

(c) Any party that proposes to assert the right to be indemnified under this
Section will, promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim is to be made
against an indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 6(a) or 6(b) shall be available to any party who shall fail to give
notice as provided in this Section 6(c) if the party to whom notice was not
given was prejudiced by the failure to give such notice but the omission so to
notify such indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any such action, suit
or proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party
shall have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified party
shall have been advised by counsel that there may be one or more legal defenses
available to it which are materially different from or in addition to those
available to the indemnifying party (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the reasonable fees
and expenses of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action, suit,
and proceeding or claim effected without its written consent, which consent
shall not be unreasonably withheld or delayed.

7. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 6(a) or 6(b)
is due in accordance with its terms but for any reason is unavailable to or
insufficient to hold harmless an indemnified party in respect to any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate losses, liabilities,
claims, damages and expenses (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Placement Agents on the other hand from the offering of the Shares pursuant to
this Agreement or, if such allocation is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company on the one hand and
the Placement Agents on the other hand in connection with the actions,
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations. The
Company and the Placement Agents agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Placement Agents were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 7, no Placement Agent
shall be required to contribute any amount in excess of the amount of placement
agent fees actually received by such Placement Agent pursuant to this Agreement.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person, if any, who controls a Placement Agent within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Placement Agent, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the Section 15 of the Securities Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 7,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section 7. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Placement
Agents’ obligations to contribute pursuant to this Section 7 are several in
proportion to their respective amounts of placement agent fees each has actually
received pursuant to this Agreement and not joint.

8. Termination.

(a) This Agreement may be terminated at any time prior to the Closing Date by
the Placement Agents by notifying the Company at any time at or before the
Closing Date in the absolute discretion of the Placement Agents if: (i) there
has occurred any material adverse change in the securities markets or any event,
act or occurrence that has materially disrupted, or in the opinion of the
Placement Agents, will in the future materially disrupt, the securities markets
or there shall be such a material adverse change in general financial, political
or economic conditions or the effect of international conditions on the
financial markets in the United States is such as to make it, in the judgment of
the Placement Agents, inadvisable or impracticable to market the Shares or
enforce contracts for the sale of the Shares; (ii) there has occurred any
outbreak or material escalation of hostilities or other calamity or crisis the
effect of which on the financial markets of the United States is such as to make
it, in the judgment of the Placement Agents, inadvisable or impracticable to
market the Shares or enforce contracts for the sale of the Shares; (iii) trading
in the Shares or any securities of the Company has been suspended or materially
limited by the Commission or trading generally on the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. or the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
have been required, by any of said exchanges or by such system or by order of
the Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; (iv) a banking moratorium has been
declared by any state or Federal authority; or (v) in the judgment of the
Placement Agents, there has been, since the time of execution of this Agreement
or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the assets, properties, condition,
financial or otherwise, or in the results of operations, business affairs or
business prospects of the Company and its subsidiaries considered as a whole,
whether or not arising in the ordinary course of business.

(b) If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Placement Agent, and no
Placement Agent shall be under any liability to the Company, except that if this
Agreement is terminated by the Placement Agents because of any failure, refusal
or inability on the part of the Company to comply with the terms or to fulfill
any of the conditions of this Agreement, the Company will reimburse the
Placement Agents for all reasonable out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with this Agreement and the proposed sale of the Shares or in
contemplation of performing their obligations hereunder.

9. [RESERVED]

10. Miscellaneous. The respective agreements, representations, warranties,
indemnities and other statements of the Company and the Placement Agents, as set
forth in this Agreement or made by or on behalf of them pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Placement Agent or the Company or any of their respective officers,
directors or controlling persons referred to in Sections 6 and 7 hereof, and
shall survive delivery of and payment for the Shares. In addition, the
provisions of Sections 5(b), 6, 7 and 8 shall survive the termination or
cancellation of this Agreement.

This Agreement has been and is made for the benefit of the Placement Agents, the
Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the Placement
Agents, or the Company, and directors and officers of the Company, and their
respective successors and assigns, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term “successors and assigns”
shall not include any Investor merely because of such purchase.

All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing,
(a) if to the Placement Agents, c/o CIBC World Markets Corp., 417 5th Avenue,
2nd Floor, New York, New York 10016 Attention: Michael Brinkman, with a copy to
Wilson Sonsini Goodrich & Rosati, a Professional Corporation, 12235 El Camino
Real, Suite 200, San Diego, California 92130, Attention: Martin J. Waters, Esq.,
and (b) if to the Company, to its agent for service as such agent’s address
appears on the cover page of the Registration Statement with a copy to Heller
Ehrman LLP, located at 4350 La Jolla Village Drive, San Diego, California
92122-1246, Attention: Stephen C. Ferruolo.

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.

This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.

Except for the section entitled ‘Confidentiality,’ this Agreement shall
supersede in all respects that certain letter agreement, dated April 1, 2005,
between the Company and CIBC World Markets, Corp.

Please confirm that the foregoing correctly sets forth the agreement among us.

Very truly yours,

AVANIR PHARMACEUTICALS

By /s/ Gerald J. Yakatan

      Title: President and CEO

Confirmed:

CIBC WORLD MARKETS CORP.
LEERINK SWANN & CO.

By: CIBC WORLD MARKETS CORP.

By /s/ Michael Brinkman

      Title: Managing Director

1

EXHIBIT A

PURCHASE AGREEMENT

Avanir Pharmaceuticals
11388 Sorrento Valley Rd, Suite 200
San Diego, CA 92121

Ladies and Gentlemen:

The undersigned entities set forth on Schedule I hereto (each an “Investor”),
hereby confirm and agree with you as follows:

1. This Purchase Agreement (the “Agreement”) is made as of April [8], 2005
between Avanir Pharmaceuticals, a California corporation (the “Company”), and
each Investor.

2. The Company has authorized the sale and issuance of up to 7,770,000 shares
(the “Shares”) of common stock of the Company, no par value (the “Common
Stock”), subject to adjustment by the Company’s Board of Directors, to certain
investors (the “Offering”). The Offering has been registered under the
Securities Act of 1933, as amended, pursuant to the Company’s Registration
Statement on Form S-3 (No. 333-114389), as amended (the “Registration
Statement”).

3. The Company and each Investor agree that each Investor will purchase from the
Company and the Company will issue and sell to each Investor the number of
Shares, set forth opposite such Investor’s name on Schedule I hereto, at a
purchase price of $2.20 per share, pursuant to the Terms and Conditions for
Purchase of Shares attached hereto as Annex I and incorporated herein by
reference as if fully set forth herein. Each Investor acknowledges that the
offering is not being underwritten by the placement agents (the “Placement
Agents”) named in the Prospectus (as hereinafter defined) and that there is no
minimum offering amount. Certificates representing the Shares purchased by each
Investor will not be issued to such Investor; instead, such Shares will be
credited to each Investor using customary book-entry procedures unless an
Investor specifically requests physical delivery of certificate(s) before the
Closing, in which case, the Company shall deliver physical stock certificate(s)
and the Investor, concurrently with such delivery, shall remit the purchase
price to an account designated by the Company.

