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Edited Transcript of RETA earnings conference call or presentation 28-Feb-19 1:00pm GMT

Q4 2018 Reata Pharmaceuticals Inc Earnings Call

IRVING Mar 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Reata Pharmaceuticals Inc earnings conference call or presentation Thursday, February 28, 2019 at 1:00:00pm 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

* Charles Cliff Duncan

Cantor Fitzgerald & Co., Research Division - Senior Analyst

* Matthew Lee Kaplan

Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research

* 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 the Reata Fourth Quarter Financial Results and Update on Development Programs. An audio recording of today's webcast will be available shortly after the call today 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, February 28, 2019, and may no longer be accurate at the time of any webcast, replay or transcript rereading.

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 call, Vinny Jindal, Vice President of Strategy. You may begin.

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

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Thanks, Demetrius. Hello, and welcome to Reata's management call to discuss Reata's fourth quarter 2018 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'm joined today by our Chief Executive Officer, Warren Huff; Chief Medical Officer, Colin Meyer; and our 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.

I'd like to begin our call today by reviewing the significant progress we made during 2018 in advancing our development pipeline, which now includes 3 ongoing pivotal programs and a fourth pivotal trial in autosomal dominant polycystic kidney disease that we plan to launch later this year.

In 2018, we completed enrollment in 2 pivotal trials for rare and severe diseases, CARDINAL studying bardoxolone in chronic kidney disease caused by Alport syndrome, and MOXIe, studying omaveloxolone in Friedrich's ataxia. There are no approved therapies for either of these deadly diseases, and we're currently positioned to have the first FDA approved treatments for these patients. We expect to report top line results for both studies in the second half of this year.

Regarding 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 eGFR after 48 weeks of treatment and a significant retained eGFR benefit following 4 weeks of drug withdrawal. The retained eGFR benefit suggested long-term treatment with bardoxolone may safely delay or prevent kidney failure in patients with Alport syndrome. The FDA has provided us with 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.

In 2018, we also completed enrollment in all cohorts of PHOENIX, a 12-week Phase II trial designed to generate proof-of-concept data in 4 rare forms of CKD, including autosomal dominant polycystic kidney disease, IgA nephropathy, FSGS and 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 week 12. Across the 103 patients enrolled in PHOENIX, mean eGFR increased by 7.8 milliliters per minute at week 12, with 88% of patients demonstrating an improvement from baseline in eGFR. 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 blood pressure. Importantly, these improvements were observed in patients whose kidney function was actively declining, despite most patients entering the study on optimized standard of care.

We've now observed significant improvements in kidney function across 7 distinct forms of CKD, a finding which strongly supports our thesis that bardoxolone addresses a common final pathway of progression in chronic kidney disease that's driven by inflammation, fibrosis and the impairment of mitochondrial function. Based on the results of PHOENIX and the historic correlation we've observed between eGFR increases at week 12 and a retained eGFR benefit at 1 year, we announced plans to initiate a pivotal study for bardoxolone in ADPKD, which will begin in mid-2019. And we announced our intention to pursue the other 3 rare forms of CKD commercially.

Turning to our Friedrich's ataxia program. In 2018, we announced that we completed enrollment in the pivotal part 2 portion of MOXIe, a trial of omaveloxolone in Friedrich's ataxia. In the dose ranging part 1 of MOXIe, we observed at the optimal dose of 160 milligrams daily, a statistically significant improvement in modified FARS scores versus baseline at week 12 and a placebo-corrected improvement in modified FARS scores which approach significance with a p-value of 0.06. Based on the results of part 1 and the design of part 2 of MOXIe, we're optimistic that omave has the potential to become the first approved therapy for patients with FA.

The ongoing CATALYST study of bardoxolone in connective tissue disease associated pulmonary arterial hypertension is also proceeding as planned and we expect top line data from this study to be available in the first half of 2020. Based on the results observed in our Phase II LARIAT trial and the design of the CATALYST trial, we believe that bardoxolone has the potential to become the first therapy approved specifically for patients with CTD-PAH.

Before turning the call over to Jason to review our financial results, I'd like to highlight some recent personnel developments. Last month, we announced the appointment of Dr. Geoff Block as Vice President of Nephrology. Dr. Block is a world-renowned nephrologist with over 20 years of experience conducting clinical research and treating patients with CKD, and he has served as one of our lead investigators and external advisors for a number of years. Jeff's extensive experience and standing in the nephrology community provides him with a unique perspective that will allow him to serve as a critical interface between our internal development, medical affairs and the global nephrology community.

