Tercica Reports Second Quarter 2008 Financial Results

  
    
  
  
    
      Tercica, Inc. (Nasdaq: TRCA) today announced financial results for the 
      quarter ended June 30, 2008. Net product sales totaled $6.2 million, 
      compared to $2.0 million in the second quarter of 2007. Net product 
      sales for Increlex® 
      and Somatuline® Depot 
      in the second quarter of 2008 were $4.6 million and $1.6 million, 
      respectively.
    
    
      Net loss for the second quarter of 2008 was $11.4 million, or $0.22 per 
      share, compared to a net loss of $12.8 million, or $0.26 per share, for 
      the second quarter of 2007.
    
    
      Cash, cash equivalents and short-term investments as of June 30, 2008 
      were $71.4 million, compared to $94.9 million as of March 31, 2008.
    
    
      Company Updates
    
    
      Agreement and Plan of Merger with Ipsen.
    
    
      
        On June 4, 2008, Tercica announced that Tercica and an affiliate of 
        Ipsen, S.A. entered into an agreement and plan of merger by which an 
        affiliate of Ipsen would acquire all of the shares of Tercica common 
        stock that Ipsen does not currently own at a price of $9.00 per share 
        in cash.
      
      
        On July 24, 2008, Tercica announced the expiration of the waiting 
        period under the Hart-Scott-Rodino Antitrust Improvements Act and 
        clearance by the German antitrust regulatory authority in connection 
        with the agreement and plan of merger. Assuming satisfaction of the 
        closing conditions in the agreement and plan of merger, including 
        stockholder approval, Tercica estimates that the completion of the 
        merger transaction should take effect late in the third quarter or 
        early in the fourth quarter of 2008.
      
      
        On July 24, 2008, Tercica also announced that Ipsen exercised in full 
        the warrant issued by Tercica in October 2006, converted in full three 
        convertible notes issued by Tercica in October 2006 and September 
        2007, and purchased 410,831 additional shares of the common stock of 
        Tercica upon exercise of its pro rata rights to purchase shares in 
        connection with other equity issuances by Tercica. Total cash proceeds 
        from the warrant exercise and purchase of additional shares by Ipsen 
        were $40.3 million.
      
    
    
      Somatuline® 
      Depot
    
    
      
        In a meeting on July 15, 2008 with the Food and Drug Administration 
        (FDA), Tercica discussed the development program for Somatuline® 
        Depot in the treatment of carcinoid syndrome, caused by certain 
        neuroendocrine tumors (NET). Based on the outcome of this meeting, 
        Tercica plans to initiate a Phase III clinical trial in this 
        indication in the U.S. by the end of 2008. Based on Tercica’s 
        most recent assessment, Tercica believes that the market for 
        somatostatin analogues in this indication is significantly larger than 
        that for acromegaly.
      
    
    
      Increlex®
    
    
      
        In a meeting on July 30, 2008 with the FDA, preliminary data from MS 
        301, a Phase IIIb study evaluating the use of Increlex® 
        in patients with Primary IGFD, a less severe and more prevalent form 
        of IGFD, was discussed. These preliminary data suggest that the study 
        will meet its primary endpoint of statistically significant increase 
        in first-year height velocity compared to the observation-only group. 
        Furthermore, no new safety issues were identified in this study.
      
      
        For approval in this expanded indication, the FDA has requested 
        additional long-term clinical data. Based on the FDA’s 
        request, Tercica plans to review the regulatory strategy for Primary 
        IGFD.
      
      
        These FDA discussions and Tercica’s plan to 
        review the regulatory strategy for Primary IGFD do not have any impact 
        on the proposed merger transaction with Ipsen.
      
