Questcor Reports Record Results for the Year Ended December 31, 2002.

Business Editors/Medical Writers

UNION CITY, Calif.--(BUSINESS WIRE)--Feb. 27, 2003

Questcor Pharmaceuticals, Inc. (AMEX:QSC) reports financial results for the fourth quarter and the year ended December 31, 2002. Questcor is a specialty pharmaceutical company that markets and sells brand name pharmaceutical and ethically promoted healthcare products. Highlights for the year ended December 31, 2002 include:

-- Exceeding its previously stated $12,000,000 revenue objective with net revenues for 2002 of $14,677,000, an increase of $9,010,000 or 159% as compared to $5,667,000 in revenues for 2001;

-- Decreasing its net loss to $2,785,000 in 2002 from $8,697,000 in 2001, a decrease of 68%;

-- Reducing its cash burn for the year ended December 31, 2002 to $835,000 as compared to $5,863,000 for the previous year, an improvement of 86%; and

-- Raising over $14,000,000 (including money received in January 2003) in cash from the issuance of preferred stock and convertible debentures.

2002 Fourth Quarter and Year End Results:

Total revenues for the quarter ended December 31, 2002 were $3,234,000, an increase of 41% from $2,297,000 for the quarter ended December 31, 2001. Revenues from the sales of products for the quarter ended December 31, 2002 were $2,934,000, an increase of 29% from $2,266,000 for the quarter ended December 31, 2001. The Company reported a net loss for the quarter ended December 31, 2002 of $355,000, or $0.01 per share, compared to a net loss of $2,566,000, or $0.07 per share, for the quarter ended December 31, 2001, an improvement of $2,211,000 or 86%.

Total revenues for the year ended December 31, 2002 were $14,677,000, an increase of 159% from $5,667,000 for the year ended December 31, 2001. Revenues from product sales for the year ended December 31, 2002 were $13,819,000, an increase of 166% from $5,196,000 for the year ended December 31, 2001. Net loss for the year ended December 31, 2002 was $2,785,000, or $0.07 per share, a decrease of 68% from $8,697,000, or $0.28 per share, for the year ended December 31, 2001.

The Company defines cash burn/earnings as net loss excluding certain non-cash charges (depreciation, amortization and equity related compensation). These non-cash charges amounted to $1,139,000 and $413,000 for the quarters ended December 31, 2001 and 2002, respectively, and $2,834,000 and $1,950,000 for the years ended December 31, 2001 and 2002, respectively. For the fourth quarter of 2002, the Company had cash earnings of $58,000 as compared to cash burn of $1,427,000 for the same period last year. For the year ended December 31, 2002, the Company's cash burn decreased to $835,000 as compared to $5,863,000 for the year ended December 31, 2001, an improvement of $5,028,000 or 86%. The reduction in cash burn for 2002 was a direct result of the increase in total revenues, coupled with specific cost control measures to help align total operating costs and expenses.

"The $9,010,000 increase in total revenues for the year represents a tremendous accomplishment for the Company," commented Charles J. Casamento, Chairman, President and CEO of Questcor Pharmaceuticals. "The dramatic increase in total revenues combined with a concerted effort to control expenses also allowed the Company to generate a small amount of cash earnings for the fourth quarter. We have demonstrated our ability to control cash burn, as needed. This becomes an important component in our long-term goal to reach profitability."

Although the Company was successful in generating cash earnings in the fourth quarter of 2002 and in reducing cash burn for the year ended December 31, 2002, there can be no assurance that the Company will be able to continue this trend in 2003. Also, there is no assurance that the Company will be able to continue to reduce expenses and to begin to generate positive cash flow from operations. If the Company were unable to fund operations through product sales, it would have to seek additional funds through public or private equity financing or from other sources. There can be no assurance that additional funds would be obtained on desirable terms or at all.

FY 2002 Accomplishments:

The year ended December 31, 2002 was marked by a number of achievements by the Company. Some of the major accomplishments included:

-- The successful relaunch of HP Acthar(R) Gel (Acthar). Acthar

revenues for the year were $9,009,000. In the twelve months

prior to the acquisition of Acthar from Aventis, the

comparative annual sales is estimated to be less than

$500,000. This is an example of the Company's strategy to

acquire small products and leverage them to new and higher

revenue levels. The Company will continue to seek other

product acquisition opportunities where it can apply its

marketing and selling capabilities and capture the upside

potential of products which had previously not been promoted

by larger pharmaceutical companies.

