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As filed with the Securities and Exchange Commission on August 8, 2003

Registration No. 333-[ ]

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

QUESTCOR PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)


CALIFORNIA	2834	33-0476164
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification Number)

3260 Whipple Road
Union City, California 94587
(510) 400-0700
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)


Agent For Service:		Copies To:
Charles J. Casamento		David A. Hahn, Esq.
Chief Executive Officer		Latham & Watkins LLP
Questcor Pharmaceuticals, Inc.		701 B Street, Suite 2100
3260 Whipple Road		San Diego, California 92101
Union City, California 94587		(619) 236-1234
(510) 400-0700

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE

Proposed Maximum

Title of Securities

Amount

Offering Price Per

Proposed Maximum Offering

Amount of

to be Registered

to be Registered(1)

Share(2)

Price(2)

Registration Fee

Common Stock, no par value per share(3)

7,966,976

0.86

6,851,599

554

(1)		A portion of the shares covered by this Registration Statement are issuable upon exercise of outstanding warrants. Pursuant to Rule 416(b) under the Securities Act of 1933, this Registration Statement shall also cover any additional shares of the Registrant’s common stock that become issuable upon the exercise of the warrants by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without receipt of consideration that increases the Registrant’s outstanding shares of common stock.

(2)		Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) based on the average of the high and low reported sales prices on the American Stock Exchange on August 5, 2003.

(3)		Each share of the Registrant’s common stock includes a right to purchase one one-hundredth of a share of Series C Junior Participating Preferred Stock, no par value per share.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

SUBJECT TO COMPLETION—DATED AUGUST 8, 2003

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not a solicitation of an offer to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

7,966,976 Shares

QUESTCOR PHARMACEUTICALS, INC.

Common Stock

The shareholders named on page 16 are selling up to 7,966,976 shares of our common stock.

Our common stock is listed on the American Stock Exchange under the symbol “QSC.” On August 7, 2003, the last sale price of our common stock as reported on the American Stock Exchange was $0.84.

See “Risk Factors” beginning on page 6 for factors that you should consider before investing in the shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus.

The date of this prospectus is , 2003.

TABLE OF CONTENTS


QUESTCOR PHARMACEUTICALS, INC.
RISK FACTORS
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
SELLING SHAREHOLDERS
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
WHERE TO FIND ADDITIONAL INFORMATION
SIGNATURES
EXHIBIT INDEX
Exhibit 4.2
Exhibit 4.3
Exhibit 5.1
Exhibit 15.1
Exhibit 23.2

TABLE OF CONTENTS


	Page

Questcor Pharmaceuticals, Inc.		5
Risk Factors		6
Special Note Regarding Forward Looking Statements		15
Use of Proceeds		16
Selling Shareholders		16
Plan of Distribution		19
Legal Matters		20
Experts		20
Where to Find Additional Information		20

The terms “Questcor,” “Company,” “we,” “our,” “ours” and “us” refer to Questcor Pharmaceuticals, Inc. and its consolidated subsidiaries, unless the context requires otherwise, and not to the selling shareholders. All references to “common stock” refer to our common stock, no par value per share.

QUESTCOR PHARMACEUTICALS, INC.

We are a specialty pharmaceutical company that markets and sells brand name prescription drugs and ethically promoted healthcare products. We focus on products for the treatment of acute and critical care conditions, including central nervous system diseases and gastroenterological disorders. Our strategy is to acquire pharmaceutical products from companies who do not actively market such products that we believe have sales growth potential, are promotion sensitive and complement our existing products. In addition, through corporate collaborations we intend to develop new patented intranasal formulations of previously FDA approved drugs. We may also acquire companies with complementary products.

Large multinational companies dominate the U.S. prescription pharmaceutical market. These companies often divest products which, as a result of consolidation or lack of strategic fit, do not meet the threshold level of sales required for continued marketing and promotion, as these companies tend to focus on drugs with annual sales in excess of $1 billion. Since inception, we have acquired and licensed products from Nastech Pharmaceutical Company, Inc., Aventis Pharmaceuticals, Inc., Schwartz Pharma AG and other pharmaceutical companies. Smaller drug development or biotech companies that do not have the capabilities to effectively market and sell approved products may also be sources of products.

Since 1995, we have introduced six products. We support the promotion of our products through our nationwide sales and marketing force of approximately 29 professionals, targeting high-prescribing acute care and specialty physicians such as neurologists that specialize in treating Multiple Sclerosis (“MS”) patients, pediatric neurologists and gastroenterologists. Third parties manufacture all of our products.

Our key products include HP Acthar® Gel (“Acthar”), an injectable drug that is approved for the treatment of certain central nervous system disorders with an inflammatory component including the treatment of flares associated with MS and is also commonly used in treating patients with infantile spasm; Nascobal®, a nasal gel used for the treatment of various Vitamin B-12 deficiencies; 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®-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. In addition, we also have the U.S. promotion rights to VSL#3™, a patented probiotic marketed as a dietary supplement to promote normal gastrointestinal function. We acquired Nascobal®, a nasal gel formulation of Cyanocobalamin USP (Vitamin B-12), from Nastech Pharmaceutical Company, Inc. (“Nastech”) on June 17, 2003. We began selling Nascobal in July 2003. We intend to market Nascobal to patients with severe deficiencies of Vitamin B-12 caused by MS and Crohn’s Disease as these patients frequently have severe deficiencies of Vitamin B-12 due to a compromised ability to absorb Vitamin B-12 through the gastrointestinal system. In June 2002, we signed a license agreement with Fabre Kramer Pharmaceuticals, Inc., whereby Fabre Kramer will manage and provide funding for the clinical development programs for Hypnostat™ (an intranasal triazolam for the treatment of insomnia) and Panistat™ (an intranasal alprazolam for the treatment of panic disorders).

Additionally, as part of our strategy to market our products globally, we have entered into several 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; Dainippon Pharmaceutical Co. Ltd., of Osaka, Japan; Nastech Pharmaceutical Company Inc. of Bothell, WA; Orphan Australia of Melbourne, Australia; Rigel, Inc. of South San Francisco, CA; and VSL Pharmaceuticals of Ft. Lauderdale, FL.

Our executive offices are located at 3260 Whipple Road, Union City, California 94587. Our telephone number is (510) 400-0700.

RISK FACTORS

You should carefully consider the following risk factors, in addition to the other information included in this prospectus, before purchasing shares of our common stock. Each of these risks could adversely affect our business, financial condition and results of operations, as well as adversely affect the value of an investment in our common stock.

We have a history of operating losses and may never generate sufficient revenue to achieve profitability.

We have a history of recurring operating losses. Our operating losses from inception through March 31, 2003 were $80.2 million, of which $3.2 million represented the loss applicable to common stockholders for the quarter ended March 31, 2003, $2.8 million represented the loss for the year ended December 31, 2002, and $8.7 million represented the loss for the year ended December 31, 2001. Further substantial operating losses are expected to continue at least through the end of 2003. To date, our revenues have been generated principally from sales of Acthar, Ethamolin, Glofil-125, Inulin and VSL#3. In July 2003, we began selling Nascobal, a product that we acquired in June 2003. We are currently unable to estimate our future sales from Nascobal due to our limited history with marketing and selling the product. We do not expect Hypnostat or Panistat to be commercially available for a number of years, if at all. Further, revenues from the sale of Emitasol, if any, will also be dependent on FDA approval and the development of Emitasol in conjunction with a new strategic partner, which has not yet been obtained.

Our ability to achieve a consistent, profitable level of operations will be dependent in large part upon our ability to:

	•		finance and acquire additional marketed products,

	•		increase sales of current products,

	•		finance the future growth of our sales/marketing and customer service organization,

	•		finance operations with external capital until positive cash flows are achieved,

	•		enter into agreements with corporate partners for the development of Emitasol,

	•		properly and timely complete the transfer of the manufacturing of Acthar to new contract manufacturers including receiving the appropriate approvals from the FDA and other regulatory authorities,

	•		continue to receive products from our sole-source contract manufacturers on a timely basis and at acceptable costs, and

	•		ensure customers compliance with our sales and exchange policies.

If we are unable to generate sufficient revenues from the sale of our products, or if we are unable to contain costs and expenses, we may not achieve profitability and may ultimately be unable to fund our operations.

If our revenues from sales of Acthar decline or fail to grow, we may not have sufficient revenues to fund our operations.

We rely heavily on sales of Acthar. Acthar revenues comprised 67%, 65% and 41% of our total product revenues for the quarter ended March 31, 2003 and years ended December 31, 2002 and December 31, 2001 (sales of Acthar began in September 2001), respectively. We review external data sources to estimate customer demand for our products. In the event that demand for our products is less than our sales to wholesalers, excess inventory may result at the wholesaler level, which may impact future product sales. If the supply of Acthar available at the wholesale level exceeds the future demand, our future revenues from the sales of Acthar may be affected adversely.

In December 2002, we noted that certain of our customers were not complying with our expired product exchange policy. These customers were deducting from amounts owed to us the full price of expired Acthar they returned to us. While we reached an agreement with these customers to pay the short-remittances upon their receipt of replacement product, certain customers have continued to deduct from amounts owed to us the full price of expired Acthar they return to us. Additionally, certain customers received an administration fee from us for the Acthar that expired in November 2002 and May 2003. We will provide replacement vials to them at no cost for Acthar that expired in November 2002 and in May 2003. In the first quarter of 2003, due to the relatively short dating of Acthar in our inventories and at the wholesale level, we limited Acthar shipments to critical care and emergency situations. A lot of Acthar, with an expiration date of January 2004 was released in the first quarter of 2003. With the release of this lot normal shipments of Acthar resumed. We believe that the replacement of expired Acthar at no cost and the decision to briefly limit shipment of Acthar had a negative impact on our first quarter 2003 product sales of Acthar.

In 2002 and 2001, the Acthar vials we sold had a one year shelf life and, in the first quarter of 2003, we began shipping product which expires in January 2004. Due to the short shelf-life of Acthar, significant quantities could expire at the wholesale or pharmacy level, which could then be returned for replacement product under our exchange policy. Such shipment of replacement product may displace future sales.

We are reviewing the amount of Acthar at the wholesale level to help assess the demand for Acthar in 2003. We expect that Acthar will continue to constitute a significant portion of our revenues for 2003. Although our goal is to actively promote Acthar, and we have no reason to believe that our promotion of Acthar will not be successful, we cannot predict whether the strong demand for Acthar will continue in the future or that we will continue to generate significant revenues from sales of Acthar. In addition, we cannot currently predict whether our efforts to promote Acthar for the treatment of MS will be successful. If the demand for Acthar declines, or if we are forced to reduce the price, or if exchange of product is higher than anticipated, or if we are forced to re-negotiate contracts or terms, or if our customers do not comply with our existing policies, or we are not successful in promoting Acthar for the treatment of MS, our revenues from the sale of Acthar would decline. If the cost to produce Acthar increases, and we are unable to raise the price correspondingly, our gross margins on the sale of Acthar would decline. Any delays or problems associated with the site transfer of the manufacturers of Acthar could also reduce the amount of the product that will be available for sale. If our revenues from the sale of Acthar decline or fail to grow, our total revenues, gross margins and operating results would be harmed and we may not have sufficient revenues to fund our operations.

If we are unsuccessful in completing the Acthar site transfer, we may be unable to meet the demand for Acthar and lose potential revenues.

Under our agreement with Aventis Pharmaceuticals, Inc. (“Aventis”), Aventis manufactured and supplied Acthar through July 2002. Aventis filled one final lot of Acthar that is included in inventories at March 31, 2003. It is anticipated that the inventory of Acthar on hand at March 31, 2003, will be sufficient to meet expected demand through late 2003. We have signed a definitive agreement with Chesapeake Biological Laboratories (“CBL”) a contract manufacturer for Acthar finished product and will continue to transfer the final fill and labeling process from Aventis to CBL. Under our agreement with Aventis, we purchased the active pharmaceutical ingredient (“API”) and other inventory residing at Aventis. We believe this API will be sufficient to meet our forecasted demand through 2005. This API originally manufactured by Aventis has been transferred to CBL, the new final fill manufacturer. It is anticipated that CBL will complete the transfer and begin supplying to us finished product using the API manufactured by Aventis during 2003. CBL has completed an initial fill of one lot of Acthar in June 2003. Based on information we have received to date, we believe that this lot of Acthar will be available for commercialization before the end of 2003. If this lot is not available for commercialization before the end of 2003, we may not be able to meet the demand for Acthar, which in turn will lead to a decrease in revenues.

We have identified a potential new manufacturer, BioVectra dcl (“BioVectra”) for the Acthar API. We have entered into an equipment and materials transfer agreement with BioVectra which was extended indefinitely through a verbal agreement, and we are currently negotiating a definitive API supply agreement with BioVectra. However, we have experienced delays and cost overruns in the validation of the release assay from Aventis to our new third party contract laboratory. If we are unable to efficiently and timely validate the release assay before we exhaust the API purchased from Aventis, we will not be able to release finished goods and therefore we may not be able to meet the expected demand for Acthar.

As described above, the process of manufacturing Acthar is complex and we may encounter problems associated with the site transfer. Once the site transfer to CBL and the new API manufacturer has been completed and the release assay has been validated and they begin supplying Acthar to us, the cost of the product is expected to increase which may cause our gross margins to decline. In addition, if the site transfers and the corresponding approval by the FDA and other regulatory authorities do not occur on a timely basis at the appropriate costs to us, we will lose sales. Moreover, contract manufacturers that we may use must continually adhere to current good manufacturing practices regulations enforced by the FDA. If the facilities of these manufacturers cannot pass an inspection, we may lose the FDA approval of our products. Failure to obtain products for sale for any reason may result in an inability to meet product demand and a loss of potential revenues.

We have little or no control over our wholesalers buying patterns, which may impact future revenues, exchanges and excess inventory.

