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Edited Transcript of RETA earnings conference call or presentation 9-May-19 12:00pm GMT

Q1 2019 Reata Pharmaceuticals Inc Earnings Call

IRVING May 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Reata Pharmaceuticals Inc earnings conference call or presentation Thursday, May 9, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Colin J. Meyer

Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development

* J. Warren Huff

Reata Pharmaceuticals, Inc. - Chairman, CEO & President

* Jason D. Wilson

Reata Pharmaceuticals, Inc. - CFO & Executive VP of Strategy

* Vineet R. Jindal

Reata Pharmaceuticals, Inc. - VP of Strategy

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Conference Call Participants

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* Adam Anderson Walsh

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst

* Brian Peter Skorney

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

* Joseph Patrick Schwartz

SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst

* Maria Antonia Barbera

Ladenburg Thalmann & Co. Inc., Research Division - Associate

* Maurice Thomas Raycroft

Jefferies LLC, Research Division - Equity Analyst

* Yigal Dov Nochomovitz

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to Reata Pharmaceuticals first quarter financial results and update on development programs. (Operator Instructions) An audio recording of today's webcast will be available shortly after the call on Reata's website at reatapharma.com in the Investors section.

Before the company proceeds with its remarks, please note the forward-looking statement disclosure in the company's press release. The company will be making forward-looking statements on today's call. There are many factors that could cause results to differ from expectations, including those noted in the company's SEC filings. Today's statements are not guarantees of future outcomes. Please also note that any comments made on today's call speak only as of today, May 9, 2019, and may no longer be accurate at the time of any webcast, replay or transcript reading. Following the prepared remarks, we will open the call up for questions. (Operator Instructions)

I would now like to introduce your host for today's conference, Vinny Jindal, Vice President of Strategy. Vinny, you may begin.

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Vineet R. Jindal, Reata Pharmaceuticals, Inc. - VP of Strategy [2]

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Thanks, Nova. Hello, everyone. Good morning, and welcome to Reata management's call to discuss our first quarter financial results and to provide a review of our development programs.

This morning, we issued a press release with a summary of these results, and the press release can be found on the Investors section of our website at reatapharma.com. I am joined today by our CEO, Warren Huff; our Chief Medical Officer, Colin Meyer; and Chief Financial Officer, Jason Wilson.

I'll now turn the call over to Warren.

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [3]

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Thanks, Vinny. Good morning, everyone, and thank you for joining us for our quarterly call. I'd like to begin our call today by reviewing the significant progress we've made over the last year in advancing our development pipeline. As most of you know, we're currently conducting 3 registrational studies of our lead Nrf2 activators: the CARDINAL study of bardoxolone for chronic kidney disease caused by Alport syndrome; the MOXIe study of omaveloxolone in Friedreich’s ’s ataxia; and the CATALYST study of bardoxolone in connective tissue disease-associated pulmonary arterial hypertension, or CTD-PAH.

In 2018, we completed enrollment in both CARDINAL and MOXIe, and we expect to report top line results from both studies in the second half of this year. There are no approved therapies for either of these deadly diseases and if the results are positive, we're currently positioned to have the first FDA-approved treatments for these patients. Additionally, we recently produced positive Phase II proof-of-concept data in our PHOENIX study in 4 additional rare forms of chronic kidney disease, including autosomal dominant polycystic kidney disease, IgA nephropathy, focal segmental glomerular sclerosis (sic) [focal segmental glomerulosclerosis] and type 1 diabetic CKD. On the basis of the data in ADPKD, this month we're launching a registrational study of bardoxolone called FALCON. We also plan to pursue the development of bardoxolone in the other 3 rare forms of CKD we studied in PHOENIX.

Starting with our Alport syndrome program, in 2018, we reported long-term results from the Phase II portion of CARDINAL, demonstrating that patients treated with bardoxolone experienced a significant improvement in estimated glomerular filtration rate, or eGFR, after 48 weeks of treatment and a significant retained eGFR benefit following 4 weeks of drug withdrawal. These improvements in eGFR were observed in patients that were actively declining on standard-of-care therapy prior to entry into the study. And the retained eGFR benefits suggest that long-term treatment with bardoxolone may safely delay or prevent kidney failure in patients with Alport syndrome.

