Rigel Pharmaceuticals shares soar
NEW YORK (AP) — Rigel Pharmaceuticals Inc. shares surged Thursday to their highest point in two years after the company stunned Wall Street with positive study results for its rheumatoid arthritis drug candidate.
The stock more than tripled in value, gaining $17.95 to reach $25.95 Thursday while volume skyrocketed. Shares reached $22.87 earlier in the trading session, its peak since November 2005.
The movement marks a sharp turnaround from nearly a month ago, when shares plunged to a new year-low after Lehman Brothers forecast that the study data on R788 would be negative.
We think the results we saw today were a very low probability, said Lehman Brothers analyst Ajim Tamboli in an interview with the Associated Press. Clearly, the results were much better than most people expected.
Rigel probably now has the lead position in terms of developing an oral drug for rheumatoid arthritis, he said.
R788, or tamatinib fosdium, will likely enter another midstage study before moving onto a larger late-stage clinical trial. If it is eventually approved, it will enter an already competitive market, but its oral dosing regimen may help win a sizable share of the more than 2 million Americans suffering with the debilitating chronic inflammatory disease.
Rituxan, which is made by Biogen Idec Inc. and Genentech Inc., had sales of $572 million during the third quarter. That drug, delivered by infusion, is also approved to treat non-Hodgkin’s lymphoma. Abbott Laboratories’ injectible drug Humira, which is approved for rheumatoid arthritis and several other conditions, had sales of $803 million.
Meanwhile, several companies including Roche, Sanofi-Aventis and Johnson Johnson either are developing new rheumatoid arthritis drugs or are planning to put one in their pipelines.
Rigel is also working on an oral drug to treat autoimmune diseases, called R348, which could provide long-term value along with several other early-stage drug candidates, Tamboli has said. He reaffirmed a Equal Weight rating with a $7.25 price target, in a note to investors.
Thomas Weisel Partners analyst M. Ian Somaiya raised his price target to $32, citing R788’s potential in the market.
We expect R788 to be multibillion dollar franchise and expect a partner for Europe to be the next major driver for stock, in addition to Phase II data in lymphoma patients in 2008, he wrote in a note to investors.
The drug could be on the market by 2011, he said.
CIBC World Markets Corp. analyst Dr. Brian Abrahams reaffirmed an Overweight rating on the stock, saying the results establish clear proof of concept for the technology behind the drug candidate.
We would be buyers of Rigel given R788’s potential to become a novel oral treatment for rheumatoid arthritis and other large-market autoimmune conditions, he said, in a note to investors.
Meanwhile, Jefferies Co. analyst Dr. Adam Walsh reaffirmed a Buy rating earlier Thursday, saying the results were significantly better than Wall Street expected. E-mail to a friend
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