NEW YORK (AP) -- Shares of Rigel Therapeutics Inc. fell to an all-time low Tuesday after its partner AstraZeneca decided not to file for marketing approval of fostamatinib, a rheumatoid arthritis drug Rigel developed.
THE SPARK: AstraZeneca said earlier studies of fostamatinib were promising, but the company reported results from late-stage studies Tuesday and said they did not measure up. The British drugmaker is returning the rights to fostamatinib to Rigel, which will take a couple of months to figure out its next steps. Rigel said it still considers fostamatinib an important drug and said it could be useful as a treatment for rheumatoid arthritis and other conditions.
The companies previously reported mixed results from one late-stage study in early April.
THE BIG PICTURE: Rigel, of South San Francisco, Calif., does not have any approved drugs. It licensed fostamatinib to AstraZeneca in early 2010 in a deal that included a $100 million upfront payment, as much as $345 million in milestone payments, and up to $800 million in other payments based on sales of the drug.
Rigel is also running clinical trials of R343, a potential a treatment for asthma; R333, a treatment for discoid lupus, an autoimmune disease that affects the skin; and R348, a treatment for dry eye.
THE ANALYSIS: Analysts said fostamatinib did not look as effective as Pfizer Inc.'s drug Xeljanz in the recent studies. Xeljanz was approved in late 2012.
"We believe that fostamatinib will have a very tough time getting traction commercially if approved," said Citi Investment Research analyst Yaron Werber. "It is not clear what Rigel's plan for the drug will be in the future."
Werber kept a "Neutral" rating on Rigel shares and removed his price target of $5 per share.
Piper Jaffray analyst Ian Somaiya downgraded Rigel shares to "Neutral" from "Overweight." Somaiya said the Food and Drug Administration might approve fostamatinib, but the data would limit the drug's sales. He said fostamatinib may have potential as a treatment for lymphoma.
The analyst lowered his price target on Rigel shares to $6 from $9 and lowered his peak sales estimate for fostamatinib to $525 million a year from $1.4 billion per year.
SHARE ACTION: Shares of Rigel fell 84 cents, or 18.4 percent, to $3.69. Earlier the stock sank to a low of $3.56. The shares are down about 40 percent since April 4.