Ipsen, Tercica to collaborate in endocrinology

New York, July 18 - Tercica and Ipsen announced a strategic collaboration in endocrinology.

Under the deal, Ipsen will grant to Tercica exclusive rights to sell Somatuline Autogel, a leading product in the European acromegaly market, in the United States and Canada. Tercica will grant to Ipsen exclusive rights to sell Increlex, a leading product in the United States for the treatment of short stature associated with severe Primary IGF-1 deficiency, in all regions of the world except the United States, Japan, Canada, the Middle East and Taiwan.

The companies will also grant to each other product development rights and share the costs for improvements to or new indications for Somatuline Autogel and Increlex.

In addition, the companies have agreed to rights of first negotiation for their respective endocrine pipelines.

The companies said their alliance is designed to allow them to offer "global care solutions" to patients suffering from growth and other endocrine disorders.

As part of the collaboration, Ipsen will acquire new shares of Tercica for a 25% stake and Tercica will issue convertible notes and a warrant to Ipsen giving it the opportunity to increase its shareholding to up to a 40% stake.

As part of the licensing agreement for Increlex, Ipsen will make an upfront cash payment of €10.0 million to Tercica and an additional €15.0 million on approval of the Medical Marketing Application for Increlex in the European Union for the targeted product label.

Once Increlex is launched in Ipsen's territory, Ipsen will pay royalties to Tercica on a sliding scale from 15% to 25% of net sales, in addition to a supply price of 20% of net sales of the product.

For Somatuline Autogel, Tercica will make an upfront payment of $25.0 million to Ipsen and an additional payment of €30 million on U.S. approval of Somatuline Autogel for the targeted product label.

Both of these milestones will be financed through the issuance by Tercica of convertible notes to Ipsen.

Once Somatuline Autogel is launched in Tercica's territory, Tercica will pay royalties to Ipsen on a sliding scale from 15% to 25% of net sales, in addition to a supply price of 20% of net sales of the product.

Ipsen will buy its 25% stake in Tercica at $6.17 per share, a premium of 30.0% to Tercica's volume-weighted average closing stock price over the 15 trading days ended July 17. The total cash payment will be $77.3 million.

3 convertible notes, warrant

To cover its $25 million upfront payment, Tercica will issue to Ipsen a convertible note with a principal amount of $25.0 million.

The note will mature after five years, pays a coupon of 2.5% and is convertible at $7.41 per share, a premium of 56.0% to Tercica's volume-weighted average closing stock price over the 15 trading days ended July 17.

Also at closing of the agreement, Tercica will issue a warrant to Ipsen with an exercise price of $7.41 per share, which represents a premium of 56.0% to Tercica's volume weighted average closing stock price over the 15 trading days ended July 17.

To cover the €30 million payment on approval of Somatuline Autogel in the United States, Tercica will issue a second convertible note, this one for €30 million principal amount.

The second convertible will mature after five years, pay a coupon of 2.5% and convert at $7.41 per share.

Also on approval of Somatuline Autogel in the United States, Tercica will issue a third convertible note for cash with a principal amount of $15 million. The note will mature after five years, pay a coupon of 2.5% and convert at $7.41 per share.

Ipsen will have the right appoint two members to Tercica's nine-member board.

Closing of the agreement is expected this year. Tercica stockholders holding 38.4% of its stock have entered into voting agreements to support the transaction.

Ipsen's endocrinology compounds in pre-clinical development include two products that could enter clinical development as early as 2007: dopastatin (BIM 23A760), a chimeric molecule directed towards somatostatin and dopamine receptors, is targeted at the possible treatment of pituitary adenomas, including those causing acromegaly, Cushing's disease and hyperprolactinemia as well as non-functional pituitary adenomas. BIM 28131, a ghrelin agonist, is targeted at restoring normal body composition in wasting diseases associated with chronic illness.

Tercica noted it will receive net cash of $77.3 million on closing and up to $46.3 million from licensing milestones and the issuance of the third convertible note.

The company expects to reach breakeven in 2010 and achieve 2011 revenues of $250 million to $300 million.

Tercica is a Brisbane, Calif., biopharmaceutical company. Ipsen is a pharmaceutical company based in Paris.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.