8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)  June 1, 2005

ADVANCED MAGNETICS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

0-14732	04-2742593
(Commission File Number)	(IRS Employer Identification No.)
61 Mooney Street Cambridge, Massachusetts	02138
(Address of Principal Executive Offices)	(Zip Code)

(617) 497-2070

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.  Entry Into a Material Definitive Agreement;  Item 8.01.  Other Events.

On June 1, 2005, Advanced Magnetics, Inc. (the “Company”) announced the sale of 290,525 units at a price of $47.50 per unit through a registered direct offering.  Each unit consists of five shares of common stock and a warrant to purchase one share of common stock at an exercise price of $13.00 per share, resulting in the sale of 1,452,625 shares of the Company’s common stock and warrants to purchase 290,525 shares of the Company’s common stock in the aggregate.  We estimate the net proceeds from the offering to be approximately $13.6 million after deducting estimated costs associated with the offering.

There will be no trading market for the units. The shares of common stock and warrants comprising the units separated immediately upon completion of this offering and prior to any trading of the common stock and warrants.  We are not listing the warrants on an exchange or any trading system and we do not expect that a trading market for the warrants will develop.

For more information, see the Company’s press release, dated June 1, 2005, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01.  Financial Statements and Exhibits.

(c)Exhibits.

The Company hereby files the following exhibits:

4.1Form of Warrant.

10.1Securities Purchase Agreement dated as of June 1, 2005, by and among Advanced Magnetics, Inc., a Delaware corporation and each of those persons and entities whose names are set forth on the Schedule of Purchasers attached thereto as Exhibit A.

99.1Press release dated June 1, 2005.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ADVANCED MAGNETICS, INC.
	By:	/s/ Jerome Goldstein
	Name: Jerome Goldstein
	Title: President
Date:  June 1, 2005

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EXHIBIT INDEX

4.1Form of Warrant

10.1Securities Purchase Agree ment dated as of June 1, 2005, by and among Advanced Magnetics, Inc., a Delaware corporation and each of those persons and entities whose names are set forth on the Schedule of Purchasers attached thereto as Exhibit A.

99.1Press release dated June 1, 2005

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EX-4.1

Exhibit 4.1

Form of Warrant

Execution Copy

ADVANCED MAGNETICS, INC.

COMMON STOCK PURCHASE WARRANT

Warrant No. CS-	Shares
June 1, 2005

1.Issuance.  For value received, this Warrant is issued to                              , by ADVANCED MAGNETICS, INC., a Delaware corporation (hereinafter with its successors called the “Company”), with its principal office at 61 Mooney Street, Cambridge, MA 02138, pursuant to the terms of that certain Securities Purchase Agreement dated June 1, 2005 (the “Purchase Agreement”).  Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Purchase Agreement.

2.Purchase Price; Number of Shares.  The registered holder of this Warrant (the “Holder”) is entitled upon surrender of this Warrant together with a duly executed Notice of Exercise in the form attached hereto, at the principal office of the Company, to purchase from the Company                                    fully paid and nonassessable shares (the “Shares”) of common stock, $0.01 par value per share, of the Company (the “Common Stock”), at a price per share of Thirteen Dollars ($13.00) (the “Purchase Price”).  Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided.  The person or persons under whose name or names any certificate representing shares of Common Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

3.Payment of Purchase Price.  The Purchase Price may be paid (i) in cash or by check or wire transfer of immediately available funds; (ii) upon the prior written consent of the Company only, by a net issue pursuant to Section 4 hereof; or (iii) by any combination of the foregoing.

4.Net Issue Election.  Should the Holder desire to exercise the net issue election provided in this Section 4, it shall first seek the consent of the Company by providing written notice at least 5days prior to the date on which the exercise of this Warrant is to occur.  The Company shall notify the Holder in writing of its consent or refusal within 2businessdays of receipt of such notice.  After obtaining the written consent of the Company, the Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Common Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company.  Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Common Stock as is computed using the following formula:

X = Y (A-B)

   A

where:	X =	the number of shares of Common Stock to be issued to the Holder pursuant to this Section 4.
	Y =	the number of shares of Common Stock covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4.
	A =	the Volume Weighted Average Price (defined below) of one share of Common Stock, as determined at the time the net issue election is made pursuant to this Section 4.
	B =	the Purchase Price per Share in effect under this Warrant at the time the net issue election is made pursuant to this Section 4.

“Volume Weighted Average Price” of a share of Common Stock as of a particular date (the “Determination Date”) shall mean the daily volume weighted average priceof the Common Stock as reported on the American Stock Exchange (the “AMEX”) (or any national securities exchange on which the Common Stock is then listed or admitted for trading), based on a trading day of 9:30 a.m. Eastern Time to 4:00 p.m. Eastern Time, over the five consecutive trading days immediately preceding the Determination Date; provided, however, that if (i) the Common Stock is neither traded on the AMEX nor on a national securities exchange, then Volume Weighted Average Price shall be the volume weighted average price of the Common Stock over the five-day period immediately preceding the Determination Date reflected in the over-the-counter market, as reported by the National Quotation Bureau, Inc. or any organization performing a similar function, or if trade prices are not then routinely reported for the over-the-counter market, the average of the last bid and asked prices of the Common Stock over the five-day period immediately preceding the Determination Date and (ii) if there is no public market for the Common Stock, then the Volume Weighted Average Price shall be the fair market value as determined in good faith by the Company’s Board of Directors.

