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Biotechs in the green after last week's carnage

Biotech investors breathed easier Monday, at least for a few moments, after last week's beating.

The Nasdaq Biotech Index opened positively Monday, before leveling off midday, as many of the larger names—Biogen Idec, Celgene, Gilead Sciences—recovered from dips and companies including Lexicon Pharmaceuticals turned in positive clinical trial data.

Lexicon, based in The Woodlands, Texas, was among the leaders in the Nasdaq Biotech Index, jumping as much as 5.7 percent after its experimental medicine for diabetes met the goals of a mid-stage clinical study. The drug, LX4211, reduced mealtime insulin use and improved glycemic control for people with Type 1 diabetes, Lexicon said Monday in a statement. The company also is testing the medicine in Type 2 diabetes, the more common of the two forms, and has been seeking a partner to help fund larger, later-stage studies, according to Phil Nadeau, an analyst with Cowen & Co.

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Akebia Therapeutics, a Cambridge, Mass.-based drugmaker that went public in March, also gained after analysts initiated coverage of the stock with price targets as high as $90. The shares closed Friday at $16.86.

Akebia is developing a medicine called AKB-6548 for anemia due to chronic kidney disease, what Nomura analyst M. Ian Somaiya calls a $6 billion global market opportunity. Somaiya initiated coverage Monday with a "buy" rating and price target of $39, while Credit Suisse's Ravi Mehrotra pegged his target at $25, with an "outperform" rating. Morgan Stanley's David Friedman set a $90 price target, noting he sees more than $2 billion in worldwide sales potential in the drug's first indications.Clinical trial data are expected in the fourth quarter.

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Even companies with negative news participated in the gains. Acorda Therapeutics rose 4.6 percent despite news Monday that a study of its drug for stroke would be delayed. The stock had been upgraded at FBR Capital Markets to "outperform."

The larger-cap companies, too, initially rallied, with Biogen regaining more than 3 percent, and Celgene and Gilead more than 2 percent. The EASL (European Association for the Study of the Liver) conference wrapped in London over the weekend, and despite strong data from Merck, AbbVie and others, Gilead remains the hepatitis C darling.

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"Gilead's data remains impressive and the simplicity of their regimen will enable it to be the dominant player in the space," Credit Suisse's Mehrotra wrote Sunday in a note.

Nomura's Somaiya points out Gilead is trading at a discount to the S&P, suggesting "current levels represent an even more compelling buying opportunity."

—By CNBC's Meg Tirrell.

(UPDATE: This story was updated from the original to reflect the movement in the stocks as well as to provide additional information about analysts' price targets for Akebia.)

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