When Rigel Pharmaceuticals of South San Francisco took the stage at the annual JP Morgan Healthcare conference in January, the 16-year-old biotechnology company hoped to soon introduce its first two approved drugs—both of them designed to treat major health problems.
At the time, London-based AstraZeneca was funding late-stage trials on Rigel’s drug candidate for rheumatoid arthritis, and Rigel’s second leading compound was in mid-stage trials for another common disorder, allergic asthma.
But Rigel’s vision of near-term success evaporated over the summer, when both the company’s frontrunners fell short of expectations. Rigel (NASDAQ: [[ticker:RIGL]]) recently said it is cutting 18 percent of its staff and refocusing on three back-burner projects for less common conditions, and its shares have lost about half their value since the beginning of the year. The company, founded in 1996, is back in the earlier stages of clinical development again.
The lasting benefit of Rigel’s season of high hopes, however, is a cash trove that amounted to $251 million at the end of June, bolstered by equity financings completed before the disappointing news from clinical trials started to land. That cash cushion gives Rigel time to test its stable of experimental drugs against three less common autoimmune disorders, in smaller, less expensive trials that it can fund independently, says chief operating officer Raul Rodriguez.
“We’re in a good financial position to decide where to go,” Rodriguez says. The company estimates that its war chest will cover operations into 2016, when it might file for FDA approval for one or possibly two new drugs if all goes well, Rodriguez says.
Any eventual profits from these drugs for smaller populations, however, will be shared by a greater number of investors. Rigel added more than 31 million new shares in 2011 and 2012 as it raised its cash reserve.
Going forward, Rigel will continue to focus on compounds that inhibit cell proteins called SYK (spleen tyrosine kinase) and JAK (janus kinases), which are implicated in inflammation and in destructive autoimmune processes in which the body attacks its own cells.
Both targets are being actively pursued by other biotechnology companies and pharmaceutical giants. In late 2012, Pfizer launched its JAK inhibitor tofacitinib (Xeljanz) in the United States as a treatment for moderate to severe rheumatoid arthritis. Rigel’s neighbor in South San Francisco, Portola Pharmaceuticals (NASDAQ: [[ticker:PTLA]]), has teamed up with Weston, MA-based Biogen Idec to test an SYK inhibitor, PRT2607, as a drug candidate in inflammatory disorders including allergic asthma. Portola also filed for FDA clearance this year to begin clinical trials for its dual SYK/JAK inhibitor, PRT2070, in hematologic cancers.
Rigel’s SYK inhibitor, fostamatinib, had shown modest benefit in rheumatoid arthritis. But after spending millions on two Phase 3 trials, AstraZeneca decided in June to drop the project and return fostamatinib to Rigel. Rigel announced Sept. 5 that it would not pursue approval of fostamatinib in rheumatoid arthritis on its own. That announcement, and the news on August 26 that Rigel’s drug candidate for allergic asthma, R343, failed to meet goals set in a mid-stage trial, led to the company’s latest stock plunge. Rigel, whose shares sold above $90 in 2001, is now trading at around $3.50.
Rigel now has the task of building confidence in the change of focus it unveiled. Company officials decided against further efforts in rheumatoid arthritis because fostamatinib could not match the efficacy of AbbVie’s Humira, Rodriguez says.
“The product worked, just not well enough,” Rodriguez says. Further trials in rheumatoid arthritis would have cost more than $50 million and required as many as 400 participants, he says.
Instead, Rigel is planning a Phase 3 trial of fostamatinib in immune thrombocytopenic purpura (ITP), an autoimmune disorder that depletes the number of blood platelets needed for healing and blood clotting.