We sell our products primarily through major drug wholesalers located in the United States. Consistent with the pharmaceutical industry, most of our revenues are derived from the three largest drug wholesalers. While we attempt to estimate inventory levels of

our products at our major wholesale customers using inventory data obtained from customers, historical prescription information and historical purchase patterns, this process is inherently imprecise. We rely solely upon our wholesale customers to effect the distribution allocation of our products. There can be no assurance that these customers will adequately manage their local and regional inventories to avoid outages or inventory build-ups. We noted in the second quarter of 2003 that one of our major customers has purchased Ethamolin units in excess of what we estimate their historical demand to be which may adversely impact future sales.

Our therapeutic pharmaceutical products have expiration dates that range from 18 to 36 months from date of manufacture. We will generally accept for exchange pharmaceutical products that have reached the expiration date. We establish reserves for these exchanges at the time of sale. There can be no assurance that we will be able to accurately forecast the reserve requirement that will be needed in the future. Although our estimates are reviewed quarterly for reasonableness, our product return activity could differ significantly from our estimates because our analysis of product shipments, prescription trends and the amount of product in the distribution channel may not be accurate. Judgment is required in estimating these reserves. The actual amounts could be different from the estimates and differences are accounted for in the period in which they become known.

We do not control or significantly influence the purchasing patterns of wholesale customers. These are highly sophisticated customers that purchase our products in a manner consistent with their industry practices and perceived business interests. Our sales are subject to the purchase requirements of our major customers, which, presumably, are based upon their projected demand levels. Purchases by any customer, during any period, may be above or below actual prescription volumes of one or more of our products during the same period, resulting in increases or decreases in product inventory existing in the distribution channel, which are managed presumably in accordance with such customer’s business practices.

We provide reserves for potentially excess, dated or otherwise impaired inventory. Reserves for excess inventory are based on an analysis of expected future sales that will occur before the inventory on hand will expire. Judgment is required in estimating reserves for excess inventories. The actual amounts could be different from the estimates and differences are accounted for in the period in which they become known.

We have no experience marketing Nascobal and may be unsuccessful in doing so.

In June 2003, we acquired the product Nascobal, a nasal gel used for the treatment of various Vitamin B-12 deficiencies for $14.2 million. We currently have no sales and marketing experience with respect to Nascobal. We also cannot predict what the demand for Nascobal will be. If the demand for Nascobal is less than we anticipate, or we are unsuccessful in marketing Nascobal, our revenues from the sale of Nascobal will be less than we are currently anticipating. We made an initial $9 million payment to Nastech to acquire Nascobal, and we are required to pay an additional $5.2 million in non-contingent payments to Nastech by December 31, 2003. We need to generate revenues from sales of Nascobal in order to raise the necessary funds to make these payments. If we are not successful in marketing Nascobal, we may need to seek other sources of cash to make such payments or to fund operations. Moreover, if the amount of Nascobal inventory at the wholesale level at the time that we purchased Nascobal was higher than we anticipated, this may also affect the demand for Nascobal in the near term.

Our inability to secure additional funding could lead to a loss of your investment.

While we raised gross proceeds of $10 million through Series B Preferred Stock in January 2003 and $5 million in a private placement in June 2003, and anticipate that our capital resources based on our internal forecasts and projections will be adequate to fund operations and capital expenditures, if we experience unanticipated cash requirements, or if revenues fail to grow, we could be required to raise additional funds. Regardless, we may seek additional funds through public or private equity financing or from other sources to potentially avoid the payment of additional dividends of 6% under the Series B Convertible Preferred Stock of which we have a waiver through the end of 2003, to acquire additional products and expand our operations and to meet future obligations. Additionally, we may seek to raise capital whenever conditions in the financial markets are favorable, even if we do not have an immediate need for additional cash at that time. There can be no assurance that additional funds can be obtained on desirable terms or at all.

In order to conduct our operating activities, we may require substantial additional capital resources in order to acquire new products, increase sales of existing products, and maintain our operations. In addition, if revenues from product sales do not significantly increase or if further capital investments do not materialize, or if such investments cannot be completed at attractive terms to us, or if we are unable to receive any additional capital investments at all, this may further limit our ability to fund operations. Our future capital requirements will depend on many factors, including the following:

	•		existing product sales performance,

	•		cost maintenance and potential future expansion of our sales force,

	•		the cost and timing of the Acthar site transfer,

	•		achieving better operating efficiencies,

	•		obtaining product from our sole-source contract manufacturers and completing the site transfer to new contract manufacturers, and

	•		acquiring additional products.

We anticipate obtaining additional financing through public or private debt or equity financings. However, additional financing may not be available to us on acceptable terms, if at all. Further, additional equity financings will be dilutive to our shareholders. If sufficient capital is not available, then we may be required to reduce our operations or to delay, reduce the scope of, eliminate or divest one or more of our products, product acquisition or manufacturing efforts.

If we are unable to contract with third party manufacturers, we may be unable to meet the demand for our products and lose potential revenues.

We will rely on third party contract manufacturers to produce our marketed products, Acthar, Nascobal, Ethamolin, Glofil, Inulin and VSL#3, and other products that we may develop, commercialize or acquire in the future. Third party manufacturers may not be able to meet our needs with respect to timing, cost, quantity or quality. All of our manufacturers are sole-source manufacturers and no currently qualified alternative suppliers exist.

Ethamolin is currently being manufactured by Ben Venue Laboratories (“Ben Venue”). We do not have a formal Ethamolin manufacturing contract in place with Ben Venue, rather we have an agreement on terms and conditions, and we purchase product on a purchase order basis under these agreed upon terms and conditions. Glofil is manufactured by ISO-Tex Diagnostics, Inc. pursuant to a supply contract we have with them. The API for Inulin is manufactured by Pfanstiehl Laboratories, Inc. on a purchase order basis, and the final fill product for Inulin is manufactured by Ben Venue pursuant to an agreement on terms and conditions, and we purchase product on a purchase order basis under these agreed upon terms and conditions. We have been notified by Pfanstiehl Laboratories, Inc. that they will no longer produce the Inulin API for us. We are currently looking for alternative sources of Inulin API, however, we may not be successful in our search. If we are unable to find an alternative supplier for Inulin API, we may no longer be able to sell Inulin. VSL#3 is supplied by VSL Pharmaceuticals, Inc. under a promotion agreement we have with them. VSL has the sole responsibility for manufacturing and/or acquiring the VSL#3 product.

If we are unable to contract for a sufficient supply of our required products and substances on acceptable terms, or if we should encounter delays or difficulties in our relationships with our manufacturers, or if the site transfers and the corresponding approval by the FDA and other regulatory authorities does not occur on a timely basis at the appropriate costs to us, we will lose sales. Moreover, contract manufacturers that we may use must continually adhere to current good manufacturing practices enforced by the FDA. If the facilities of these manufacturers cannot pass an inspection, we may lose the FDA approval of our products. During December of 2001, we experienced a short supply situation with Ethamolin and Acthar due to manufacturing constraints at two of our third party contract manufacturers, which were resolved in 2002. We cannot guarantee that we will not have supply interruptions in the future for Ethamolin and Acthar or any of our current or future products. Failure to obtain products for sale for any reason may result in an inability to meet product demand and a loss of potential revenues.

If our third party distributors are unable to distribute our products, we will lose potential revenues.

We currently outsource certain functions previously performed in our Carlsbad, California distribution center, including, but not limited to, warehousing, shipping and quality control studies. The outsourcing of these functions is complex, and we may experience difficulties at the third party contractor level that could result in the non-shipment of our products. We have transferred the distribution of Acthar, Nascobal, Ethamolin, Glofil and Inulin to third party distributors, and we distribute VSL#3 from our Union City facility. If we encounter problems with the distribution of these products at the third party distribution level the products could become unavailable and we could lose revenues, or the costs to distribute these products could become higher than we anticipated.

If we lose the services of certain key personnel or are unable to hire skilled personnel in the future, our business will be harmed.

We are highly dependent on the services of Charles J. Casamento, Chairman, President, and Chief Executive Officer, Timothy E. Morris, Senior Vice President of Finance and Administration and Chief Financial Officer, and Kenneth R. Greathouse, Senior Vice President of Commercial Operations. If we were to lose either Mr. Casamento, Mr. Morris or Mr. Greathouse as employees, our business could be harmed. Moreover, we do not carry key person life insurance for our senior management or other personnel. Additionally, the future potential growth and expansion of our business is expected to place increased demands on our management skills and resources. Although only minor increases in staffing levels are expected during 2003, recruiting and retaining management and operational personnel to perform sales and marketing, business development, regulatory affairs, medical affairs and contract manufacturing in the

future will also be critical to our success. We do not know if we will be able to attract and retain skilled and experienced management and operational personnel in the future on acceptable terms given the intense competition among numerous pharmaceutical and biotechnology companies for such personnel. If we are unable to hire necessary skilled personnel in the future, our business could be harmed.

Our products in the development stage may not be accepted by the market, which may result in lower future revenues as well as a decline in our competitive positioning.

Emitasol, an intranasal medication used to treat nausea and vomiting, is in the development stage. Emitasol could be developed for two indications: a decreased movement of the stomach region in diabetics causing fullness, bloating and nausea, known as diabetic gastroparesis, and delayed onset emesis, the vomiting associated with cancer chemotherapy patients occurring the day after and beyond the chemotherapy treatment. The diabetic gastroparesis drug candidate was being developed in collaboration with a subsidiary of Shire Pharmaceutical Group plc in the U.S. and had completed a Phase II clinical trial in patients with diabetic gastroparesis. With the expiration in July 2001 of the exclusive option to develop Emitasol held by Shire, development of Emitasol under this collaboration stopped. Further development of Emitasol is on hold pending our entering into an agreement with a future partner to fund the development of Emitasol. We also have intranasal drug candidates, Panistat for the management of panic disorders, and Hypnostat for the treatment of insomnia, which have now been licensed to Fabre Kramer. There is no guarantee that any of these drugs will successfully complete the additional clinical testing needed to obtain FDA approval. Clinical trial results are frequently susceptible to varying interpretations by scientists, medical personnel, regulatory personnel, statisticians and others, which may delay, limit or prevent further clinical development or regulatory approvals of a product candidate. Also, the length of time that it takes for our partners to complete clinical trials and obtain regulatory approval for product marketing can vary by product and by the indicated use of a product. If one or more of these drugs fail to successfully pass Phase III testing, we would be unable to market or sell the product, which could result in lower future revenues as well as a decline in our competitive positioning.

Additionally, our commercial products and any products that we successfully develop, if approved for marketing, may never achieve market acceptance. These products, if successfully developed, will compete with drugs and therapies manufactured and marketed by major pharmaceutical and other biotechnology companies. Physicians, patients or the medical community in general may not accept and utilize the products that we may develop or that our corporate partners may develop.

The degree of market acceptance of any products that we develop will depend on a number of factors, including:

	•		the establishment and demonstration of the clinical efficacy and safety of the product candidates,

	•		their potential advantage over alternative treatment methods and competing products,

	•		reimbursement policies of government and third-party payors, and

	•		our ability to market and promote the products effectively.

The failure of our products to achieve market acceptance may result in lower future revenues as well as a decline in our competitive positioning.

A large percentage of our common stock is beneficially owned by one shareholder and its affiliates, who in the future could attempt to take over control of our management and operations or exercise voting power to advance their own best interests and not necessarily those of other shareholders.

Sigma-Tau Finanziaria S.p.A. and its affiliates (“Sigma-Tau”) beneficially own, directly or indirectly, approximately 27% of the voting power of our outstanding voting capital stock, and they beneficially own, including shares of our common stock issuable upon conversion of a convertible debenture and exercise of warrants, approximately 34% of our outstanding common stock, as of June 30, 2003. Accordingly, these shareholders may control the outcome of certain shareholder votes, including votes concerning the election of directors, the adoption or amendment of provisions in our Articles of Incorporation, and the approval of mergers and other significant corporate transactions. This level of concentrated ownership may, at a minimum, have the effect of delaying or preventing a change in the management or voting control of us by a third party. It may also place us in the position of having our large shareholder take control of us and having new management inserted and new objectives adopted.

On January 17, 2003, Sigma-Tau requested that we increase the size of our Board of Directors by two, with such directors to be nominated by Sigma-Tau and elected by our Board of Directors as soon as possible. Sigma-Tau subsequently rescinded this request. On March 11, 2003, Sigma-Tau indicated that they have determined to sell all or a portion of the shares of our common stock that they currently own. They further indicated that such sales, if they occur, will be through open market transactions or privately negotiated, and will depend on prevailing market conditions at time of sale. Such sales, if they occur, could have a depressing effect on the market price of our common stock. Since this announcement in March, according to information filed with the Securities and Exchange Commission, Sigma-Tau has sold 30,000 shares of our common stock.

If competitors develop and market products that are more effective than ours, our commercial opportunity will be reduced or eliminated.

The pharmaceutical and biotechnology industries are intensely competitive and subject to rapid and significant technological change. A number of companies are pursuing the development of pharmaceuticals and products that target the same diseases and conditions that we target. For example, there are products on the market that compete with Acthar, Nascobal, Ethamolin, Glofil-125, Inulin, and VSL#3. Moreover, technology controlled by third parties that may be advantageous to our business may be acquired or licensed by competitors of ours, preventing us from obtaining this technology on favorable terms, or at all.

Our ability to compete will depend on our ability to create and maintain scientifically advanced technology, and to develop, acquire and commercialize pharmaceutical products based on this technology, as well as our ability to attract and retain qualified personnel, obtain patent protection, or otherwise develop proprietary technology or processes, and secure sufficient capital resources for the expected substantial time period between technological conception and commercial sales of products based upon our technology.

