Ipsen and Tercica to Enter into Worldwide Strategic Collaboration in Endocrinology

-- Cross licensing agreements for Somatuline(R) Autogel(R) and Increlex(TM)

-- Ipsen to acquire initial 25% stake in Tercica, with the potential to increase to up to 40% ownership via convertible notes and warrant

-- Joint product development rights for endocrine pipelines

-- Somatuline(R) Autogel(R) gets marketing approval in Canada; Tercica expects to launch in early 2007

Ipsen (EURONEXT:IPN) and Tercica (Nasdaq:TRCA) today announcedthat they have agreed to a worldwide strategic collaboration inendocrinology. In cross licensing agreements, Ipsen will grant toTercica exclusive rights to sell(1) Somatuline(R) Autogel(R), aleading product in the European acromegaly market, in the UnitedStates and Canada. Tercica will grant to Ipsen exclusive rights tosell(1) Increlex(TM), a leading product in the United States for thetreatment of short stature associated with severe Primary IGF-1deficiency (Primary IGFD), in all regions of the world except theUnited States, Japan, Canada, the Middle East and Taiwan(2). Thecompanies will also grant to each other product development rights andshare the costs for improvements to or new indications forSomatuline(R) Autogel(R) and Increlex(TM). In addition, the companieshave agreed to rights of first negotiation for their respectiveendocrine pipelines. This alliance is designed to allow Ipsen andTercica to offer global care solutions to patients suffering fromgrowth and other endocrine disorders. In the context of thispartnership, Ipsen will acquire newly issued shares of Tercica commonstock representing a 25% stake in Tercica (post transaction, on anon-diluted basis), and Tercica will issue convertible notes and awarrant to Ipsen giving it the opportunity to increase itsshareholding to up to a 40% stake in Tercica (post transaction, on afully diluted basis). Both companies believe their collaboration willsignificantly enhance their respective competitive positioning andgrowth prospects.

The key components of the collaboration agreement announced todayare:

1- Licensing agreements(3):

-- Ipsen will license from Tercica the rights to develop and market Increlex(TM) worldwide except for the United States, Japan, Canada, the Middle East and Taiwan. Ipsen will make an upfront cash payment of EUR 10.0 million ($12.5 million) to Tercica upon the closing of this transaction, and an additional EUR 15.0 million ($18.8 million) on approval of the Increlex(TM) Medical Marketing Application in the European Union for the targeted product label. Once Increlex(TM) is launched in Ipsen's territory, Ipsen will pay royalties to Tercica on a sliding scale from 15% to 25% of net sales, in addition to a supply price of 20% of net sales of the product.

-- Tercica will license from Ipsen the rights to develop and market Somatuline(R) Autogel(R) in the United States and Canada. Tercica will make an upfront payment of $25.0 million (EUR 20.0 million) to Ipsen upon closing of this transaction, and an additional payment of EUR 30 million ($37.6 million) upon U.S. approval of Somatuline(R) Autogel(R) for the targeted product label. Both of these milestones will be financed through the issuance by Tercica of convertible notes to Ipsen (see below). Once Somatuline(R) Autogel(R) is launched in Tercica's territory, Tercica will pay royalties to Ipsen on a sliding scale from 15% to 25% of net sales, in addition to a supply price of 20% of net sales of the product.

2- Equity investment and convertible notes(3):

At closing:

-- Equity stake: Ipsen will acquire newly issued shares of Tercica common stock representing a 25% stake (post transaction, on a non-diluted basis) in Tercica at $6.17 per share, a premium of 30.0% to Tercica's volume-weighted average closing stock price over the past 15 trading days ended July 17 for a total cash consideration of $77.3 million (EUR 61.8 million).

-- Convertible note 1: Tercica will issue to Ipsen a convertible note for a principal amount of $25.0 million (EUR 20 million). The note, which will mature 5 years from the date of closing carries a coupon of 2.5% and is convertible into Tercica common stock at a conversion price of $7.41 (EUR 5.92) per share, a premium of 56.0% to Tercica's volume-weighted average closing stock price over the past 15 trading days ended July 17. This note will be issued in payment of the upfront licensing payment for Somatuline Autogel described above.

