Rigel Pharmaceuticals ( RIGL) will release new clinical data next month on an experimental pill for rheumatoid arthritis that could alleviate concerns about the drug's safety and help the company sign a lucrative partnership deal later this year.

The Rigel drug, known as R788, is one of two oral medicines in mid- and late-stage clinical trials as a treatment for rheumatoid arthritis (RA), a progressive disease in which a patient's immune system attacks the bones and cartilage in the body's joints.

The current RA treatment market totals about $14 billion in sales worldwide, with the bulk of that coming from a class of injectable drugs known as "TNF-alpha inhibitors."

Rigel and Pfizer ( PFE) are locked in a race to develop the first oral pill for RA that could compete with, and perhaps even supplant, the currently dominant TNF-alpha inhibitor drugs -- mainly Johnson & Johnson's ( JNJ) Remicade; Enbrel, which is sold by Amgen ( AMGN) and Wyeth ( WYE); and Abbott Labs' ( ABT) Humira.

Rigel, a small drugmaker based in South San Francisco, is conducting two phase II studies of R788 that have enrolled a total of about 650 patients with RA. The company expects to release the first results from these studies in July, followed by another data release in August.

Rigel shares have already begun moving higher as investors anticipate the new R788 data. Rigel shares trading at $8 in late May closed Friday at $11.89. The stock was up 2.7% to $12.21 in recent trading.

A previous and smaller phase II study of R788 released last year showed the drug to be effective at alleviating the pain and joint inflammation suffered by RA patients, but the study was too small to adequately assess R788's safety. RA is a chronic disease requiring patients to take drugs for the rest of their lives, so long-term safety is critical.

In particular, R788 caused an increase in blood pressure that raised concerns about a potential increase in cardiovascular risk for patients. The two ongoing phase IIb studies were designed, in part, to provide more detailed safety data on blood pressure effects tied to R788.

If the two studies are positive, Rigel plans to meet with the U.S. Food and Drug Administration in the fall to get the agency's sign off on a phase III study program for R788 in RA. The company will also use the new safety and efficacy data to negotiate a partnership and development deal for R788 with a larger drug company.

Pfizer's oral RA drug, known as CP-690,550, is already in phase III studies. Additional phase II data were presented last week at a European meeting of rheumatologists. Like R788, Pfizer's drug has shown effectiveness at treating RA, but it also comes with concerning side effects -- in this case, increases in cholesterol levels.

R788 belong to a new class of experimental oral drugs known as SYK inhibitors. These drugs work by inhibiting an enzyme found only on immune cells that prevents the autoimmune process that leads to inflammation and destruction of joints.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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