Acthar is currently used in patients suffering from arthritis, multiple sclerosis, and infantile spasm. Acthar may be challenged by newer agents, such as synthetic corticosteriods, immune system suppressants known as immunosuppressants, and anti-seizure medications (in the case of infantile spasms) and other types of anti-inflammatory products for various autoimmune conditions that have inflammation as a clinical aspect of the disease. An injectable form of B-12 is widely available in generic form and provides the same benefit as Nascobal at a lower overall cost. One company offers a sclerotherapy agent (chemicals injected into varicose veins that damage and scar the inside lining of the vein, causing it to close) that competes with Ethamolin. Other competitive agents include Rubber Band Ligation methods (procedures in which bleeding esophageal varices are tied off at their base with rubber bands, cutting off the blood flow) such as the Multi-band Superview manufactured by Boston-Scientific, the Multi-band Six Shooter manufactured by Wilson-Cook, and the Multi-band Ligator manufactured by Bard. Other products may reduce the number of bleeding esophageal varices by lowering portal hypertension, such as Sandostatin® manufactured by Novartis. The competition to market FDA-approved active bleeding esophageal varices therapies is intense.

There are numerous products that may be viewed as competitors to Glofil-125. These include intrinsic tests, such as serum creatinine tests and creatinine clearance tests, both used to measure how quickly the kidneys are able to clear creatinine, an endogenously produced natural chemical, from the blood. Extrinsic tests use such products as Tc-DTPA, manufactured by Mallinckrodt, Inc., Omnipaque® (an injectable contrast media agent), manufactured by Sanofi, a division of Sanofi-Synthelabo, and Conray®-iothalamate meglumine (another injectable contrast medium), manufactured by Mallinckrodt, Inc. There is intense competition among both FDA and non-FDA approved products to measure kidney function.

Virtually any number of manufacturers of probiotics may be considered competitors to VSL#3. Among the most notable are Culturelle™ by ConAgra and Probiotica by Johnson and Johnson.

Several large companies’ products will compete with Emitasol in the delayed onset emesis market, including Zofran® (a medication used to prevent and treat chemotherapy induced nausea and vomiting) by Glaxo-Wellcome, Kytril® (a medication used to prevent and treat chemotherapy induced nausea and vomiting) by SmithKline Beecham and Reglan® (a medication used to prevent and treat chemotherapy induced nausea and vomiting) by A.H. Robins. These competitive products, however, are currently available in oral and intravenous delivery forms only. Additionally, on March 26, 2003, the FDA approved Merck’s Emend (aprepitant) for various indications including delayed onset emesis. The competition to develop FDA-approved drugs for delayed onset emesis and diabetic gastroparesis is intense.

Many of the companies developing competing technologies and products have significantly greater financial resources and expertise in development, manufacturing, obtaining regulatory approvals, and marketing than we do. Other smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

Academic institutions, government agencies and other public and private research organizations may also seek patent protection and establish collaborative arrangements for clinical development, manufacturing, and marketing of products similar to ours. These companies and institutions will compete with us in recruiting and retaining qualified sales and marketing and management personnel, as well as in acquiring technologies complementary to our programs. We will face competition with respect to:

	•		product efficacy and safety,

	•		the timing and scope of regulatory approvals,

	•		availability of resources,

	•		price, and

	•		patent position, including potentially dominant patent positions of others.

If our competitors succeed in developing technologies and drugs that are more effective or less costly than any that we are developing, our technology and future drugs may be rendered obsolete and noncompetitive. In addition, our competitors may succeed in obtaining the approval of the FDA or other regulatory approvals for drug candidates more rapidly than we will. Companies that complete clinical trials, obtain required regulatory agency approvals and commence commercial sale of their drugs before their competitors may achieve a significant competitive advantage, including patent and FDA marketing exclusivity rights that would delay our ability to market specific products. We do not know if drugs resulting from the joint efforts of our existing or future collaborative partner will be able to compete successfully with our competitors’ existing products or products under development or whether we will obtain regulatory approval in the U.S. or elsewhere.

We face possible delisting from the American Stock Exchange that would result in a limited public market for our common stock.

Certain of our financial measures have fallen below certain of the American Stock Exchange’s (“AMEX”) continued listing standards and we have therefore become subject to possible delisting. Specifically, on August 9, 2002, we received notification from AMEX that we had fallen below the standards set forth in the AMEX Guide Section 1003(a)(i) by having (1) shareholders’ equity of less than $2,000,000 and losses from continuing operations in the last two fiscal years and (2) shareholders’ equity of less than $4,000,000 and losses from continuing operations in the last three fiscal years. The notification provided that we could submit a plan to AMEX by September 10, 2002 advising it of the measures we intended to take in order to bring us into compliance with AMEX’s continuing listing standards. We submitted such a plan of compliance to the AMEX on September 10, 2002. On October 15, 2002, the AMEX notified us that it had completed its review of our plan of compliance and determined that, in accordance with Section 1009 of the AMEX Company Guide, the plan made a reasonable demonstration of our ability to regain compliance with the continued listing standards within eighteen months. We will be subject to periodic review by the AMEX staff during the eighteen month extension period during which period we are required to make progress consistent with our plan and to ultimately comply with the continued listing standards. If we are delisted from AMEX, the public market for our common stock would be limited. In January 2003 we completed a $10 million private placement of Series B convertible preferred stock, and in June 2003 we completed a $5 million private placement of common stock and warrants. These placements increased our net equity and we believe this may bring us back into compliance with the AMEX listing requirements.

If we fail to maintain or enter into new contracts related to collaborations and in-licensed or acquired technology and products, our product development and commercialization could be delayed.

Our business model has been dependent on our ability to enter into licensing and acquisition arrangements with commercial or academic entities to obtain technology for commercialization or marketed products. If we are unable to enter into any new agreements in the future, our development and commercialization efforts will be delayed. Disputes may arise regarding the inventorship and corresponding rights in inventions and know-how resulting from the joint creation or use of intellectual property by us and our licensors or scientific collaborators. We may not be able to negotiate additional license and acquisition agreements in the future on acceptable terms, if at all. In addition, current license and acquisition agreements may be terminated, and we may not be able to maintain the exclusivity of our exclusive licenses.

If collaborators do not commit sufficient development resources, technology, regulatory expertise, manufacturing, marketing and other resources towards developing, promoting and commercializing products incorporating our discoveries, the development of our

licensed products progress will be stalled. Further, competitive conflicts may arise among these third parties that could prevent them from working cooperatively with us. The amount and timing of resources devoted to these activities by the parties could depend on the achievement of milestones by us and otherwise generally may be controlled by other parties. In addition, we expect that our agreements with future collaborators will likely permit the collaborators to terminate their agreements upon written notice to us. This type of termination would substantially reduce the likelihood that the applicable research program or any lead candidate or candidates would be developed into a drug candidate, would obtain regulatory approvals and would be manufactured and successfully commercialized.

If none of our collaborations are successful in developing and commercializing products, or if we do not receive milestone payments or generate revenues from royalties sufficient to offset our significant investment in product development and other costs, then our business could be harmed. Disagreements with our collaborators could lead to delays or interruptions in, or termination of, development and commercialization of certain potential products or could require or result in litigation or arbitration, which could be time-consuming and expensive and may result in lost revenues and substantial legal costs which could negatively impact our results from operations. In addition, if we are unable to acquire new marketed products on a timely basis at appropriate purchase price and terms, we may not reach profitability and may not generate sufficient cash to fund operations.

If we are unable to protect our proprietary rights, we may lose our competitive position and future revenues.

Our success will depend in part on our ability to:

	•		obtain patents for our products and technologies,

	•		protect trade secrets,

	•		operate without infringing upon the proprietary rights of others, and

	•		prevent others from infringing on our proprietary rights.

We will only be able to protect our proprietary rights from unauthorized use by third parties to the extent that these rights are covered by valid and enforceable patents or are effectively maintained as trade secrets and are otherwise protectable under applicable law. We will attempt to protect our proprietary position by filing U.S. and foreign patent applications related to our proprietary products, technology, inventions and improvements that are important to the development of our business.

The patent positions of biotechnology and biopharmaceutical companies involve complex legal and factual questions and, therefore, enforceability cannot be predicted with certainty. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patents that we own or license from third parties may not provide any protection against competitors. Pending patent applications we may file in the future, or those we may license from third parties, may not result in patents being issued. Also, patent rights may not provide us with proprietary protection or competitive advantages against competitors with similar technology. Furthermore, others may independently develop similar technologies or duplicate any technology that we have developed or we will develop. The laws of some foreign countries may not protect our intellectual property rights to the same extent as do the laws of the U.S.

In addition to patents, we rely on trade secrets and proprietary know-how. We currently seek protection, in part, through confidentiality and proprietary information agreements. These agreements may not provide meaningful protection or adequate remedies for proprietary technology in the event of unauthorized use or disclosure of confidential and proprietary information. The parties may not comply or may breach these agreements. Furthermore, our trade secrets may otherwise become known to, or be independently developed by competitors.

Our success will further depend, in part, on our ability to operate without infringing the proprietary rights of others. If our activities infringe on patents owned by others, we could incur substantial costs in defending ourselves in suits brought against a licensor or us. Should our products or technologies be found to infringe on patents issued to third parties, the manufacture, use and sale of our products could be enjoined, and we could be required to pay substantial damages. In addition, we, in connection with the development and use of our products and technologies, may be required to obtain licenses to patents or other proprietary rights of third parties, which may not be made available on terms acceptable to us, if at all.

Since we must obtain regulatory approval to market our products in the United States and in foreign jurisdictions, we cannot predict whether or when we will be permitted to commercialize our products.

Any products that we develop are subject to regulation by federal, state and local governmental authorities in the U.S., including the FDA, and by similar agencies in other countries. Any product that we develop must receive all relevant regulatory approvals or clearances before it may be marketed in a particular country. The regulatory process, which includes extensive pre-clinical studies and clinical trials of each product to establish its safety and efficacy, is uncertain, can take many years and requires the expenditure of substantial resources. Data obtained from pre-clinical and clinical activities are susceptible to varying interpretations that could delay, limit or prevent regulatory approval or clearance. In addition, delays or rejections may be encountered based upon changes in regulatory policy during the period of product development and the period of review of any application for regulatory approval or clearance for a product. Delays in obtaining regulatory approvals or clearances could:

	•		stall the marketing, selling and distribution of any products that our corporate partners or we develop,

	•		impose significant additional costs on our corporate partners and us,

	•		diminish any competitive advantages that we or our corporate partners may attain, and

	•		decrease our ability to receive royalties and generate revenues and profits.

Regulatory approval, if granted, may entail limitations on the indicated uses for which a new product may be marketed that could limit the potential market for the product. Product approvals, once granted, may be withdrawn if problems occur after initial marketing. Furthermore, manufacturers of approved products are subject to pervasive review, including compliance with detailed regulations governing FDA good manufacturing practices. The FDA periodically revises the good manufacturing practices regulations. Failure to comply with applicable regulatory requirements can result in warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, refusal of the government to grant marketing applications and criminal prosecution.

In addition, we cannot predict the extent of government regulations or the impact of new governmental regulations that may result in a delay in the development, production and marketing of our products. As such, we may be required to incur significant costs to comply with current or future laws or regulations. For example, successful late stage Phase III clinical trials for such potentially important treatments such as diabetic gastroparesis and delayed onset emesis may require the enrollment of many patients. Together, the costs of these trials, if funded solely by us, could exceed our current financial resources.

Our ability to generate revenues is affected by the availability of reimbursement on our products, and our ability to generate revenues will be diminished if we fail to obtain an adequate level of reimbursement for our products from third party payors.

In both domestic and foreign markets, sales of our products will depend in part on the availability of reimbursement from third-party payors such as state and federal governments (for example, under Medicare and Medicaid programs in the U.S.) and private insurance plans. Because of VSL#3’s non-prescription status, it is not widely covered by third party payors. In certain foreign markets, the pricing and profitability of our products generally are subject to government controls. In the U.S., there have been, and we expect there will continue to be, a number of state and federal proposals that limit the amount that state or federal governments will pay to reimburse the cost of drugs. In addition, we believe the increasing emphasis on managed care in the U.S. has and will continue to put pressure on the price and usage of our products, which may impact product sales. Further, when a new therapeutic is approved, the reimbursement status and rate of such a product is uncertain. In addition, current reimbursement policies for existing products may change at any time. Changes in reimbursement or our failure to obtain reimbursement for our products may reduce the demand for, or the price of, our products, which could result in lower product sales or revenues, thereby weakening our competitive position and negatively impacting our results of operations.

In the U.S., proposals have called for substantial changes in the Medicare and Medicaid programs. If such changes are enacted, they may require significant reductions from currently projected government expenditures for these programs. Driven by budget concerns, Medicaid managed care systems have been implemented in several states and local metropolitan areas. If the Medicare and Medicaid programs implement changes that restrict the access of a significant population of patients to its innovative medicines, the market acceptance of these products may be reduced.

To facilitate the availability of our products for Medicaid patients, we have contracted with the Center for Medicare and Medicaid Services. As a result, we pay quarterly rebates consistent with the utilization of our products by individual states. We also must give discounts under contract on purchases or reimbursements of pharmaceutical products by certain other federal and state agencies and programs. If these discounts and rebates become burdensome to us and we are not able to sell our products through these channels, our net sales could decline.

Our stock price has a history of volatility, and an investment in our stock could decline in value.

The price of our stock, like that of other specialty pharmaceutical companies, is subject to significant volatility. Our stock price has ranged in value from $2.18 to $0.75 over the last two years. Any number of events, both internal and external to us, may continue to affect our stock price. These include, without limitation, the quarterly and yearly revenues and earnings/losses, our ability to acquire and market appropriate pharmaceuticals, announcement by us or our competitors regarding product development efforts, including the status of regulatory approval applications; the outcome of legal proceedings, including claims filed by us against third parties to enforce our patents and claims filed by third parties against us relating to patents held by the third parties; the launch of competing products; our ability to obtain product from our contract manufacturers; the resolution of (or failure to resolve) disputes with collaboration partners and corporate restructuring by us.

If product liability lawsuits are successfully brought against us or we become subject to other forms of litigation, we may incur substantial liabilities and costs and may be required to limit commercialization of our products.

