ImClone Jumps, and the Biotech Sector Surges

ImClone wasn't the only stock in the biotech group collecting sizeable gains. The Amex Biotech Index was climbing 4.1%, and the Nasdaq Biotech Index was adding 3.8%.

Among individual issues, Human Genome Sciences (HGSI Quote) was rising almost 9%. Chiron (CHIR Quote) was up 6%, and Biogen (BGEN Quote) was up 5%. Amgen (AMGN Quote) was higher by 3%.

Gilead Sciences (GILD Quote) was gaining 5%, and Genentech (DNA Quote) was tacking on 4%.

Adam Walsh, a biotech analyst with Jefferies & Co., said the broad rally was being driven by a number of factors, including earnings growth out of the profitable companies in the sector, short-covering, the belief that the FDA is more willing to work faster on drug approvals, and the important American Society of Clinical Oncology meeting that starts Saturday.

"The rally has been led by the bellwethers," Walsh said. "Often what you see is the bellwethers will lead, and the development-stage companies will follow."

Both Walsh and Banc of America's Michael King indicated that recent drug approvals, such as AstraZeneca's (AZN Quote) Iressa and Millennium Pharmaceuticals' (MLNM Quote) Velcade, both cancer treatments, have helped spur investor interest in the group.

Another positive development came out of Genentech, which earlier this month said its experimental drug Avastin "markedly" improved the survival of patients with colon cancer when used alongside chemotherapy.

"I think it's pretty clear that things are improving, particularly at the FDA level," King said.

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Adam Feuerstein and James Cramer both wrote about Genentech today on RealMoney. If you already subscribe to RealMoney, please click here for their commentary. For readers who would like a free trial, please click here.