5.Delivery of Warrant Shares.

(a)  Upon surrender of this Warrant together with a properly completed and duly executed Notice of Exercise in the form attached hereto, at the principal executive office of the Company, and upon payment of the Purchase Price multiplied by the number of Shares that the Holder intends to purchase hereunder, the Company shall promptly (but in no event later than four Trading Days (as defined below) after the Date of Exercise (as defined below)) issue and deliver to the Holder, a certificate for the number of Shares issued upon such exercise (which, shall be free of restrictive legends) or otherwise make arrangements with the Company’s transfer agent for the proper electronic notation of the Company’s records to reflect Holder as the record holder of the number of Shares issued upon such exercise.

(b)  If by the fourth Trading Day after a Date of Exercise the Company fails to deliver the required number of Shares in the manner required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise upon written notice to the Company.

(c)  If by the fourth Trading Day after a Date of Exercise the Company fails to deliver the required number of Shares in the manner required pursuant to Section 5(a), and if after such

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fourth Trading Day and prior to the receipt of such Shares, the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (i) pay in cash to the Holder the amount by which (A) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (B) the amount obtained by multiplying (x) the number of Shares that the Company was required to deliver to the Holder in connection with the exercise at issue by (y) the last reported sales price of the Common Stock at the time of the obligation giving rise to such purchase obligation and (ii) deliver to the Holder the number of Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  The Holder shall provide the Company prompt written notice indicating the amounts payable to the Holder in respect of the Buy-In.

(d) For purposes of this Section 5:

(i)  “Trading Day” means any day on which the AMEX is open for the transaction of business; and

(ii)  “Date of Exercise” means the date on which the Holder shall have delivered to Company: (A) a properly completed and duly executed Notice of Exercise in the form attached hereto, and (B) if such Holder is not utilizing the net issue election pursuant to Section 4 hereof, payment of the Purchase Price for the number of Shares so indicated by the Holder to be purchased.

6.Partial Exercise.  This Warrant may be exercised in part, and the Holder shall be entitled to promptly receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

7.Fractional Shares.  In no event shall any fractional share of Common Stock be issued upon any exercise of this Warrant.  If, upon exercise of this Warrant as an entirety, the Holder would, except as provided in this Section 7, be entitled to receive a fractional share of Common Stock, then the Company shall pay in lieu thereof, the Fair Market Value of such fractional share in cash.

8.Expiration Date; Early Termination.

(a)  Except as otherwise set forth in this Section 8, this Warrant shall expire on the close of business on June 1, 2008 (the “Expiration Date”), and shall be void thereafter.

(b) In the event of, at any time prior to the Expiration Date, any dissolution, liquidation or winding-up of the Company, or the consolidation or merger of the Company with or into another corporation, or the sale or other disposition of all or substantially all the properties and assets of the Company to any other person (a “Transaction”), the Company shall provide to the Holder twenty (20) calendar days’ advance written notice of such Transaction, and this Warrant shall terminate upon consummation of such Transaction unless properly exercised prior to the occurrence of such Transaction.  The Company shall update any such notice to reflect any material changes in the Transaction or the information set forth in the notice.  Notwithstanding anything contained in this Section 8(b) to the contrary, the Company may not effect a

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Transaction unless and until after giving the Holder at least twenty (20) days’ advance notice of the Transaction (including any material updates contemplated by the preceding sentence) and affording the Holder the opportunity to exercise the Warrant during such period (to the extent the Warrant is then exercisable).

9.Reserved Shares; Valid Issuance.  The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Common Stock, free from all preemptive or similar rights therein, as will be sufficient to permit the exercise of this Warrant in full into shares of Common Stock upon such exercise.  The Company further covenants that such shares as may be issued pursuant to such exercise will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all transfer taxes, liens and charges with respect to the issuance thereof.

10.Stock Splits and Dividends.  If after the date hereof the Company shall subdivide the Common Stock, by split-up or otherwise, into a larger number of shares, or combine the Common Stock, by reverse split or otherwise, into a lesser number of shares, or issue additional shares of Common Stock in payment of a stock dividend or other distribution on the Common Stock, the number of shares of Common Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend or distribution, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend or distribution, or proportionately increased in the case of a combination.

11.Notices of Record Date, Etc.  In the event of:

(a)  any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

(b)  any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

(c)  any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof.  Such notice shall be provided at least twenty (20) calendar days prior to the earlier of (i) the date specified in such notice on which any such action is to be taken, and (ii) the record date for purposes of determining the record holders of the Common Stock with respect to any such action.  The Company shall update any such notice to reflect any material change in the information set forth in its notice.  Notwithstanding anything in this Section 11 to the contrary, the Company may not effect a Transaction unless and until after giving the Holder at least twenty (20) days’ advance notice (including any material updates contemplated by the preceding sentence) and affording the Holder the opportunity to exercise the Warrant during such period.

