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Reata (RETA) Q1 Earnings Miss, Stock Dips on Pipeline Updates
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Reata Pharmaceuticals, Inc. reported a first-quarter 2023 adjusted loss of $3.14 per share, wider than the Zacks Consensus Estimate and our model estimate of a loss of $2.34 and $2.37, respectively. In the year-ago quarter, the company registered an adjusted loss of $2.03 per share.
The bottom line included stock-based compensation expenses and non-cash interest expense from liability related to the sale of future royalties. Excluding these, the adjusted loss was $1.81 per share in the reported quarter compared with $1.33 in the prior-year period.
Total revenues, including collaboration revenues, came in at $0.2 million, significantly down from the year-ago quarter’s $0.9 million. The decline was primarily due to the company reaching the end of the performance obligation with the Kyowa Kirin Agreement as of Jun 30, 2022. The top line missed the Zacks Consensus Estimate of $1 million.
In February 2023, the FDA approved Reata’s first drug, Skyclarys (omaveloxolone), for treating Friedreich’s ataxia in adults and adolescents aged 16 years and older. The company has deployed a sales team and infrastructure for the drug, and received around 500 patient start forms.
RETA has completed the final stages of manufacturing and packaging for Skyclarys but needs an NDA supplement approval to release the drug to the specialty pharmacy. The supplement is currently under review with the FDA with an approval target action date in mid-August 2023. Reata expects Skyclarys to be launched by the same date if the FDA finds no issues with the review. Earlier, the company expected Skyclarys to be available by the second quarter of 2023.
It also submitted a marketing authorization application for the drug in Europe and plans to respond to the European Medicines Agency in the third quarter of 2023.
Quarter in Detail
Research and development expenses increased 40% year over year to $55.4 million due to a surge in costs for ongoing clinical studies.
General and administrative expenses totaled $54.8 million, up 121% from that recorded in the year-ago period. This increase was due to a rise in commercial activities for Skyclarys.
Cash, cash equivalents and marketable securities amounted to $321 million as of Mar 31, 2023, compared with $387.5 million as of Dec 31, 2022. Reata expects its cash resources to fund operations through 2026-end.
Pipeline Update
In May, a phase III AYAME study evaluating bardoxolone methyl for diabetic kidney disease met primary and key secondary endpoints. However, there was no significant difference in the occurrence of end-stage renal disease events between the bardoxolone and placebo groups after three years of treatment.
As a result, RETA and partner Kyowa Kirin decided to discontinue the development of bardoxolone for CKD.
Reata has a development and commercialization funding agreement with Blackstone Life Sciences for bardoxolone. The latter was entitled to various percentage royalty payments on worldwide net sales of the drug, once approved.
Post discontinuation, RETA has amended its funding agreement with Blackstone Life Sciences and will now pay it a low, single-digit royalty on worldwide net sales of Skyclarys. This, in turn, will allow Reata to refocus its capital resource of more than $100 million toward future pipeline developments.
The company’s shares were down 14.23% on May 10, following the announcement of the discontinuation of bardoxolone for CKD. The decline could also be attributed to the potential delay in launch of Skyclarys. Shares of the company jave surged 137.9% year to date against the industry’s 5.5% decline.
Loss per share estimates for Ocuphire Pharma have narrowed from 29 cents to 24 cents for 2023 and from 86 cents to 81 cents for 2024, in the past 60 days.
The company’s shares have surged 76.8% in the year-to-date period. Ocuphire’s earnings beat estimates in three of the last four quarters and missed the mark in one, the average surprise being 23.85%.
Loss per share estimates for Allogene have narrowed from $2.56 to $2.31 for 2023 and from $2.53 to $2.20 for 2024, in the past 60 days. Shares of ALLO have surged 1.1% in the year-to-date period.
Allogene’s earnings beat estimates in three of the last four quarters and missed the mark in one, the average surprise being 5.08%.
Loss per share estimates for Arcus Biosciences have narrowed from $4.52 to $4.42 for 2023 and from $3.51 to $3.33 for 2024, in the past 60 days. Shares of RCUS have plunged 9% in the year-to-date period.
Arcus Biosciences’ earnings outpaced estimates in two of the last four quarters, met the mark in one and missed in another, the average negative surprise being 48.83%.
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Reata (RETA) Q1 Earnings Miss, Stock Dips on Pipeline Updates
Reata Pharmaceuticals, Inc. reported a first-quarter 2023 adjusted loss of $3.14 per share, wider than the Zacks Consensus Estimate and our model estimate of a loss of $2.34 and $2.37, respectively. In the year-ago quarter, the company registered an adjusted loss of $2.03 per share.