On the basis of the Phase II results, we initiated and fully enrolled the Phase III portion of the CARDINAL study. The FDA has provided us written guidance that a statistically significant, placebo corrected retained eGFR benefit after 1 year of treatment may support accelerated approval, and a retained eGFR benefit after 2 years of treatment may support full approval. We expect top line data from the Phase III portion of CARDINAL to be available in the second half of this year.

In the first quarter of this year, we announced top line data from the FSGS cohort of the PHOENIX trial as well as summary data from all PHOENIX cohorts combined, which included a total of 103 patients with ADPKD, IgA nephropathy, FSGS or CKD caused by type 1 diabetes. We've reported positive results from all 4 cohorts, with each cohort meeting its primary endpoint of an increase in eGFR at week 12.

Across the 103 patients enrolled in PHOENIX, the mean eGFR increased by 7.8 milliliters per minute at week 12, and 88% of patients treated for 12 weeks demonstrated an improvement from baseline eGFR. Importantly, these improvements were observed in patients whose kidney function was actively declining, despite most patients entering the study on optimized standard of care. There was no significant change in urinary protein and mean blood pressure decreased significantly, providing strong evidence that bardoxolone's effect on kidney function is not mediated through an increase in glomerular pressure.

In the ADPKD cohort of PHOENIX, 96% of patients treated with bardoxolone for 12 weeks experienced an increase in eGFR, with an average increase of 9.3 milliliters per minute versus baseline. In prior bardoxolone trials of at least 1 year in duration, the 12-week eGFR change from baseline correlated with the eGFR change at 1 year and in all 3 studies, there was a significant retained eGFR benefit after 1 year of treatment and a 4-week washout. As a result, the 12-week eGFR improvements observed in patients with PKD suggest that the long-term eGFR improvements observed in other forms of CKD may translate to these patients.

We have now observed significant improvements in kidney function across 7 distinct forms of chronic kidney disease, a finding which strongly supports our thesis that bardoxolone addresses a common final pathway of progression in CKD that is driven by inflammation, fibrosis and the impairment of mitochondrial function.

In light of this, in January, we announced plans for FALCON, a randomized, double-blind, placebo-controlled, international Phase III study that will enroll approximately 300 patients across sites in the United States, Europe and Australia. The footprint of this study is similar to that of our ongoing CARDINAL study in Alport syndrome patients and will leverage many of the same investigators and clinical sites. As in the CARDINAL trial for Alport syndrome, the FDA has provided written guidance that 1-year placebo-corrected, retained eGFR data in FALCON could support accelerated approval, and the 2-year placebo-corrected, retained eGFR data could support full approval in ADPKD. We anticipate enrolling the first patient in FALCON later this month.

Since we will have top line 1-year data from the Phase III CARDINAL study in Alport syndrome patients in the second half of this year, we are in active preparation for NDA submission and commercial launch, in the event that the trial data are positive. The FDA has indicated that we've conducted all preclinical toxicology studies and clinical pharmacology studies required for NDA submission. We are making significant investments in supply chain readiness, we put our marketing, commercial operations and sales leadership in place, and we've initiated our first disease awareness campaigns for Alport syndrome.

Turning now to our neuromuscular disease program. We're studying omaveloxolone, our second-generation Nrf2 activator in the ongoing pivotal MOXIe trial for the treatment of Friedreich’s ataxia, or FA. In the dose-ranging Part 1 of MOXIe, we observed at the optimal dose, a statistically significant improvement in the modified Friedreich’s Ataxia Rating Scale scores, or mFARS scores, versus baseline at week 12, and a placebo corrected improvement in mFARS scores, which approached significance with a p-value of 0.6.

Based on the results of Part 1 and the design of Part 2 of MOXIe, we are optimistic that omaveloxolone has the potential to become the first approved therapy for patients with FA. The MOXIe study is fully enrolled, and we expect top line pivotal data from this study to be available in the second half of this year.

Our fourth pivotal study is the CATALYST trial of bardoxolone in patients with CTD-PAH. In comparison to patients with the idiopathic form of PAH, patients with CTD-PAH generally have a worse prognosis and despite treatment with vasodilator therapies, these patients have a 5-year survival rate of only approximately 44%.

