Biotech stocks surged Friday to 52-week highs, with several major players up on the day, led by Vertex Pharmaceuticals Inc., which jumped on a positive initiation of analyst coverage.
The American Stock Exchange's Biotechnology Index, which tracks 17 major biotech companies, rose 8.30 points, or 1.3 percent, to 646.76, capping a 2.5 percent rise on the week, to approach its 52-week high of 654.98.
Shares of index component Vertex rose $1.57, or 7.5 percent, to $22.45 in afternoon trading on the Nasdaq, surpassing the old year high of $20.97, at more than double their average trading volume. Its stock has climbed from a 52-week low of $8.61 in April and rallied in May as Vertex began releasing data from its early stage hepatitis C clinical trial. The company's shares have more than doubled so far this year.
Prudential Equity Group initiated coverage on Vertex, rating shares as "Overweight," with a price target of $25. Jason Zhang, a Prudential analyst, said in a research note he believes the company's hepatitis C treatment VX-950 has blockbuster potential after clinical studies showed that it lowered viral loads by 99.996 percent, compared to the standard treatment, pegylated interferon, which usually results in less than a 99.9 percent reduction in viral load and carries unpleasant side effects.
The analyst also based his rating on Vertex's pipeline, which includes rheumatoid arthritis treatment VX-702 and HIV treatment VX-385, both of which are in mid-stage clinical trials.
Other components bumping up the index included Gilead Sciences Inc. and MedImmune Inc., both of which also hit new 52-week highs as flu season approaches.
Shares of Gilead, which developed flu symptom treatment Tamiflu and now receives royalties from Roche AG, rose $1.03, or 2.2 percent, to $48.53 on the Nasdaq, and earlier traded as high as $49.19, surpassing the old 52-week high of $47.99.
As for MedImmune, shares rallied against a Thursday downgrade from AG Edwards to "Hold" from "Buy" because the company hit the investment firm's price target. On Wednesday, the company announced it will work with federal researchers to develop a vaccine to be used against flu strains that could cause wide outbreaks, including the avian flu. MedImmune shares climbed 54 cents, or 1.6 percent, to $33.49 on the Nasdaq, after setting a new 52-week high of $33.83 earlier in the day.
Shares of Affymetrix Inc., which was upgraded to "Equal Weight" from "Underweight" by Lehman Brothers, also grew 90 cents, or 2 percent, to $46.15 on the Nasdaq.
Shares of Biogen Idec Inc., which launched the largest multiple sclerosis treatment study on Thursday, rose 84 cents, or 2.2 percent, to $39.44 on the Nasdaq.
All the positive stock activity boosted the index despite one the largest biotechs being down on the day. Amgen Inc. shares slipped 26 cents to $79.51 on the Nasdaq.
The American Stock Exchange's Biotechnology Index, which tracks 17 major biotech companies, rose 8.30 points, or 1.3 percent, to 646.76, capping a 2.5 percent rise on the week, to approach its 52-week high of 654.98.
Shares of index component Vertex rose $1.57, or 7.5 percent, to $22.45 in afternoon trading on the Nasdaq, surpassing the old year high of $20.97, at more than double their average trading volume. Its stock has climbed from a 52-week low of $8.61 in April and rallied in May as Vertex began releasing data from its early stage hepatitis C clinical trial. The company's shares have more than doubled so far this year.
Prudential Equity Group initiated coverage on Vertex, rating shares as "Overweight," with a price target of $25. Jason Zhang, a Prudential analyst, said in a research note he believes the company's hepatitis C treatment VX-950 has blockbuster potential after clinical studies showed that it lowered viral loads by 99.996 percent, compared to the standard treatment, pegylated interferon, which usually results in less than a 99.9 percent reduction in viral load and carries unpleasant side effects.
The analyst also based his rating on Vertex's pipeline, which includes rheumatoid arthritis treatment VX-702 and HIV treatment VX-385, both of which are in mid-stage clinical trials.
Other components bumping up the index included Gilead Sciences Inc. and MedImmune Inc., both of which also hit new 52-week highs as flu season approaches.
Shares of Gilead, which developed flu symptom treatment Tamiflu and now receives royalties from Roche AG, rose $1.03, or 2.2 percent, to $48.53 on the Nasdaq, and earlier traded as high as $49.19, surpassing the old 52-week high of $47.99.
As for MedImmune, shares rallied against a Thursday downgrade from AG Edwards to "Hold" from "Buy" because the company hit the investment firm's price target. On Wednesday, the company announced it will work with federal researchers to develop a vaccine to be used against flu strains that could cause wide outbreaks, including the avian flu. MedImmune shares climbed 54 cents, or 1.6 percent, to $33.49 on the Nasdaq, after setting a new 52-week high of $33.83 earlier in the day.
Shares of Affymetrix Inc., which was upgraded to "Equal Weight" from "Underweight" by Lehman Brothers, also grew 90 cents, or 2 percent, to $46.15 on the Nasdaq.
Shares of Biogen Idec Inc., which launched the largest multiple sclerosis treatment study on Thursday, rose 84 cents, or 2.2 percent, to $39.44 on the Nasdaq.
All the positive stock activity boosted the index despite one the largest biotechs being down on the day. Amgen Inc. shares slipped 26 cents to $79.51 on the Nasdaq.
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