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What: Shares of drug company Rigel Pharmaceuticals plummeted 34% today after the experimental rheumatoid arthritis drug it is licensing to AstraZeneca failed to meet one of two primary objectives in a clinical study.
So what: While fostamatinib showed superior results compared to a placebo in the mid-stage study, it proved inferior to Abbott Laboratories' Humira, dealing a huge setback to Rigel's revenue prospects going forward. Part of Rigel's deal with AstraZeneca involves receiving sales-related milestone payments if the drug achieves commercial success, as well as hefty double-digit royalties, so it's no surprise that the stock is setting a new 52-week low on the faded hopes.
Now what: AstraZeneca said the results should not be taken as definitive and that there are larger studies to come.
"A more comprehensive assessment of the benefit/risk profile of fostamatinib used in combination with a DMARD is being undertaken in the pivotal studies that form the OSKIRA Phase III programme which are on track to report in the first half of 2013, and would form the basis of regulatory submissions," said Martin Mackay, president of AstraZeneca R&D.
Given today's disappointing results, however, Rigel investors shouldn't set their expectations too high.
With the impending spinoff of its branded-drug business, Abbott is losing a massive blockbuster drug in Humira. It's a confusing event to understand, with many investors left wondering what to do with these two stocks once they're separated. To help investors better understand the upcoming event, the Fool has created a brand new premium report outlining both Abbott Labs and its spinoff, AbbVie. Inside, we outline all of the must-know opportunities and risks facing both companies, so make sure to claim this 2-for-1 report by clicking here now.
The article Why Rigel Pharmaceuticals Shares Got Crushed originally appeared on Fool.com.
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