Our business will expose us to potential liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical products. The use of any drug candidates ultimately developed by us or our collaborators in clinical trials may expose us to product liability claims and possible adverse publicity. These risks will expand for any of our drug candidates that receive regulatory approval for commercial sale and for those products we currently market. Product liability insurance for the pharmaceutical industry is generally expensive, if available at all. We currently have product liability insurance for claims up to $10,000,000. However, if we are unable to maintain insurance coverage at acceptable costs, in a sufficient amount, or at all, or if we become subject to a product liability claim, our reputation, stock price and ability to devote the necessary resources to the commercialization of our products could be negatively impacted.

We have not authorized any person to make a statement that differs from what is in this prospectus. If any person does make a statement that differs from what is in this prospectus, you should not rely on it. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of its date, but the information may change after that date.

FORWARD-LOOKING STATEMENTS

This prospectus contains and incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks, uncertainties and assumptions about us, including, among other things, those set forth elsewhere in this prospectus under the heading “Risk Factors.” You can identify these forward-looking statements by forward-looking words such as “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” and similar expressions in this prospectus.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

USE OF PROCEEDS

We are registering the shares of our common stock offered by this prospectus for the account of the selling shareholders identified in the section of this prospectus entitled “Selling Shareholders.” All of the net proceeds from the sale of our common stock by this prospectus will go to the selling shareholders who offer and sell their shares of our common stock. We will not receive any part of the proceeds from the sale of these securities.

SELLING SHAREHOLDERS

The following table provides the name of each selling shareholder and the number of shares of our common stock offered by each selling shareholder under this prospectus. The shares of common stock being offered under this prospectus were issued to the indicated selling shareholder in June 2003 in a private placement. Of the 7,966,976 shares of common stock being offered under this prospectus, 2,987,616 shares are issuable upon the exercise of outstanding warrants issued to the indicated selling shareholder. Because the selling shareholders may sell all or part of their shares of our common stock being offered under this prospectus, and since this offering is not being underwritten on a firm commitment basis, we cannot estimate the number and percentage of shares of our common stock that the selling shareholders will hold at the end of the offering covered by this prospectus.


	Shares Beneficially						Shares Beneficially
	Owned						Owned
	Before the Offering						After the Offering

							Shares
							Being
Name	Number			Percent(1)			Offered			Number		Percent

Camco Tactical Return Partners, L.P.(2)		2,182,160	(3)		5	%		1,600,000	(4)		—		—
Craig Drill Capital, L.P.(5)		800,000	(6)		2	%		800,000	(6)		—		—
Craig Drill Capital Limited(7)		800,000	(6)		2	%		800,000	(6)		—		—
Elliott Associates, L.P.(8)		1,188,120	(9)		3	%		1,188,120	(9)		—		—
Everspring Master Fund, Ltd.(10)		79,208	(11)			*		79,208	(11)		—		—
Islandia, L.P.(12)		1,036,233	(13)		2	%		475,248	(14)		—		—
Itros I, L.P.(15)		59,040	(16)			*		59,040	(16)		—		—
Itros II QP, L.P.(17)		473,040	(18)		1	%		473,040	(18)		—		—
Itros Offshore, Ltd.(19)		667,920	(20)		2	%		667,920	(20)		—		—
The Larry Haimovitch 2000 Separate Property Revocable Trust(21)		219,500	(22)			*		80,000	(23)		—		—
Midsummer Investment, Ltd.(24)		2,334,790	(25)		5	%		792,080	(26)		—		—
ProMed Partners, L.P.(27)		708,345	(28)		2	%		676,320	(28)		—		—
ProMed Offshore Fund, Ltd.(29)		121,475	(30)			*		116,000	(30)		—		—
Truk Opportunity Fund, LLC(31)		80,000	(23)			*		80,000	(23)		—		—
George S. Taylor		384,650	(32)		1	%		80,000	(23)		—		—

*		Ownership is less than 1%

(1)		Calculated in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, and based on 44,268,602 shares of common stock outstanding as of July 25, 2003.

(2)		Camco Tactical Return Partners, L.P. is a private partnership managed by Broadwood Capital, Inc. based in New York City. As President of Broadwood Capital, Inc., Neal C. Bradsher may be deemed to have dispositive power over the shares listed herein.

(3)		Includes 761,350 shares of common stock issuable upon exercise of warrants.

(4)		Includes 600,000 shares of common stock issuable upon exercise of a warrant.

(5)		Craig Drill Capital, L.P. is a private Delaware limited partnership, whose principal business office is in New York City. As the Manager of Craig Drill Capital, LLC, which is the General Partner of Craig Drill Capital, L.P. , Craig A. Drill may be deemed to have dispositive power over the shares listed herein.

(6)		Includes 300,000 shares of common stock issuable upon exercise of a warrant.

(7)		Craig Drill Capital Limited is a British Virgin Island corporation, whose principal business office is in New York City. As the President of Craig Drill Capital Corporation, which is the Investment Manager of Craig Drill Capital Limited, Craig A. Drill may be deemed to have dispositive power over the shares listed herein.


(8)		Elliott Associates, LP. is a limited partnership, whose principal business office is located in New York City. As the General Partner of Elliott Associates, LP., Paul Singer may be deemed to have dispositive power over the shares listed herein.

(9)		Includes 445,545 shares of common stock issuable upon exercise of a warrant.

(10)		Everspring Capital, LLC, a Delaware limited liability company (“Everspring Capital”), serves as investment manager to Everspring Master Fund Ltd., a Cayman Islands exempted company (“Everspring Master Fund”). By reason of such relationship, Everspring Capital may be deemed to share dispositive power over the common shares owned by Everspring Master Fund. Everspring Capital disclaims beneficial ownership of such shares of common stock. Messrs. Brian S. Yeh (“Yeh”) and Theodore E. Kalem (“Kalem”) are members of Everspring Capital. By reason of such relationships, Yeh and Kalem may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Everspring Master Fund. Yeh and Kalem disclaim beneficial ownership of such shares of common stock. No other person has sole or shared voting or dispositive power with respect to the shares of common stock being offered by Everspring Master Fund, as those terms are used for the purposes of Regulation 13D-G under the Securities Exchange Act of 1934, as amended. No other person or “group” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, or the SEC’s Regulation 13D-G) controls Everspring Capital.

(11)		Includes 29,703 shares of common stock issuable upon exercise of a warrant.

(12)		John Lang, Inc., a Delaware corporation (“John Lang”), is general partner of Islandia, L.P., a Delaware limited partnership (“Islandia Investment”). By reason of such relationship, John Lang may be deemed to share dispositive power over the shares of common stock owned by Islandia Investment. John Lang disclaims beneficial ownership of such shares of common stock. Mr. Richard Berner (“Berner”) is the president of John Lang. By reason of such relationship, Berner may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Islandia Investment. Berner disclaims beneficial ownership of such shares of common stock. No other person has sole or shared voting or dispositive power with respect to the shares of common stock being offered by Islandia Investment, as those terms are used for the purposes of Regulation 13D-G under the Securities Exchange Act of 1934, as amended. No other person or “group” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, or the SEC’s Regulation 13D-G) controls John Lang.

(13)		Includes 424,989 shares issuable upon conversion of Series B Preferred Stock and 314,214 shares of common stock issuable upon exercise of warrants.

(14)		Includes 178,218 shares of common stock issuable upon exercise of a warrant.

(15)		Itros Capital Management, LLC, a Delaware limited liability company (“Itros Capital Management”), is the investment manager of Itros I, L.P. By reason of its control of Itros I, L.P., Itros Capital Management may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Itros I, L.P. Itros Capital Management disclaims any beneficial ownership of such shares of common stock. John R. Schroer is the President of Itros Capital Management. By reason of such relationship, John R. Schroer may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Itros I, L.P. John R. Schroer disclaims beneficial ownership of such shares of common stock.

(16)		Includes 22,140 shares of common stock issuable upon exercise of a warrant.

(17)		Itros Capital Management, LLC, a Delaware limited liability company (“Itros Capital Management”), is the investment manager of Itros II QP, L.P. By reason of its control of Itros II QP, L.P., Itros Capital Management may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Itros II QP, L.P. Itros Capital Management disclaims any beneficial ownership of such shares of common stock. John R. Schroer is the President of Itros Capital Management. By reason of such relationship, John R. Schroer may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Itros II QP, L.P. John R. Schroer disclaims beneficial ownership of such shares of common stock.

(18)		Includes 177,390 shares of common stock issuable upon exercise of a warrant.

(19)		Itros Capital Management, LLC, a Delaware limited liability company (“Itros Capital Management”), is the investment manager of Itros Offshore, Ltd. By reason of its control of Itros Offshore, Ltd., Itros Capital Management may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Itros Offshore, Ltd. Itros Capital Management disclaims any beneficial ownership of such shares of common stock. John R. Schroer is the President of Itros Capital Management. By reason of such relationship, John R. Schroer may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Itros Offshore, Ltd. John R. Schroer disclaims beneficial ownership of such shares of common stock.

(20)		Includes 250,470 shares of common stock issuable upon exercise of a warrant.

(21)		As the sole trustee of The Larry Haimovitch 2000 Separate Property Revocable Trust, Larry Haimovitch may be deemed to have dispositive power over the shares listed herein.

(22)		Includes 56,500 shares of common stock issuable upon exercise of warrants and 10,000 shares of common stock issuable upon exercise of stock options.

(23)		Includes 30,000 shares of common stock issuable upon exercise of a warrant.

(24)		Midsummer Capital, LLC, a New York limited liability company (“Midsummer Capital”), serves as investment advisor to Midsummer Investment Ltd., a Bermuda company (“Midsummer Investment”). By reason of such relationship, Midsummer Capital may be deemed to share dispositive power over the shares of common stock owned by Midsummer Investment. Midsummer Capital disclaims beneficial ownership of such shares of common stock.

		Messrs. Michel A. Amsalem (“Amsalem”) and Scott D. Kaufman (“Kaufman”) are members of Midsummer Capital. By reason of such relationships, Amsalem and Kaufman may be deemed to share dispositive power over the shares of common stock stated as beneficially owned by Midsummer Investment. Amsalem and Kaufman disclaim beneficial ownership of such shares

		of common stock. No other person has sole or shared voting or dispositive power with respect to the shares of common stock being offered by Midsummer Investment, as those terms are used for the purposes of Regulation 13D-G under the Securities Exchange Act of 1934, as amended. No other person or “group” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, or the SEC’s Regulation 13D-G) controls Midsummer Capital.

(25)		Includes 1,168,720 shares issuable upon conversion of Series B Preferred Stock and 671,020 shares of common stock issuable upon exercise of warrants.

(26)		Includes 297,030 shares of common stock issuable upon exercise of a warrant.

(27)		ProMed Partners, L.P. is a healthcare investment fund managed by Barry Kurokawa and David B. Musket.

(28)		Includes 253,620 shares of common stock issuable upon exercise of a warrant.

(29)		ProMed Offshore Fund, Ltd. is a healthcare investment fund managed by Barry Kurokawa and David B. Musket.

(30)		Includes 43,500 shares of common stock issuable upon exercise of a warrant.

(31)		Truk Opportunity Fund, LLC is a Delaware limited liability company. Atoll Asset Management, LLC., a Delaware limited liability company qualified to do business in NYC, is the managing member of the Truk Opportunity Fund, LLC and is responsible for making trading and investment decisions on behalf of the fund. The principal executives of the managing member are Michael E. Fein and Stephen E. Saltzstein.

(32)		Includes 161,550 shares of common stock issuable upon exercise of warrants and 10,000 shares of common stock issuable upon exercise of stock options.

Pursuant to agreements between us and the selling shareholders, we agreed to file a registration statement covering the shares of common stock issuable to the selling shareholders.

None of the selling shareholders has any position, office or other material relationship with us or any of our affiliates, nor have they had any position, office or material relationship with us or any of our affiliates within the past three years.

PLAN OF DISTRIBUTION

The selling shareholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling shareholders may use any one or more of the following methods when selling shares:

	•		ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

	•		block trades in which the broker-dealer will attempt to sell the shares as an agent but may position and resell a portion of the block as principal to facilitate the transaction;

	•		purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

	•		an exchange distribution in accordance with the rules of the applicable exchange;

	•		privately negotiated transactions;

	•		short sales;

	•		broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;

	•		a combination of any such methods of sale; and

	•		any other method permitted pursuant to applicable law

The selling shareholders may also sell shares under Rule 144 under the Securities Act of 1933, if available, rather than under this prospectus.

Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Each of the selling shareholders does not expect these commissions and discounts from such selling shareholder to exceed what is customary in the types of transactions involved.

The selling shareholders may from time to time pledge or grant a security interest in some or all of the shares of common stock or warrants owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus.

The selling shareholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The selling shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. Each of the selling shareholders has informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.

We are required to pay all fees and expenses incident to the registration of the shares. We have agreed to indemnify the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act of 1933.

LEGAL MATTERS

The legality of our common stock offered by this prospectus will be passed upon by Latham & Watkins LLP, San Diego, California.

EXPERTS

Ernst & Young, LLP, independent auditors, have audited our consolidated financial statements and schedule included in our Annual Report on Form 10-K for the year ended December 31, 2002, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our consolidated financial statements and schedule are incorporated by reference in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.

With respect to the unaudited condensed consolidated interim financial information for the three-month periods ended March 31, 2003 and March 31, 2002, incorporated by reference in this Prospectus, Ernst & Young LLP have reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report, included in Questcor Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, and incorporated herein by reference, states that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted considering the limited nature of the review procedures applied. The independent auditors are not subject to the liability provisions of Section 11 of the Securities Act of 1933 (the “Act”) for their report on the unaudited interim financial information because that report is not a “report” or a “part” of the Registration Statement prepared or certified by the auditors within the meaning of Sections 7 and 11 of the Act.