    
    
      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 short stature and other 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: (A) Tercica estimates that 
      completion of the transaction contemplated by the agreement and plan of 
      merger with an affiliate of Ipsen should take effect late in the third 
      quarter or early in the fourth quarter of 2008; (B) the MS 301 study 
      will meet its primary endpoint of statistically significant increase in 
      first-year height velocity compared to the observation-only group; (C) 
      Tercica expects to initiate a Phase III clinical trial of Somatuline® 
      Depot for the treatment of carcinoid syndrome caused by certain 
      neuroendocrine tumors by the end of 2008; and (D) Tercica believes that 
      the market for somatostatin analogues in the treatment of carcinoid 
      syndrome caused by certain neuroendocrine tumors is significantly larger 
      than that for acromegaly. 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) 
      above, the transactions contemplated by the agreement and plan of merger 
      with an affiliate of Ipsen may not be consummated as the transaction is 
      subject to certain closing conditions, the closing of the transaction 
      may be delayed and the expected benefits of the transaction may not be 
      realized; (ii) regarding (B) above, the risks and uncertainty of any 
      clinical trial, including unexpected final results that may not be 
      consistent with the preliminary results of the trial; (iii) regarding 
      (C) above, Tercica may have protocol or other technical and 
      non-technical issues preventing or delaying the commencement of the 
      trial; (iv) regarding (D) above, Tercica’s 
      assessment of the market for somatostatin analogues in the treatment of 
      carcinoid syndrome caused by certain neuroendocrine tumors may be 
      incorrect and may be significantly less than Tercica expects; and (v) 
      the risks and uncertainties disclosed from time to time in reports filed 
      by Tercica with the Securities and Exchange Commission (SEC), including 
      most recently Tercica's Form 10-Q for the quarter ending March 31, 2008 
      filed with the SEC on May 12, 2008. Tercica disclaims any obligation or 
      undertaking to update or revise any forward-looking statements contained 
      in this press release.
    
    
      Additional Information about the Proposed Merger Transaction and 
      Where You Can Find It
    
    
      Tercica has filed a preliminary proxy statement with the SEC relating to 
      a solicitation of proxies from its stockholders in connection with a 
      special meeting of stockholders of Tercica to be held for the purpose of 
      voting on the adoption of the agreement and plan of merger with an 
      affiliate of Ipsen relating to the proposed merger transaction. Tercica 
      and Beaufour Ipsen Pharma also filed a transaction statement on Schedule 
      13E-3 with the SEC relating to the transactions contemplated by the 
      agreement and plan of merger. BEFORE MAKING ANY VOTING DECISION WITH 
      RESPECT TO THE PROPOSED TRANSACTION, SECURITY HOLDERS ARE URGED TO READ 
      THE DEFINITIVE PROXY STATEMENT, TRANSACTION STATEMENT ON SCHEDULE 13E-3 
      AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY 
      WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The 
      preliminary and definitive proxy statement, transaction statement on 
      Schedule 13E-3 and other relevant materials, and any other documents 
      filed by Tercica with the SEC, may be obtained free of charge at the 
      SEC's website at www.sec.gov. In 
      addition, stockholders of Tercica may obtain free copies of the 
      documents filed with the SEC by contacting Tercica's Investor Relations 
      department at [phone] or Investor Relations, Tercica, Inc., 2000 
      Sierra Point Parkway, Suite 400, Brisbane, California 94005. You may 
      also read and copy any reports, statements and other information filed 
      by Tercica with the SEC at the SEC public reference room at 100 F 
      Street, NE, Room 1580, Washington, D.C. 20549. Please call the SEC at 
      1-800-SEC-0330 or visit the SEC's website for further information on its 
      public reference room.
    
    
      Tercica and its executive officers and directors may be deemed to be 
      participants in the solicitation of proxies from the stockholders of 
      Tercica in favor of the transactions contemplated by the agreement and 
      plan of merger. A list of the names of Tercica's executive officers and 
      directors, a description of their respective interests in Tercica, and 
      any additional benefits they will receive in connection with the 
      proposed merger transaction are set forth in the preliminary proxy 
      statement filed in connection with the special meeting of stockholders 
      of Tercica to be held for the purpose of voting on the adoption of the 
      agreement and plan of merger, and in any documents subsequently filed by 
      its directors and executive officers under the Securities and Exchange 
      Act of 1934, as amended.
    
