Rigel Pharmaceuticals (RIGL) Sparks Optimism Among Investors; Here’s Why

Rigel Pharmaceuticals’ (RIGL) long-suffering bulls finally have reason to celebrate: The stock is up nearly 11% in pre-market trading Wednesday after the company announced a collaboration and license agreement with Grifols, S.A. to commercialize fostamatinib in Europe and Turkey. Grifols will receive exclusive rights for fostamatinib in all human diseases, including chronic immune thrombocytopenia (ITP), autoimmune hemolytic anemia (AIHA), and IgA nephropathy (IgAN).

“Grifols has a broad presence in Europe and an established position in the hematology commercial landscape, which supports our goal of bringing fostamatinib to patients in these countries,” said Raul Rodriguez, President and CEO of Rigel. “Our marketing authorization application for fostamatinib in chronic ITP is currently under review by the European Medicines Agency, and we anticipate a decision by the end of 2019. This provides a potential opportunity for fostamatinib to begin generating revenue in the European market in 2020.”

Under terms of the agreement, Rigel will receive a $30 million upfront cash payment, with the potential for $297.5 million in payments related to regulatory and commercial milestones, which includes a $20 million payment for EMA approval of fostamatinib for the treatment of chronic ITP. Rigel will receive significant stepped double-digit royalty payments based on tiered net sales which may reach 30% of net sales. In return, Grifols receives exclusive rights to fostamatinib in human diseases, including chronic ITP, autoimmune hemolytic anemia (AIHA), and IgA nephropathy (IgAN), in Europe and Turkey. In the event that, in 2021, after the second anniversary of the agreement, fostamatinib has not been approved by the EMA for the treatment of ITP in Europe, Grifols will have the option during a six-month time-frame to terminate the entire agreement which would terminate all their rights to ITP, AIHA, and all other indications.  In this limited circumstance, Rigel will pay Grifols $25 million and regain all rights to fostamatinib in Europe and other territories.  Rigel retains the remaining global rights to fostamatinib outside the Grifols territories and those rights previously granted to Kissei Pharmaceuticals (in Japan, China, Taiwan and the Republic of Korea).

“Given our global leadership position as a manufacturer of plasma medicines and our in-depth knowledge and expertise in blood disorders, adding fostamatinib to our portfolio is a natural fit for Grifols,” said Joel Abelson, President, Bioscience Commercial Division of Grifols. “Its potential in multiple indications, including ITP, may provide significant benefit for patients and is a valuable addition to our portfolio.”

The Street Verdict

The biotech player has certainly drawn bullish attention on Wall Street. Out of 4 analysts polled in the last 3 months, all 4 rate a Buy on RIGL stock. The 12-month average price target stands at $8.13, marking over 300% upside potential from yesterday’s closing price. (See RIGL’s price targets and analyst ratings on TipRanks)


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