Biotechnology companies including Biogen Inc, MedImmune Inc. and Celgene Corp had a strong second-quarter showing, but Biogen's report of disappointing trial results for an experimental drug kept a lid on sector share prices.

"Investors are disappointed, but I wouldn't read too much into this," said Mark Schoenebaum, an analyst at U.S. Bancorp Piper Jaffray. "Most investors recognize that the (Biogen) trial was fairly high risk and appear to be in a forgiving mood."

Biogen said its experimental drug Antegren, which it is developing for Crohn's disease with Elan Corp, failed to meet the main goal of a late-stage trial.

Legg Mason analyst Stefan Loren, who has a "hold" rating on Biogen, questioned whether Avonex growth can be sustained given growing competition from other drugs. "Overall, we believe this merger is reminiscent of various large pharmaceutical mergers ... most large pharma mergers have been unsuccessful, leading us to question the potential synergies in this case," the analyst said in a report.