Rigel Pharmaceuticals, Inc. (NASDAQ: RIGL) is a biotechnology company dedicated to discovering, developing, and providing novel small molecule drugs that improve the lives of patients with immune and hematological disorders, cancer, and rare diseases.
The company recently announced pricing of its previously announced underwritten public offering of 18,100,000 shares of its common stock, offered at a price of $3.35 per share to the public. The gross proceeds to Rigel from this offering are expected to be $60,635,000. The offering is expected to close on October 10, 2017, and the proceeds will be used in the ongoing R&D activities of the company.
Also, Rigel recently announced that the company completed enrollment of Stage 1 of its Phase 2, open-label, multi-center, two-stage study of its investigational drug fostamatinib for the treatment of patients with warm antibody AIHA. On a top-line, preliminary basis, the Phase 2 study has achieved the pre-specified primary efficacy endpoint for Stage 1. A response was defined as achieving a hemoglobin level of greater than 10 g/dl and at least a 2 g/dl increase from baseline.
This Phase 2 study, also known as the SOAR study, is evaluating the safety and efficacy of fostamatinib in patients with warm antibody AIHA who have previously received at least one treatment for this disease, but did not have a meaningful benefit and are still anemic. The SOAR study utilizes an open-label, Simon two-stage design to evaluate fostamatinib at 150 mg BID (twice daily) in patients with warm antibody AIHA.
The safety profile was consistent with the existing fostamatinib safety database, which comprises over 5,000 patient-years of exposure. Having met the Stage 1 primary efficacy endpoint, Rigel intends to begin enrollment for Stage 2 of this study in which 20 patients will be enrolled under the same protocol.
Autoimmune hemolytic anemia (AIHA) is a rare, serious blood disorder where the immune system produces antibodies that destroy the body’s red blood cells. AIHA affects approximately 40,000 adult patients in the US and can be a severe, debilitating anemia. To date, there are no disease-targeted therapies for AIHA, despite the tremendous medical need that exists for these patients.
In a separate announcement, RIGL informed that during the company’s mid-cycle meeting with the U.S. Food and Drug Administration (FDA) the FDA indicated that, at this point, it is not planning to hold an Oncology Drugs Advisory Committee (ODAC) meeting to discuss the New Drug Application (NDA) for fostamatinib in patients with chronic or persistent immune thrombocytopenia (ITP). Additionally, the FDA indicated that it anticipates meeting the Prescription Drug User Fee Act (PDUFA) action date for the application review, which is April 17, 2018. In an earlier communication, the FDA had conditionally approved the proprietary name TavalisseTM.
As far as financial performance is concerned, RIGL successfully managed to curtail its operating expense to $19.3 million, lower than $22.2 million in the previous year. The decline in spending reflects Rigel’s commitment towards managing its liquidity and financial flexibility efficiently as it works towards the commercial launch of Tavalisse. Furthermore, this would also ensure that the company does not suffer any unforeseen liquidity related contingencies over the near to medium term.
Rigel ended the quarter with $82.3 million in cash, cash equivalents and short-term investments, which reemphasize its improving financial flexibility. The company had $74.8 million in cash, cash equivalents and short-term investments at the end of the corresponding quarter the previous year. With the average burn rate of nearly $19.5 million per quarter, the current cash position gives the company a flexibility of more than a year.
Rigel stock has started showing enormous strength and strong momentum in the recent past. The momentum is likely to continue as RIGL approaches other catalysts such as advisory committee meeting during the fourth quarter of 2017 followed by FDA decision due in April next year.
The company presently has a low market cap, with ample liquidity, efficient/promising product pipeline in a high growth industry. Driven by factors as mentioned earlier, traders and investors seem to be pricing RIGL positively. The stock currently has an average rating of “BUY” and a consensus price target of $6. Considering present valuation, RIGL is at a favorable risk-reward position.
