Merck & Co.'s move to pay a headturning $1.1 billion for Sirna Therapeutics Inc. sent shares of several other small biotechnology companies skyrocketing Tuesday.

The biotechnology sector has seen a burst of M&A activity over the past several months and analysts expect the trend to continue, as big pharmaceutical companies look to fill their pipelines by acquiring smaller biotech operations. But the move to buy Sirna reinforces confidence in what many in the medical field see as the next stage in medical science - the ability to click off specific genes that cause disease.

"We view this acquisition as a cornerstone technology for Merck," said Cantor Fitgerald analyst Pamela Bassett, in a note to investors. "We expect other companies with important breakthrough technology platforms that can be widely leveraged across multiple products and industries to be increasingly sought after by pharma."

Several other companies, including Alnylam Pharmaceuticals Inc. and CytRx Corp., are also developing drugs based on RNA interference technology, or gene silencing. The discoverers of the technique, Andrew Fire and Craig Mello, received the Nobel Prize for medicine for their find. Simply put, the technology focuses on shutting down specific genes by interfering with messenger-carrying RNA. Possibilities, which several companies are banking on, include the ability to target genes for chronic diseases, including cancer, and turn them off, eventually making broad approach treatments like chemotherapy unnecessary.

Shares of San Francisco-based Sirna nearly doubled on Merck's announcement to end at $12.63 on the Nasdaq, up $6.18. And Cambridge, Mass.-based Alnylam caught a $3.12, or 18.8 percent, boost, to end at $19.72, as analysts see the company as the next possible buyout target.

Shares of Los Angeles-based CytRx rose 28 cents, or 21.4 percent, to finish at $1.59.

Bassett said the acquisition price for Sirna fairly reflects its development-stage value. But with investor focus shifting to Alnylam as the next acquisition target, she maintained a "Hold" rating, citing a collaboration between Merck and Alnylam that is no longer relevant to Alnylam's future. And while she said there is speculation Novartis may buy out the company, there doesn't seem to be good reason until the company provides proof of technology.

Novartis is one of several development partners working with Alnylam.

But Bank of America analyst David Witzke raised his price target on Alnylam to $30 from $23, and maintained a "Buy" rating, citing the company's position as "the only major stand-alone siRNA discovery platform" after the Merck buyout of Sirna.

"Alnylam has filed over 200 patents and patent applications for fundamental RNAi structure and uses," he wrote in a note to clients.

The deal between Merck and Sirna will likely not impact Merck's obligations under a collaboration agreement with Alnylam to develop age-related blindness treatments, he said.

Rodman & Renshaw analyst Michael G. King Jr. said the move by Merck validates the potential for the new technology, and notes that with "Sirna gone, Alnylam is the only game in town."

The company has taken steps to ensure its position as a leader in the field, he wrote, running a variety of clinical programs and employing a strong staff of scientists. King maintains a "Market Outperform" rating on the stock and said he is reviewing his current $18 price target.

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