It's a bag made from the skin of a dead dragon.
It contains: a Sceptre of Ares (+4), a cloak of the vampire, a glowing alanthium-corbite poniard (+3),
  a granite troll-cleaver (+1), a masterwork falchion (+3), a mithril warhammer (+3), a soul sabre
  (+3), a wolvesbane broadsword (+3).
The dragonskin bag is an object of lore.