WHERE TO FIND ADDITIONAL INFORMATION

We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy materials we have filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of its Public Reference Room. Our SEC filings also are available to the public on the SEC’s Internet site at www.sec.gov. In addition, you may obtain a copy of our SEC filings at no cost by writing or telephoning our Chief Financial Officer at:

Questcor Pharmaceuticals, Inc.
3260 Whipple Road
Union City, California 94587
(510) 400-0700

The SEC allows us to “incorporate by reference” in this prospectus information we file with the SEC, which means that we may disclose important information in this prospectus by referring you to the document that contains the information. The information incorporated by reference is considered to be a part of this prospectus, and later information filed with the SEC will update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until the offering of securities covered by this prospectus is completed:

	•		Our Annual Report on Form 10-K for the fiscal year ended December 31, 2002;

	•		Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2003;

	•		Our Current Reports on Form 8-K filed on January 16, 2003, February 14, 2003 and June 17, 2003;

	•		Our Definitive Proxy Statement on Schedule 14A filed with the SEC on March 25, 2003 and April 15, 2003; and

	•		The description of our common stock contained in our (formerly Cypros Pharmaceutical Corporation) Registration Statement on Form 8-A filed with the SEC on October 26, 1992, as amended.

All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date this Registration Statement is filed with the SEC and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference in this Registration Statement and to be a part of it from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes

of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

We have filed with the SEC a Registration Statement on Form S-3 under the Securities Act of 1933 relating to the securities that may be offered by this prospectus. This prospectus is a part of that Registration Statement, but does not contain all of the information in the Registration Statement. For more detail concerning Questcor and any securities offered by this prospectus, you may examine the Registration Statement and the exhibits filed with it at the offices of the SEC.

You should rely only on the information provided or incorporated by reference in this prospectus or in the applicable supplement to this prospectus. You should not assume that the information in this prospectus and the applicable supplement is accurate as of any date other than the date on the front cover of the document.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

Our estimated expenses in connection with the distribution of the securities being registered are as set forth in the following table:


SEC Registration Fee		$	554
Legal Fees and Expenses			25,000
Accounting Fees and Expenses			10,000
Printing and Engraving Expenses			0
Miscellaneous			1,446

	Total	$	37,000

All of the above items except the registration fee are estimates.

Item 15. Indemnification of Directors and Officers

Section 317 of the California General Corporation Law authorizes a court to award, or a corporation’s Board of Directors to grant, indemnity to directors and officers who are parties or are threatened to be made parties to any proceeding (with exceptions) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation. This limitation on liability has no effect on a director’s liability (i) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) for acts or omissions that a director believes to be contrary to the best interests of the corporation or its security holders or that involve the absence of good faith on the part of the director, (iii) relating to any transaction from which a director derived an improper personal benefit, (iv) for acts or omissions that show a reckless disregard for the director’s duty to the corporation or its security holders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director’s duties, of a risk of a serious injury to the corporation or its security holders, (v) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the directors’ duty to the corporation or its security holders, (vi) under Section 310 of the California General Corporation Law (concerning contracts or transactions between the corporation and a director) or (vii) under Section 316 of the California General Corporation Law (directors’ liability for improper dividends, loans and guarantees). The provision does not extend to acts or omissions of a director in his capacity as an officer. Further, the provision has no effect on claims arising under federal or state securities laws and does not affect the availability of injunctions and other equitable remedies available to our security holders for any violation of a director’s fiduciary duty to us or our security holders. Although the validity and scope of the legislation underlying the provision have not yet been interpreted to any significant extent by the California courts, the provision may relieve directors of monetary liability to us for grossly negligent conduct, including conduct in situations involving attempted takeovers of Questcor.

In accordance with Section 317, our Amended and Restated Articles of Incorporation (our “Articles”), limit the liability of a director to us or our security holders for monetary damages to the fullest extent permissible under California law, and authorizes us to provide indemnification to our agents (including our officers and directors), subject to the limitations set forth above. Our Bylaws further provide for indemnification of corporate agents to the maximum extent permitted by the California General Corporation Law.

Pursuant to the authority provided in our Articles, we have entered into indemnification agreements with each of our officers and directors, indemnifying them against potential liabilities that may arise as a result of their service and providing for other protection.

We also maintain insurance policies that insure our officers and directors against liabilities arising from their positions.

The foregoing summaries are necessarily subject to the complete text of the statute, our Articles, our Bylaws and the agreements referred to above and are qualified in their entirety by reference thereto.

Item 16. Exhibits

The Exhibit Index is attached hereto on page E-1.

Item 17. Undertakings

(a) The undersigned registrant hereby undertakes:


	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:


	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in this registration statement; provided, however, that subparagraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement;

provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Company pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement.


	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.


	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) The undersigned registrant hereby further undertakes that, for the purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to existing provisions or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Union City, County of Alameda, State of California, on August 8, 2003.


	QUESTCOR PHARMACEUTICALS, INC. By: /s/ CHARLES J. CASAMENTO

	Charles J. Casamento Chairman, President and Chief Executive Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Each person whose signature appears below hereby constitutes and appoints Charles J. Casamento and Timothy E. Morris, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, or any registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with exhibits thereto and other documents in connection therewith or in connection with the registration of the common stock offered hereby under the Securities Act of 1933, with the SEC, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that such attorneys-in-fact and agents, and each of them, may do or cause to be done by virtue hereof.


Signature	Title	Date

/s/ CHARLES J. CASAMENTO Charles J. Casamento	Chairman, President and Chief Executive Officer and Director (Principal Executive Officer)	August 8, 2003



/s/ TIMOTHY E. MORRIS Timothy E. Morris	Vice President, Finance & Administration, and Chief Financial Officer (Principal Financial and Accounting Officer)	August 8, 2003



/s/ ROBERT F. ALLNUTT Robert F. Allnutt	Director	August 8, 2003



/s/ BRIAN C. CUNNINGHAM Brian C. Cunningham	Director	August 8, 2003



/s/ FRANK J. SASINOWSKI Frank J. Sasinowski	Director	August 8, 2003



/s/ JON S. SAXE Jon S. Saxe	Director	August 8, 2003



/s/ ROGER G. STOLL Roger G. Stoll	Director	August 8, 2003



/s/ VIRGIL D. THOMPSON Virgil D. Thompson	Director	August 8, 2003

EXHIBIT INDEX


Exhibit
Number		Description

4.1(1)		Form of Common Stock Certificate.

4.2		Form of Common Stock and Warrant Purchase Agreement dated as of June 11, 2003 by and between the Registrant and purchasers of common stock and warrants thereto.

4.3		Form of Warrant to purchase common stock dated June 11, 2003 issued by the Registrant to the purchasers of common stock and warrants.

5.1		Opinion of Latham & Watkins LLP.

15.1		Letter Regarding Unaudited Interim Financial Information

23.1		Consent of Latham & Watkins LLP (contained in Exhibit 5.1).

23.2		Consent of Ernst & Young LLP, Independent Auditors.

24.1		Powers of Attorney (contained on the signature page of this Registration Statement).

(1)

Filed as an exhibit to Questcor Pharmaceuticals, Inc.’s, formerly Cypros Pharmaceutical Corporation, Registration Statement on Form 8-A, as amended (File No. 33-51682), and incorporated herein by reference.



                                                                     EXHIBIT 4.2

                      STOCK AND WARRANT PURCHASE AGREEMENT

      This Stock and Warrant Purchase Agreement (the "Agreement") is made as of
June 11, 2003 between Questcor Pharmaceuticals, Inc., a California corporation
(the "Company"), and the purchasers who are signatories hereto (the
"Purchasers").

                                    AGREEMENT

      1. Purchase and Sale of Shares and Warrants.

            1.1. Sale to the Purchasers. Subject to the terms and conditions
hereof, the Company will issue and sell to each Purchaser the number of shares
(the "Shares") of Common Stock of the Company, no par value per share (the
"Common Stock"), and the number of warrants (the "Warrants") to purchase Common
Stock, set forth opposite such Purchaser's name on the signature page hereto for
the purchase price indicated on the signature page hereto (the "Purchase
Price"). The obligations of each Purchaser hereunder are several and not joint
and no Purchaser shall be obligated to purchase any number of Shares or Warrants
in excess of the number set forth opposite such Purchaser's name on the
signature page hereto.

            1.2. Aggregate Sale. The Purchase Price of the Shares and Warrants
will be the market price (the "Market Price") of the Common Stock, which shall
be calculated based on the average of the daily volume weighted average price on
the American Stock Exchange ("AMEX"), as reported by Bloomberg Financial, L.P.,
for the five trading days up to and including the close of business on June 11,
2003 or such other date as may be mutually agreeable to the Company and the
Purchasers (the "Closing Date"), multiplied by the number of Shares set forth
opposite such Purchaser's name on the signature page hereto. The number of
Warrants issued shall be equal to 60% of the number of Shares purchased by such
Purchaser hereunder. The Warrants shall have an exercise price equal to 125% of
the Market Price, shall be exercisable for a term of five years from the date of
issuance, and shall be subject to the other terms and conditions set forth in
the Warrant.

            1.3. Payment of Purchase Price. On or prior to the Closing Date,
each Purchaser will deliver to the Company by wire transfer of immediately
available funds the aggregate Purchase Price for the Shares and Warrants
purchased by such Purchaser hereunder.

      2. Closing Date and Delivery.

            2.1.  Closing Date. The closing of the purchase and sale of
the Shares and Warrants hereunder (the "Closing") will be held on the
Closing Date and shall occur at the offices of the Company, 3260 Whipple
Road, Union City, CA 94587.

            2.2. Deliveries at Closing. At the Closing, the Company shall
deliver the following to each Purchaser: (a) a stock certificate registered in
such Purchaser's name, or in such nominee name(s) as designated by the Purchaser
in writing, representing the Shares purchased by such Purchaser; and (b) a
Warrant in such Purchaser's name, or in such nominee name(s) as designated by
the Purchaser in writing. At the Closing, each Purchaser shall effect a wire
transfer of the Purchase Price to the Company as provided in Section 1.3.

      3. Representations and Warranties by the Company. The Company represents
and warrants to each Purchaser as of the Closing Date that, except as set forth
in the SEC Reports (as hereinafter defined):

            3.1. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
The Company is qualified to do business and is in good standing as a foreign
corporation in every jurisdiction in which the failure to so qualify would have
a material adverse effect on the financial condition or business of the Company.

            3.2. Changes. Except as set forth in the SEC Reports, since March
31, 2003, the Company has not, to the extent material to the Company: (a)
incurred any debts, obligations or liabilities, absolute, accrued or

contingent, whether due or to become due, other than in the ordinary course of
business; (b) mortgaged, pledged or subjected to lien, charge, security interest
or other encumbrance any of its assets, tangible or intangible, other than in
the ordinary course of business; (c) waived any debt owed to the Company or its
subsidiaries, other than in the ordinary course of business; (d) satisfied or
discharged any lien, claim or encumbrance or paid any obligation other than in
the ordinary course of business; (e) declared or paid any dividends, other than
in the ordinary course of business; or (f) entered into any transaction other
than in the ordinary course of business.

            3.3. Litigation. Except as set forth in the SEC Reports, there are
no legal actions, suits, arbitrations or other legal, administrative or
governmental proceedings pending or, to the Company's knowledge, threatened
against the Company or its properties, assets or business, and the Company is
not aware of any facts which might result in or form the basis for any such
action, suit or other proceeding, in each case which, if adversely determined,
would individually or in the aggregate have a material adverse effect on the
financial condition or business of the Company.

            3.4. Compliance with Other Instruments. Except for such matters
which, either individually or in the aggregate, would not have a material
adverse effect on the financial condition or business of the Company, the
execution and delivery of, and the performance and compliance with, this
Agreement and the Warrants and the transactions contemplated hereby or thereby,
with or without the giving of notice or passage of time, will not (a) result in
any breach of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any asset or property of the Company pursuant to any
agreement or other instrument to which the Company is a party or by which it or
any of its properties, assets or rights is bound or affected; (b) violate the
Amended and Restated Articles of Incorporation (the "Articles") or Amended and
Restated Bylaws (the "Bylaws") of the Company, or any law, rule, regulation,
judgment, order or decree; or (c) except for the registration of the Shares and
the Warrant Shares (as hereinafter defined) under the Securities Act of 1933, as
amended (the "Securities Act"), the listing of the Shares and the Warrant Shares
on the AMEX and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and applicable state securities laws in connection
with the purchase of the Shares and the Warrants by the Purchasers, require any
consent, approval, authorization or order of or filing with any court or
governmental agency or body. The Company is not in violation of its Articles or
Bylaws nor in violation of, or in default under, any lien, mortgage, lease,
agreement or instrument, except for such defaults which would not, individually
or in the aggregate, have a material adverse effect on the financial condition
or business of the Company. The Company is not subject to any restriction which
would prohibit the Company from entering into or performing its obligations
under this Agreement or the Warrants, except for such restrictions which would
not, individually or in the aggregate, have a material adverse effect on the
ability of the Company to perform its obligations under this Agreement and the
Warrants.

            3.5. Reports and Financial Statements. As of their respective filing
dates, the Company's Form 10-K for the year ended December 31, 2002, the
Company's Proxy Statement in connection with the 2003 Annual Meeting of
Shareholders and all Forms 10-Q and 8-K filed by the Company with the Securities
and Exchange Commission (the "SEC") after January 1, 2003, in each case without
exhibits thereto (the "SEC Reports") were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such SEC Reports. The SEC Reports, when read as a whole, do not contain any
untrue statements of a material fact and do not omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company included in
the SEC Reports have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present, in all material
respects, the financial position of the Company as at the dates thereof and the
results of its operations and cash flows for the periods then ended subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described in such financial statements.