-- Warrant: Tercica will also issue a warrant to Ipsen, with an exercise price of $7.41 per share, which represents a premium of 56.0% to Tercica's volume weighted average closing stock price over the past 15 trading days ended July 17.

Upon approval of Somatuline(R) Autogel(R) in the United States forthe targeted product label:

-- Convertible note 2: Tercica will issue to Ipsen a convertible note for a principal amount of EUR 30.0 million ($37.6 million). The note, which will mature 5 years from the date of closing, carries a coupon of 2.5% and is convertible into Tercica common stock at a conversion price of EUR 5.92 ($7.41) per share. This note will be issued in payment of the second licensing payment for Somatuline(R) Autogel(R) described above.

-- Convertible note 3: Tercica will issue to Ipsen a convertible note for a principal amount of $15.0 million (EUR 12.0 million). The note, which will mature 5 years from the date of closing, carries a coupon of 2.5% and is convertible into Tercica common stock at a conversion price of $7.41 (EUR 5.92) per share. Ipsen will purchase this note for cash.

In aggregate, excluding the Warrant, Ipsen may pay to Tercica atotal cash amount of up to EUR 98.7 million ($123.6 million) asfollows:
-- EUR 73.7 million ($92.3 million) under the equity and
convertible notes net of convertible notes 1 and 2:

-- $77.3 million (EUR 61.8 million) upon closing of the
transaction and;

-- $15.0 million (EUR 12.0 million) upon issuance of the
third convertible note.

-- EUR 25 million ($31.3 million) under the licensing agreement
for Increlex(TM):

-- EUR 10.0 million ($12.5 million) upfront, and

-- EUR 15.0 million ($18.8 million) upon EU approval of
Increlex(TM) for the targeted product label.

Tercica may receive additional proceeds from Ipsen if the warrantis exercised.

Overall, these instruments will allow Ipsen to increase itsstakeholding in Tercica to up to 40%, on a post transaction and fullydiluted basis. Should Ipsen decide not to convert the notes, theywould be repaid in cash at maturity.

Additional terms of the collaboration include agreements givingIpsen the right to appoint two members to Tercica's nine-member boardof directors, replacing two current directors, providing Ipsen withcertain protective provisions, including an approval right related tospecified material transactions and actions by Tercica, and providingfor the implementation of a stockholder rights plan. Closing of thetransaction, which is expected to occur this year, is subject toapproval by Tercica's stockholders and the expiration of the HartScott Rodino waiting period, as well as other customary closingconditions. Tercica stockholders holding an aggregate of 38.4% ofTercica's outstanding common stock have entered into voting agreementsin which they have agreed to vote their shares of Tercica's commonstock in favor of the proposed transaction and related matters.

3 - Development of Somatuline(R) Autogel(R), Increlex(TM), andEndocrinology Pipeline Product candidates:

-- Each company has granted to the other the right to pursue development of new indications and improvements to Somatuline(R) Autogel(R) and Increlex(TM), either jointly or on its own, with the other party retaining a right to "opt in" to co-fund later.

-- Each company has granted to the other a right of first negotiation for products in its endocrine pipeline, and has agreed on a framework for joint clinical development and subsequent commercialization of endocrine products on a worldwide basis.

-- Ipsen has several endocrinology compounds in pre-clinical development, including two products that could enter clinical development as early as 2007: dopastatin (BIM 23A760), a chimeric molecule directed towards somatostatin and dopamine receptors, is targeted at the possible treatment of pituitary adenomas, including those causing acromegaly, Cushing's disease and hyperprolactinemia as well as non-functional pituitary adenomas. BIM 28131, a ghrelin agonist, is targeted at restoring normal body composition in wasting diseases associated with chronic illness.

Jean-Luc Belingard, Chairman and CEO of Ipsen, said, "After anextensive review of our options, we have chosen Tercica to marketSomatuline(R) Autogel(R) in the United States considering its uniqueposition and experience in endocrinology and in recognition of theexcellence of its team. This transaction represents an importantmilestone in our strategy of international expansion: it is a majorstep forward in building a powerful business platform in North Americain one of our high-growth targeted therapeutic areas."

