Shares of Rigel Pharmaceuticals jumped more than 15% as the biotech company announced an exclusive $960 million collaboration with Eli Lilly to develop and commercialize receptor interacting serine/threonine protein kinase 1 (RIPK1) inhibitors for the treatment of immunological and neurodegenerative diseases.
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The partnership includes an upfront payment of $125 million to Rigel (RIGL) and possible development, regulatory and sales milestone payments of up to $835 million from Lilly. Rigel is also entitled to royalty payments varying from mid single digits to high teens dependent on its investment in clinical development.
As part of the collaboration, Rigel expects to start Phase 2 clinical trials in 2021 for RIPK1 inhibitor R552. Inhibition of RIPK1 is seen as a possible new therapy to address different autoimmune, inflammatory and neurodegenerative disorders.
The two companies will jointly develop R552 and Lilly will be responsible for its global commercialization. Rigel has the right to co-commercialize R552 in the US.
Rigel CEO Raul Rodriguez said, “This collaboration will provide significant resources and expertise to support a broad investigation in multiple disease indications with our RIPK1 inhibitors.” (See Rigel stock analysis on TipRanks).
Rigel shares have gained about 100% over the past year. Nonetheless, H. C. Wainwright analyst Joseph Pantginis last month reiterated a Buy rating on the stock with a price target of $8, suggesting that an additional 76.6% upside potential lies ahead. The analyst cited the positive push forward from Rigel’s Tavalisse and the company’s expected higher sales in 4Q as well as fiscal 2020, which are poised to exceed his estimates.
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