Rigel Pharmaceuticals, Inc. (NASDAQ: RIGL) is making a run for the top in the market this morning after announcing positive news surrounding a COVID-19 treatment under development. Here’s the scoop:
Rigel Pharmaceuticals Announces Positive Data
In a press release issued early this morning, Rigel Pharmaceuticals announced positive topline results from a Phase 2 clinical trial. The multi-center trial was designed to evaluate the safety of fostamatinib, the company’s oral spleen tyrosine kinase (SYK) inhibitor under development for the treatment of hospitalized COVID-19 patients.
The company reminded investors that the trial is being conducted in collaboration with the National Heart, Lung, and Blood Institute, an arm of the National Institutes of Health, as well as Inova Health Systems.
In the release, Rigel Pharmaceuticals said that the study met its primary endpoint of safety.
In fact, the data showed that fostamatinib led to a reduction of Serious Adverse Events by half. By the 29th day of treatment, there were three SAEs in the placebo plus SOC group of 29 patients. In the fostamatinib group, there was a reduction in a disease related SAE, known as hypoxia, compared to placebo, with only one SAE in the fostamatinib group.
In a statement, Raul Rodriguez, President and CEO at Rigel Pharmaceuticals, had the following to offer:
Despite the growing arsenal of vaccines gaining emergency use authorization, COVID-19 continues to spread and patients remain in need of effective therapies. We are extremely pleased with the outcome of this trial, which provides early indications of the potential positive impact of fostamatinib for patients with COVID-19.
These results are an important addition to the extensive accumulation of data evaluating fostamatinib in COVID-19, which also include the ongoing Phase 2 study with Imperial College London and our own Phase 3 clinical trial being conducted in the U.S. and Latin America.
The above statement was followed up by Wolfgang Dummer, M.D., Ph.D., CMO at Rigel Pharmaceuticals. Here’s what he had to offer:
Fostamatinib was shown to be well tolerated in hospitalized patients with COVID-19 on oxygen. Taken altogether, the results of this trial suggest fostamatinib may be a useful addition to improve the outcome of severe and critically ill COVID-19 patients who are at the highest risk of death despite treatment with the best conventional therapies under the current standard of care (including remdesivir and steroids).
Consistent with the observed clinical outcomes, we are encouraged to see that in patients receiving fostamatinib there was a more rapid decline in a number of inflammatory biomarkers, that have previously been shown to be associated with the course of COVID-19 disease, compared to those receiving placebo.
A Short Squeeze In The Making?
While the news surrounding the COVID-19 treatment doing well is enough to send Rigel Pharmaceuticals stock to the top, we may also be seeing a short squeeze in the making.
Short squeezes take place when heavily shorted stocks begin to tick up. Those who hold short positions start losing money and race to buy shares in order to cover their positions. This increased buying often leads to a flood of trade volume and significant price appreciation.
When it comes to Rigel Pharmaceuticals, the stock trades with a short interest of around 18%. That’s pretty high, and with the positive news today, those holding those positions are losing their shirts. As a result, we could see a short squeeze come into play sending the stock significantly higher.
The Bottom Line
The bottom line is that while COVID-19 vaccines have become available, and for most people, accessible, the virus is not gone. In fact, slowing case counts seem to have plateaued, leading to concerns of another resurgence of the virus.
As such, effective and safe therapeutics are still a necessity, and will likely continue to be for the foreseeable future. This, combined with the fact that there’s strong potential for a short squeeze here, makes RIGL stock one that’s hard to ignore.