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[Avanir Pharmaceuticals letterhead]

Gregory P. Hanson CMA

Vice President and CFO

SENT VIA FACSIMILE: 202-942-9533

AND EDGAR SYSTEM

May 6, 2005

Mr. James Rosenberg

Senior Assistant Chief Accountant

United States Securities and Exchange Commission

Mail Stop 03-09

Washington, D.C. 20549

    RE:
    Avanir Pharmaceuticals
Form 10-K for the fiscal year ended September 30, 2004
File No. 001-15803

Dear Mr. Rosenberg:

          Thank you for your comment letter of April 8, 2005 on our Annual Report on Form 10-K for the
fiscal year ended September 30, 2004. We submit to you the following information in response to
your letter. For you convenience, we have restated each comment and set forth our response
immediately after each comment.

Form 10-K for the fiscal year ended September 30, 2004

Selected Consolidated Financial Data, Page 21

    1.
    Please include gross profit in your selected quarterly financial data as required by
Item 302 of Regulation S-K.

Response:

Beginning with the Annual Report on Form 10-K for the year ending September 30, 2005, we will
include gross profit in our selected quarterly financial data as required by Item 302 of Regulation
S-K.

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Management’s Discussion and Analysis

Liquidity and Capital Resources, Page 33

    2.
    Your discussion of your license agreement with IriSys Research and Development, LLC
includes references to payments that you will potentially make related to achievement of
milestones and royalties. Please assess whether these milestone payments and royalties
meet the criteria of a purchase obligation and if these milestone payments and royalties
should be shown in the contractual obligations table under Item 303(a)(5) of Regulation
S-K. Include explanatory footnotes to this table as necessary to provide the essential
data needed to understand the timing and amount of your specified contractual obligations
as well as those obligations that have been excluded from the table. If as a result of
that assessment, you do not include these payments in the table, please expand your
liquidity and capital resources disclosures to discuss the amount and timing of event
milestone and royalty commitments that are reasonable likely to be paid. Please refer to
Section IV of Financial Reporting Release 72.

Response:

The milestone payments due under this license agreement are contingent upon the occurrence of
future events relating to the FDA’s regulatory approval process. To date, we have not triggered
these milestone payments and there can be no assurance that we will do so. Accordingly, we did not
reflect these milestone payment obligations in the table of contractual commitments as of September
30, 2004.

The royalty payment obligations are also contingent, as they represent a percentage of revenue on
commercial sales of the drug, if and when the drug is approved by the FDA for commercialization.

Although these events remain contingent, we will continue to assess the probability of the events
in each future period, and will disclose these payment obligations on the table of contractual
commitments as soon as it is appropriate to do so.

We also respectfully note that each of the two milestone payment obligations is $75,000, which is
an amount that we do not consider material to our liquidity or capital resources. (For example,
each payment represents approximately 0.4% of our cash and cash equivalents and investments in
securities as of March 31, 2005.) However, in future filings we will expand our liquidity and
capital resources disclosure to include such event milestone and royalty commitments that are
reasonably likely to be paid.

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies

Revenue Recognition, Page F-14

    3.
    Please tell us and expand your disclosure to include your revenue recognition policy
for product sales, including any related return policy. Please formulate this response to
specifically address how your policy complies with SAB 101.

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Response:

We will expand our disclosure in our Quarterly Report on Form 10-Q for the quarter ended March 31,
2005, to include our revenue recognition policy for our current product sales activity, which
consists solely of sales of the active pharmaceutical ingredient docosanol. Our revenue
recognition policy for these sales is set forth below.

Disclosure Beginning with Form 10-Q for Quarter Ended March 31, 2005:

Product Sales – Active Pharmaceutical Ingredient Docosanol

Revenue from product sales, which consist of sales of our active pharmaceutical ingredient
docosanol, is recorded when the following criteria are met: there is written evidence that an
arrangement exists; products are shipped and title and risk of loss have passed to the buyer upon
delivery; the price to the buyer is fixed and determinable; and collectibility is reasonably
assured. We sell the active pharmaceutical ingredient docosanol to various licensees and ship only
on written order for the materials. Our total shipments occur fewer than five times a year. Our
contracts for sales of active pharmaceutical ingredient docosanol include buyer acceptance
provisions that give our buyers the right of replacement if the delivered materials do not meet
specified criteria, by giving notice within 30 working days after receipt of such defective
material, and we have the option to refund or replace such defective materials. However, we have
historically demonstrated that materials shipped from the same pre-inspected lot have consistently
met the specified criteria and no buyer has rejected any of our shipments from the same
pre-inspected lot. Therefore, we recognize revenue from sales of the active pharmaceutical
ingredient dosocanol without providing for such contingency upon shipment.