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12.Representations, Warranties and Covenants.  This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:

(a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder.  This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws of general application affecting the enforcement of the Holder’s rights or by general equity principals.

(b) The execution and delivery of this Warrants does not, and the performance of this Warrants and the compliance with the provisions hereof, including the issuance, sale and delivery of the Shares by the Company will not, conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien pursuant to the terms of, the Certificate or Bylaws of the Company, each as amended to date, or any statute, law, rule or regulation or any state or federal order, judgment or decree or any indenture, mortgage, lease or other agreement or instrument to which the Company or any of its properties is subject, except for any conflict, breach, violation, default or imposition of a lien (other than pursuant to the terms of the Certificate or Bylaws) that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the assets, liabilities, financial condition, business or operations of the Company.

(c)  The shares of Common Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

(d)  The shares of Common Stock issuable upon exercise of this Warrant have been registered under the Securities Act of 1933 on Form S-3 and are listed for trading on the American Stock Exchange.

13.Amendment and Waiver.  The terms of this Warrant may be amended, modified or waived only with the written consent of the party against which enforcement of the same is sought.

14.Notices, Transfers, Etc.

(a) Any notice or written communication required or permitted to be given to the Holder may be given by certified mail or delivered to the Holder at the address most recently provided by the Holder to the Company.

(b) Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder.  Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee, which shall be identical to this Warrant.  Upon surrender of this Warrant to the Company, together with the

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assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Common Stock purchasable hereunder, the Company shall issue a new warrant, which shall be in all respects other than denomination identical to this Warrant, to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant, which shall be in all respects other than denomination identical to this Warrant, covering the number of shares in respect of which this Warrant shall not have been transferred.

(c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant and an indemnification of loss by the Holder in favor of the Company.

15.Rights of Holder.  Holder shall not, by virtue hereof, be entitled to any rights of a stockholder of the Company, either at law or equity, and the rights of Holder are limited to those expressed in this Warrant.  Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company on any matters or with respect to any rights whatsoever as a stockholder of the Company.  No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the Shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised in accordance with its terms.

16.Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

17.No Impairment.

(a)  Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its Certificate of Incorporation or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, or the reduction of the par value of its Common Stock, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

(b)  If any event occurs as to which the provisions of this Warrant are not strictly applicable but the failure to make any adjustment would not fairly and adequately protect the purchase rights of the Warrant in accordance with the intent and principles of such provisions, then there shall be made such adjustments in the application of such provisions, in accordance with such intent and principles, as shall be reasonably necessary to protect such purchase rights of the Warrants, but in no event shall any such adjustment have the effect of increasing the Purchase Price (unless to the extent contemplated by Section 10).

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18.Governing Law.  This Agreement shall be governed in all respects by and construed in accordance with the laws of the State of Delaware without any regard to conflicts of laws principles.

19.Successors and Assigns.  This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

20.Business Days.  If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in Massachusetts, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed by its duly authorized officer and to be dated as of the date first written above.

Company:
ADVANCED MAGNETICS, INC.
By:
	Name:	Jerome Goldstein
	Title:	President

[Signature Page to Common Stock Purchase Warrant]

ADVANCED MAGNETICS, INC.

NOTICE OF EXERCISE

(1)The undersigned hereby:

[           ]	elects to purchase                             shares of Common Stock of the Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full, together with all applicable transfer taxes, if any.
[           ]	elects to exercise its net issuance rights pursuant to Section 4 of the attached Warrant with respect to                              shares of Common Stock, and shall tender payment of all applicable transfer taxes, if any.

(2)Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

(Name)

(Address)

(3)The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, all except as in compliance with applicable securities laws.

(Date)	(Signature)
	(Print name)

ADVANCED MAGNETICS, INC.

NOTICE OF ASSIGNMENT OF WARRANT

For value received                               hereby sells, assigns and transfers unto

[Please print or type the name and address of Assignee]

the within Warrant, and does hereby irrevocably constitute and appoint                                         its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

DATED:

IN THE PRESENCE OF:

EX-10.1

Exhibit 10.1

Execution Copy

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of June 1, 2005, by and among Advanced Magnetics, Inc., a Delaware corporation (the “Company”), and each of those persons and entities, severally and not jointly, whose names are set forth on the Schedule of Purchasers attached hereto as Exhibit A (which persons and entities are hereinafter collectively referred to as “Purchasers” and each individually as a “Purchaser”).

RECITALS

WHEREAS, the Company has authorized the sale and issuance of Units, consisting of common stock and warrants, as provided herein;

WHEREAS, at the Closing (as defined herein), the Company desires to sell, and each Purchaser desires to purchase, severally and not jointly, the Units upon the terms and conditions stated in this Agreement; and

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

AUTHORIZATION AND SALE OF SECURITIES

1.1  Authorization.  The Company has authorized the sale and issuance of up to 290,525 units (the “Units”), each Unit consisting of five (5) shares of its common stock (the “Common Shares”) and (b) a warrant to purchase one (1) share of its common stock.   The Warrants shall be substantially in the form attached hereto as Exhibit B (the “Warrants”).

