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Reata (RETA) Stock Down Despite Q2 Earnings & Sales Beat
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Reata Pharmaceuticals Inc. reported second-quarter 2021 loss of $2.00 per share, narrower than the Zacks Consensus Estimate of a loss of $2.13.
However, the above loss included stock-based compensation and a non-cash interest expense. Adjusted loss for the quarter was $1.32 per share, wider than $1.23 per share recorded in the year-ago period.
Total revenues, comprising collaboration revenues, were $2.2 million compared with $3.1 million in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1.45 million.
Operating Expenses & Cash Position
Adjusted research and development expenses rose 18.7% year over year to $34.8 million due to increased clinical study activities.
General and administrative expenses were $14.1 million, up 50.2% from the year-ago period due to increased commercial launch readiness activities and higher personnel cost.
The company had cash and cash equivalents of $755.7 million as of Jun 30, 2021 compared with $777.6 million as of Mar 31, 2021. The company expects its cash resources to fund operations through mid-2024.
Pipeline Update
Reata is developing its lead pipeline candidates — bardoxolone methyl (bardoxolone) and omaveloxolone — for rare forms of chronic kidney disease (“CKD”) and neurological diseases, respectively. Please note that Reata re-acquired development, manufacturing and commercialization rights related to omaveloxolone and bardoxolone from AbbVie (ABBV - Free Report) last year.
Last month, the company announced that the FDA had accepted its new drug application (“NDA”) seeking approval for bardoxolone as a potential treatment for CKD caused by Alport syndrome. The NDA was filed based on positive data from the phase III CARDINAL study. A decision from the FDA is expected by Feb 25, 2022. In EU, Reata plans to file a regulatory application for the CKD caused by Alport syndrome indication in the fourth quarter.
Along with the press release, the company said that it has completed a mid-cycle communication meeting with the FDA. The regulatory agency has identified four “significant clinical and statistical review issues”, which Reata needs to address in follow-up submissions to the NDA. The FDA has not listed any safety issues as significant issues. Additionally, FDA does not believe a Risk Evaluation and Mitigation Strategies (“REMS”) program is needed. The FDA also informed Reata that an Advisory Committee meeting is tentatively scheduled for Dec 8.
Despite better-than-expected results, shares of Reata were down 13.7% in after-hours trading on Monday, in response to the negative regulatory update. The company’s shares have declined 1.2% so far this year against the industry’s increase of 1.8%.
Image Source: Zacks Investment Research
Reata is also developing bardoxolone for treating autosomal dominant polycystic kidney disease (“ADPKD”) in the phase III FALCON study. Along with the earnings release, Reata announced that following a Type B meeting with the FDA, it is considering amendments to the FALCON protocol. The primary endpoint now will be Year 2 off-treatment analysis and the company has decided not to unblind the study until after its completion.
Reata has decided to increase the study’s patient enrollment sample size from the current target of 550 patients. It expects to enroll 550 patients in the FALCON study by the end of 2021. Until now, the study has enrolled 370 patients. If a decision is taken to increase the target enrollment, an updated guidance on enrollment timeline will be given.
The candidate is also being evaluated in a phase II study (MERLIN) in patients with CKD at risk of rapid progression to end-stage kidney disease. Enrollment in the study is complete with top-line data expected in the fourth quarter.
The company successfully completed the pivotal MOXIe study on its another pipeline candidate, omaveloxolone, as a potential treatment for Friedreich’s ataxia (“FA”) in 2019. Data showed statistically significant improvement in mFARS (a measure of FA disease progression) compared to placebo after 48 weeks of treatment. The company also successfully completed a baseline-controlled study (crossover study) and additional exploratory analyses for additional data requested by the FDA previously. In May 2021, the FDA asked the company to withdraw its request for the scheduled Type C meeting and request a pre-NDA meeting to discuss study data.
Along with the earnings release, the company said that the pre-NDA meeting is scheduled for the third quarter of 2021. Accordingly, Reata plans to submit a NDA for the candidate in the first quarter of 2022.
Zacks Rank & Stocks to Consider
Reata currently carries a Zacks Rank #3 (Hold).
Reata Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Larimar’s loss per share estimates have narrowed from $3.08 to $2.56 for 2021 and from $3.09 to $2.98 for 2022 in the past 30 days.
Ironwood’s earnings per share estimates have moved north from $1.05 to $1.08 for 2021 and from $1.18 to $1.22 for 2022 in the past 30 days. The stock has risen 16.6% so far this year.