4. Except as disclosed to the Company in writing, each Investor represents that
(a) it has had no position, office or other material relationship within the
past three years with the Company or persons known to it to be affiliates of the
Company, (b) it is not an NASD member or an Associated Person (as such term is
defined under the NASD Membership and Registration Rules Section 1011) as of the
Closing, and (c) neither the Investor or any group of Investors (as identified
in a public filing made with the Commission) of which the Investor is a part in
connection with the offering of the Shares acquired, or obtained the right to
acquire, 20% or more of the Common Stock (or securities convertible or
exercisable for Common Stock) or the voting power of the Company on a
post-transaction basis.

5. Each Investor hereby confirms receipt of the Prospectus Supplement, dated
April 5, 2005 and the Base Prospectus, dated May 25, 2004 (collectively, the
“Prospectus”) filed by the Company with the Securities and Exchange Commission
on April 6, 2005. Each Investor confirms that it had full access to the
Prospectus and the information incorporated by reference therein, and was fully
able to read and review such materials.

2

Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.

              AGREED AND ACCEPTED:Name of Investor:
       
 
             
   
 
           
 
      Name:  

 
      Title:  

 
           
 
  Name of Investor:  
 

 
                 
   
 
           
 
      Name:  

 
      Title:  

 
           
 
  Name of Investor:  
 

 
                 
   
 
           
 
      Name:  

 
      Title:  

 
           
 
  Name of Investor:  
 

 
                 
   
 
           
 
      Name:  

 
      Title:  

 
           
 
  Name of Investor:  
 

 
                 
   
 
           
 
      Name:  

 
      Title:  

 
           
AVANIR PHARMACEUTICALS
a California corporation
 

 

 

 
           
By:
 
 
 

 
     
 

 
           
Name:
 
 
 

 
     
 

 
           
Title:
 
 
 

 
     
 

3

SCHEDULE I

SCHEDULE OF INVESTORS

                                                              Name in which    
                            book-entry                                 should be
made   Investor Address,           Aggregate                         Telephone
and   Aggregate Number of                 Investor   (if different):   Contact
Person   Shares   Purchase Price   Tax ID Number   Name of Broker   Broker DTC
No.
1.
                                          CIBC        
 
                                                       
2.
                                          CIBC        
 
                                                       
3.
                                          CIBC        
 
                                                       
4.
                                          CIBC        
 
                                                       

4

ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SHARES

1. Authorization and Sale of Shares. The Company has authorized the sale of up
to 7,770,000 Shares. The Company reserves the right to increase or decrease this
number.

  2.   Agreement to Sell and Purchase the Shares; Subscription Date.

2.1 Upon the terms and subject to the conditions hereinafter set forth, at the
Closing (as defined in Section 3), the Company will sell to each Investor, and
each Investor will purchase from the Company, the number of Shares set forth on
Schedule I of this Agreement at the purchase price set forth on therein.

2.2 The Company may enter into agreements similar to this Agreement with certain
other investors (the “Other Investors”) and expects to complete sales of Shares
to them. (Each Investor and the Other Investors are hereinafter collectively
referred to as the “Investors,” and this Agreement and the purchase agreements
executed by the Other Investors are hereinafter collectively referred to as the
“Agreements.”) The Company may accept or reject any one or more Agreements in
its sole discretion.

3. Delivery of the Shares at Closing. The completion of the purchase and sale of
the Shares (the “Closing”) shall occur on April [8], 2005 (the “Closing Date”),
at the offices of the Placement Agents’ counsel. At the Closing, the Company
shall deliver to each Investor, using customary book-entry procedures unless an
Investor specifically requests physical delivery of certificate(s), in which
case, the Company shall deliver physical stock certificate(s), the number of
Shares set forth on Schedule I to this Agreement, and each Investor shall
deliver to the Company or as otherwise directed by the Placement Agents a
certified or official bank check or wire transfer of funds in the full amount of
the purchase price for the Shares being purchased hereunder, as set forth
opposite such Investor’s name on Schedule I hereto, to the Heller Ehrman LLP
(the “Escrow Agent”) client trust account.

The Company’s obligation to issue and sell the Shares to each Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Escrow Agent of a certified or official bank
check or wire transfer of funds in the full amount of the purchase price for the
Shares being purchased; (b) completion of the purchases and sales of Shares
under the Agreements that may be executed with the Other Investors (provided
that all parties acknowledge that there are no minimum purchase amounts as a
pre-condition to the effectiveness of this Agreement); and (c) the accuracy of
the representations and warranties made by each Investor and the fulfillment of
those undertakings of each Investor to be fulfilled prior to the Closing.

Each Investor’s obligation to purchase the Shares shall be subject to the
condition that the Placement Agents shall not have (a) terminated the Placement
Agency Agreement dated April 5, 2005, between the Company and the Placement
Agents (the “Placement Agency Agreement”) pursuant to the terms thereof or
(b) determined that the conditions to closing in the Placement Agency Agreement
have not been satisfied.

4. Representations, Warranties and Covenants of the Company. The Company hereby
represents and warrants to, and covenants with, each Investor, as follows:

4.1 The Company has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement.

4.2 This Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

  5.   Representations, Warranties and Covenants of each Investor.

5.1 Each Investor represents and warrants that it has received the Company’s
Prospectus.

5.2 Each Investor, if outside the United States, will comply with all applicable
laws and regulations in each foreign jurisdiction in which it purchases, offers,
sells or delivers Shares or has in its possession or distributes any offering
material, in all cases at its own expense.

5.3 Each Investor further represents and warrants to, and covenants with, the
Company that (i) such Investor has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) this Agreement constitutes a valid and
binding obligation of such Investor enforceable against such Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

5.4 Each Investor understands that nothing in the Prospectus, this Agreement or
any other materials presented to such Investor in connection with the purchase
and sale of the Shares constitutes legal, tax or investment advice. Such
Investor has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of Shares.

5.5 From and after obtaining the knowledge of the sale of the Shares
contemplated hereby, such Investor has not taken, and prior to the public
announcement of the transaction such Investor shall not take, any action that
has caused or will cause such Investor to have, directly or indirectly, sold or
agreed to sell any shares of Common Stock, effected any short sale, whether or
not against the box, established any “put equivalent position” (as defined in
Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended) with
respect to the Common Stock, granted any other right (including, without
limitation, any put or call option) with respect to the Common Stock or with
respect to any security that includes, relates to or derived any significant
part of its value from the Common Stock, whether or not, directly or indirectly,
in order to hedge its position in the Shares.

