NEW YORK ( TheStreet) -- Shares of Medicis Pharmaceuticals ( MRX) were leading the small-cap action Monday after the company reached a settlement with Teva Pharmaceuticals ( TEVA) to enable the latter to produce and sell generic versions of its flagship drug Solodyn from 2018. The agreement effectively protects Medicis' franchise from the onslaught of cheaper drugs for a longer period than previously expected.

Analysts at JPMorgan and Piper Jaffray upgraded the stock to overweight following the news. Shares surged 22% to $31.54 in afternoon trades. Monday's volume of 5.6 million was roughly seven times the issue's trailing three-month daily average.

PDL Biopharma ( PDLI) also saw its shares pop after the company settled its legal dispute with Novartis ( NVS), dismissing its claims against Novartis in a Nevada state court after Novartis agreed to withdraw its opposition appeal in the European Patent Office challenging the validity of PDL's Queen patent in Europe.

PDL also agreed to pay Novartis certain amounts based on net sales of Lucentis made by Novartis during calendar year 2011 and beyond. PDL is also taking action against Genentech and Roche ( RHBBY), and the company said the settlement with Novartis doesn't affect its claims against those parties.

The stock was up 17% to $5.68. PDL also said its board has adopted a regular dividend policy calling for it to make four quarterly payments of 15 cents a share each in 2011.

Shares of auto parts maker Amerigon ( ARGN) were jumping 12.4% to $12.99 after the company said it's acquired 75.6% of the voting shares of a publicly traded German automotive company WET Automotive Systems for € 40 a share. Amerigon also intends to make a tender offer for the remaining stake, bringing the total transaction value to € 121.6 million.

Small-cap oil and gas drillers were once again dominating the list of small-cap winners, even though oil prices showed signs of stabilizing.

Shares of Royale Energy ( ROYL) continues to defy gravity, climbing another 18% to $5.92. The stock has more than doubled since February.

Samson Oil & Gas ( SSN) was another major gainer, up 11% to $3.44. Parker Drilling ( PKD), Kodiak Oil & Gas ( KOG) and BPZ Resources ( BPZ) also gained smartly.

--Written by Shanthi Bharatwaj in New York

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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