1.2Sale of Units.  At the Closing, subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to each Purchaser, severally and not jointly, and each Purchaser agrees to purchase from the Company, severally and not jointly, Units consisting of:

(a) The number of Common Shares set forth opposite such Purchaser’s name on Exhibit A under the heading “Common Shares”; and

(b) Warrants to purchase the number of shares of Common Stock set forth opposite such Purchaser’s name on Exhibit A under the heading “Warrant Shares”,which Warrants shall have an exercise price equal to $13.00 per share of Common Stock (the “Warrant Price”).  The shares of common stock issuable upon exercise of the Warrants are referred to herein as the “Warrant Shares”.  The Units, Common Shares and the Warrants are sometimes collectively referred to herein as the “Securities”.

The purchase price per Common Share shall equal $ 47.50

1.3Independent Nature of Investors’ Obligations and Rights.  The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder.  The decision of each Purchaser to purchase the Units pursuant to this Agreement or the warrants has been made by such Purchaser independently of any other Purchaser.  Nothing contained herein or therein, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby.  Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder and that no Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment in the Units or enforcing its rights under this Agreement.  Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

ARTICLE 2

CLOSING DATE; DELIVERY

2.1Closing Date.  The closing of the purchase and sale of the Common Shares and Warrants hereunder (the “Closing”) shall be held at the offices of Debevoise & Plimpton LLP, 919 Third Avenue, New York, NY, at 10:00 a.m. New York time on the date hereof or at such other time and place upon which the Company and the Purchasers purchasing, in the aggregate, the majority of the Units (the “Majority in Interest”) shall agree.

2.2Delivery.  At the Closing, the Company will deliver to each Purchaser a duly executed Warrant representing the right to purchase the number of Warrant Shares which such Purchaser is entitled to purchase and either (1) a share certificate representing the number of Common Shares being purchased by such Purchaser or (2) evidence of book entry annotation by the Company’s transfer agent, registered in the Purchaser’s name as shown on Exhibit A.  Such delivery shall be against payment of the purchase price therefor by wire transfer of immediately available funds to the Company in accordance with the Company’s written wiring instructions, which instructions shall have been delivered to Purchasers’ counsel.  The Company shall also deliver to the Purchasers (a) an opinion of Sullivan & Worcester LLP, counsel to the Company, in form and substance satisfactory to the Majority in Interest, (b) a certificate from a duly authorized officer of the Company certifying that the representations made by the Company in Article 3 are true and correct as of the Closing and (c) a prospectus supplement covering the Units.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Purchasers, as of the date hereof, as follows:

3.1Organization and Standing.  The Company is a corporation duly organized and validly existing under, and by virtue of, the laws of the State of Delaware and is in good standing under the laws of said state, with requisite corporate power and authority to own its properties and assets and to carry on its business as currently conducted.  The Company is not in violation of any of the provisions of its Certificate of Incorporation (the “Certificate”) or Bylaws.

3.2Corporate Power; Authorization.  The Company has all requisite legal and corporate power and has taken all requisite corporate action to execute and deliver this Agreement, to sell and issue the Securities, to issue the Warrant Shares upon exercise of the Warrants in accordance with the terms of such Warrants, and to carry out and perform all of its obligations under this Agreement and the Warrants.  This Agreement constitutes, and upon execution and delivery by the Company of the Warrants, the Warrants will constitute, legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally and (b) as limited by equitable principles generally. The execution and delivery of this Agreement and the Warrantsdoes not, and the performance of this Agreement and the Warrants and the compliance with the provisions hereof and thereof, including the issuance, sale and delivery of the Securities by the Company will not, conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien pursuant to the terms of, the Certificate or Bylaws of the Company, each as amended to date, or any statute, law, rule or regulation or any state or federal order, judgment or decree or any indenture, mortgage, lease or other agreement or instrument to which the Company or any of its properties is subject, except for any conflict, breach, violation, default or imposition of a lien (other than pursuant to the terms of the Certificate or Bylaws) that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the assets, liabilities, financial condition, business or operations of the Company.

3.3Issuance and Delivery of the Securities.  The Common Shares are duly authorized and, when issued at the Closing, will be validly issued, fully paid and nonassessable.  The Warrant Shares are duly authorized and, upon exercise of the Warrants in accordance with the terms thereof will be validly issued, fully paid and nonassessable.  The issuance and delivery of the Securities is not subject to any right of first refusal, preemptive right, right of participation, or any similar right existing in favor of any person or any liens or encumbrances.  When issued in compliance with the provisions of this Agreement and the Certificate, the issuance of the Securities hereunder does not require the approval of the Company’s stockholders under the provisions of the Certificate or the Delaware General Corporation Law, or, based on oral advice received from the representatives of the American Stock Exchange, the listing rules of the American Stock Exchange.