Based on the results observed in over Phase II LARIAT trial and the design of the CATALYST trial, we are optimistic that bardoxolone has the potential to become the first therapy approved specifically for patients with CTD-PAH. We expect top line data to be available in the first half of 2020.

I'll now turn the call over to Jason to provide a summary of our financials for the quarter.

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Jason D. Wilson, Reata Pharmaceuticals, Inc. - CFO & Executive VP of Strategy [4]

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Thanks, Warren. As noted earlier, this morning we reported financial results for the first quarter of 2019.

Net loss for the quarter was $29.2 million or $0.98 per share compared to a net income of $4.1 million or $0.16 per share for the same period last year. The net loss for the 3-month period is driven by both an increase in expenses and a decrease in revenue. Higher expenses were driven primarily by an increase in R&D expenses due to clinical and manufacturing activities and an increase in personnel expenses as we expand our development activities.

The company incurred total expenses of $36.3 million for the quarter ended March 31, 2019, with research and development accounting for $26.1 million. This compares to total expenses of $28.1 million for the same period of the prior year when research and development accounted for $21.4 million.

As you likely know, revenue to date has primarily been related to license and collaboration agreements entered into a number of years ago. The quarter-over-quarter decrease in revenue was primarily due to a sharp uptick in revenue in the first quarter of 2018 that related to partial recognition of a $30 million milestone from KHK.

Due to the change in revenue recognition guidance in 2018, revenue from milestones is now recorded across the full performance obligation period of the contract and therefore, a large portion of the milestone was allocated to the time period from execution of the contract through the end of first quarter 2018. This did not occur in 2019.

Our cash-based operating expenses, a non-GAAP measure we define as total expenses, excluding stock-based compensation expense and depreciation expense, were $31.9 million for the 3 months ended March 31, 2019, compared to $25.6 million for the same period ended in 2018. A reconciliation of this non-GAAP measure to total expenses can be found attached to the press release filed this morning. We expect our cash-based operating expenses will continue to increase in the future as we advance our product candidates through ongoing and future clinical trials, scale manufacturing for registration and validation purposes, expand our product candidate portfolio, increase both our research and development and administrative personnel and plan for [full] commercialization of our product candidates.

At March 31, 2019, we had $313.1 million in cash and cash equivalents, which we expect to fund our operations through data readouts for 3 ongoing registrational clinical trials.

With that, I'll turn the call back over to Warren.

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [5]

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Thanks, Jason. At Reata, our mission is to develop therapeutics with novel mechanisms of action for severe orphan diseases with no effective therapies. We conduct a battery of Phase II studies, looking for meaningful improvements in key clinical parameters, and we set a high bar for advancing programs into pivotal studies. This approach has produced our current pipeline of 4 promising registrational programs in Alport syndrome, ADPKD, Friedreich's ataxia and CTD-PAH, along with a series of additional Phase II proof-of-concept studies that provide expansion opportunities for our molecules.

Over the course of the next 15 months, we expect to achieve major milestones, including initiating enrollment in our pivotal FALCON trial in ADPKD later this month; reporting top line pivotal data from our registrational studies in Alport syndrome in Friedreich's ataxia in the second half of this year; and reporting top line data from our pivotal trial in CTD-PAH in the first half of 2020.

With a strong balance sheet, a portfolio of pivotal programs, and ongoing commercial launch preparation activities, Reata is well positioned to commercialize one or more groundbreaking therapies for underserved orphan diseases in the coming years. We look forward to updating you soon on our progress. That concludes our prepared remarks.

And I'll now turn the call over to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Yigal Nochomovitz from Citigroup.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [2]

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Colin, earlier this week, I understand that you gave a talk at the CKD3 meeting to nephrologists. I'm wondering if you could just spend a little bit of time giving us some of the feedback from that talk. And more specifically, what were the data points both preclinically and clinically that you think were worth highlighting, that were perhaps least appreciated, that were better appreciated after conveying your message to the -- that nephrologist community?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [3]

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Sure, Yigal. So the meeting was well attended by global KOLs and the heads of development for the global companies working in the CKD space. And I think what's of interest to [probably the] community is that, the role of inflammation in CKD is becoming quite evident. There were numerous talks demonstrating that inflammation actually drives [remodeling] fibrosis and loss of kidney function, and mitochondrial function plays a key role. And so there were probably 5 talks before mine about this. And so it wasn't very surprising when I spoke about the role of Nrf2 and how it can suppress inflammation, restore mitochondrial function, reduce fibrosis and have broad utility.

