On Tuesday, we highlighted two companies in the biotech space that had taken a hit across the last couple of sessions. Today, we’ve got two of the week’s biggest gainers. Here goes.

Lexicon Pharmaceuticals

First up, Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX). For those not familiar with the company, it’s a Texas-based, development stage biotech wit ha focus on human diseases. It currently has two primary candidates – one late stage diabetes indication and one late stage carcinoid syndrome indication. At market close on February 29, Lexicon sold for $9.34. By the time the session closed on March 1, the company had gained more than 16% to trade for its current $10.85 a share. This one’s an earnings induced gain. Lexicon reported its fourth quarter and full year 2015 financials before the Tuesday open, and beat analyst estimates across the board. In the development stage biotech sector, earnings aren’t generally that important – simply because most companies that are developing drugs don’t generate any substantial revenues (at least, not revenues that are representative of the potential of their pipeline). In this instance, however, Lexicon reported a substantial turnaround, and it looks to have filtered through to bullish sentiment.

The company chalked up revenues of $127.3 million across the final quarter of 2015, and $130 million full year, for a final quarter net income of $86.6 million. The vast majority of these revenues, and the likely reason behind their reporting having such a dramatic impact on the company’s valuation, derive from a partnership with biopharma giant Sanofi SA (ADR) (NYSE:SNY). As a forward prospect, the latest gains highlight Lexicon as an intriguing allocation. The company is set to file its first carcinoid NDA before the end of March, opening up the possibility for an approval before year end. It’s got about $500 million cash on hand, further milestones if all runs smoothly with its development pipeline, and the potential for a host of pivotal topline releases in both oncology and diabetes. One to watch as we head into the second quarter of the year.

NanoString Technologies

Next on the list is NanoString Technologies Inc (NASDAQ:NSTG). NanoString strengthened by close to 19% on Tuesday, and premarket Wednesday, looks set to gain further on session open. The company reported a Q4 loss at the beginning of the week, but true to form, market focus shifted away from the loss and towards a just announced expansion of its collaboration with Merck & Co., Inc. (NYSE:MRK). The partnership is based around a diagnostics product the the two companies hope can play companion to Merck’s blockbuster non small cell lung cancer drug, Keytruda. Under its terms, NanoString has picked up a $12 million immediate cash injection, and is in line for an additional $12 million in milestone payments set to realize across the next twelve months.

Just as with Lexicon, NanoString is a potentially intriguing exposure going forward. It’s a little riskier than the former – its balance sheet is far from comfortable ($50 million at the end of 2015, not accounting for the latest Merck collaboration. However, it expects to pull in a further $45 million cash from collaborations before the end of the year, which should fund its burn for the next 24-36 months, at least.

As a small scale, speculative allocation, and one that affords a small cap piggy back on the success of a large cap’s blockbuster (i.e. Keytruda) it’s far from a write off.

It’s also got an interesting business model – one that should feed an expansion of its bottom line going forward. Its products require replacement fill, meaning every time it sells a diagnostics tool to an end user (physician, hospital, etc.) that system forms the basis of a repeat contract.

So there we go – two companies that have picked up strength over the last couple of sessions to counter those that lost yesterday. It’s not all doom and gloom in biotech at the moment, and the strength in both Lexicon and NanoString demonstrated that there is still capital searching for allocation in the space.