On August 9, 2021 Reata Pharmaceuticals, Inc. (Nasdaq: RETA) ("Reata," the "Company," "our," "us," or "we"), a clinical-stage biopharmaceutical company, reported financial results for the quarter ended June 30, 2021, and provided an update on the Company’s business operations and clinical development programs (Press release, Reata Pharmaceuticals, AUG 9, 2021, View Source [SID1234586250]).
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Recent Company Highlights
Omaveloxolone in Patients with Friedreich’s Ataxia ("FA")
Based on a communication received from the U.S. Food and Drug Administration ("FDA") regarding omaveloxolone for the treatment of FA, we withdrew our request for a Type C meeting and requested a pre-NDA meeting with the FDA. The pre-NDA meeting request has been granted, a pre-NDA meeting has been scheduled during the third quarter of this year, and we have submitted briefing materials for the meeting. We recently received a communication from the FDA requesting the estimated date of our New Drug Application ("NDA") for its planning purposes. We plan to submit the NDA during the first quarter of 2022.
Bardoxolone Methyl ("Bardoxolone") in Patients with Alport Syndrome
The NDA for bardoxolone for the treatment of patients with chronic kidney disease ("CKD") caused by Alport syndrome is currently under review by the FDA. The FDA completed a bio-research monitoring inspection of Reata. We did not receive any observations. We also recently completed a mid-cycle communication meeting with the FDA. While we have not yet received formal minutes from the FDA, in the preliminary agenda for, and during, the meeting, the FDA identified four significant clinical and statistical review issues for us to address. The FDA invited us to respond to its identified issues in follow-up submissions to the NDA, and we believe each of the identified issues is addressable with additional data and analyses. The FDA did not designate any safety issues as significant issues, and it stated that, based on its current review, it does not believe a Risk Evaluation and Mitigation Strategies ("REMS") program is needed. The FDA also advised us that an Advisory Committee meeting is tentatively scheduled for December 8, 2021. The Prescription Drug User Fee Act ("PDUFA") date, the FDA action date for the application, is scheduled for February 25, 2022.
We reaffirm our plan to submit a Marketing Authorization Application ("MAA") with the European Medicines Agency ("EMA") in the fourth quarter of 2021 for marketing approval of bardoxolone for the treatment of CKD caused by Alport syndrome in the European Union.
On July 27, 2021, Kyowa Kirin Co., Ltd. ("KKC"), our strategic collaborator in CKD in Japan, submitted an NDA in Japan to the Ministry of Health, Labour and Welfare ("MHLW") for bardoxolone for the treatment of patients with CKD caused by Alport syndrome. Based on this submission, we have earned a milestone payment under the KKC license agreement.
Bardoxolone in Patients with Autosomal Dominant Polycystic Kidney Disease ("ADPKD")
FALCON is an international, multi-center, randomized, double-blind, placebo-controlled, registrational Phase 3 trial studying the safety and efficacy of bardoxolone in patients with ADPKD randomized one-to-one to bardoxolone or placebo. We recently had a Type B meeting with the FDA regarding the ADPKD development program, and we have not yet received minutes from the meeting. Based on the discussion during the meeting, we plan to modify the protocol so that the primary endpoint will be the Year 2 off-treatment analysis. Additionally, we will not unblind the trial until after its completion, we will add an eight-week off-treatment visit to the study, and we will incorporate the FDA’s feedback on data related to patients who discontinued treatment early in the study. We may need to increase the patient enrollment sample size from the current target of 550 patients. More than 370 patients are currently enrolled in the study. We continue to expect to enroll 550 patients in the FALCON study by the end of 2021. However, if we decide to increase the target enrollment, we will provide updated guidance on our enrollment timeline.
Bardoxolone in Patients with CKD at Risk of Rapid Progression
MERLIN is a multi-center, double-blind, placebo-controlled, Phase 2 trial to evaluate the safety and efficacy of bardoxolone in patients with CKD due to multiple etiologies at meaningful risk of progression to end-stage kidney disease. We have completed enrollment in the MERLIN trial and expect to have top-line data in the fourth quarter of 2021. If the results of this study are positive, we may proceed to a larger Phase 3 with similar eligibility criteria.
Recent Presentations
Abstracts highlighting results from our various programs in CKD and FA have been selected for presentation at recent international medical conferences. Posters that have been presented can be found on our website at View Source." target="_blank" title="View Source." rel="nofollow">View Source
Dr. David Lynch, MD, PhD, Director, Friedreich’s Ataxia Program, Division of Neurology, Children’s Hospital of Philadelphia, Philadelphia, PA, presented the talk Efficacy of Omaveloxolone in Patients with Friedreich’s Ataxia: Baseline-Controlled Study at the National Ataxia Foundation’s Ataxia Investigators Meeting 2021, which was held virtually from May 24 – 27, 2021.
Dr. Bradley A. Warady, MD, Director, Division of Pediatric Nephrology, Children’s Mercy Kansas City, Kansas City, MO presented the talk Safety of Bardoxolone Methyl in Pediatric Patients with Alport Syndrome in CARDINAL Phase 3 Trial at the 58th ERA-EDTA Congress, which was held virtually from June 5 – 8, 2021.
Dr. Arlene Chapman, MD, Professor of Medicine, University of Chicago, Chicago, IL, presented the poster Trial Design for Phase 3 FALCON: Evaluation of the Safety, Tolerability, and Efficacy of Bardoxolone Methyl in Patients with Autosomal Dominant Polycystic Kidney Disease at the PKD CON:NECT Conference, which was held virtually from June 25 – 26, 2021.
