Exhibit
      10.1

     

     

    April
      2,
      2007

     

    Mr.
      Jerome Goldstein

    282
      Buckminster Road

    Brookline,
      MA 02445

    


    Dear
      Jerry:

     

    In
      consideration for your long-term contributions to Advanced Magnetics, Inc.
      (the
“Company”) and in connection with the termination of your employment, this
      letter agreement outlines and confirms the terms and conditions of severance
      being offered to you as a result of your separation from employment with the
      Company.

    


    1. Termination.
      Your
      employment with the Company will terminate as of 9:00 a.m. on May 1, 2007
      (the “Separation Date”). You hereby resign as a member of the Board of Directors
      effective as of 9:00 a.m. on the Separation Date.

     

    2. Severance
      Payment and Stock Options.
      Upon
      expiration of the revocation period set forth in Section 6, the Company will
      promptly pay you $85,000 in a lump sum, minus tax withholdings as required
      by
      law, in accordance with your written instructions. Prior to the Separation
      Date
      and effective upon the expiration of the revocation period set forth in Section
      6, the Board will accelerate the vesting of your November 7, 2006 stock option
      grant so that options to purchase 25,000 shares of the Company’s common stock
      become vested and immediately exercisable. In addition, the option agreement
      with respect to such November 7, 2006 grant shall be amended to make the vested
      portion of such option grant exercisable until December 31, 2007.

    


    3. Other
      Payments.
      No
      later than on the Company’s next payroll cycle, the Company will pay you all
      accrued but unpaid salary as of the Separation Date and the balance of your
      vacation days accrued but not yet taken as of the Separation Date, all minus
      tax
      withholdings as required by law. You shall not receive any other payments,
      perks
      or benefits from the Company. 

     

    4. Confidential
      Information; Return of Company Property.
      You
      agree to treat as strictly confidential all proprietary and other confidential
      information of the Company, and to not at any time, without the Company’s prior
      written consent, reveal or disclose to any person outside of the Company, or
      use
      for your own benefit or for the benefit of any other person or entity, any
      confidential information concerning the Company’s business, clients, or
      employees. Confidential information includes, without limitation, financial
      information, reports, forecasts, intellectual property, trade secrets, know-how,
      clinical trial data, market information and plans, client lists, regulatory
      matters, prospects and opportunities. All documents, records, materials,
      computers, software, equipment, office entry keys, credit cards and other
      physical property, and all copies of the same that have come into your
      possession or been produced by you in connection with your employment, have
      been
      and remain the sole property of the Company. 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    5. General
      Release of Claims.
      In
      consideration of the promises made in this Agreement, you on behalf of yourself
      and your heirs, executors, administrators and assigns, hereby release and
      forever discharge the Company and its parents and affiliates, and each of their
      respective officers, directors, employees, agents, successors and assigns (the
      “Released Parties”), from any and all suits, claims, demands, debts, sums of
      money, damages, interest, attorneys’ fees, expenses, actions, causes of action,
      judgments, accounts, promises, contracts, agreements, and any and all claims
      of
      law or in equity, whether now known or unknown, which you now have or ever
      have
      had against the Released Parties, or any of them, including, but not limited
      to,
      any claims under Title VII of the Civil Rights Act of 1964, the Americans With
      Disabilities Act, the Age Discrimination in Employment Act of 1967, the Older
      Workers Benefit Protection Act, the Family and Medical Leave Act, Mass. G.L.
      c.
      148 and 151B, and any other federal, state or local statute, regulation,
      ordinance or common law creating employment-related causes of action, and all
      claims related to or arising out of your employment or your separation from
      employment with the Company. 

