Staff Writer

Rigel Pharmaceuticals Inc. could gross nearly $150 million in an underwritten public offering of 16.3 million shares of common stock and an overallotment option for an additional 2.4 million shares at $8 a share, a 5.7 percent discount.

The offering could roughly double the South San Francisco-based company's bank account and position it for multiple clinical trials.

Rigel shares (NASDAQ:RIGL) were up 32 cents, to close at $8.81 Thursday.

Jefferies & Co. Inc. and J.P. Morgan Securities LLC are joint book-running managers for the offering, which is expected to close by June 1. Piper Jaffray & Co. is co-manager.

Earlier this month, the company reported end-of-first-quarter cash of $155.5 million. Rigel said it was enough to see its lead program – oral Syk inhibitor fostamatinib – through a large Phase III program in rheumatoid arthritis led by partner AstraZeneca plc, of London, begin two Phase I trials by the end of 2011 for two JAK3 programs, and generally fund operations into 2013.

But several days later Rigel said it would assume development of its other advanced candidate, R343, an inhaled Syk inhibitor for allergic asthma, after New York-based Pfizer Inc. opted to return full rights to the drug.

Rigel Chief Financial Officer Ryan Maynard told BioWorld Today that getting back R343, which is nearing a Phase II trial, accelerated the timing of the public offering.

With a fostamatinib new drug application filing expected in 2013, Maynard said that Rigel had given guidance that it could fund operations into 2013, but added, "We knew we needed to do a raise to give us more runway, and what sped it up for us was getting back R343. It wasn't either-or; we knew had to do it at some point. R343 accelerated it, and this offering gets us into 2014." (See BioWorld Today, Sept. 30, 2010.)

Maynard said that Rigel is currently evaluating the details of R343's development to date and designing a Phase II study expected to get under way during the first half of 2012. "We're delighted to get back a Phase II-ready program," he said.

The return of R343 was a result of Pfizer's February decision to exit the allergy and respiratory therapeutic R&D area and close its 2,400-employee research and development center in Sandwich, UK, as part of the drugmaker's program to focus its R&D operation.

R343 had emerged from a 2005 licensing deal between the companies involving inhaled small-molecule Syk inhibitors.

Rigel said that a year later Pfizer identified R343 as the lead product candidate for intrapulmonary delivery in the potential treatment of allergic asthma, and in 2007 Pfizer began the first in a series of Phase I trials of R343 in healthy adults and later in mildly asthmatic adults. The initial results have not been published, but Rigel said R343 was well tolerated and with beneficial improvement in both the early and late phase asthmatic responses following an allergen challenge. (See BioWorld Today, Jan. 21, 2005.)

Piper Jaffray & Co. analyst M. Ian Somaiya has estimated that Pfizer invested as much as $200 million on R343, the only syk kinase inhibitor in clinical trials for respiratory diseases, in the process of completing several Phase I studies that evaluated the drug in more than 200 patients. With between 40 million and 50 million people in the U.S. and Europe with asthma – and about 300 million people worldwide – Somaiya wrote earlier this month that there is a massive opportunity, which "should allow Rigel to sign a lucrative marketing agreement following availability of Phase II data."

In addition to R343 and the Phase III fostamatinib program, Rigel said it expects to begin Phase I trials with two internal JAK3 inhibitor programs by the end of 2011. One is an oral JAK3 inhibitor for treatment of organ transplant rejection, the other a different JAK3 inhibitor in a topical formulation for treatment of discoid lupus erythematosus, a chronic autoimmune disease of the skin.

In other financing news:

• Endo Pharmaceuticals Holdings Inc., of Chadds Ford, Pa., announced a private offering of $700 million aggregate principal amount of senior unsecured notes. The company said the notes will be unsecured, unsubordinated obligations of and will be guaranteed by Endo's subsidiaries. Endo said it intends to use the proceeds together with cash on hand and borrowings under its new credit facility to finance its $2.9 billion acquisition of American Medical Systems Holdings Inc., of Minnetonka, Minn., which was announced in April and is expected to close in the third quarter, as well as to refinance the company's existing credit facility and existing American Medical Systems Holdings and pay related fees and expenses.