6. Escrow Agent.

6.1 The Company and each Investor hereby appoint Heller Ehrman LLP as the
“Escrow Agent” under this Agreement to serve from the date hereof until the
Closing; provided, however, that no Escrow Agent shall be appointed for any
Investors who have requested physical delivery of certificate(s).

6.2 Powers and Duties of Escrow Agent, Indemnity.

(a) Each Investor and the Company hereby irrevocably authorizes the Escrow Agent
to take all actions, to make all decisions and to exercise all powers and
remedies on its behalf under the provisions of this Agreement, including without
limitation all such actions, decisions and powers as are reasonably incidental
thereto. The Escrow Agent may execute any of its duties hereunder by or through
agents, designees or employees.

(b) Neither the Escrow Agent nor any of its partners, directors, members,
officers, agents, designees or employees (collectively, “Escrow Agent
Indemnified Persons”) shall be liable or responsible to any Investor, the
Company or any third party for any action taken or omitted to be taken by the
Escrow Agent or any other such Escrow Agent Indemnified Persons in accordance
with this Agreement or under any related agreement, instrument or document.

7. Survival of Representations, Warranties and Agreements. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements,
representations and warranties made by the Company and each Investor herein
shall survive the execution of this Agreement, the delivery to such Investor of
the Shares being purchased and the payment therefor.

8. Notices. All notices, requests, consents and other communications hereunder
shall be in writing, shall be mailed (A) if within domestic United States by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, or by facsimile, or (B) if delivered from
outside the United States, by International Federal Express or facsimile, and
shall be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by a
nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt
and shall be delivered as addressed as follows:

(a) if to the Company, to:

Avanir Pharmaceuticals

11388 Sorrento Valley Rd, Suite 200

San Diego, CA 92121

Attention: Chief Financial Officer

Telecopy No.: (858) 658-7447

(b) With a copy to:

Heller Ehrman LLP

4350 La Jolla Village Drive

San Diego, California 92122

Attention: Stephen C. Ferruolo, Esq.

Telecopy No.: (858) 450-8499

(c) if to an Investor, at its address on Schedule I hereto, or at such other
address or addresses as may have been furnished to the Company in writing.

9. Changes. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and each Investor.

10. Headings. The headings of the various sections of this Agreement have been
inserted for convenience or reference only and shall not be deemed to be part of
this Agreement.

11. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law.

13. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other parties.

5

INSTRUCTION SHEET FOR INVESTOR
(to be read in conjunction with the entire Purchase Agreement)

A. Please complete the following:

1. Provide the information regarding the Investor requested on Schedule I to the
Purchase Agreement. The Purchase Agreement must be executed by an individual
authorized to bind the Investor.

2. By 8:30 a.m. New York Time on April 6, 2005, return via facsimile signed
copies of the enclosed Purchase Agreement to each of the following persons:

CIBC World Markets Corp.,
300 Madison Avenue
New York, New York 10017
Attn: Ashley Myles
Phone: (212) 667-7258
Telecopy: (212)667-6140

Wilson Sonsini Goodrich & Rosati
12235 El Camino Real, Suite 200 San Diego, California 92130 Attention: Martin J.
Waters, Esq.
Telecopy No.: (858) 350-2399

Please complete all of the information on the signature page of the Purchase
Agreement to facilitate the Closing and the electronic delivery of the Shares.
Please also deliver the originally signed documents to Wilson Sonsini Goodrich &
Rosati at the address above via overnight delivery.

A copy of the Purchase Agreement signed by the Company will be delivered to the
Investor at a later date.

3. By 1:00 p.m. New York Time on April 6, 2005, the Investor shall wire the
purchase price for the Shares to the trust account at the Escrow Agent pursuant
to the enclosed Wire Instructions.

6

Settlement Date

Wire Instructions

Bank:
ABA #:
Swift code (for int’l wires):
Acct name:
Acct #:
Reference:

IMPORTANT: Please clearly indicate on the wire (i) the name of the originator
(i.e., the Investor) and (ii) the beneficiary, Avanir Pharmaceuticals, Inc.
Please also coordinate with your financial institution to ensure that
transaction fees are not inadvertently deducted from the wired funds prior to
their receipt.

PLEASE NOTE: If you will be initiating a wire transfer from overseas, please use
the Swift code number set forth above. Funds may be wired in U.S. dollars only.

CONTACT:

SHARE DELIVERY

Upon closing, shares will be transferred via DTC from Avanir’s Transfer Agent to
the accounts listed in Schedule I of this Purchase Agreement.

Transfer Agent Contact Information:
American Stock Transfer & Trust Co.
59 Maiden Lane
New York, N.Y. 10038
Attn: Isaac Kagan

7

EXHIBIT B

FORM OF LOCK-UP AGREEMENT

April 5, 2005

CIBC World Markets Corp.
Leerink Swann & Co.
c/o CIBC World Markets Corp.
300 Madison Avenue,
New York, New York 1001

Re: Public Offering of Common Stock of Avanir Pharmaceuticals

Gentlemen:

The undersigned, a holder of common stock (“Common Stock”) or rights to acquire
Common Stock, of Avanir Pharmaceuticals (the “Company”) understands that the
Company intends to file a Prospectus Supplement to Prospectus dated April 5,
2005 pursuant to and in accordance with Rule 424(b) under the Securities Act of
1933, as amended, with the Securities and Exchange Commission for the public
offering of Common Stock (the “Offering”). The undersigned further understands
that you are contemplating entering into a Placement Agency Agreement with the
Company in connection with the Offering.

In order to induce the Company and you to enter into the Placement Agency
Agreement and to induce you to act as the Placement Agents in the Offering, the
undersigned agrees, for the benefit of the Company and you, as the Placement
Agents, that should the Offering be effected the undersigned will not, without
the prior written consent of CIBC World Markets Corp., directly or indirectly,
make any offer, sale, assignment, transfer, encumbrance, contract to sell, grant
of an option to purchase or other disposition of any Common Stock beneficially
owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) by the undersigned on the date hereof or
hereafter acquired for a period of 90 days subsequent to the date of the
Placement Agency Agreement (the “Restricted Period”), other than Common Stock
transferred as a gift or gifts (provided that any donee thereof agrees in
writing to be bound by the terms hereof).

The undersigned confirms that he, she or it understands that the Placement
Agents and the Company will rely upon the representations set forth in this
agreement in proceeding with the Offering. This agreement shall be binding on
the undersigned and his, her or its respective successors, heirs, personal
representatives and assigns. The undersigned agrees and consents to the entry of
stop transfer instructions with the Company’s transfer agent against the
transfer of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock held by the undersigned except in compliance with
this agreement.

Notwithstanding anything to the contrary herein, the undersigned shall be
permitted to enter into a trading plan or agreement with respect to Company
securities pursuant to Rule 10b5-1 under the Exchange Act, provided that no
transactions shall occur under such plan or agreement during the Restricted
Period.

