On August 8, 2019 Reata Pharmaceuticals, Inc. (Nasdaq: RETA), a clinical-stage biopharmaceutical company, reported financial results for the second quarter ended June 30, 2019, and provided an update on the Company’s business and product development programs (Press release, Reata Pharmaceuticals, AUG 8, 2019, View Source [SID1234538451]).
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Product Development Updates
Phase 2/3 CARDINAL Trial of Bardoxolone in Alport Syndrome
The Phase 3 portion of CARDINAL is an international, multi-center, randomized, double-blind, placebo-controlled trial studying the safety and efficacy of bardoxolone methyl (bardoxolone) in patients with chronic kidney disease caused by Alport syndrome. Enrollment in the pivotal Phase 3 portion of CARDINAL was completed last year with 157 patients. We expect to announce one-year, top-line results from CARDINAL in the second half of 2019. The U.S. Food and Drug Administration (FDA) has provided guidance that an improvement in retained estimated glomerular filtration rate (eGFR) versus placebo after 48 weeks of treatment and a four-week drug withdrawal period may support accelerated approval under subpart H. Data demonstrating an improvement versus placebo in retained eGFR after two years may support full approval. No safety concerns have been reported by the data monitoring committee.
MOXIe Trial of Omaveloxolone in Friedreich’s Ataxia
MOXIe is a two-part, international, multi-center, randomized, double-blind, placebo-controlled registrational trial studying the safety and efficacy of omaveloxolone in patients with Friedreich’s ataxia (FA). Enrollment in the pivotal part 2 of MOXIe was completed last year with 103 patients, and we expect to announce top-line data in the second half of 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 New Drug Application for omaveloxolone for the treatment of FA. No safety concerns have been reported by the data monitoring committee.
Phase 3 FALCON Trial of Bardoxolone in Autosomal Dominant Polycystic Kidney Disease
We announced in May 2019 that the first patient was enrolled in a registrational Phase 3 trial called FALCON, an international, multi-center, randomized, double-blind, placebo-controlled trial studying the safety and efficacy of bardoxolone in approximately 300 patients with autosomal dominant polycystic kidney disease. The FDA has provided guidance that an improvement in retained eGFR versus placebo at one year may support accelerated approval under subpart H, and that data demonstrating an improvement versus placebo in retained eGFR after two years may support full approval.
Phase 3 CATALYST Trial of Bardoxolone in Connective Tissue Disease-Associated Pulmonary Arterial Hypertension
We are conducting the pivotal Phase 3 CATALYST trial of bardoxolone in patients with pulmonary arterial hypertension associated with connective tissue disease, an often-fatal manifestation of many types of autoimmune disease, including systemic sclerosis (scleroderma) and systemic lupus erythematosus. The trial will enroll approximately 200 patients, with top-line data expected in the first half of 2020.
Selected Clinical Milestones in 2019
Pivotal CARDINAL data in the second half of 2019
Pivotal MOXIe data in the second half of 2019
Financial Highlights
The Company incurred total expenses of $41.5 million for the quarter ended June 30, 2019, with research and development accounting for $29.6 million. This compares to total expenses of $34.2 million for the same period of the year prior, when research and development accounted for $23.4 million. We reported a net loss of $34.4 million or $1.14 per share for the quarter ended June 30, 2019. This compares to a net loss of $28.2 million or $1.08 per share in the same period of the year prior.
The net loss for the three-month period compared to the year prior is primarily driven by an increase in expenses while revenue remained consistent to the year prior. Higher expenses were driven by an increase in research and development expenses due to clinical, manufacturing, and medical affairs activities, and an increase in personnel expenses to support growth of our development activities.
We incurred total expenses of $77.8 million for the six month period ended June 30, 2019, with research and development accounting for $55.7 million. This compares to total expenses of $62.4 million for the same period of the year prior, when research and development accounted for $44.8 million. We reported a net loss of $63.5 million or $2.12 per share for the six month period ended June 30, 2019. This compares to a net loss of $24.1 million or $0.92 per share in the same period of the year prior.
The increase in net loss for the six month period is driven primarily by both an increase in expenses and a decrease in revenue. Higher expenses were driven by an increase in research and development expenses due to clinical, manufacturing, and medical affairs activities, and an increase in personnel expenses to support expanded development activities. Revenue to date has primarily been related to license and collaboration agreements entered into during 2009, 2010, and 2011. The decrease in revenue was primarily due to an increase in revenue recognized in the first quarter of 2018 from the portion of a $30 million milestone from Kyowa Kirin Company that was included in the transaction price for which we did not have a similar event during 2019.
Our cash-based operating expenses, a non-GAAP measure, were $36.8 million and $68.7 million for the three and six months ended June 30, 2019, respectively. This compares to $31.6 million and $57.1 million for the same period of the year prior. Cash-based operating expenses for the quarters ended June 30 and March 31, 2019, were $36.8 million and $31.9 million, respectively. The increase in cash-based operating expenses for the three months ended June 30, 2019, were driven by increased manufacturing and clinical activities, as well as increased personnel costs to support growth in our development activities. We expect our cash-based operating expenses to continue to increase in the future as we advance bardoxolone and omaveloxolone through ongoing and future clinical trials, scale manufacturing for registrational and validation purposes, advance other product candidates into mid- and later-stage clinical trials, expand our product candidate portfolio, increase both our research and development and administrative personnel, and plan for commercialization of our product candidates.
At June 30, 2019, we had $280.4 million in cash and cash equivalents. We expect our current cash to fund our operations through data readouts for CARDINAL, MOXIe, and CATALYST.
Non-GAAP Financial Measures
In addition to the U.S. generally accepted accounting principles (GAAP) financial highlights, this earnings release includes cash-based operating expenses, a non-GAAP financial measure, which the Company defines as total expenses excluding stock-based compensation expense and depreciation expense. A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is presented in the table below in this earnings release.
We believe that this non-GAAP financial measure, in addition to GAAP financial measures, provides a meaningful measure of our ongoing business and operating performance by allowing investors to analyze our financial results similarly to how management analyzes our financial results by viewing period expense totals more indicative of effort directly expended to advance the business and our product candidates. Non-GAAP financial measures should be considered in addition to, not in isolation or as a substitute for, GAAP financial measures. In addition, our non-GAAP financial measure may differ from similarly named measures used by other companies.
CONFERENCE CALL INFORMATION
Date: Wednesday, August 8, 2019
Time: 8:00 a.m. ET
Audience Dial-in (toll-free): (844) 348-3946
Audience Dial-in (international): (213) 358-0892
Conference ID: 7587139
Webcast Link: View Source