Shares in Rigel Pharmaceutical shares have taken a dive after the US firm licensed its late-stage rheumatoid arthritis fostamatinib to AstraZeneca but analysts believe the market has acted far too harshly.

After announcing the deal with the Anglo-Swedish major, which comes with a $100 million upfront payment, shares of Rigel still ended the day down 9.2% at $8.56. However the AstraZeneca pact could be worth almost $1.25 billion for fostamatinib, the furthest developed oral spleen tyrosine kinase (Syk) inhibitor for RA.

Broker Rodman & Renshaw believes that at least part of the reason for the sell-off “comes from pressure on the stock by investors who had a short-term horizon and built position ahead of this event, and never intended to hold on to the shares post-deal”. In a research note, analysts Simos Simeonidis and Yatin Suneja say the deal is very positive, validating the compound and securing the future development of fostamatinib with “a worldwide partner with the resources and global reach required to maximise the drug’s potential”.

They claim the financial terms are “very favourable” and “speak to the drug’s blockbuster potential”. The deal is particularly favourable compared to the two most recent deals done in RA, namely Bristol -Myers Squibb’s licensing of Alder’s Biopharmaceuticals’,injectable interleukin-6 monoclonal antibody ALD518 ($85 million upfront) the Incyte/Eli Lilly link-up for the former’s oral Janus kinase (JAK) 1 and 2 inhibitor INCB28050 ($90 million).

The analysts conclude by saying that any early signs of confirmation of fostamatinib’s efficacy and safety in the forthcom,ng Phase III programme “would make Rigel an obvious acquisition target” by AstraZeneca.