About the Company: Rigel’s current clinical programs include clinical trials of fostamatinib, an oral spleen tyrosine kinase (SYK) inhibitor, in some indications. The company has submitted an NDA to the FDA for fostamatinib in patients with chronic or persistent ITP. The investigation of fostamatinib also includes Phase 2 clinical trials for autoimmune hemolytic anemia (AIHA) and IgA nephropathy (IgAN). Also, Rigel has product candidates in development with partners BerGenBio AS, Daiichi Sankyo, and Aclaris Therapeutics.
Other recent announcements
- On June 19, 2017, Rigel announced the U.S Food & Drug Administration (FDA) had accepted for filing its New Drug Application (NDA) for the use of TAVALISSE™ (fostamatinib disodium) in patients with chronic or persistent immune thrombocytopenia (ITP).
- The FDA has set the date of April 17, 2018, to complete its review of fostamatinib in ITP under the Prescription Drug User Fee Act (PDUFA).
- Strengthened leadership team with three key hires to support its commercial and regulatory efforts.
- The FDA acceptance of NDA for Rigel’s lead product candidate, TAVALISSE™, in ITP is a significant milestone for the company.
- The positive FDA decision for Tavalisse will open up a lucrative market for the company as it is estimated that the global market for Idiopathic Thrombocytopenic Purpura (ITP) is poised to cross the $566 million mark by 2020 and the US is expected to account for a large share of the market.
2017 Second quarter financial results:
Net Loss: For the second quarter of 2017, Rigel reported a net loss of $19.1 million, or $0.16 per basic and diluted share, compared to a net loss of $13.5 million, or $0.15 per basic and diluted share, in the same period of 2016.
Revenues: There were no contract revenues from collaborations in the second quarter of 2017. Contract revenues from collaborations of $8.6 million in the second quarter of 2016 were comprised of $4.8 million from the amortization of the $30.0 million upfront payment, which was fully amortized in September 2016, and $95,000 in FTE fees earned pursuant to Rigel’s collaboration and license agreement with Bristol-Myers Squibb, as well as payments of $3.7 million that Rigel received pursuant to its license agreement with BerGenBio AS.
Expenses: Rigel quarterly results showed tighter control on expenses. It reported total costs and expenses of $19.3 million in the second quarter of 2017, compared to $22.2 million for the same period in 2016. The decrease in costs and expenses was primarily due to the decreases in personnel costs and research-related costs because of the reduction in workforce in September 2016.
Liquidity & financial Flexibility: As of June 30, 2017, Rigel had cash, cash equivalents and short-term investments of $82.3 million, compared to $74.8 million as of December 31, 2016. Rigel expects that its cash, cash equivalents and short-term investments as of June 30, 2017, will be sufficient to support its current and projected funding requirements, including the preparation for the potential U.S. commercial launch, through at least the next 12 months. Rigel continues to evaluate ex-U.S. partnerships for fostamatinib and other partnering opportunities across its pipeline.
Key risk factors and potential stock drivers:
The FDA decision for Tavalisse is extremely important for Rigel, as the company needs to establish a steady stream of revenue to maintain its financial flexibility and fund its ongoing studies.
The continuity in cost control would further strengthen the financial flexibility of the company.
The biotech space is a high-risk sector due to uncertainties associated with the novel drug development. Therefore, favorable outcome of the upcoming catalyst is necessary for the stock to retain its momentum. Any adversities related with the same could upset the stock performance significantly.
On Monday, October 9th, 2017, in intra-day trading, RIGL shares were at $3.96 (+2.06%) on volume of 1.0 million shares exchanging hands. Market capitalization is $482.64 million. The current RSI is 82.15
In the past 52 weeks, shares of RIGL have traded as low as $1.94 and as high as 4.03
At $3.96, shares of RIGL are trading above its 50-day moving average (MA) at $2.53 and above its 200-day MA at $2.60.
The present support and resistance levels for the stock are at $3.62 & $4.05 respectively.
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