Tercica Inc. pushed its initial public offering through, though investors welcomed the company with a lesser per-share price than originally hoped.

The South San Francisco-based business generated $49.5 million through its IPO, pricing 5.5 million shares at $9 apiece. The transaction had been postponed in November due to market conditions. The shares sold a bit lower than the $11 to $13 range set by Tercica last month, and considerably lower than the $14 to $16 range it proposed soon after registering for the offering late last summer. (See BioWorld Today, Sept. 15, 2003.)

Its stock (NASDAQ:TRCA) on Wednesday traded flat, closing at $9.

Tercica, which is developing therapies for endocrine disorders such as diabetes and human growth diseases, said funds from the IPO, coupled with existing cash reserves, would be sufficient to meet capital requirements through at least the end of next year. As of Dec. 31, the company reported $37.3 million in existing cash, cash equivalents and short-term investments.

Representatives at Tercica could not comment on the pricing as per SEC-imposed regulations.

But in its prospectus, it reported plans to spend the majority of its prior and newfound funds on its lead product, rhIGF-1 (recombinant human insulin-like growth factor-1). Tercica gained access to the product through a licensing arrangement with Genentech Inc., also of South San Francisco. It acquired rights to develop, manufacture and commercialize rhIGF-1 for a range of indications, including worldwide rights for short stature and U.S. rights in diabetes.

A deficiency of the naturally occurring IGF-1 hormone can result in short stature, which is characterized by children being shorter than about 97.5 percent of normal children. It can lead to other metabolic disorders in children and adults, such as lipid abnormalities, decreased bone density, obesity and insulin resistance.

The company also said it would allot funds for activities related to the launch and post-launch sales and marketing of rhIGF-1 for severe pediatric insulin growth factor-1 deficiency (IGFD). A Phase III study in that indication is complete, and Tercica said it plans to file a new drug application with the FDA early next year after validating a production process with a contract manufacturer.

Pursuing a label-expansion strategy, it also plans to spend on late-stage clinical trials of rhIGF-1 for additional indications. A Phase III study in pediatric IGFD is scheduled to begin late this year, as is a Phase II trial for Type I diabetes. Phase II studies planned for next year include evaluations of rhIGF-1 in adult IGFD and in Type II diabetics characterized by severe insulin resistance.

Other funds are earmarked for general corporate purposes, including the possible acquisition of new products as Tercica intends to build a franchise of endocrinology products.

The company granted the underwriting team a 30-day, 825,000-share overallotment option. New York-based Lehman Bros. Inc. was the offering's sole book-running manager. SG Cowen Securities Corp., also of New York, served as joint lead manager, with co-management from Harris Nesbitt Gerard, of New York, and Robert Baird & Co., of Chicago.

Prior to pricing its IPO, Tercica had raised $65.5 million in two rounds of venture capital financing since beginning operations in May 2002. It is the eighth U.S. biotech company to go public this year; nine became public companies last year.