AVI BioPharma Updates Third-Generation NEUGENE Antisense Program; Research, Preclinical and Clinical Trial Highlights Demonstrate Progress.

PORTLAND, Ore. -- AVI BioPharma, Inc. (Nasdaq:AVII), today announced a year-to-date progress report on its third-generation NEUGENE(R) antisense program highlighting research, preclinical development, and clinical trial programs.

AVI pioneered third-generation antisense oligomers starting in the late 1980s to solve the potential problems it perceived with the second-generation antisense technologies, which were ultimately experienced by others in preclinical and clinical development. These problems with earlier technologies still exist today as evidenced by recent high-profile Phase III clinical trial failures by other antisense companies. In contrast, AVI's third-generation NEUGENE chemistry has been developed over the past 14 years to overcome the pitfalls of the other antisense backbone chemistries.

In general, antisense compounds are made up of repeating subunits linked together to form a polymer. This is referred to as the antisense backbone. Each antisense subunit carries a genetic letter that matches its complementary letter in the genetic target. Although the naturally occurring genetic letters are common to all antisense compounds, the chemical structures of the subunits and the linkages vary widely.

AVI's proprietary third-generation antisense backbone is an entirely distinct and novel chemistry compared with all other antisense backbones. The backbone chemistry does not resemble structures found in nature and therefore is stealthy in the body. As such, these advanced antisense structures are not recognized by proteins, receptors, enzymes or other regulatory elements within the body. Thus, NEUGENES either find their genetic target and inactivate it or they are cleared by the kidney without any metabolic breakdown.

AVI's third-generation NEUGENE antisense agents also function through a mechanism of action that is completely distinct from other antisense compounds. NEUGENES do not activate enzymes in cells to cleave target RNA, but rather prevent RNA from directing protein synthesis in a well-characterized process that is more efficient than those of other mechanisms. This process also forms the basis of AVI's unique and dominating patent position with third-generation antisense technology.

The third-generation backbone chemistry results in potent inhibitors of targeted genetic function without the side effects, off-target effects or toxicities that have plagued all other antisense chemistries. Advantages in stability, specificity, potency, delivery and, importantly, safety have been demonstrated extensively in animals and confirmed in 11 human clinical trials involving more than 300 patients.

Research and Development

AVI's research program includes both in-house and collaborative programs in functional genomics, infectious disease, cancer, inflammation, cardiovascular disease and immunology.

Zebrafish Functional Genomics

NEUGENE antisense chemistry has become an effective tool for gene knockdown for basic functional genomics studies in zebra fish. The zebra fish model system has become a benchmark for correlating gene function with expression and, thus, leading to new drug development targets. Studies conducted by AVI collaborators, using more than 2,000 NEUGENE agents, demonstrated an effective gene knockdown rate of over 85 percent in fish treated with a single NEUGENE sequence. More than 200 peer-reviewed publications from independent investigators around the world describe evaluation of more than 500 genes in more than 47,000 zebra fish embryos. In these experiments, 74 percent of the NEUGENES demonstrated efficient gene knockdown from a single target design. The large number of observations in embryos presents an impressive 0.17 percent nontargeted effect compared with 0.66 percent spontaneous mutation rate in control embryos from the same studies. No other antisense or gene-targeting chemistry can come close to this level of demonstrated efficiency and specificity.

Infectious Disease Research Program

The infectious disease program at AVI is robust. AVI is currently investigating 17 viral families with a total of 45 viruses, some of which include hepatitis C virus (HCV), SARS, dengue virus, HIV, influenza, West Nile virus (WNV), Respiratory Syncitial virus and the Ebola virus (EBV). AVI collaborates on research with more than 50 academic institutions, as well as the Centers for Disease Control and Prevention, Walter Reed Army Hospital, Southern Research Institute, U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) and the National Institute of Allergy and Infectious Diseases (NIAID). These studies are supported by two Cooperative Research and Development Agreements (CRADAs) and three grants from the National Institutes of Health (NIH). The observations from various studies have been presented at five national and international meetings in 2004. Lessons learned from these studies are directly applicable to AVI's clinical program for HCV and enhance the company's capability to design effective agents for new and engineered pathogens.

Immunology Research Program

The immunology program at AVI has demonstrated remarkable observations in the manipulation of immune responses. Presentations regarding NEUGENE agents targeting B7-2 and c-FLIP immune targets provided the first observations involving reduction in the magnitude of immune response and selective apoptosis in activated T-cells. This resulted in elimination of responses to selected antigens. Further, progress with novel Cytoporter(TM) delivery molecules have been developed for selective and efficient delivery of antisense to cells of the immune system. These research studies will be applied to improved therapeutic management of transplantation immunology and autoimmune diseases.

Preclinical Programs

AVI has three antisense programs in preclinical development; AVI-5126 for coronary artery bypass grafting (CABG); AVI-4065 for HCV, and AVI-4539 for Ebola. These programs have completed the research stage, establishing efficacy in the appropriate model systems, including cell-free translation systems, cell culture studies and animal models. The NEUGENE agents have been manufactured under documented conditions in AVI's Good Manufacturing Process (GMP) facility for Good Laboratory Practice (GLP) toxicology and pharmacokinetic studies. These studies are ongoing, and AVI anticipates filing an Investigational New Drug (IND) application for each of these agents in 2005. Phase I and Phase Ib studies also are planned for 2005.

