New York-based Pfizer (NYSE: [[ticker:PFE]]) is the biggest drug company in the world, so when it slashes costs and dumps drug candidates left and right, people take note. But sometimes what gets overlooked is that one company’s loss is another’s gain, and that’s what appears to be happening at South San Francisco-based Rigel Pharmaceuticals.
Rigel (NASDAQ: [[ticker:RIGL]]) said today it has raised a cool $130.4 million through a stock offering of 16.3 million new shares at $8 apiece. There appears to have been strong demand to get into Rigel, as the company only offered the new investors a relatively slim 5.7 percent discount from yesterday’s closing market price of $8.49. Jefferies & Co. and JP Morgan Securities led the offering, and Piper Jaffray & Co. was the co-manager.
The new shot of cash will go toward supporting Rigel’s pipeline of drug candidates, which includes an oral treatment for rheumatoid arthritis that is in pivotal studies through a partnership with London-based AstraZeneca. But investors are also clearly buying into the story from earlier this month, in which Rigel said it basically got handed a big gift from Pfizer.
Essentially, the Big Pharma partner, as part of its cost-cutting and portfolio review, took a Rigel drug for allergy-induced asthma through early-stage clinical trials, prepared it for Phase 2, then decided to bail out on allergy and respiratory drugs entirely. So Pfizer, after investing its money in critical early stage tests, gave a much more valuable drug, called R343, back to Rigel.
“It is rare in our business that one has the opportunity to develop an asset which is both promising and on which the research and development has been as well done as the package that Pfizer is transferring to us. R343 will now become Rigel’s most advanced in-house project,” said James Gower, Rigel’s CEO, in a statement on May 6.
It will be interesting to see how many other companies find themselves in a position to take advantage of the shrinkage going on at Pfizer. If you see any other interesting examples, please shoot me a note.
