Analyst Conference Summary

conference date: November 12, 2019 @ 5:00 AM Pacific Time
for quarter ending: September 30, 2019 (Q3, third quarter 2019)

Forward-looking statements

Overview: Positive Phase 3 data from two studies has sent the stock soaring.

Basic data (GAAP):

Revenue was $8.2 million, up sequentially from $7.8 million and up from $5.2 million in the year-earlier quarter.

Net income was negative $39.7 million, down sequentially from negative $34.4 million, and down from negative $30.8 million year-earlier.

Diluted EPS was negative $1.32, down sequentially from negative $1.14, and down from negative $1.07 year-earlier.

Guidance:

Cash should be sufficient through the end of 2020.

Conference Highlights:

Warren Huff, CEO of Reata, said "Yesterday we announced positive topline results from the Cardinal pivotal Phase 3 study of bardoxolone in patients with chronic kidney disease casued by Alport Syndrome."

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 reported positive topline data expected in the fourth quarter of 2019. Data may support accelerated approval; plans to meet with FDA. Bardoxolone treatment slows the decline leading to kidney failure. Alport Syndrome is estimated to affect 30,000 to 60,000 people in the U.S. and 32,000 to 64,000 in the EU5.

MOXIe, a double-blind, placebo-controlled registrational trial studying the safety and efficacy of omaveloxolone in patients with Friedreich’s ataxia (FA), reported positive topline data. The FDA has provided guidance that an analysis of modified Friedreich’s Ataxia Rating Scale (mFARS) scores demonstrating an improvement versus placebo after 48 weeks of omaveloxolone treatment may support submission of a NDA for omaveloxolone for the treatment of FA. No safety concerns have been reported by the data monitoring committee.

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.

A Phase 2 study (PHOENIX) of bardoxolone methyl for CKD from four rare causes produced clinically and statistically significant results in Q1 2019. Reata also plans to pursue IgAN, T1D CKD, and FSGS as commercial indications for bardoxolone

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 $240 million, down sequentially from $280 million.

Operating expense of $46.8 million consisted of $32.3 million for R&D, $14.3 million for general and administrative, and depreciation of $0.3 million. Other expense net $1.1 million.

Q&A summary:

EGFR trends, additional color? EGFR is not fully disclosed because it could be unblinding. EGFR was similar to prior trials at week 48. Saw a very meaningful clinical effect compared to placebo.

Dose effects? Not disclosing by dose, but in general higher doses resulted in higher treatment effects. Efficacy was similar in adults and kids.

We saw a similar on treatment and off treatment effect across all of our trials. The quartile analysis shows this most clearly.

Quality of life? We are not disclosing our one measurement, but patients often report they are feeling better.

Some confusion about mechanism of action. Our drug results in an increase in surface area, not hyperfiltration.

Adverse events? Albuminurea has not come up with the FDA. Focus is on change in retained EGFR. Proteinuria may or may not reflect improvements in kidney function. There was no adverse events of concern to the data monitoring committee, no change in blood pressure, generally AEs were same or lower than placebo group, only 2 discontinuations. Tolerability is quite good, and we can reduce dose to deal with patients with a tolerability issue.

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