M. Belingard added: "Ipsen is also convinced that Increlex(TM)will be successfully established in the market as the referencelong-term treatment of growth failure in children with severe primaryIGFD, and our licensing agreement will enable Ipsen to build a globalfranchise, offering to endocrinologists a comprehensive solution tochildren suffering from such growth disorders."

Commenting on the structure of the transaction, M. Belingard said:"We strongly believe this partnership will create value for bothshareholder bases by extracting cross-selling synergies between twohighly regarded products and enhancing both companies' R&Dcapabilities in endocrinology. Furthermore, our staged equityinvestment demonstrates our financial discipline and provides Ipsenwith flexibility regarding its future equity position in Tercica."

John A. Scarlett, M.D., President and Chief Executive Officer ofTercica, said, "We are very pleased to partner with Ipsen, a worldleader in endocrinology. Through this collaboration we expect toachieve several critical objectives. With Somatuline(R) Autogel(R), wewill have an attractive late-stage endocrinology product for thetreatment of acromegaly, which affects approximately 15,000 people inthe United States and Canada. Upon approval, the addition ofSomatuline Autogel to our U.S. product portfolio will enable us toleverage our existing sales and marketing infrastructure in theendocrine marketplace. Additionally, our agreement with Ipsen willprovide us with a very strong partner that will commercializeIncrelex(TM) in the European Union and other global markets."

Dr. Scarlett added: "As a part of this collaboration, we also gainaccess to Ipsen's endocrinology pipeline, which includes two veryexciting compounds in late-stage preclinical testing. Also, Ipsen'sproprietary technologies might be applicable in the future to design asustained release formulation of Increlex."

Dr. Scarlett continued, "Additionally, the transaction willprovide Tercica with a net cash infusion of $77.3 million from theinitial equity sale upon closing and up to another $46.3 million fromlicensing milestones and the issuance of the third convertible note.These cash receipts will significantly strengthen our balance sheet.

"Giving effect to the proposed transaction, Tercica expects toreach breakeven in 2010 and achieve 2011 revenues of $250 million to$300 million, with Increlex and Somatuline Autogel sales expected tocontribute roughly equal amounts. For 2006, Tercica expects Increlexrevenues of approximately $1 million and cash burn, excluding expensesrelated to this transaction, of $63 million to $69 million aspreviously stated," continued Dr. Scarlett.

Tercica's Increlex(TM) (mecasermin (rDNA origin) injection) is anrhIGF-1 replacement therapy indicated for the long-term treatment ofgrowth failure in children with severe Primary IGFD. The activeingredient of Increlex(TM) is identical to the natural hormone IGF-1,which the body normally produces in response to stimulation by growthhormone. IGF-1 is the direct mediator of growth hormone's effect onstatural growth and must be present in order for children's bones,cartilage and organs to grow normally. Without adequate IGF-1,children cannot achieve a height within the normal range.Increlex(TM), approved for the treatment of severe Primary IGFD by theU.S. Food and Drug Administration (FDA) in August 2005, iscommercially available to patients throughout the United States. Also,in December 2005, Tercica submitted for marketing approval ofIncrelex(TM) in the European Union and has been granted an "orphanproduct" designation.

Severe primary IGF-1 deficiency (Primary IGFD) is a distinctdiagnosis of short stature and is defined by height standard deviationscore less than or equal to -3.0, Basal IGF-1 standard deviation scoreless than or equal to -3.0 and normal or elevated growth hormone. Itis believed that approximately 6,000 children in the U.S. have severeprimary IGF-1 deficiency. Severe Primary IGFD causes are rooted in theIGF-1 expression and production pathway. Disease state includespatients with mutations in the growth hormone receptor (GHR), post-GHRsignaling pathway, and IGF-1 gene defects. Patients with severePrimary IGFD are not growth hormone deficient, and therefore, cannotbe expected to respond adequately to exogenous growth hormonetreatment. Reduced levels of endogenous IGF-1 can be detected by anIGF-1 assay.