The bottom line included stock-based compensation expenses and non-cash interest expense from liability related to the sale of future royalties. Excluding these, the adjusted loss was $1.81 per share in the reported quarter compared with $1.33 in the prior-year period.
Total revenues, including collaboration revenues, came in at $0.2 million, significantly down from the year-ago quarter’s $0.9 million. The decline was primarily due to the company reaching the end of the performance obligation with the Kyowa Kirin Agreement as of Jun 30, 2022. The top line missed the Zacks Consensus Estimate of $1 million.
In February 2023, the FDA approved Reata’s first drug, Skyclarys (omaveloxolone), for treating Friedreich’s ataxia in adults and adolescents aged 16 years and older. The company has deployed a sales team and infrastructure for the drug, and received around 500 patient start forms.
RETA has completed the final stages of manufacturing and packaging for Skyclarys but needs an NDA supplement approval to release the drug to the specialty pharmacy. The supplement is currently under review with the FDA with an approval target action date in mid-August 2023. Reata expects Skyclarys to be launched by the same date if the FDA finds no issues with the review. Earlier, the company expected Skyclarys to be available by the second quarter of 2023.
It also submitted a marketing authorization application for the drug in Europe and plans to respond to the European Medicines Agency in the third quarter of 2023.
Quarter in Detail
Research and development expenses increased 40% year over year to $55.4 million due to a surge in costs for ongoing clinical studies.
General and administrative expenses totaled $54.8 million, up 121% from that recorded in the year-ago period. This increase was due to a rise in commercial activities for Skyclarys.
Cash, cash equivalents and marketable securities amounted to $321 million as of Mar 31, 2023, compared with $387.5 million as of Dec 31, 2022. Reata expects its cash resources to fund operations through 2026-end.
Pipeline Update
In May, a phase III AYAME study evaluating bardoxolone methyl for diabetic kidney disease met primary and key secondary endpoints. However, there was no significant difference in the occurrence of end-stage renal disease events between the bardoxolone and placebo groups after three years of treatment.
As a result, RETA and partner Kyowa Kirin decided to discontinue the development of bardoxolone for CKD.
Reata has a development and commercialization funding agreement with Blackstone Life Sciences for bardoxolone. The latter was entitled to various percentage royalty payments on worldwide net sales of the drug, once approved.
Post discontinuation, RETA has amended its funding agreement with Blackstone Life Sciences and will now pay it a low, single-digit royalty on worldwide net sales of Skyclarys. This, in turn, will allow Reata to refocus its capital resource of more than $100 million toward future pipeline developments.
The company’s shares were down 14.23% on May 10, following the announcement of the discontinuation of bardoxolone for CKD. The decline could also be attributed to the potential delay in launch of Skyclarys. Shares of the company jave surged 137.9% year to date against the industry’s 5.5% decline.
Image Source: Zacks Investment Research
Reata Pharmaceuticals, Inc. Price and Consensus
Reata Pharmaceuticals, Inc. price-consensus-chart | Reata Pharmaceuticals, Inc. Quote
Zacks Rank and Stocks to Consider
Currently, Reata has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are Ocuphire Pharma (OCUP - Free Report) , Allogene Therapeutics (ALLO - Free Report) and Arcus Biosciences (RCUS - Free Report) . While Ocuphire Pharma sports a Zacks Rank #1 (Strong Buy), Allogene Therapeutics and Arcus Biosciences, both carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Loss per share estimates for Ocuphire Pharma have narrowed from 29 cents to 24 cents for 2023 and from 86 cents to 81 cents for 2024, in the past 60 days.
The company’s shares have surged 76.8% in the year-to-date period. Ocuphire’s earnings beat estimates in three of the last four quarters and missed the mark in one, the average surprise being 23.85%.
Loss per share estimates for Allogene have narrowed from $2.56 to $2.31 for 2023 and from $2.53 to $2.20 for 2024, in the past 60 days. Shares of ALLO have surged 1.1% in the year-to-date period.
Allogene’s earnings beat estimates in three of the last four quarters and missed the mark in one, the average surprise being 5.08%.
Loss per share estimates for Arcus Biosciences have narrowed from $4.52 to $4.42 for 2023 and from $3.51 to $3.33 for 2024, in the past 60 days. Shares of RCUS have plunged 9% in the year-to-date period.
Arcus Biosciences’ earnings outpaced estimates in two of the last four quarters, met the mark in one and missed in another, the average negative surprise being 48.83%.