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Back in spring 2010, Astra Zeneca (AZN) ponied up $100 million in upfront money to partner with Rigel (RIGL) on its rheumatoid arthritis drug fostamatinib ("FosD"). Some worried Rigel had over-hyped the deal, focusing too much attention on the back-end and not enough on the upfront.

We'll soon find out if investors patient enough to hold the past few years will be rewarded.

In Phase IIb data released in fall of 2010, FosD helped 67% of patients resistant to treatment with methotrexate improve symptoms by at least 20%. A third of those patients saw improvement within the first week of treatment.

The results were good enough for Astra to launch a flurry of late stage FosD trials to develop new oral alternatives to standard anti-TNF injections. The goal being an NDA filing in 2013 and commercialization in 2014.

If FosD is commercialized in 2014, it could eventually reach blockbuster status. Oral delivery is far more patient friendly than injections, which means FosD could win share from Abbott's (ABT) Humira and Amgen's (AMGN) Enbrel.

It will also compete with Pfizer's own oral drug, tofacitinib, which gained a nod from the FDA's advisory panel in May and has an August PDUFA date.

While the advisory panel backed tofacitinib, the FDA reported concerns over the drug's safety profile, which could result in a more restrictive label. If tofacitinib worries persist, FosD may find doctors more willing to prescribe it. To bolster its case, AZN is conducting long-term safety studies across 2,000 patients recruited during Phase 2 and Phase 3.

That's not to say FosD isn't without its own problems.

It increased blood pressure in some patients. And an interim study failed to meet its endpoint. But, blood pressure can be managed and anti-TNF's have their own drawbacks. As for the study, Astra is on record believing the setback was due to poor design of the study, rather than an indication of the drug's effectiveness. Either way, there remains no perfect drug for RA and a growing unmet need.

Just how big is the market?

In the U.S., between 1.3 and 2 million suffer from RA. Frost & Sullivan projects the U.S. market for RA drugs will grow from $5.78 million in 2010 to $8.34 billion in 2017. Factor in global sales and the addressable market likely doubles.

In 2010, Enbrel raked in $3.5 billion for Amgen in the U.S. and another $3.2 billion in sales overseas for Pfizer. In Q1, U.S. sales were $890 million. Humira generated $928 million in Q1 sales for Abbott.

And, despite the significant market size and sales of these drugs, patients will welcome new treatments.

A recent 3 year study of 272 Humira patients provided clues why up to a third of patients on the drug fail to respond. The study blamed immune systems for developing antibodies which prevent it from working as hoped. With such a large population failing to respond to existing treatment, oral alternatives become additionally compelling.

Data from the three ongoing Phase III FosD OSKIRA trials are expected in early 2013. The OSKIRA-1 study puts FosD to the test in patients who failed on methotrexate. Oskira-3 evaluates FosD in patients who failed to respond on the anti-TNF's like Humira. Coming sooner will be Phase IIb monotherapy data, likely to be released later this year.

Astara thinks there may be additional indications for FosD too. It started a phase II trial in large B cell lypmphoma in Q1, with results expected in spring 2013.

Outside of FosD, Rigel has other drugs in the clinic too.

When Pfizer abandoned its asthma program, it returned rights for R343 to Rigel. Although the study isn't yet recruiting, Rigel plans to start enrolling by the end of summer. The Phase II trial will compare two doses of the drug against placebo in mild to moderate allergic asthma patients. The company plans to complete the study in October 2013.

The company also has R333 ready for Phase II in discoid lupus. Again, the study hasn't enrolled yet, but will compare R333 ointment against placebo with a planned trial completion date of October 2013. Rigel also has R548 in phase I for transplant rejection.

And, in mid June AZN inked another partnership with the RIGL relationship. This time, the drug is R256, an inhaleable treatment for tough cases of asthma. AZN will gain global marketing rights and will be responsible for shepherding the drug through trials. In exchange, RIGL received $1 million up front with another $8.25 million in early milestone payments expected by 2014. Overall, the company believes the deal is worth $100 million, plus royalties if the drug makes it to market.

Finally, a long standing collaboration with Daiichi on research related to ligases for cancer treatment produced a $750,000 payment related to the pre-clinical oncology program. Overall, RIgel has earned $6.5 million from Daiichi.

Given the strong pipeline of data likely to hit markets over the coming year, there's likely to be plenty of fits and starts for Rigel shareholders.

As long as programs continue to enroll and advance, the market opportunity may make Rigel much more valuable than its current $794 million market cap, particularly if Astra decides they want to buy Rigel outright.

Source: Rigel's Drug Trials Offer Upside Through 2013