-- Increase in Ethamolin revenues. Revenues from the sale of

Ethamolin more than doubled in 2002 as compared to 2001. Total

units sold increased 60% in 2002 as compared to 2001. Given

the impact of the strategic buying that occurred in mid-2002,

the Company does not anticipate an increase in the annual

revenues from Ethamolin in 2003 as compared to 2002. The

Company was also successful in completing the manufacturing

site transfer of Ethamolin to ensure an uninterrupted supply

of product in the future.

-- Significant progress made on the Acthar manufacturing and site

transfer. In November 2002, the FDA approved the Company's

supplemental New Drug Application to extend the shelf life of

Acthar to 18 months from the date of manufacture. In the

meeting with the FDA, the Company also got consensus on a

number of items that are favorable to the manufacturing and

site transfer plan for Acthar, including agreement to utilize

the existing Active Pharmaceutical Ingredient ("API")

indefinitely (so long as the API meets specific potency

standards), concurrence on the Company's selection of a

manufacturer for Acthar final dosage form, and agreement on

the procedures for the transfer of the biological assay

necessary to release product. The Company has also selected a

vendor to produce the API. The favorable progress made on the

Acthar site transfer should help provide for adequate supply

of product.

-- Expansion into overseas markets. The Company entered into

international distribution agreements with Orphan Australia

for the marketing of Acthar and Ethamolin in Australia and New

Zealand, and with Beacon Pharmaceuticals, Ltd. for the

marketing of Acthar in the United Kingdom. In addition, the

Company also announced an expansion of its Emitasol license

agreement with Ahn-Gook Pharmaceutical Co., Ltd. to include

twelve Asian countries in addition to Korea. Ahn-Gook also

received marketing approval for Emitasol in Korea during 2002

and began selling Emitasol in Korea in January 2003. While the

Company does not expect significant revenues in 2003 from

these agreements, it represents progress in expanding its

products into the international marketplace.

-- Licensed the worldwide rights to two products from the

intranasal portfolio. The Company completed a License

Agreement with Fabre Kramer Pharmaceuticals, Inc. for the

development of Hypnostat(TM) and Panistat(TM). Hypnostat is an

intranasal administered product for sleep and Panistat is an

intranasal administered product for panic attacks. The Company

received and recognized a $250,000 payment and could receive a

minimum of $2,250,000 in additional payments pending

successful completion of specific developmental milestones.

The Company will also receive 50% of all worldwide product

related revenues including sublicense fees and milestone

payments received by Fabre-Kramer.

-- Increased gross margin and increased working capital. For the

year ended December 31, 2002, the Company increased gross

margin on product sales to 79% from 62%. In addition, through

effective cash management and the raising of funds through a

debenture offering, the Company increased its working capital

164% to $7,018,000 from $2,659,000.

-- Raised $14 million in new capital. In March 2002, the Company

raised $4 million through the issuance of 8% convertible

debentures due in March 2005. In December 2002, the Company

executed subscription agreements for the issuance of $10

million of Series B convertible preferred stock. In January

2003, the Company received the funds from the sale of the

Series B preferred stock and closed the financing. The Series

B private placement included well known healthcare investors,

and the resulting $10 million of proceeds combined with the

$7,506,000 of cash and short-term investments provided the

Company with over $17 million of cash on a proforma basis as

of December 31, 2002. This proforma cash balance should

provide the Company with funds to assist in the acquisition of

new products.

Year ended December 31, 2002 Conference Call

Questcor Pharmaceuticals, Inc. will be hosting a conference call to discuss its 2002 year end results on Wednesday, March 5, 2003 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). Please call the following numbers to participate: [phone] (domestic) or [phone] (international).

A telephonic replay of this call will be available from 1:00 p.m. Eastern Time on Wednesday, March 5, 2003 through 11:59 p.m., Eastern Time on Wednesday, March 12, 2003. Please call [phone] (domestic) or [phone] (international) and use access number 286673.

