Reata suggests Friedreich's ataxia program could be delayed, sending stock plunging
Reata Pharmaceuticals $RETA made waves last October when its drug omaveloxolone produced positive trial results in treating a rare neurological disorder, but the candidate’s path forward became much murkier Monday.
In a report of quarterly earnings, the biotech divulged that the FDA is considering delaying omaveloxolone’s NDA pending completion of a second trial. That could push back approval by at least a year given that the target population, individuals with Friedreich’s ataxia, is limited and progression of the hard-to-treat illness is notoriously slow. The Covid-19 pandemic would also hinder Reata’s ability to complete an additional trial.
The news shook Wall Street as Reata stock closed down a little over 33% on the day.
Reata’s proposed solution to keep the delay as short as possible involves submitting a “crossover study” that would measure the effect of omaveloxolone in patients who were previously in the placebo group and are being treated with the candidate in an open-label extension study. Should the FDA accept that approach, Reata expects to complete the crossover study before the end of the year and then submit the NDA in the first quarter of 2021.
If the proposal is rejected or the data do not return positive results, however, the biotech will re-evaluate whether or not a second trial as outlined is feasible. Regardless of the outcome, Reata noted it will continue to pursue approval outside the United States.
Analysts did not immediately know what to make of the update. SVB Leerink’s Joseph Schwartz wrote to investors that while Reata seemed confident it could persuade the FDA to accept its crossover trial, the biotech gave no indication to which way regulators were leaning and “would not provide guidance on how they expect these discussions to progress.” Schwartz further said that the possibility of a first-quarter NDA “remains to be seen” and that their model for Reata’s stock projection is undergoing review.
Within the quarterly update, Reata also disclosed that the FDA raised questions about its other lead program bardoxolone regarding Phase III trial results within the second year of the study. If those results are available before the year is out, the biotech could submit the data before regulators make a determination on accelerated approval, pushing back the PDUFA date but also resulting in full approval instead. If full approval is indeed the route, the NDA filing would be delayed to the first quarter of 2021.
Again, Schwartz noted that Reata did not hint at when the FDA began questioning the data for this program. He went on to write that the biotech had potentially spooked investors with “less assertive” language in their 2019 10-K compared to their 2018 filing, and the company would again not say whether this change coincided with regulators’ concerns.
Baird analyst Brian Skorney took a different view, however, calling the nosedive an “overreaction.” He noted that while concerns about omaveloxolone are “valid” and the drug’s approval could be pushed as far back as 2023, bardoxolone is likely to pull a bigger haul.
This is not the first time Reata has faced headwinds in the last 12 months. Shortly before revealing their positive omaveloxolone data, Reata unceremoniously decoupled from a partnership with AbbVie that cost the biotech $330 million. Reata was also forced to halt some trials due to Covid-19 complications, but continued others by adapting to at-home blood draws as opposed to clinic visits.
The dealings with AbbVie go back several years, as the companies signed two partnerships in rapid succession to the tune of $850 million in the early 2010s. But AbbVie suddenly halted its chronic kidney disease studies on bardoxolone in 2012 after heart-related adverse effects began popping up. Those effects essentially took the compound out of the running in the CKD field, where CEO Warren Huff had once vowed to make it a blockbuster.