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                                  Exhibit 10.4

                            INDEMNIFICATION AGREEMENT

         This Indemnification Agreement ("Agreement") is made as of this __th
day of _____, ___ by and between AVANIR PHARMACEUTICALS, a California
Corporation (the "Company"), and _________________ ("Indemnitee").

         WHEREAS, the Company and Indemnitee recognize the existence of a
substantial increase in corporate litigation in general, subjecting officers and
directors to expensive litigation risks, many of which are not covered by
reasonably available liability insurance;

         WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors and officers or in other capacities
unless they are provided with reasonable protection through insurance or
indemnification against risks of claims and actions against them arising out of
their service to and activities on behalf of the corporations.

         WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified.

         WHEREAS, Indemnitee is willing to serve, to continue to serve and to
take on additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.

         NOW THEREFORE, the Company and Indemnitee hereby agree as follows:

1. INDEMNIFICATION.

         (a) Third Party Proceedings. The Company shall indemnify Indemnitee if
Indemnitee is or was a party, witness or participant or is threatened to be made
a party, witness or participant to any threatened, pending or completed action
or proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company, or a
subsidiary of the Company, by reason of any action or inaction on the part of
Indemnitee while an officer or director or by reason of the fact that the
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against (i) expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Company (which approval shall not be unreasonably withheld),
and (ii) any federal, state, local or foreign taxes imposed as a result of the
actual or deemed receipt of any payments under this Agreement relating to any
indemnifiable event, provided that (A) the foregoing were actually and
reasonable incurred by Indemnitee in connection with such action or proceeding,
and (B) Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe Indemnitee's
conduct
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was unlawful. The termination of any action or proceeding by judgment, order,
settlement, conviction, or upon plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that Indemnitee did not act in good faith
and in a manner which Indemnitee reasonably believed to be in the best interests
of the Company, or, with respect to any criminal action or proceeding, had no
reasonable cause to believe that Indemnitee's conduct was unlawful.

         (b) Proceedings By or in the Right of the Company. The Company shall
indemnify Indemnitee if Indemnitee is or was a party, witness or participant or
is threatened to be made a party, witness or participant to any threatened,
pending or completed action or proceeding by or in the right of the Company or
any subsidiary of the Company to procure a judgment in its favor by reason of
the fact that Indemnitee is or was a director, officer, employee or agent of the
Company or any subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by reason of the fact
that the Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), and to the fullest extent permitted by law, amounts paid in settlement,
in each case to the extent actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such action or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the best interests of the Company and its shareholders, except that no
indemnification shall have been adjudged to be liable to the Company in the
performance of Indemnitee's duty to the Company and its shareholders unless and
only to the extent that the court in which such action or proceeding is or was
pending shall determine upon application that, in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnity for
expenses and then only to the extent that the court shall determine.

2. AGREEMENT TO SERVE. In consideration of the protection afforded by this
Agreement, if Indemnitee is a director of the Company, he agrees to serve at
least for the balance of the term as a director and not to resign voluntarily
during such period without the written consent of a majority of the Board of
Directors. If Indemnitee is an officer of the Company not serving under an
employment contract, he agrees to serve in such capacity at least for the
balance of the current fiscal year of the Company and not to resign voluntarily
during such period without the written consent of a majority of the Board of
Directors. Nothing contained in this Agreement is intended to create in
Indemnitee, if an employee of the Company, any right to continued employment.

3. EXPENSES; INDEMNIFICATION PROCEDURE.

         (a) Advancement of Expenses. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil, criminal, administrative or investigative action or
proceeding referenced in Section 1(a) or (b) hereof (but not amounts actually
paid in settlement of any such action or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company as authorized hereby. The advances to

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be made hereunder shall be paid by the Company to Indemnitee within twenty (20)
days following delivery of a written request therefor by Indemnitee to the
Company.

