UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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| ¨ | Preliminary Proxy Statement |
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| ¨ | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| x | Soliciting Material Pursuant to §240.14a-12 |
Tercica, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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John A. Scarlett, M.D.
Chief Executive Officer
Ajay Bansal
Chief Financial Officer
Forward-Looking Statement
Except for the historical statements contained herein, this presentation contains forward-looking statements concerning Tercica’s prospects and results, including statements that relate to: completion and terms of the proposed transaction with Ipsen; market prospects for Increlex™ and Somatuline® Autogel®; development of product candidates; launching Somatuline® Autogel® in Canada in early 2007; estimates of patients with acromegaly, severe Primary IGFD or Primary IGFD; clinical trials; and future revenues, costs, timing to profitability and other financial expectations and projections. Because Tercica’s forward-looking statements are subject to risks and uncertainties, there are important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, risks and uncertainties related to the satisfaction of closing conditions in connection with the proposed transaction; and additional risks and uncertainties that can be found: (a) in the forward-looking statements section of Tercica’s July 18, 2006 press release announcing the transaction, and (b) in Tercica’s Form 10-Q filed with the SEC on May 10, 2006. Tercica disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this presentation.
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Worldwide Strategic Endocrinology Collaboration
A Transformative Collaboration
Product
U.S./Canadian Rights to Somatuline® Autogel®, a Proven Commercial Product in Europe
Partner
A Strong European Partner for Increlex™ with Expertise in Short Stature
Pipeline
Access to a Rich Pipeline of Novel Endocrine Drugs
Funding
Sufficient Funding to Achieve Profitability
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An Innovation-Driven International Specialty Pharmaceutical Group with More than 75 Years of Operations
Ipsen At A Glance
A World-Class Group
>100 Countries; ~4,000 Employees
2005: Sales €807M ($1.01B1);EBIT €185M ($232M1); 23% Margin Market Capitalization (as of 14 July 2006): €2.7B ($3.4B1)
Product Portfolio
Diversified and Balanced Portfolio of >20 Field Proven Products Clear Strategic Focus on Specialist Care Worldwide
– 49% of 2005 Group Sales
– Oncology, Neuromuscular Disorder and Endocrinology
Differentiating R&D
Capability
Focused on (i) Hormone-dependent Diseases, (ii) Peptide and Protein Engineering and (iii) Innovative Delivery Systems 700 Staff; 2005 Budget: 20.9% of Sales
Recognized Strategic Partner
Alliances with:
- International Industry Leaders in U.S., Europe and Japan
- Best-in-Class Universities Around the World
1. Exchange rate €/$=1.2519 All Figures are IFRS, Proforma
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Tercica and Ipsen Cross-License
United States Canada
Worldwide except the United States, Japan, Canada, the Middle East and Taiwan1
1. Rights for the Middle East and Taiwan will be granted to Ipsen after a period of time
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Somatuline® Autogel®—The Fit with Tercica
Pituitary
Growth Hormone
GH Receptor
IGF-1 Secretion
Growth Hormone : IGF-1 Axis
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IGF-1 Deficiency
Pituitary
Growth Hormone
GH Receptor Abnormality
Decreased IGF-1 Secretion
Increlex™
Fraternal Twins
Severe Primary IGFD
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IGF-1 Excess
