Sector Snap: Biotech Continues Climbing

The American Stock Exchange biotechnology index rose 9.83 points to 799.73, building on a 16-point gain Monday. Similarly, the Nasdaq Biotechnology Index, which tracks a range of small- and midcap stocks gained 11.85 points to reach 845.58 points, adding to a 10-point gain yesterday.

Wall Street has so far held a favorable outlook on the sector for 2008, citing the fact that most drug development innovation is generated by biotechnology companies, with mid- to large-cap players somewhat insulated from market volatility.

Presentations on Monday helped to reaffirm the bullish sentiment, with companies including Celgene Corp. and Biogen Idec forecasting continued revenue increases. JPMorgan analyst Geoffrey Meacham reaffirmed "Overweight" ratings on bellwethers Celgene, Gilead Sciences Inc. and Biogen, saying the companies' presentations showed new products and increasing market share will drive growth.

Meacham said Celgene CEO Sol Barer was right to address Revlimid data from December's hematology conference, which had hurt the company's shares. He said that discussion, as well as better-than-expected quarterly results and 2008 guidance lifted an overhang on the stock.

He also reaffirmed an "Overweight" rating on smaller biotech Amicus Therapeutics Inc., which released midstage study results suggesting its technology could treat two rare diseases. Shares of Cranbury, N.J.-based Amicus rose 60 cents, or 5.7 percent, to $11.19 in afternoon trading.

Meanwhile, Banc of America Securities analyst William A. Sargent said the future looks positive for Cambridge, Mass.-based Alnylam Pharmaceuticals Inc., which has been attracting lucrative partners to its RNAi technology. RNAi, or gene silencing technology, is aimed at switching off genes at the root of a condition in order to treat it.

The company already has a partnership with Roche and announced it could form four more alliances by 2010, helping to boost earnings. Sargent reaffirmed a "Buy" rating with a $38 price target.

"Due to the transformational potential of siRNA and microRNA, we believe Alnylam should be a core long-term health care holding," he said in a note to investors. Alnylam shares rose $1.65, or 5.6 percent, to $30.83.

Rodman & Renshaw analyst Michael G. King Jr. said Canada's Cardiome Corp. is poised for success in treating abnormal heart rhythms with its drug Kynapid. After speaking with several doctors at the conference, King said, he learned the drug could likely be used widely and in a diverse population of patients. The Food and Drug Administration is set to make a decision on the intravenous formulation of the drug Jan. 19.