Analyst Conference Summary

Reata Pharmaceuticals

conference date: May 9, 2019 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2019 (Q1, first quarter 2019)

Forward-looking statements

Overview: Phase 3 enrollment of bardoxolone for CKD is complete, top line results should be available in 2019.

Basic data (GAAP):

Revenue was $7.8 million, down sequentially from $8.5 million and down from $32.4 million in the year-earlier quarter.

Net income was negative $29.2 million, down sequentially from negative $25.6 million, and down from $4.1 million year-earlier.

Diluted EPS was negative $0.98, up slightly sequentially from negative $0.86, and down from $0.15 year-earlier.


Cash should be sufficient to get pivotal data readouts from 3 trials.

Conference Highlights:

Warren Huff, CEO of Reata, said "We are currently conducting three registrational studies."

The decrease in income y/y was due to high revenue recognition of milestones in Q1 2018, plus changes in recognition rules.

Revenue is from partners and is down due to completing recognition of prior milestones. It is most pro-rated from earlier milestones.

Expects cash-based expenses to increase as development is accelerated and preparations for commercial launch are made. Also investing in commercial manufacturing capabilities.

The Phase 3 CARDINAL trial of bardoxolone methyl for CKD (chronic kidney disease) caused by Alport Syndrome is fully enrolled with topline data expected in the second half of 2019.

Partner Kyowa Hakko Kiri initiated a pivotal Phase 3 trial in diabetic CKD in Japan during 2018. The EU granted Orphan Drug status in May 2018.

Reata announced the clinical trial design for FALCON, a Phase 3 study of bardoxolone for the treatment of patients with ADPKD and expects to dose the first patient in May 2019. A Phase 2 study (PHOENIX) of bardoxolone methyl for CKD from four rare causes produced clinically and statistically significant results in Q1 2019. Bardoxolone demonstrated a statistically significant improvement from baseline in mean eGFR of 7.8 mL/min/1.73m2 (p≤0.00001; n=103) after 12 weeks of treatment. Each individual cohort demonstrated statistically significant increases in mean eGFR representing recovery of multiple years of kidney function loss based on historical average eGFR decline. Reata also plans to pursue IgAN, T1D CKD, and FSGS as commercial indications for bardoxolone

Omaveloxolone for Friedreich's ataxia is in a Phase 2 registrational trial (MOXIe) with enrollment completed. Topline data should be available in the second half of 2019. Earlier data was positive. Granted EU Orphan Drug status in July 2018.

CATALYST Phase 3 topline data for bardoxolone for CTD-PAH (connective tissue disease associated pulmonary arterial hypertension) is expected in the first half of 2020. Primary endpoint is 6-minute walk distance. Enrollment proceeding as planned.

Reata has been hiring professionals in preparation for the product launches.

Cash ended at $313 million, down sequentially from $338 million.

Operating expense of $36.3 million consisted of $26.1 million for R&D, $10.0 million for general and administrative, and depreciation of $0.2 million. Other expense $0.6 million.


CKD meeting feedback? Meeting was well-attended. The community was aware of inflammation as a driver of CKD. People were interested in our mechanism of action, which affects volume without affecting pressure. We have preclinical data on 6 forms of CKD. A talk showed inflammation is causative through eGFR. New endpoints give us a much more efficient path to approval. People were interested in our retained benefit of eGFR.

Acceptance in community of mechanism of action? The debate is only in people who are unaware of our data.

Number of patients with disease, diagnostics? Most nephrologists describe Alport Syndrome as typically young boys, but we now know their mothers are also affected. We now know 30 to 60 thousand patients in the U.S. Many patients with the classic phenotype have been identified. Blood in the urine is a tell-tale sign. We now know there are other forms of CKD that had not been identified as Alport, but are.

NDA preparation? We are working to be ready if data is positive, but no guidance on timing.

We would have a separate dedicated salesforce for the pulmonary application of the drug. Also separate for Freidrich's Ataxia.

Theme of patients who did not show improvement? Phoenix eGFR non-responders were mostly type 1 diabetics.

Patient populations and pricing decision? Yes, PKD data and Alport's NDA could be at about the same time. Pricing will be informed by results of both clinical trials. Many patients already have significant kidney function loss.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2019 William P. Meyers