            3.6. Shares. The Shares, the Warrants and the shares of Common Stock
issuable upon the exercise of the Warrants (the "Warrant Shares"), when issued
and paid for pursuant to the terms of this Agreement or the Warrants, as
applicable, will be duly and validly authorized, issued and outstanding, fully
paid, nonassessable and free and clear of all pledges, liens, encumbrances and
restrictions (other than arising under federal or state securities laws). The
issuance of the Shares, the Warrants and the Warrant Shares is not subject to
any preemptive or other similar rights. The Company has duly reserved a
sufficient number of shares of its authorized but unissued

Common Stock to allow the Warrants to be exercised in full by the Purchasers,
and such shares shall remain so reserved (subject to reduction from time to time
for Common Stock issued upon the exercise of the Warrants), as long as the
Warrants are exercisable.

            3.7. Capital Stock. As of March 31, 2003, 38,992,419 shares of the
Common Stock were issued and outstanding, 2,155,715 shares of the Company's
Series A Preferred Stock, no par value per share (the "Series A Preferred
Stock"), were issued and outstanding, which are convertible into 2,155,715
shares of Common Stock, 10,000 shares of the Company's Series B Preferred Stock,
no par value per share (the "Series B Preferred Stock"), were issued and
outstanding, which are convertible into 10,624,731 shares of Common Stock,
2,531,646 shares of Common Stock issuable upon conversion of convertible
debentures, and options and/or warrants to purchase 17,776,952 shares of Common
Stock were issued and outstanding. All of the outstanding shares of the
Company's capital stock are validly issued, fully paid and nonassessable. Except
as set forth in this Section 3.7, as of March 31, 2003, there are no outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
conversion rights or other agreements or arrangements of any character or nature
whatever under which the Company is or may be obligated to issue its Common
Stock, Series A Preferred Stock, Series B Preferred Stock, or warrants or
options to purchase the Common Stock or the Series A Preferred Stock or Series B
Preferred Stock. No holder of any security of the Company is entitled to any
preemptive or similar rights to purchase any securities of the Company.

            3.8. Corporate Acts and Proceedings. This Agreement has been duly
authorized by the requisite corporate action and has been duly executed and
delivered by an authorized officer of the Company, and is a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and as to limitations on the enforcement of the remedy of
specific performance and other equitable remedies. The requisite corporate
action necessary for the authorization, reservation, issuance and delivery of
the Shares, the Warrants and the Warrant Shares has been taken by the Company.
Upon execution and delivery thereof by a duly authorized officer of the Company,
the Warrants will be valid and binding obligations of the Company, enforceable
in accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and as to limitations
on the enforcement of the remedy of specific performance and other equitable
remedies.

            3.9. No Implied Representations. All of the Company's
representations and warranties are contained in this Agreement, and no other
representations or warranties by the Company shall be implied.

            3.10. Filing of Reports. Since the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2002, the Company has filed with the
SEC all reports and other material required to be filed by it therewith pursuant
to Section 13, 14 or 15(d) of the Exchange Act and the Company is eligible to
register the offer and resale of the Shares and the Warrant Shares by the
holders thereof on a Registration Statement on Form S-3.

            3.11. Compliance with Laws. The business and operations of the
Company have been conducted in accordance with all applicable laws, rules and
regulations of all governmental authorities, except for such violations which
would not, individually or in the aggregate, have a material adverse effect on
the financial condition or business of the Company.

            3.12. Proprietary Rights. To the knowledge of the Company, the
Company owns or is licensed to use all patents, patent applications, inventions,
trademarks, trade names, applications for registration of trademarks, service
marks, service mark applications, copyrights, trade secrets, licenses and rights
in any thereof and any other intangible property and assets (herein called the
"Proprietary Rights") which are material to the business of the Company. Except
as would not have a material adverse effect on the financial condition or
business of the Company, the Company does not have any knowledge of, and the
Company has not given or received any notice of, any pending conflicts with or
infringement of the rights of others with respect to any Proprietary Rights.
Except as would not have a material adverse effect on the financial condition or
business of the Company, no action, suit, arbitration, or legal, administrative
or other proceeding, or investigation is pending or, to the knowledge of the
Company, threatened, which involves any Proprietary Rights. Except as would not
have a material adverse effect on the financial condition or business of the
Company, to the knowledge of the Company, no Proprietary Rights used

by the Company, and no services or products sold by the Company, conflict with
or infringe upon any proprietary rights owned or licensed by any third party.
Except as would not have a material adverse effect on the financial condition or
business of the Company, no claims have been asserted by any person with respect
to the validity of the Company's ownership or right to use the Proprietary
Rights and, to the knowledge of the Company, there is no reasonable basis for
any such claim to be successful.

            3.13. Compliance with Environmental Laws. Except as would not,
singly or in the aggregate, have a material adverse effect on the financial
condition or business of the Company, the Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to the Company's knowledge, no expenditures
material to the Company are or will be required to comply with any such existing
statute, law or regulation. To the Company's knowledge, the Company does not
have any liability to any governmental authority or other third party arising
under or as a result of any such past or existing statute, law or regulation,
which liability would be material to the Company.

            3.14. Permits, Licenses, Etc. The Company owns, possesses or has
obtained, and is operating in compliance with, all governmental and
administrative licenses, permits, certificates, registrations, approvals,
consents and other authorizations (collectively, "Permits") necessary to own or
lease (as the case may be) and operate its properties, whether tangible or
intangible, and to conduct its businesses or operations as currently conducted,
except such licenses, permits, certificates, registrations, approvals, consents
and authorizations the failure of which to obtain would not have a material
adverse effect on the financial condition or business of the Company. The
Company has not received any notice of proceedings relating to the revocation,
modification or suspension of any Permits or any circumstance which would lead
it to believe that such proceedings are reasonably likely.

            3.15. Insurance. The Company maintains insurance of the type and in
the amount which the Company believes is reasonably adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and effect.

            3.16. Brokers or Finders. No agent, broker, investment banker or
other person (as such term is defined in the Securities Act) is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
from the Company in connection with any of the transactions contemplated hereby.

      4. Representations and Warranties by the Purchasers; Restrictions on
Transfer. Each Purchaser severally represents and warrants to, and covenants and
agrees with, the Company, as of the Closing Date, as follows:

            4.1. Authorization. Purchaser has all requisite legal and corporate
or other power and capacity and has taken all requisite corporate or other
action to execute and deliver this Agreement, to purchase the Shares and the
Warrants to be purchased by it and to carry out and perform all of its
obligations under this Agreement. This Agreement constitutes the legal, valid
and binding obligation of Purchaser, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and as to limitations on the enforcement of the
remedy of specific performance and other equitable remedies.

            4.2. Investor Status. Purchaser is an "Accredited Investor" as
defined in Rule 501 of the Securities Act or a "Qualified Institutional Buyer,"
as such term is defined in Rule 144A of the Securities Act. Purchaser is aware
of the Company's business affairs and financial condition and has had access to
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Shares and the Warrants. Purchaser has
such business and financial experience as is required to give it the capacity to
protect its own interests in connection with the purchase of the Shares and
Warrants and is able to bear the risks of an investment in the Shares and the
Warrants. Purchaser is not itself a "broker" or a "dealer" as defined in the
Exchange Act and is not an "affiliate" of the Company as defined in Rule 405 of
the Securities Act.

            4.3. Investment Intent. Purchaser is purchasing the Shares and the
Warrants for its own account as principal, for investment purposes only, and not
with a present view to or for resale, distribution or fractionalization thereof,
in whole or in part, within the meaning of the Securities Act. Purchaser
understands that its acquisition of the Shares and the Warrants has not been
registered under the Securities Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may depend upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein. Purchaser has, in connection with its
decision to purchase the number of Shares and the Warrants set forth in this
Agreement, relied solely upon the representations and warranties of the Company
contained herein. Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares or the Warrants,
except in compliance with the Securities Act and the rules and regulations
promulgated thereunder and all applicable state securities laws.

            4.4. Registration or Exemption Requirements. Purchaser further
acknowledges and understands that the Shares, the Warrants and the Warrant
Shares may not be resold or otherwise transferred except in a transaction
registered under the Securities Act and applicable state securities laws unless
counsel to the Company shall advise the Company that such transfer may be
effected without such registration. Purchaser understands that until the Shares,
the Warrants and the Warrant Shares have been registered under the Securities
Act and all applicable state securities laws, the certificates evidencing the
Shares, the Warrants and the Warrant Shares will be imprinted with a legend that
prohibits the transfer of the Shares, the Warrants and the Warrant Shares.

            4.5. Restriction on Sales, Short Sales and Hedging Transactions.
Purchaser represents and agrees that during the period from the date Purchaser
was first contacted with respect to the potential purchase of the Shares and the
Warrants through the date of the execution of this Agreement by Purchaser,
Purchaser did not, directly or indirectly, execute or effect or cause to be
executed or effected any short sale, option or equity swap transaction in or
with respect to the Common Stock or any other derivative security transaction
the purpose or effect of which is to hedge or transfer to a third party all or
any part of the risk of loss associated with the ownership of the Shares and the
Warrants by the Purchaser.

            4.6. No Legal, Tax Or Investment Advice. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares and the Warrants constitutes
legal, tax or investment advice. Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares and the Warrants.

            4.7. Brokers or Finders. Upon the consummation of the transactions
contemplated by this Agreement, no agent, broker, investment banker or other
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from the Purchaser in connection with any of the
transactions contemplated hereby.

      5. Covenants.

            5.1. Registration Requirements.

                  (a) Promptly after, but not later than 60 days after, the
Closing Date, the Company shall prepare and file a registration statement (the
"Registration Statement") with the SEC to register the offer and resale of the
Shares and the Warrant Shares (together, the "Registrable Securities") by the
Purchasers and shall use commercially reasonable efforts to cause such
Registration Statement to become effective within 90 days from the Closing Date
or not more than five days from the date upon which the SEC shall allow the
Company to accelerate effectiveness, whichever is shorter. In the event that the
Company shall fail to file the Registration Statement within the 60-day period
following the Closing Date or shall fail to obtain effectiveness of the
Registration Statement within the 90-day period following the Closing Date, the
Company hereby agrees that it shall issue to each Purchaser Warrants to purchase
such number of shares of Common Stock equal to 2% of the aggregate number of
Shares purchased by such Purchaser for each and every thirty (30) day period
with respect to which such Registration Statement shall not be filed or
effective, as the case may be (the "Penalty Warrant"); provided, however, that
if the Registration Statement is subject to review by the SEC staff, then such
90-day period shall be extended an additional 90 days without any Penalty
Warrants required to be issued; provided, further, the Company

shall not be obligated to issue any Penalty Warrants if the Registration
Statement is not effective due to the Purchaser's failure to provide any
information about itself that is necessary to be contained in such Registration
Statement. The Penalty Warrants shall have an exercise price per share equal to
125% of the Market Price and shall be exercisable for a period of five years
from the date of issuance and shall be substantially similar to the Warrants.

                  (b) The Company shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder and each Purchaser shall pay all Selling Expenses (as defined below)
and other expenses that are not Registration Expenses relating to the
Registrable Securities resold by such Purchaser. "Registration Expenses" shall
mean all expenses, except for Selling Expenses, incurred by the Company in
complying with the registration provisions herein described, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses and the expense of any special audits incident to or required by
any such registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Registrable
Securities and all fees and disbursements of counsel for any Purchaser.

                  (c) If the Registration Statement becomes effective, the
Company will use commercially reasonable efforts to: (i) keep such registration
effective until the fifth anniversary of the date such Registration Statement is
declared effective; (ii) except as provided in Section 5.1(f), prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by the Registration Statement; (iii)
furnish such number of prospectuses and other documents incident thereto,
including any amendment of or supplement to the prospectus, as a Purchaser from
time to time may reasonably request; (iv) cause the Shares and the Warrant
Shares to be listed on the AMEX or any securities exchange or quoted on each
quotation service on which the Common Stock of the Company is then listed or
quoted; (v) provide a transfer agent and registrar for all securities registered
pursuant to the Registration Statement and a CUSIP number for all such
securities; and (vi) file the documents required of the Company and otherwise
use commercially reasonable efforts to maintain requisite blue sky clearance in
all U.S. jurisdictions in which any of the Shares are originally sold and all
other states specified in writing by a Purchaser, provided, however, that the
Company shall not be required to qualify to do business in any state in which it
is not now so qualified or has not so consented.

                  (d) The Company shall furnish to each Purchaser upon request a
reasonable number of copies of a supplement to or an amendment of the prospectus
used in connection with the Registration Statement as may be necessary to
facilitate the public sale or other disposition of all or any of the Registrable
Securities held by Purchaser.

                  (e) With a view to making available to Purchasers the benefits
of Rule 144 of the Securities Act and any other rule or regulation of the SEC
that may at any time permit Purchasers to sell Registrable Securities to the
public without registration, the Company covenants and agrees to use
commercially reasonable efforts to: (i) make and keep public information
available as those terms are understood and defined in Rule 144 of the
Securities Act until the earlier of (A) the date on which the Registrable
Securities may be sold pursuant to Rule 144(k) (or any successor rule); or (B)
such date as all of the Registrable Securities shall have been resold; (ii) file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and Exchange Act; and (iii) furnish to any
Purchaser upon request, as long as the Purchaser owns any Registrable Securities
(A) a written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act; (B) a copy of the most
recent annual or quarterly report of the Company; and (C) such other information
as may be reasonably requested in order to avail any Purchaser of any rule or
regulation of the SEC that permits the selling of any such Registrable
Securities without registration.

                  (f) Purchaser hereby acknowledges that there may be times when
the Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to such Registration
Statement has been filed by the Company and declared effective by the SEC or
until the Company has amended or supplemented such prospectus. The Purchaser
hereby covenants that it will not sell any securities pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchaser notice of the suspension of the use of said prospectus and ending
at the time the Company gives the Purchaser notice that Purchaser may thereafter
effect sales pursuant to said prospectus. Notwithstanding anything herein to the

contrary, the Company shall not suspend use of the Registration Statement by
Purchaser unless such suspension is required by the federal securities laws and
the rules and regulations promulgated thereunder.

