I was out marinating ice cubes last night with a hedge fund manager friend of mine. The conversation quickly turned to recent big rally in the market. While we both believe the rally has been overdone due to the lack of breadth of the rise as well as iffy economic data recently, we both noted the improved sentiment on the biotech sector over the past month.

The sector had dipped a toe into “official” bear market territory back in late September. The recent advance started in the large cap part of that space early in October in front of what turned out to be robust results from large cap biotech names like Gilead Sciences (NASDAQ:GILD) and Amgen (NASDAQ:AMGN). Over the last week or so that advance has broadened to include in the small and mid-cap part of the sector.

This development is welcome and we still both think the biotech sector will outperform the overall market at least through year end and probably at least for the next six months. We started talking about the individual names we like in the biotech space especially among the small and mid-cap plays that have just began to move.

We actually made a parlor game of it involving naming attractive biotech stocks that sold for more than the beer ($7) he was drinking but less than the martini ($12) I was imbibing. Here are two we both turned out to like and own at the moment.

Let’s start with Trevena (NASDAQ:TRVN) that had a big day yesterday rallying almost seven percent Wednesday to broach the $11.00 a share level. The stock is also up almost 70% since being included in the Biotech Forum portfolio on August 15th at $6.50 a share. However, the shares could still have significant further upside.

The main trigger for the rise the stock has had since that August selection occurred late in the month. The company disclosed its main drug candidate for pain that has superior traits to widely-used morphine delivered impressive Phase II trial results and demonstrated a statistically significant reduction in pain over 24 hours compared to placebo in patients with moderate-to-severe pain following abdominoplasty surgery.