    
      If and to the extent that executive officers or directors of Tercica 
      will receive any additional benefits in connection with the transactions 
      contemplated by the agreement and plan of merger that are unknown as of 
      the date of this filing, the details of such benefits will be described 
      in the definitive proxy statement, and security holders may obtain 
      additional information regarding the interests of Tercica's executive 
      officers and directors in the proposed merger transaction by reading the 
      preliminary proxy statement.
    
    
    
    
      
        
          
            TERCICA, INC.
          
          
            (In thousands, except per share data)
          
          
            (Unaudited)
          
        
      
      
        
           
        
      
      
        
          Statements of Operations
        
        
           
        
        
          
            Three Months EndedJune 30,
          
        
        
           
        
        
          
            Six Months Ended June 30,
          
        
      
      
        
        
        
        
        
          2008
        
        
           
        
        
          2007
        
        
        
        
          2008
        
        
           
        
        
          2007
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net revenues
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Net product sales
        
        
        
        
          $
        
        
          6,214
        
        
        
        
        
        
          $
        
        
          2,048
        
        
        
        
        
        
          $
        
        
          10,562
        
        
        
        
        
        
          $
        
        
          3,139
        
        
        
      
      
        
          License revenue
        
        
        
        
        
        
          194
        
        
        
        
        
        
        
        
          194
        
        
        
        
        
        
        
        
          388
        
        
        
        
        
        
        
        
          388
        
        
        
      
      
        
          Royalty revenue
        
        
        
        
        
        
          104
        
        
        
        
        
        
        
        
          —
        
        
        
        
        
        
        
        
          169
        
        
        
        
        
        
        
        
          —
        
        
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
      
      
        
          Total net revenues
        
        
        
        
           
        
        
          6,512
        
        
           
        
        
        
        
           
        
        
          2,242
        
        
           
        
        
        
        
           
        
        
          11,119
        
        
           
        
        
        
        
           
        
        
          3,527
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Costs and expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            Cost of sales(a)
          
        
        
        
        
        
        
          3,565
        
        
        
        
        
        
        
        
          1,131
        
        
        
        
        
        
        
        
          6,706
        
        
        
        
        
        
        
        
          1,632
        
        
        
      
      
        
          
            Manufacturing start-up costs(a)
          
        
        
        
        
        
        
          1,749
        
        
        
        
        
        
        
        
          742
        
        
        
        
        
        
        
        
          3,293
        
        
        
        
        
        
        
        
          840
        
        
        
      
      
        
          
            Research and development(a)
          
        
        
        
        
        
        
          5,403
        
        
        
        
        
        
        
        
          4,101
        
        
        
        
        
        
        
        
          11,512
        
        
        
        
        
        
        
        
          9,013
        
        
        
      
      
        
          
            Selling, general and administrative(a)
          
        
        
        
        
        
        
          15,514
        
        
        
        
        
        
        
        
          10,282
        
        
        
        
        
        
        
        
          27,889
        
        
        
        
        
        
        
        
          19,833
        
        
        
      
      
        
          Amortization of intangibles
        
        
        
        
           
        
        
          703
        
        
           
        
        
        
        
           
        
        
          —
        
        
           
        
        
        
        
           
        
        
          1,405
        
        
           
        
        
        
        
           
        
        
          —
        
        
           
        
      
      
        
          Total costs and expenses
        
        
        
        
        
        
          26,934
        
        
        
        
        
        
        
        
          16,256
        
        
        
        
        
        
        
        
          50,805
        
        
        
        
        
        
        
        
          31,318
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating loss
        
        
        
        
        
        
          (20,422
        
        
          )
        
        
        
        
        
        
          (14,014
        
        
          )
        
        
        
        
        
        
          (39,686
        
        
          )
        
        
        
        
        
        
          (27,791
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest expense
        
        
        
        
        
        
          1,331
        
        
        
        
        
        
        
        
          190
        
        
        
        
        
        
        
        
          2,596
        
        
        
        
        
        
        
        
          378
        
        
        
