Drug Royalty Reports 80 Percent Increase In 1996 First Quarter Cash Flow.

TORONTO, Ontario--(BUSINESS WIRE)--Jan. 15, 1996--DRUG ROYALTY CORP. (TSE: DRI ) Drug Royalty Corporation Inc. announced today that first quarter cash flow from operations improved over 80 percent to $332,291 or $0.01 per share, compared with $182,026 in the prior year period. Cash and cash equivalents were $12.5 million or $0.48 per share as at November 30, 1995.

Net income for the quarter ended November 30, 1995 was $38,458 compared with a loss of $100,056 in the same period last year. Revenue increased 28 percent to $737,847, primarily reflecting a higher royalty payment from strategic partner Cambridge Antibody Technology (C.A.T.), related to a recently signed license agreement with Pfizer, with further payments expected during 1996. Royalty revenue also includes payments from Dura Pharmaceuticals Inc., and Ethical Holdings, plc.

"C.A.T.'s unique technology for developing fully human antibodies is leading to lucrative licensing agreements with a number of internationally recognized pharmaceutical companies," said Edward Rygiel, Chief Executive Officer. "Our royalty agreement with C.A.T. entitles us to a share of the revenue from these agreements and is an excellent illustration of how the royalty concept can be used innovatively to generate revenues very early in the product development cycle." In addition to Pfizer, C.A.T. has agreements with Merck, Pharmacia, Sumitomo, Igen, Knoll, Boehringer Mannheim, Genentech and Mitsubishi.

Drug Royalty now has royalty interests in over 25 drug products in various stages of development through strategic partnerships with both private and public pharmaceutical companies. Highlights of other strategic partners' activities during the quarter include:

- An announcement by Dura Pharmaceuticals, Inc. that it has formed a new corporation, Spiros Corp., with initial funding of US$41 million which will continue the development of Spiros(TM), the dry powder inhaler formerly known as the Dryhaler(TM). This reflects Dura's commitment to the commercialization of this new pulmonary drug delivery system. Drug Royalty will benefit from future sales of Spiros(TM) in the territories specified in our royalty agreement with Dura.

- An announcement by strategic partner Peptech(UK) Limited that it received a full drug registration license for its novel, orally-active drug GMDP in Russia. Previously, Peptech(UK) and Allergan entered into an option agreement for the drug's use in psoriasis and a second milestone payment from Allergan is anticipated in February or March. Drug Royalty is entitled to receive 12 percent of license and milestone payments and 3 percent of direct sales made by Peptech(UK) or its affiliates.

- A report by strategic partner Ethical Holdings, plc that it generated total revenues of US$29 million for the year ended August 31, 1995, an increase of 58 percent over the prior year. Drug

Royalty has an interest in several of Ethical's lead products and the Canadian rights to all of Ethical's products and technologies.

Drug Royalty Corporation Inc. provides shareholders with a means of participating in the global pharmaceutical industry by developing and acquiring royalty rights in emerging and existing drugs. Drug Royalty's common shares trade on The Toronto Stock Exchange under the symbol DRI, and two series of warrants are listed on the Canadian Dealing Network. -0-

                   DRUG ROYALTY CORPORATION INC.
                   -----------------------------

                            3 Months Ended      3 Months Ended
(Unaudited)                 Nov. 30, 1995       Nov. 30, 1994

Revenue
Royalties                    $   532,229         $   392,321
Interest                         205,618             183,531
                             -----------         -----------
                                 737,847             575,852
                             -----------         -----------

Expenses
General and administration       405,556             393,826
Amortization and provisions      293,833             282,082
                             -----------         -----------
                                 699,389             675,908
                             -----------         -----------

Net Income (Loss) for the Period  38,458           (100,056)

Deficit, Beginning of Period   3,253,439           2,498,286
                             -----------         -----------

Deficit, End of Period       $ 3,214,981         $ 2,598,342
                             -----------         -----------
                             -----------         -----------

Net Income (Loss) per Share  $      0.00         $    (0.00)

Cash Flow from Operations    $   332,291         $   182,026

Cash Flow from Operations
 Per Share                   $      0.01         $      0.01

Average Number of Shares
 Outstanding                  25,815,798          25,815,798

                       As at Nov. 30, 1995 As at Nov. 30, 1994
                       ------------------- -------------------
Working Capital              $11,921,965         $10,768,928
Royalty Interests            $11,918,869         $13,159,595
Shareholders' Equity         $23,890,421         $23,979,060

CONTACT: Drug Royalty Corporation Inc.

Mr. James R. Webster 

Senior Vice-President

or

Mr. Harry K. Loveys

Senior Vice-President

[phone]

[phone] (Fax) REPEATS: New York 212-575-8822 or 800-221-2462; Boston 617-236-4266 or