Court Rules Insmed Infringes Tercica IGF-1 Process Patent.

BRISBANE, Calif. -- Tercica, Inc. (Nasdaq:TRCA) announced today that on June 30, 2006, the U.S. District Court for the Northern District of California issued rulings on summary judgment and claim construction in Tercica's patent infringement litigation against defendants Insmed Incorporated, Celtrix Pharmaceuticals, Inc. and Insmed Therapeutic Proteins, Inc. In the case, Tercica has alleged that the defendants have infringed and are infringing three patents: U.S. Patent No. 6,331,414 (the 414; IGF-1 production process patent), U.S. Patent No. 5,187,151 (the 151; method of use patent) and U.S. Patent No. 5,258,287 (the 287; BP-3 production process patent).

The Court granted both of Tercica's motions for partial summary judgment. The Court ruled that Insmed's process for making IPLEX(TM) literally infringes three claims of the 414 patent. The Court also ruled that the 151 patent was valid over the prior art, and as a consequence, Insmed will have no prior art defense to challenge the patent's validity at the trial.

The Court also denied four of Insmed's five motions for summary judgment. In two motions, Insmed and its co-defendants requested the Court to find that they did not infringe the 414 patent and the 151 patent. The Court denied these motions. In two other motions, the defendants requested that the Court find that the 414 patent was invalid based on written description and utility defenses. Again, the Court denied these motions. In the fifth motion, the Court granted the defendants' motion for summary judgment to exclude from this case any liability of Celtrix, Insmed's predecessor, for its actions prior to its acquisition by Insmed.

"We are very pleased with the Court's decisions on claim construction and motions relating to patent validity and infringement," stated Stephen N. Rosenfield, Tercica's General Counsel and Executive Vice President of Legal Affairs. "The Court has ruled that Insmed's process for making IPLEX(TM) literally infringes three claims of the 414 patent. In order for Insmed to prevail on this patent, the jury must find there is 'clear and convincing evidence' that the patent office was wrong when it issued the 414 patent with its existing claims," added Rosenfield. "In addition, we defeated all of Insmed's motions on invalidity and non-infringement. All three patents therefore go into our planned November jury trial. For Tercica to prevail, the jury need only find that Insmed infringed a single valid claim from the 414, the 151 or the 287 patent."

About Tercica and Increlex

Tercica, Inc. is a biopharmaceutical company focused on developing and commercializing products to improve endocrine health. The company's first product, Increlex(TM) (mecasermin (rDNA origin) injection), or recombinant human insulin-like growth factor-1 (rhIGF-1), is the only product approved by the FDA for the long-term treatment of severe Primary IGFD. For further information on Tercica, please visit www.tercica.com.

Insulin-like Growth Factor-1 (IGF-1) is the principal hormone necessary for statural growth, and is released in response to stimulation by growth hormone. Primary IGFD is diagnosed in children who have normal or elevated secretion of endogenous growth hormone yet are resistant to its effects, and whose height and serum IGF-1 levels are more than two standard deviations below normal. A sub-set of these children, whose height and serum IGF-1 levels are more than three standard deviations below normal, are diagnosed with severe Primary IGFD.