1262175--3/16/2006--TERCICA

related topics

{product, candidate, development}

{product, liability, claim}

{stock, price, share}

{stock, price, operating}

{property, intellectual, protect}

{acquisition, growth, future}

{provision, law, control}

{control, financial, internal}

{customer, product, revenue}

{personnel, key, retain}

{financial, litigation, operation}

{competitive, industry, competition}

Risks Related to Our Business We are a development stage company with a limited operating history and may not be able to successfully market and sell any products, generate significant revenues or attain profitability. If there are fewer children with severe Primary IGFD or Primary IGFD than we estimate, we may not generate sufficient revenues to continue development of other products or to continue operations, or we may not be able to complete our clinical trials. Increlex may fail to achieve market acceptance, which could harm our business. Reimbursement may not be available for Increlex, which could diminish our sales and impact our ability to achieve profitability. We face significant competition from large pharmaceutical, biotechnology and other companies that could harm our business. If we do not receive additional regulatory marketing approvals of Increlex, our business will be harmed. If our contract manufacturers facilities and operations do not maintain satisfactory cGMP compliance, we may be unable to market and sell Increlex. Our inability to enter into a commercial agreement on commercially reasonable terms with a single-source manufacturer to fill-finish our approved product could adversely affect our commercial supply and ability to grow revenues. We rely solely on single-source third parties in the manufacture, testing, storage and distribution of our products. We rely in certain cases on single-source and sole-source materials suppliers to manufacture Increlex. Difficulties or delays in product manufacturing due to advance scheduling requirements and/or capacity constraints at our third-party manufacturers could harm our operating results and financial performance. Claims and concerns may arise regarding the safety and efficacy of Increlex, which could require us to perform additional clinical trials, could slow introduction into the marketplace, or cause reduced sales or product withdrawal after introduction. If other companies overcome our U.S. orphan drug marketing exclusivity or obtain marketing exclusivity in Europe, they will be able to compete with us, and our revenues will be diminished. We will not be able to sell our products if we are not able to maintain our regulatory approval due to changes to existing regulatory requirements. Competitors could develop and gain FDA approval of products containing rhIGF-1, which could adversely affect our competitive position. Competitors could challenge our patents and file an Abbreviated New Drug Application (ANDA) or a 505(b)(2) new drug application for an IGF-1 product and adversely affect the competitive position of Increlex. If we fail to protect our intellectual property rights, competitors may develop competing products, and our business will suffer. We may incur substantial costs as a result of patent infringement litigation or other proceedings relating to patent and other intellectual property rights, and we may be unable to protect our intellectual property rights. If we lose our licenses from Genentech, we may be unable to continue our business. We are subject to Genentech s option rights with respect to the commercialization of Increlex for all diabetes and non-orphan indications in the United States. We do not know whether our planned clinical trials will begin on time, or at all, or will be completed on schedule, or at all. Clinical development is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. If third-party clinical research organizations do not perform in an acceptable and timely manner, our clinical trials could be delayed or unsuccessful. We may need others to market and sell Increlex in Europe. If we fail to identify and in-license other patent rights, products or product candidates, we may be unable to grow our revenues. The committed equity financing facility that we entered into with Kingsbridge Capital Limited may not be available to us if we elect to make a draw down, and may require us to pay certain liquidated damages. If we fail to obtain the capital necessary to fund our operations, we will be unable to execute our business plan. If we are unable to manage our expected growth, we may not be able to implement our business plan. If product liability lawsuits are brought against us, we may incur substantial liabilities. Budgetary or cash constraints may force us to delay our efforts to develop certain research and development programs in favor of developing others, which may prevent us from meeting our stated timetables and completing these projects through to product commercialization. We must implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to satisfy new reporting requirements. If we are unable to attract and retain additional qualified personnel, our ability to market and sell Increlex and develop other product candidates will be harmed. Risks Related to Our Common Stock If our results do not meet analysts forecasts and expectations, our stock price could decline. If our officers, directors and largest stockholders choose to act together, they are able to control our management and operations, acting in their best interests and not necessarily those of other stockholders. Anti-takeover provisions in our charter documents and under Delaware law may make an acquisition of us, which may be beneficial to our stockholders, more difficult. The committed equity financing facility that we entered into with Kingsbridge may result in dilution to our stockholders. Our stock price may be volatile, and an investment in our stock could decline in value. We are at risk of securities class action litigation. Substantial sales of shares may impact the market price of our common stock.

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1262175--3/16/2006--TERCICA_INC