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                                 [CELTRIX LOGO]

                                   LETTERHEAD

NEWS RELEASE

                              CONTACT:     Andreas Sommer, Ph.D.
                                           President and Chief Executive Officer
                                           (408) 988-2500

                      CELTRIX REPORTS FIRST QUARTER RESULTS

        SANTA CLARA, CA -- July 22, 1997 -- For the first quarter ended June 30,
1997, Celtrix Pharmaceuticals, Inc. (Nasdaq: CTRX) reported revenues of $24,000
and a net loss of $2,568,000, or $0.12 per share. Operating expenses of
$3,553,000 were offset in part by a $737,000 gain on investment from the sale of
Prograft Medical, Inc. securities held by Celtrix since 1993. At June 30, 1997,
Celtrix had $16,724,000 in cash and investments, which included $13,353,000
million in net proceeds from a private placement in April 1997.

        In comparison, revenues for the first quarter ended June 30, 1996, were
$42,000, operating expenses were $3,148,000, and the net loss was $2,943,000, or
$0.19 per share. The 13 percent increase in operating expenses for the first
quarter ended June 30, 1997, was due primarily to additional costs associated
with human clinical studies of SomatoKineAE, Celtrix's novel formulation of
insulin-like growth factor I (IGF-I) and its major binding protein (BP3).

        "We are actively focused on the use of SomatoKine to treat a variety of
serious medical conditions and continue to be enthusiastic about the commercial
potential," said Andreas Sommer, Ph.D., Celtrix's president and chief executive
officer. "Initial treatment targets include hip fracture surgery in the elderly
and severe burns, both of which are now undergoing Phase II clinical feasibility
studies. With hip fracture surgery, SomatoKine offers the potential to stimulate
the formation of new muscle and bone, restore mobility and increase the
patient's functional independence. With severe burns, SomatoKine could
potentially speed the recovery time and shorten the patients' hospital stay."

        Celtrix is a biopharmaceutical company developing novel therapeutics for
the treatment of seriously debilitating, degenerative conditions primarily
associated with severe trauma, chronic diseases or aging. The company's focus is
on SomatoKine, a novel IGF-BP3 complex, for use in regenerating lost muscle,
bone and other tissues essential for the patient's health and quality of life.
Initial product development programs target acute traumatic injury, such as hip
fracture surgery in the elderly and severe burns. Other potential indications
include severe osteoporosis and protein wasting diseases associated with cancer,
AIDS and other life-threatening conditions. Through strategic alliances with
Celtrix, The Green Cross Corporation is developing SomatoKine for the treatment
of osteoporosis in Japan, and Genzyme Corporation is developing TGF-beta-2 as
part of a comprehensive approach to tissue repair and the treatment of systemic
disease.

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

                           - FINANCIAL CHARTS FOLLOW -