Soaring +11% In Pre-Market, Rigel Receives Buy Initiation Amid Fostamatinib Phase 3 Optimism

H.C. Wrainwright's Positive Take On Phase 3

H.C. Wainwright & Co's Shaunak Deepak initiated Rigel Pharmaceuticals at Buy with a price target of $6.00.

"We believe fosta (Fostamamtinib) is likely to show a significant benefit over placebo, due to a historically low placebo-response rate in ITP (0–5 percent)," stated Deepak. Additionally, positive data from the phase 2 study supports the probable success of the phase 3 study according to the analyst.

If the Phase 2 data were to be replicated in Phase 3, Deepak believes Rigel Pharmaceuticals could "bring fostamatinib to market in the U.S. by 2018 with a 50-person sales team. Assuming fosta targets TPO-failing ITP patients, we believe RIGL could sell $200 million in 2024."

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'Partnerships Expected to Curb Cash Burn'

In addition to positive expectations for Fostamatinib, Deepak saw "further catalysts this year in two more speculative Phase 2 fosta trials, as well as RIGL's current and potential new partnerships."

"We see drug discovery and development as a way to mitigate cash burn through partnerships. In 2015, RIGL earned $41.5 million in upfront payments and could earn over $500 million in milestone payments and potential royalties from its partners including Aclaris, BerGenBio, BMS, and Daiichi Sankyo," stated Deepak.

At time of writing, Rigel was up 11.11 percent in Wednesday's pre-market trading at $2.50.