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Reata (RETA) Stock Down Despite Q2 Earnings & Sales Beat
Reata Pharmaceuticals Inc. reported second-quarter 2021 loss of $2.00 per share, narrower than the Zacks Consensus Estimate of a loss of $2.13.
However, the above loss included stock-based compensation and a non-cash interest expense. Adjusted loss for the quarter was $1.32 per share, wider than $1.23 per share recorded in the year-ago period.
Total revenues, comprising collaboration revenues, were $2.2 million compared with $3.1 million in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1.45 million.
Operating Expenses & Cash Position
Adjusted research and development expenses rose 18.7% year over year to $34.8 million due to increased clinical study activities.
General and administrative expenses were $14.1 million, up 50.2% from the year-ago period due to increased commercial launch readiness activities and higher personnel cost.
The company had cash and cash equivalents of $755.7 million as of Jun 30, 2021 compared with $777.6 million as of Mar 31, 2021. The company expects its cash resources to fund operations through mid-2024.
Pipeline Update
Reata is developing its lead pipeline candidates — bardoxolone methyl (bardoxolone) and omaveloxolone — for rare forms of chronic kidney disease (“CKD”) and neurological diseases, respectively. Please note that Reata re-acquired development, manufacturing and commercialization rights related to omaveloxolone and bardoxolone from AbbVie (ABBV - Free Report) last year.
Last month, the company announced that the FDA had accepted its new drug application (“NDA”) seeking approval for bardoxolone as a potential treatment for CKD caused by Alport syndrome. The NDA was filed based on positive data from the phase III CARDINAL study. A decision from the FDA is expected by Feb 25, 2022. In EU, Reata plans to file a regulatory application for the CKD caused by Alport syndrome indication in the fourth quarter.
Along with the press release, the company said that it has completed a mid-cycle communication meeting with the FDA. The regulatory agency has identified four “significant clinical and statistical review issues”, which Reata needs to address in follow-up submissions to the NDA. The FDA has not listed any safety issues as significant issues. Additionally, FDA does not believe a Risk Evaluation and Mitigation Strategies (“REMS”) program is needed. The FDA also informed Reata that an Advisory Committee meeting is tentatively scheduled for Dec 8.
Despite better-than-expected results, shares of Reata were down 13.7% in after-hours trading on Monday, in response to the negative regulatory update. The company’s shares have declined 1.2% so far this year against the industry’s increase of 1.8%.
Image Source: Zacks Investment Research
Reata is also developing bardoxolone for treating autosomal dominant polycystic kidney disease (“ADPKD”) in the phase III FALCON study. Along with the earnings release, Reata announced that following a Type B meeting with the FDA, it is considering amendments to the FALCON protocol. The primary endpoint now will be Year 2 off-treatment analysis and the company has decided not to unblind the study until after its completion.
Reata has decided to increase the study’s patient enrollment sample size from the current target of 550 patients. It expects to enroll 550 patients in the FALCON study by the end of 2021. Until now, the study has enrolled 370 patients. If a decision is taken to increase the target enrollment, an updated guidance on enrollment timeline will be given.
The candidate is also being evaluated in a phase II study (MERLIN) in patients with CKD at risk of rapid progression to end-stage kidney disease. Enrollment in the study is complete with top-line data expected in the fourth quarter.
The company successfully completed the pivotal MOXIe study on its another pipeline candidate, omaveloxolone, as a potential treatment for Friedreich’s ataxia (“FA”) in 2019. Data showed statistically significant improvement in mFARS (a measure of FA disease progression) compared to placebo after 48 weeks of treatment. The company also successfully completed a baseline-controlled study (crossover study) and additional exploratory analyses for additional data requested by the FDA previously. In May 2021, the FDA asked the company to withdraw its request for the scheduled Type C meeting and request a pre-NDA meeting to discuss study data.
Along with the earnings release, the company said that the pre-NDA meeting is scheduled for the third quarter of 2021. Accordingly, Reata plans to submit a NDA for the candidate in the first quarter of 2022.
Zacks Rank & Stocks to Consider
Reata currently carries a Zacks Rank #3 (Hold).
Reata Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Reata Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Reata Pharmaceuticals, Inc. Quote
A couple of better-ranked stocks from the same sector include Larimar Therapeutics, Inc. (LRMR - Free Report) and Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Larimar’s loss per share estimates have narrowed from $3.08 to $2.56 for 2021 and from $3.09 to $2.98 for 2022 in the past 30 days.
Ironwood’s earnings per share estimates have moved north from $1.05 to $1.08 for 2021 and from $1.18 to $1.22 for 2022 in the past 30 days. The stock has risen 16.6% so far this year.