Biotech guru does double-take on mega deal

Another mega deal in biotech

Alexion Pharmaceuticals agreed to buy Synageva BioPharma for $8.4 billion in cash and stock, but shares of Alexion fell as investors worried the company paid too much for the acquisition.

Top-rated biotech analyst Mark Schoenebaum said he couldn't believe his eyes.

"My first reaction was I had to recheck my iPhone to make sure I was reading the premium correctly," Schoenebaum said on CNBC's "Halftime Report." "I can't say that in my 16 years I've seen a major deal go for 140% premium."

Evercore ISI's Schoenebaum pointed to activity in the ultra-orphan drug space and said only time will tell if valuations are too high.

"The ultra-orphan drug space treats diseases that only affect maybe 1,000 to 3,000 patients, very rare diseases. This is a hot area."

Despite rising valuations, Schoenebaum said we are not in a bubble.

"I'm not in the persuasion that we are in a biotech bubble," he said. "It's reasonable to say that biotech valuations as a whole are not cheap at this point."

Today is very different than the biotech bubble in 2000, said Schoenebaum.

"There are actual drugs being brought to the market and selling right now," he said. "We are curing diseases, gene therapy companies are making blind patients see, and we are doubling survival rates in cancer. There are real things happening."

—By CNBC Producer Bree Kelly. Follow her on Twitter @Bree_Kelly