CFA IPO Spotlight: Tercica Inc Prospectus Information
DOW JONES NEWSWIRES
DJ CFA SOURCE:SEC S-1
OFFERING: COMMON
AMOUNT: Up to $86.25 million
SEC RECEIVE: 09/12/2003
SHELF FILING: N
POST EFFECTIVE: N
SELLING HOLDER: N
WASHINGTON -- Tercica Inc. filed an initial public offering
Friday with the Securities and Exchange Commission to sell up to $86.25
million in common stock. This is a summary of its prospectus, as
provided to the SEC:
THE COMPANY
Tercica, based in San Francisco, is a biopharmaceutical company
focused on developing and commercializing recombinant human insulin-like
growth factor-1, or rhIGF-1, for treating short stature, diabetes and other
endocrine system disorders.
Tercica licensed Genentech Inc.'s (DNA) rights to develop,
manufacture and commercialize rhIGF-1 for a broad range of indications,
including for short stature worldwide and for diabetes in the U.S.
Tercica has Phase III clinical trial data for rhIGF-1 for its first
short stature indication, severe pediatric IGFD. The company said it intends
to submit a new drug application to the U.S. Food and Drug Administration by
early 2005 after completing the transfer and validation of its rhIGF-1
manufacturing process to its contract manufacturer.
OFFERING INFORMATION
Tercica plans to sell up to $86.25 million in common stock. Details
about the price per share and number of shares offered weren't included in
the filing.
The company said net proceeds from the offering will be used for
late-stage clinical trials of rhIGF-1, for launch and post-launch sales and
marketing activities for rhIGF-1, for manufacturing transfer and validation
of rhIGF-1, and for general purposes, including the possible
acquisition of new products or product candidates.
Morgan Stanley, Lehman Brothers and Pacific Growth Equities LLC were
listed as underwriters for the offering.
The company plans to list its common stock on the Nasdaq National
Market under the symbol TRCA.
The $86.25 million valuation was estimated solely for calculating the
registration fee, the filing said. Often, the eventual price terms of an IPO
differ substantially from the initial valuation.
EARNINGS
Six Months Ended June 30,
2003 2002
= ---------- ----------
Research and development $6,153,000 $453,000
Net income ($7,742,000) ($6,243,000)
Figures in parentheses are losses.
BUSINESS STRATEGY
Tercica's goal is to capitalize on the opportunities presented by
rhIGF-1 and to develop and commercialize additional new products for the
treatment of endocrine disorders.
To achieve this, Tercica plans to seek FDA approval of rhIGF-1 for
severe pediatric IGFD, or IGF-1 deficient; expand its severe pediatric IGFD
indication to all children with IGFD; develop rhIGF-1 for additional
indications; establish a U.S. sales and marketing organization; and broaden
its portfolio of endocrine-related products.
RISK FACTORS
Tercica said risk factors include being a development-stage company
with a limited operating history; uncertain future profitability; the loss of
licenses from Genentech; failure to get regulatory approvals; delays in
transferring or validating the Genentech rhIGF-1 manufacturing process at its
contract manufacturers; and failure to get FDA approval of the contract
manufacturers' facilities, or those facilities becoming unavailable.
Tercica said other factors include competition to develop and gain
FDA approval of rhIGF-1; discoveries or developments of new technologies
possibly making rhIGF-1 obsolete; rapid and significant technological change;
inability to commercialize rhIGF-1; failure to protect intellectual property
rights; rhIGF-1 failing to achieve market acceptance; and inability to
establish a direct sales force in the U.S.
Other factors include possible reliance on others to market and
commercialize rhIGF-1 in international markets; failure to identify and
in-license other products or product candidates; failure to get capital
needed for operations; inability to manage expected growth; third-party
clinical research organizations not performing in an acceptable and timely
manner; product liability lawsuits; and ability to attract and keep
additional qualified personnel.
MANAGEMENT
Name Age Position
=- ----- --- --------
John A. Scarlett, M.D. 52 President, chief executive and
director
Alexander Barkas, Ph.D. 56 Chairman
Scarlett has served as president and CEO and as a member of the board since
February 2002.
Barkas has served as chairman since August and as a member of the board since
May 2002.
SHAREHOLDERS
Shareholder Shares Before Offer (%) After Offer
=----------- ----------------------- -----------
MPM Capital L.P. 26,770,000 (36.8%) N/A
Prospect Management Co. II 13,050,000 (17.9%) N/A
Rho Ventures 8,000,000 (11.0%) N/A
Genentech Inc. 4,070,667 (5.6%) N/A
Care Capital LLC 4,000,000 (5.5%) N/A
MedImmune Ventures Inc. 4,000,000 (5.5%) N/A
FINANCIAL CONDITION AND LIQUIDITY
Tercica has incurred net losses since inception, and as of June 30
had an accumulated deficit of about $16.7 million.
Through Aug. 31, the company had funded its operations and growth
from inception with about $66.8 million in private equity financings, the
filing said.
Cash and cash equivalents decreased to $10.4 million at June 30 from
$15.9 million at Dec. 31, 2002.
-By Brian Coyle; Dow Jones Newswires; 202-862-3545 |