Pituitary Tumor
Increased GH Secretion
Identical Twins
Acromegaly
Excess IGF-1 Secretion
Somatuline® Autogel®
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Acromegaly
Patients
U.S. & Canada—15,000 ~50% Receive Drug Therapy
Medical Considerations
>2x Excess Mortality1 5-10 yr Less Life Expectancy2 GH/IGF-1 Normalizes Mortality3,4
Somatostatin Analogs – Mainstays of Therapy
Sandostatin® and Sandostatin® LAR® – U.S. Sales $420M in 2005
~40% ~40% ~20%
Acromegaly NET
Other
1. Orme SM et al. JCEM 83: 2730-4, 1998
2. Clayton RN et al. J Endocrinol (Suppl 1): S23-9, 1997
3. Abosch A et al. JCEM 83: 3411-8, 1998
4. Swearingen B et al. JCEM 83: 3419-26, 1998
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Somatuline® Autogel®
Injectable Sustained-Release Formulation Containing Lanreotide
– Somatostatin Analog That Inhibits Release of Growth Hormone and GI Hormones, Lowering GH & IGF-1 Levels
– Formulation Requires No Excipient Other Than Water
– Releases Active Substance Over 28-56 Days (Monthly Dosing)
Initially Developed in Europe for Treatment of Acromegaly
In Most European Countries, Also Approved for Treatment of Symptoms
Associated With Neuroendocrine Tumors (e.g. Carcinoid Syndrome)
Prefilled Syringe for Easier Administration Than Other Long-Acting Somatostatin Analogs
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Ease of Administration
Sandostatin® LAR®
Route of
Intramuscular
Administration
Volume Injected 2.0 mL
Needle Length 40 mm
Powder for
Formulation
Reconstitution
Somatuline® Autogel®
Subcutaneous
0.4 mL 20 mm
Ready to Use
Comparison of Pre-Filled subcutaneous vs. Competitor’s Intramuscular Injection Device
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Somatuline® and Somatuline® Autogel®
Marketing Authorizations in >50 Countries as of 12/31/05 2005 Sales of €81.8M ($102M1)
– Up 13.4% vs. 2004
30—50%
Market Share in Main European Markets2
1. Exchange rate €/$=1.2519
2. IMS MIDAS/ Ex-manufacturers as a percentage of sales of sustained release formulations of the specific molecules: lanreotide, octreotide and pegvisomant—in class H1C2
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Canadian Approval
Somatuline® Autogel® approved by Health Canada on July 17, 2006
– Indication: For the long-term treatment of patients with acromegaly due to pituitary tumors who have had inadequate response to or cannot be treated with surgery and/or radiotherapy and for the relief of symptoms associated with acromegaly
Launch is expected by Tercica in early 2007
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Somatuline® Autogel®
U.S. Acromegaly NDA Filing Expected Before the End of 2006 Estimated 2011 U.S. Sales ~$125M—$150M
Potential to Expand Indication
– NeuroEndocrine Tumors (NET)
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Somatuline® Autogel® Licensing Terms
Territory USA and Canada
Duration 15 Years1
$25M (€20M)
Upfront Payment
(Paid with a Convertible Note Upon Closing)
€30M ($37.6M)
Milestone on U.S. FDA Approval
(Paid with a Convertible Note Upon U.S. FDA Approval)
Sliding Scale (From 15 to 25%) Based
Royalty on Net Sales
Upon Net Sales of the Product
Supply Price 20% of Net Sales
1. The longer of the patent protection or 15 years. Period after which license is fully paid and irrevocable
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Ipsen – Excellent Partner for Increlex™ 1
Strong Endocrine Franchise:
Somatuline® Autogel® Nutropin AQ® Testim® Gel
Experienced in Short Stature
Genentech Licensee for Nutropin AQ®
Expertise in Sustained-Release Protein Formulations
Could Be Beneficial for a Long-Acting Increlex™
1. All regions of the world except the U.S., Japan, Canada, the Middle East and Taiwan; Rights for the Middle East and Taiwan will be granted to Ipsen after a period of time.
