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Editor's notes: RCPT's MS treatment has better tolerability and the potential for clinically meaningful activity for ulcerative colitis. Biotech expert Stephen Simpson sees 50% upside to fair value.

Investors do well to be very skeptical of the biotech companies that go public in the late stages of a multi-year bull market. In many cases, bankers, executives, and insiders are looking to cash in on hope and hype and exploit a market that isn't too discriminating about the details. So while I went into researching Receptos (RCPT) with ample skepticism, I walk away more than a little intrigued.

Receptos seems like a pretty straightforward story - basically a "2.0" version of the already-successful oral multiple sclerosis drug Gilenya sold by Novartis (NVS), but one with a potentially much better tolerability profile. Add to that the possibility of clinically meaningful activity in ulcerative colitis...

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