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Shareholders of Rigel Pharmaceuticals (NASDAQ: RIGL) got a nasty surprise on December 13th, 2012 when their partner AstraZeneca announced negative top-line results from the phase IIb study known as OSKIRA-4.

This clinical trial studied the spleen tyrosine kinase inhibitor fostamatinib (R788), which is being developed as a treatment for rheumatoid arthritis.

There were two primary objectives (endpoints) explored in OSKIRA-4. First was the superiority against placebo 6 weeks into the study, which was demonstrated with statistically significant improvements in DAS 28 (Disease Activity Score) in two of the fostamatinib arms, but not the other. The arm with the highest dose received 100mg of the compound twice daily. The next received 100mg twice daily for 30 days, then was switched onto a 150mg once daily dose. Then there was a third dosage group which received 100mg of fostamatinib twice daily for 30 days then received 100mg once daily for the next two weeks.

We can see that the DAS 28 measurements show that fostamatinib works, although the group that received 100mg twice daily for the first month then 100mg once daily in the last two weeks was unable to produce good enough results to consider the primary objective of the trial a complete success. The potential toxicity of upping the fostamatinib dose could introduce some problems into the safety profile of the drug despite improving its demonstrated efficacy.

The most upsetting news was related to the secondary objective of OSKIRA-4, which compared the fostamatinib arms against standard-of-care adalimumab - more commonly known as HUMIRA. HUMIRA was developed by Abbott Labs (NYSE: ABT) and was brought to market in 2003 as a treatment for rheumatoid arthritis. It was very successful, and has become standard-of-care treatment for the condition. Unfortunately for Rigel, none of the three fostamatinib dosage groups were able to demonstrated superiority over adalimumab (HUMIRA). This was disappointing to hear, but it certainly doesn't destroy the drug's prospects.

The OSKIRA program is set to report results from its ongoing phase III trial in the earlier part of 2013. The reason that Rigel has not fallen further on these results is because the company actually wants to pair fostamatinib with a DMARD (disease-modifying anti-rheumatic drug) for the NDA submission that will hopefully lead to FDA approval. This means that the inferiority of the drug against adalimumab/HUMIRA is not a huge deal at this time, although the data surrounding the primary endpoint (superiority versus placebo) should be considered.

Going forward, I expect Rigel to continue trading mostly based on the development of fostamatinib although there are other pipeline compounds in clinical development that should be watched too. I listed them below:

1.) R343 - their syk kinase inhibitor for stopping the reaction seen in asthma, is in phase II studies and expects to report results in 2013.

2.) R333 - Rigel's topically applied JAK/SYK inhibitor for the treatment of discoid lupus that is in phase II trials, also expecting results in 2013

3.) R548 - the JAK3 inhibitor intended to be used to inhibit organ transplant rejection, now entering phase I trials

Shares of Rigel Pharmaceuticals may remain propped up on the hope that phase III trials for fostamatinib provide better data in 2013, although it may prove difficult for the company even if it can get the compound approved as a treatment for rheumatoid arthritis. Not only is its efficacy profile at this point in question, but there is intense competition coming to challenge the likes of HUMIRA in RA. This is what one should expect with a drug market that targets over two million people in the United States alone - intense competition for the outsized profits.

Source: Rigel Recovers On 2013 Hope For Its Rheumatoid Arthritis Drug