Shares of biotech companies have surged in recent months, boosted by innovation, a spate of deals and easing worries about political risks.

The Nasdaq Biotechnology Index has gained 22% so far this quarter, far outpacing the S&P 500’s 7.7% gain. The recent rally has helped the biotech index recover from a third-quarter decline, bringing its year-to-date performance to 25%, nearly in line with the broader index’s 28% advance.

Biotech…

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