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Increlex™ Licensing Terms
Territory Worldwide ex USA, Canada and Japan¹
Duration 15 Years2
Upfront Payment €10M ($12.5M; Paid Upon Closing)
Milestone on MA Grant €15M ($18.8M; Paid Upon MAA Approval in EU)
Sliding Scale (from 15 to 25%)
Royalty on Net Sales
Based Upon Net Sales of the Product
Supply Price 20% of Net Sales
1. Except in Taiwan and certain Middle Eastern countries; in which rights will be granted to Ipsen after a period of time
2. The longer of the patent protection or 15 years. Period after which license is fully paid and irrevocable
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Access to Ipsen Endocrinology Pipeline
Framework Established for Joint Clinical Development if Right of First Negotiation Exercised
DISCOVERY
OPTIMIZATION
PRECLINICAL
DEVELOPMENT
PHASE III
Lanreotide
Combination therapy with Somavert in refractory acromegaly
Treatment of asymptomatic NET
Increlex™
Daily administration
Expanded use to primary IGFD
Dopastatin
BIM-23A760 (Pituitary Tumors)
Ghrelin agonist
BIM-28131 (Wasting Diseases)
Melanocortin Program
MC4 Agonist (Obesity/Metabolic Syn)
MC4 Antagonist (Wasting Diseases)
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Equity Stake
Ipsen Will Take 25% Equity Stake in Tercica on a Post-Investment Basis
Tercica Will Issue 12.5 Million Shares to Ipsen for Cash Proceeds of $77.3 Million
Tercica Post-Transaction Outstanding Shares Will Total 50.1 Million
Shares Will Be Priced at $6.17 per Share, a 30% Premium Over Past 15 Day Volume Weighted Average Share Price Ended July 17
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Equity Stake
Ipsen to Own 40% of Tercica’s Shares (Post Investment, On a Fully Diluted Basis)
Convert I
$25M Note Convertible at $7.41/Shr. Issued at Closing Issued against SA Rights Coupon (PIK1) of 2.5% Matures in 5 Years from Closing
Convert II
€30M Note Convertible at €5.92/Shr. Issued Upon FDA Approval of SA
Issued against SA Rights Coupon (PIK1) of 2.5% Matures in 5 Years from Closing
Convert III
$15m Note Convertible at $7.41/Shr. Issued Upon FDA Approval of SA To Be Paid in Cash by Ipsen to Tercica Coupon (PIK1) of 2.5% Matures in 5 Years from Closing
Warrant
4.95M Shares of Tercica 5 Year Term From Closing Exercisable at $7.41/Share
1If converted, the interest will be paid in shares
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Cash Infusion from Transaction
25% Equity Upon Closing $77.3M
Increlex™ Upfront Upon Closing $12.5M
$ 89.8M
Increlex™ Approval Milestone $18.8M
$108.6M
Convert III Upon SA Approval $15.0M
$ 123.6M1
Expected To Be Sufficient to Reach Breakeven
1Excluding transaction fees
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Key Corporate Governance Principles
Ipsen to Appoint Two Members to Tercica’s Nine Member Board of Directors
Protective Provisions
Right to Veto Material Strategic Transactions by Tercica Implementation of Stockholder’s Rights Plan
Investment Provisions
Cash Redemption of Convertible Notes if not Converted Lockup and Standstill for 1 Year
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A Transformative Transaction
Post Collaboration
Increlex™ U.S.
Opportunities Increlex™ U.S.
Increlex™ Partner EU
SA U.S.
SA Canada
Revenues $125—$150M $250—$300M
2011 Projected
Access to Ipsen
Pipeline Short Stature
Endocrinology Pipeline
Financing Sufficient Cash to
Balance Sheet
Required Achieve Breakeven
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Additional Information
Additional Information about the Proposed Transaction and Where You Can Find It
Tercica plans to file a proxy statement with the Securities and Exchange Commission relating to a solicitation of proxies from its stockholders in connection with a special meeting of stockholders of Tercica to be held for the purpose of voting on various matters relating the subject of this press release, including: (1) the sale of the common stock, warrant to purchase common stock and convertible notes to be issued to Ipsen, (2) amendments to Tercica’s Amended and Restated Certificate of Incorporation and Bylaws, (3) the adoption of a share purchase rights plan and (4) certain other matters (the “Proposed Transaction”). BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE PROPOSED TRANSACTION, SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The proxy statement and other relevant materials, and any other documents filed by Tercica with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, stockholders of Tercica may obtain free copies of the documents filed with the SEC by contacting Tercica’s Investor Relations department at (650) 624-4949 or Investor Relations, Tercica Inc., 2000 Sierra Point Parkway, Suite 400, Brisbane, California 94005. You may also read and copy any reports, statements and other information filed by Tercica with the SEC at the SEC public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.
Tercica and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Tercica in favor of the Proposed Transaction. A list of the names of Tercica’s executive officers and directors, and a description of their respective interests in Tercica, are set forth in the proxy statement for Tercica’s 2006 Annual Meeting of Stockholders, which was filed with the SEC on April 24, 2006, and in any documents subsequently filed by its directors and executive officers under the Securities and Exchange Act of 1934, as amended.
If and to the extent that executive officers or directors of Tercica will receive any additional benefits in connection with the Proposed Transaction that are unknown as of the date of this filing, the details of such benefits will be described in the proxy statement and security holders may obtain additional information regarding the interests of Tercica’s executive officers and directors in the Proposed Transaction by reading the proxy statement when it becomes available.
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