West Coast Editor

Wall Street pounded Rigel Pharmaceuticals Inc. on word that the firm's nasal spray for allergic rhinitis, R112, came up short in a Phase II trial comparing the effects of the syk kinase binder against placebo - and doing the same with GlaxoSmithKline plc's marketed Beconase AQ, which proved superior.

"It wasn't the answer we wanted, but we got the answer," said Raul Rodriguez, executive vice president and chief operating officer of South San Francisco-based Rigel, adding that the study was "the right trial to do, and we did it well."

The company's stock (NASDAQ:RIGL) closed at $8.01, down $13.91, or 63.5 percent, after heavy trading.

Enrolling 396 patients, the randomized, double-blind trial compared R112 and Beconase AQ (beclomethasone) spray to placebo, over a seven-day period. Treatment with R112 failed to show a statistically significant difference from placebo in improving nasal allergy symptoms, the study's primary endpoint, whereas Beconase AQ, which Rodriguez called the "gold standard," beat placebo.

Primary endpoints were safety and efficacy, as measured by a total nasal symptom severity rating scale, which includes five nasal symptoms including congestion, runny nose, sneezing, itchy nose and postnasal drip. The trial included a screening period during which the patients stopped taking any allergy medications, followed by a placebo run-in period, before they were randomized to a seven-day treatment cycle of twice daily dosing of R112, placebo or Beconase AQ.

"It's likely we're not going to move forward with R112, but we're going to look at the data more fully," Rodriguez told BioWorld Today. "[The drug] worked well in four trials prior to this one."

In an earlier, 316-patient Phase II trial called the Park study, which Rodriguez said was "remarkably similar" in design, R112 did reach statistically significant efficacy in improving symptoms, including sneezing, stuffy nose, running nose, itchy nose, itchy throat, post nasal drip, cough, headache and facial pain. (See BioWorld Today, Aug. 3, 2004.)

In that study, R112 on day one reduced the Global Nasal Allergy Symptom Score by 7 points (38 percent) vs. 5.4 points (29 percent) for placebo (p=0.0005), an absolute difference of 9 percent, and a relative improvement over placebo of 24 percent. Results on day two were of similar magnitude (p=0.0016), the company said.

What's more, the drug showed a rapid onset of action in the Park study - as early as 30 minutes to 45 minutes over a two-day period.

"In that trial, we dosed every four hours," whereas in the latest study to report, "we asked the drug to perform over a longer period of time, and maybe that's the problem."

Also, the earlier trial included "almost as many nurses as there were patients, making sure they filled out the form [to answer questions about symptoms] every 15 minutes." In the latest study, patients filled out a diary card twice a day.

"The question is, Do you feel stuffy today?' Overall, it's very subjective," Rodriguez allowed. "But you power the trials with a big enough number so you get a meaningful result."

R112, which has shown a favorable safety profile in all studies, "may just not have the potency necessary" to get the job done, he said. The compound binds to intracellular syk, a kinase that regulates IgE receptor signaling, in mast cells and interrupts the signal from the IgE receptor, with the goal of blocking all major pathways triggered in an allergic attack.

Antihistamines or antileukotrienes intercept only a single mediator. Intranasal steroids are able to block multiple mediators in the allergic response, but they act more slowly and may require days of therapy for good effects. Still, Rigel noted, the U.S. market for allergic rhinitis therapies approaches $4 billion - and the company has other potential ways to get a piece of the action.

"We have compounds up to 100 times more potent than this one," Rodriguez said. "We probably wouldn't repeat exactly the Park study, [since we have already shown that] if you inhibit syk, you improve symptoms. We would go into a more extended trial, like this one" with a more potent drug.

At the start of the year, Rigel's work with IgE receptor inhibitors for allergic asthma and other diseases netted the company a collaborative research and licensing deal with New York-based Pfizer Inc., but the arrangement excluded R112, which Pfizer has an option to take later for more money.

Analysts valued the deal at between $200 million and $300 million, and at the time, Rodriguez called Pfizer the "first choice" as a would-be partner for R112. (See BioWorld Today, Jan. 21, 2005.)

Though the market's reaction to the R112 news was harsh, he pointed out Rigel has other value drivers in its basket. In October, a preclinical program focused on Aurora kinase inhibitors brought the firm its fifth oncology deal, this one with Geneva-based Serono SA and worth up to $160 million. Rigel plans to file an investigational new drug application in "a matter of days" for its lead cancer candidate, R763, he said. (See BioWorld Today, Oct. 26, 2005.)

Rigel completed a Phase I study earlier this year of R788, its solid oral form of R406 (an oral liquid), for rheumatoid arthritis. A Phase I/II trial in RA patients is expected to begin in the first half of next year. The drug is unpartnered, and "we're going to keep that for ourselves for quite a while," Rodriguez said.

"We have another program in the transplant area, coming on as our next IND toward the end of next year," he said, adding that the balance sheet looks satisfactory.

The Serono deal gave Rigel $25 million in initial payments - a $10 million license fee and a $15 million equity purchase at a premium to the market price that will give the overseas firm less than a 3 percent stake in the company.

As of Sept. 30, Rigel had about $91.7 million in cash and cash equivalents, and about $36.1 million in available-for-sale securities.

"We've been burning $12 million to $15 million a quarter, $48 million to $60 million per year, so we have well over two years' worth of cash," Rodriguez said.