Updated from Monday, Oct.27

Shares of Rigel ( RIGL) took a beating Monday, as the company presented data for experimental arthritis treatment R788.

Shares were down 38% in late-afternoon trading Monday on a combination of heightened safety concerns and newly evident geographic disparity in data from the phase IIa study. Analysts said Tuesday morning that the selloff may be overdone and the risks manageable, but clipped price targets to reflect increased risk.

Patients receiving both R788 and a placebo did better in Mexico than patients in the U.S. Also weighing on shares, there appeared to be an increase in blood pressure, or hypertension, in patients dosed with R788, although hypertension is transient and goes away when the drug is stopped.

"While much of this data had been disclosed previously, the detailed presentation revealed a modest, dose related blood pressure increase with R788, an imbalance in response rates noted at the Mexican trials sites, and more granularity on elevated liver enzymes noted with R788," wrote Merrill Lynch analyst Andrew Berens, who maintained a neutral rating on the stock.

According to Berens, these risks appear manageable, but are likely to increase regulatory risk for the drug and could delay a partnership with a large pharma/biotech company.

Barclays Jim Birchenough, who maintained an overweight rating on the stock on Tuesday, said the selloff was overdone. Birchenough said that while scores were higher in Mexico, such imbalances have been observed in other RA trials, didn't bias the results, and resulted in similar heightened benefit in the placebo arm.

"While investors' 'shoot first ask questions later' mentality is understandable in the current environment, we believe upon greater analysis of the data, the selloff may prove myopic," wrote Susquehanna Financial Group's Derek Jellinek. The analyst reiterated a positive rating on shares, but lowered his price target to $23 from $30 based on the increased risk associated with the program.

"The nearly 40% selloff may be extreme, but given the lack of near-term positive catalysts and general market conditions, we are remaining neutral rating, despite our $16 price objective -- a 40%appreciation from current levels," wrote Merrill Lynch's Berens, who lowered his price objective to $16 from $25 on Tuesday.

Also at the American College of Rheumatology annual meeting, Pfizer ( PFE) will be presenting data on its RA candidate, CP550, later Tuesday, while Incyte Pharmaceuticals ( INCY) presented data on its experimental RA drug earlier in the weekend.

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