This Lock-Up Agreement shall terminate and the undersigned shall be released
from the undersigned’s obligations hereunder if (i) the Company does not proceed
with the Offering with the Placement Agents and notifies the Placement Agents in
writing of the same or (ii) the final prospectus relating to the Offering has
not been filed by April 18, 2005.

Dated:      ,

Very truly yours,

     
Signature

Printed Name and Title (if applicable):

     
     
     

8

EXHIBIT C

OPINION OF COMPANY COUNSEL

     
April 8, 2005
  Telephone (858) 450-8400
Fax (858) 450-8499

          CIBC World Markets Corp.

Leerink Swann & Co. As Placement Agents
        c/o CIBC World Markets Corp.

300 Madison Avenue New York, New York 10017 Re:
  Avanir Pharmaceuticals

Ladies and Gentlemen:

We have acted as counsel to Avanir Pharmaceuticals, a California corporation
(the “Company”), in connection with the issuance and sale of up to 7,770,000
shares of Class A Common Stock of the Company (the “Shares”) in connection with
that certain Placement Agency Agreement, dated as of April 5, 2005, between you
and the Company (the “Agreement”). This opinion is rendered to you pursuant to
Section 4(f) of the Agreement. Capitalized terms used without definition in this
opinion have the meanings given to them in the Agreement.

I.

In connection with this opinion, we have assumed the authenticity of all
records, documents, and instruments submitted to us as originals, the
genuineness of all signatures, the legal capacity of natural persons, the
conformity to the originals of all records, documents, and instruments submitted
to us as copies, faxes or .pdf files. We have based our opinion upon our review
of the following records, documents and instruments:

a. The Amended and Restated Articles of Incorporation of the Company, certified
by the Secretary of State of the State of California as of      , 2005 and
certified to us by an officer of the Company as being complete and in full force
and effect as of the date of this opinion letter;

b. The Bylaws of the Company, certified to us by an officer of the Company as
being complete and in full force and effect as of the date of this opinion
letter;

c. Records certified to us by an officer of the Company as constituting all
records of proceedings and actions of the Board of Directors and any committees
thereof and the shareholders of the Company relating to (i) the authority to
execute and deliver the Agreement, (ii) the transactions contemplated by the
Agreement, and (iii) certain factual matters;

d. A Certificate of Status relating to the Company, issued by the Secretary of
State of the State of California, dated      , 2005 and a letter of good
standing relating to the Company, issued by the Franchise Tax Board of the State
of California, dated      , 2005;

e. The Registration Statement;

f. The prospectus supplement dated      , 2005 (the “Prospectus”);

g. The Company’s annual report filed on Form 10-K for the period ending
September 30, 2004, the Company’s quarterly report filed on Form 10-Q for the
period ending December 31, 2004, and the Company’s current reports on Form 8-K
filed on December 15, 2004, December 21, 2004, January 19, 2005, February 10,
2005, March 14, 2005 and March 23, 2005 (collectively, the “1934 Act Filings”);

h. The agreements, leases or other documents or instruments listed on Annex A to
this opinion (the “Material Agreements”);

i. A certificate from American Stock Transfer & Trust Co., the Company’s
Registrar and Transfer Agent, regarding the outstanding capitalization of the
Company’s Class A Common Stock as of the close of business on      , 2005;

j. The Certificate to Counsel in Support of Legal Opinions, dated      , 2005
(the "Backup Certificate”), of the President and Chief Executive Officer and the
Chief Financial Officer of the Company delivered to us in connection with this
opinion letter;

k. Such other records, certificates, documents and instruments as we have deemed
necessary for the purpose of rendering the opinions contained herein;

l. The Agreement;

m. The Articles of Incorporation of Xenerex Biosciences, a California
corporation (“Xenerex”), certified by the Secretary of State of the State of
California as of      , 2005 and certified to us by an officer of the Company as
being complete and in full force and effect as of the date of this opinion
letter;

n. A Certificate of Status relating to Xenerex, issued by the Secretary of State
of the State of California, dated      , 2005 and a letter of good standing
relating to the Company, issued by the Franchise Tax Board of the State of
California, dated      , 2005; and

o. The Articles of Incorporation of Avanir Holding Company, a California
corporation (“AHC”), certified by the Secretary of State of the State of
California as of      , 2005 and certified to us by an officer of the Company as
being complete and in full force and effect as of the date of this opinion
letter;

p. A Certificate of Status relating to AHC, issued by the Secretary of State of
the State of California, dated      , 2005 and a letter of good standing
relating to the Company, issued by the Franchise Tax Board of the State of
California, dated      , 2005; and

q. Our legal opinions, dated August 8, 2003 and December 31, 2003, relating to
the due authorization, valid issuance and fully-paid and non-assessable status
of certain shares of Avanir Class A common stock, filed with the Securities and
Exchange Commission as exhibits to the Company’s registration statements on Form
S-3 (File Nos. 333-107820 and 333-111680).

Our opinion in Paragraph 1 of Part III below that the Company, Xenerex and AHC
are each “validly existing as a corporation in good standing under the laws of
the State of California” is based solely on the records identified in Items (a),
(d), (j), (m), (n), (o) and (p) of Part I.

Our opinion in Paragraph 2 of Part III below as to (i) the “authorized
capitalization” of the Company is based solely on the records identified in Item
(a) of Part I; (ii) the due authorization, valid issuance and non-assessable and
fully-paid status of the Class A Common Stock of the Company issued as of the
date of this opinion is based solely on the records identified as Items (a),
(h), (j) and (q) of Part I; and; (iii) the fully-paid and nonassessable status
of the outstanding shares of the Class A Common Stock of the Company is based on
the representations set forth in the Backup Certificate that the Company has
received the amount of consideration recited in the applicable agreements and
board resolutions pursuant to which such capital stock of the Company was
issued.

We express no opinion with respect to any consents, approvals, authorizations,
orders, filings, registrations or qualifications required by the NASD and the
Blue Sky laws of the various states and other jurisdictions within the United
States or the securities laws of any jurisdiction outside the United States for
the issuance and sale of the Shares and compliance by the Company with the
provisions of the Agreement.

In connection with our opinion in Paragraph 5 of Part III below (and elsewhere)
relating to any Material Agreement, we have not reviewed, and express no opinion
on (i) financial covenants or similar provisions requiring financial
calculations or determinations to ascertain compliance; (ii) provisions relating
to the occurrence of a “material adverse event” or words of similar import; or
(iii) parol evidence bearing on interpretation or construction. To the extent
that any Material Agreement is governed by the laws of any jurisdiction other
than the laws of the State of California or the State of New York, our opinion
relating to those agreements is based solely upon the plain meaning of their
language without regard to interpretation or construction that might be
indicated by the laws governing those agreements or instruments.

