One of the strongest corners of the tech stock universe in recent weeks has been biotech--a trend that continued Tuesday.
Leading biotech shares soared, lifting the Amex index of 17 major industry stocks 5.1% to its highest level since December.
Brokerage J.P. Morgan helped stoke the sector by upgrading Human Genome Sciences (ticker symbol: HGSI) and Celgene (CELG) to "buy" from "long-term buy."
Human Genome Sciences said Tuesday that the U.S. Food and Drug Administration will allow the company to begin human testing of Albutropin, its experimental growth-hormone treatment.
The firm said it will test Albutropin in adults who don't produce enough growth hormone, which can cause bone-thinning and increase the risk of heart disease.
The drug is a protein created by fusing the gene for a human growth hormone to the gene for the main protein in human blood, called albumin. The technology, designed to create a longer-acting therapy, may lead to other improved versions of protein-based drugs.
"Albutropin is the pilot program for their albumin-fusion technology. You can take various molecules, fuse them and get improved delivery characteristics that potentially improve safety and efficacy," said Matthew Geller, an analyst with CIBC World Markets.
Human Genome shares surged $4.20, or 6%, to $74.17 on Nasdaq, their highest since December. The stock fell as low as $39.19 on April 4, which marked the bottom for the Nasdaq market. The stock's all-time high was $108, reached in March 2000.
On average, 12 analysts surveyed by Zacks Investment Research expect Human Genome to lose 64 cents a share this year and 82 cents a share in 2002.
Despite expectations that many cutting-edge biotech firms won't be profitable for years, interest has revived in the sector over the last two months.
J.P. Morgan told clients in a research note Tuesday that the industry continues to boast better growth prospects than many other sectors. Morgan also said that many biotech firms' partnerships with drug giants are lowering the risks of bringing new drugs through clinical trials.
Morgan's upgrade of Celgene helped boost the stock $1.57 to $34.57 on Nasdaq. The brokerage cited the firm's focus on anti-cancer drugs.
Celgene is expected to make money this year, earning 29 cents a share, according to Zacks.
Other biotech gainers Tuesday included Alkermes (ALKS), up $3.74 to $35.92; Protein Design Labs (PDLI), up $7.73 to $90.39; and Myriad Genetics (MYGN), up $6.45 to $77.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
New Biotech Boom?
The Amex biotechnology stock index, tracking 17 industry shares, surged 5.1% on Tuesday to its highest since December. The index has rocketed 63% since April 4, though it's still below its all-time high of 785.96 reached Sept. 1.
Amex biotech stock index, monthly closes and latest
Source: Bloomberg News