AVI BioPharma Included in Initial Defense Funding Allocation

Preliminary FY ’06 defense spending bill directs $22 million to AVI for ongoing and new research and development programs

PORTLAND, Ore. — Oct. 3, 2005 — AVI BioPharma, Inc. (Nasdaq: AVII), today announced that the U.S. Senate Committee on Appropriations has approved $22 million for AVI’s research and development programs as part of the FY2006 defense spending bill. The spending bill must now be approved by the full Senate, and the total amount awarded to AVI is subject to change.

If approved in its current form, the spending bill would direct $22 million to AVI for the continued development of technology to test for and find therapeutic agents for Ebola ($6 million) and Marburg ($6 million) viruses, and anthrax and ricin toxins ($4 million). In addition, the allocation includes new funding for an AVI project to test for and find therapeutic agents for dengue virus ($6 million).

“This funding level, while preliminary, is a validation of the successful application of our NeuGene® antisense technology to combat some of the most feared and challenging bioterror threats,” said Alan P. Timmins, president and COO of AVI. “We are grateful again for the efforts of Oregon Senators Gordon Smith and Ron Wyden, whose support of this legislation will push forward our ongoing projects, while funding an additional important effort targeting Dengue virus.”

Last year, AVI initiated collaborative research programs with the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) in Ebola, Marburg, anthrax and ricin through an initial $5 million allocation from the Department of Defense. AVI previously announced successful results from several preclinical studies conducted with USAMRIID using antisense drugs to protect animals from the deadly Ebola virus. In addition, AVI has successfully met most of the benchmarks in the other three projects, resulting in receipt of approximately $3.5 million in funding this quarter. Ongoing work with the government will result in receipt of the remainder of the FY ’05 funding in the near term.

Currently, AVI has three Cooperative Research and Development Agreements (CRADAs) with various government agencies underway to test its antisense drugs against a variety of infectious viruses:

AVI believes its NeuGene antisense “rapid response therapeutics” have a significant role to play in the future of bioterrorism defense. NeuGene compounds are synthetic compounds that mirror a critical portion of a disease–causing organism’s genetic code, which bind to specific portions of the target genetic sequence. Like a key in a lock, NeuGene antisense compounds are designed to match up perfectly with a specific gene or viral sequence, blocking the function of the target gene or virus.

About AVI BioPharma

AVI BioPharma develops therapeutic products for the treatment of life–threatening diseases using third–generation NeuGene antisense drugs. 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 combat disease by targeting single–stranded RNA viruses, including West Nile virus, hepatitis C virus, dengue virus and Ebola virus. AVI has introduced a NeuGene–based exon–skipping technology called ESPRIT therapy. More information about AVI is available on the company’s Web site at 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.