About Questcor

Questcor Pharmaceuticals, Inc. is a specialty pharmaceutical company that markets and sells brand name pharmaceutical and ethically promoted healthcare products. Questcor currently markets five products in the U.S.: HP Acthar(R) Gel, an injectable drug that is commonly used in treating patients with infantile spasm, or West Syndrome; Ethamolin(R), an injectable drug used to treat enlarged weakened blood vessels at the entrance to the stomach that have recently bled, known as esophageal varices; Glofil(R)-125 and Inulin in Sodium Chloride, which are both injectable agents that assess how well the kidney is working by measuring glomerular filtration rate, or kidney function; and VSL#3(TM), a patented probiotic marketed as a dietary supplement, to promote normal gastrointestinal (GI) function. As part of a strategy to develop its products globally, Questcor has entered into 28 contractual relationships with public and private companies including: Ahn-Gook Pharmaceuticals of Korea; Aventis Pharmaceuticals Inc. of Bridgewater, NJ; Beacon Pharmaceuticals, Ltd. of Tunbridge Wells, Kent, United Kingdom; CSC Pharmaceuticals Handels GmbH of Vienna, Austria; Dainippon Pharmaceutical Co. Ltd., of Osaka, Japan; Orphan Australia of Melbourne, Australia; Rigel, Inc. of South San Francisco, CA; Tularik, Inc. of South San Francisco, CA and VSL Pharmaceuticals of Ft. Lauderdale, FL.

Note: Except for the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. Such statements are subject to certain factors, which may cause Questcor's results to differ from those reported herein. Factors that may cause such differences include, but are not limited to, Questcor's ability to accurately forecast the demand for each of their products, the gross margins achieved from the sale of those products and the expenses and other cash needs for the upcoming periods, Questcor's ability to obtain finished goods from its sole source contract manufacturers on a timely basis if at all, Questcor's need for additional funding, uncertainties regarding Questcor's intellectual property and other research, development, marketing and regulatory risks, and, to the ability of Questcor to implement its strategy and acquire products and, if acquired, to market them successfully as well as the risks discussed in Questcor's report on Form 10-K for the calendar year ended December 31, 2001 and other documents filed with the Securities and Exchange Commission. The risk factors and other information contained in these documents should be considered in evaluating Questcor's prospects and future financial performance.

The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

                    Questcor Pharmaceuticals, Inc.
            Selected Consolidated Balance Sheet Information
                            (In thousands)

                                         December 31,    December 31,
                                             2002             2001
                                          (unaudited)     (unaudited)
                                         -------------   -------------
Cash, cash equivalents and short-term
 investments (including compensating
 balance of $5 million in 2001)                $7,506         $10,571
Working capital                                 7,018           2,659
Total assets                                   12,766          14,946
Long-term debt (including $4 million
 face value convertible debentures, net
 of deemed discount at December 31,
 2002)                                          2,908             122
Preferred stock, subject to redemption          5,081           5,081
Stockholders' equity (deficit)                    496            (300)


                    Questcor Pharmaceuticals, Inc.
                 Consolidated Statements of Operations
                 (In thousands, except per share data)

                                              Year Ended December 31,
                                             ------------------------
                                                2002         2001
                                             -----------  -----------
Revenues:
  Net product sales                             $13,819       $5,196
  Other revenue                                     858          471
                                             -----------  -----------
Total revenues                                   14,677        5,667
                                             -----------  -----------
Operating costs and expenses:
  Cost of product sales                           2,932        1,978
  Sales and marketing                             5,900        3,129
  General and administrative                      4,815        4,707
  Research and development                        2,295        2,352
  Depreciation and amortization                   1,138        2,207
  Loss on discontinued product line                  --          677
                                             -----------  -----------
     Total operating costs and expenses          17,080       15,050
                                             -----------  -----------
Loss from operations                             (2,403)      (9,383)
Non-cash amortization of deemed discount
 on convertible  debentures                        (415)          --
Interest income (expense), net                       (8)          55
Other income (expense), net                        (241)          19
Rental income, net                                  282          612
                                             -----------  -----------

Net loss                                        $(2,785)     $(8,697)
                                             ===========  ===========

Basic and diluted net loss per common
 share                                           $(0.07)      $(0.28)
                                             ===========  ===========
Weighted average shares of common
  stock outstanding                              38,407       31,425
                                             ===========  ===========