As it prepares to launch in January its first product, Tercica Inc. now has access to as much as $75 million in capital through an equity financing facility with private investment group Kingsbridge Capital Ltd.

The company will be able to draw down funds over the next three years in exchange for newly issued shares of its common stock, and Tercica is responsible for determining the timing and amount of financings. Though the Brisbane, Calif.-based company said it has sufficient cash to operate through 2006, "we're just making sure that we are prepared for any additional capital needs," said Ina McGuinness, vice president of corporate communications and investor relations.

"This really gives us maximum flexibility to draw upon a variety of financing options," she told BioWorld Today. In addition to the equity facility through Kingsbridge, Tercica also has a shelf registration for $75 million put on file with the SEC last month.

"We can still look at a more conventional financing through the shelf that's placed," McGuinness said. But, in an unfavorable market, the Kingsbridge financing would be "a very attractive option for us," and would offer Tercica "the complete gamut of financing options."

Kingsbridge Capital has entered deals with several other biotech firms in the last couple of years. In August, it agreed to provide up to $75 million to Sunnyvale, Calif.-based Nuvelo Inc. in exchange for shares of its common stock over a three-year period, and Emisphere Technologies Inc., of Tarrytown, N.Y., entered a deal with Kingsbridge in December to gain access to $20 million over two years. Similar deals were structured with Warrington, Pa.-based Discovery Laboratories Inc. in July 2004 and with Brisbane, Calif.-based Cellegy Pharmaceuticals Inc. in January 2004. (See BioWorld Today, Dec. 29, 2004, and Aug. 8, 2005.)

"We've found that people are getting a little more familiar" with the committed equity financing facility, McGuinness said, "and can appreciate its appeal."

Under the terms, Tercica can draw down up to $7 million in each tranche, which would be issued and priced over an eight-day pricing period. The company does not have to use all the funds over the three-year period, and there are no minimum commitments. In connection with the agreement, Tercica issued a warrant to Kingsbridge to purchase up to 260,000 shares of stock at a 30 percent premium over the average closing price for the five days prior to the agreement.

The company's stock (NASDAQ:TRCA) closed at $9.73 Monday, down 26 cents.

Tercica has not specified how the funds will be spent. McGuinness said the use of proceeds will be spelled out when the company makes its first drawdown.

In the meantime, the company is gearing up to get its first product on the market. Its growth hormone drug, Increlex, recombinant human insulin-like growth factor-1 (rhIGF-1) was approved Aug. 31 for the long-term treatment of severe primary IGF deficiency. Tercica is putting together a 30-member sales force and "things are on schedule" for a Jan. 3 launch, McGuinness said. (See BioWorld Today, Sept. 1, 2005.)

She said the company has not heard from the FDA whether Increlex will face any competition in the primary IGF deficiency market. Last month, Richmond, Va.-based Insmed Inc. received an approvable letter for its drug, iPlex (rhIGF-1rhIGFBP-3) (mecasermin rinfibate), formerly known as SomatoKine, but it's unclear whether iPlex will be excluded from the market by Increlex's orphan drug status in short stature due to primary IGF deficiency. The FDA has not yet issued a determination.

Though iPlex also received orphan drug designation, Increlex was the first to gain marketing approval. Orphan drug status would guarantee seven years of marketing exclusivity.

Tercica expects to report its third-quarter results later this month. The company reported a net loss of $12.4 million, or 40 cents per share for the second quarter. As of June 30, it had cash, cash equivalents and short-term investments totaling $83.5 million.