Additionally, we continue to grow our commercial leadership team with industry veterans who have significant product launch experience. Dale Hooks recently joined Reata as Vice President, Global Commercial Operations. Dale has over 25 years of experience in commercial biotech and has held senior level roles in marketing, sales, operations and business unit leadership with Genentech and Clovis Oncology. Dr. Keith Ward, our Chief Development Officer. Recently informed us of his intention to retire and submitted his resignation effective March 8th. Keith has reached a point where he's financially able to retire and he plans to use this as an opportunity to spend more time with his family. As part of his transition to retirement, Keith will work with us as a consultant for the next several months to ensure a smooth and successful transition. We certainly will miss Keith and we wish him well in the new phase of his life. Most of Keith's job functions will be assumed by Joel Proksch who is being promoted to Chief Development Officer. Joel has been with the Company for 7 years recently serving as Senior Vice President, Regulatory Affairs and Development.

With that, I'll now turn the call over to Jason to provide a summary of our financials for the fourth quarter and full year of 2018.

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

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Thanks, Warren. This morning, we reported financial results for the fourth quarter and full year of 2018. Net loss for the quarter was $25.6 million or $0.86 per share compared to a net loss of $16.7 million or $0.64 per share for the same period last year. The increased net loss for the 3-month period is due to both an increase in expenses and a decrease in revenue. The decrease in revenue is related to license and collaboration agreements. We signed 3 license and collaboration agreements in 2009, '10 and '11 and the upfront payments for these agreements was deferred and recognized over a period of development that is our performance obligation.

In 2017, we finished recognizing revenue from the 2010 license agreement, so it is no longer being recognized in 2018. The higher expenses are primarily driven by an increase in research and development due to clinical and manufacturing activities, an increase in personnel expenses and an increase in personnel expenses to support expanded development activities.

For the 12-month period ended December 31, 2018, net loss was $80.5 million or $2.91 per share. This compares to a net loss of $47.7 million or $1.99 per share in the prior year. The increased net loss for the year is primarily due to the increase in expenses related to clinical and manufacturing activities, development activities for earlier stage assets to expand our product candidate portfolio and in personnel expenses to support expanded development activities.

Our cash-based operating expenses, a non-GAAP measure we define as total expenses, excluding stock-based compensation expense and depreciation expense, were $30.5 million and $119.5 million for the 3 months and 12 months ended December 31, 2018, respectively compared to $24.6 million and $88 million for the same periods ended December 31, 2017. 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 as we advance our product candidates into additional development, continue to grow the Company and prepare for commercialization.

At December 31, 2018, we had $337.8 million in cash and cash equivalents. We expect our current cash to fund our operations through and beyond the data readouts for all 3 of our ongoing registrational clinical trials.

And with that, I will 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. 2019 has the potential to be a transformative year for Reata if positive data from our registrational studies in Alport syndrome and Friedreich's ataxia, which we expect in the second half of 2019, could support our transition from a development stage company to a fully commercial enterprise. We've already begun the commercial, regulatory and clinical manufacturing activities to support the filing of a new drug application for bardoxolone for Alport syndrome and omave for Friedreich's ataxia. Our commercial launch preparation activities are underway and we are well positioned to make the transition if data from our pivotal studies are positive.

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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[Operators Instructions) And our first question comes from Yigal Nochomovitz with Citigroup.

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

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I had a question on data timing. Obviously you've highlighted that you're going to have the Phase IIIs for Friedreich's ataxia and the CARDINAL in the second half. But if you look at the timelines on clinical trials, obviously the CARDINAL study finished enrollment I believe in November and in a similar time frame for the MOXIe study, CARDINAL's 52 week endpoint, MOXIe's 24 week end point. So it would seem that you could conclude that we get MOXIe first possibly in the third quarter and then CARDINAL in the fourth quarter. So just want to understand if that's a fair appraisal of the timelines or if there is some particular reason why you wouldn't want to commit to that order of events and quarterly reporting of those 2 studies. Thanks.

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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, ClinicalTrials.gov is not updated in real time and so whenever we make changes, it's not necessarily indicative of when things actually occur. And secondly, as you mentioned, the readout -- the pivotal readout for CARDINAL is the week 52 endpoint, but for MOXIe, it's not week 24, it's week 48. And so as of right now we're sticking with our guidance of having pivotal readouts for both trials in the second half of this year.

