Tercica (TRCA) is a small biotech which had an operating loss of $86 million last year on revenue of a little over $1 million. The year’s numbers have not been much better.

The company’s shares are up almost 25% after hours to $6.60 which would give the company a market cap over $270 million.

Why? Tercica signed a deal with Genentech (DNA) for the larger company to pay "up to" $53 million "to combine its Increlex with Genentech’s Nutropin, a growth hormone, to form a once-daily injectable treatment for children who don’t grow normally," according to CNN Money.

Phase 2 testing will not begin until next year, so the drug may or may not be approved by 2010.

A lot can happen in three years.

Douglas A. McIntyre