Shares of Insmed ( INSM) were among the best-performing health-related stocks Tuesday, climbing 17% after the company's drug Iplex received Food and Drug Administration approval.

The drug, which is used to treat growth failure in children who are missing a certain growth hormone, was granted orphan drug status, which means the company can market the drug on an exclusive basis for seven years. "We are very pleased Iplex was approved, making Iplex the only approved once-daily IGF-1 replacement therapy available to treat children with severe short stature," the company said.

Shares of Tercica ( TRCA), which has a competing drug that's also been awarded orphan drug status, sank on Insmed's FDA approval news. Earlier this month, Tercica filed a lawsuit against Insmed, alleging that Insmed engaged in deceptive promotional statements and unfair business practices related to Tercica's competing Increlex product. Insmed said the complaint "is unwarranted and without merit." Shares of Insmed were recently trading up 26 cents to $1.75, while shares of Tercica tumbled $3.31, or 33%, to $6.59.

FoxHollow Technologies ( FOXH) tumbled 15% after the medical device company announced the resignation of its chief executive officer. Robert Thomas, 44, will retire from the company on Jan. 1. John Simpson, founder and chairman, will serve as Thomas' replacement until the company names a new CEO. Thomas, who joined FoxHollow in 1998, will serve as a consultant to the company.

FoxHollow also said that it continues to expect fourth-quarter sales of $40 million to $42 million and full-year sales of $126 million to $128 million. Analysts polled by Thomson First Call project higher fourth-quarter sales of $43.4 million and 2005 sales of $129.4 million. Shares were trading down $7.11 to $39.01.

Shares of Vertex Pharmaceuticals ( VRTX) rose 3% after the company signed a new agreement with GlaxoSmithKline ( GSK) to develop and commercialize VX-409, a subtype selective sodium channel modulator that's used for pain treatment. GlaxoSmithKline will have the exclusive right to develop and commercialize VX-409. Vertex will receive an upfront payment of $20 million and could receive up to an additional $385 million if certain milestones are reached. GlaxoSmithKline will also pay Vertex royalties that are tied to annual sales. Vertex shares were trading up 75 cents to $27.

Magellan Health Services ( MGLN) rose 8% after the health care management organization said it will buy privately held National Imaging Associates for $122 million in cash. The deal is expected to close during the first quarter of 2006. Assuming the deal closes at the end of February, Magellan expects National Imaging to generate about $13 million in segment profit and $58 million in sales during the final 10 months of the year. The acquisition is expected to add about 2 cents a share to Magellan's 2006 earnings. Excluding the acquisition, Magellan expects to post 2006 earnings of $55 million to $71 million, or $1.42 to $1.84 a share, on sales of $1.61 billion to $1.65 billion. Analysts project earnings of $1.69 a share and sales of $1.53 billion. Shares were trading up $2.37 to $31.45.

Shares of CuraGen ( CRGN) were hammered after the company's oral mucositis treatment failed to achieve a statistically significant benefit in a Phase II trial. The company said its velafermin drug, which is used for the prevention of mouth sores in cancer patients, didn't show a statistically significant benefit, but did show a reduction in oral mucositis in one of the three velafirmin dose arms when compared to a placebo. The company also said the drug appeared to be safe and well tolerated. CuraGen plans to release further details of the trial at a presentation in February. Shares were trading down 96 cents, or 23%, to $3.10.

Other health care volume movers included Pfizer ( PFE), up 98 cents to $21.92; Elan ( ELN), down 33 cents to $12.33; Novavax ( NVAX), up 57 cents to $4.64; Merck ( MRK), up 44 cents to $28.85; Johnson & Johnson ( JNJ), up 16 cents to $60.31; Abbott Labs ( ABT), up 21 cents to $39.38; Bristol-Myers Squibb ( BMY), up 17 cents to $21.50; UnitedHealth Group ( UNH), up 36 cents to $63.56; and Schering-Plough ( SGP), up 22 cents to $19.62.

Get Jim Cramer's picks for 2006.