Tercica estimates that 6,000 to 8,000 children suffer from severePrimary IGF-1 deficiency in the EU. Tercica is also conductingclinical trials to study once-daily dosing of Increlex(TM) as well asexpanded labeling of Increlex(TM) for use in children with a lesssevere form of Primary IGFD. Tercica also estimates that an additional24,000 children in the EU have the less-severe form of the disease.

Ipsen's Somatuline(R) Autogel(R) is an injectablesustained-release formulation containing lanreotide, a somatostatinanalogue. Somatuline(R) was initially developed in Europe for thetreatment of acromegaly (a disorder caused by the over-production ofgrowth hormone secondary to a benign tumor of the anterior pituitarygland) and, in most European countries, is also approved for thetreatment of symptoms associated with neuroendocrine tumors. TheSomatuline(R) Autogel(R) formulation requires no excipient other thanwater and releases lanreotide over a period of at least 28 days and upto 56 days. The product is conditioned in a pre-filled syringe foreasier administration than other long-acting somatostatin analogue. Inacromegaly, Somatuline(R) is used primarily when circulating levels ofgrowth hormone remain high despite surgery or radiotherapy, andthrough its inhibitory effects, Somatuline(R) lowers growth hormoneand IGF-1 levels, thus controlling disease progression and relievingthe symptoms associated with active disease.

According to epidemiology data(4), acromegaly affectsapproximately 15,000 people in the United States and Canada and ismost commonly found in middle-aged adults. Studies estimate anall-cause mortality rate associated with acromegaly of at least twicethe normal population, and a reduction in life expectancy of 5 to 10years. Somatuline(R) also treats the symptoms associated withneuroendocrine tumors, particularly carcinoid syndrome, such asdiarrhea and flushing, by inhibiting the over-production of hormonessecreted by these tumors.

At 31 December 2005, Somatuline(R) and Somatuline(R) Autogel(R)had marketing authorizations in over 50 countries for the treatment ofacromegaly and neuroendocrine tumors. The Group intends to file anapplication for marketing authorization in the U.S. by the end of 2006for the treatment of acromegaly.

Somatuline(R) and Somatuline(R) Autogel(R) generated sales of EUR81.8 million in 2005, up 13.4% vs. 2004. In its main markets inEurope, Somatuline(R) Autogel(R) has achieved a 30% to 50% marketshare varying from country to country(5) of the acromegaly market.

On July 17, Health Canada approved Somatuline(R) Autogel(R) forthe long-term treatment of patients with acromegaly due to pituitarytumors who have had inadequate response to or cannot be treated withsurgery and/or radiotherapy and for the relief of symptoms associatedwith acromegaly. Tercica expects to launch Somatuline(R) Autogel(R) inCanada in early 2007.

A Current Report on Form 8-K describing the proposed transactionin more detail will be filed by Tercica, and this press release issubject to the further detail provided in the Form 8-K and exhibitsthereto.

About Tercica

Tercica is a biopharmaceutical company committed to improvingendocrine health by partnering with the endocrine community to developand commercialize new therapeutics for short stature and associatedmetabolic disorders. For further information on Tercica, please visitwww.tercica.com.

About Ipsen

Ipsen is a European pharmaceutical group with over 20 products onthe market and a total worldwide staff of nearly 4,000. The company'sdevelopment strategy is based on a combination of products in targetedtherapeutic areas (oncology, endocrinology and neuromusculardisorders), which are growth drivers and primary care products whichcontribute significantly to its research financing. This strategy isalso supported by an active policy of partnerships. The location ofits four R&D centers (Paris, Boston, Barcelona and London) gives theGroup a competitive edge in gaining access to leading universityresearch teams and highly qualified personnel. In 2005, Research andDevelopment expenditure reached EUR 169 million, i.e. 20.9% ofconsolidated sales, which amounted to EUR 807 million in the Group'spro forma accounts set up according to the IFRS. Nearly 700 people inR&D are dedicated to the discovery and development of innovative drugsfor patient care. Ipsen's shares are traded on Segment A of Eurolistby Euronext (stock code: IPN, ISIN code: FR0010259150). Ipsen'sinternet website is www.ipsen.com.

