AVI Biopharma Announces First Quarter Financial Results

PORTLAND, Ore. - May 7, 2002 - AVI BioPharma, Inc. (Nasdaq: AVII, AVIIW, AVIIZ), a biopharmaceutical company developing treatments for life-threatening diseases based on antisense and cancer immunotherapy technologies, today reported financial results for the three months ended March 31, 2002.

For the first quarter of 2002, the company reported a net loss of $7.8 million, or $0.33 per share, compared with a net loss of $3.2 million, or $0.15 per share, for the first quarter of 2001. Research and development expenses during the first three months of 2002 increased to $7.0 million from $2.6 million for the comparable quarter last year. Approximately $4.0 million of this increase was due to costs of GMP manufacturing of NeuGeneS® by an outside contractor in preparation for Phase III clinical trials and potential commercial launch of the Resten-NG™ product. The remaining increase was due to additional costs associated with outside collaborations, expansion of the company's clinical development and regulatory affairs efforts, and additional preclinical and clinical testing of the company's products.

The company had cash, cash equivalents and short-term securities of $37.8 million as of March 31, 2002, an increase of $12.2 million from December 31, 2001. This increase was due primarily to the receipt of $21.4 million in net proceeds from a private equity financing with several institutional investors, offset by $4.5 million used in operations, $1.0 million used for purchases of property and equipment and patent related costs, and a net $3.9 million decline in the value of the company's short-term securities.

For 2002, AVI BioPharma expects higher operating costs as a result of a growing investment in R&D and expanded clinical trials, with an anticipated burn rate for the full year of approximately $20 million.

"We continue to make strong progress in our goal to commercialize drugs that treat life-threatening diseases, and are very pleased to report recent major clinical milestones with programs involving both of our core technologies, NeuGeneS and AVICINE®," commented Denis R. Burger, Ph.D., AVI's chief executive officer.

"Last week, we announced our plans to initiate a Phase III clinical trial program with AVICINE for treating pancreatic cancer," Dr. Burger continued. "We based our decision to move forward with the Phase III program after evaluating highly encouraging Phase II results. In addition, we are able to gain regulatory synergies between this pivotal trial with AVICINE in pancreatic cancer with our ongoing study with AVICINE in colorectal cancer."

In a press release issued earlier today, AVI BioPharma announced initial results from its liver enzyme modification clinical trial with NeuGeneS. Results from this trial demonstrated that a NeuGene targeting the key liver enzyme, cytochrome P450, significantly changed the metabolism of a test drug. These studies provide the first clear evidence that an antisense agent can change gene expression in man.

"We are extremely pleased by the results of this study due to its broad implications for AVI," said Dr. Burger. "We view this study as an important part of our overall plan to attract strategic alliances with pharmaceutical companies interested in improving the pharmacokinetics of a broad range of drugs in clinical use, including those coming off patent."

Also during the quarter, AVI announced initiation of a strategic relationship with Jefferson Medical College of Thomas Jefferson University in Philadelphia for a clinical development program using the company's NeuGene antisense drug Resten-NG to reduce the failure rate of coronary artery bypass grafts. "This is a significant market opportunity for another unmet medical need. Because of the advanced stage of development of Resten-NG for coated stents with Medtronic, we are poised to move quickly and aggressively into the bypass graft field," noted Dr. Burger. "In addition, we were pleased to report publication of data demonstrating effectiveness of NeuGeneS administered orally in a preclinical model."

Product Update

Antisense

NeuGene

Antisense compounds are designed to bind to specific disease-causing gene sequences to disable or inactivate the disease process. AVI has developed proprietary third-generation antisense compounds called NeuGeneS, which are characterized by a fully synthetic backbone, instead of the natural or modified backbone of competing technologies. This chemistry allows NeuGene antisense agents to be more stable, specific, efficacious and safer than second-generation antisense compounds in clinical development by others.

Resten-NG
Resten-NG is a NeuGene compound for treating cardiovascular restenosis, or the re-narrowing of an artery following balloon angioplasty. Resten-NG targets a transcription factor, and upon entering arterial cells, it blocks the underlying cause of the disease: smooth muscle cell activation and proliferation. AVI has demonstrated in preclinical studies that Resten-NG significantly reduced coronary restenosis. A global license has been granted to Medtronic for AVI's antisense compounds deployed on stents or other devices for treating restenosis. AVI is currently in a Phase II trial with this product.

Cancer
AVI is conducting a Phase I/II clinical study with its NeuGene antisense technology in patients with solid tumors. The company expects to complete this study around the end of 2002. Previous studies have shown that this antiproliferative antisense drug is both safe and effective at shutting down cell division, a hallmark of cancer progression.