I think preclinically, there are, I think, two main aspects that were of interest to those who had not been following us; one of which is, of course, the mechanism by which our drug acutely increases kidney function. And it's very clear now that our drug affects inflammation that affects the volume of the glomerulus, which is constricted in many forms of CKD. This is not an effect on pressure. There are many drugs that do affect pressure because an increase in pressure on hyperfiltration is present in many forms and is bad and is addressed by many available therapies. And so I think just presenting the data, showing our drug does affect volume, and there's no evidence that it affects pressure, and actually protects the [amount of] pressure was of interest. I think the other element to the preclinical data that was interesting was that we now had data, and presented data on basically 6 different forms of CKD preclinically where our drug reduces fibrosis. And there's actually additional examples in literature, and so there's broad activity across many different forms of CKD.

I think clinically what was of interest to people was data that was actually presented by Matthias Kretzler, a few talks before mine. He runs a big group at the University of Michigan and his group demonstrated across a large biopsy study that included 9 different forms of CKD, including Alport syndrome, diabetic CKD, hypertensive CKD, IgA nephropathy and FSGS, that inflammation and metabolic pathways were dysregulated across those 9 different forms, and those pathways were associated with loss of eGFR. So our clinical endpoint as well as the lab value that physicians use to track patients kidney function, and that Nrf2 was the central hub that connects them. And so I think that [wasn't] well appreciated even though it's published about 5 years ago. I think clinically what was striking to people was that our drug is active across many different forms of CKD. The effect is durable for up to 2 years. It's associated with reduction of inflammatory biomarkers, many people have not seen that data. We've obviously published the data from our BEACON trial showing it actually reduced the newly validated events endpoint.

And then most notably, there has been a lot of interest in new endpoints for CKD. And so Kerry Willis from the National Kidney Foundation, who led the joint NKF-FDA EMA working group was there. Dr. Aliza Thompson, the Deputy Director of FDA, who participated from FDA in that working group, she spoke about endpoints and obviously, we and a few other companies now have these new endpoints that give us a much more efficient path to approval. And specifically about ours, I think most people weren't quite aware that we've actually demonstrated a significant increase in estimated GFR after withdrawal, the so-called routine benefit in 3 trials that we've previously conducted. And that's the endpoint for ongoing CARDINAL trial in Alport syndrome, and our FALCON trial in ADPKD that we're launching now. And so I think all in all, it was a pretty compelling presentation and I had a lot of positive feedback.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [4]

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Okay. Great. Just one quick follow-up regarding the translation from the 12-week data to the 48-week data. Obviously, you've shown that very nicely with bardoxolone in Alport. What is the level of evidence that would suggest that you can see that translation from omaveloxolone for the MOXIe Part 2 that you've shown [with] the 12-week modified FARS data. But for the 48-week data, I just wondered how do you -- how you believe that will translate?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [5]

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So we've obviously seen translation in Phase II Alport syndrome trial of eGFR from week 12 to week 48. We've also seen it in our BEAM and BEACON trials. So we haven't really seen a setting where the activity has been lost clinically with longer duration treatment. The pharmacology is the same; obviously, molecule is slightly different, but still induces Nrf2 and suppresses NF-kappa B and restores mitochondrial function.

