FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL OMB Number: 3235-0287 Expires: January 31, 2005 Estimated average burden hours per response... 0.5

(Print or Type Responses)

1. Name and Address of Reporting Person * PROSPECT VENTURE PARTNERS II LP   2. Issuer Name and Ticker or Trading Symbol TERCICA INC [TRCA] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director __X__ 10% Owner _____ Officer (give title below) _____ Other (specify below) (Last) (First) (Middle) 435 TASSO STREET, SUITE 200 3. Date of Earliest Transaction (Month/Day/Year) 09/02/2005 (Street) PALO ALTO, CA 94301 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) ___ Form filed by One Reporting Person _X_ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock 09/02/2005   J(1)   940,196 D $ 0 2,820,588 I By Prospect Venture Partners II, L.P. (4) Common Stock 09/02/2005   J(2)   14,318 D $ 0 42,952 I By Prospect Associates II, L.P. (4) Common Stock 09/02/2005   J(3)   77,291 A $ 0 77,291 I By Prospect Management Co. II, LLC (4)

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
	Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.		SEC 1474 (9-02)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
PROSPECT VENTURE PARTNERS II LP 435 TASSO STREET, SUITE 200 PALO ALTO, CA 94301		X
PROSPECT ASSOCIATES II L P 435 TASSO STREET, SUITE 200 PALO ALTO, CA 94301		X
PROSPECT MANAGEMENT CO II LLC 435 TASSO STREET, SUITE 200 PALO ALTO, CA 94301		X
SCHNELL DAVID 435 TASSO STREET, SUITE 200 PALO ALTO, CA 94301		X
TANANBAUM JAMES B 435 TASSO STREET, SUITE 200 PALO ALTO, CA 94301		X
HIRSCH RUSSELL C 435 TASSO STREET, SUITE 200 PALO ALTO, CA 94301		X

Signatures

Prospect Venture Partners II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ Russell C. Hirsch Managing Member		09/08/2005
**Signature of Reporting Person		Date
Prospect Associates II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ Russell C. Hirsch Managing Member		09/08/2005
**Signature of Reporting Person		Date
Prospect Management Co. II, LLC By: /s/ Russell C. Hirsch Managing Member		09/08/2005
**Signature of Reporting Person		Date
/s/ David Schnell		09/08/2005
**Signature of Reporting Person		Date
/s/ James B. Tananbaum		09/08/2005
**Signature of Reporting Person		Date
/s/ Russell C. Hirsch		09/08/2005
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	Represents in-kind distribution by Prospect Venture Partners II, L.P. without consideration to its limited and general partners.
(2)	Represents in-kind distribution by Prospect Associates II, L.P. without consideration to its limited and general partners.
(3)	Represents change in ownership by Prospect Management Co. II, LLC, as general partner of Prospect Venture Partners II, L.P. and Prospect Associates II, L.P., from indirect to direct in connection with the in-kind distribution by such entities without consideration to their partners.
(4)	Alexander Barkas (who is a director of the Issuer and files separate Section 16(a) reports), Russell C. Hirsch, David Schnell and James B. Tananbaum are managing members of Prospect Management Co. II, LLC, the general partner of each of Prospect Venture Partners II, L.P. and Prospect Associates II, L.P. Each of the Reporting Persons disclaims beneficial ownership except to the extent of his or its pecuniary interests therein.

Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB number.