     

    6. CONSULTATION
      WITH COUNSEL; TIME FOR SIGNING; REVOCATION.
      YOU
      HAVE THE RIGHT TO AND SHOULD CONSULT WITH AN ATTORNEY OF YOUR OWN CHOICE PRIOR
      TO SIGNING THIS AGREEMENT. YOU HAVE UNTIL TWENTY-ONE (21) DAYS FROM YOUR RECEIPT
      OF THIS AGREEMENT TO DECIDE WHETHER TO SIGN IT. YOU WILL HAVE SEVEN (7) DAYS
      AFTER SIGNING THIS AGREEMENT TO REVOKE YOUR SIGNATURE. IF YOU INTEND TO REVOKE
      YOUR SIGNATURE, YOU MUST DO SO IN WRITING ADDRESSED AND DELIVERED TO ME PRIOR
      TO
      THE END OF THE 7-DAY REVOCATION PERIOD. THIS
      AGREEMENT SHALL NOT BE EFFECTIVE, AND NEITHER THE COMPANY NOR YOU SHALL HAVE
      ANY
      RIGHTS OR OBLIGATIONS HEREUNDER, UNTIL THE EXPIRATION OF THE 7-DAY REVOCATION
      PERIOD.

     

    7. General
      Provisions.

     

    a) Severability.
      You
      agree that if any of the provisions of this Agreement are declared or determined
      by any court to be illegal or invalid, the validity of the remaining parts,
      terms or provisions shall not be affected.

     

    b) Enforcement;
      Applicable Law; Jurisdiction.
      This
      Agreement is intended to operate as a contract under seal and shall be governed
      by and construed in accordance with the laws of the Commonwealth of
      Massachusetts. You hereby agree that any dispute concerning or arising out
      of
      this Agreement shall be brought in any court of competent jurisdiction within
      the Commonwealth of Massachusetts, and you hereby consent to jurisdiction in
      such courts.

     

    c) Entire
      Agreement; No Representations.
      Subject
      to the provisions of the next sentence, this Agreement constitutes the entire
      agreement concerning the terms and conditions of your separation from employment
      with the Company and supersedes all prior and contemporaneous agreements,
      understandings, negotiations and discussions, whether oral or written, between
      you and the Company. The Employment Agreement dated as of February 7, 2006
      between the Company and you is hereby terminated except for the provisions
      that
      impose post-termination obligations on you, which shall continue in full force
      and effect. 

     

    d) Modification
      and Waiver.
      This
      Agreement may be amended or modified only in a writing signed by you and an
      authorized representative of the Company. 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    e) Section
      409A.
      It is
      the intention of the parties that no payment or entitlement pursuant to this
      Agreement will give rise to any adverse tax consequences to any person pursuant
      to Section 409A of the Internal Revenue Code of 1986 (the “Code”).
      Notwithstanding any provision in this Agreement to the contrary, this Agreement
      shall be interpreted, applied and to the minimum extent necessary, amended,
      so
      that this Agreement does not fail to meet, and is operated in accordance with,
      the requirements of Section 409A of the Code. It is the intent of the parties
      that any such amendment will give you substantially the same economic value
      as
      contained in this Agreement. Any reference in this Agreement to Section 409A
      of
      the Code shall also include any proposed, temporary or final regulations, or
      any
      other guidance, promulgated with respect to such Section by the U.S. Department
      of the Treasury or the Internal Revenue Service.

     

    f) Press
      Release.
      The
      press release to be issued in connection with the announcement of your
      separation from the Company shall be subject to our mutual
      agreement.

     

    Please
      indicate your understanding and acceptance of this Agreement by signing and
      returning one copy to me. The other copy is for your records.

     

    


     

    
      	 	
              Very
                truly yours,

            
	 	 
	 	 
	 	 
	 	
              /s/
                Mark Skaletsky

            
	 	
              Mark
                Skaletsky

            
	 	
              Lead
                Director

            


    

    


     

    Accepted
      and Agreed:

    


    


    


    
      	
              /s/
                Jerome Goldstein

            	
              Dated:
                April 2, 2007

            
	
              Jerome
                Goldstein