Effective October 29, 2007, AVI BioPharma, Inc. (the “Company”) entered into an agreement with the AVI Shareholder Advocacy Trust (the “Trust”), the Shareholder Advocate LLC, and Richard Macary (the “Trust Agreement”). Under the Trust Agreement, the Board of Directors of the Company agreed to appoint Dr. Gil Price and Mr. William Goolsbee as directors of the Company. These new directors will fill the unexpired terms of James Hicks and Alan Timmins, who have resigned as directors of the Company effective October 29, 2007. Alan Timmins will continue to serve as President and Chief Operating Officer and Dr. Hicks will continue to serve the Company as a consultant.

As directors, Dr. Gil Price and Mr. William Goolsbee will receive (a) a grant of options to purchase 33,000 shares of the Company’s common stock at the closing price on the date of grant, with vesting of such options in equal annual installments over a four year period; (b) directors fees of $30,000 per year paid in equal quarterly installments of $7,500; (c) eligibility to receive additional fees if appointed to serve on any board committees; and (d) reimbursement of expenses incurred on behalf of the Company, including but not limited to those incurred for attendance at meetings of the Board of Directors. While serving as directors they will also be eligible to receive annual grants of options to purchase 10,000 shares of the Company’s common stock, with such options vesting in equal monthly installments over a period of 12 months.

Under the Trust Agreement, the Trust, the Trust’s managing trustee, the Shareholder Advocate LLC, and Richard Macary have agreed to terminate the Trust and, subject to certain conditions, not to take certain actions until at least the close of the Company’s annual meeting of shareholders in 2010. These actions include any activities that relate to or would result in extraordinary transactions, including mergers, liquidation and transfer of a material amount of the Company’s assets, changes in the Board or management of the Company, changes in the Company’s business or corporate structure or material assets, or changes in the Company’s charter or bylaws.

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