Rigel Refuels R&D in $130M Offering

| About: Rigel Pharmaceuticals, (RIGL)

Rigel Pharmaceuticals (NASDAQ:RIGL) is tapping public investors in a new offering to raise funds for advancing its pre-clinical pipeline, including an asthma drug carried through an early-stage trial by Pfizer (NYSE:PFE) before it dumped its stake in the program during a May portfolio review.

The new offering is expected to raise $130.4 million through a sale of 16.3 million new shares at $8 apiece. Shares are being sold at a 5.7 percent discount to Rigel’s Wednesday closing price of $8.49, a day before the offering was announced.

Rigel, a clinical-stage drug developer based in South San Francisco, focuses on small-molecule drugs for the treatment of inflammatory diseases, autoimmune conditions, and muscle disorders. It says it will use the funds to support research and development of its pipeline, including its late-stage rheumatoid arthritis therapy, fostamatinib, which enjoys additional support from the company’s partnership with AstraZeneca (NYSE:AZN).

The company had a long-running partnership with Pfizer, which started in the first quarter 2005 when Rigel announced it had entered into a collaborative research and license agreement for the development of inhaled products for the treatment of allergic asthma and other respiratory diseases, such as COPD. Fast-forwarding to a more challenging time, Pfizer is looking at a multitude of way to both refocus and restructure the company. As part of that process, at the beginning of May it cut 39 projects during a first-quarter house cleaning, including its partnership on R343. The drug is Rigel’s inhaled Syk inhibitor for allergic asthma, a chronic inflammatory disorder of the lungs and respiratory passages caused in response to an allergen or pathogen.

Although Pfizer’s decision left Rigel without a partner on R343, it also gave the company the opportunity to move ahead with a compound ready for mid-stage testing.

“It is rare in our business,” said Rigel CEO James Gower on the day Pfizer announced its decision, “that one has the opportunity to develop an asset [that] is both promising and on which the research and development has been as well done as the package that Pfizer is transferring to us.