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3.4SEC Documents; Financial Statements.  Each report and proxy statement delivered to the Purchasers is a true and complete copy of such document as filed by the Company with the Securities and Exchange Commission (the “SEC”). The Company has filed in a timely manner all documents that the Company was required to file with the SEC such documents, together with the exhibits thereto, (the “SEC Documents”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during the twelve calendar months preceding the date hereof.  As of their respective filing dates, all SEC Documents complied in all material respects with the requirements of the Exchange Act.  None of the SEC Documents as of their respective dates contained any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Documents (the “Financial Statements”) comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto.  The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied and fairly present the consolidated financial position of the Company and its subsidiaries, if any, at the dates thereof and the consolidated results of their operations and consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring adjustments or to the extent that such unaudited statements do not include footnotes).

3.5Governmental Consents.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement except for (a) compliance with the securities and blue sky laws in the states in which the Common Shares and Warrants are offered and/or sold, which offer and sale will be effected in compliance with such laws, and (b) the filing of the an application to list the Common Shares and the Warrant Shares with the American Stock Exchange.

3.6 Capitalization.

(a) The authorized capital stock of the Company consists of (a) 15,000,000 shares of Common Stock of which, as of May 31, 2005, 8,050,113 shares were outstanding, and (b) 2,000,000 shares of Preferred Stock, $0.01 par value, none of which are outstanding as of the date hereof.

(b) Except (i) as disclosed to the Purchasers in writing or (ii) as contemplated herein, there are no outstanding warrants, options, convertible or exchangeable securities or other rights, agreements or arrangements of any character under which the Company is or may be obligated to issue any equity securities of any kind.

3.7  Litigation.  Except as disclosed to the Purchasers in writing and except as disclosed in the SEC Documents, there are no actions, suits, proceedings or investigations pending or, to the best of the Company’s knowledge, threatened against the Company or any of its properties before or by any court or arbitrator or any governmental body, agency or official in which there is a reasonable likelihood (in the reasonable judgment of the Company) of an adverse decision

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that (a) could have a material adverse effect on the assets, liabilities, financial condition, business or operations of the Company, or (b) could impair the ability of the Company to perform in any material respect its obligations under this Agreement or the Warrants.

3.8 Company not an “Investment Company”.  The Company has been advised by competent counsel of the rules and requirements under the Investment Company Act of 1940, as amended (the “Investment Company Act”).  The Company is not, and immediately after receipt of payment for the Units will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act and shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

3.9AMEX Compliance.  The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is listed on the American Stock Exchange, and the Company has taken no action designed for the purpose of, or likely to have the effect of, terminating the registration of its Common Stock under the Exchange Act or de-listing the Common Stock from the American Stock Exchange, nor has the Company received any notification that the SEC or the American Stock Exchange is contemplating terminating such registration or listing.  The Company is in material compliance with the listing and maintenance requirements for continued listing of the Common Stock on the American Stock Exchange.

3.10Use of Proceeds.  The proceeds of the sale of the Units shall be used by the Company for development of the Company’s products, working capital and general corporate purposes.

3.11Brokers and Finders.  Except as otherwise disclosed to the Purchasers in writing prior to the date hereof, no person or entity will have, as a result of or in connection with the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company or any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding, written or oral, entered into by or on behalf of the Company.

3.12Intellectual Property.

(a) “Intellectual Property” shall mean patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes.

(b) Except as disclosed in the SEC Documents and to the best knowledge of the Company, the Company owns or has the valid right to use all of the Intellectual Property that is necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted with respect to products currently in clinical trials or about to enter into clinical trials, free and clear of all material liens and encumbrances.

(c) Except as disclosed to the Purchasers in writing or as disclosed in the SEC Documents and to the knowledge of the Company, (i) the conduct of the Company’s business as currently conducted does not infringe or otherwise conflict with (collectively, “Infringe”) any

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Intellectual Property rights of any third party or any confidentiality obligation owed by the Company to a third party and the Company has not received any written notice of any such Infringement, and (ii) the Intellectual Property and confidential information of the Company are not being Infringed by any third party.

(d) Each employee, consultant and contractor of the Company who has had access to confidential information of the Company which is necessary for the conduct of Company’s business as currently conducted or as currently proposed to be conducted has executed an agreement to maintain the confidentiality of such confidential information and has executed agreements that are substantially consistent with the Company’s standard forms thereof.

3.13Questionable Payments.  Neither the Company nor, to the best knowledge of the Company, any of its current or former stockholders, directors, officers, employees, agents or other persons acting on behalf of the Company, has on behalf of the Company or in connection with its business: (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

3.14  Transactions with Affiliates.  Except as disclosed in the SEC Documents, none of the officers, directors or shareholders of the Company and, to the best knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or to a presently contemplated transaction (other than for services as employees, officers and directors) that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act of 1933.

