Shares in Rigel dropped nearly 20% yesterday in the aftermath of AstraZeneca's decision not to file its rheumatoid arthritis drug fostamatinib.

While announcing top-line Phase III results of the drug showing statistically significant improvements on certain markers of the disease, the drug giant said that, after assessing the entire programme, it has decided not to proceed with regulatory filings for fostamatinib.

"The results of the late stage trials did not measure up to the promising results we saw earlier in development," said Briggs Morrison, MD, Executive Vice President of Global Medicines Development and Chief Medical Officer, explaining the decision.

Rigel licensed fostamatinib to AstraZeneca in 2010 for an upfront payment of $100 million, up to $345 million in milestone payments and $800 million in other sales-based royalties.

Rights to the drug will now be returned to the firm, which will decide whether to continue its clinical development and pursue regulatory filings.

But there doesn't seem to be much confidence in the drug in RA. "We believe that fostamatinib will have a very tough time getting traction commercially if approved," said Citi Investment Research analyst Yaron Werber, as reported by the Associated Press. "It is not clear what Rigel's plan for the drug will be in the future."

The news is certainly a huge blow to Rigel, which is yet to achieve regulatory approval for one of its products.

AstraZeneca's decision means that it will incur a pre-tax impairment charge of around $140 million to R&D expense in the second quarter of 2013 for the intangible assets relating to fostamatinib.