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Operator [6]

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Our next question comes from the line of Adam Walsh from Stifel.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [7]

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So Colin, first a follow-up on Yigal's question. I'm just curious specifically about the feedback from physicians on the mechanism of action and the degree of acceptance at this point? Obviously, there's been some street debate around the mechanism of action. So just the feedback, how are clinicians broadly accepting the mechanism at this point or in the clinical community at the meeting? Is there still a lot of debate around that? And then also, I think -- recall correctly, you may have some ongoing work or studies, I think laser microscopy studies to kind of proof -- further prove out your mechanism of action. If so, can you check that box for me and then tell us when you're going to see some data from that trial?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [8]

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Sure. So I only think there's debate in people who are unaware of our data. And so in all the interactions that we've had with either investigators or KOLs who are willing to listen, I think we've adequately addressed all major questions. And speaking to, I think, what was, I think, part of the debate was, does our drug cause hyperfiltration? And I think as I mentioned to everyone before and even at the CKD3 conference, hyperfiltration is specifically defined as an increase in pressure that will result in an increase in kidney function, and there is actually no evidence of that in any of the preclinical or clinical data and there's many lines of evidence. And so when I walk people through the data, I think, it's quite clear that the drug doesn't do that.

There's only 2 specific mechanisms, and I think non-nephrologists are unaware, there's not many ways this can be caused, it's simply by increasing systemic blood pressure and transmitting that to the kidney, our drug does not do that. And then there's relative vasodilation of the afferent arteriole, and there's no evidence that the drug does that. And there's actually no other way to cause hyperfiltration. The only other way to affect GFR is to affect this parameter called [KFS], which includes the surface area or volume of the glomerulus, and we do have evidence preclinically that the drug does affect it. And that was actually published in 2013 in Kidney International, which is one of the top kidney journals. So I think that once people are aware of those data and the fact that in models of hyperfiltration, now there's several published models or data -- several published papers across a few models that bardoxolone and [omaveloxolone] actually protect and preserve kidney function and reduce fibrosis. And that coupled with our clinical data that I described when answering Yigal's question provide a pretty compelling picture to really almost all nephrologists.

And the only ones that I am aware who still question it are really unwilling to listen to the data. And so I think there's really not much debate in those who are informed, and once again the clinical picture and preclinical picture is very different. As far as the laser microscopy work that you mentioned, yes, I discussed at the CKD3 meeting that we have, what I think is one last set of experiments to address any remaining questions about the mechanism. There's really sophisticated imaging techniques that allow investigators to visualize the kidney in living animals without any artificial manipulation, sticking probes into them. And many of these physiological parameters can be directly measured. And so we think that, that work will hopefully be quite definitive, and we hope to -- that will be presented at a future medical meeting.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [9]

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That's great. And just one more here. Do you have any more granularity on the timing of the MOXIe and the CARDINAL study results beyond the back half of this year? Kind of any indication, which may come first and whether it's going to be third quarter or fourth quarter?

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [10]

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No, we really don't. We've guided that both studies are fully enrolled and that we expect to have top line data in the second half, and we really can't say more than that.

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Operator [11]

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Our next question comes from the line of Joseph Schwartz of SVB Leerink.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [12]

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So some new studies suggest that there could be some upside bias to the number of patients that are out there with rare kidney diseases. So I was wondering if you could talk a little bit about how the diagnostic protocols are evolving, and where in the community do you expect to be able to find the most patients who can benefit from bardoxolone treatment for different forms of CKD?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [13]

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Sure. And so I think if you speak to most nephrologists and ask them about Alport syndrome, and you ask them to describe the average patient, they would comment that it's typically a young boy with kidney function impairment, with blood in the urine and hearing loss, and only in the past few years has it been appreciated that the mothers of those boys actually are also affected. And so the Alport Syndrome Foundation has suggested there are between 30,000 to 60,000 Alport syndrome patients in the U.S. that primarily comprise those 2 phenotypes. Fairly recently, the International Alport Syndrome Community has come together and many of the global experts published a new recommended set of guidelines for diagnosis of Alport syndrome patients.

It was published in the same journal I mentioned a few minutes ago, Kidney International in May of last year. And it also comprises of few other hereditary patterns, including autosomal-dominant Alport syndrome, which is previously known as [thin basement] membrane disease. Those patients also have a meaningful risk of reaching end stage kidney disease in their lifetime, it's about 25%, so similar to the mothers of X-linked boys. And it appears that, that is maybe a very meaningful population. And so right now obviously patients who have the classic phenotype are -- many of them have been identified, and we're working on efforts right now to better educate the broad nephrology community about the many forms of Alport syndrome. The one telltale sign is blood in the urine.