Ipsen's forward-looking statements

The forward-looking statements and targets related to Ipsencontained herein are based on Ipsen's management's current views andassumptions. Such statements involve known and unknown risks anduncertainties, including with respect to products, markets,investments or acquisitions that may cause actual results, performanceor events to differ materially from those anticipated herein. Inparticular, a number of products that the Group is developing arestill at the very first stages of development and the Group cannot becertain that these products will be approved by the competentregulatory authorities and that they will be successfully marketed. Ifthe products that the Group is developing are not approved duringclinical and pre-clinical trials or if they are not approvedthereafter by the regulatory authorities, this will have a negativeimpact on the growth of the Group. Several years can elapse before aproduct is approved and it may be that the Group will fail to launchsome of its new products on the market. A new product can also appearto be promising at a preparatory stage of development or afterclinical trials but never be launched on the market or be launched onthe market but fail to sell.

Ipsen expressly disclaims any obligation or undertaking to updateor revise any forward-looking statements, targets or estimatescontained in this press release to reflect any change in events,conditions, assumptions or circumstances on which any such statementsare based unless so required by applicable law. Ipsen's business issubject to the risk factors outlined in its information documentsfiled with the French Autorite des marches financiers.

Tercica' forward-looking statements

Except for the historical statements contained herein, this pressrelease contains forward-looking statements concerning Tercica'sprospects and results, including all statements that reflectcompletion of the proposed transaction with Ipsen (includingstatements related to Tercica's receipt of proceeds from the initialequity sale to Ipsen and as a result of the achievement of licensingmilestones and warrant exercises); statements related to the marketprospects for Increlex(TM) and Somatuline(R) Autogel(R); potentialdevelopment of additional products; that Tercica expects to launchSomatuline(R) Autogel(R) in Canada in early 2007; statements relatingto estimates of the numbers of patients with acromegaly, severePrimary IGFD or Primary IGFD; and statements related to financialprojections, including without limitation, that (a) Tercica expects toreach break-even in 2010 and achieve 2011 revenues of $250 million to$300 million, with Increlex(TM) and Somatuline(R) Autogel(R) salesexpected to contribute roughly equal amounts; and (b) for 2006,Tercica expects Increlex(TM) revenues of approximately $1 million andcash burn, excluding expenses related to this transaction, of $63million to $69 million. Because Tercica's forward-looking statementsare subject to risks and uncertainties, there are important factorsthat could cause actual results to differ materially from those in theforward-looking statements. These factors include, without limitation,risks and uncertainties related to the satisfaction of closingconditions related to the proposed transaction and the risk that theproposed transaction will not be completed, risks and uncertaintiesrelated to the achievement of milestones, including the followingrisks: (i) Somatuline(R) Autogel(R) might never achieve marketingapproval for the targeted indication, or any indication, in the UnitedStates on a timely basis, or at all; (ii) for the remainder of 2006,physicians my not prescribe Increlex(TM) at the rate Tercica expects;(iii) Increlex(TM) may not receive a marketing authorization from theFDA for Primary IGFD or from the EMEA for any indication; (iv) Tercicamay not prevail in the patent infringement litigation against InsmedIncorporated; (v) Tercica's estimates for the number of patients withacromegaly, severe Primary IGFD or Primary IGFD may not be correct;(vi) Tercica may not launch Somatuline(R) Autogel(R) in Canada inearly 2007 if the transaction does not close on a timely basis; and(vii) the risks and uncertainties disclosed from time to time inreports filed by Tercica with the SEC, including most recentlyTercica's Form 10-Q for the quarter ended March 31, 2006 filed withthe SEC on May 10, 2006. Tercica disclaims any obligation orundertaking to update or revise any forward-looking statementscontained in this press release to reflect any change in events,conditions, assumptions or circumstances on which any such statementsare based unless so required by applicable law.

Conference Call Information

Tercica and Ipsen will hold conferences calls as follows:

Ipsen's Conference Call and Webcast Information

Ipsen's management will host an investment community conferencecall on Wednesday, July 19, 2006 beginning at 2:00 p.m. Paris time(GMT+1) to discuss Ipsen's strategic partnership with Tercica, thefinancial terms of the agreement and to answer questions. A slidepresentation to accompany the conference call commentary will beavailable on the Company's website homepage at www.ipsen.com. An audiowebcast and slide presentation will accompany the conference callcommentary and is available on the Company's homepage atwww.ipsen.com.

