UPDATE 2-Rigel says arthritis drug shows progress; shares soar

* Says drug shows significant improvement in phase-II trial

* Shares up 19 pct (Adds analysts' comments; updates share price)

BANGALORE, July 9 (Reuters) - Rigel Pharmaceuticals Inc (RIGL.O) said results from a mid-stage study of its lead drug candidate showed significant improvement in patients suffering from rheumatoid arthritis, sending its shares up as much as 19 percent.

However, analysts noted blood pressure elevation in patients given the experimental treatment R788 as an issue in the trial.

"In our view, and assuming that there is an absence of serious cardiovascular events, these data point to a very benign and manageable hypertension profile," Rodman & Renshaw analyst Simos Simeonidis.

"That should alleviate most of investors' fears regarding the true-but-manageable hypertension signal of this drug."

However, RBC Capital Markets analyst Jason Kantor pointed to risks of cardiovascular events from the hypertension data of the mid-stage study.

"For both potential partners and the U.S. Food and Drug Administration, the recent experience of Vioxx's removal from the market would likely be considered in any decision regarding R788," Kantor said.

Results of the mid-stage study strengthens chances of a potential partnership, which the company hopes to obtain by the first half of 2010, and confirms further development of the drug.

Rigel had said that it would not pursue late-stage studies on the experimental oral treatment for rheumatoid arthritis without a partner.

Rodman & Renshaw's Simeonidis also drew parallels between Rigel's R788 and Pfizer Inc's (PFE.N) oral arthritis compound CP-690,550, saying efficacy of both compounds were comparable.

Simeonidis said the significant difference between the two products was in that Rigel had demonstrated that it can deal with the hypertension signal, while Pfizer would have to show that use of statins will be able to adjust cholesterol levels downward.

R788 is also being tested as a potential treatment for cancer.

Shares of the company, which shot up as much as 19 percent to $13.37 early in the session, pared some of their gains to trade at $12.04 Thursday on Nasdaq. (Reporting by Vidya L Nathan in Bangalore; Editing by Gopakumar Warrier, Anil D'Silva)