What happened

Shares of Rigel Pharmaceuticals (RIGL 2.86%), a clinical-stage biotech, were down around 21% as of 11:44 a.m. EDT on Tuesday. Investors are reacting to a mid-stage clinical trial failure involving the company's lead treatment candidate, fostamatinib.

So what 

The FDA is reviewing Rigel's application to make fostamatinib a first-in-class treatment for perhaps 65,000 underserved patients with a rare blood disorder called immune thrombocytopenic purpura (ITP). Fostamatinib performed well among ITP patients. However, it failed to show a significant benefit in a study as a treatment for immunoglobulin A (IgA) nephropathy, for which the patient population is roughly twice as large as ITP's.

Anxious looking person looking at their computer screen.

Image source: Getty Images.

Investigators randomized 76 IgA nephropathy patients into groups receiving a placebo, or fostamatinib different dosages. The trial was designed to measure how much protein leaked from their kidneys -- a measurement of disease activity -- and enrolled patients leaking 500 mg per day. There were differences in the rates of improvement between groups, but they weren't strong enough to be considered statistically significant.

Now what

Rigel was able to point to an interesting subgroup analysis that suggests its candidate could still have a future as a treatment for IgA nephropathy. Among the 45 patients with damaged kidneys leaking a full gram of protein per day, the differences were much wider. The median kidney damage reduction from baseline was 36% for patients given 150 mg of fostamatinib versus just 14% in the placebo group.

Although these results warrant further study, Rigel doesn't appear willing to direct its limited resources in this direction right now. Instead, management stated it would seek a partner to help fund such development down the road.

The FDA is expected to deliver a decision about fostamatinib's ITP application by April 17, so don't be surprised if the stock bounces back, or plummets in the days ahead based on the regulator's ruling.