Second Quarter Financial Highlights
Cash and Cash Equivalents
At June 30, 2021, we had cash and cash equivalents of $755.7 million. The decrease in cash and cash equivalents during the second quarter of 2021 was $21.9 million, as compared to $40.5 million in the first quarter of 2021. This decrease in cash used is primarily due to a $22.9 million tax refund related to the Coronavirus Aid, Relief and Economic Security Act that was received during the second quarter of 2021. We reaffirm our current cash runway to last through mid-2024.
Collaboration Revenue
Collaboration revenue was $2.2 million in the second quarter of 2021, as compared to $3.1 million for the same period of the year prior.
GAAP and Non-GAAP Research and Development ("R&D") Expenses
R&D expenses according to generally accepted accounting principles in the U.S. ("GAAP") were $40.1 million for the second quarter of 2021, as compared to $36.8 million, for the same period of the year prior.
Non-GAAP R&D expenses were $34.8 million for the second quarter of 2021, as compared to $29.3 million, for the same period of the year prior.1
GAAP and Non-GAAP General and Administrative ("G&A") Expenses
GAAP G&A expenses were $22.0 million for the second quarter of 2021, as compared to $16.6 million, for the same period of the year prior.
Non-GAAP G&A expenses were $14.0 million for the second quarter of 2021, as compared to $9.3 million for the same period of the year prior.1
GAAP and Non-GAAP Net Loss
The GAAP net loss for the second quarter of 2021 was $72.7 million, or $2.00 per share, on both a basic and diluted basis, as compared to a GAAP net loss of $67.6 million, or $2.03 per share, on both a basic and diluted basis, for the same period of the year prior.
The non-GAAP net loss for second quarter of 2021 was $48.0 million, or $1.32 per share on both a basic and diluted basis, as compared to a non-GAAP net loss of $40.9 million, or $1.23 per share, on both a basic and diluted basis, for the same period of the year prior.1
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1 See "Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and a reconciliation between GAAP and non-GAAP R&D expenses, GAAP and non-GAAP G&A expenses, and GAAP and non-GAAP net loss, respectively, appearing later in the press release.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, including non-GAAP R&D expenses, non-GAAP G&A expenses, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per common share – basic and diluted. These measures are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP financial measures used by other companies.
The increases in GAAP and non-GAAP net loss are driven primarily by increased clinical study and manufacturing activities, commercial launch readiness activities, and increased personnel and personnel-related costs to support the growth of our development activities compared to the same period of the year prior.
The Company defines non-GAAP R&D expenses as GAAP R&D expenses, excluding stock-based compensation expense; non-GAAP G&A expenses as GAAP G&A expenses, excluding stock-based compensation expense; non-GAAP operating expenses as GAAP operating expenses, excluding stock-based compensation expense; non-GAAP net loss as GAAP net loss, excluding stock-based compensation expense, non-cash interest expense from liability related to sale of future royalties, loss on extinguishment of debt, and gain on lease termination; and non-GAAP net loss per common share – basic and diluted as GAAP net loss per common share – basic and diluted, excluding stock-based compensation expense, non-cash interest expense from liability related to sale of future royalties, and loss on extinguishment of debt. The Company has excluded the impact of stock-based compensation expense, which may fluctuate from period to period based on factors including the variability associated with performance-based grants for stock options and restricted stock units and changes in the Company’s stock price, which impacts the fair value of these awards. The Company has excluded the impact of accreted non-cash interest expense from liability related to sale of future royalties as it may be calculated differently from, and therefore may not be comparable to, peer companies who also provide non-GAAP disclosures. The Company has excluded the impact of loss on extinguishment of debt and gain on lease termination as they are non-recurring transactions that make it difficult to compare its results to peer companies who also provide non-GAAP disclosures. The Company has excluded the impact of stock-based compensation expense, non-cash interest expense from liability related to sale of future royalties, loss on extinguishment of debt, and gain on lease termination because the Company believes its impact makes it difficult to compare its results to prior periods and anticipated future periods. Because management believes certain items, such as stock-based compensation expense, non-cash interest expense from liability related to sales of future royalties, loss on extinguishment of debt, and gain on lease termination, can distort the trends associated with the Company’s ongoing performance, the following measures are often provided, excluding special items, and utilized by the Company’s management, analysts, and investors to enhance consistency and comparability of year-over-year results, as well as to industry trends, and to provide a basis for evaluating operating results in future periods: non-GAAP net loss; non-GAAP net loss per common share – basic and diluted; non-GAAP R&D expenses; non-GAAP G&A expenses; and non-GAAP operating expenses.
The Company believes the presentation of these non-GAAP financial measures provides useful information to management and investors regarding the Company’s financial condition and results of operations. When GAAP financial measures are viewed in conjunction with these non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance and are better able to compare the Company’s performance between periods. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating performance, allocating resources and planning and forecasting future periods. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures. A reconciliation between these non-GAAP measures and the most directly comparable GAAP measures is provided later in this press release.
Conference Call Information
Reata’s management will host a conference call on August 9, 2021, at 4:30 pm ET. The conference call will be accessible by dialing (866) 270-1533 (toll-free domestic) or (412) 317-0797 (international) using the access code: 10157197. The webcast link is View Source
Second quarter financial results to be discussed during the call will be included in an earnings press release that will be available on the company’s website shortly before the call at View Source and will be available for 12 months after the call. The audio recording and webcast will be accessible for at least 90 days after the event at View Source." target="_blank" title="View Source." rel="nofollow">View Source