Rigel Sinks as Arthritis Medicine Shows Mixed Results

Rigel Pharmaceuticals Inc., a drugmaker with no products on the market, plunged the most in 7 years after its rheumatoid arthritis medicine being developed with AstraZeneca Plc showed mixed results in a trial.

Rigel dropped 40 percent to $4.50 at the close in New York, the shares’ biggest one-day drop since December 2005. The South San Francisco, California-based company has lost 43 percent in the last 12 months.

The treatment, fostamatinib, showed statistically significant improvement in a measure of arthritis signs and symptoms in the study known as Oskira-1, London-based AstraZeneca said in a statement today. Fostamatinib didn’t show improvement in an X-ray that tracks the progression of joint damage, the company said.

“The jury is still out on fostamatinib,” David Ferreiro, an analyst with Oppenheimer & Co., wrote in a research report today. He has an “outperform” recommendation on Rigel. “Overall, we expect downside in the shares” and need more data to “reach a conclusion.”

The trial shows the drug “has an effect on the signs and symptoms of rheumatoid arthritis,” Briggs Morrison, executive vice president of AstraZeneca’s global medicines development, said in the statement. “We will await the results of the remaining Phase III studies, Oskira-2 and Oskira-3, to further evaluate and characterize the profile of fostamatinib as a potential treatment for rheumatoid arthritis.”

Commercial Potential

The results may add to concern that fostamatinib lacks commercial potential. The drug failed to show a benefit versus Abbott Laboratories’ Humira in a mid-stage trial, AstraZeneca said in December. Results from Oskira-2 and Oskira-3 are due later in the second quarter, AstraZeneca said.

“Though the drug could still be viable, the weaker-than-expected efficacy results suggest a less competitive profile than we had expected,” Brian Abrahams, an analyst with Wells Fargo, wrote in a research note today. He lowered his rating on Rigel to market perform from outperform. The results add “some clinical and regulatory risk” and reduce “the potential market opportunity for the agent were it to be approved.”

AstraZeneca fell less than 1 percent in London trading.

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