Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in Receptos (UNKNOWN:RCPT.DL) surged by as much as 10% today after announcing that it had completed enrollment in its phase 3 trial for the treatment of multiple sclerosis and amid chatter of a potential buyer.
So What: Receptos has been one of biotech's top performing stocks on optimism that its MS drug ozanimod could outperform Biogen's top-selling Avonex in late stage trials.
Receptos' RPC1063 is a once-daily drug that reduces the activity of autoreactive lymphocytes, or white blood cells, which are thought to be one of the causes of autoimmune disorders.
During phase 2 trials, ozanimod successfully achieved its primary endpoint of reducing the number of brain lesions in MS patients.
Receptos has indicated that it would like to find a partner to team up with on ozanimod, and, according to Bloomberg, interest may have expanded beyond licensing ozanimod to include a potential acquisition.
Now What: MS is a big and growing indication, and Biogen's Avonex is one of the top sellers in this $17 billion market, racking up $3.01 billion in sales last year.
If Receptos' phase 3 data is as good as its mid-stage data, then Receptos could file for FDA approval, and if that approval is granted, Receptos could end up with a blockbuster on its hands. Those are a lot of "ifs" so investors should approach this biotech with some caution -- especially since trial results from this study won't be available until 2017. That said, Receptos' potential opportunity could mean that it's a good option for speculative investors that are unfazed by the risk of a trial failure.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.