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

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Okay, got it. And then a more general question around the -- some of the competitive dynamics with respect to ADPKD. Obviously, the Otsuka drug, it's in our Q, it seems to be launching exceptionally well and it has I would characterize as a very modest benefit. So I'm just curious what you're hearing either anecdotally or through your KOL network regarding receptivity for that PKD drug and more specifically, what you're learning about the PKD market that could be helpful for you as you move through the Phase IIIs and start to put together a commercial value proposition for bardoxolone in PKD?

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

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Sure. So I think that the general KOL community is encouraged that there is now a first treatment for patients with PKD. I would say that it's dependent to the -- the level of enthusiasm is dependent upon particular nephrologists and so those who participate in the clinical trials appear to be using it more so than physicians who are not in those clinical trials and so most of the sites for instance that we're targeting for our FALCON pivotal trial are not actively using tolvaptan. So I'm sure you're aware, there's over 100,000 patients diagnosed with PKD and so even though the numbers are quite good for tolvaptan the actual number of patients on the drug are relatively small. But when you step back and think about that drug competitively versus bardoxolone, we do not view them as competitive, and so the FALCON trial will be the only ongoing pivotal trial in ADPKD that allows patients to be on background tolvaptan. Once again, our mechanism is very different and so we think that early broad acceptance at least in the subset of these patients with tolvaptan is encouraging for a potential uptake of bardoxolone long-term.

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [6]

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Yigal, this is Warren. I'd just add one general comment and I think it just shows that there's been so little development for any of these severe rare forms of CKD. I think it suggests that there's going to be significant uptake for any meaningful new therapy. These patients have had nothing but blood pressure medications. There really have been no novel mechanisms for decades. There's just a huge unmet need here.

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Operator [7]

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And our next question comes from Adam Walsh with Stifel.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [8]

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I just got a couple of quick ones. The first one is on [ADPDK]. Maybe you can discuss the gating factors to initiate the pivotal trial in the mid-year and then also compare and contrast the trial design that you're thinking about to the pivotal CARDINAL trial that's ongoing now. And then just this one other. In terms of Dr. Geoff Block joining the company, can you speak to his early outreach to the nephrology community and how you would expect that to ramp and play out over time? Thank you.

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [9]

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Sure. And so the gating activity to starting our FALCON trial in ADPKD is the same as any of our trials and so starts with obviously design, meeting with regulators, receiving feedback, which we already have, and so, and now it's just execution operationally and so identifying all the sites and we're heavily leveraging our existing network of nephrology sites in the U.S. and globally and so all that is underway. Obviously, kits for drug supply have to be made and packaged and sent to sites and contracting all the local investigators for the budgets is obviously at the core of it. And so that's very standard and we do that obviously with all of our trials, and so we're on track to initiate dosing midyear. And so that's all going very well. And as far as comparing and contrasting the design of FALCON to the ongoing CARDINAL trial in Alport syndrome, they're very similar. So the total duration is the same, so 2 years with 1 year critical readout to support accelerated approval using the same eGFR based endpoints. The eligibility criteria are similar and so same eGFR range of 30 to 90. There is a slight difference in how we define eGFR eligibility for FALCON that heavily mirrors the REPRISE study of tolvaptan. We simply ensure that patients with GFR is the higher end because patients who have been actively progressing have documented loss of eGFR of 2 ml per minute per year prior to study entry. Other than that they are very similar. Obviously, with background tolvaptan being allowed, there's some language ensuring that those patients were able to tolerate tolvaptan before they enter our trial. And so overall, it uses the same basic -- same basic design, same titration schedule, same visit schedule, and it leverages once again heavily our operational know-how in CKD. And then lastly, to address your question about Geoff Block joining. And so, he has been fantastic. Between our VP of Medical Affairs and myself and Jeff, we have relationships with many if not most of the notable global KOLs, and so it's been a pleasure having Jeff join our team and extending some of the relationships that we previously did not have. And so we see a lot of enthusiasm, obviously, with him joining us. He's treated approximately 50 patients in clinical trials dating back several years, and so he has first-hand experience with the drug and it provides a pretty compelling rationale for others to join in our programs.

