ADVANCED MAGNETICS, INC.
Charter of the Compensation Committee
(Adopted January 19, 2006; Amended and Restated November 7, 2006)

A. Purpose

The purpose of the Compensation Committee is to discharge certain of the responsibilities of the Board of Directors relating to compensation of the Company's directors and officers.

B. Structure and Membership

1. Number. The Compensation Committee shall consist of at least three members of the Board of Directors.

2. Independence. Except as otherwise permitted by the applicable rules of The NASDAQ Global Market (or such other market, exchange or electronic quotation system upon which shares of the Company’s Common Stock are primarily traded from time to time) (in each case, the “Applicable Rules”), each member of the Compensation Committee shall be an "independent director" as defined by the Applicable Rules.

3. Chair. Unless the Board of Directors elects a Chair of the Compensation Committee, the Compensation Committee shall elect a Chair by majority vote.

4. Compensation. The compensation of Compensation Committee members shall be as determined by the Board of Directors.

5. Selection and Removal. Members of the Compensation Committee shall be appointed by the Board of Directors. The Board of Directors may remove members of the Compensation Committee from such committee, with or without cause .

C. Authority and Responsibilities

General
The Compensation Committee shall discharge its responsibilities, and shall assess the information provided by the Company's management, in accordance with its business judgment.

Compensation Matters
1.
Officer Compensation. The Compensation Committee shall have the authority, on behalf of the board to review, negotiate, authorize and approve, the recruitment, hiring and compensation, including salary, bonus and incentive compensation levels; deferred compensation; executive perquisites; equity compensation (including awards to induce employment); severance arrangements; change-in-control benefits and other forms of compensation (including any material changes thereto), for any executive officers (as defined in Section 3b-7 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act")) and all other officers of the Company with a title of Senior Vice President or higher (each an “Officer”). Notwithstanding the foregoing, the Compensation Committee shall not have the authority to approve the compensation (including any material changes thereto) of (a) the Chief Executive Officer or President of the Company, or (b) any Officer position which was not provided for in a Board-reviewed budget, each of which shall be presented by the Compensation Committee to all of the independent (as defined by the Applicable Rules) directors of the Board of Directors for approval based on the recommendation of the Compensation Committee. The Compensation Committee or the Board of Directors, as the case may be, shall meet without the presence of executive officers when approving CEO or President compensation but may, in its or their discretion, invite the CEO and/or President to be present during approval of other executive officer compensation. The Compensation Committee may delegate any authority granted to it in this Section 1 to the Chair or any other member of the Compensation Committee in its sole discretion .

2. Plan Recommendations and Approvals. The Compensation Committee shall periodically review and make recommendations to the Board of Directors with respect to incentive-compensation plans and equity-based plans. In addition to any recommendation provided by the Compensation Committee to the full Board of Directors, the Compensation Committee shall approve, or recommend for approval by the Board of Directors, any tax-qualified, non-discriminatory employee benefit plans (and any parallel nonqualified plans) for which stockholder approval is not sought and pursuant to which options or stock may be acquired by officers, directors, employees or consultants of the Company.

3. Incentive Plan Administration. The Compensation Committee shall have the authority to exercise all rights, authority and functions of the Board of Directors under all of the Company's stock option, stock incentive, employee stock purchase and other equity-based plans, including without limitation, the authority to interpret the terms thereof, to grant options thereunder and to make stock awards thereunder; provided, however, that, except as otherwise expressly authorized to do so by a plan or resolution of the Board of Directors, the Compensation Committee shall not be authorized to amend any such plan. To the extent permitted by applicable law and the provisions of a given equity-based plan, and consistent with the requirements of applicable law and such equity-based plan, the Compensation Committee may delegate to one or more executive officers of the Company the power to grant options or other stock awards pursuant to such equity-based plan to employees of the Company or any subsidiary of the Company who are not directors or executive officers of the Company.

4. Director Compensation. The Compensation Committee shall periodically review and make recommendations to the Board of Directors with respect to director compensation.

5. Compensation Committee Report on Executive Compensation. The Compensation Committee shall prepare for inclusion where necessary in a proxy or information statement of the Company relating to an annual meeting of security holders at which directors are to be elected (or special meeting or written consents in lieu of such meeting) or in any other filing with the Securities and Exchange Commission, such reports and/or other disclosures as are required by the rules and regulations applicable to such proxies, information statements or other filings.

6. Additional Powers. The Compensation Committee shall have such other duties as may be delegated from time to time by the Board of Directors.

D. Procedures and Administration

1. Meetings. The Compensation Committee shall meet as often as it deems necessary in order to perform its responsibilities. The Compensation Committee may also act by unanimous written consent in lieu of a meeting. The Compensation Committee shall keep such records of its meetings as it shall deem appropriate.

2. Subcommittees. The Compensation Committee may form and delegate authority to one or more subcommittees as it deems appropriate from time to time under the circumstances (including (a) a subcommittee consisting of a single member and (b) a subcommittee consisting of at least two members, each of whom qualifies as a "non-employee director," as such term is defined from time to time in Rule 16b-3 promulgated under the Exchange Act, and an "outside director," as such term is defined from time to time in Section 162(m) of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder).

3. Reports to Board. The Compensation Committee shall report regularly to the Board of Directors.

4. Charter. The Compensation Committee shall periodically review and reassess the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.

5. Consulting Arrangements. The Compensation Committee shall have the authority to retain and terminate any compensation consultant to be used to assist in the evaluation of executive officer compensation and shall have the authority to approve the consultant's fees and other retention terms. The Compensation Committee shall also have authority to commission compensation surveys or studies as the need arises. The Compensation Committee is empowered, without further action by the Board of Directors, to cause the Company to pay the compensation of such consultants as established by the Compensation Committee.

6. Independent Advisors. The Compensation Committee shall have the authority, without further action by the Board of Directors, to engage such independent legal, accounting and other advisors as it deems necessary or appropriate to carry out its responsibilities. Such independent advisors may be the regular advisors to the Company. The Compensation Committee is empowered, without further action by the Board of Directors, to cause the Company to pay the compensation of such advisors as established by the Compensation Committee.

7. Investigations. The Compensation Committee shall have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it shall deem appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Compensation Committee or any advisors engaged by the Compensation Committee.

8. Periodic Self-Evaluation. The Compensation Committee shall evaluate its own performance from time to time as appropriate.