Celtrix reports Fiscal Year-End Financial Results; Year of Significant Progress in Business and Product Development.

SANTA CLARA, Calif.--(BUSINESS WIRE)--May 14, 1996--For the fiscal year ended March 31, 1996, Celtrix Pharmaceuticals, Inc. (NASDAQ: CTRX) reported revenues of $1,750,000 and a net loss of $7,246,000, or $0.51 per share.

These results compare with revenues of $2,200,000 and a net loss of $20,749,000, or $1.57 per share, for the fiscal year ended March 31, 1995. Fourth quarter revenues were $733,000 and the net loss was $1,337,000, or $0.09 per share, compared with revenues of $635,000 and a net loss of $5,120,000, or $0.37 per share, for the same period in fiscal 1995.

Operating expenses decreased by 45 percent, to $13,084,000 for fiscal 1996 from $23,792,000 for fiscal 1995. This was due primarily to Celtrix's restructuring and cost-reduction program implemented in the second half of fiscal 1995.

During fiscal 1996, the company reported a $3.5 million gain on investment from the sale of Metra Biosystems securities held by Celtrix since 1990. In addition, Celtrix exercised its option under an agreement with Genzyme Corporation, receiving $4.4 million in exchange for equity during December 1995. This increased Genzyme's total ownership position to 19.9 percent of Celtrix's 15.2 million shares of common stock outstanding. At March 31, 1996, Celtrix had $17.6 million in cash, cash equivalents and short-term investments.

"Fiscal 1996 was a year of significant progress for Celtrix," said Andreas Sommer, Ph.D., Celtrix's president and chief executive officer. "In addition to improving our financial results, we advanced the development of SomatoKine(R), our novel complex of the anabolic hormone IGF-I and its binding protein BP3. Evidence obtained from preclinical toxicology and efficacy studies indicates that our technology greatly improves the safety and efficacy profile of IGF-I, thus potentially allowing SomatoKine to be administered safely at substantially higher doses than appears possible with IGF-I alone. This opens up major opportunities for the treatment of seriously debilitating, degenerative conditions. We expect to initiate Phase I human clinical studies this spring."

"Clinical opportunities represent attractive markets estimated at $1 billion in the United States alone," Dr. Sommer said. "Among them are patients undergoing major surgery, or suffering from organ damage/failure or traumatic injury. These seriously ill patients frequently suffer from destructive metabolic processes (catabolism) associated with abnormally low blood levels of IGF-I. Our objective is to provide hormone replacement therapy that enhances the patient's recovery and quality of life."

Celtrix is a biopharmaceutical company developing novel therapeutics for seriously debilitating, degenerative conditions primarily associated with severe trauma, chronic diseases or aging. Company programs initially target the treatment of destructive metabolic processes (catabolism) in acute indications such as major surgery, organ damage/failure or traumatic injury. Potential chronic indications could include osteoporosis, chronic renal (kidney) failure, and wasting conditions associated with cancer and AIDS. In addition, through strategic alliances, Celtrix's SomatoKine (IGF-BP3 complex) is being developed by The Green Cross Corporation for the treatment of osteoporosis in Japan, and TGF-beta-2 is being developed by Genzyme Corporation as part of a comprehensive approach to tissue repair and the treatment of systemic disease.

This press release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may differ materially from the statements made, as a result of various factors, including risks associated with future company research, the regulatory approval process, competitive products and other factors which are listed from time to time in Celtrix's Securities and Exchange Commission (SEC) filings. These forward-looking statements represent Celtrix's judgment as of the date of this release. -0-

                        Celtrix Pharmaceuticals, Inc.
                     Condensed Consolidated Balance Sheets
                               (In thousands)

                                          March 31,    March 31,
                                            1996         1995

ASSETS

 Current assets:
  Cash, cash equivalents and
   short-term investments                   $17,643     $19,929
  Receivables and other current assets          195         307
    Total current assets                     17,838      20,236

 Property and equipment, net                 10,013      12,203
 Intangible and other assets, net             2,294       2,585
                                            $30,145     $35,024

LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
  Accounts payable and accrued liabilities   $1,301      $1,480
  Current portion of long-term obligations      633         639
  Accrued restructuring costs                     -       1,306
    Total current liabilities                 1,934       3,425

 Deferred rent                                1,187       1,335
 Long-term obligations                          238         828

 Stockholders' equity                        26,786      29,436
                                            $30,145     $35,024

                        Celtrix Pharmaceuticals, Inc.
               Condensed Consolidated Statements Of Operations
                   (In thousands, except per share amounts)

                                   Three Months    Ended Year Ended
                                     March 31,         March 31,
                                   1996    1995     1996      1995
                                    (unaudited)

Revenues:
Product sales                       $11  $   -        $99      $296
Other revenues                      722     635     1,651     1,904
                                    733     635     1,750     2,200

Costs and expenses:
Cost of sales                         2      -         31       134
Research and development          2,935   3,857    10,990    18,091
General and administrative          455     772     2,063     3,459
Restructuring costs                   -   1,306         -     2,108
                                  3,392   5,935    13,084    23,792

Operating loss                   (2,659) (5,300)  (11,334)  (21,592)

Interest income, net                178     180       625       843

Gain on investment                1,144       -     3,463        --
Net loss                       $(1,337) $(5,120)  $(7,246) $(20,749)

Net loss per share              $(0.09)  $(0.37)   $(0.51)   $(1.57)

Shares used in computing
 net loss per share             15,214   13,718    14,161    13,255

CONTACT: Celtrix Pharmaceuticals Inc.

Mary Anne Ribi, 408/988-2500