As to matters of fact material to our opinion, we have relied upon the
representations of factual matters contained in the Backup Certificate.

In connection with our opinion in Paragraph 10 of Part III below, we have
assumed that, pending the uses identified in the Prospectus, the net proceeds of
the offering contemplated by the Prospectus will be invested in government
securities within the meaning of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), to the extent necessary to ensure that the
Company will not hold “investment securities” (within the meaning of the
Investment Company Act) having a value exceeding 40% of the Company’s total
assets (exclusive of government securities and cash items) on an unconsolidated
basis. We have also not considered the effect on such opinion of the identity,
business or control of any of the Company’s shareholders and have assumed that
none of the Company’s shareholders would be deemed an “investment company”
within the meaning of the Investment Company Act.

As used in our opinion, the expressions “to our knowledge,” “known to us,” and
similar phrases mean that, after an examination of the documents made available
to us by the Company and after inquiries of officers of the Company, but without
any further independent factual investigation, we find no reason to believe that
the statements herein so qualified are inaccurate. Further, the expressions “to
our knowledge,” “known to us,” and similar phrases refer to the actual knowledge
of attorneys in this firm who are or have been involved in substantive legal
representation of the Company regarding the Agreement and the transactions
contemplated thereby. Except to the extent expressly set forth herein, we have
not undertaken any independent investigation to determine the existence or
absence of any fact or the accuracy of any statement so qualified, and any
limited inquiry undertaken by us during the preparation of this opinion letter
should not be regarded as such investigation. Except to the extent expressly set
forth herein, no inference as to our knowledge of any matters bearing on the
accuracy of any statement so qualified should be drawn from our representation
of the Company or our rendering of the opinions set forth below.

We have also assumed that there are no facts or circumstances relating to the
Placement Agents or any holder of securities that might prevent them from
enforcing any of the rights to which our opinion relates (for example, lack of
due incorporation by the Placement Agents, regulatory prohibitions relating to
the Placement Agents or failure on the part of the Placement Agents to qualify
to do business in any state where such qualification is a prerequisite to
enforcement of rights under the Agreement).

II.

With respect to the opinions set forth in Part III below, we express no opinion
as to:

a. The anti-fraud laws, rule or regulations of any jurisdiction.

b. The tax, anti-trust, land use, export, safety, environmental

c. Except as set forth in paragraph 9 below, the securities laws of any
jurisdiction.

d. The applicable choice-of-law rules that may affect the interpretation of the
Agreement.

e. The financial statements and schedules and other financial and statistical
data included in the Registration Statement or Prospectus.

f. Any state or federal laws, rules or regulations applicable to the
transactions contemplated by the Agreement because of the nature of the business
of any party thereto other than the Company.

g. The past, present or future fair market value of any securities.

This opinion is limited to the federal laws of the United States of America and
the laws of the State of California and the State of New York. We disclaim any
opinion as to the laws of any other jurisdiction and we further disclaim any
opinion as to any statute, rule, regulation, ordinance, order or other
promulgation of any regional or local governmental body. Without limiting the
generality of the foregoing, we are not acting here as experts on, and we do not
express any opinion on any applicable laws, rules or regulations relating to
patents, copyrights, trademarks and other proprietary rights and licenses.

III.

Based upon the foregoing and our examination of such questions of law as we have
deemed necessary or appropriate for the purpose of this opinion, and subject to
the assumptions, exceptions, limitations and qualifications expressed in this
opinion letter, it is our opinion that:

1. The Company, Xenerex and AHC have been duly incorporated and are validly
existing as corporations in good standing under the laws of the State of
California, and the Company has all corporate power and authority necessary to
own or hold its properties and to conduct its business as described in the
Registration Statement, except where the failure to have such power or authority
would not have, singularly or in the aggregate, a material adverse effect on the
condition (financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole.

2. The Company has an authorized capitalization as set forth in the Prospectus,
and all of the issued shares of Class A Common Stock of the Company have been
duly authorized and validly issued, and are non-assessable and fully-paid. Such
shares conform to the description thereof contained under the heading
“Description of Securities” in the Prospectus. The Shares being delivered by the
Company on the date of this opinion have been duly authorized and, when issued
and delivered to and paid for on the terms set forth in the Prospectus, will be
validly issued, fully-paid and non-assessable and conform to the description
thereof contained under the heading “Description of Securities” in the
Prospectus.

3. There are no preemptive or other rights to subscribe for or to purchase from
the Company any of the Shares pursuant to the Company’s Amended and Restated
Articles of Incorporation or Bylaws nor, to our knowledge, are there any
contractual preemptive rights to subscribe for any Shares.

4. The Agreement has been duly authorized, executed and delivered by the
Company.

5. The execution and delivery of the Agreement by the Company and the sale of
the Shares as contemplated by the Prospectus will not (A) to our knowledge,
breach any of the terms or provisions of, or constitute a default under, any
Material Agreement, (B) result in any violation of the Amended and Restated
Articles of Incorporation or Bylaws of the Company, or (C) result in any
violation of any federal, California, or New York law, rule or regulation or, to
our knowledge, any decree, judgment or order applicable to the Company.

6. Except for the registration of the Shares under the Securities Act of 1933
(the “Securities Act”) and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities Exchange
Act of 1934 and applicable state securities or blue sky laws in connection with
the sale of Shares by the Company, no consent, approval, authorization or order
of, or filing or registration with, any federal, California, or New York
governmental or regulatory agency or body is required in connection with the
execution and delivery of the Agreement by the Company and the sale of the
Shares to the Buyers as contemplated by the Prospectus.

7. The statements in the Prospectus under the heading “Description of
Securities,” and in Item 15 of Part II of the Registration Statement, to the
extent that they constitute summaries of law or documents referred to therein,
fairly summarize the law and documents described therein in all material
respects.

8. To our knowledge, there are no legal or governmental proceedings threatened
or pending to which the Company or any of its subsidiaries is a party or of
which any property or asset of the Company or any of its subsidiaries is the
subject that are required to be described in the Prospectus but are not so
described.

9. The Registration Statement and the Prospectus, and any further amendments or
supplements thereto made by the Company prior to the date of this opinion
letter, and all documents incorporated by reference in the Registration
Statement (other than the financial statements and schedules and other financial
and statistical data contained therein or incorporated by reference therein, as
to which with your permission we express no opinion) complied as to form in all
material respects with the requirements of the Securities Act.

10. The Company is not, and after giving effect to the offering and sale of the
Shares and the application of the proceeds thereof as described in the
Prospectus will not be, required to register as an “investment company” as such
term is defined in the Investment Company Act.

IV.