3.15  Insurance.  The Company maintains and will continue to maintain insurance with financially sound and reputable insurers in such amounts and covering such risks and in such amounts as are reasonably adequate, prudent and consistent with industry practice for the conduct of its business and the value of its property, all of which insurance is in full force and effect.  The Company has not received notice from, and has no knowledge of any threat by, any insurer that has issued any insurance policy to the Company that such insurer intends to deny coverage under or cancel, discontinue or not renew any insurance policy in force as of the date hereof.

3.16No Additional Agreements.  The Company does not have any agreement or understanding with any Purchaser with respect to the transactions contemplated by this Agreement other than as specified in this Agreement.

3.17  Absence of Undisclosed Liabilities.  The Company has no material liabilities of any nature (whether absolute, accrued, contingent or otherwise), except (i) as and to the extent reflected in the Financial Statements as of and for the period ended March 31, 2005, and (ii) for liabilities that have been incurred in the ordinary course of business consistent with past practice

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since March 31, 2005 and that would not, individually and in the aggregate, reasonably be expected to have a material adverse effect on the assets, financial condition, business or operations of the Company.

3.18Governmental Authorizations.  The Company has all permits, licenses and other authorizations of governmental authorities that are required for the conduct of its business and operations as currently conducted or as currently proposed to be conducted (including permits, licenses and other authorizations of the Food and Drug Administration and comparable regulatory agencies in state and local jurisdictions and in foreign countries), the lack of which could materially and adversely affect the assets, financial condition, business or operations of the Company, except as described in the SEC Documents and for permits, licenses and other authorizations of the Food and Drug Administration and comparable regulatory agencies in state and local jurisdictions and in foreign countries that the Company needs to obtain for the further development and the production and marketing of its products under development.  The Company is, and at all times has been, in compliance with the provisions of its material permits, licenses and other governmental authorizations.

3.19  No Material Adverse Change.  Except as otherwise disclosed herein or in the SEC Documents, since March 31, 2005, there have not been any changes in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements except changes in the ordinary course of business which have not been, either individually or in the aggregate, materially adverse.  The Company does not have pending before the Commission any request for confidential treatment of information.

3.20  Registration Statement.  A registration statement on Form S-3 (File No.333— 119682) (the “Initial Registration Statement”) in respect of the Common Shares, the Warrants and the Common Shares issuable upon exercise of the Warrants has been filed with the SEC; the Initial Registration Statement and any post-effective amendment thereto have been declared effective by the SEC; other than a registration statement, if any , increasing the size of the offering, filed pursuant to Rule 462(b) under the Securities Act, which became effective upon filing, no other document with respect to the Initial Registration Statement or document incorporated by reference therein has heretofore been filed with the SEC; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or any rule 462(b) registration statement (such documents collectively, and together with any documents incorporated by reference therein, the “Registration Statement”), if any, has been issued and no proceeding for that purpose has been initiated or threatened by the SEC.  The Registration Statement, including the prospectus included therein, conforms and any further amendments or supplements to the Registration Statement or the prospectus included therein will conform, in all material respects to the requirements of the Securities Act and the rules and regulations of the SEC thereunder and do not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  No order preventing or suspending the use of any preliminary prospectus included in or filed in connection with the Initial Registration Statement has been issued by the SEC.

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3.21  Listing.  All of the Common Stock sold hereunder is listed for trading on the American Stock Exchange.

3.22  Internal Accounting Controls.  The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Company has established disclosure controls and procedures (as defined in Exchange Rules 13a-15 and 15d-15) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Form 10-K or 10-Q, as the case may be, is being prepared.

3.23  Title to Assets.  The Company has good and marketable title in fee simple to all real property owned by it that is material to the business of the Company and good and marketable title in all tangible personal property owned by them that is material to the business of the Company in each case free and clear of all liens, except for liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases with which the Company is in material compliance.

3.24  Ferumoxytol Clinical Trials.  (a) No serious adverse event related to ferumoxytol in the ferumoxytol Phase III iron replacement therapy clinical trials has been reported to the Company, (b) to the knowledge of the Company, no events of moderate or severe hypotension related to ferumoxytol in the ferumoxytol Phase III iron replacement therapy clinical trials have occurred, (c) since initiating the ferumoxytol Phase III iron replacement therapy program in April 2004, the Company has not been informed by the FDA of any suggested modifications to the size or primary endpoint of the ferumoxytol Phase III iron replacement therapy clinical trials and (d) since April 2004 the FDA has not notified the Company of any material deficiencies relating to the ferumoxytol Phase III iron replacement therapy clinical trials.

3.25  Registration Rights.  Except as disclosed to the Purchasers in writing, the Company has not granted or agreed to grant to any person any rights (including “piggy back” registration rights) to have any securities of the Company registered with the SEC or any other governmental authority.

3.26 Material Non-Public Information.  The Company confirms that it has not provided any of the Purchasers or their agents or counsel with any information that constitutes or might constitute material non-public information as of the Closing Date.  The Company understands and confirms that the Purchasers shall be relying on the foregoing representations in effecting transactions in securities of the Company.

