Rigel Pharmaceuticals (RIGL 4.35%) developed and launched the drug Tavalisse for the treatment of the autoimmune disease called chronic immune thrombocytopenia (or immune thrombocytopenic purpura, "ITP"). In its first five quarters on the market, Tavalisse generated $44 million in net product sales. While sales are on the upswing, this slow growth highlights the difficulty of breaking into a crowded therapeutic area, even with a drug that has a new mechanism of action.
Due to the chronic nature of ITP, patients cycle through a variety of treatment options. Patients often stop therapy during periods when the disease appears to be under control. According to Rigel, at any one time, roughly half of treatable ITP patients fall into this "watchful waiting" category. Of those receiving treatment, approximately 40% receive steroid therapy and the other 60% take other types of drugs. The last group provides an opportunity for a differentiated drug with a new mechanism, like Tavalisse.
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Rigel's fight to gain market share with Tavalisse will be like David versus Goliath against global heavyweights including Amgen and Novartis. Amgen's Nplate, for example, entered the market in 2008 and earned $467 million in revenue in the U.S. over the past 12 months; over the last year, Nplate's sales in Europe ranged from $70 million to $79 million per quarter. Novartis' Promacta generated $380 million in the third quarter of 2019 -- granted, it treats both ITP and another disease called severe aplastic anemia.
Rigel spends more on its operations than Tavalisse generates in revenue. For a company based on research and development, this is not necessarily a bad thing; it needs to invest in promising drug development in order to open new markets and opportunities to generate revenue. For the first nine months of 2019, Rigel reported a net loss of $49.7 million.
The latest earnings release noted that quarterly expenses rose to $32.9 million, "primarily due to increased research and development costs related to its ongoing Phase 3 study in warm autoimmune hemolytic anemia (AIHA)." The expenses of this trial will continue to increase as more patients enter the study. Rigel expects to complete enrollment in mid-2020, with results in mid-2021.
Rigel and its partner Grifols (GRFS 2.82%) plan to launch Tavalisse in Europe next year. Last month, Tavalisse received a positive opinion from the Committee for Medicinal Products for Human Use, the scientific committee of the European Medicines Agency (EMA). While the EMA has yet to make the final determination, an approval seems likely. Approval would trigger a much needed $20 million milestone payment from Grifols.
Tavalisse is an interesting product that is likely to continue gaining usage in treating patients with ITP. But as an investment, its growth, while promising, seems slow. I look forward to the prospects of Tavalisse in treating warm AIHA, but top-line results will not be available before mid-2021. Until then, Rigel remains a slow growth story with an arguably low price of entry. A patient, long-term biotech investor can acquire shares now at an attractive price. However, there are other companies that have better prospects in the near term.
If Tavalisse's launch stumbles, or the phase 3 trial in warm AIHA takes longer than anticipated, Rigel could face a capital crunch and need to raise additional capital; this could hurt the share price. But if investors revisit Rigel a year from now, they'll have two years of market data on Tavalisse, a fully enrolled phase 3 trial in warm AIHA, more data on early-pipeline drug candidates, and clarity on the company's financial picture -- all allowing them to make an investment decision with greater conviction.