In connection with the registration of the Shares, we have reviewed the
Registration Statement, the Prospectus and the 1934 Act Filings, but have not
independently verified the accuracy, completeness or fairness of the statements
in those documents. Since we have undertaken no independent investigation
whatsoever, the limitations inherent in our review and therefore the knowledge
available to us are such that we are unable to assume any responsibility for
such accuracy, completeness or fairness. However, based on our limited review,
no facts have come to our attention that cause us to believe that the
Registration Statement (including any document incorporated by reference therein
as of the date such document was filed with the Commission), as of the date of
the Company’s most recent Form 10-K, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or that the Registration Statement as of
the date such document was filed with the Commission (including any document
incorporated by reference therein as of the date such document was filed with
the Commission), the Prospectus, or any further supplement to the Prospectus, in
each case, as of the date such document was filed with the Commission and at all
times up to the date of this opinion letter, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that we express no
belief with respect to the financial statements and schedules and other
financial and statistical data contained or incorporated by reference in the
Registration Statement or Prospectus).

This opinion letter is rendered to you in connection with the issuance and sale
of the Shares as contemplated by the Agreement and is solely for your benefit in
connection with the Agreement. This opinion letter may not be relied upon by you
for any other purpose, or relied upon by any other person, firm, corporation or
other entity for any purpose, without our prior written consent. We disclaim any
obligation to advise you of any facts, circumstances, events or developments in
areas covered by this opinion letter that occur or that are brought to our
attention after the date of this opinion letter.

Very truly yours,

9

Annex A
Material Agreements

     
•
  Avanir Pharmaceuticals Amended and Restated 1998 Stock Option Plan
 
   
•
  Avanir Pharmaceuticals Amended and Restated 1994 Stock Option Plan
 
   
•
  Avanir Pharmaceuticals Amended and Restated 2000 Stock Option Plan
 
   
•
  Avanir Pharmaceuticals 2003 Equity Incentive Plan
 
   
•
  Employment Agreement, dated November 29, 2001, between Avanir Pharmaceuticals
and Gerald J. Yakatan
 
   
•
  Form of Indemnification Agreement with certain Directors and Executive
Officers of AVANIR
Pharmaceuticals.
 
   
•
  License Agreement, dated March 31, 2000, by and between Avanir Pharmaceuticals
and SB Pharmco Puerto
Rico, a Puerto Rico Corporation
 
   
•
  License Purchase Agreement, dated as of November 22, 2002, between Avanir
Pharmaceuticals and Drug
Royalty USA
 
   
•
  License Agreement, dated August 1, 2000, by and between Avanir Pharmaceuticals
and Irisys Research and
Development, LLC, a California limited liability company
 
   
•
  Standard Industrial Net Lease by and between Avanir Pharmaceuticals and BC
Sorrento, LLC, effective
September 1, 2000
 
   
•
•
•
•
•
•
•
•
•
•
•
  Standard Industrial Net Lease by and between Avanir Pharmaceuticals (“Tenant”)
and Sorrento Plaza, a
California limited partnership (“Landlord”), effective May 20, 2002
Settlement Agreement and Mutual Release by and between Avanir Pharmaceuticals s
and David H. Katz, M.D.
and Lee R. Katz, effective March 23, 2000.
Settlement Agreement and Mutual General Release by and between LIDAK
Pharmaceuticals and Medical Biology
Institute, effective August 27, 1998.
Technology Acquisition Agreement by and between Avanir Pharmaceuticals and
Ciblex Corporation, effective
March 2, 2001.
Securities Purchase Agreement, dated as of November 25, 2003, by and between
Avanir Pharmaceuticals and
several accredited investors.
Securities Purchase Agreement, dated as of July 21, 2003, by and between Avanir
Pharmaceuticals and
several accredited investors.
Form of Stock Option Agreement under the Avanir Pharmaceuticals’ 2005 Equity
Incentive Plan
Asset Purchase Agreement, dated March 8, 2005, by and among Avanir
Pharmaceuticals, Avanir Holding
Company, IriSys, Inc., Gerald J. Yakatan, Ph.D. and Gina M. Stack.
Form of Retention Agreement between Avanir Pharmaceuticals and certain of its
executive officers.
Stock Purchase Agreement between Avanir Pharmaceuticals and CDIB Capital
Investment America Ltd., dated
December 10, 2004.
Underwriting Agreement between Avanir Pharmaceuticals and Lazard Freres & Co.
LLC, dated May 25, 2004.

10

EXHIBIT D

OPINION OF SPECIAL REGULATORY COUNSEL FOR THE COMPANY

April [8], 2005

CIBC World Markets Corp.
Leerink Swann & Co.
As Placement Agents
c/o CIBC World Markets Corp.
300 Madison Avenue
New York, New York 10017

Ladies and Gentlemen:

We have been engaged by Avanir Pharmaceuticals, Inc., a California corporation
(“the Company”), to review, in connection with the issuance and sale of up to
7,770,000 shares of the Company’s Class A Common Stock, the description in the
offering materials of certain matters pertaining to the approval and regulation
of products by the United States Food and Drug Administration. This opinion is
being rendered pursuant to Section 4(f) of the Placement Agency Agreement, dated
as of April 5, 2005, between you and the Company. Subject to certain exceptions
set forth in the opinion, it is our opinion that, as of the date hereof:

(i) We are familiar with the United States Federal Food, Drug and Cosmetic Act
(the “FDC Act”) and related governmental regulatory matters as applied generally
to drugs of the nature under development by the Company and we have reviewed the
sections of the Registration Statement and Prospectus, including documents
incorporated by reference therein, related to governmental regulatory matters as
applied generally to drugs of the nature under development by the Company
(collectively, the “Regulatory Disclosure”);

(ii) Insofar as the statements in the Regulatory Disclosure constitute summaries
of legal matters, documents or legal or regulatory proceedings referred to
therein, the Regulatory Disclosure accurately summarizes the information called
for with respect to such legal matters, documents or proceedings and accurately
summarizes the matters referred to therein;

(iii) To our knowledge, there are no legal or governmental proceedings relating
to the FDC Act, the Public Health Service Act or any regulations of the FDA
pending or threatened to which the Company or any of its subsidiaries is a
party, nor are we aware of any material violations of such acts or regulations
by the Company or any of its subsidiaries; and

(iv) As to the Regulatory Disclosure contained in each Registration Statement
and Prospectus, we have not independently verified its accuracy, completeness or
fairness. Since we have undertaken no independent investigation whatsoever, the
limitations inherent in our review and therefore the knowledge available to us
are such that we are unable to assume any responsibility for such accuracy,
completeness or fairness. However, based on our limited review, no facts have
come to our attention that cause us to believe that the Regulatory Disclosure,
as of the effective date of the Registration Statement and at all times up to
the date of this opinion letter, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that such sections
of the Prospectus or any amendment or supplement thereto, in each case, as of
the date such document was filed with the Commission and at all times up to the
date of this opinion letter, contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

This opinion is rendered to you in connection with the Underwriting Agreement
and is solely for your benefit. This opinion may not be relied upon by you for
any other purpose, or relied upon by any other person, firm, corporation, or
other entity for any purpose, without our prior written consent. We disclaim any
obligation to advise you of any developments in areas covered by this opinion
that occur after the date of this opinion.

