Tercica Reports Fourth Quarter and Year-End 2007 Financial Results

  
    
  
  
    
      Tercica, Inc. (Nasdaq: TRCA) today announced financial results for the 
      quarter and year ended December 31, 2007. Net product sales for the 
      quarter ended December 31, 2007 totaled $3.8 million. The net loss for 
      the quarter was $18.7 million, or $0.36 per share, compared to a net 
      loss of $41.0 million, or $0.85 per share, for the fourth quarter of 
      2006.
    
    
      Research and development expenses for the fourth quarter of 2007 were 
      $4.5 million, compared to $29.3 million for the fourth quarter of 2006. 
      The decrease was primarily due to the $25 million licensing payment that 
      Tercica paid to Ipsen for Somatuline® 
      Depot in the fourth quarter of 2006. Selling, general and administrative 
      expenses for the fourth quarter of 2007 were $12.3 million, compared to 
      $13.0 million for the fourth quarter of 2006.
    
    
      Tercica reported product revenues of $9.8 million for the year ended 
      December 31, 2007. Net loss for the year was $40.5 million, or $0.80 per 
      share, compared to a net loss of $83.0 million, or $2.09 per share, for 
      the full year in 2006. Total costs and expenses for the year ended 
      December 31, 2007 were $71.4 million, compared to $87.9 million for the 
      same period in 2006.
    
    
      Cash, cash equivalents and short-term investments as of December 31, 
      2007 were $113.5 million, compared to $125.6 million as of December 31, 
      2006.
    
    
      2007 and Recent Highlights
    
    
      Increlex®
    
    
      
        Total product revenues in 2007 were $9.6 million.
      
      
        In August 2007, the European Commission granted marketing 
        authorization for Increlex® 
        (mecasermin) 10 mg/ml solution for injection. The authorized 
        indication was for the long-term treatment of growth failure in 
        children and adolescents with severe primary insulin-like growth 
        factor-1 deficiency (Primary IGFD). Increlex® 
        also received an Orphan Drug designation for the authorized 
        indication, providing ten years of marketing exclusivity in the 
        European Union where the product is marketed by our partner Ipsen.
      
      
        In July 2007, enrollment of all patients was completed in 
        MS301, a Phase IIIb trial evaluating the efficacy and safety of the 
        current formulation of Increlex® 
        administered in children with Primary IGFD, a less severe and more 
        prevalent form of severe Primary IGFD. In this multi-center, 
        open-label trial, children with Primary IGFD (height and IGF-1 levels 
        at least two standard deviations below the mean for the child’s 
        age and sex) are treated with Increlex® 
        for one year. The primary endpoint for the trial is height velocity. 
        Data from the MS301 trial is expected to be available in the fourth 
        quarter of 2008, and if positive, an sNDA submission for this 
        indication is planned by year-end 2008.
      
      
        In May 2007, enrollment of all patients was completed in MS308, a 
        clinical trial to investigate once-daily dosing of the current 
        formulation of Increlex® 
        in children with Primary IGFD.
      
      
        The company expects to present the data from the MS301 and MS308 
        trials at a medical conference in the fourth quarter of 2008.
      
    
    
      Somatuline® 
      Depot
    
    
      
        In August 2007, Somatuline® 
        Depot received notice of approval from the U.S. Food and Drug 
        Administration (FDA) for the long-term treatment of acromegaly in 
        patients who have had an inadequate response to surgery and/or 
        radiotherapy, or for whom surgery and/or radiotherapy is not an 
        option. The FDA also designated Somatuline® 
        Depot as an orphan drug for acromegaly. The Orphan Drug Act provides a 
        seven-year period of exclusive marketing to the first manufacturer who 
        obtains marketing approval for a designated orphan product.
      
      
        Somatuline® Depot 
        became available for commercial sale in the United States in 
        mid-November 2007. Total Somatuline® 
        Depot product revenues in 2007 were $0.2 million.
      
    
    
      Combination Products Agreement with 
      Genentech
    
    
      
        In July 2007, Tercica and Genentech entered into an agreement for the 
        development, manufacture and worldwide commercialization of two 
        product candidates containing Genentech’s 
        recombinant human growth hormone Nutropin AQ® 
        and Tercica’s recombinant insulin-like 
        growth factor-1 Increlex®. 
        One product candidate is for the treatment of short stature, and the 
        other product candidate is for the treatment of adult growth hormone 
        deficiency (AGHD) and, potentially, other metabolic disorders.
      