Prostate Cancer
In August 2001, AVI announced the initiation of a study in prostate cancer, funded by the Department of Defense. AVI presented preclinical study results at the Annual CaP Cure prostate cancer conference in September showing that AVI's antisense compounds inhibit cancer cell growth and cause cell death in prostate tumors. In December 2001, AVI was awarded a Department of Defense Prostate Cancer Research Program grant to pursue development of therapeutics to fight both the initial stages and the incurable metastatic forms of prostate cancer using AVI's NeuGeneS. Also in December, AVI presented preclinical study results at the 10th International Conference on Gene Therapy of Cancer demonstrating that a combination of two proprietary NeuGene drugs had a synergistic effect in halting cell growth of refractory cancer cells in prostate cancer. In April 2002, a company scientist presented new research showing NeuGene directed against the c-myc gene caused cell growth inhibition and cell death in human prostate cancer cells in athymic mice. AVI plans to initiate human testing in prostate cancer later this year.

Liver Enzyme Modification
AVI successfully completed a clinical trial demonstrating that AVI's antisense drug improves the pharmacokinetic profile of a test drug in modifying the function of a liver enzyme that is critical to the body's processing of many drugs. The study is based on the results of preclinical studies using AVI's NeuGene antisense technology targeting liver cytochrome enzymes, which control metabolism of most drugs. Data from the trial will be presented at scientific forums later this year.

Polycystic Kidney Disease
In December 2001, AVI initiated a Phase I/II clinical study in patients with polycystic kidney disease (PKD). Preclinical studies have demonstrated that AVI-4126 is effective in preventing some of the clinical manifestations of PKD. The study will evaluate the safety and pharmacokinetics of three doses of AVI-4126 in patients with PKD and with varying degrees of compromised kidney function.

Cancer Immunotherapy

AVICINE

AVICINE is a therapeutic cancer vaccine designed to elicit an immune response to a well-characterized, tumor-associated antigen, human chorionic gonadotropin (hCG). The hCG hormone is naturally produced during pregnancy, and is believed to stimulate growth and shield the embryo from immune system attack. The hCG hormone is expressed in most, if not all, cancers as a membrane-associated tumor marker, and is believed to promote tumor growth and vascularization and to render patients immunologically unresponsive to the tumor. The role of hCG in cancer and pregnancy is widely believed to be analogous. Thus, AVICINE stimulates the immune system to mount an attack against cancer cells expressing this hormone.

Pancreatic Cancer
In December 2001, AVI reported Phase II data demonstrating that AVICINE provided substantial survival benefit to patients with pancreatic cancer. In this study, patients were treated with AVICINE alone, or with AVICINE in combination with the chemotherapy agent Gemzar. Those treated with AVICINE reported one-year survival data similar to historical results for those treated with Gemzar®, without the vaccine-related side effects often associated with Gemzar. A one-year survival rate of 30% was reported for patients treated with AVICINE plus Gemzar, which is approximately double the survival rate for either treatment alone. As noted above, later this year the company plans to begin a Phase III clinical program with AVICINE for treating pancreatic cancer.

AVI BioPharma has scheduled an investor conference call regarding this announcement to be held today, beginning at 11:00 a.m. Eastern Time. A telephone replay will be available until midnight, Eastern Time May 9, by dialing (800) 642-1687, and entering reservation number 3946544.

Those interested in listening to the conference call live via the Internet may do so by visiting the company's Web site at www.avibio.com. A replay will be available on the site for 14 days.

About AVI BioPharma

AVI BioPharma develops therapeutic products for the treatment of life-threatening diseases using two technology platforms: NeuGene antisense drugs and cancer immunotherapy. Its lead cancer agent, AVICINE, a therapeutic cancer vaccine, has completed three Phase II trials in colorectal and pancreatic cancer and is initiating a Phase III pivotal trial in pancreatic cancer, with a supporting study in colorectal cancer. The first application of its NeuGene compounds, Resten-NG, is designed to treat cancer, cardiovascular restenosis and other cell proliferation disorders by inhibiting the production of a cellular transcription factor, the oncogene c-myc. It is currently in Phase II trials for restenosis and in Phase I/II trials for cancer and polycystic kidney disease. AVI has recently completed a Phase I NeuGene antisense study that successfully down-regulated the liver enzyme cytochrome P450 and modified drug metabolism. 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 Companies' Securities and Exchange Commission filings.

[Tables to Follow]

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

STATEMENTS OF OPERATIONS
(unaudited)

Three months ended March 31,
2002 2001
Revenues from license fees, grants and research contracts $237,695 $15,980
Operating expenses:
Research and development 7,049,120 2,592,615
General and administrative 1,084,519 964,131
_________
8,133,639		 _________
3,556,746
Other income:
Interest income, net 79,851 362,056
Net loss $(7,816,093) $(3,178,710)
Net loss per share - basic and diluted $(0.33) $(0.15)
Shares used in per share calculations 23,442,127 21,529,674

BALANCE SHEET HIGHLIGHTS

March 31, 2002* December 31, 2001**
Cash, cash equivalents and short-term securities $37,825,328 $25,597,121
Total current assets 38,101,374 27,511,076
Total assets 45,137,124 33,815,113
Total current liabilities 4,719,853 3,281,066
Total shareholders' equity $40,417,271 $30,534,047

* Unaudited
** Derived from audited statements