On November 12, 2019 Reata Pharmaceuticals, Inc. (Nasdaq: RETA) ("Reata" or the "Company"), a clinical-stage biopharmaceutical company, reported financial results for the third quarter ended September 30, 2019, and provided an update on the Company’s business and product development programs (Press release, Reata Pharmaceuticals, NOV 12, 2019, View Source [SID1234550988]).

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Recent Company Highlights

Reported positive, topline one-year data from the pivotal CARDINAL study of bardoxolone methyl in patients with chronic kidney disease caused by Alport syndrome
Reported positive topline data from the pivotal MOXIe study of omaveloxolone in patients with Friedreich’s ataxia
Third Quarter Financial Highlights

The Company incurred total expenses of $46.8 million for the quarter ended September 30, 2019, with research and development accounting for $32.3 million. This compares to total expenses of $34.7 million for the same period of the year prior, when research and development accounted for $27.1 million. We reported a net loss of $39.7 million or $1.32 per share for the quarter ended September 30, 2019. This compares to a net loss of $30.8 million or $1.07 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 offset with an increase 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 growth of our development activities.

We incurred total expenses of $124.6 million for the nine month period ended September 30, 2019, with research and development accounting for $87.9 million. This compares to total expenses of $97.1 million for the same period of the year prior, when research and development accounted for $72.0 million. We reported a net loss of $103.2 million or $3.44 per share for the nine month period ended September 30, 2019. This compares to a net loss of $55.0 million or $2.03 per share in the same period of the year prior.

The increase in net loss for the nine month period ended September 30, 2019 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 growth of our development activities. Revenue to date has primarily been related to license and collaboration agreements entered into during 2009, 2010, and 2011. Additional revenue related to variable consideration that was included in the transaction price under the KKC Agreement was recognized in the prior year period. Since we did not have a similar event in the current period, the revenue decreased by comparison.

Our cash-based operating expenses, a non-GAAP measure, were $41.2 million and $109.9 million for the three and nine months ended September 30, 2019, respectively. This compares to $31.9 million and $89.0 million for the same periods of the year prior. The increase in cash-based operating expenses for the three and nine months ended September 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 methyl 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 September 30, 2019, we had $240.1 million in cash and cash equivalents. We expect our current cash, along with our access to additional equity or debt funding, will enable us to meet our current obligations through December 31, 2020.

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: November 12, 2019
Time: 8:00 a.m. ET
Audience Dial-in (toll-free): (844) 348-3946
Audience Dial-in (international): (213) 358-0892
Conference ID: 4159656
Webcast Link: View Source