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Operator [10]

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And our next question comes from Maury Raycroft with Jefferies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [11]

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Just to start, for CARDINAL and PHOENIX, you guys break out patients by greater than or 300 -- greater than 300 ACR and then less than 300 ACR and those patients get different doses maxing out at 20 or 30 mgs. I'm just wondering if you're commenting on any efficacy difference on eGFR based on the different max doses there.

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [12]

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We have not seen any meaningful differences in eGFR change based upon max dose. In prior trials, when we had the same max dose, for instance at 20 milligrams, there was a difference. And we also noted this in a dose-ranging trial that we conducted before BEACON, where at a given dose patients with higher levels of proteinuria had less of a response. We believe this is likely due to a few factors, which includes patients have a lot of proteinuria, and proteinuria induces inflammation, and so if they have more inflammation, they probably need more (inaudible) injection to suppress the larger amount of inflammation. We also believe that if patients have higher levels of proteinuria, they probably have more fibrosis and so this potentially less capacity for those patients to show an acute improvement. And then lastly, our drug is heavily protein bound and there appears to be lower exposures in patients with higher levels of proteinuria because more of the drug is lost in the urine when patients are excreting high levels of protein. So for all those reasons, we conducted a series of analyses from our BEACON trial as well as our prior trial and simply identified that if we were able to ratchet the patients with higher levels of proteinuria up to a higher dose, they should have a similar effect and that's being borne out in our ongoing trials, both CARDINAL and PHOENIX, and for that reason, we don't break it out, but we see similar efficacy regardless of proteinuria status.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [13]

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Got it. So you don't anticipate that variable playing into the Phase III CARDINAL study at all?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [14]

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No. And in fact, we think it's favorable and that we now see similar efficacy across the different groups.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [15]

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Right, okay. And then the other question was just on, if you can provide a status update with the relationship with Kirin and then as far as the AYAME study goes, the Phase III AYAME study. I'm seeing it's up and running, but only 1 site is posted on ClinicalTrials.gov as of December 12. So any comments on how Kirin anticipates rolling out that study and will it only be recruiting in Japan or will it be recruiting in other regions as well?

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [16]

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I'll comment on the relationship and then let Colin comment on the AYAME program. Our relationship with Kirin has been excellent. As you know, they have got a commercial and development rights to bardoxolone in Japan and Southeast Asia. They have been very supportive to us in conducting the CARDINAL trial as well as the CATALYST trial in PAH, and as your question, they're conducting their own pivotal Phase III study in diabetic nephropathy, AYAME. Colin, you want to comment on their status?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [17]

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Sure. And so I think to similar comment before, in that ClinicalTrials.gov is not actively updated by many and appears to be the same for KHK. They began enrolling their trial in the second quarter, and I don't believe they've commented publicly on the status, but they've been making great progress. And so I think they estimate that they will have data in the first half of 2022 and that is a Japan only trial. But we've been working closely with them.

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [18]

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Notably, they are incorporating the now validated -- newly validated event endpoints for large CKD studies, including 30% decline in GFR.

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Operator [19]

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And our next question comes from Brian Skorney with Baird.

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Unidentified Analyst, [20]

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This is Jack dialing on for Brian. I was wondering if you could go into a little bit of detail with respect to your plans to build out a sales force around bardoxolone as we come to the pivotal trial readouts of the CARDINAL study in the second half of this year.

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [21]

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Yes. As you can see, we are -- we've been adding our commercial leadership team. We brought in a while ago a Chief Commercial Officer, Dawn Bir, who launched IMBRUVICA in the United States for Pharmacyclics and Dawn has been putting the key members of our senior team in place. And I think as you know, we've retained 100% of the commercial rights for the CKD applications of bardoxolone in the United States, and we plan to build a specialty sales force directly targeting the nephrology community. And we've been really working on all the fronts to prepare for that launch. We've been doing the -- market assessments and kind of the current views. We've made progress in terms of our payer plan. Preliminary work has been done on the sales force sizing and how we will stage that all as well.

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Operator [22]

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And our next question comes from Charles Duncan with Cantor.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [23]

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Congrats on a good year of progress. I had a question on bardoxolone and then a follow-up omaveloxolone. The first is on bardoxolone. I'm just kind of wondering when you think -- it may be a premature question, but when you think about tolvaptan and its clinical benefit as well as specifically the patient population that it's approved for, is that a good metric in terms of considering pricing -- potential pricing for bardoxolone? Or do you think that there are, call it different drivers to clinical value, and would you anticipate mechanistically as well as potentially a clinical benefit out of bardoxolone to drive kind of different levels of pricing? And I'm not really asking you about pricing. I'm asking you about pharmacoeconomic value for bardoxolone.

