Tercica Inc. is gearing up to launch Somatuline Depot, a somatostatin analog packaged as a pre-filled syringe for treating patients with acromegaly, after the FDA approved a new drug application from partner Ispen SA.

The Paris-based pharma firm made good on the companies' 2006 cross-licensing collaboration, in which Tercica granted European rights to Ipsen for its short stature drug, Increlex, and Ipsen gave Tercica U.S. and Canadian rights to Somatuline Depot, a sustained-release formulation of lanreotide that Ipsen markets in Europe as Somatuline Autogel. The product previously was approved in Canada, and now has gained U.S. approval as an orphan drug, which guarantees it seven years of marketing exclusivity.

Acromegaly is a rare disorder caused by the pituitary gland releasing too much growth hormone into the blood stream and can result in enlarged hands, feet and head, facial changes, enlarged organs, joint pain and fatigue, reduced sex drive and concentration. The disease affects an estimated 60 people out of one million, and generally is treated with surgery to remove the tumor usually responsible for stimulating over-production of the growth hormone and somatostatin analogues to reduce tumor size. Aimed as a "patient-friendly" therapy, Somatuline is designed as a pre-filled syringe so that its administration is more convenient, in that it doesn't require reconstitution, can be given subcutaneously rather than intramuscularly and has an injection volume that's significantly less than existing products, said John Scarlett, Tercica's president and CEO.

It also allows the option of at-home administration, "which means a lot to some patients, not needing to go into the doctor's office every month," he added. Those advantages should give Somatuline "good traction in the market, and really give patients a good alternative."

Total somatostatin analog sales in the U.S. and Canada are about $400 million, Scarlett said, and about 40 percent of that market is for acromegaly. Analysts Christopher Raymond, of Chicago-based Robert W. Baird & Co. and Matthew Osborne, of New York-based Lazard Capital Markets LLC, both are predicting 2008 U.S. sales of Somatuline at $16 million.

Tercica expects to launch the product in about eight weeks, and already has "slightly increased" its endocrine drug sales force, which was established upon the approval of Increlex in late 2005, to 27 sales representatives, Scarlett said. Increlex (mecasermin, recombinant human insulin-like growth factor (IGF)-1) was approved for children with short stature due to primary IGF deficiency and posted second-quarter sales of $2 million.

Under the terms of Tercica's and Ipsen's collaboration, Tercica owes the French company a €30 million (US$41 million) milestone upon the FDA approval of Somatuline, which it will pay by issuing a bond convertible into Tercica stock at a conversion price of €5.92 each. Tercica also will issue an additional $15 million convertible bond to Ipsen, to be convertible into common stock priced at $7.41 per share, which will be paid in cash to Tercica. If Ipsen converts all debt, including the $25 million note paid by Tercica last fall in lieu of an up-front payment, and exercises all warrants, it would own about 40 percent of Tercica.

The 2006 cross-licensing deal also gives both companies the first right of refusal for other pipeline products. Though Tercica has not moved on any additional drugs yet, Scarlett said the company identified two molecules of potential interest: the first is dopastatin, a follow-on compound to somatostatin, for treating pituitary diseases, and the second is a ghrelin agonist aimed at restoring normal body composition in wasting diseases associated with chronic illness. (See BioWorld Today, July 20, 2006.)

"We're preparing to do some development planning" to decide the firm's next programs, Scarlett said.

The Somatuline approval "continues a whole string of initiatives we've worked on over the past year," he told BioWorld Today, including the European approval of Increlex, which triggered a €15 million milestone payment from Ipsen. In July, Tercica added to its early-stage pipeline by signing a deal with South San Francisco-based Genentech Inc. That deal involves the development of two next-generation growth hormone products using Increlex and Genentech's recombinant human growth hormone Nutropin AQ for treating short stature, adult growth hormone deficiency and other metabolic disorders. (See BioWorld Today, July 12, 2007.)

Tercica reported a net loss of $12.8 million, or 26 cents per share for the second quarter. As of June 30, the company had cash totaling $98 million, and, with the €15 million milestone payment from Ipsen, plans to end the year with between $100 million and $105 million in the bank.

Shares of Tercica (NASDAQ:TRCA) gained 11 cents Friday to close at $6.65.

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