      
        In January 2008, the first patient entered into a Phase II clinical 
        study for the treatment of short stature. The primary objective of 
        this trial is to assess the efficacy, measured as first-year height 
        velocity, and safety of three different combination regimens of 
        Nutropin AQ® and 
        Increlex® compared 
        to Nutropin AQ® 
        alone in the treatment of short stature associated with low IGF-1 
        levels. The goal of the study is to provide a majority of patients 
        with a co-mixture of Nutropin AQ® 
        and Increlex® 
        administered as single injection. The initial patients enrolled in 
        this trial will receive separate injections of each Nutropin AQ® 
        and Increlex®.
      
      
        A Phase II clinical study for the treatment of adult growth hormone 
        deficiency (AGHD) is expected to start in late 2008.
      
    
    
      “We achieved three major corporate milestones 
      in 2007. In July, we signed the agreement with Genentech to develop 
      growth hormone and IGF-1 combination products. Then in August, 
      Somatuline Depot was approved in the United States for the treatment of 
      acromegaly, and Increlex was granted marketing authorization in the 
      European Union for the treatment of severe Primary IGFD. With these 
      milestones, we believe that in 2007, we built a solid platform for 
      sustainable growth at Tercica,” said John A. 
      Scarlett, M.D., Tercica’s President and Chief 
      Executive Officer. “In 2008, we look forward 
      to strong commercial performance from both Increlex and Somatuline 
      Depot, and progress in our clinical development programs for Increlex, 
      Somatuline Depot, and our next-generation growth hormone products,” 
      he added.
    
    
      Financial Guidance for 2008
    
    
      Revenue and Expenses
    
    
      
        Tercica expects net product sales for Increlex® 
        between $20 million to $22 million, and net product sales for 
        Somatuline® Depot 
        between $10 million to $15 million.
      
      
        Including FAS 123 share-based compensation expense of approximately $7 
        million to $8 million, R&D expenses are anticipated to be 
        approximately $29 million to $31 million; and selling, general, and 
        administrative expenses are anticipated to be approximately $50 
        million to $52 million.
      
    
    
      Cash
    
    
      
        Tercica expects to invest approximately $18 million for Increlex® 
        and Somatuline® 
        Depot commercial inventory build. Accounting for this inventory build, 
        Tercica expects to end the year with approximately $40 million in cash.
      
    
    
      Conference Call and Webcast Information
    
    
      Management will host an investment community conference call beginning 
      at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) on Wednesday, 
      February 27, 2008 to discuss the financial results, provide a business 
      update and answer questions.
    
    
      Individuals interested in listening to the live conference call may do 
      so by dialing [phone] toll free within the U.S. and Canada, or 
      [phone] for international callers. A telephone replay will be 
      available approximately two hours after the call for two days by dialing 
      [phone] from the U.S., or [phone] for international 
      callers, and entering reservation number 32591844.
    
    
      Individuals interested in listening to the conference call via the 
      Internet may do so by visiting www.tercica.com. 
      A replay will be available on the Company’s 
      Web site for 21 days.
    
    
      About Tercica
    
    
      Tercica is a biopharmaceutical company committed to improving endocrine 
      health by partnering with the endocrine community to develop and 
      commercialize new therapeutics for pediatric and adult growth disorders, 
      and for adult metabolic disorders. For further information on Tercica, 
      please visit www.tercica.com.
    
