Tercica stock surges on FDA approval

NEW YORK (CNNMoney.com) -- Tercica's stock climbed more than 4 percent on Friday after the biotech said it received FDA approval for a growth disorder drug.

Tercica, Inc., (up $0.08 to $6.62, Charts) a biotech based in Brisbane, California, said Thursday that the Food and Drug Administration approved Somatuline Autogel, an injectable treatment for acromegaly, a growth disorder that causes enlarged body tissue in the face, jaw, hands, feet and skull.

Tercica's stock surged 20 percent in pre-market trading, then came off its highs. The stock had already surged 30 percent year-to-date, prior to the FDA decision, because investors had anticipated approval of the new drug. Nonetheless, the agency's actions have grown less predictable over time. This has made investors grow "skittish," said Eric Schmidt, an analyst at Cowen and Co., on Thursday, who expected the stock to jump on FDA approval.

Acromegaly is a rare disorder, affecting about a half-dozen people in 100,000, according to the National Institutes for Health. Because the patient pool is relatively small, annual sales for Somatuline Autogel are expected to peak at about $100 million by 2011, analysts said.

While this pales in comparison to the sought-after $1 billion-a-year blockbusters, it's a big deal for Tercica. The biotech's net sales, excluding licensing, barely exceeded $3 million during the first six months of 2007, and the company lost $25 million in that time.

Tercica's newly approved drug will compete with the product Sandostatin LAR from the Swiss drug giant Novartis (up $0.42 to $52.65, Charts).

Tercica has another product on the market: Increlex, a drug for children with stunted growth. Tercica has partnered with the French drugmaker Ipsen (down $0.19 to $25.90, Charts) to market its products overseas.