RIGL stock exploded higher last month after instigating an investigator-sponsored trial (IST) with the Imperial College London to evaluate the efficacy of fostamatinib, its oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of COVID-19 pneumonia. This was indeed big news and drove shares to over $5.
RIGL stock has since dropped back down on short-selling pressure and weak longs selling. However, we see this selling as a discount entry opportunity for investors looking to pick up cheap exposure to a name with huge potential. In this article, we take a look at why we think RIGL stock has multi-bagger potential and is more than just a Covid-19 play.
First up, here’s a little background info for those that aren’t familiar with RIGL stock. Rigel Pharmaceuticals is a biotechnology company dedicated to discovering, developing, and providing novel small molecule drugs that significantly improve the lives of patients with immune and hematologic disorders, cancer, and rare diseases.
The company’s first FDA approved product is TAVALISSE® (fostamatinib disodium hexahydrate) tablets, the only oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of adult patients with chronic immune thrombocytopenia who have had an insufficient response to a previous treatment. The product has been approved by the European Commission for the treatment of chronic immune thrombocytopenia in adult patients who are refractory to other treatments and is marketed in Europe under the name TAVLESSE® (fostamatinib).
Rigel’s clinical programs include a Phase 3 study of fostamatinib in warm autoimmune hemolytic anemia (AIHA); a completed Phase 1 study of R8354, a proprietary molecule from its interleukin receptor-associated kinase (IRAK) inhibitor program; and an ongoing Phase 1 study of R5524, a proprietary molecule from its receptor-interacting protein kinase (RIP) inhibitor program.
In addition, Rigel has product candidates in clinical development with partners Aclaris Therapeutics, AstraZeneca, BerGenBio ASA, and Daiichi Sankyo.
The Investigator-Sponsored Trial
SYK is a key mediator of immunoreceptor signaling in a host of inflammatory cells. By inhibiting SYK, fostamatinib may specifically inhibit the infiltration and activation of monocytes and neutrophils in the lungs that are prominent in COVID-19.
The IST will be a two-stage trial with patients randomized (1:1:1) to fostamatinib, ruxolitinib, or standard of care. The primary objective will be to determine the efficacy of fostamatinib and ruxolitinib compared to standard of care to reduce the proportion of hospitalized patients progressing from mild or moderate to severe COVID-19 pneumonia.
RIGL stock will provide support for this trial along with Novartis.
University of Amsterdam In Vitro Studies
Recent in vitro studies led by the Amsterdam University Medical Center at the University of Amsterdam, showed that R406, the active metabolite of fostamatinib, blocked macrophage hyperinflammatory responses to a combination of immune complexes formed by anti-Spike IgG in serum from severe COVID-19 patients. Anti-Spike IgG levels are known to correlate with the severity of COVID-19. These results suggest that by inhibiting anti-Spike IgG-mediated hyper inflammation, R406 could potentially play a role in the prevention of cytokine storms as well as pulmonary edema and thrombosis associated with severe COVID-19.
MIT Harvard Study
Researchers at The Broad Institute of the Massachusetts Institute of Technology (MIT) and Harvard recently screened 3,713 FDA-approved compounds that reduce the abundance of a protein called mucin-1 (MUC1), a biomarker to predict the development of acute lung injury and acute respiratory distress syndrome. Fostamatinib was the only one that qualified, demonstrating preferential depletion of MUC1 from epithelial cells without affecting cell viability.
RIGL Stock Reasons To Be Bullish
- RGL stock is not just a Covid-19 play.
- RIGL is more de-risked today, than it was before, with European sales of Tavalisse about to begin, under licensee Grifol.
- Tavalisse has been estimated to reach $300 million in peak sales for ITP alone.
- Biopharma stocks usually trade with a market cap around 5x sales. This would give Rigel Pharmaceuticals stock a share price of $8 to $9.
- As of June 30, 2020, Rigel had cash, cash equivalents, and short-term investments of $92.5 million, compared to $98.1 million as of December 31, 2019.
- In the second quarter of 2020, total revenues were $16.0 million, consisting of $15.0 million in net product sales and $1.0 million in contract revenues from collaborations. Net product sales increased by 47% from $10.2 million in the second quarter of 2019.
- If fostamatinib gets approved by the FDA to treat COVID-19, RIGL stock will skyrocket.
- The COVID-19 global pandemic continues to extract a significant human and economic toll and there remains a serious and immediate need for safe and effective therapies,” said Raul Rodriguez, Rigel’s president and CEO. “Severe COVID-19 pneumonia can lead to acute respiratory distress syndrome, or ARDS, which can often be fatal. Given encouraging data from pre-clinical models of fostamatinib, we believe there is potential for SYK inhibition to help treat the severity of the disease for these patients and to prevent ARDS.
- Even without fostamatinib, the current stock price clearly ignores the potential of Tavalisse and Rigel’s current pipeline.
- RIGL stock has a current market cap of just $446 million, making shares very, very cheap at current levels.
The current stock price clearly ignores the potential of Tavalisse and fostamatinib. We expect some pr’s to be hitting the tape over the next few weeks that will send RIGL stock higher. Any weakness should be viewed as an opportunity to pick up cheap exposure. With 5% of the float short, RIGL stock is gearing up to squeeze the shorts and a big move higher like it did last month.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:RIGL or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.