Very Truly Yours,

11

EXHIBIT E

MATTERS TO BE COVERED IN THE OPINION OF
PATENT COUNSEL FOR THE COMPANY

1. We have reviewed the statements under the captions “Risk Factors —
[Intellectual Property Risk Factor]” and “Business — [Intellectual Property].”
To the best of our knowledge, and to the extent that they constitute matters of
law, summaries of legal matters, documents or proceedings, or legal conclusions,
the statements in the aforementioned portions of the Prospectus relating to the
Patents are correct in all material respects and fairly and correctly present
the information called for with respect thereto. Nothing has come to our
attention which caused us to believe that the above-mentioned sections of the
Registration Statement and any amendment or supplement thereto made available
and reviewed by us, at the time the Registration Statement became effective and
at all times subsequent thereto up to and on the Closing Date, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made.

2. The Company is listed in the records of the United States Patent and
Trademark Office (“USPTO”) as the sole holder of record of the U.S. Company
Patents. To the best of our knowledge, there exist no asserted claims of third
parties to any ownership interest or lien with respect to the Company Patents,
with the exception of a lien held by Drug Royalty USA, Inc. (“DRC”) in
connection with certain Company Patents listed in Schedule A of the Security
Agreement between Company and DRC (Annex A). With the exception of the DRC lien,
we are not aware of any facts that would preclude the Company from having clear
title to the Company Patents listed in the Schedule. To the best of our
knowledge and based on facts certified by officers of the Company, the Company
owns as its sole property the Company Patents.

3. We are not aware of any material defect in the preparation or filing of the
Patents that we prosecuted on behalf of the Company.

4. To the extent that we have had or now have actual knowledge of any material
prior art and that we have appreciated or now appreciate the materiality of such
prior art, we have complied with and are complying with the required duty of
candor and good faith in dealing with the U.S. Patent and Trademark Office
(“USPTO”), including the duty to disclose as defined in 37 CFR § 1.56 with
respect to all U.S. Patents in the Schedule which we prosecute or have
prosecuted.

5. To the best of our knowledge, the Patents in the Schedule are being pursued
by the Company and have not lapsed, expired, or been abandoned by the Company.

6. To the best of our knowledge, there is no threatened action, suit, proceeding
or claim by others that the Company is infringing any patent.

7. To the best of our knowledge, there are no actions, suits, proceedings, or
claims of third parties to any ownership or inventorship interest with respect
to any of the Patents, and we know of no reasonable basis for any such actions,
suits, proceedings, or claims.

8. Although we have not completed market clearance searches or analyses, we are
not aware that the Company in its current or proposed business is infringing any
valid or enforceable patent rights of others.

9. To the best of our knowledge, there are no legal or governmental proceedings
pending against the Company or its officers, the Company’s licensors or their
officers, relating to any patent application listed in the Schedule, other than
review by patent offices of pending applications for patents.

10. To the best of our knowledge and based on facts certified by officers of the
Company, there is no action, suit, claim or proceeding relating to patent rights
or licenses, trademarks or trademark rights, copyrights, collaborative research,
licenses or royalty arrangements or agreements or trade secrets, know-how or
proprietary techniques, including processes and substances, owned by or
affecting the business or operations of the Company, which have been asserted
against the Company or any of its officers or directors.

11. To the best of our knowledge, there is no reason why the Patents if issued
are not valid, and if not yet issued, would not be valid or would not afford the
Company patent protection for Abreva, Neurodex and IgE.

12. To the best of our knowledge and based on facts certified by officers of the
Company, we are not aware of any parties that are infringing any Licensed Patent
or Company Patent.

13. To the best of our knowledge and based on facts certified by officers of the
Company, we are not aware of anything that would affect the Company’s
obligations under any of its agreements relating to the Patents.

12

EXHIBIT F

ACCOUNTANTS’ COMFORT LETTER

CIBC World Markets Corp.
Leerink Swann & Co.
As Placement Agents
c/o CIBC World Markets Corp.
300 Madison Avenue
New York, New York 10017

Ladies and Gentlemen:

We have audited the consolidated balance sheets of Avanir Pharmaceuticals and
subsidiary (the “Company”) as of September 30, 2004 and 2003, and the related
consolidated statements of operations and comprehensive operations,
stockholders’ equity, and cash flows for each of the three years in the period
ended September 30, 2004, all included in the Company’s annual report on Form
10-K for the year ended September 30, 2004, which is incorporated by reference
in the registration statement (No. 333-114389) on Form S-3 filed by the Company
under the Securities Act of 1933 (the “1933 Act”); our report with respect
thereto is also incorporated by reference in the registration statement. The
registration statement, including the related prospectus supplement dated
April 5, 2005 is herein referred to as the registration statement.

In connection with the registration statement:

1. We are independent certified public accountants with respect to the Company
within the meaning of the Act and the applicable rules and regulations
thereunder adopted by the Securities and Exchange Commission (“SEC”) and the
Public Company Accounting Oversight Board (US) (“PCAOB”).

2. In our opinion, the consolidated financial statements audited by us and
incorporated by reference in the registration statement comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and the Securities Exchange Act of 1934 (the “1934 Act”), and the related rules
and regulations adopted by the SEC.

3. We have not audited any financial statements of the Company as of any date or
for any period subsequent to September 30, 2004; although we have conducted an
audit for the year ended September 30, 2004, the purpose (and therefore the
scope) of the audit was to enable us to express our opinion on the consolidated
financial statements as of September 30, 2004, and for the year then ended, but
not on the consolidated financial statements for any interim period within that
year. Therefore, we are unable to and do not express any opinion on the
unaudited consolidated balance sheets as of December 31, 2004 and the unaudited
consolidated statements of operations and comprehensive operations and of cash
flows for the three months ended December 31, 2004 and 2003 , included in the
Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2004
, incorporated by reference in the registration statement, or on the financial
position, results of operations, or cash flows as of any date or for any period
subsequent to September 30, 2004.

4. For purposes of this letter, we have read the minutes of the meetings of the
stockholders and the board of directors, including committees thereof, of the
Company held since September 30, 2004 as set forth in the minutes book at
[one/two days prior to close], 2005, officials of the Company having advised us
that the minutes of all such meetings through that date were set forth therein;
we have carried out other procedures to [one/two days prior to close], 2005 (our
procedures did not extend to [ ], 2005) as follows:

(a) With respect to the three month periods ended December 31, 2004 and 2003, we
have—

(i) Performed the procedures specified by the American Institute of Certified
Public Accountants for a review of interim financial information as described in
SAS No. 100, Interim Financial Information, on the unaudited consolidated
financial statements for these periods, described in 3, included in the
Company’s quarterly report on Form 10-Q for the quarters ended December 31, 2003
and March 31, 2004, incorporated by reference in the registration statement.