    4.
    We note you are deferring the revenue received from the sale of rights to future
royalties to Drug Royalty USA because of continuing involvement in earning the royalties.
Please provide us your analysis of the required revenue recognition for this transaction
and tell us what continuing involvement you have with GlaxoSmithKline in earning future
royalty revenues.

Response:

Under SAB 101, revenues are recognized when earned, collection is reasonably assured and no
additional performance of services is required. Further, in EITF 88-18, the Emerging Issues Task
Force addresses arrangements in which an enterprise receives cash from an investor in exchange for
a specified percentage of the future revenue for a specified period of time. The Task Force
believes that it would be unlikely that immediate income recognition would ever be appropriate in a
sale of future revenue. The Task Force went on to say that it assumed immediate income recognition
was not appropriate because the enterprise generally maintains some continuing involvement with the
business or product, and therefore, the earnings process is not completed when the cash is
received.

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We believe that our revenue recognition policies have been consistent with these accounting
pronouncements. As an initial matter, we respectfully note that our continuing involvement that
gives rise to this accounting treatment is under our agreement with Drug Royalty USA (the “Royalty
Agreement”), and not the underlying license agreement with GlaxoSmithKline (“GSK”) (the “License
Agreement”). With regard to our continuing involvement in the Royalty Agreement, there are
covenants under which we must perform in order to satisfy the continuing terms and conditions of
that agreement. These covenants include, among others, the following obligations:

    •
    Oversee GSK’s performance of its duties and responsibilities under the License
Agreement;

    •
    Ensure that GSK complies with the covenants and other terms of the License Agreement
and assist Drug Royalty with the enforcement of the License Agreement;

    •
    Monitor patent infringement, adverse claims or litigation involving Abreva and
communicate those matters to Drug Royalty; and

    •
    Undertake, within 180 days, to enter into a new license agreement for Abreva in the
event that GSK terminates the License Agreement, in whole or in part.

Nonperformance on the part of the Company would result in default under the Royalty Agreement, and
could, among other things, trigger a default under a separate security agreement with Drug Royalty,
which could result in our loss of rights to share in future Abreva
royalties. These covenants were sufficiently material to Drug Royalty
when negotiating the agreement, that it would not have entered into
the Royalty Agreement without these covenants in place to ensure our
continued involvement.

Although we intend to fully perform our obligations under the Royalty Agreement to avoid default
under the covenants, we believe that the nature of these terms and covenants results in our
continuing involvement under that agreement. Accordingly, we have deferred the recognition of
revenue received from the sale of rights to future royalties, and are recognizing such royalties
ratably over the expected life of the Royalty Agreement.

In light of your comment, we will expand our disclosure in our Quarterly Report on Form 10-Q for
the quarter ended March 31, 2005 regarding our continuing involvement in the Royalty Agreement that
requires us to account for the transaction as deferred revenue. Our expanded disclosure in our
Condensed Consolidated Notes to the Financial Statements (Unaudited) is set forth below.

Disclosure Beginning with Form 10-Q for the Quarter Ended March 31, 2005:

Deferred Revenue

In December 2002, we sold to Drug Royalty USA, Inc. (“Drug Royalty USA”) an undivided interest
in our rights to receive future Abreva® royalties under the license agreement with GlaxoSmithKline
subsidiary, SB Pharmco Puerto Rico (“SB”), for $24.1 million (the “Drug

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Royalty USA Agreement” and “SB License Agreement”, respectively). Under the Drug Royalty USA
Agreement, Drug Royalty USA has the right to receive royalties from SB on sales of Abreva® until
the later of December 2013 or the date of expiration of a certain Abreva® patent in accordance with
the SB License Agreement.

The terms of the Drug Royalty USA Agreement contain certain covenants under which we must perform
in order to satisfy the continuing terms and conditions of the arrangement. In certain
circumstances, nonperformance on our part could result in default of the arrangement, and could
trigger a separate security agreement with Drug Royalty USA, which could result in loss of our
rights to share in future Abreva® royalties if wholesale sales
exceed $62 million in a year. The nature of these terms and covenants results in
our continuing involvement, and accordingly, we recorded the net proceeds of the transaction as
deferred revenue, to be recognized as revenue ratably over the expected life of the license
agreement.

* * *

If you have any further questions or wish to discuss the responses we have provided above,
please call the undersigned at 858-622-5201 at your convenience.

Sincerely,

/s/ Gregory P. Hanson

Gregory P. Hanson

Chief Financial Officer

    cc:
    Helen Adams, Deloitte & Touche LLP

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