Rigel Shares Get Crushed

Updated from 9:56 a.m. EST

Rigel Pharmaceuticals (RIGL Quote) was taken to the woodshed Thursday after the company said a trial of its lead product candidate, a hay fever treatment, fell short of the study's main goal.

Shares of Rigel were plunging $13.79, or 63%, to $8.13 on tremendous volume. More than 18 million shares have changed hands, compared with an average of about 273,000 for a full session during the last three months.

The South San Francisco, Calif., company said that a midstage study compared its R112, a prospective treatment for hay fever, or allergic rhinitis, and GlaxoSmithKline's (GSK Quote) Beconase AQ nasal spray to a placebo over a seven-day period. In the trial, the treatment with R112 failed to show a statistically significant difference vs. the placebo in improving seasonal nasal allergy symptoms, the study's primary endpoint.

Beconase AQ was superior to the placebo, Rigel said in a press release.

The results were especially discouraging because a previous study conducted at two sites during peak pollen season found that R112 showed a statistically significant improvement in symptoms of seasonal hay fever. Rigel says the drug began working in as little as 30 minutes.

Regarding the latest trial, analysts said the twice-daily dosing schedule and a greater number of test sites may have contributed to the negative results by creating too much variance in the test environment. The most recent study was conducted in 25 centers across the U.S.

At least two analysts say this particular Rigel drug may have come to the end of the road, but they believe the company has other promising avenues to pursue.

"We think R112 is probably now a dead program, but believe Rigel will consider advancing more potent nasal-administered Syk inhibitors into human allergy testing in the future," analyst Martin Auster of Wachovia Capital Markets wrote in a research report. Syk inhibitors target an enzyme called syk kinase and are meant to reduce chronic inflammation in patients with nasal allergies.