AVANIR's Board of Directors Approves the Implementation of a One-for-Four Reverse Stock Split

AVANIR Pharmaceuticals (AMEX: AVN) announced today that
its Board of Directors has approved the implementation of a
one-for-four reverse split of the company's common stock. The reverse
split was previously approved by the company's shareholders at the
company's annual shareholder meeting held on March 17, 2005. AVANIR's
common stock will begin trading on a split-adjusted basis when the
market opens on January 18, 2006.
   "AVANIR has twice sought and obtained shareholder authorization to
implement a reverse stock split," stated Eric Brandt AVANIR President
and Chief Executive Officer. "During the past year, AVANIR has worked
to transform itself from a research and development company into an
integrated pharmaceutical company, with the prospects of product
sales, assuming our drug candidate, Neurodex(TM) is approved by the
FDA for marketing. Having reached the company's current stage of
development with our pending new drug application for Neurodex, and in
preparation for the business events of 2006 (further advancement of
the pipeline and potential launch of Neurodex), we decided to
implement the reverse split at this time to reduce our total
outstanding shares to a level believed to be more appropriate for a
company AVANIR's size."
   AVANIR had 122.3 million shares of common stock issued and
outstanding at the end of trading on January 5, 2006, the date the
Board approved the reverse split. When the market opens on January 18,
2006, there will be approximately 30.6 million shares issued and
outstanding, assuming that no warrants or options are exercised in the
interim.
   AVANIR will not issue fractional shares of common stock in
connection with the reverse split. Rather, shareholders will receive a
cash payment equal to the value of the fractional shares that they
otherwise would have received. Additional information about the
reverse stock split is available in AVANIR's definitive proxy
statement filed with the Securities and Exchange Commission on January
28, 2005.
   The reverse split is intended to broaden AVANIR's investor base.
Because some growth-orientated institutional investors have minimum
price and float requirements for their investments, a higher stock
price, while maintaining a float in excess of 30 million shares, may
encourage greater levels of long-term institutional stock ownership.
This potential increase in investor interest may improve the
marketability of our common stock to a broader range of investors.
   The reverse split impacts not only those shares that are currently
outstanding, but also it affects all outstanding stock options,
including those held by the directors, officers and employees of the
Company. Additionally, the reverse split affects the total shares
issuable in the future under the Company's stock option plans and all
outstanding warrants. Following the reverse split, the number of
shares that may be acquired upon the exercise of outstanding stock
options and warrants will be decreased to one-fourth the pre-split
number and the exercise price under these options and warrants will
increase to four times the pre-split price. Further, the size of the
Company's stock option plans will be reduced proportionately.
   In light of AVANIR's decision to implement the reverse split at
this time, the Company will remove from consideration at the 2006
annual meeting a proposed extension of the Board's authority to
implement a reverse split in the coming year.
   AVANIR Pharmaceuticals is focused on developing and
commercializing novel therapeutic products for the treatment of
chronic diseases. AVANIR's product candidates address therapeutic
markets that include central nervous system and cardiovascular
disorders, inflammation, and infectious diseases. AVANIR previously
announced positive results in the second of two required Phase III
clinical trials of Neurodex(TM), an investigational new drug for the
treatment of pseudobulbar affect. Additionally, AVANIR has initiated a
new Phase III clinical trial for Neurodex as a potential treatment in
patients with diabetic neuropathic pain. AVANIR has active
collaborations with two international pharmaceutical companies:
Novartis International Pharmaceutical Ltd. for the treatment of
inflammatory disease and AstraZeneca for the treatment of
cardiovascular disease. The Company's first commercialized product,
Abreva(R), is marketed in North America by GlaxoSmithKline Consumer
Healthcare and is the leading over-the-counter product for the
treatment of cold sores. Further information about AVANIR can be found
at www.avanir.com.
   Except for the historical information presented herein, matters
discussed in this press release contain forward-looking statements
that are subject to certain risks and uncertainties that could cause
actual results to differ materially from any future results,
performance or achievements expressed or implied by such statements.
Statements that are not historical facts, including statements that
are preceded by, followed by, or that include such words as
"estimate," "anticipate," "believe," "plan" or "expect" or similar
statements are forward-looking statements. Risks and uncertainties for
Avanir Pharmaceuticals include risks associated with the reverse stock
split, the regulatory approval of Neurodex and the successful
commercialization of Neurodex, if approved by the FDA, as well as
risks described in Avanir's most recent Annual Report on Form 10-K and
Quarterly Report on Form 10-Q and from time-to-time in other publicly
available information regarding the company. Risks relating to the
reverse stock split are set forth in these filings and in the
Company's definitive proxy statement on Schedule 14A, filed with the
SEC on January 28, 2005. Copies of such information are available from
Avanir upon request. Such publicly available information sets forth
many risks and uncertainties related to Avanir's business and
technology. Our RCT research program is in the early stages of
development and competes with other research approaches and compounds
under development by large pharmaceutical and biotechnology companies.
Preclinical research findings are not always supportable by evidence
obtained from clinical trials. Final review decisions made by the FDA
and other regulatory agencies concerning clinical trial results are
unpredictable and outside the influence and/or control of the Company.
The company disclaims any intent or obligations to update these
forward-looking statements.