Rigel Pharmaceuticals (NASDAQ:RIGL) presented at the JPMorgan Healthcare Conference this week. The clinical-stage company had to focus on its pipeline projects. Its leading drug hit a snag in December. Is the pipeline strong enough to back it up?

Lead drug's small potential
Rigel partnered with AstraZeneca (NYSE:AZN) on the oral rheumatoid arthritis treatment fostamatinib. Shares dropped more than 20% last month when the drug's phase 2b data emerged. Fostamatinib outperformed the placebo but underperformed the best-selling Humira injection from Abbott spinoff AbbVie (NYSE:ABBV).

Adding to fostamatinib's problems is the fact that there's an approved oral drug for RA -- Pfizer (NYSE:PFE)'s Xeljanz. The FDA will approve the drug -- it's generally effective and well tolerated -- but it's destined for a small market share.

Fostamatinib's phase 3 studies should report data in the first half of the year. Regulatory filings in the U.S. and Europe could come by year's end.

Parallel phase 2 trials
Rigel initiated phase 2 trials for two different drugs last September. Allergic asthma inhalant R343 and R333 for a dermatological form of lupus should report in mid-2013.

R343 would become a competitor for the injectable Xolair from Novartis and Roche subsidiary Genentech, which leads the market. Rigel's drug has the dosage convenience, but safety is where it could move further ahead. Xolair's earned a post-market warning increase due to anaphylaxis risk, which came on top of an FDA ordered heart safety study.

R333 treats discoid lupus erythematosus, or DLE, which is typically treated with steroidal creams. The rare condition offers a limited market, but it would be Rigel's.

The stragglers
R348 brings up the pipeline's rear. The topical JAK/SYK inhibitor treats chronic dry eyes. A phase 1 trial initiated last month, and phase 2 should kick off in mid-2013. Investors will get a better idea once data's available. R348 would enter a market that includes Allergan's (NYSE:AGN) Restasis.

Rigel also has some preclinical projects in the works that are worth a look. But these won't show any real potential -- or failure-- for quite some time. One area covers an enzyme activator meant to aid muscle cells and help congestive heart failure patients with exercise endurance. Then there's the loosely defined group of muscle atrophy inhibitors that could have a wide range of uses in the future.

Foolish bottom line
Rigel's third-quarter reported cash and equivalents amounted to around $19 million, and cash burn was about $20 million. Those aren't stellar numbers, but predictable when there's no approved drug and the pipeline's so small. Rigel's former strength laid in partnerships with big pharma, but its lead drug with AstraZeneca looks to be a dud. The following drugs have a small market potential. Unless fostamatinib pulls off something remarkable in its phase 3 trial, I would hold off on Rigel until there are better signs of strength.

Brandy Betz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.