(ii) Inquired of certain officials of the Company who have responsibility for
financial and accounting matters whether the unaudited consolidated financial
statements referred to in a(i) comply as to form in all material respects with
the applicable accounting requirements of the 1934 Act as it applies to Form
10-Q, and the related rules and regulations adopted by the SEC.

(b) With respect to the period from January 1, 2005 to February 28, 2005, we
have—

(i) Read the unaudited consolidated financial statements of the Company for
January, February of both 2005 and 2004 furnished us by the Company, officials
of the Company having advised us that no such financial statements as of any
date or for any period subsequent to February 28, 2005, were available.

(ii) Inquired of certain officials of the Company who have responsibility for
financial and accounting matters whether the unaudited consolidated financial
statements referred to in b(i) are stated on a basis substantially consistent
with that of the audited consolidated financial statements incorporated by
reference in the registration statement.

The foregoing procedures do not constitute an audit conducted in accordance with
PCAOB auditing standards. Also, they would not necessarily reveal matters of
significance with respect to the comments in the following paragraph.
Accordingly, we make no representations about the sufficiency of the foregoing
procedures for your purposes.

5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:

(a) (i) Any material modifications should be made to the unaudited consolidated
financial statements described in 3, incorporated by reference in the
registration statement, for them to be in conformity with accounting principles
generally accepted in the United States of America.

(ii) The unaudited consolidated financial statements described in 4(a)(i) do not
comply as to form in all material respects with the applicable accounting
requirements of the 1934 Act as it applies to Form 10-Q, and the related rules
and regulations adopted by the SEC.

(b) (i) At February 28, 2005, there was any change in

the capital stock, increase in long-term debt, or decrease in net current assets
or shareholders’ equity of the Company as compared with amounts shown in the
December 31, 2004 unaudited condensed consolidated balance sheet incorporated by
reference in the registration statement, except that the unaudited consolidated
balance sheet as of February 28, 2005, which we were furnished by the Company,
showed an increase in capital stock of $104,867, a decrease in net current
assets of $4,035,754, and a decrease in shareholders’ equity of $4,907,734.

(ii) For the period from January 1, 2005 to February 28, 2005, there was a
decrease, as compared with the corresponding period in the preceding year, in
the Company’s operating revenues, or an increase in net loss attributable to
common shareholders or net loss per share, except for a decrease in operating
revenues of $50,115 and an increase in net loss attributable to common
shareholders of $454,424.

6. As mentioned in 4(b)(i), Company officials have advised us that no
consolidated financial statements as of any date or for any period subsequent to
February 28, 2005 are available; accordingly, the procedures carried out by us
with respect to changes in financial statement items after February 28, 2005,
have, of necessity, been even more limited than those with respect to the
periods referred to in 4. We have inquired of certain officials of the Company
who have responsibility for financial and accounting matters whether (a) at
[one/two days prior to close], 2005 there was any change in the capital stock,
increase in long-term debt or equity or any decrease in consolidated net current
assets shareholder’s equity of the Company as compared with amounts shown on the
December 31, 2004 unaudited consolidated balance sheet incorporated by reference
in the registration statement, or (b) for the period from February 28, 2005 to
[one/two days prior to close], 2005 there were any decreases, as compared with
the corresponding period in the preceding year, in operating revenues or
increases in net loss attributable to common shareholders or net loss per share.
On the basis of these inquiries and our reading of the minutes as described in
4, nothing came to our attention that caused us to believe that there was any
such change, increase, or decrease, except for changes comparable to those noted
in 5(b).

7. For purposes of this letter, we have also read the items identified by you on
the attached copies of the Company’s registration statement on Form S-3, report
on Form 10-K for the year ended September 30, 2004 and related Form 14A
Definitive Proxy, Form 10-Q and related earnings releases on Form 8-K for the
quarter ended December 31, 2004, and any financial information contained in the
prospectus supplement dated April 5, 2005, and have performed the following
procedures, which were applied as indicated with respect to the symbols
explained below:

A. Compared the amount with (or recomputed from) the Company’s audited
consolidated financial statements (after rounding, where applicable) and notes
thereto, as of or for the period indicated, incorporated by reference in the
registration statement and found them to be in agreement.

B. Compared the amount with (or recomputed from) the Company’s audited
consolidated financial statements (after rounding, where applicable) and notes
thereto, as of or for the period indicated, which are not included or
incorporated by reference in the registration statement, and found them to be in
agreement.

C. Compared the amount with (or recomputed from) the Company’s unaudited
consolidated financial statements (after rounding, where applicable) and notes
thereto, which are incorporated by reference in the registration statement, and
found them to be in agreement.

D. Compared the amount with (or recomputed from) a schedule or report prepared
by the Company, which was derived from the accounting records of the Company
that are subject to the Company’s internal controls and found them to be in
agreement.

8. Our audit of the consolidated financial statements for the periods referred
to in the introductory paragraph of this letter was comprised of audit tests and
procedures deemed necessary for the purpose of expressing an opinion on such
financial statements taken as a whole. For none of the periods referred to
therein, or any other period, did we perform audit tests for the purpose of
expressing an opinion on individual balances of accounts or summaries of
selected transactions such as those enumerated above, and, accordingly, we
express no opinion thereon.

9. It should be understood that we make no representations regarding questions
of legal interpretation or regarding the sufficiency for your purposes of the
procedures enumerated in 7; also, such procedures would not necessarily reveal
any material misstatement of the amounts or percentages referred to above.
Further, we have addressed ourselves solely to the foregoing data as set forth
in the registration statement and make no representations regarding the adequacy
of disclosure or regarding whether any material facts have been omitted.

10. This letter is to assist the placement agents in conducting and documenting
their investigation of the affairs of the Company in connection with the
placement of the securities covered by the registration statement, and it is not
to be used, circulated, quoted, or otherwise referred to within or without the
placement agent group for any other purpose, including but not limited to the
registration, purchase, or sale of securities, nor is it to be filed with or
referred to in whole or in part in the registration statement or any other
document, except that reference may be made to it in the placement agency
agreement or in any list of closing documents pertaining to the offering of the
securities covered by the registration statement.

13

SCHEDULE I

LOCK-UP SIGNATORIES

Officers

James Berg

J. David Hansen

Gregory P. Hanson

Gerald J. Yakatan, Ph.D.

Non-Employee Directors

Stephen G. Austin
Dennis J. Carlo, Ph.D.
Charles A. Mathews
Harold F. Oberkfell
Kenneth E. Olson
Dennis G. Podlesak
Jonathan T. Silverstein
Paul G. Thomas

Others Company Shareholders

IriSys, Inc.

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