Analyst Conference Summary

Reata Pharmaceuticals

conference date: November 9, 2020 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2020 (Q3, third quarter 2020)

Forward-looking statements

Overview: Released positive Phase 3 bardoxolone results.

Basic data (GAAP):

Revenue was $1.4 million, down sequentially from $3.0 million and down from $8.2 million in the year-earlier quarter.

Net income was negative $65 million, up sequentially from negative $67 million, and down from negative $40 million year-earlier.

Diluted EPS was negative $1.94, up sequentially from negative $2.03, and down from negative $1.32 year-earlier.


Believes cash is sufficient to fund operations through 2023.

Conference Highlights:

The Phase 3 CARDINAL trial of bardoxolone methyl for CKD (chronic kidney disease) caused by Alport Syndrome reported positive topline 2-year data in the fourth quarter of 2020. Plans to apply to FDA for approval in 1Q 2020. 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 a genetic testing program for Alport syndrome. The study showed that improved kidney function continued in the third year of treatment, and the largest treatment effect was observed in pediatric patients.

The Baseline-Controlled Study of Omaveloxolone for Friedreich's Ataxia met its primary endpoint of paired difference in annualized mFARS slope with a statistically significant 3.76 point improvement (p=0.0022) between the treatment and pre-treatment periods in the primary analysis population. Further, all sensitivity analyses of the primary analysis showed a significant treatment effect. Thus, we believe that the results of the Baseline-Controlled Study support the positive mFARS results of Part 2 and provide additional evidence of the effectiveness of omaveloxolone in FA. The Baseline-Controlled Study completed in October 2020 and the results were provided to the FDA. The FDA confirmed that it will review the study results and may request a meeting with us to discuss the conclusions of its review. If the FDA views these results as sufficient to increase the persuasiveness of data from Part 2, our plan would be to submit an NDA in mid-2021. However, there can be no assurance that the FDA will accept the design of the BaselineControlled Study. Previously, the FDA was not convinced that the MOXIe Part 2 results would 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 the crossover study.

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 were put on a screening hold, but that began to be lifted in June 2020.

The Phase 2 BARCONA IST study of bardoxolone in patients with COVID-19 is enrolling. It is a randomized, double-blind trial that will enroll approximately 40 patients with a primary endpoint of safety and treatment duration of up to 29 days in hospitalized patients.

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 $578 million, down sequentially from $610 million. No debt.

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.

Non-GAAP numbers: net income negative $44 million, down sequentially from negative $40.9 million and down from negative $34 million year-earlier. Diluted EPS negative $1.31 down sequentially from negative $1.23 and down from negative $1.14 year-earlier.

Operating expense of $56 million consisted of $37 million for R&D, $18 million for general and administrative, and depreciation of $0.3 million. Other expense net $ million. Income tax benefit $0 million.

Q&A summary:

Filing strategy, full approval v. accelerated? It was a difficult ask for accelerated approval, when it was clear we would have the 2 year data during the review process. We would have had to submit the 2 year data as a major amendment. So we chose the faster, surer path.

Pediatric patients, were they on other drugs? Pediatric patients were required to be at the maximum dose of an ACE inhibitor or other drug.

Liver enzyme management? Already applied to APDK setting. We have demonstrated that the (bad) enzymes decline when taken off drug, so we do that, then start them on a lower dose.

Risk of kidney failure slide, are they going on dialysis? Includes dialyis, transplant, low EGFR. The composite predicts actual events, but the trial was not powered to show that, but we saw trends.

Bard v. placebo decline during off drug period? Mechanism of action is reversible. The point of the off-drug test was to wash out the reversible effect. The improvements are not permanent. We demonstrated significant placebo-corrected separation in the off-treatment of analysis. That magnitude is 3 time larger than what supported tolvaptan in ADPKD.

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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