Clinical Trial Update

AVI has completed 11 clinical trials with its third-generation NEUGENE antisense agents involving more than 300 subjects. The trials have involved three distinct genetic targets: the regulatory transcription factor, c-myc; the metabolic enzyme, cytochrome P450 3a4; and a specific regulatory gene of the West Nile virus. Four routes of administration have been used: intravenous, subcutaneous, intra-coronary artery and oral.

C-MYC Target

AVI-4126 targets c-myc and has been used clinically in a safety study in normal volunteers, in a pilot study in cancer, in a trial in polycystic kidney disease (PKD), and in two studies in cardiovascular restenosis. In the safety study, AVI-4126 was found to have an excellent safety profile without the notable side effects that have been documented with other antisense chemistries.

In the cancer study, AVI demonstrated that AVI-4126 was delivered effectively to both vascular (breast cancer) and avascular (prostate cancer) tumors after IV administration. Based on these pilot findings, AVI plans additional cancer studies with AVI-4126 in both a broad cancer screening trial and a Phase II bladder cancer study.

In the PKD study, AVI demonstrated that AVI-4126 had excellent safety parameters even in patients with impaired kidney function. Based on these prerequisite findings, AVI has developed plans for pilot studies in the childhood variant of PKD, which has high rates of morbidity and mortality.

In the restenosis studies, AVI demonstrated that Resten-NG(R) (AVI-4126) delivered by a catheter into the site of balloon angioplasty demonstrated statistically significant efficacy in preventing restenosis as measured by angiography and intravascular ultrasound at six months. Based on these findings, AVI has acquired expertise with a drug-eluting stent (DES) platform and plans to initiate studies leading to marketing approval in Europe with its own DES incorporating the advantageous characteristics of AVI-4126. AVI also is using a proprietary micro-particle formulation in clinical studies of AVI-4126 delivered systemically after angioplasty, which may ultimately be used with all types of bare and drug-eluting stents.

Cytochrome P450 3a4 Target

AVI-4557 targets human cytochrome P450 3a4 (P450) and has been used clinically in four drug metabolism trials. In these extensive studies, AVI demonstrated that AVI-4557 administered by three routes -- intravenous, subcutaneous and oral -- inhibited P450, which is responsible for drug metabolism or breakdown. Administration of two test drugs -- BuSpar and midazolam -- after antisense knockdown resulted in alterations in the pharmacokinetic profile of the test drugs exhibiting the predicted increased maximum test drug concentration and half-life. Oral administration of AVI-4557 produced similar results. This was the first demonstration of efficacy for any antisense chemistry via oral administration. Based on these findings, AVI plans to out-license the P450 program to potential pharmaceutical partners. Achieving oral efficacy with third-generation AVI agents also may have profound implications for AVI's infectious disease program, in which oral delivery may be critical.

West Nile Virus Target

AVI-4020 targets the polyprotein gene of West Nile virus and has been used in one completed trial, one ongoing clinical trial and in a compassionate use protocol. AVI-4020 was found to have an excellent safety profile with no adverse advent associated with the drug. In addition, significant concentrations of the drug were found in the cerebral spinal fluid (CSF) of patients. This is critical to viral infections that cause neurological symptoms such as WNV. Based on these findings, an efficacy study is underway. Most important, these studies also are directly applicable to AVI's preclinical and future clinical development program on HCV. The WNV program has provided the foundation for the HCV program and shortened the timeline to filing an IND and moving into Phase Ib and Phase II clinical development in HCV.

Ebola Virus Target

AVI-4413 and AVI-4412 were designed to target viral gene expression and viral replication of the Ebola virus and received compassionate use approval from the Food and Drug Administration (FDA) for use in an accident at USAMRIID. AVI is involved in the further preclinical and future clinical development of EBV targets under a Cooperative Research and Development Agreement (CRADA) with USAMRIID with a budget allocation from the Department of Defense.

Conclusions from the 11 clinical trials with AVI's third-generation NEUGENE antisense agents are that, first and foremost, the proprietary backbone chemistry has an excellent safety record, vastly exceeding those of all other antisense chemistries. There has not been a single drug-related severe adverse event in these trials, though the drug has been administered by four routes in doses up to 10 times that which is anticipated for clinical use. In preclinical animal studies, no adverse events have been observed in doses up to 100 times the anticipated clinical dose. This is crucial, as recent clinical failures by other antisense chemistries have all implicated safety issues. In addition, efficacy in human trials was demonstrated in five clinical studies with two genetic targets and four routes of administration. Unique to this third-generation chemistry is the demonstration of oral efficacy and delivery of the agents across the blood-brain barrier into the cerebrospinal fluid (CSF).

About AVI BioPharma

AVI BioPharma develops therapeutic products for the treatment of life-threatening diseases using two technology platforms: third-generation NEUGENE antisense drugs and cancer immunotherapy. AVI's lead NEUGENE antisense compound is designed to target cell proliferation disorders, including cardiovascular restenosis, cancer and polycystic kidney disease. In addition to targeting specific genes in the body, AVI's antiviral program uses NEUGENE antisense compounds to target single-stranded RNA viruses, including West Nile virus, SARS coronavirus, hepatitis C virus and dengue virus. AVI's second technology, AVICINE(R), is a therapeutic cancer vaccine with late-stage trials planned for the treatment of pancreatic cancer. More information about AVI is available on the company's Web site at http://www.avibio.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, the results of research and development efforts, the results of preclinical and clinical testing, the effect of regulation by the FDA and other agencies, the impact of competitive products, product development, commercialization and technological difficulties, and other risks detailed in the company's Securities and Exchange Commission filings.