Ipsen will release its second quarter sales on August 1, 2006 andfirst half results on September 5, 2006.

Tercica's Conference Call and Webcast Information

Tercica's management will host an investment community conferencecall beginning at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) onWednesday, July 19, 2006 to discuss Tercica's strategic partnershipwith Ipsen, the financial terms of the agreement, and to answerquestions.

To participate in the live call by telephone, dial 888-803-8296from the U.S., and for international callers, dial 706-634-1250. Awebcast slide presentation will accompany the conference callcommentary and is available on the company's homepage atwww.tercica.com. Individuals interested in listening to the webcastmay do so by visiting www.tercica.com.

A telephone replay will be available approximately two hours afterthe call for 48 hours by dialing 800-642-1687 from the U.S., or706-645-9291 for international callers, and entering reservationnumber 3017093. A replay of the webcast will be available on thecompany's web site for 21 days at www.tercica.com.

Tercica expects to release its second quarter financial resultsafter market close on August 8, 2006.

Additional Information about the Proposed Transaction and WhereYou Can Find It

Tercica plans to file a proxy statement with the Securities andExchange Commission relating to a solicitation of proxies from itsstockholders in connection with a special meeting of stockholders ofTercica to be held for the purpose of voting on various mattersrelating the subject of this press release, including: (1) the sale ofthe common stock, warrant to purchase common stock and convertiblenotes to be issued to Ipsen, (2) amendments to Tercica's Amended andRestated Certificate of Incorporation and Bylaws, (3) the adoption ofa share purchase rights plan and (4) certain other matters (the"Proposed Transaction"). BEFORE MAKING ANY VOTING DECISION WITHRESPECT TO THE PROPOSED TRANSACTION, SECURITY HOLDERS ARE URGED TOREAD THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOMEAVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THEPROPOSED TRANSACTION. The proxy statement and other relevantmaterials, and any other documents filed by Tercica with the SEC, maybe obtained free of charge at the SEC's website at www.sec.gov. Inaddition, stockholders of Tercica may obtain free copies of thedocuments filed with the SEC by contacting Tercica's InvestorRelations department at 650-624-4949 or Investor Relations, TercicaInc., 2000 Sierra Point Parkway, Suite 400, Brisbane, California94005. You may also read and copy any reports, statements and otherinformation filed by Tercica with the SEC at the SEC public referenceroom at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Pleasecall the SEC at 1-800-SEC-0330 or visit the SEC's website for furtherinformation on its public reference room.

Tercica and its executive officers and directors may be deemed tobe participants in the solicitation of proxies from the stockholdersof Tercica in favor of the Proposed Transaction. A list of the namesof Tercica's executive officers and directors, and a description oftheir respective interests in Tercica, are set forth in the proxystatement for Tercica's 2006 Annual Meeting of Stockholders, which wasfiled with the SEC on April 24, 2006, and in any documentssubsequently filed by its directors and executive officers under theSecurities and Exchange Act of 1934, as amended.

If and to the extent that executive officers or directors ofTercica will receive any additional benefits in connection with theProposed Transaction that are unknown as of the date of this filing,the details of such benefits will be described in the proxy statementand security holders may obtain additional information regarding theinterests of Tercica's executive officers and directors in theProposed Transaction by reading the proxy statement when it becomesavailable.
NOTES:

(1) Subject to approval by relevant regulatory authorities.

(2) Rights for the Middle East and Taiwan will be granted to Ipsen
after a period of time.

(3) Figures in the body of the text are contractual. Figures in
brackets are given for information purposes only, using the
exchange rate below.

NOTE: Where applicable, all data were converted using a EUR/US$
exchange rate of 1.252 (17 July 2006)

(4) Source: (Alexander L, Clin Endocrinol 12:71-79, 1980 &
Bengtsson BA, Acta Med Scan 223:327-335, 1988)

(5) Source: IMS MIDAS/Ex-manufactures as a percentage of sales of
sustained release formulations of the specific molecules
lanreotides, octreotide and pegvisomant -- in class H1C2