Tercica, Genentech Team Up - TheStreet

Tercica, Genentech Team Up

The biopharmaceutical companies will partner to develop products that treat hormone deficiencies.
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Tercica (TRCA) on late Tuesday said it's partnering with Genentech (DNA) to develop two products to treat hormone deficiencies in adults.

The companies said they would combine products -- Tercica's Increlex, a recombinant insulin-like growth factor-1 (IGF-1), and Genentech's Nutropin AQ, a recombinant human growth hormone -- to treat short stature, adult growth hormone deficiency and, possibly, other metabolic disorders.

"With demonstrated synergies in pre-clinical studies, the combination of rhGH and rhIGF-1 could have the potential for several important therapeutic benefits compared to either rhGH or rhIGF-1 monotherapy alone for the treatment of patients with short stature and AGHD and potentially other adult metabolic disorders," said Tercica CEO John Scarlett.

According to the agreement, announced after the market's close, Genentech will pay Tercica up to $53 million in equity payments, opt-in payments, research and development cost reimbursement and milestone payments. The company will also pay $4 million for 708,591 shares of Tercica's common stock.

Tercica will fund and lead initial development efforts for both combination products. Pending Food and Drug Administration guidance, the company hopes to initiate phase II clinical development in 2008 on one combination product for patients with low IGF-1 levels and short stature not associated with growth hormone deficiency. It also will lead a second combination for patients with AGHD.

The companies said Genentech will have opt-in rights for the developmental programs of both combinations until a phase II clinical study is completed for each product that's sufficient to enable a pivotal trial. If Genentech does opt in, it will reimburse R&D costs, and a cost and profit share structure will take effect for the future development and commercial activities for both products. If not, Tercica will maintain full development and commercialization rights, paying Genentech royalties on worldwide sales.

Scarlett added that the company continues to believe it will be profitable by 2010, without need for additional equity financing to support its current operations.

Tercica closed down 21 cents, or 3.7%, to $5.42, while Genentech closed down 91 cents, or 1.2%, to $74.85.