And so not that many types of conditions of the kidney can cause blood in the urine, and so the young boys have it. It's hard sometimes for the nephrologists to identify adults because the patients don't have hearing loss and they're not -- they weren't trained 10, 20-plus years ago that there are other forms, but now it is known and truthfully hematuria is the telltale sign as well as a family member's CKD. There was a study published about 4 years ago in the Journal of the American Society of Nephrology, the prescient group took 101 people who had CKD, blood in the urine and a family member with CKD, none of those patients were related, and they identified Alport syndrome in 80% of the patients. And so that provides a clear road map for us to identify these patients, because as I mentioned not many conditions actually cause blood in the urine.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [14]

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Okay, interesting. And then kind of leading into my next question then, can you talk about your disease awareness campaigns in Alport? I know you can't market the drug until after it's approved and materials are approved. But are you able to identify individual patients at this juncture that could ultimately receive the drug, and how many patients have you been able to reach so far?

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [15]

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So we haven't initiated a campaign to identify specific patients at this point. We have begun disease awareness campaign to simply educate the community about many of the findings and data that Colin has already mentioned that, yes, there is this classic phenotype. But then in particular, the mothers of the boys with the classic phenotype are also at high risk of being on -- needing a dialysis or a transplant during their lifetimes.

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Operator [16]

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Our next question comes from the line of Maury Raycroft from Jefferies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [17]

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First question is just on the NDA submission for Alport. Just based on your prepared remarks, I assume you're writing it up already. So provided the Alport syndrome data are positive, how quickly do you think you can file after you report the top line results?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [18]

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Maury, so, yes, we're actively working on the NDAs for Alport syndrome as well as for Friedreich's ataxia. It's a many-month long process, and we want to make sure that, assuming that the data are positive and they support approval, that we're able to interact with regulators quickly and expeditiously file the NDA. At this point, we're not going to provide guidance on timing and we'll provide more guidance once we hopefully have positive data and have had those initial interactions with the regulators.

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [19]

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Look, I'll just add that we're very aware that both of these groups of patients have a deadly disease with no approved therapy. So we'll be doing everything we can to move the programs expeditiously.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [20]

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Got it. Okay. And then for Phase II CARDINAL and for the Phase II PHOENIX trials, dose reduction was allowed in both of those studies. I'm just wondering if you have perspective into how much dose reduction has occurred in the Phase III for Alport syndrome. And if you can remind, if dose reducing has any impact on efficacy or not?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [21]

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So I can't comment on the ongoing pivotal trials as far as the specific doses. But in the context of the Phase II data, we typically see that 2/3 or 75% of patients can tolerate their max dose. And so this titration scheme definitely helps compliance because sometimes the goal dose is too high. And so we would hope that in the pivotal trial [because] this obviously helps with compliance. When we look across our prior trials we've conducted, it's often that the patients may be smaller in size or for some reason that may not be clear they have higher exposure at a given dose. And so there does not appear to be, at the higher end of the dose range, a difference in dose response.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [22]

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Okay. Great. And last question is just on ADPKD enrollment. Just wondering if you can enroll some of the patients over from the Phase II into the Phase III. And if so, how many of those patients are warehoused and [linked to] , go into the Phase III?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [23]

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So we do not allow patients, who've been exposed to our drugs to participate in future trials, but that was only 31 patients, and we enrolled those patients only from 8 sites in the U.S. in 8 weeks with no data in PKD. We have a much larger set of investigators targeting approximately 80 sites globally. Obviously, we'll enroll the first patients in the U.S., but there's a large amount of enthusiasm, and so we haven't provided specific enrollment guidance yet to the PKD trial. But since this is a relatively large rare disease, and many of these patients are diagnosed, about 140,000 in the U.S. already, and there's only a single agent that's approved and our drug is not competitive and allows patients to be on standard of care, we're hoping for a quick enrollment.

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Operator [24]

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Our next question comes from Matt Kaplan from Ladenburg.