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ARTICLE 4

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS

Each Purchaser hereby severally represents and warrants to the Company:

4.1Authorization.  (a) Purchaser has all requisite legal and corporate or other power and capacity and has taken all requisite corporate or other action to execute and deliver this Agreement, to purchase the Common Shares and the Warrants to be purchased by it and to carry out and perform all of its obligations under this Agreement, and (b) this Agreement constitutes the legal, valid and binding obligation of such Purchaser, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights generally and (ii) as limited by equitable principles generally.

4.2No Legal, Tax or Investment Advice.  Purchaser understands that nothing in this Agreement or any other materials presented to Purchaser in connection with the purchase and sale of the Common Shares and the Warrants constitutes legal, tax or investment advice.  Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Units.

ARTICLE 5

ADDITIONAL AGREEMENTS OF THE COMPANY

5.1  Securities Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m. Eastern time on the business day following the date of this Agreement, issue a press release or file a Current Report on Form 8-K, in each case reasonably acceptable to the Majority in Interest on behalf of the Purchasers, disclosing the transactions contemplated hereby.  The Company and the Majority in Interest shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and none of the Company, the Majority in Interest, or any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Majority in Interest or any Purchaser, or without the prior consent of the Majority in Interest on behalf of the Purchasers, with respect to any press release of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with notice of such public statement or communication and consult with each other with respect thereto prior to such public disclosure.  Notwithstanding the foregoing, other than as set forth above, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or stock exchange, except to the extent such disclosure is required by law or stock exchange regulation, in which case the Company shall provide the Purchasers with prior notice of such disclosure.

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5.2  Listing of Common Stock.  The Company hereby agrees to use commercially reasonably efforts to maintain the listing on the American Stock Exchange of the Common Stock sold hereunder or issuable upon exercise of the Warrants.  The Company further agrees, if the Company applies to have its Common Stock traded on any other stock exchange or quotation system, it will include in such application the Common Stock sold hereunder or issuable upon exercise of the Warrants, and will take such other action as is necessary or desirable in the opinion of the Purchasers to cause the Common Stock sold hereunder or issuable upon exercise of the Warrants to be listed on such other stock exchange or quotation system as promptly as possible.

ARTICLE 6

MISCELLANEOUS

6.1Waivers and Amendments.  The terms of this Agreement may be waived or amended only upon the written consent of the Company and the Majority in Interest.

6.2  Governing Law.  This Agreement shall be governed in all respects by and construed in accordance with the laws of the State of Delaware without any regard to conflicts of laws principles.

6.3 Survival.  The representations, warranties, covenants and agreements made in this Agreement shall survive any investigation made by the Company or the Purchasers and the Closing.

6.4  Successors and Assigns.  No Purchaser shall assign this Agreement without the prior written consent of the Company.

6.5  Entire Agreement.  This Agreement, the Warrants and any Confidentiality Agreement between the Company and the Purchasers (the “CDAs”) constitute the full and entire understanding and agreement between the parties with regard to the subjects thereof.  The CDAs are hereby amended to the extent necessary to allow any Purchaser to purchase the Units under this Agreement or pursuant to exercise of the Warrants.  The CDAs shall not be interpreted to limit the Purchasers’ rights as shareholders of the Company.

6.6  Notices, etc.  All notices and other communications required or permitted under this Agreement shall be in writing and may be delivered in person, by telecopy, overnight delivery service or registered or certified United States mail, addressed to the Company or each of the Purchasers, as the case may be, at their respective addresses set forth at the beginning of this Agreement or on Exhibit A, or at such other address as the Company, on the one hand, or a Purchaser, on the other hand, shall have furnished to the other party in writing. All notices and other communications shall be effective upon the earlier of actual receipt thereof by the person to whom notice is directed or (a) in the case of notices and communications sent by personal delivery or telecopy, one business day after such notice or communication arrives at the applicable address or was successfully sent to the applicable telecopy number, (b) in the case of notices and communications sent by overnight delivery service, at noon (local time) on the

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second business day following the day such notice or communication was sent, and (c) in the case of notices and communications sent by United States mail, seven days after such notice or communication shall have been deposited in the United States mail.

6.7Severability of this Agreement.  If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

6.8 Counterparts; Signatures by Facsimile.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.  This Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

6.9 Further Assurances.  Each party to this Agreement shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as the other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

6.10  Expenses.  Each party shall bear its own expenses, except that the Company agrees to reimburse the Purchasers for the reasonable, documented fees and expenses of their counsel with respect to this Agreement and the transactions contemplated hereby up to a maximum amount of $85,000.

6.11  Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefore, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested.  The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities.

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IN WITNESS WHEREOF, this Agreement is hereby executed as of the date first above written.

