(Updates stock price)

Rigel Pharmaceuticals ( RIGL) said Thursday that its oral medicine, R788, significantly improved the symptoms of rheumatoid arthritis patients in a phase II study compared with a placebo, but as in previous studies of the drug high blood pressure emerged as a leading side effect.

Based on these new R788 data, the South San Francisco-based drugmaker said it will seek out a corporate partner to co-develop and help finance phase III studies of R788 beginning in the first half of next year.

Rigel's R788 is one of two oral drugs in mid- and late-stage clinical trials as a treatment for rheumatoid arthritis, or RA, a progressive disease in which a patient's own 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, perhaps even supplant, the current dominance of these 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's phase II study, known as Taski2, enrolled 457 patients with RA who were treated with one of two doses of R788 or a placebo for six months. Of the patients treated with 100 mg of R788 twice a day, 66% demonstrated a so-called ACR20 score, which means their RA symptoms improved by 20%. By comparison, only 35% of patients treated with a placebo improved enough to score an ACR20 response.

Forty-three percent of the patients treated with the 100 mg dose of R788 improved their RA symptoms by 50% compared with 19% of placebo patients, while another 28% of these R788 patients improved by 70% compared with just 10% of placebo patients.

All of the efficacy results were statistically significant in favor of R788. Patients treated with 150 mg of R788 once a day also improved but generally not as much as the lower dose of the drug.

Increases in blood pressure tied to treatment with R788 emerged as the most worrisome side effect in a previous phase II study of the drug, so this most recent study was designed to more closely measure the drug's affect on hypertension.

RA is a chronic disease requiring patients to take drugs for the rest of their lives, so long-term safety is critically important.

The mean increase in blood pressure from baseline at six months was approximately 1 mmHg for patients treated with 100 mg of R788 twice a day. About 23% of these patients had blood pressure medicines adjusted or in some cases started during the course of the study, compared with 7% of placebo patients.

Other side effects related to R788 included infections and diarrhea.

"We now have a much better understanding of R788's safety profile and believe that the observed side effects may be effectively managed," said Elliott Grossbard, chief medical officer for Rigel, in a statement.

Rigel shares were rising 8.4% to $12.18 in Thursday morning trading.
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.