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What: Investors in Raptor Pharmaceutical (NASDAQ:RPTP), a biopharmaceutical company focused on treating rare diseases, are seeing green today. Shares are up more than 10% as of 11:50 a.m. EDT on rumors that the company might be a takeover target.

So what: Rumors are swirling that Retrophin (NASDAQ:RTRX)a small-cap biopharmaceutical company also focused on rare diseases, is considering making an offer to acquire Raptor. Bloomberg is reporting that Retrophin is interested in the deal as it would give a boost to the company's growth in rare-disease treatments. 

However, as of the time of this writing neither company had released any information that confirms or denies these rumors. Bloomberg also reported that, in a phone interview, Raptor's CEO, Julie Smith, had declined to comment.

Now what: This isn't the first time this year that shares of Raptor have jumped in response to rumors of a buyout. In April shares surged 24% after news broke that the company had hired investment bankers to discuss a potential takeover. Of course, those turned out to be just rumors, so shares eventually settled back down. 

Without more information to go on, investors should do their best to ignore today's price action and focus on the long-term potential of the business. If you are considering making an investment in Raptor today, I'd suggest that you only do so if you are a believer in the potential of the company's products, not because you think that shares could pop if time shows that the takeover rumors are true.

Brian Feroldi has no position in any stocks mentioned. Like this article? Follow him on Twitter where he goes by the handle @Longtermmindset or connect with him on LinkedIn to see more articles like this.

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