      
      
        
          Other income (expense)
        
        
        
        
        
        
          9,743
        
        
        
        
        
        
        
        
          —
        
        
        
        
        
        
        
        
          11,700
        
        
        
        
        
        
        
        
          —
        
        
        
      
      
        
          Interest and other income, net
        
        
        
        
        
        
          609
        
        
        
        
        
        
        
        
          1,397
        
        
        
        
        
        
        
        
          1,716
        
        
        
        
        
        
        
        
          2,968
        
        
        
      
      
        
          Provision for income taxes
        
        
        
        
           
        
        
          5
        
        
           
        
        
        
        
           
        
        
          —
        
        
           
        
        
        
        
           
        
        
          10
        
        
           
        
        
        
        
           
        
        
          —
        
        
           
        
      
      
        
          Net loss
        
        
        
        
          $
        
        
          (11,406
        
        
          )
        
        
        
        
          $
        
        
          (12,807
        
        
          )
        
        
        
        
          $
        
        
          (28,876
        
        
          )
        
        
        
        
          $
        
        
          (25,201
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic and diluted net loss per share
        
        
        
        
          $
        
        
          (0.22
        
        
          )
        
        
        
        
          $
        
        
          (0.26
        
        
          )
        
        
        
        
          $
        
        
          (0.56
        
        
          )
        
        
        
        
          $
        
        
          (0.50
        
        
          )
        
      
      
        
          Shares used to compute basic and diluted net loss per share
        
        
        
        
           
        
        
          51,624
        
        
           
        
        
        
        
           
        
        
          50,178
        
        
           
        
        
        
        
           
        
        
          51,597
        
        
           
        
        
        
        
           
        
        
          50,161
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
           
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            (a) Includes non-cash stock-based compensation expense as follows:
          
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cost of sales
        
        
        
        
          $
        
        
          32
        
        
        
        
        
        
          $
        
        
          —
        
        
        
        
        
        
          $
        
        
          66
        
        
        
        
        
        
          $
        
        
          —
        
        
        
      
      
        
          Manufacturing start-up costs
        
        
        
        
        
        
          38
        
        
        
        
        
        
        
        
          —
        
        
        
        
        
        
        
        
          66
        
        
        
        
        
        
        
        
          —
        
        
        
      
      
        
          Research and development
        
        
        
        
        
        
          388
        
        
        
        
        
        
        
        
          525
        
        
        
        
        
        
        
        
          745
        
        
        
        
        
        
        
        
          1,049
        
        
        
      
      
        
          Selling, general and administrative
        
        
        
        
           
        
        
          1,119
        
        
           
        
        
        
        
           
        
        
          1,110
        
        
           
        
        
        
        
           
        
        
          2,168
        
        
           
        
        
        
        
           
        
        
          2,087
        
        
           
        
      
      
        
          Total
        
        
        
        
          $
        
        
          1,577
        
        
           
        
        
        
        
          $
        
        
          1,635
        
        
           
        
        
        
        
          $
        
        
          3,045
        
        
           
        
        
        
        
          $
        
        
          3,136
        
        
           
        
      
    
    
      
        
        
        
           
        
        
          June 30,
        
        
           
        
        
          December 31,
        
      
      
        
        
        
        
        
          2008
        
        
        
        
          2007
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Balance Sheet Data
        
        
        
        
        
        
        
        
        
      
      
        
          Cash, cash equivalents and short-term investments
        
        
        
        
          $
        
        
          71,416
        
        
        
        
          $
        
        
          113,485
        
      
      
        
          Restricted short-term investments
        
        
        
        
        
        
          540
        
        
        
        
        
        
          440
        
      
      
        
          Total assets
        
        
        
        
        
        
          146,872
        
        
        
        
        
        
          176,683
        
      
      
        
          
            Total liabilities
          
        
        
        
        
        
        
          108,781
        
        
        
        
        
        
          113,524
        
      
      
        
          Total stockholders’ equity
        
        
        
        
        
        
          38,091
        
        
        
        
        
        
          63,159