Drug Royalty Cash Flow Increases 400 Percent To 10 Cents Per Share.

CORP.(TSE: DRI ) Drug Royalty Corporation Inc. today announced that cash flow from operations improved 400 percent to $2.6 million or $0.10 per share from $482,111 or $0.02 per share in the prior year. The Company had cash of $12.6 million on August 31, 1995.

"Cash flow was generated from royalty agreements with four strategic partners with a combined market capitalization in excess of $750 million," said Ed Rygiel, Chairman and Chief Executive Officer. "This achievement is especially impressive in that it occurred in our second full year as a public company and it illustrates the fact that royalty financing can generate revenues in all stages of drug development."

Net loss for the year ended August 31, 1995 was $755,153 versus a loss of $111,716 incurred in 1994. The 1995 results include a provision of $2.2 million which has been established against a non-revenue producing royalty interest, Peptide T for HIV/AIDS. Subsequent to year-end, Peptide Technology Limited, the party responsible for clinical development of Peptide T for HIV/AIDS, informed the Company that it intends to terminate all further activities and investment in the area. The Company's accounting policy is to set aside a provision when a possible permanent impairment in a royalty interest is identified. Increases in royalty values are not recorded until actually realized.

1995 revenues increased to $3.8 million as compared to $1.7 million in the prior year reflecting the sale of warrants received as part of the royalty agreement with Dura Pharmaceuticals and royalty revenue from four strategic partners: Dura Pharmaceuticals, Inc., Cambridge Antibody Limited, Peptech(UK) and Ethical Holdings plc.

During 1995 Drug Royalty realized $1.5 million on the sale of warrants returning 50 percent of the total amount invested in Dura in September 1994. Drug Royalty continues to hold its royalty interest in specific Dura sales territories where Drug Royalty's funds are being used to fund a sales force expansion. "The Dura transaction shows how negotiating warrants and other entitlements to reduce the overall cost of acquiring a royalty interest, greatly enhances the overall return a royalty agreement generates," said Rygiel.

Drug Royalty announced a royalty deal with TPL Phytogen earlier in the year which is involved in the worldwide paclitaxel cancer therapeutic market. This investment is expected to begin paying a royalty in fiscal 1996 with exciting potential for growth in this rapidly expanding market which is expected to reach $ 1 billion in the year 2000.

In 1995, strategic partner Peptech(UK) announced an agreement with Allergan, Inc., a California based global health care company, giving it the option to use GMDP, Peptech's orally active proprietary drug for the treatment of skin disorders such as psoriasis. "The Peptech(UK)/Allergan, Inc. agreement is an excellent example of how an innovative application of royalty financing principles can develop revenue from drugs even before they are commercialized" said Ed Rygiel, Chairman and CEO of Drug Royalty.

Drug Royalty Corporation Inc. is the first public Canadian company to provide shareholders with a means of participating in the global pharmaceutical industry by developing and acquiring royalty rights in emerging and existing drugs. Drug Royalty has royalty interests in over 25 drug products in various stages of development and drug development activities with strategic partner companies in Canada, Australia, the United Kingdom, the United States and Denmark. Drug Royalty's common shares trade on The Toronto Stock Exchange under the symbol DRI. -0-

                    DRUG ROYALTY CORPORATION INC.

                       3 Months            12 Months
                        Ended                Ended
                  Aug.31,     Aug.31,     Aug.31,  Aug. 31
                  1995         1994        1995      1994
Revenue
Royalties     $ 562,494     $246,387  $1,635,078  $1,250,000
Gain on
 Sale of
 Warrants      1,297,356        -      1,297,356       -
Interest         225,690     226,587     840,551     490,550
             -----------    ---------- ----------  ----------
               2,085,540     472,974   3,772,985   1,740,550
             -----------    ---------- ----------  ----------
Expenses
General and
 Administration  285,791     351,753   1,328,664   1,258,439
Amortization and
 Provisions    2,352,509     284,561   3,199,474     712,827
             -----------    ---------- ----------  ----------
               2,638,300     636,314   4,528,138   1,971,266
             -----------    ---------- ----------  ----------
Loss for the Period
  Before the
   Following   (552,760)    (163,340)   (755,153)   (230,716)
Gain on
  Disposition
  of Unrelated
  Business
  Interests        -             -           -       119,000
             -----------    ---------- ----------  ----------
Loss for
 the Period    (552,760)     (163,340)   (755,153)  (111,716)
Deficit,
 Beginning
  of Period  (2,700,679)   (2,334,946) (2,498,286) (2,386,570)
Deficit,
  End of
   Period   $(3,253,439) $(2,498,286) $(3,253,439) $(2,498,286)
            ============ ============ ============ =============
Loss Per
  Share     $    (0.02)   $    (0.01)  $   ( 0.03) $    (0.01)
Cash Flow
 from
 Operations $ 1,977,294   $   121,221  $ 2,621,865 $   482,111
Cash Flow
  from Operations
 Per Share  $      0.08   $      0.01  $     0.10  $      0.02
Average Number
 of Shares
 Outstanding                           25,683,798   20,755,768

As at Aug. 31,          As at Aug. 31,
                            1995                     1994
Working Capital       $  11,600,612           $   10,609,057
Royalty Interests     $  12,199,653           $   13,420,499
Shareholders' Equity  $  23,851,963           $   24,079,116

CONTACT: James R. Webster

or

Harry Loveys

416/863-1865

416/863-5161 (Fax)