What happened
Shares of development-stage biopharma Rigel Pharmaceuticals (RIGL -4.00%) jumped more than 14% today after the company announced fourth-quarter and full-year 2017 results. The company was in full development mode last year, so only $4.5 million in collaboration revenue was reported for all of 2017.
Of course, the most important consideration for investors is the pending marketing approval by the U.S. Food and Drug Administration of fostamatinib for the treatment of adults with chronic immune thrombocytopenia (ITP), a rare blood disease. The Prescription Drug User Fee Act (PDUFA) action date is April 17, which means investors will know the fate of the drug candidate by then. Wall Street is expecting the binary event to end with a positive result.
As of 2:19 p.m. EST, the stock had settled to a 12.1% gain.
Image source: Getty Images.
So what
While fostamatinib hasn't had an easy path through clinical trials for every disease it's been thrown up against, the combined results from two clinical trials in ITP show a clear benefit compared to a placebo. That has some analysts expecting the drug to ultimately be approved. It's not exactly a slam dunk, but peak annual sales potential has been estimated at $350 million. That's not bad considering Rigel Pharmaceuticals is valued at $635 million as of this writing.
Of course, PDUFA action dates are set well in advance, so April 17 has been on shareholders' calendars for quite some time.
Nonetheless, gaining marketing approval for fostamatinib would provide the biopharma with its first commercial product and finally allow it to generate meaningful revenue. It would also significantly de-risk Rigel Pharmaceuticals as an investment, especially considering its next most-advanced pipeline assets are just starting phase 2 trials. Fostamatinib is about halfway through two phase 2 trials for other autoimmune and blood disorders.
Now what
Long story short, Rigel Pharmaceuticals reminded Wall Street that it's on the cusp of gaining marketing approval for what would be its first-ever commercial product. That was enough to send shares sharply higher today. Considering the biopharma ended 2017 with $115 million in cash and cash equivalents, and has been investing in pre-launch activities in recent months, it should be able to hit the ground running if fostamatinib is approved next month. It will likely need more funds to really ramp up marketing and sales activity, in addition to the continued development of its young pipeline, but Mr. Market thinks financing could be easier to come by in about six weeks.
