Rigel's R348 Fails in Phase II Study, Shares Down 13.6%


Rigel Pharmaceuticals, Inc. (RIGL) announced that its ophthalmic JAK/SYK inhibitor, R348, failed to meet the primary and secondary endpoints in a phase II study for the treatment of dry eye disease. Rigel’s shares fell 13.6% following the company’s announcement.

The primary endpoints in the study were measured by changes in corneal fluorescein staining, conjunctival staining, tear production and dry eye symptom scores from baseline under treatment with R348 compared to placebo, over a 12-week long treatment period. However, the company stated that any significant adverse event was not reported in the study.

Although Rigel has decided not to conduct any further trials with R348 for the treatment of dry eye disease, it will proceed with an ongoing phase II study on R348 in patients with graft versus host disease (GvHD) who are suffering from dry eye.

We note that Rigel is currently focusing on the development of fostamatinib. The company stated in the press release issued by it that it will invest resources for developing fostamatinib for two indications − immune thrombocytopenic purpura (ITP.TO) and IgA Nephropathy (IgAN). Fostamatinib is already in a phase III study for ITP. Rigel intends to initiate a phase II study on the candidate for IgAN in the fourth quarter of 2014.

Our take

The company’s decision to stop developing R348 for dry eye disease following its failure in the phase II study in this indication is a matter of concern. While the company is advancing R348 in another phase II study for the treatment of dry eye in GvHD patients, the future of this candidate depends on study results. We expect investor focus to remain on further updates on this study as well as the phase III program on fostamatinib.

Rigel carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Endo International plc (ENDP), United Therapeutics Corporation (UTHR) and Anacor Pharmaceuticals, Inc. (ANAC). While Endo and United Therapeutics carry a Zacks Rank #1 (Strong Buy), Anacor holds a Zacks Rank #2 (Buy).

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