         (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
precedent to his right to be indemnified under this Agreement, give the Company
notice in writing as soon as practicable of any action or proceeding against or
involving the Indemnitee for which indemnification will or could be sought under
this Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). Notice shall be deemed received three business days after the date
postmarked if sent by domestic certified or registered mail, properly addressed;
otherwise notice shall be deemed received when such notice shall actually be
received by the Company. In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.

         (c) Procedure. Other than an advancement of expenses, the time of which
is specified separately in Section 3(a), any indemnification provided for in
Section 1 shall be made no later than forty-five (45) days after receipt of the
written request of Indemnitee. If a claim under this Agreement, under any
statute, or under any provision of the Company's Articles of Incorporation or
By-laws providing for indemnification, is not paid in full by the Company within
twenty (20) days in the case of an advancement of expenses or, in case of all
other indemnification, within forty-five (45) days after a written request for
payment thereof has first been received by the Company, then Indemnitee may
request that the right to advancement or other indemnification be determined by
binding arbitration to be conducted as expeditiously as possible in San Diego,
California. To initiate such arbitration, the Indemnitee shall nominate three
retired federal or California Superior Court judges and provide written notice
of those nominations to the Company; the Company shall select one of those
nominees and provide the Indemnitee with notice of such selection within ten
(10) working days after the Indemnitee's notice of nomination has been received
by the Company. The arbitration shall be conducted in accordance with the
procedures set forth in the Commercial Arbitration Rules of the American
Arbitration Association, and a final award by such arbitrator may be enforced by
the San Diego County Superior Court. The Arbitrator's fees shall be paid by the
Company, and subject to Section 14 of this Agreement, Indemnitee shall also be
entitled to be paid for the expenses (including attorney's fees) of bringing and
conducting such arbitration proceeding. It shall be a defense to any such
proceeding (other than a proceeding brought to enforce a claim for advancement
of expenses incurred in connection with any action or proceeding in advance of
its final disposition) that Indemnitee has not met the standards of conduct
which make it permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed, but the burden of proving such defense shall
be on the Company, and Indemnitee shall be entitled to receive interim payments
of expenses pursuant to Subsection 3(a) unless and until such defense may be
finally adjudicated by a final award of the Arbitrator. It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the
Arbitrator to decide, and neither the failure of the Company (including its
Board of Directors, any subcommittee or subgroup of the Board

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of Directors, independent legal counsel, or its shareholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company (including its Board
of Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its shareholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct, shall create a presumption that
Indemnitee has or has not met the applicable standard of conduct.

         (d) Notice to Insurers. If, at the time of the receipt of a notice of a
claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.

         (e) Selection of Counsel. In the event the Company shall be obligated
under Section 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, which approval shall
not be unreasonably withheld, upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (i) Indemnitee shall have the right to employ his counsel in any
such proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense
or (C) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.

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4. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

         (a) Scope. Notwithstanding any other provision of this Agreement, the
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Articles of
Incorporation, the Company's By-laws or by statute. In the event of any change,
after the date of this Agreement, in any applicable law, statute or rule which
expands the right of a California corporation to indemnify a member of its Board
of Directors or an officer, such changes shall be, ipso facto, within the
purview of Indemnitee's rights and the Company's obligations, under this
Agreement. In the event of any change in any applicable law, statue or rule
which narrows the right of a California corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.

         (b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its By-laws, any agreement, any
vote of shareholders or disinterested directors, the statutory or common law of
California, or otherwise, both as to action in Indemnitee's official capacity
and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an indemnified capacity even
though he may have ceased to serve in such capacity at the time of any action or
other covered proceeding.

5. PARTIAL INDEMNIFICATION.

If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the expenses, judgments,
fines or penalties actually or reasonably incurred by him in the investigation,
defense, appeal or settlement of any civil, criminal, administrative or
investigative action or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.

6. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge that in
certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

7. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Company shall, from time to
time, make the good faith determination whether or not it is practicable for the
Company to obtain and maintain a policy or policies of insurance with reputable
insurance companies providing the officers and directors of the Company with
coverage for losses from wrongful acts, or to ensure the Company's performance
of its indemnification

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obligations under this Agreement. Among other considerations, the Company will
weigh the costs of obtaining such insurance coverage against the protection
afforded by such coverage. In all policies of directors' and officers' liability
insurance, Indemnitee shall be named as an insured in such a manner as to
provide Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors, if Indemnitee is a director; or of
the Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if Indemnitee is not an officer or
director but is a key employee. Notwithstanding the foregoing, the Company shall
have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if the
premium costs for such insurance are disproportionate to the amount of coverage
provided, if the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.

8. SEVERABILITY. Nothing in this Agreement is intended to, required, or shall be
construed as requiring the Company to do or fail to do any act in violation of
applicable law. The Company's inability, pursuant to court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable as provided in
this Section 8. If this Agreement or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

9. EXCEPTIONS. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:

         (a) Excluded Acts. To indemnify Indemnitee for any acts or omissions or
transactions from which a director may not be relieved of liability under the
California General Corporation Law; or

         (b) Claims Initiated by Indemnitee. To indemnify or advance expenses to
Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 317 of the California General Corporation Law, but such indemnification
or advancement of expenses may be provided by the Company in specific cases if
the Board of Directors has approved the initiation or bringing of such suit; or

         (c) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction or arbitrator determines that each of the material assertions made
by the Indemnitee in such proceeding was not made in good faith or was
frivolous; or

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         (d) Insured Claims. To indemnify Indemnitee for expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) which have been paid
directly to Indemnitee by an insurance carrier under a policy of directors' and
officers' liability insurance maintained by the Company; or

         (e) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar or successor statute.

10. EFFECTIVENESS OF AGREEMENT. To the extent that the indemnification permitted
under the terms of certain provisions of this Agreement exceeds the scope of the
indemnification provided for in the California General Corporation Law, such
provisions shall not be effective unless and until the Company's Articles of
Incorporation authorize such additional rights of indemnification. In all other
respects, the balance of this Agreement shall be effective as of the date set
forth on the first page and may apply to acts or omissions of Indemnitee which
occurred prior to such date if Indemnitee was an officer, director, employee or
other agent of the Company, or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, at the time such act or omission occurred.

11. CONSTRUCTION OF CERTAIN PHRASES.

         (a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

         (b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to serving at the request of the Company shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries.

12. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original.

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13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and
its successors and assigns, and shall inure to the benefit of Indemnitee and
Indemnitee's estate, heirs, legal representatives and assigns.

14. ATTORNEYS' FEES. In the event that any action is instituted by Indemnitee
under this Agreement to enforce or interpret any of the terms hereof, Indemnitee
shall be entitled to be paid all court or arbitrator costs and expenses,
including reasonable attorneys' fees, incurred by Indemnitee with respect to
such action, unless, as a part of such action, the court of competent
jurisdiction or arbitrator determines that each of the material assertions made
by Indemnitee as a basis for such action were not made in good faith or were
frivolous. In the event of an action instituted by or in the name of the Company
under this Agreement or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court or arbitrator costs
and expenses, including attorneys' fees, incurred by Indemnitee in defense of
such action (including with respect to Indemnitee's counterclaims and
cross-claims made in such action), unless as a part of such action the court or
arbitrator determines that each of Indemnitee's material defenses to such action
were made in bad faith or were frivolous.

15. NOTICE. All notices, requests, demands and other communications under this
agreement shall be in writing and shall be deemed duly given (i) if delivered by
hand and receipted for by the party addressee, on the date of such receipt, or
(ii) if mailed by domestic certified or registered mail with postage prepaid, on
the third business day after the date postmarked. Addresses for notice to either
party are as shown on the signature page of this Agreement or as subsequently
modified by written notice.

16. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby irrevocably
consent to the jurisdiction of the courts of the State of California for all
purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of California.

17. CHOICE OF LAW. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of California as applied to
contracts between California residents entered into and to be performed entirely
within California.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                           AVANIR PHARMACEUTICALS

                           By: _______________________________

                           Title:

                           Address:


AGREED TO AND ACCEPTED:

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