Questcor to Raise $10 Million in a Private Placement

Questcor Pharmaceuticals, Inc. (AMEX: QSC - News) has executed definitive documents for a $10.0 million private placement of Series B Convertible Preferred Stock to an investor group comprised of the Delta Opportunity Funds, a set of funds managed by Diaz & Altschul Capital Management, LLC, the Corporate Opportunities Fund, a fund managed by Sanders Morris Harris Inc., Montreux Equity Partners and Midsummer Capital, LLC. The Series B Convertible Preferred Stock is entitled to an annual dividend initially set at 8% and is initially convertible into 10,624,732 shares of Questcor common stock at a fixed conversion price of $0.9412 per share. The conversion price was determined based on a volume weighted daily average trading price for the five days prior to the signing of the subscription agreements. Under certain conditions, Questcor may redeem the Series B Convertible Preferred Stock for cash. The investors will also receive warrants to purchase 3,399,910 shares of Questcor common stock at an exercise price of $1.0824 per share. The exercise price was determined based on a fifteen percent premium to the volume weighted daily average trading price for the five days prior to the signing of the subscription agreements. The warrants will expire four years following their date of issuance. Questcor received the required approval late in the day on Friday, Jan. 10 from the American Stock Exchange on its application to list the underlying shares of its common stock to be issued in connection with the private placement. The private placement is subject to the satisfaction of certain closing conditions.

"This investor group has had tremendous success with specialty pharmaceutical and healthcare companies in the past and we consider their investment to be a validation of our business model," commented Charles J. Casamento, chairman, president, and CEO of Questcor. "In a difficult fundraising market we felt it was important to add capital at this time to take advantage of certain new marketed product acquisition opportunities that will allow us to continue to build our business and execute our strategy of creating a specialty pharmaceutical company. We are also pleased that we were able to complete the financing at a price per share, which was, upon signing of the definitive documents, at market."

Questcor will use the funds raised in this offering to assist in the acquisition of new products and to strengthen its balance sheet. At Sept. 30, 2002, Questcor had cash and cash equivalents of $9.2 million.

"Questcor represents a unique investment opportunity in the area of specialty pharmaceuticals," stated Reinaldo M. Diaz, managing member of Diaz & Altschul. "Acquiring marketed products that have been underserved by their former owners provides Questcor with a relatively lower risk strategy to generate immediate revenues and to improve their bottom line."

About Questcor
Questcor Pharmaceuticals, Inc. is an integrated specialty pharmaceutical company focused on the acquisition and marketing of acute care and critical care hospital/specialty pharmaceutical and related healthcare products. Questcor currently markets five products in the U.S.: HP Acthar® Gel, an injectable drug that is commonly used in treating patients with infantile spasm, or West Syndrome; Ethamolin®, 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(TM)-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, N.J.; 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, Calif.; Sigma-Tau Finanziaria S.p.A of Rome, Italy; Tularik, Inc. of South San Francisco, Calif.; and VSL Pharmaceuticals of Ft. Lauderdale, Fla.

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, the ability of Questcor to implement its strategy and acquire products and, if acquired, to market them successfully, 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 as well as the risks discussed in Questcor's report on Form 10-K for the calendar year ended Dec. 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.

Contact:

Questcor Pharmaceuticals, Inc.
Charles J. Casamento
Chairman, President & CEO
510/400-0700

Timothy E. Morris
CFO
510/400-0700

The Investor Relations Group
Investors and Media:
Shayne Payne / Dian Griesel
212/825-3210