Why Rigel Pharmaceuticals Shares Tanked

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Rigel Pharmaceuticals (NASDAQ: RIGL  ) , a clinical-stage biopharmaceutical company focused on autoimmune, inflammatory, and muscle disease disorders, dropped as much as 17% after announcing that R343 didn't meet its primary endpoint in a mid-stage allergic asthma study.

So what: R343 is an inhaled SYK inhibitor that, according to this phase 2 trial, was to hit a predefined change in pre-bronchodilator FEV1 (a measure of lung function that takes into account expelled air volume in the first second) from the start of the trial to the end at week eight relative to the placebo. Although Rigel noted that the drug was safe and well-tolerated, it did not meet either its primary or secondary endpoints, and development of the drug will be ceased.

Now what: Disappointments are becoming all too common for Rigel, which saw its shares implode in June after its then-development-partner AstraZeneca (NYSE: AZN  ) decided to take a $140 million charge and return all rights to rheumatoid arthritis pill fostamatinib, its lead drug candidate, back to Rigel. A good chunk of fostamatinib's top-line data from its late-stage studies have been statistically significant; however, AstraZeneca saw no need to pour additional money into the program. What's left to buoy Rigel now is its $252 million in cash with no debt. But considering that it will likely burn through $80 million to $90 million per year in cash, that's not a big comfort to existing shareholders.

Rigel's recent troubles could serve as the perfect reminder that the best investment strategy is to pick great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" not only shares stocks that could help you build long-term wealth, but also winning strategies that every investor should know. Click here to grab your free copy today.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2610092, ~/Articles/ArticleHandler.aspx, 9/30/2014 8:03:15 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement