Analyst Conference Summary

Reata Pharmaceuticals

conference date: May 11, 2020 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2020 (Q1, first quarter 2020)

Forward-looking statements

Overview: Trials were successful, so preparing for applications to FDA and commercial launches.

Basic data (GAAP):

Revenue was $1.3 million, down sequentially from $2.7 million and down from $7.8 million in the year-earlier quarter.

Net income was negative $49 million, up sequentially from negative $187 million, and down from negative $29 million year-earlier.

Diluted EPS was negative $1.47, up sequentially from negative $5.91, and down from negative $0.98 year-earlier.


Believes cash is sufficient to fund operations through 2021.

Conference Highlights:

Warren Huff, CEO of Reata, said "At this time, we expect that data collection for the ongoing CARDINAL study of bardoxolone methyl (bardoxolone) in chronic kidney disease caused by Alport syndrome will not be significantly impacted by the COVID-19 pandemic. We have observed no significant data loss during this period. When the FALCON trial for bardoxolone in ADPKD was paused in March, we implemented adjustments similar to those implemented for CARDINAL. We have observed no significant data loss in the FALCON trial to date. For the FALCON study, we have been able to continue treatment of patients enrolled in the study, but because in-clinic visits are necessary to enroll new patients, we have had to pause enrollment of new patients into the study. Clinical trial sites are starting to reopen, and we are hopeful that we may be able to resume screening of patients for FALCON as early as this quarter at some sites." On track to submit NDAs for bardoxolone and omaveloxolone. CARDINAL needs to be continued to get full approval, so added home health visits and direct shipment of drugs to patient's homes.

The Phase 3 CARDINAL trial of bardoxolone methyl for CKD (chronic kidney disease) caused by Alport Syndrome reported positive topline 1-year data 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. There is now a genetic testing program for Alport syndrome, which is alrady finding previously undiagnosed patients.

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 in Q4 2019. 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. Plans to make a regulatory filing in 2020.

Reata is actively preparing commercial teams for bardoxolone.

The pivotal, global Phase 3 FALCON study of bardoxolone in patients with CKD caused by autosomal dominant polycystic kidney disease (ADPKD) was launched in Q4 2019. Some sites remain open, others should re-open in Q2 2020.

Reata reacquired the development, manufacturing, and commercialization rights concerning our proprietary Nrf2 activator product platform, including bardoxolone and omaveloxolone, originally licensed to AbbVie, Inc. (AbbVie) for territories outside of the United States and excluding, for bardoxolone, certain Asian countries previously licensed to Kyowa Kirin Co., Ltd. (KKC).

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) was expected in the first half of 2020. However, for safety the trial was stopped during the pandemic (as of May 11, 2020). Primary endpoint is 6-minute walk distance. Enrollment was completed in 2019.

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

Cash ended at $624 million, down sequentially from $664 million. There was a $155 million term loan outstanding.

Non-GAAP numbers: net income negative $29.6 million, up sequentially from negative $50.3 million and down from negative $24.9 million year-earlier. Diluted EPS negative $0.89 down sequentially from negative $1.59 and down from negative $0.84 year-earlier.

Operating expense of $69 million consisted of $48 million for R&D, $21 million for general and administrative, and depreciation of $0 million. Other expense net $4 million. Income tax benefit $22 million.

Q&A summary:

Alport's Syndrome population estimate revision? We are sticking with 30,000 to 60,000 for now. We do think it will turn out to be larger than that initial estimate.

Omav label expansion priorities? After the NDA submissions and Falcon restart, we see two major categories: movement disorders. Familial Parkinson's is a clear target. Progressive supranuclear palsy is another. The other category is non-movement disorders. Some dementias have mitochondria playing a role, so those would be targets.

How far along in enrollment in Falcon are you? We are well along, not disclosing a specific number. We need to understand more about how reopening will go.

FA KOLs feedback? FA affects several organs. The data will be presented at a kidney meeting, it is exciting to nephrologists.

We believe bard will not have the issues involved with Tolvaptan, and it did very well in the market.

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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 2020 William P. Meyers