CS: Rigel Pharmaceuticals Inc. (RIGL) OUTPERFORM [V] M. Aberman
CP: US$ 11.24 TP: US$ 20 CAP: US$ 411.2m
TASKi2 Allays Concerns, HTN Notwithstanding - Raising Target Price to $20 (from $15)
• Conclusion: The results of TASKi2 study demonstrated R788's utility as an oral treatment of rheumatoid arthritis (RA)
regarding both safety and efficacy of this novel agent. On the efficacy side, there is clear dose response between the tested
doses and the ACR scores appear to be comparable to another oral agent under development, CP-690,550, the JAK3
inhibitor being developed by Pfizer in Phase III clinical trials. Although the ACR70 score fails to reach statistical significance,
the 150 QD dose may be a viable option and is worth being investigated in a pivotal study. With regard to safety, we are
pleased with the comparable infection rates to placebo, benign LFT results, and acceptable blood pressure elevation. The
less than 1 mmHg increase is largely due to active monitoring and management of hypertension in this study. Despite being a
real drug-related side effect, we note this is manageable as evidenced by the rate of hypertension. In summary, we are
comfortable about R788's safety and efficacy profile as a treatment for RA. As such, we believe the company will be able to
partner R788 with a major pharma company on favorable terms.
• What's New? Rigel announced the results of its Phase IIb TASKi2 trial for R788 in methotrexate-inadequate rheumatoid
arthritis.
• Implication: Remain Outperform with $20 TP (from $15). Given these encouraging results, we are increasing probability of
success for Phase II to 100% from 80% and raising the price target to $20. While TASKi3 has a higher hurdle of biologic
failures to treat, we believe these results warrant confidence in the next data readout due by the end of July, where the 100
mg bid will be tested. Notwithstanding the hypertension issue, the substantial market size for RA therapy along with the
scarcity of attractive assets in the field of oral treatment for RA qualifies Rigel's value in the league of small/mid-cap biotech
companies. |
