Updated from 2:54 p.m. EDT

Analysts cast an optimistic eye on

OSI Pharmaceuticals

( OSIP), and biotech pairs reported progress on a generally flat day Tuesday for the health indices.

OSI gained $1.81, or 5.9%, to $32.67 after an upgrade to overweight from underweight by JPMorgan Tuesday. The analysts said they expect label-expanding trial data for cancer drug Tarceva in the second half of 2008 to rev up sales, and they're optimistic about the long-term prospects. They now expect the company to earn $1.60 a share in 2008 compared to a prior estimate of $1.06; $2.10 vs. $1.18 in 2009; and $2.20 vs. $1.26 in 2010.

After announcing a pain-treatment collaboration with

Pfizer

(PFE) - Get Report

,

Icagen

( ICGN) gained 16 cents, or 8.3%, to $2.08. Pfizer was down 31 cents, or 1.3%, to $23.58.

Regeneron Pharmaceuticals

(REGN) - Get Report

said Monday after market close that it received a $20 million milestone payment from

Bayer

( BAY) in light of dosing the first patient in the phase III study for its VEGF Trap-Eye for age-related macular degeneration.

The stock gained a few ticks last week when Regeneron announced the initiation of the study. And investors seem to be happy with the milestone payment, as well. Shares rose 58 cents, or 3.6%, to $16.68.

Epix Pharmaceuticals

(EPIX) - Get Report

met a milestone in its pairing with

GlaxoSmithKline

(GSK) - Get Report

regarding a discovery stage program prompting a $3 million payment from GSK in the next 30 days. Epix added 14 cents, or 3.4%, to $4.25.

Also on Tuesday, GSK said the Food and Drug Administration accepted an application to review its vaccine to prevent diarrhea virus in infants. The GSK vaccine could be given at six weeks, offering completion of the rotavirus vaccination series by four months of age. The vaccine is already licensed in 99 countries. Health authorities currently recommend infants be immunized at two, four and six months of age.

GSK closed down $1.04, or 2%, to $50.51 on Tuesday. It's a component of the Amex Pharmaceutical index, which was down 4.64, or 1.4%, to 330.63.

Shifting to earnings,

Cytori Therapeutics

(CYTX)

, which also reported a narrower quarterly loss, gained 24 cents, or 4%, to $6.19. Cytori reported a net loss for the quarter of $4 million, or 17 cents a share, compared to a loss of $7.3 million, or 47 cents a share, in the comparable period in 2006. Note that there were were 23.5 million weighted average common shares in the quarter just ended, vs. 15.6 million in the year-ago period.

"The balance sheet has strengthened year over year and we expect to continue to minimize our reliance on the capital markets where possible through anticipated strategic transactions," said Cytori's CFO Mark Saad.

On the other hand,

Alexza Pharmaceuticals

(ALXA)

, which uses its own technology to develop vaporized drugs that can be inhaled to treat migraines, panic attacks and schizophrenia among other things, had a rough day, sliding $1.09, or 11.6%, to $8.30.

The company was downgraded Tuesday after its post-market earnings release on Monday. Its net loss narrowed to $10.3 million, or 36 cents a share, from a loss of $10.6 million, or 45 cents a share in the year-ago quarter. Analysts surveyed by Thomson Financial were expecting a loss of 37 cents a share.

JMP Securities downgraded the company to market perform from market outperform due to the lack of information divulged about new trials since the release of positive results from studies on its migraine and schizophrenia drugs last March.