    
      Safe-Harbor Statement
    
    
      Except for the historical statements contained herein, this press 
      release contains forward-looking statements concerning Tercica’s 
      prospects and results, including that Tercica: (A) expects 2008 Increlex® 
      and Somatuline® 
      Depot net product sales between $20 million to $22 million and $10 
      million to $15 million, respectively; (B) expects to end 2008 with 
      approximately $40 million in cash; (C) anticipates, including FAS 123 
      stock-based compensation expense, R&D expenses in 2008 to be 
      approximately $29 million to $31 million, and selling, general, and 
      administrative expenses to be approximately $50 million to $52 million; 
      (D) expects to invest approximately $18 million for Increlex® 
      and Somatuline® 
      Depot commercial inventory build; and (E) looks forward to strong 
      commercial performance from both Increlex® 
      and Somatuline® 
      Depot, and progress in clinical development programs for Increlex®, 
      Somatuline® Depot, 
      and next-generation growth hormone products. Because Tercica’s 
      forward-looking statements are subject to risks and uncertainties, there 
      are important factors that could cause actual results to differ 
      materially from those in the forward-looking statements. These factors 
      include, without limitation, risks and uncertainties related to the 
      following: (i) regarding (A), (B), and (E) above, physicians may not 
      prescribe and patients may discontinue their use of Increlex® 
      and Somatuline® 
      Depot at the rates Tercica expects; (ii) regarding (B), (C), and (D) 
      above, there may be significant unexpected expenditures; and (iii) the 
      risks and uncertainties disclosed from time to time in reports filed by 
      Tercica with the SEC, including most recently Tercica’s 
      Form 10-Q for the quarter ended September 30, 2007 filed with the SEC on 
      November 1, 2007. Tercica disclaims any obligation or undertaking to 
      update or revise any forward-looking statements contained in this press 
      release.
    
    
    
    
      
        
          
            TERCICA, INC.
          
          
            (In thousands, except per share data)
          
          
            (Unaudited)
          
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
          Statements of Operations
        
        
        
        
          
            Three Months Ended
          
          
            December 31,
          
        
        
        
        
          
            Year Ended
          
          
            December 31,
          
        
      
      
        
        
        
        
        
          2007
        
        
           
        
        
          2006
        
        
        
        
          2007
        
        
           
        
        
          2006
        
      
      
        
          Net revenues:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Net product sales
        
        
        
        
          $
        
        
          3,819
        
        
        
        
        
        
          $
        
        
          748
        
        
        
        
        
        
          $
        
        
          9,809
        
        
        
        
        
        
          $
        
        
          1,315
        
        
        
      
      
        
          License revenue
        
        
        
        
        
        
          194
        
        
        
        
        
        
        
        
          194
        
        
        
        
        
        
        
        
          21,119
        
        
        
        
        
        
        
        
          194
        
        
        
      
      
        
          Royalty revenue
        
        
        
        
        
        
          51
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          51
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
      
      
        
          Total net revenues
        
        
        
        
           
        
        
          4,064
        
        
           
        
        
        
        
           
        
        
          942
        
        
           
        
        
        
        
           
        
        
          30,979
        
        
           
        
        
        
        
           
        
        
          1,509
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Costs and expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cost of sales
        
        
        
        
        
        
          2,511
        
        
        
        
        
        
        
        
          511
        
        
        
        
        
        
        
        
          5,540
        
        
        
        
        
        
        
        
          1,667
        
        
        
      
      
        
          Manufacturing start-up costs
        
        
        
        
        
        
          1,162
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          3,065
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
          
            Research and development*
          
        
        
        
        
        
        
          4,535
        
        
        
        
        
        
        
        
          29,295
        
        
        
        
        
        
        
        
          19,136
        
        
        
        
        
        
        
        
          42,034
        
        
        
      
      
        
          
            Selling, general and administrative*
          
        
        
        
        
        
        
          12,308
        
        
        
        
        
        
        
        
          12,996
        
        
        
        
        
        
        
        
          43,186
        
        
        
        
        
        
        
        
          44,248
        
        
        
      
      
        
          Amortization of Intangibles
        
        
        
        
           
        
        
          468
        
        
           
        
        
        
        
           
        
        
          -
        
        
           
        
        
        
        
           
        
        
          468
        
        
           
        
        
        
        
           
        
        
          -
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total costs and expenses
        
        
        
        
           
        
        
          (20,984
        
        
          )
        
        
        
        
           
        
        
          (42,802
        
        
          )
        
        
        
        
           
        
        
          (71,395
        
        
          )
        
        
        
        
           
        
        
          (87,949
        
        
          )
        
      
      
        
          Loss from operations
        
        
        
        
        
        
          (16,920
        
        
          )
        
        
        
        
        
        
          (41,860
        
        
          )
        
