Ipsen and Tercica agreed to a worldwide strategic collaboration in endocrinology. In cross licensing agreements, Ipsen will grant to Tercica exclusive rights to sell Somatuline Autogel, a leading product in the European acromegaly market, in the US and Canada.

Tercica will grant to Ipsen exclusive rights to sell Increlex, a leading product in the US, for the treatment of short stature, associated with severe Primary IGF-1 deficiency (Primary IGFD), in all regions of the world except the US, Japan, Canada, the Middle East and Taiwan.

The companies will also grant to each other product development rights, and share the costs for improvements, to new indications for Somatuline, Autogel and Increlex. In addition, the companies have agreed to rights of first negotiation for their respective endocrine pipelines.

This alliance is designed to allow Ipsen and Tercica to offer, global care solutions to patients suffering from growth and other endocrine disorders. In the context of this partnership, Ipsen will acquire newly issued shares of Tercica common stock, representing a 25 per cent stake in Tercica (post transaction, on a non-diluted basis), and Tercica will issue convertible notes and a warrant to Ipsen giving it the opportunity to increase its shareholding to up to a 40 per cent stake in Tercica (post transaction, on a fully diluted basis).

Under the terms of the agreement, Ipsen will license from Tercica the rights to develop and market Increlex worldwide except for the US, Japan, Canada, the Middle East and Taiwan. Ipsen will make an upfront cash payment of EUR 10.0 million ($12.5 million) to Tercica upon the closing of this transaction, and an additional EUR 15.0 million ($18.8 million) on approval of the Increlex medical marketing application in the European Union for the targeted product label. Once Increlex is launched in Ipsen's territory, Ipsen will pay royalties to Tercica on a sliding scale from 15 per cent to 25 per cent of net sales, in addition to a supply price of 20 per cent of net sales of the product.

At closing: Equity stake: Ipsen will acquire newly issued shares of Tercica common stock representing a 25 per cent stake (post transaction, on a non-diluted basis) in Tercica at $6.17 per share, a premium of 30.0 per cent to Tercica's volume-weighted average closing stock price over the past 15 trading.