Rigel Pharmaceuticals, Inc. (RIGL) Message Board

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Biotech / Medical : Rigel Pharmaceuticals, Inc. (RIGL)

RIGL 30.70

-2.8%

9:30 AM EST

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From: mopgcw	7/24/2009 10:43:50 AM
	of 566

CS: Rigel Pharmaceuticals Inc. (RIGL) OUTPERFORM [V] M. Aberman CP: US$ 11.56 TP: US$ 20 CAP: US$ 422.9m Defending Rigel Again; Reaction Overdone • Conclusion: With the stock down over 26% in the after hours trading after falling 14% during the day, we believe RIGL is being unfairly punished on a trial that was not needed in the first place. We believe that R788's appropriate position is after methotrexate and before biologics and we note Pfizer is currently not even testing its JAK3 inhibitor in a trial limited to biologics non-responders. In addition, while we are not arguing that R788 works in this setting (needs to be proven), there are a number of issues with this trial that could have led to this failure, including the high placebo rate (see full report for comparison of trials in this setting), small size, and short duration. With regard to safety, the data look similar to the TASKI2 trial other than a larger elevation in blood pressure (3 mmHg vs. ~1 mmHg). We again reiterate that we think the toxicity profile is appropriate for an RA drug and remind investors that Savella was recently approved for fibromyalgia with a similar blood pressure signal. • What's new? Rigel announced that the TASKi3 trial did not meet its efficacy in RA patients who had previously failed biologic therapies. Safety findings are consistent with what was observed in TASKi1 and TASKi2 trials. • Implication: Remain Outperform with $20 TP. Given that these data do not change our view on R788's probability of success or market size, we have not changed our thesis or valuation for Rigel. That is not to say the trial failure is not a disappointment. But, we believe our price target accurately reflects the risk and the stock reaction is way overdone making a great buying opportunity. We recognize that the trial program is not without risk. That said, we think the price (at our target) represents an appropriate risk adjustment. With few options for oral drugs targeting autoimmune diseases and R788's profile, we believe that if the market does not recognize the value of this asset, a large Pharma may find RIGL as an attractive acquisition target instead of partnership.

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