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Maria Antonia Barbera, Ladenburg Thalmann & Co. Inc., Research Division - Associate [25]

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This is Maria, for Matt. I have a couple of questions. The first one, in the CATALYST program, the readout, it's first half 2020, still almost a year away. And it's probably early to speak about commercialization. But I was wondering, if for that program, will you need a different sales force team than the 2 that you have now for CKD and Friedreich’s Ataxia?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [26]

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Yes, yes. So very specifically, we would anticipate that we would have a separate dedicated sales force for the pulmonary -- dedicated sales force for the pulmonary applications of the drug and obviously for the connective tissue disease-associated PAH. The target physician group is different from the other 2 diseases that we're addressing. We would actually expect to have separate forces for Friedreich's ataxia as well as for Alport syndrome and the other rare forms of CKD.

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Maria Antonia Barbera, Ladenburg Thalmann & Co. Inc., Research Division - Associate [27]

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Okay. Great. And then regarding the PHOENIX trial and moving forward to pivotal studies, besides ADPKD, you announced your intention to pursue the other rare forms of CKD commercially. So would you run a study in CKD caused by type 1 diabetes, or will the Japanese partner include this patient population in their study? And also [so] the results -- I think you said that there were 103 patients enrolled in PHOENIX and 88% of patients showed an improvement from baseline in eGFR, which is obviously a very high percentage. But for the 12% of patients who did not show an improvement, was there a common reason or a common theme of why they didn't respond?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [28]

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So maybe starting with your last question. So in this PHOENIX trial of 103 patients, yes, 88% showed an increase in eGFR, which is, we think, remarkable and striking how most drugs don’t have a comparable efficacy. As well -- as far as the 12% who didn't have an increase, we noted that there's a subset of patients in the type 1 diabetic CKD cohort, who were enrolled with GFRs above 80, so near-normal and those patients generally showed no change in eGFR and that accounts for the majority of the lack of response. And there's very few others, and so it's very hard to know, we don't know if there's some exposure that just happened to be low or if there's some particular reason why they were unable to respond.

You're correct. Our Japanese partner, KHK, is conducting a trial in Japan of both type 1 and type 2 diabetic CKD. I think we -- at this point, we have to be thoughtful about what we do next. We obviously are excited that bardoxolone is broadly active, and as Warren said, has shown activity in 7 distinct forms of CKD. And so we are executing now 3 pivotal trials. We're launching our FALCON trial this month, and so we need to make sure that we can execute our lead programs. And then when additional resources are available, layer on additional trials. We'd anticipate that for the rare forms of CKD, it would likely be a similar approach. And so as you have heard, the design for our FALCON trial is very similar for Alport syndrome. And so this process is scalable. We just need to make sure that we allocate the appropriate resources at the right time for the additional opportunities.

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Operator [29]

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(Operator Instructions) Our next question comes from the line of Brian Skorney from Baird.

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Brian Peter Skorney, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [30]

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Just looking at kind of the time line that you have set up here, it looks like there might be similar time frame for getting top line FALCON data and when you can get approval in Alport for bardoxolone. I'm just wondering, does that seem to match up right? And how does that determine your initial pricing decision? When you look at the 2 different patient populations, would we expect it to affect price or do you think an Alport price can be extrapolated to a polycystic kidney disease price?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [31]

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And so as far as timing, yes, we haven't provided specific guidance obviously for NDA submission for Alport syndrome, and potential approval or for enrollment time lines for PKD, but obviously it's within probably a reasonably close period of time. And so obviously that we have to be thoughtful about how we approach the nephrology community. As far as pricing, we think that they're probably [independent] . We would figure out what price is relevant for Alport syndrome and...

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [32]

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Yes. I'd just -- obviously, the pricing is going to be informed by the results of both clinical trials. I'd just say that in both cases, the studies are designed to provide information about whether the drugs are modifying the course of the disease and could reduce the risk that these patients go on dialysis or a transplant. And I think, as you know, each of these studies is designed to treat patients that have been actively declining for years, most have lost half of their kidney function prior to entering the studies. And so we're hoping to have -- we're hoping that the data will demonstrate that the drugs can significantly reduce the risk of progressing to end-stage kidney disease. And so obviously, the drug will be priced based on what those results are.

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Operator [33]

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Thank you. Ladies and gentlemen, this does conclude our question-and-answer session for today. As a reminder, an audio recording of this conference will be available shortly after the call on Reata's website at reatapharma.com in the Investors section. Thank you for participating in today's conference. This concludes your call, and you may all disconnect. Everyone, have a wonderful day.