Tercica soars on Genentech deal

NEW YORK (CNNMoney.com) -- Tercica stock rallied Wednesday after the California-based biotech announced a deal on a growth drug with Genentech late on Tuesday.

Shares of Tercica (up $0.67 to $6.09, Charts), based in Brisbane, Calif., jumped about 13 percent in active Nasdaq trading about 90 minutes into the session.

The company said after the market closed Tuesday that it inked a deal with Genentech (Charts) to develop a combo drug for kids with a form of growth failure. Genentech, a $78 billion market cap company based in South San Francisco, agreed to pay up to $53 million to Tercica, which has a market cap of $300 million.

Tercica is developing a combo of its drug Increlex with Genentech's growth hormone Nutropin, to form a once-daily injectable treatment for children who don't grow normally. Tercica won't begin phase 2 testing until 2008, meaning the combo is still years away from potential market approval.

Genentech is the world's second-biggest biotech in terms of annual sales, behind Amgen (Charts, Fortune 500).