Analyst Conference Summary

Reata Pharmaceuticals

conference date: Ausust 10, 2020 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2020 (Q2, secodn quarter 2020)

Forward-looking statements

Overview: Trials were successful, but apparently some questions about the data have been raised by the FDA. Summary below, for full details see the press release.

Basic data (GAAP):

Revenue was $3.0 million, up sequentially from $1.3 million and down from $7.8 million in the year-earlier quarter.

Net income was negative $67 million, down sequentially from negative $49 million, and down from negative $34 million year-earlier.

Diluted EPS was negative $2.03, down sequentially from negative $1.47, and down from negative $1.14 year-earlier.


Believes cash is sufficient to fund operations through 2023.

Conference Highlights:

For Bardoxolone for Alport Syndrome, will have a pre-NDA meeting with the FDA to discuss the planned filing. THE Year 1 CARDINAL trial results path is clear, but there is a question about incorporating Year 2 results, and how that is decided may affect whether there is accelerated approval, or, with a delay, full approval.

For Omaveloxolone for Friedreich's Ataxia, the FDA is not convinced that the MOXIe Part 2 results will support a single study approval without additional evidence that lends persuasiveness to the results. The FDA stated that we will need to conduct a second pivotal trial that confirms the mFARS results of the MOXIe Part 2 study with a similar magnitude of effect. Our counterproposal was for a crossover study. The FDA asked us to submit a study design and will condider that. If it is accepted, we could submit an NDA in Q1 2021. In either case, Reata plans to pursue market approval outside the U.S.

Warren Huff, CEO of Reata, said "We have had a type C meeting where the FDA expressed concern about accepting a filing for accelerated approval based on the Year 1 data alone. . . One of the key questions to be resolved at the pre-NDA meeting is how the Year 2 data should be handled during the NDA process."

Reata, in Q2 2020, announced a $350 million strategic investment by Blackstone Life Sciences. $300 million is against future royalties, and $50 million was for shares at $146.72 per share. Part of the proceeds were used to pay off $172 million in prior loans.

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 began to re-open in June 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.

An investigator initiated trial of Bardoxolone for kidney-related effects of Covid-19 could initiate in Q3 2020.

Cash ended at $610 million, down sequentially from $624 million. There was a $155 million term loan outstanding.

Non-GAAP numbers: net income negative $40.9 million, down sequentially from negative $29.6 million and down from negative $29.9 million year-earlier. Diluted EPS negative $1.23 down sequentially from negative $0.89 and down from negative $0.99 year-earlier.

Operating expense of $53.7 million consisted of $36.8 million for R&D, $16.6 million for general and administrative, and depreciation of $0.3 million. Other expense net $17.0 million. Income tax benefit $0 million.

Q&A summary:

Omav FDA comments, written or oral? Willingness to consider options occured during the meeting.

Alport study, what additional analyses were requested? Were about efficacy, not safety. We provided preclinical mechanism of action, pharpacological profile, prespecified sensitivity analyses.

FA, why FDA did not think results support approval? We believe the results are supportive of approval. MOXIe was the largest placebo-controled mFARS study to date. We hit the pre-specified primary endpoint. Many other data points favored omav. The criticism of the data is that we missed the secondary endpoints. We know prior to conducting the trial that the secondary endpoints were not powered, they were included to provide supporive, descriptive data. PGIC approached significance. CCIC favored omav. Patient living, ADL, had a p value of .04. We want to make sure the FDA is in agreement on the crossover trial design before execution.

What Year 1 data did the FDA question? What Year 2 data do they want to see? We submitted an IND amendment with posthoc analyses they submitted. We will discuss with the FDA data submitssion for Year 2. They were just standard questions and pharmakodynamic effects.

Blackstone deal, impact of delay on royalties? Their diligence was conducted after the reference part C bard meeting. There is no effect on the royalties.

Our current plan is still to file based on one year data, for accelerated approval.

FDA timeline for crossover study? It will take some time.

The FDA seems to be following their guidelines for single study approvals.

Year 2 data should be available in Q4 2020, but there has to be analysis to submit it. We hope to file it by year end.

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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