AVI BioPharma Announces Second Quarter 2009 Financial Results & Corporate Highlights

BOTHELL, WA--(Marketwire - August 10, 2009) - AVI BioPharma, Inc. (NASDAQ: AVII), a developer
of RNA-based drugs, today reported financial results for the three and six
months ending June 30, 2009. The Company will host a conference call
today, Monday, Aug. 10, at 9:30 a.m. Eastern time (6:30 a.m. Pacific) to
review its financial results and corporate highlights (see below for
details).

Revenues for the second quarter of 2009 were $2.9 million, compared to $5.0
million in the prior-year period, reflecting decreases in research contract
revenues of $1.9 million. Revenues for the first half of 2009 were $6.1
million, compared to $10.6 million in the first half of 2008, reflecting
decreases in research contract revenues of $4.5 million.

The net loss for the second quarter of 2009 was $19.7 million, or $(0.23)
per share, compared with a net loss for the second quarter of 2008 of $1.8
million, or $(0.02) per share. The net loss for the second quarter of 2009
includes a
non-cash expense for warrant liability of $14.6 million compared to a gain
from the same source of $3.0 million during the second quarter of 2008. For
the six months ended June 30, 2009, the Company reported a net loss of
$20.6 million, or $(0.25) per share, compared with a net loss for the
comparable period in 2008 of $16.8 million, or $(0.25) per share. The net
loss for the six months ended June 30, 2009 includes a non-cash expense for
warrant liability of $12.0 million compared to a gain of $1.6 million
during the same period of 2008. The increase in warrant liability is a
non-cash expense and is the result of the increase in the Company's stock
price subsequent to the issuance of the warrants as a part of the equity
financing that closed in January 2009. The increase or decrease in the
warrant liability fluctuates as the price of the Company's stock
fluctuates.

Research and development (R&D) expenses for the second quarter of 2009
decreased to $5.8 million from $7.7 million during the second quarter of
2008. R&D expenses for the first six months of 2009 decreased to $10.3
million from $14.6 million in the prior-year period. The decrease in R&D
expenses for the second quarter and the six months of 2009 was due
primarily to decreases in government research contracting costs associated
with the decline in government research contract revenue. R&D expenses for
the second quarter and the first six months also include higher expenses
intended to accelerate the progress on AVI's Duchenne muscular dystrophy
projects.

General and adminstrative (G&A) expenses for the second quarter of 2009
were $2.2 million, unchanged from $2.2 million in the prior year's second
quarter. G&A expenses in the first six months of 2009 decreased to $4.4
million from $4.7 million in the prior-year period. The G&A expense
decrease for the first six months was due primarily to stock compensation
expenses incurred in the prior-year quarter related to the Ercole
acquisition.

Net interest income declined primarily due to declines in market rates of
interest on the Company's interest-earning investments.

AVI had cash, cash equivalents and short-term securities of $20.2 million
as of June 30, 2009, an increase of $8.7 million from December 31, 2008.
This increase was primarily due to the equity financing that raised net
proceeds of $15.5 million, partially offset by cash used in operations of
$6.0 million and property and equipment and patent-related costs of
approximately $700,000.

"The first half of 2009 has been a period of sustained progress on several
fronts for AVI, as we have secured a number of important new contracts and
collaborations to support the advance of our promising development
programs, including those for Duchenne muscular dystrophy," said Leslie
Hudson, Ph.D., President and Chief Executive Officer. "We have established
our claim as an innovator in the development of exon skipping technology,
as well as, the development of antiviral therapeutics targeting H1N1 and
potential biological threats such as Ebola, Marburg and Junín viruses."

Second Quarter and Recent Corporate Highlights

Duchenne Muscular Dystrophy

-- Entered into collaboration with Action Duchenne Limited, a leading UK
charity dedicated to increasing awareness, engendering action and raising
funds to find a cure for Duchenne muscular dystrophy (DMD), to support the
acceleration of research and development for AVI's exon skipping candidate
drugs for the treatment of DMD. The agreement has a one-year term, with an
option to extend for additional years, and will provide approximately $1.2
million in support to AVI over the initial term for advancement of
research, regulatory efforts and clinical trial recruitment.
-- Entered into an amended sponsored research agreement with Charley's
Fund Inc., a not for profit organization, to provide for an additional $3
million in sponsored research funds, for a total of $5 million in support
of the development of AVI-5038 for treatment of DMD through to IND.
-- Announced a $2.5 million contract with Children's National Medical
Center in Washington, D.C. to support preclinical studies in the
development of AVI-4658, for treatment of DMD. The collaboration will
support the series of GLP toxicology studies for AVI-4658 which is required
to release the clinical hold on the US IND.