ADVANCED MAGNETICS, INC.
By:	/s/ Jerome Goldstein
Name: Jerome Goldstein
Title: President

[Purchaser Signature Blocks Appear on Following Page(s)]

By: /s/ Brian J.G. Pereira

Brian J.G. Pereira

BIOMEDICAL VALUE FUND, L.P.
By:		Great Point GP, LLC
Its:		General Partner
By:	/s/ Dr. Jeffrey R. Jay, MD
Name:		Dr. Jeffrey R. Jay, MD
Title:		Senior Managing Member

BIOMEDICAL OFFSHORE VALUE FUND LTD.
By:		Great Point Partners, LLC
Its:		Investment Manager
By:	/s/ Dr. Jeffrey R. Jay, MD
Name:		Dr. Jeffrey R. Jay, MD
Title:		Senior Managing Member

/s/ Jeffrey R. Jay

Jeffrey R. Jay

EXHIBIT A

SCHEDULE OF PURCHASERS

PURCHASER	AGGREGATE PURCHASE PRICE				COMMON SHARES UNDERLYING UNITS	WARRANT SHARES UNDERLYING UNITS
Biomedical Offshore Value Fund Ltd. 2 Pickwick Plaza, Suite 450 Greenwich, CT 06830	$			6,650,000.00	700,000	140,000
Biomedical Value Fund, L.P. 2 Pickwick Plaza, Suite 450 Greenwich, CT 06830	$		6,499,995.00		684,210	136,842
Jeffrey R. Jay 2 Pickwick Plaza, Suite 450 Greenwich, CT 06830	$		499,985.00		52,630	10,526
Brian J.G. Pereira c/o Tufts-New England Medical Center 750 Washington Street, Box 5224 Boston, MA 02111	$		149,957.50		15,785	3,157
Total	$	13,799,937.50			1,452,625	290,525

EX-99.1

Exhibit 99.1

For Immediate Release

Contact:

Jerome Goldstein, CEO

or Lisa Gordon, VP of Business Development

Advanced Magnetics, Inc.

(617) 497-2070

ADVANCED MAGNETICS, INC. ANNOUNCES CLOSING OF $13.8 MILLION REGISTERED DIRECT SALE OF COMMON STOCK AND WARRANTS

Cambridge, MA (June 1, 2005) — Advanced Magnetics, Inc. (AMEX:AVM) today announced that it has closed a registered direct sale of common stock and warrant units to affiliates of Great Point Partners, LLC of Greenwich, CT and one of Advanced Magnetics’ directors.

Each unit was comprised of five (5) shares of common stock and a warrant to purchase one (1) share of common stock.  The issue price for each unit was $47.50, and the exercise price for each warrant is $13.00 per share.  Advanced Magnetics issued and sold a total of 1,452,625 shares of its common stock and warrants to purchase 290,525 shares of its common stock in connection with the transaction.  The company estimates net proceeds from the financing to be approximately $13.6 million after deducting estimated costs associated with the offering.  The proceeds from the transaction will be used to fund clinical development programs including continued development of ferumoxytol as an iron replacement therapeutic and for general working capital purposes.

The securities were issued pursuant to the Company’s existing shelf registration statement on Form S-3, which has been declared effective by the Securities and Exchange Commission.  This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be the sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

About Advanced Magnetics
Advanced Magnetics, Inc. is a developer of superparamagnetic iron oxide nanoparticles used in pharmaceutical products.  As a leader in our field, we are dedicated to the development and commercialization of our proprietary nanoparticle technology for use in therapeutic iron compounds to treat anemia, as well as novel imaging agents to aid in the diagnosis of cardiovascular disease and cancer.  For more information about us, please visit our website at http://www.advancedmagnetics.com, the content of which is not part of this press release.

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws.  Any statements contained in this press release that do not describe historical fact, including statements regarding the clinical  development of ferumoxytol and our intended use of the proceeds from the financing are forward-looking statements that

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involve risks and uncertainties that could cause actual results to differ materially from those discussed in such forward-looking statements.  Such risks and uncertainties include the following: (1) the possibility that we may not be able to successfully complete the clinical development of ferumoxytol, one of our two products currently under development, or may not be able to complete the development in a timely manner, due to the timing of enrollment of patients in the Phase III studies, unexpected results from our clinical sites, inadequate performance by third-party service providers involved in the conduct of the clinical trials, deficiencies in the design or oversight by us of these studies, or any other factor causing a delay in or negatively affecting the results of the clinical studies for ferumoxytol; (2) the possibility that the results of past ferumoxytol studies may not be replicated in future studies; (3) uncertainties surrounding the timing and results of FDA interactions regarding the clinical development of ferumoxytol; (4) the possibility that we may not be able to timely or cost-effectively resolve the questions raised by the FDA and satisfy the conditions specified for approval of Combidex, including the provision of additional data or the conduct of additional clinical trials to demonstrate the efficacy of Combidex; (5) the possibility that we may not be able to raise additional capital on terms and on a timeframe acceptable to us, if at all; (6) our reliance on a limited number of customers and our dependence on our collaborative relationships; (7) uncertainties relating to our ability to continue to operate at commercial scale in compliance with FDA regulations and other applicable manufacturing requirements when producing Combidex or ferumoxytol; (8) uncertainties relating to patents and proprietary rights and other risks identified in our Securities and Exchange Commission filings.  We caution readers not to place undue reliance on any forward-looking statements which speak only as of the date they are made.  We disclaim any obligation to publicly update or revise any such statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

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