With plans to file for FDA approval of its lead drug next year, Tercica Inc. raised $44 million to finance related activities.

Following its second round of venture capital funding, the South San Francisco firm has raised $65.5 million since last year, when it licensed recombinant human insulin-like growth factor-1 (IGF-1) from Genentech Inc. Tercica has completed Phase III studies of the product as a replacement therapy for short stature due to IGF-1 deficiency, also called growth hormone insensitivity syndrome (GHIS).

"Our principal activity is commercializing IGF-1, and I think the investment group was interested in joining the effort because of three key points," Tercica President and CEO John Scarlett told BioWorld Today. "First, the studies necessary to file with the FDA for our initial indication are complete. Second of all, we are well into completing the transfer of our manufacturing from Genentech to our contract manufacturer. Third, this would give us sufficient funding to launch the product in IGF-1 deficiency and to pursue diabetes indications."

Tim Lynch, Tercica's chief financial officer, said the funding would support product launch efforts scheduled to begin in 2005 and carry the company's operations well into 2006, at which time it should see revenues from IGF-1 sales.

While working on the new drug application process, the company said it would use some of its latest proceeds to complete its commercial manufacturing plans in conjunction with East Rutherford, N.J.-based Cambrex Corp., and hire a sales force to target the pediatric endocrinology community. GHIS patients have low serum IGF-1 levels due to cellular resistance to the effects of growth hormone, despite having adequate or elevated levels of growth hormone.

The program on which Tercica plans to file for approval began in the early 1990s under the direction of Genentech. Since that time, about 230 patient-years worth of data have been collected from the nearly 70 patients treated with IGF-1, some of whom have received the replacement therapy for more than a decade.

"These were patients with a very severe form of IGF-1 deficiency, and the group as a whole had very robust responses," Scarlett said. "IGF-1 is the principal molecule responsible for growth, and replacing it is something you really want to do and it is very predictable that it would engender growth. That's certainly what we saw."

He said Tercica also would include safety data from studies of IGF-1 in more than 1,000 diabetes patients in its submission.

A little more than a year ago, Tercica gained access to the molecule through a license agreement with South San Francisco-based Genentech. For its part, Genentech received an undisclosed ownership position in Tercica and put itself in position for downstream payments based on milestones and eventual sales.

Tercica received intellectual property related to GHIS and other indications, rights to Genentech's manufacturing process, and an option to acquire rights to the combination of IGF-1 and insulin-like growth factor binding protein-3 (BP3). The company reported its $21.5 million Series A round at the same time. (See BioWorld Today, May 24, 2002.)

Tercica also said it would apply the latest funding toward late-stage trials of IGF-1 for diabetes.

"We will initiate new studies next year to explore use of the product in patients with quite severe diabetes, those without too many other alternatives today," Scarlett said, adding that it was too early to predict the trial size and length. "We think we can help Type II diabetes patients who already are receiving maximum doses of oral anti-diabetic agents and already are on insulin. The problem is that you need a different agent that has insulin-sensitizing properties that can be added without too many safety problems."

He said that Tercica is exploring endocrinology opportunities beyond IGF-1, through expanding undisclosed internal programs to in-licensing development-stage molecules or already-marketed products. The company also plans to study uses of IGF-1 outside GHIS and diabetes.

"We're really evaluating a very broad range of opportunities," Scarlett said. "I think we'll be judicious in trying to pick both what we think will be winners and also a mix of different projects, eventually."

Its latest investors include New York-based Rho Ventures, which led the financing, as well as Care Capital LLC and MedImmune Ventures Inc., a wholly owned subsidiary of MedImmune Inc. Tercica added two investor representatives to its board in the process - Mark Leschly, a managing partner at Rho, and Wayne Hockmeyer, the chairman and founder of Gaithersburg, Md.-based MedImmune. Also named as an adviser to the company was Argeris Karabelas, a partner at Princeton, N.J.-based Care Capital.

Returning investors included MPM Capital, of Boston, and Prospect Venture Partners, of Palo Alto, Calif.