BioDefense & Antivirals

-- Announced AVI is under contract with the U.S. Defense Threat Reduction
Agency (DTRA) for development of one or more nucleotide-based candidate
drugs targeting the present epidemic of H1N1 swine flu. The objective of
the contract, which includes a funding award up to $5.1 million, is to
accomplish the preclinical development of one or more medical
countermeasures based on AVI's proprietary antisense PMO backbone and
demonstrate efficacy using an appropriate animal model. Additional
information regarding the DTRA contract can be found at: www.fbo.gov (PDF).
-- Entered into an amendment to the contract with DTRA to support
additional tasks for the continued development of DTRA's programs with the
Transformational Medical Technologies Initiative ("TMTI") for the Company's
Ebola virus and Marburg virus therapeutic product candidates. Under this
amendment, DTRA has extended the contract performance period to
November 29, 2009 and added a cost modification of an additional $5.9
million, thus increasing the contract amount to $33.9 million.
-- Presented at the 7th Annual Biodefense Vaccines & Therapeutics
conference taking place in Washington, D.C. as part of a pre-conference
symposium on "Developments in Biodefense Technology Platform." As an
invited participant in the session titled "Building Technology Platforms to
Array Against Multiple Threats," Dr. Patrick Iversen discussed the utility
of AVI's RNA-based drugs against biological threats, including Ebola and
Marburg viruses.
-- Presented preclinical findings using an antiviral oligomer compound
that incorporates AVI's proprietary backbone chemistry (PMOplusT) at the
American Society of Virology Annual Meeting.
-- Received key patents for drug candidate AVI-6002 targeting Ebola Zaire
Virus protein VP35.The patents cover composition and methods to target the
Ebola virus VP35 protein with a range of PMOplusT compounds.

Corporate

-- Announced the move of its corporate headquarters and much of its
leadership team to the greater Seattle area.
-- Appointed Paul Medeiros, Senior Vice President of Business Development
and Chief Business Officer. Medeiros most recently served as Vice
President, Global Licensing and Strategic Alliances for Schering-Plough,
where he led worldwide specialty product licensing and strategic partnering
initiatives.
-- Announced that AVI joined the broad-market Russell 3000® Index
following Russell Investments' annual reconstitution of its comprehensive
set of U.S. and global equity indexes. Membership in the Russell 3000,
which remains in place for one year, means automatic inclusion in the large-
cap Russell 1000 Index or small-cap Russell 2000 Index as well as the
appropriate growth and value style indexes.

Guidance:

For 2009, AVI confirms its guidance for expenditures for operations, net of
government funding and other collaborative efforts, to be approximately $10
to $12 million. The Company believes it will receive additional funding
from government and other sources to pursue the development of product
candidates, and has assumed certain revenues from these awards in providing
this guidance. If the Company does not receive the additional contracts or
if their award is delayed, this might have a negative impact on this
guidance.

Conference Call

AVI management will hold a conference call to report second quarter 2009
financial results on Monday, August 10, 2009, at 9:30 a.m. Eastern time
(6:30 a.m. Pacific time).
Individuals interested in listening to the live conference call may do so
by dialing 800-967-7135 toll free within the United States and Canada, or
719-457-2603 for international callers.

A replay of the call will be available by dialing 888-203-1112 toll free
within the U.S. and Canada or 719-457-0820 for international callers. The
passcode for the replay is 4026242. In addition, a recording of the call
will be available within approximately 24 hours at www.avibio.com.

About AVI BioPharma

AVI BioPharma is focused on the discovery and development of RNA-based
drugs utilizing proprietary derivatives of its antisense chemistry
(morpholino-modified phosphorodiamidate oligomers or PMOs) that can be
applied to a wide range of diseases and genetic disorders through several
distinct mechanisms of action. Unlike other RNA-based therapeutic
approaches, AVI's antisense technology has been used to directly target
both messenger RNA (mRNA) and its precursor (pre-mRNA), allowing for both
up- and down-regulation of targeted genes and proteins. AVI's RNA-based
drug programs are being evaluated for the treatment of Duchenne muscular
dystrophy as well as for the treatment of cardiovascular restenosis through
our partner Global Therapeutics, a Cook Group Company. AVI's antiviral
programs have demonstrated promising outcomes in Ebola Zaire and Marburg
Musoke virus infections and may prove applicable to other viral targets
such as HCV or Dengue viruses. For more information, visit
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.

AVI BIOPHARMA, INC.
(A Development-Stage Company)
(unaudited)
(in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues, from license
fees, grants and research
contracts $ 2,945 $ 4,983 $ 6,095 $ 10,608

Operating expenses:
Research and development 5,804 7,678 10,299 14,581
General and
administrative 2,206 2,184 4,426 4,737
Acquired in-process - - - -
Research and
development - - - 9,916
---------- ---------- ---------- ----------
8,010 9,862 14,725 29,234

Other income (loss):
Interest (expense)
income and other, net (31) 81 (15) 248
(Increase) decrease on
warrant liability (14,572) 3,047 (11,950) 1,613
---------- ---------- ---------- ----------

Net loss $ (19,668) $ (1,751) $ (20,595) $ (16,765)
========== ========== ========== ==========
Net loss per share--
basic and diluted $ (0.23) $ (0.02) $ (0.25) $ (0.25)
========== ========== ========== ==========
Shares used in per share
calculations 85,664 70,986 83,235 68,154
========== ========== ========== ==========

BALANCE SHEET HIGHLIGHTS
(unaudited)
(in thousands)

June 30, December 31,
2009 2008
---------- -----------
Cash, cash equivalents and short-term
securities $ 20,205 $ 11,474
Total current assets 24,329 17,044
Total assets 32,617 25,536
Total current liabilities 26,288 7,288
Total shareholders' equity $ 3,788 $ 15,732