ASCO Has Biotechs Riding High

Updated from 12:21 p.m. EDT

The biotech sector was already in rally mode in recent weeks, but the decidedly upbeat news released at this year's meeting of the American Society of Clinical Oncology provided an additional lift to the group on Monday.

Many biotech stocks finished off their highs of the session, as the group fell victim to the same late-day sluggishness that hit the broader market, but on the whole, the sector was still positive.

Vion Pharmaceuticals (VION Quote), Genentech (DNA Quote) and Millennium Pharmaceuticals (MLNM Quote) were among the names climbing to start the week, but one of the biggest winners of the day was ImClone Systems (IMCLE Quote).

ImClone's European partner, German drugmaker Merck KgaA, released study results at ASCO over the weekend for the experimental cancer drug Erbitux, showing that the drug, when combined with chemotherapy, shrank tumors in patients with late-stage colon cancer.

The data from the Merck study are an almost exact repeat of data previously gathered by ImClone in 2001. The legitimacy of the earlier ImClone data and the way it was gathered was questioned by the Food and Drug Administration. The agency rejected the company's original application for Erbitux in December 2001.

Even though the results were essentially as expected, investors rushed to buy shares of ImClone, which saw its stock stumble last year amid an insider trading scandal that led to the resignation of then-CEO Sam Waksal.

ImClone added $5, or nearly 18%, to $33.50. The stock ended below its high of the day, but still shattered the old 52-week high of $28.68. Since the start of the year, the company's share price has more than tripled. Volume was nearly 10 times the normal level.

The Amex Biotech Index closed with a gain of 1.3%, and the Nasdaq Biotech Index climbed 0.7%.

Continuing the Run

The biotech stocks have been enjoying solid gains lately, thanks to anticipation before the ASCO meeting, strong earnings from the group, short-covering and the belief that the FDA is trying to get new drugs approved faster.

(Columnist Adam Feuerstein attended this year's ASCO meeting, and his coverage appeared on both TheStreet.com and RealMoney.com.)

Vion rose $1.06 to close at $2.30, a gain of 85%. Genentech gained 7% to $66.73, and Millennium was higher by 3% at $15.97.

As for Genentech, analysts are so far positive on the company's prospective cancer drug Avastin, but the experts are torn about the stock's valuation.