AVANIR Pharmaceuticals to Receive $24 Million for Rights to Abreva(R) North American Royalty Stream

SAN DIEGO, Dec. 26 /PRNewswire-FirstCall/ -- AVANIR Pharmaceuticals (Amex: AVN) announced today that it has sold a portion of its future royalty stream on North American sales of Abreva(R) 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, Ph.D., 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."

About Abreva(R)

Abreva is the brand name in North America for docosanol 10% cream, a topical pharmaceutical approved for the treatment of cold sores. Docosanol was approved by the U.S. Food and Drug Administration (FDA) in July 2000 and the Canadian Therapeutic Products Directorate (TPD) in May 2002. In March 2000, AVANIR licensed to GlaxoSmithKline the rights to manufacture, market and sell Docosanol in the U.S. and Canada. Launched in October 2000, Abreva has become the number one selling treatment for cold sores available over-the-counter in the United States.

About Drug Royalty USA, Inc.

Drug Royalty USA, Inc. is a wholly owned subsidiary of Drug Royalty Corporation, located in Toronto, Canada. Drug Royalty is one of a select few financial institutions that specialize in acquiring royalty streams generated from pharmaceutical products. Drug Royalty has built an international royalty portfolio of high-growth pharmaceutical products through transactions with companies such as Amgen, Johnson & Johnson, Celgene, and Bristol-Meyers Squibb Company. Information about Drug Royalty Corporation Inc. can be found at www.drugroyalty.com .

About AVANIR Pharmaceuticals

AVANIR Pharmaceuticals, based in San Diego, is a drug discovery and development company that has a commercialized FDA-approved product and a product in Phase III clinical trials. AVANIR is engaged in small molecule research to develop treatments for central nervous system disorders and inflammatory diseases. Through its subsidiary, Xenerex Biosciences, AVANIR also develops human monoclonal antibodies for therapeutic applications. Further information about AVANIR and Xenerex can be found at www.AVANIR.com .

The information contained in this press release, including any forward- looking statements contained herein, should be reviewed in conjunction with the company's Annual Report on Form 10-K and other publicly available information regarding the company. Copies of such information are available from the company upon request. Such publicly available information sets forth many risks and uncertainties related to the company's business and technology. Forward-looking statements often contain such words like "estimate," "anticipate," "believe," "plan," "intend" or "expect". Final decisions made by the U.S. Patent Office and other regulatory agencies are unpredictable and outside the influence and/or control of the company.

For further information, please contact: General Information, Kristen McNally, +1-310-407-6548, kmcnally@webershandwick.com , or Analyst/Investor, Tricia Ross, +1-310-407-6540, tross@webershandwick.com , or Media, Tim Grace, +1-312-640-6667, tgrace@webershandwick.com , all of FRB|Weber Shandwick, for AVANIR Pharmaceuticals; or Investor Relations, Patrice Saxon of AVANIR Pharmaceuticals, +1-858-622-5202, psaxon@AVANIR.com .

SOURCE AVANIR Pharmaceuticals

12/26/2002

/CONTACT: General Information, Kristen McNally, +1-310-407-6548, kmcnally@webershandwick.com , or Analyst/Investor, Tricia Ross, +1-310-407-6540, tross@webershandwick.com , or Media, Tim Grace, +1-312-640-6667, tgrace@webershandwick.com , all of FRB|Weber Shandwick, for AVANIR Pharmaceuticals; or Investor Relations, Patrice Saxon of AVANIR Pharmaceuticals, +1-858-622-5202, psaxon@AVANIR.com /

/Web site: http://www.drugroyalty.com