What happened

Shares of Rigel Pharmaceuticals Inc. (NASDAQ:RIGL) a clinical-stage biotech, are surging today after announcing the FDA's acceptance of a recently submitted new drug application. As of noon, the stock was up about 13% in response to the news.

So what 

Before the FDA switched to electronic submissions, the reams of data required to support new drug applications would fill a small office from floor to ceiling. This is why the agency doesn't automatically review every submission it receives. It's also why investors are thrilled with today's announcement concerning Rigel's lead candidate, Tavalisse, the molecule formerly known as fostamatinib.

Excited investor looking at upward sloping stock charts.

Image source: Getty Images.

The application is for the treatment of immune thrombocytopenic purpura (ITP), and the FDA's official acceptance comes as a relief. An estimated 60,000 to 125,000 Americans suffer from the rare, blood-based autoimmune disease, and the late-stage studies supporting the application were small enough that one responder in a placebo group nearly derailed the entire program. Although combined data strongly suggests Tavalisse is a winner, the FDA's acceptance of the application wasn't an entirely foregone conclusion.

Now what

Even in the wake of today's run up, Rigel Pharmaceuticals is still a biotech stock I'd buy right now. The underserved ITP population is small enough that end payers probably won't push back too hard on pricing, but large enough for the drug to generate an estimated $340 million in annual sales at its peak.

At recent prices, Rigel's market cap is just $342 million. Biotechs generally trade at multiples several times higher than total sales, which suggests this company has multibagger potential. Of course, Tavalisse still needs to earn a green light from the FDA. The agency is expected to announce its decision by next April.

Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.