                  (g) As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when: (i) a registration
statement covering such securities shall have become effective under the
Securities Act and such securities have been disposed of in accordance with such
registration statement; (ii) such securities may be sold pursuant to Rule 144(k)
(or any successor rule); or (iii) such securities shall have ceased to be
outstanding.

                  (h) No Purchaser shall be entitled to any right provided for
in this Section 5.1 after the earlier of (i) five (5) years following the
effective date of the Registration Statement; or (ii) the date on which the
Registrable Securities may be sold pursuant to Rule 144(k) (or any successor
rule).

            5.2. Indemnification and Contribution.

                  (a) The Company agrees to indemnify and hold harmless each
Purchaser from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which such Purchaser may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon (i) any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in the
Registration Statement, on the effective date thereof, or any amendment or
supplements thereto; or (ii) any violation by the Company of any Federal, state
or common law rule or regulation applicable to the Company in connection with
any such registration, and the Company will, as incurred, reimburse such
Purchaser for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend, settling, compromising or paying any such
action, proceeding or claim; provided, however, that the Company shall not be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon (i) an untrue statement or alleged untrue
statement of a material fact or omission or alleged omission in any registration
statement or prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser
specifically for use in preparation thereof; (ii) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus delivered by the Purchaser after the Company had
notified the Purchaser in writing that such registration statement or prospectus
contained such untrue statement or alleged untrue statement; (iii) any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading after the
Company had notified the Purchaser in writing that such registration statement
or prospectus contained such omission or alleged omission; or (iv) the failure
of the Purchaser to deliver any preliminary or final prospectus, or any
amendments or supplements thereto, required under applicable securities laws,
including the Securities Act, to be so delivered, provided that a sufficient
number of copies thereof had been previously provided by the Company to the
Purchaser.

                  (b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
the Company may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact in the Registration Statement, or any amendment or
supplements thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Purchaser specifically for use
in preparation of the Registration Statement or (ii) an untrue statement or
alleged untrue statement or omission or alleged omission in any prospectus that
is corrected in any subsequent prospectus or supplement or amendment thereto,
that was delivered to a Purchaser at least one (1) day prior to the pertinent
sale or sales by such Purchaser and not delivered by such Purchaser to the
entity to which it made such sale(s) prior to such sale(s), and each Purchaser,
severally and not jointly, will, as incurred, reimburse the Company for any
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim.

                  (c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 5.2,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action and, subject to the provisions
hereinafter stated, in case any such action shall be

brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to the indemnified person.
After notice from the indemnifying person to such indemnified person of the
indemnifying person's election to assume the defense thereof, the indemnifying
person shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof; provided, however, that if there exists or shall exist a conflict of
interest that would make it inappropriate in the opinion of outside counsel of
the indemnified person for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense of
such indemnifying person; provided, further, that the indemnifying person shall
not be obligated to assume the expenses of more than one counsel to represent
all indemnified persons. No indemnifying person shall be liable for any
settlement of any action or proceeding effected without its written consent. No
indemnifying person shall, without the consent of the indemnified person (which
consent shall not be reasonably withheld or delayed), consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified person
of a release from all liability in respect to such claim or litigation.

                  (d) If the indemnification provided for in this Section 5.2 is
unavailable to or insufficient to hold harmless an indemnified person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person shall contribute to the amount paid or payable by
such indemnified person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and each Purchaser
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or a Purchaser on the other. The Company and the Purchasers agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Purchasers were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified person as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified person in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Purchaser's obligations in this
subsection (d) to contribute are several in proportion to their sales of Shares
or Warrant Shares, as the case may be, to which such loss relates and not joint.

                  (e) The obligations of the Company and the Purchasers under
this Section 5.2 shall be in addition to any liability which the Company and the
respective Purchasers may otherwise have and the indemnification obligations
hereunder shall extend, as applicable, upon the same terms and conditions, to
directors, officers, employees and agents of the Company and the Purchasers and
to each person, if any, who controls the Company or any Purchaser within the
meaning of the Securities Act and the Exchange Act.

            5.3 AMEX Listing. Promptly following the Closing Date, the Company
shall use its commercially reasonable efforts to cause the Shares and Warrant
Shares to be listed on the AMEX. So long as the Purchasers beneficially own any
Shares or Warrant Shares, the Company will use its commercially reasonable
efforts to maintain the listing of the Common Stock on the AMEX or a registered
national securities exchange.

      6. Restrictions on Transferability of Shares and Warrants; Compliance with
Securities Act.

            6.1. Restrictions on Transferability. The Shares, the Warrants and
the Warrant Shares shall not be resold or otherwise transferred except in a
transaction registered under the Securities Act and applicable state securities
laws unless counsel to the Company shall advise the Company that such transfer
may be effected without such registration.

            6.2. Restrictive Legend. Until and unless the Shares and the Warrant
Shares are registered under the Securities Act, each certificate representing
the Shares and the Warrant Shares and each Warrant shall bear substantially the
following legend (in addition to any legends required under applicable state
securities laws):

            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
            SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
            RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
            TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
            APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
            EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
            OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
            TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
            WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

            6.3 Transfer of Shares and Warrants. Each Purchaser hereby covenants
with the Company not to make any sale of the Shares or Warrants except either
(a) a sale of Shares or Warrant Shares in accordance with the Registration
Statement, in which case the Purchaser covenants to comply with the requirement
of delivering a current prospectus, (b) a sale of Shares or Warrant Shares in
accordance with Rule 144, in which case the Purchaser covenants to comply with
Rule 144 and to deliver such additional certificates and documents as the
Company may reasonably request, or (c) in accordance with another exemption from
the registration requirements of the Securities Act. The legend set forth in
Section 6.2 will be removed from a certificate representing Shares or the
Warrant Shares, as the case may be, following and in connection with any sale of
Shares or Warrant Shares pursuant to subsection (a) or (b) hereof but not in
connection with any sale of Shares or Warrant Shares pursuant to subsection (c)
hereof. The Company will substitute one or more replacement certificates without
the legend at the request of the Purchaser promptly after such time as the
Registration Statement becomes effective.

      7. Miscellaneous.

            7.1 Survival of Representations and Warranties. All representations
and warranties contained herein shall survive the execution and delivery of this
Agreement, any investigation at any time made by or on behalf of the Purchasers,
and the sale and purchase of the Shares and the Warrants and payment therefor.

            7.2.  Entire Agreement.  This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous arrangements or
understandings with respect thereto.

            7.3.  Headings.  The headings of the sections of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.

            7.4. Choice of Law. It is the intention of the parties that the
internal laws of the State of California, without regard to the body of law
controlling conflicts of law, shall govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties set forth herein.

            7.5.  Counterparts.  This Agreement may be executed
concurrently in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

            7.6. Assignment; Parties in Interest. This Agreement may not be
pledged, assigned or otherwise transferred by the Purchasers except by operation
of law but all the terms and provision of this Agreement shall be binding upon
and inure to the benefit of and be enforced by the successors in interest of the
parties hereto.

Each successive transferee of the Purchasers shall be deemed to be a Purchaser
for the purpose of Section 5 of this Agreement.

            7.7. Amendments. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Purchasers or the Company therefrom shall in any event be effective unless
the same shall be in writing and signed by the party to be charged with
enforcement, and then shall be effective only in the specific instance and for
the purpose for which given. No course of dealing between the parties hereto
shall operate as an amendment of, or a waiver of any right under, this
Agreement.

            7.8. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid, but
if any provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.

            7.9. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other party:

                        If to the Company, to:
                        Questcor Pharmaceuticals, Inc.
                        3260 Whipple Road
                        Union City, California 94587
                        Attn:  CFO

                        With a copy to:
                        Latham & Watkins LLP
                        701 "B" Street, Suite 2100
                        San Diego, California 92101
                        Attn: David A. Hahn, Esq.

                        If to the Purchaser, to:
                        the address set forth on the
                        signature page of this Agreement



                            [SIGNATURE PAGES FOLLOW]

            IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their proper and duly authorized representatives
as of the day and year first above written.

                                                Questcor Pharmaceuticals, Inc.


                                                By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

                   PURCHASER SIGNATURE PAGE AND QUESTIONNAIRE

      The undersigned Purchaser hereby executes the Stock and Warrant Purchase
Agreement with Questcor Pharmaceuticals, Inc. (the "Company") and hereby
authorizes this signature page to be attached to a counterpart of such document
executed by a duly authorized officer of the Company.

                                                      
                                                         -----------------------
No. of Shares to be                                      [  ]
Purchased:
          --------------

No. of Shares Underlying
Warrants:
          --------------

Aggregate Purchase
Price:   $
          --------------



Name in which Shares and Warrants are to be registered:
                                                         -----------------------


Address of registered holder:
                                                         -----------------------

                                                         -----------------------


Social Security or Tax ID No. of registered holder:
                                                         -----------------------


Contact name and telephone number regarding
Settlement and registration:
                                                         -----------------------
                                                         Name

                                                         -----------------------
                                                         Telephone Number



                                                                     EXHIBIT 4.3

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

                         QUESTCOR PHARMACEUTICALS, INC.

               WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK



June 11, 2003                                                             Shares
                                                            --------------


      For Value Received, QUESTCOR PHARMACEUTICALS, INC., a California
corporation (the "Company"), with its principal office at 3260 Whipple Road,
Union City, California 94587, hereby certifies that [__] ("Holder"), or its
assigns, in partial consideration for Holder's purchase of Common Stock pursuant
to the Stock and Warrant Purchase Agreement dated June 11, 2003, by and among
the Company and the Purchasers who are signatories thereto (the "Purchase
Agreement"), is entitled, subject to the provisions of this Warrant, to purchase
from the Company, at any time before 5:00 p.m. (Pacific Standard Time) on June
11, 2008 (the "Expiration Date"), the number of fully paid and nonassessable
shares of Common Stock of the Company set forth above, subject to adjustment as
hereinafter provided.

      Holder may purchase such number of shares of Common Stock at an exercise
price per share (as appropriately adjusted pursuant to Section 7 hereof) equal
to 125% of the Market Price, as such term is defined in the Purchase Agreement
(the "Exercise Price"). The term "Common Stock" shall mean the aforementioned
Common Stock of the Company, together with any other equity securities that may
be issued by the Company in addition thereto or in substitution therefor as
provided herein.

      The number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for a share of Common Stock are subject to
adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares."

      SECTION 1. EXERCISE OF WARRANT. This Warrant may be exercised in whole or
in part on any business day prior to the Expiration Date by presentation and
surrender hereof to the


                                       1

Company at its principal office at the address set forth in the initial
paragraph hereof (or at such other address as the Company may hereafter notify
Holder in writing) with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of the Exercise Price in lawful money of the
United States of America in the form of a check or wire transfer of immediately
available funds, subject to collection, for the number of Warrant Shares
specified in the Purchase Form. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant, execute and deliver a
new Warrant evidencing the rights of Holder thereof to purchase the balance of
the Warrant Shares purchasable hereunder. Upon receipt by the Company of this
Warrant and such Purchase Form, together with proper payment of the Exercise
Price, at the principal office of the Company, Holder shall be deemed to be the
holder of record of the Warrant Shares, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing such
Warrant Shares shall not then be actually delivered to Holder.

      SECTION 2. RESERVATION OF SHARES. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company from time to time issuable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise in
accordance with the terms of this Warrant, shall be validly issued, fully paid
and nonassessable.

      SECTION 3. FRACTIONAL INTEREST. The Company will not issue a fractional
share of Common Stock upon exercise of this Warrant. Instead, the Company will
deliver its check for the current market value of the fractional share. The
current market value of a fraction of a share is determined as follows: multiply
the current market price of a full share by the fraction of a share and round
the result to the nearest cent.

      SECTION 4. TRANSFERS; ASSIGNMENT OR LOSS OF WARRANT.

            (a) Subject to the terms and conditions contained in Section 9
hereof, this Warrant and all rights hereunder are transferable in whole or in
part by Holder and any successor transferee; provided that prior to such
transfer Holder shall give thirty (30) days prior written notice of any such
transfer to the Company, and the Company shall have the right to acquire the
Warrant under the identical provisions contained in such notice by giving Holder
written notice within fifteen (15) days of receipt of such notice. The Company's
failure to respond to said notice within said fifteen (15) days shall be deemed
a waiver of this right of first refusal. The transfer shall be recorded on the
books of the Company upon receipt by the Company of the Transfer Notice annexed
hereto, at its principal offices and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer.

            (b) Holder shall not, without obtaining the prior written consent of
the Company, which consent shall not be unreasonably withheld, assign its
interest in this Warrant in whole or in part to any person or persons. Subject
to the provisions of Section 9, upon surrender of this Warrant to the Company or
at the office of its stock transfer agent or warrant agent, with the Assignment
Form annexed hereto duly executed and funds sufficient to pay any transfer tax,
the Company shall, without charge, execute and deliver a new Warrant or Warrants
in the name


                                       2

of the assignee or assignees named in such instrument of assignment (any such
assignee will then be a "Holder" for purposes of this Warrant) and, if Holder's
entire interest is not being assigned, in the name of Holder, and this Warrant
shall promptly be canceled.

            (c) Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of indemnification satisfactory to the Company, and
upon surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date. In the event that this
Warrant is lost, stolen, destroyed or mutilated, Holder shall pay all reasonable
attorneys' fees and expenses incurred by the Company in connection with the
replacement of this Warrant and the issuance of a new Warrant.

      SECTION 5. RIGHTS OF HOLDER. Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of Holder are limited to those expressed in this Warrant. Nothing
contained in this Warrant shall be construed as conferring upon Holder hereof
the right to vote or to consent or to receive notice as a stockholder of the
Company on any matters or with respect to any rights whatsoever as a stockholder
of the Company. No dividends or interest shall be payable or accrued in respect
of this Warrant or the interest represented hereby or the Warrant Shares
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised in accordance with its terms.

      SECTION 6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number
and kind of securities purchasable upon the exercise of the Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:

            (a) RECLASSIFICATION OF OUTSTANDING SECURITIES. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall execute a new Warrant (in form and substance
reasonably satisfactory to the Holder of this Warrant) providing that the Holder
of this Warrant shall have the right to exercise such new Warrant and upon such
exercise to receive, in lieu of each share of Common Stock theretofore issuable
upon exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification or change
by a holder of one share of Common Stock. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6. The provisions of this subsection
(a) shall similarly apply to successive reclassification or changes.

            (b) SUBDIVISIONS OR COMBINATION OF SHARES. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Warrant Shares
issuable upon exercise hereof shall be proportionately adjusted.


                                       3

            (c) STOCK DIVIDENDS. If the Company at any time while this Warrant
is outstanding and unexpired shall pay a dividend payable in shares of Common
Stock (except any distribution specifically provided for in the foregoing
subsections (a) and (b)), then the Exercise Price shall be adjusted, from and
after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Exercise
Price in effect immediately prior to such date of determination by a fraction
(a) the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution, and the number of
Warrant Shares subject to this Warrant shall be proportionately adjusted.

            (d) NOTICE OF RECORD DATE. In the event of any taking by the Company
of a record of its shareholders for the purpose of determining shareholders who
are entitled to receive payment of any dividend (other than a cash dividend) or
other distribution, any right to subscribe for, purchase or otherwise acquire
any share of any class or any other securities or property, or to receive any
other right, or for the purpose of determining shareholders who are entitled to
vote in connection with any proposed merger or consolidation of the Company with
or into any other corporation, or any proposed sale, lease or conveyance of all
or substantially all of the assets of the Company, or any proposed liquidation,
dissolution or winding up of the Company, the Company shall mail to the Holder
of this Warrant, at least ten days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.

            (e) NO ADJUSTMENT UPON EXERCISE OF WARRANTS. No adjustments shall be
made under any Section herein in connection with the issuance of Warrant Shares
upon exercise of the Warrants.

      SECTION 7. OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of Section 8, the Company shall deliver
an officer's certificate showing the adjusted Exercise Price determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment and the manner of computing such adjustment. Each such officer's
certificate shall be signed by the chairman, president or chief financial
officer of the Company.

      SECTION 8. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. This
Warrant may not be exercised and neither this Warrant nor any of the Warrant
Shares, nor any interest in either, may be offered, sold, assigned, pledged,
hypothecated, encumbered or in any other manner transferred or disposed of, in
whole or in part, except in compliance with applicable United States federal and
state securities or blue sky laws and the terms and conditions hereof. Each
Warrant shall bear a legend in substantially the same form as the legend set
forth on the first page of this Warrant. Each certificate for Warrant Shares
issued upon exercise of this Warrant, unless at the time of exercise such
Warrant Shares are acquired pursuant to a registration statement that has been
declared effective under the Securities Act of


                                       4

1933, as amended (the "Securities Act"), and applicable blue sky laws, shall
bear a legend substantially in the following form:

      THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
      LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
      TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
      PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
      TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
      REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
      ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
      WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

Any certificate for any Warrant Shares issued at any time in exchange or
substitution for any certificate for any Warrant Shares bearing such legend
(except a new certificate for any Warrant Shares issued after the acquisition of
such Warrant Shares pursuant to a registration statement that has been declared
effective under the Securities Act) shall also bear such legend unless, in the
opinion of counsel for the Company, the Warrant Shares represented thereby need
no longer be subject to the restriction contained herein. The provisions of this
Section 8 shall be binding upon all subsequent holders of certificates for
Warrant Shares bearing the above legend and all subsequent holders of this
Warrant, if any.

      SECTION 9. REPRESENTATIONS AND COVENANTS OF HOLDER. This Warrant has been
entered into by the Company in reliance upon the following representations and
covenants of Holder, which by its execution hereof Holder hereby confirms:

            (a) INVESTMENT PURPOSE. The right to acquire Common Stock, and any
Common Stock issued upon exercise of Holder's rights contained herein, will be
acquired for investment and not with a view to the sale or distribution of any
part thereof, and Holder has no present intention of selling or engaging in any
public distribution of the same except pursuant to a registration or exemption.

            (b) PRIVATE ISSUE. Holder understands (i) that the Common Stock
issuable upon exercise of Holder's rights contained herein is not registered
under the Securities Act or qualified under applicable state securities laws on
the ground that the issuance contemplated by this Warrant will be exempt from
the registration and qualification requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 9.

            (c) DISPOSITION OF HOLDER'S RIGHTS. In no event will Holder make a
disposition of any of its rights to acquire Common Stock, or of any Common Stock
issued upon exercise of such rights, unless and until (i) it shall have notified
the Company of the proposed disposition, and (ii) if requested by the Company,
it shall have furnished the Company with an


                                       5

opinion of counsel (which counsel may either be inside or outside counsel to
Holder) satisfactory to the Company and its counsel to the effect that (A)
appropriate action necessary for compliance with the Securities Act has been
taken, or (B) an exemption from the registration requirements of the Securities
Act is available. Notwithstanding the foregoing, the restrictions imposed upon
the transferability of any of its rights to acquire Common Stock, or of any
Common Stock issued on the exercise of such rights do not apply to transfers
from the beneficial owner of any of the aforementioned securities to its nominee
or from such nominee to its beneficial owner, and shall terminate as to any
particular share of Common Stock when (1) such security shall have been
effectively registered under the Act and sold by the holder thereof in
accordance with such registration, (2) such security shall have been sold
without registration in compliance with Rule 144 under the Securities Act, or
(3) a letter shall have been issued to Holder at its request by the staff of the
Securities and Exchange Commission or a ruling shall have been issued to Holder
at its request by such Commission stating that no action shall be recommended by
such staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the Securities Act in accordance with the
conditions set forth in such letter or ruling, and such letter or ruling
specifies that no subsequent restrictions on transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove provided, Holder
or a holder of a share of Common Stock then outstanding as to which such
restrictions have terminated shall be entitled to receive from the Company,
without expense to such holder, one or more new certificates for the Warrant or
for such shares of Common Stock not bearing any restrictive legend.

            (d) FINANCIAL RISK. Holder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment and has the ability to bear the economic risks of its
investment.

            (e) RULE 144. Holder also understands that any sale of its rights to
purchase Common Stock, or of any Common Stock, which might be made by it in
reliance upon Rule 144 under the Securities Act may be made only in accordance
with the terms and conditions of that Rule.

            (f) ACCREDITED INVESTOR. Holder is an "accredited investor" within
the meaning of the Securities Act Rule 501 of Regulation D, as presently in
effect.

      SECTION 10. REGISTRATION RIGHTS. The Warrant Shares issuable upon the
exercise of this Warrant are subject of certain registration rights granted by
the Company to the Holder as more specifically set forth in the Purchase
Agreement.

      SECTION 11. SATURDAYS, SUNDAYS AND HOLIDAYS. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday in the State
of California, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday in the State of
California.

      SECTION 12. ISSUE TAX. The issuance of certificates for Common Stock upon
the exercise of the Warrant shall be made without charge to the holder of the
Warrant for any issue


                                       6

tax (other than any applicable income taxes) in respect thereof; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificates in a name other than that of the then Holder of the Warrant being
exercised.

      SECTION 13. MODIFICATION AND WAIVER. Neither this Warrant nor any term
hereof may be changed, waived, discharged or terminated other than by an
instrument in writing signed by the Company and by Holder.

      SECTION 14. NOTICES. Unless otherwise specified herein, any notice,
request or other document required or permitted to be given or delivered to
Holder or the Company shall be given in writing and shall be deemed effectively
given (i) upon personal delivery to the party to be notified, (ii) three (3)
days after deposit in the United States mail if sent by registered or certified
mail, postage prepaid, or (iii) one (1) day after deposit with an overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to Holder at its address as shown on the books of
the Company, or to the Company at the address indicated therefor in the first
paragraph of this Warrant.

      SECTION 15. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California, without
regard to its conflicts of laws principles.

      SECTION 16. ATTORNEYS' FEES. In any litigation, arbitration or court
proceeding between the Company and Holder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant.

      SECTION 17. SURVIVAL. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant shall survive the execution and delivery of this Warrant.

      SECTION 18. SEVERABILITY. In the event any one or more of the provisions
of this Warrant shall for any reason be held invalid, illegal or unenforceable,
the remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.


                            [Signature Page Follows]


                                       7

      IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed
by its duly authorized officer and to be dated as of the date first above
written.

                                      
                                         QUESTCOR PHARMACEUTICALS,  INC.

                                         By:
                                            -----------------------------------
                                            Name:
                                            Title:




                                       8

                                  PURCHASE FORM

                                                        Dated            ,
                                                              -----------  ----


      The undersigned hereby irrevocably elects to exercise the within Warrant
to purchase ______ shares of Common Stock and hereby makes payment of
$_____________ in payment of the exercise price thereof, together with all
applicable transfer taxes, if any.

      In exercising its rights to purchase the Common Stock of Questcor
Pharmaceuticals, Inc., the undersigned hereby confirms and acknowledges the
investment representations and warranties made in Section 9 of the Warrant.

      Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below.

                                      

                                         --------------------------------------
                                         (Name)


                                         --------------------------------------
                                         (Address)



                                         HOLDER:


                                         --------------------------------------

                                         By:
                                            -----------------------------------

                                         Print Name:
                                                    ---------------------------

                                         Title:
                                               --------------------------------




                                       9

                                 ASSIGNMENT FORM

                                                        Dated            ,
                                                              -----------  ----


      FOR VALUE RECEIVED, ___________________ hereby sells, assigns and
transfers unto ________________________________________________(the "Assignee"),
                     (please type or print in block letters)

- --------------------------------------------------------------------------------
                                (insert address)
its right to purchase up to __________shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.

                                      

                                         --------------------------------------

                                         By:
                                            -----------------------------------

                                         Print Name:
                                                    ---------------------------

                                         Title:
                                               --------------------------------




                                       10

                                 TRANSFER NOTICE

      (To transfer or assign the foregoing Warrant, execute this form and supply
      required information. Do not use this form to purchase shares.)

      FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby transferred and assigned to:

- --------------------------------------------------------------------------------
                                 (Please Print)

whose address is
                 ---------------------------------------------------------------

- --------------------------------------------------------------------------------

                                      

                                         Dated
                                               --------------------------------

                                         Holder's Signature
                                                            -------------------

                                         Holder's Address
                                                         ----------------------
                                         --------------------------------------



Note:   The signature to this Transfer Notice must correspond with the name as
        it appears on the face of the Warrant, without alteration or enlargement
        or any change whatever. Officers of corporations and those acting in a
        fiduciary or other representative capacity should file proper evidence
        of authority to assign the foregoing Warrant.


                                       11



                                                                     EXHIBIT 5.1

                       [LATHAM & WATKINS LLP LETTERHEAD]

August 8, 2003


Questcor Pharmaceuticals, Inc.
3260 Whipple Road
Union City, California 94587

            Re:   Registration Statement on Form S-3;
                  7,966,976  Shares of Common Stock, no par value per share

Ladies and Gentlemen:

      In connection with the registration under the Securities Act of 1933, as
amended, of 7,966,976 shares (the "Shares") of common stock, no par value per
share, of Questcor Pharmaceuticals, Inc., a California corporation (the
"Company"), on a Registration Statement on Form S-3 filed with the Securities
and Exchange Commission on August 8, 2003 (the "Registration Statement"), you
have requested our opinion with respect to the matters set forth below. Of the
Shares being registered, (i) 4,979,360 shares of common stock (the "Issued
Shares") are issued and outstanding, and (ii) 2,987,616 shares (the "Warrant
Shares") may be issued in the future upon exercise of certain warrants (the
"Warrants").

      In our capacity as your counsel in connection with such registration, we
are familiar with the proceedings taken and proposed to be taken by the Company
in connection with the authorization of the Shares, and for the purposes of this
opinion, have assumed such proceedings will be timely completed in the manner
presently proposed. In addition, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction of such documents,
corporate records and instruments, as we have deemed necessary or appropriate
for purposes of this opinion.

      In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.

      We are opining herein as to the effect on the subject transaction only of
the internal laws of the State of California, and we express no opinion with
respect to the applicability thereto, or the effect thereon, of the laws of any
other jurisdiction or as to any matters of municipal law or the laws of any
local agencies within any state.

      Subject to the foregoing, it is our opinion that as of the date hereof (i)
the Issued Shares are validly issued, fully paid and nonassessable, and (ii)
upon exercise of the Warrants and payment for the Warrant Shares in accordance
with the terms set forth in the respective Warrants

                       [LATHAM & WATKINS LLP LETTERHEAD]

QUESTCOR PHARMACEUTICALS, INC.
AUGUST 8, 2003
PAGE 2


under which such Warrant Shares will be issued, the Warrant Shares will be
validly issued, fully paid and nonassessable.

      We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters."

                                       Very truly yours,


                                       /s/ Latham & Watkins LLP


                                                                    EXHIBIT 15.1

August 5, 2003

The Board of Directors and Stockholders
Questcor Pharmaceuticals, Inc.

We are aware of the incorporation by reference in the Registration Statement
(Form S-3) of Questcor Pharmaceuticals, Inc. for the registration of 7,966,976
shares of its common stock of our report dated April 29, 2003 relating to the
unaudited condensed consolidated interim financial statements of Questcor
Pharmaceuticals, Inc. that are included in its Form 10-Q for the quarter ended
March 31, 2003.

Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.

                                                      Very truly yours,

                                                      /s/ Ernst & Young LLP





                                                                    EXHIBIT 23.2

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

         We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Questcor
Pharmaceuticals, Inc. for the registration of 7,966,976 shares of its common
stock and to the incorporation by reference therein of our report dated February
11, 2003, with respect to the consolidated financial statements and schedule of
Questcor Pharmaceuticals, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 2002, filed with the Securities and Exchange Commission.

Palo Alto, California
August 5, 2003

                                                      /s/ Ernst & Young LLP

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