Replies to post #83639 on Biotech Values

[mcbio]

Re: RIGL - Feuerstein article

RIGL - AF had an interesting piece and I think some of his points are valid.

"Rigel Pharmaceuticals is selling more stock, but wasn't the small drug maker supposed to raise money by partnering its experimental rheumatoid arthritis drug?

Announced Wednesday after the close, Rigel said it intends to sell 6 million shares with an over-allotment option for another 900,000-shares. At Wednesday's closing price, the offering would gross just under $53 million.

Rigel ended the second quarter with about $80 million in cash, enough to get the company into the middle of next year.

The new offering will bolster the company's bank account and could help it at the negotiating table as it seeks a partner for R788, a novel pill for rheumatoid arthritis.

Or, does this new offering signal that Rigel is having trouble finding a partner interested in R788?

The drug is certainly not without controversy. An oral pill for rheumatoid arthritis could be a very big deal given that current medicines -- most notably the so-called "anti-TNFs" like Amgen's(AMGN Quote) Enbrel and Abbott Labs' Humira -- are given by injection.

But in July, Rigel reported negative results from a phase II study in which R788 failed to improve the rheumatoid arthritis of patients who had previously failed anti-TNF medicines. The setback sent Rigel shares sharply lower and raised questions about the future of the drug. Two previous phase II studies of R788 in patients who had not yet been treated with anti-TNFs yielded more positive results.

Rigel downplayed the negative results from this most recent phase II study, insisting that the primary goal was to develop R788 first as drug that would compete head to head against the anti-TNFs like Enbrel and Humira. This is where the drug has shown more promise in phase II studies.
The challenge of that approach is that Enbrel and Humira are very effective drugs with well-known safety records, and a potential partner may not feel comfortable funding trials that try to directly unseat these very well established therapies. Moreover, R788 still has unresolved safety questions, including an elevated high blood pressure risk."

http://www.thestreet.com/story/10599708/2/psst-these-drug-firms-are-getting-bought-biobuzz.html

Yes, I think this is a fair article from Adam. I understand the safety questions, which mainly center around the elevated blood pressure. My understanding is that R788 causes a slight blood pressure elevation in less than 10% of RA patients and that slight elevation is able to be resolved in the majority of cases by adjusting patients' high-blood pressure medication. I don't see that as a big deal but I clearly understand and respect the questions and that is why I think it makes total sense to wait until after RIGL has its end-of-Phase 2b meeting with the FDA at the end of next month before considering a long position. E.g., will the FDA impose strict requirements for a very long Phase 3 trial of R788 in order to flesh out the blood pressure signal? It's hard to say and that's why I think it makes sense to get the FDA guidance first. I don't see the stock soaring if the FDA doesn't impose material restrictions during the meeting given that I think it will ultimately take a partnership to really get the stock moving. However, the stock could really crater if the FDA imposes serious restrictions that would likely scare off a partner. So, that's why I think it makes no sense to be long right now and makes much more sense to wait for FDA guidance. I also think it's wise that the company is raising significant cash now in front of the FDA meeting.

I also think the failure in anti-TNF patients is being completely overblown. R788 is essentially attacking the same targets as Enbrel and the other biologics with the obvious difference being that R788 is oral. So, if the biologics failed in those anti-TNF patients, why should R788 succeed? I see the failed TASKi3 trial as being completely taken out of context.

The other important point that I think gets lost in the shuffle is that R788 itself is not a one-trick pony as it's being tested in various cancers and has already shown PoC here. Even more importantly, RIGL has a pretty diverse pipeline above and beyond R788 with three other drugs in early clinical development ( http://www.rigel.com/rigel/pipeline ). All told, I see a lot going on for a company with a sub-$300 million market cap whose main drug still has a legitimate chance to compete as one of the first oral entrants in a huge RA market. Let's see where the company stands after the end-of-Phase 2b meeting with the FDA though.