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Rigel upgraded at Citi on bullish outlook for new leukemia drug

Citi upgraded Rigel Pharmaceuticals (NASDAQ:RIGL) to Buy from Neutral on Friday after the biotech announced the U.S. approval of its blood cancer therapy Rezlidhia for acute myeloid leukemia (AML), sending its shares sharply higher in the morning hours.

Accordingly, the Rezlidhia capsules will be available to treat adults with relapsed or refractory (R/R) acute AML who carry a susceptible isocitrate dehydrogenase-1 (IDH1) genetic mutation.

Citing Dr. Jorge Cortes, Director of the Georgia Cancer Center who joined Rigel's (RIGL) conference call on the approval, Citi analyst Yigal Nochomovitz expects Rezlidhia to take market leadership for R/R IDH1-mutated AML beating Tibsovo, a rival therapy from Servier Pharmaceuticals.

Nochomovitz argues that Rezlidhia outperforms Tibsovo across multiple measures indicating a higher complete response rate and lower cardiotoxicity rate.

Therefore, the analyst forecasts Rezlidhia's market share to reach ~55% by about 2030, up from ~40% in the previous forecast, and raises his price target for Rigel (RIGL) to $2 from $1.50 per share.

Today's rally marks a sharp reversal for Rigel (RIGL) stock after a decline of more than ~64% over the past 12 months, as shown in this graph.