NEW YORK (AP) -- Shares of Receptos Inc. advanced Monday after two analysts started covering the drug developer with "Outperform" ratings and positive views of its most advanced experimental drug.
THE SPARK: The drug RPC 1063 is in mid-stage testing as a treatment for multiple sclerosis and inflammatory bowel disease. Wedbush analyst Liana Moussatos said RPC 1063 could be the best multiple sclerosis treatment of its type and the first of its type for inflammatory bowel disease. She wrote that Receptos' management has a strong track record, including experience with MS drugs.
She estimated that RPC 1063 could reach the market in 2018 or 2019 and it could have nine or 10 years of patent protection after that.
BMO Capital Markets analyst Jim Birchenough said sales of new MS drugs like Novartis AG's Gilenya and Biogen Idec Inc.'s Tecfidera have been strong, so there should be significant interest when Receptos reports more clinical data on RPC 1063 in the middle of next year.
Both analysts say Receptos won't become profitable until 2019. Moussatos set a price target of $23 per share, and Birchenough set a target of $22 per share.
THE BIG PICTURE: The San Diego company completed its IPO in May. It sold 5.2 million shares for $14 per share, and the underwriters of its IPO have the option to buy another 780,000 shares.
SHARE ACTION: Up $3.27, or 20.6 percent, to $19.14 in afternoon trading. The stock hit a high of $19.95 earlier in the day.