        
        
        
        
        
          (40,416
        
        
          )
        
        
        
        
        
        
          (86,440
        
        
          )
        
      
      
        
          Interest expense
        
        
        
        
        
        
          (1,225
        
        
          )
        
        
        
        
        
        
          (162
        
        
          )
        
        
        
        
        
        
          (1,937
        
        
          )
        
        
        
        
        
        
          (162
        
        
          )
        
      
      
        
          Other expense
        
        
        
        
        
        
          (2,120
        
        
          )
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          (3,071
        
        
          )
        
        
        
        
        
        
          -
        
        
        
      
      
        
          Interest income and other income, net
        
        
        
        
           
        
        
          1,578
        
        
           
        
        
        
        
           
        
        
          1,662
        
        
           
        
        
        
        
           
        
        
          5,975
        
        
           
        
        
        
        
           
        
        
          4,226
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Loss before income taxes
        
        
        
        
        
        
          (18,687
        
        
          )
        
        
        
        
        
        
          (40,360
        
        
          )
        
        
        
        
        
        
          (39,449
        
        
          )
        
        
        
        
        
        
          (82,376
        
        
          )
        
      
      
        
          Provision for income taxes
        
        
        
        
           
        
        
          -
        
        
           
        
        
        
        
           
        
        
          (621
        
        
          )
        
        
        
        
           
        
        
          (1,017
        
        
          )
        
        
        
        
           
        
        
          (621
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
        
        
          $
        
        
          (18,687
        
        
          )
        
        
        
        
          $
        
        
          (40,981
        
        
          )
        
        
        
        
          $
        
        
          (40,466
        
        
          )
        
        
        
        
          $
        
        
          (82,997
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic and diluted net loss per share
        
        
        
        
          $
        
        
          (0.36
        
        
          )
        
        
        
        
          $
        
        
          (0.85
        
        
          )
        
        
        
        
          $
        
        
          (0.80
        
        
          )
        
        
        
        
          $
        
        
          (2.09
        
        
          )
        
      
      
        
          Shares used to compute basic and diluted net loss per share
        
        
        
        
           
        
        
          51,486
        
        
           
        
        
        
        
           
        
        
          48,344
        
        
           
        
        
        
        
           
        
        
          50,717
        
        
           
        
        
        
        
           
        
        
          39,789
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
           
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            * Includes non-cash stock-based 
            compensation expense as follows:
          
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Research and development
        
        
        
        
          $
        
        
          345
        
        
        
        
        
        
          $
        
        
          541
        
        
        
        
        
        
          $
        
        
          1,799
        
        
        
        
        
        
          $
        
        
          2,043
        
        
        
      
      
        
          
            Selling, general, and administrative
          
        
        
        
        
           
        
        
          897
        
        
           
        
        
        
        
           
        
        
          866
        
        
           
        
        
        
        
           
        
        
          4,070
        
        
           
        
        
        
        
           
        
        
          3,680
        
        
           
        
      
      
        
          Total
        
        
        
        
          $
        
        
          1,242
        
        
           
        
        
        
        
          $
        
        
          1,407
        
        
           
        
        
        
        
          $
        
        
          5,869
        
        
           
        
        
        
        
          $
        
        
          5,723
        
        
           
        
      
    
    
    
    
      
        
          
            TERCICA, INC.
          
        
      
      
        
        
        
           
        
        
        
        
           
        
        
           
        
        
           
        
        
        
      
      
        
        
        
        
        
          December 31,
        
        
        
        
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
          2007
        
        
        
        
        
        
        
        
          2006
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Balance Sheet Data
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            Cash, cash equivalents, and short-term investments
          
        
        
        
        
          $
        
        
          113,485
        
        
        
        
        
        
        
        
          $
        
        
          125,575
        
      
      
        
          Total assets
        
        
        
        
        
        
          176,683
        
        
        
        
        
        
        
        
        
        
          137,687
        
      
      
        
          Total liabilities
        
        
        
        
        
        
          113,524
        
        
        
        
        
        
        
        
        
        
          47,756
        
      
      
        
          Total stockholders’ equity
        
        
        
        
        
        
          63,159
        
        
        
        
        
        
        
        
        
        
          89,931