Why Rigel Pharmaceuticals, Inc. Got Hammered Today

By Brian OrelliMarketsFool.com

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What happened

Rigel Pharmaceuticals(NASDAQ: RIGL) is down 23% at 11:30 a.m. EDT after the company reported a second phase 3 clinical trial testing for its spleen tyrosine kinase inhibitor,fostamatinib, in patients withadult chronic/persistent immune thrombocytopenia failed to live up to the results of the first trial.

So what

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In the first study, reported back in August, 18% of patients responded tofostamatinib compared to 0% of patients taking placebo. The results were deemed statistically significant with a p-value of 0.026, under the typical cutoff of 0.05.

In the second study released today, Rigel Pharmaceuticals saw the same 18% response rate in patients takingfostamatinib, but unfortunately there was one responder in the placebo group. There were only 24 patients in the placebo group, so that works out to a response rate of 4%, which isn't statistically different -- p-value of0.152 --than the 18% for the group taking the active drug.

If you combine the two studies, the response rate for patients takingfostamatinib stays at 18% while the average of 0% and 4% results in a 2% response rate for the placebo group. Given the larger number of patients, doing the statisticsfor the combined studies gives a p-value ofp=0.007, or put another way, a 0.7% chance that the difference was due to chance alone.

After both studies ended, the patients were allowed to enroll in a long-term extension study where everyone received fostamatinib. Of the36 non-responders from the first two trials that had at least 12 weeks of follow-up, six were deemed responders, a 17% response rate.

Now what

Given how consistent the data are for patients takingfostamatinib and the fact that it was just one responder in the placebo group that ruined the second study, Rigel Pharmaceuticals plans to meet with the Food and Drug Administration to see if the data are good enough to approve the drug.

The FDA would normally require two independent statistically significant studies to approve a drug, and won't accept a combination as a substitute. The most famous of these cases wasInterMune'sEsbriet, which the FDA rejected on similar grounds six years ago.

But these are different times with a more lenient agency, so the FDA may be willing to give Rigel Pharmaceuticals a pass. After all, InterMune eventually ran a third phase 3 trial, proving thatEsbriet helps patients and got the drug approved.

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