Avanir Pharmaceuticals has sold a portion of its future royalty stream on North American sales of Abreva to Drug Royalty USA for $24.1 million. Avanir retains rights to all current and future royalties from product sales in the rest of the world. Avanir also retains the rights to other potential product indications, such as HSV2 and herpes zoster.

Terms of the license purchase agreement with Drug Royalty provide for an initial payment of $20.5 million that was received on December 24, 2002. Avanir retains rights to 50% of royalties earned on sales of Abreva in excess of $62 million a year. Avanir will receive an additional $3.6 million from Drug Royalty upon approval of the extension of one of Avanir's key patents. The Company expects approval to be granted by the U.S. Patent Office in early 2003.

"We are pleased to have concluded this monetization of our royalty stream with Drug Royalty," said Gerald J. Yakatan, Avanir's President and Chief Executive Officer. "Monetizing a portion of our Abreva royalty stream enables us to leverage a current asset to fund the development of a potentially larger asset, our Neurodex product platform. We also generate significant funds to support our product pipeline and drug development programs without having to access the capital markets. Since licensing Abreva, Avanir will have received over $55 million from milestones, fees, royalties and this sale of rights to future royalties."