Assistant Managing Editor

Rigel Pharmaceuticals Inc., which saw its stock jump a dramatic 224 percent on positive Phase II rheumatoid arthritis data in December, is taking advantage of that increase by raising $135 million in a public offering.

The South San Francisco-based firm priced its offering of 5 million shares at $27 each, a minor discount to Thursday's closing price of $27.53. Rigel's stock (NASDAQ:RIGL) dropped $1.35 Friday to close at $26.18.

That's a big change for a firm that was trading around the $8 mark only a month and a half ago before reporting impressive data from its rheumatoid arthritis (RA) drug R788 (tamatinib fosdium). Data from that 189-patient trial showed that, when given at the 100-mg and 150-mg doses, the drug achieved higher American College of Rheumatology (ACR) criteria specified response rates over placebo, with the onset of pain relief in both of those dose groups occurring as early as one week after the start of treatment. R788 met its primary endpoint, defined as a 20 percent improvement using ACR criteria, at the end of 12 weeks, demonstrating that 65 percent of patients in the 100-mg arm and 72 percent in the 150-mg arm achieved ACR20 vs. 38 percent in the placebo group. (See BioWorld Today, Dec. 14, 2007.)

Rigel expects to initiate a Phase IIb trial by the end of the first half of 2008 to evaluate dosing and X-rays of bones over a six-month period. It's also planning a second Phase IIb trial, to start about the same time, in a subpopulation of RA patients.

Proceeds from the offering - expected to gross $155.3 million if underwriters exercise in full the 750,000-share overallotment option - are expected to fund research and development efforts and support general corporate purposes. Though Rigel has not yet reported its fourth-quarter earnings, the company said in its prospectus that it anticipates reporting a cash position of $108.3 million as of Dec. 31. Money from the offering, plus existing cash and expected collaboration proceeds, should fund operations for the next 12 months.

Over the next year, Rigel expects to make significant headway with R788 in other indications.

The firm plans to start Phase II trials in immune thrombocytopenia purpura and lupus, and anticipates reporting interim results from a Phase I/II study of the drug in B-cell lymphoma.

Elsewhere in its pipeline, the company has R348, an oral JAK inhibitor in development for RA, psoriasis, transplant rejection and graft-vs.-host disease, that is expected to yield interim Phase I data in the first half of this year. Rigel also is working in collaboration with Merck Serono on R763, an oral Aurora kinase inhibitor in three Phase I trials in solid tumors and hematological malignancies, and with New York-based Pfizer Inc. on R343, an inhaled syk inhibitor for asthma that started a Phase I trial in December.

Rigel has said it plans to continue filing one additional investigational new drug application each year.

Credit Suisse Securities LLC is acting as the sole bookrunner, with Thomas Weisel Partners LLC, Jefferies & Co. Inc. and Oppenheimer & Co. Inc. serving as co-managers.

Following the offering, expected to close Feb. 6, Rigel expects to have about 36 million shares outstanding.

In other financings news:

• Cardium Therapeutics Inc., of San Diego, completed its $5.3 million registered direct offering to support product development and general corporate purposes. Empire Asset Management Co. acted as sole placement agent.