Biotechnology companies saw more acquisitions and deals in the third quarter of 2006 than in the second quarter, according to a report Monday from merchant bank Burrill & Co. of San Francisco. September seemed especially strong, it says.

"With the Feds keeping rates unchanged and the Dow Jones flirting with an all-time high before falling just short at months end, investors were in an optimistic mood,” says Steven Burrill, CEO of the private bank that specializes in technology issues.

“With biotech-biotech acquisitions, partnership deals up 133 percent over the Q2 deals, venture capital flowing and Amgen and Genentech receiving regulatory approval for lead products, it was a better month for biotech stocks," says Mr. Burrill.

In his opinion, it looks as though “biotech has emerged from its rough patch and the final quarter should see a further improvement."

"The only damper on an otherwise excellent third quarter was that fund raising among biotech's companies was down considerably,” he says.

Biotech has already raised 20 percent more capital in 2006 than it did in the whole of 2005, according to the Burrill figures. “Biotech is well on its way to a record setting $40 billion year from financing and partnerships," says Mr. Burrill.