Analyst Conference Summary

conference date: May 10, 2023 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2023 (Q1, first quarter)

Forward-looking statements

Overview: Skyclarys approval by FDA. But killed Bardoxolone programs.

Basic data (GAAP):

Revenue was $0.2 million, down sequentially from $na million and down from $0.9 million in the year-earlier quarter.

Net income was negative $116 million, down sequentially from negative $na million, and down from negative $74 million year-earlier.

Diluted EPS was negative $3.14, down sequentially from negative $na, and down from negative $2.03 year-earlier.

Guidance:

Cash, including that from the new debt, provides a runway to the end of 2026.

Conference Highlights:

Warren Huff, CEO said "In the first quarter of 2023, we announced that the U.S. Food and Drug Administration (FDA) approved Skyclarys (omaveloxolone) as the first and only FDA-approved drug indicated for the treatment of Friedreich's ataxia, a rare, genetic, debilitating, and degenerative neuromuscular disorder. This was a historic milestone for FA patients, their families, the FA support community, and Reata. Our commercial sales team has been in the field since early March, and we have completed the final stages of manufacturing and packaging commercial supplies of Skyclarys. We are encouraged by the significant interest from patients and health care providers to begin Skyclarys treatment and have already engaged a large segment of the neurology community in the brief time since the company received approval." Working on lining up patients and doctors. Had a glitch in manufacturing Skyclarys and working to fix that with FDA to get the drug to patients, should be no later than mid August. Launch of Skyclarys puts Reata on a path to being self-sustained.

The FDA approved omaveloxolone (Skyclarys) for the treatment of patients with FA (Friedreich's ataxia on February 28, 2023. Has submitted an MAA to the EU. Reata REACH program will help FA patients get therapy, including commercial copay assistance. Sees about 4,500 in on-label addressable market in the U.S. Has already received over 500 start forms. Payers should be onboard by 2H 2023.

Looking to a path for label expansion of Skyclarys for adolescents under 16, with a meeting requested with the FDA in Q2 2023. Hopes to start study in Q4 2023.

An FDA Complete Response Letter was issued for Bardoxolone for Alport Syndrome CKD (chronic kidney disease) on February 25, 2022. In May 2023, following more data from the AYAME Phase 3 trial, the entire kidney disease program was terminated. As a result of discontinuation of bardoxolone development, Reata amended the development and commercialization funding agreement with Blackstone Life Sciences. All obligations for development and commercialization of bardoxolone, restrictions on debt financing, restrictions on licensing assets, and all prior security interests have been removed. Reata will pay to Blackstone a low, single-digit royalty on world-wide net sales of omaveloxolone for FA.

In May 2023 agreed to a $275 million debt facility with Pharmakon, in 4 tranches.

Completed a Phase 1 study of RTA 901 (Cemdomespib) for Diabetic Peripheral Neuropathic Pain (DPNP) in healthy volunteers with positive PK results in Q1 2021. Currently in Phase 1 pharmacology study. Plans a Phase 2 study to begin in Q3 2023.

Preclinical work indicates omaveloxolone (or related Nrf2 activators RTA 415 and RTA 417) may be applicable to progressive suprnuclear palsy, ALS, Parkinson's, frontotemporal dementia, Huntington's, Alzheimer's, and epilepsy. Hopes to file the two INDs in 2024.

Cash ended at $321 million, down sequentially from $388 million. No debt.

Non-GAAP numbers: net income negative $67 million, down sequentially from negative $na million and down from negative $49 million year-earlier. Diluted EPS negative $1.81 sequentially from negative $na and down from negative $1.33 year-earlier.

Operating expense of $111 million consisted of $55 million for R&D, $55 million for general and administrative, and depreciation of $0.3 million. Other expense net $6 million. Income tax $0 million.

Q&A selective summary:

Skyclarys Start form accruel rate? Pleased with early demand. Just a two-month window. Too early to say if this is a bolus or this level of enrollment will continue.

Any plans for second manufacturing source? FDA has not given granularity for a possble earlier approval. Manufacturing of capsules for initial sales has been completed, waiting for FDA approval. Has capacity for the near term. Could do a second source further down the line.

The MAA is not yet aware of the impurity issue, we will be informing them.

We think the FDA review is routine, yes, no news is good news while waiting for approval.

Bardoxoline discontinuation effect on expenses, time to cash-flow break even? To get to self sustainable we would need about 2000 patients. With 500 lined up already, we believe that could come pretty quickly after launch.

Yes, we are proposing to increase the impurity reporting threshhold. Our readings were just slightly above the original threshhold. It is an acetone product that is part of the regular manufacturing process. We do not plan to change the manufacturing process.

Were any EMA questions fundamentally different from the FDA's? Very consistent.

Given our current funding, there is no current need to sell our pediatric voucher.

The EU nitrosoamine question is a standard question that we believe we can answer with no issues.

Skyclarys royalty is a low single-digit percent and is capped. It was necessary to exit all other obligations under the program.

We are seeing payers already making prior authorizations, but the bulk of payer decisions will be in the second half of this year.

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