West Coast Editor

Rigel Pharmaceuticals Inc.'s preclinical work with IgE receptor inhibitors in respiratory mast cells to treat allergic asthma and other diseases netted the company a collaborative research and licensing deal with Pfizer Inc. - but the arrangement does not include Rigel's Phase II rhinitis drug, R112, which the big-pharma firm might scoop up later for more money.

"It's easier to agree on this [asthma program]," said Raul Rodriguez, chief operating officer of South San Francisco-based Rigel, which gets cash up front plus milestone payments and royalties. Pfizer, of New York, is making an equity investment and taking on responsibility for worldwide development and commercialization.

Rodriguez declined to disclose specific monetary figures, but analysts proved willing to speculate. Among them were Jim Birchenough, with Lehman Brothers in New York, who estimated in a research report up-front fees and milestone payments from Pfizer "in excess of $200 million, with royalties in the mid-to-upper teens," and Ian Somaiya, with Thomas Weisel Partners LLC in San Francisco, who valued the deal in his report at between $200 million and $300 million.

Rodriguez said Pfizer is "certainly our first choice for R112, but we're continuing to talk to other companies as well." Because the asthma compounds would be delivered into the lung and the rhinitis drug R112 into the nose, the programs could be separated, though both are from the same area of research.

"Whenever you're able to slice the salami thinner,' you're able to get more revenue," Rodriguez pointed out. Somaiya wrote that separate licensing agreements for the asthma and rhinitis drugs could almost double the milestones on the two therapeutic areas, and boost royalties above 20 percent.

Rigel's stock (NASDAQ:RIGL) closed Thursday at $20.80, down $1.37.

The company's IgE compounds work by blocking the signaling enzyme Syk kinase, an area of research that Rigel pioneered. Unlike typical allergy and asthma drugs that block only a single chemical mediator, Syk inhibitors take on the major IgE-dependent pathways in mast cells that trigger an allergic attack.

In November, Pfizer completed its $125 million purchase of the remaining 90 percent of the drug delivery firm Meridica Ltd. from PA Consulting Group, of London - thus gaining an inhaler device that fits well with Rigel's compounds.

"In this category, the product is the drug plus the device," according to the FDA, Rodriguez noted. "You have to marry the two in order to make progress with it. We could go get an off-the-shelf device somewhere and move it into the clinic ourselves, but then Pfizer would have to go all the way back to square one if they wanted to use the Meridica device."

Otherwise, he said, Rigel's typical strategy is to keep compounds in-house through Phase II development.

The asthma deal with Pfizer should give Rigel more leverage with partners for R112, Rodriguez added. "We can say, They've bought into Syk inhibition in a big way, and if you guys don't act, Pfizer's going to get it.'"

Steroids are the only other non-injectable agents that interfere with multiple chemical mediators in the allergic-asthma response. But they take "a day or two to kick in," whereas Rigel has managed to show relief in as little as 30 minutes with R112, Rodriguez said.

"People get up in the morning and if they're feeling allergic, steroids do nothing for them that day," he said. Therefore, patients must guess about their future conditions and pre-medicate. "That day, there might not be any pollen in the air, and they've medicated themselves unnecessarily, which is not good either."

With R112, Rigel will go after patients such as those taking the market-leading nasal steroid Flonase (fluticasone propionate), a $1.4 billion drug from London-based GlaxoSmithKline plc.

R112 recently yielded strong Phase II data, and more Phase II studies will be done to test for equivalence to steroids with faster onset, as well as dose ranging, Rodriguez said. Those trials will begin in the upcoming allergy season. (See BioWorld Today, Aug. 3, 2004.)

"We'll be talking much more extensively about the data around R112" at the meeting of the American Academy of Allergy, Asthma and Immunology in March in San Antonio, he said.

Meanwhile, Rigel has R406 in a Phase I trial for rheumatoid arthritis. The study began in December and "data will be rolling out this year," Rodriguez said.

"It's the biggest opportunity for the company so far," he told BioWorld Today, acknowledging that the anti-tumor necrosis factor compounds such as Enbrel (etanercept), from Thousand Oaks, Calif.-based Amgen Inc. are "huge sellers. Unfortunately for them, they're injectable, not terribly convenient and expensive."

R406, on the other hand, is oral and "much more broadly acting," he said. "If we're lucky, it will continue to show itself to be a good [disease-modifying anti-rheumatic drug]." Patients, he noted, tend to prefer attacking their disease early on.

"By the time they get an anti-TNF agent like Enbrel, it's already almost too late," he said, adding that unpartnered R406 is "something we're going to keep for ourselves for quite a while," all the way through to the filing of a new drug application.

The deal with Pfizer is Rigel's second pact with a major pharma company in recent months. In November, Merck & Co. Inc., of Whitehouse Station, N.J., entered an agreement with Rigel to investigate ubiquitin ligases for cancer therapies and others. Rigel got undisclosed cash up front and research funding for two and a half years, plus milestone payments for preclinical and clinical events. (See BioWorld Today, Nov. 16, 2004.)

Pfizer's deal with Rigel comes amid buzz that the pharma company may buy start-up Angiosyn Inc., of La Jolla, Calif., which was founded in 2003 with money from Alta Partners in San Francisco. Focused on controlling angiogenesis, Angiosyn's first targets are ophthalmic diseases such as macular degeneration - an indication made hot by the approval of Macugen (pegaptanib sodium), from Pfizer and Eyetech Pharmaceuticals Inc., also of New York - and diabetic retinopathy.