UPDATE: J.P. Morgan Downgrades Rigel Pharmaceuticals to Neutral Following AZN Decision

In a report published Tuesday, J.P. Morgan analyst Cory Kasimov downgraded the rating on Rigel Pharmaceuticals RIGL from Overweight to Neutral.

In the report, J.P. Morgan noted, “We are downgrading RIGL shares to Neutral (from OW) following AZN's decision to return the rights for RIGL's lead asset, fostamatinib (for all indications), to the company. This morning, AZN/RIGL announced top-line data for the OSKIRA-2 and OSKIRA-3 Ph3 trials for fostamatinib (for RA), and while the drug may be approvable (there does not appear to be any negative safety surprises), it appears undifferentiated vs. PFE's oral RA drug, Xeljanz (lack of radiographic improvement and lower ACR20 scores than hoped for). As such, we are removing fostamatinib from our model and withdrawing our price target. We spoke with RIGL management this morning and after reviewing the data generated by AZN for fostamatinib over the summer, RIGL expects to make a decision on next steps in 3Q13. In the meantime, while RIGL has upcoming Ph2 data readouts for other, earlier-stage assets (Ph2 data for R343 in allergic asthma and Ph2 data for R333 in discoid lupus both expected in 3Q13), these are unproven at this stage. As such, we do not assign these programs much credit at present and are stepping to the sidelines until we have more proof-of-concept data for these assets.”

Rigel Pharmaceuticals closed on Monday at $4.53.