The NASDAQ Biotechnology Index rose about 3% in midday trading Friday to 3,636.45, the highest level since February.
With Biogen, Celgene (CELG) , Amgen (AMGN) , and Gilead Sciences (GILD) underperforming the overall NASDAQ Index in the past year, investors might be recognizing the hidden value of the firms' drug research and development, says Steve Chesney, an analyst for Atlantic Equities in London who covers large cap biotech firms worth more than $60 billion.
"The sector is too cheap and the value of the industry is not reflected in current share prices," Chesney said. "This is all about believing innovation and when a company like Biogen comes and reports positive clinical results for a disease like Alzehimer's the implied probability for success for the rest of the industry's pipeline moves a little bit higher."
Celgene, a biotechnology company which develops anti-inflammatory drugs for cancer and other diseases rose around 2% to $82.09 in early afternoon trading. (Click here for Real Money's Bruce Kamich's take on Celgene.)
Amgen, whose flagship drugs Neulasta and Neulogen treat blood disorders, also rose 2% to its highest level in over a month. Gilead Sciences jumped more than 3% to $75.10. (Bruce Kamich also analyzed Biogen, Amgen and Gilead Friday.)
"Today, however, both puts and calls are flying off the shelves," says Patrick Martin of Schaeffer's Investment Research. Biogen is on track for the annual high with about 6,600 calls and 6,400 puts in just the first hour of the session, about 15 times the norm, according to Schaeffer's data.
-- By Martin Cassidy