Related Party Transactions and Outside Related Director Information

Advanced Magnetics, Inc. (AMAG)

12/14/2005 Proxy Information

Rachel Konforty, the daughter of Jerome Goldstein, our Chairman of the Board, Chief Executive Officer, and Treasurer, was employed by us as General Counsel through February 2005 and as Corporate Counsel through May 2005 and Lisa Gordon, also the daughter of Mr. Goldstein, is employed by us as Vice President of Business Development. Ms. Konforty accrued $98,745 in salary and bonus payments during fiscal 2005, and Ms. Gordon accrued an annual salary of $155,430 during fiscal year 2005. Ms. Konforty was, and Ms. Gordon is, eligible for employee benefits plans and programs available generally to all salaried employees, including option grants.

As further described above under “HOW ARE THE COMPANY’S DIRECTORS COMPENSATED?”, in July 2005 we entered into a one-year consulting agreement with Dr. Brian J.G. Pereira, one of our directors, to provide advice and consultation to us in the areas of business development, product marketing, and medical affairs. As compensation for Dr. Pereira’s services, we granted him an option to purchase 60,000 shares of common stock under the terms of our 2000 Stock Plan at an exercise price of $10.80, the fair market value of a share of our common stock on the date the option was granted. As also further described above, in connection with his election as President of the Company in November 2005, we entered into a three-year employment agreement with Dr. Pereira, at which time we granted him options to purchase 250,000 shares of our common stock and agreed to grant him an additional option to purchase 100,000 shares upon shareholder approval of the Amended and Restated 2000 Stock Plan.