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [24]

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Yes, I think, Charles, that tolvaptan -- it is a good benchmark. But as you alluded to, the profile is very distinct between tolvaptan and bardoxolone. Once again, the mechanism is completely different, and so we do not view tolvaptan as competitive. But when you think about the efficacy profile in the pivotal trial REPRISE, which served as the basis for approval here in the U.S. for April of last year, in the one year trial, the retained benefit was about 1.27 mil per minute. Placebos were down about 3.6 mil per minute and tolvaptan patients were down about 2.4. And so they were still down from baseline. And interestingly, when the patients were on tolvaptan before the drug was withdrawn they're actually doing worse than placebo. And so in the context of bardoxolone, what we've seen in our trials is that it increases and improves GFR while patients are on drug, and we've seen that that's been durable for the longest duration we've tested, which is actually out to about 2.5 years in one of our trials. And upon withdrawal, a portion of that effect is retained and it's above baseline, and so it's a very different paradigm. We believe bardoxolone at least in the trials we've tested so far on average has halted, if not recovered, progression from patients versus slowing progression across the population. So from an efficacy perspective, it's very different. And then from a from a safety perspective, since our BEACON trial we've figured out how to appropriately use our drug using a titration based design and following patients carefully, and it's had a very good safety profile without any major safety signals or tolerability issues. And so, once again, I'd say it's a different profile from tolvaptan which in some patients is not well tolerated because of the large amount of (inaudible) due to the mechanism of that drug. So overall we agree with you. It's a very different paradigm. We won't comment specifically on pricing except to say it's serves as a good benchmark.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [25]

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Okay, that's helpful. And sounds like there are a lot of other considerations when you go do set pricing in terms of creating pharmacoeconomic value for that drug. Let me ask you another question regarding omaveloxolone. Obviously, you've got a lot of patient experience with bardoxolone, but I guess my question is, on omav, fast forwarding to possibly positive data out in this -- late in the second half, it seems like on omav. Is that necessary and sufficient to drive an NDA for omave? And then secondarily, back to the question, and I think someone was asking or partially asking, and that is the commercial -- commercialization strategy on omav. Do you think that your sales force will be able to accommodate both drugs or would there be a separate sales force for omave?

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J. Warren Huff, Reata Pharmaceuticals, Inc. - Chairman, CEO & President [26]

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Yes, Charles, I'll comment on both of those. We've received guidance obviously from the FDA that the design of part 2 of MOXIe could support approval in Friedreich's ataxia for omave if positive. And we're in the process of conducting the additional work around omave to support NDA submission if the study -- if the study is positive. Yeah, I neglected to mention in the prior question that we have similar activities -- commercial activities running for Friedreich's ataxia, and while the senior leadership of the commercial team would obviously be the same for both applications, the medical affairs functions and the commercial sales functions would definitely be separate. We would need a separate sales force targeting the neurology community for omave and would not see the same force representing the 2 products in the 2 different specialties.

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Operator [27]

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(Operator Instructions) And we have a question from Matt Kaplan with Ladenburg Thalmann.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [28]

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Just wanted to -- we've been spending a lot of time on bardoxolone. Just wanted to zero in a little bit more on omaveloxolone, given the Phase III readout later this year. Can you give us a sense in terms of -- just remind us in terms of part 2 of the MOXIe study? What we're looking for in terms of the change in the mFARS for this patient population, these Friedreich's ataxia patients in the study and how it's powered?

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Colin J. Meyer, Reata Pharmaceuticals, Inc. - Chief Medical Officer & Executive VP of Product Development [29]

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Sure, Matt. And so the modified FARS score is the primary endpoint of the trial. The modified FARS is a neurological exam that's used by the neurologists who see these patients to track their progression. There have been a large amount of data generated in a natural history study that's enrolled a few thousand patients and tracked these patients for up to 10 years to demonstrate how these patients progress in terms of their modified FARS scores. I mean, what's known is that these patients typically progress at a rate of about 1 to 2 points annually. And so we powered our trial to be able to detect what we think is a clinically meaningful change, which is about 1 point, 2 points. And so, assuming that the variability is in line with our expectations and if we observe a 1 point, 2 point difference, the trial should show statistical significance. And that would represent approximately 6 months to 1 year progression for a patient.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [30]

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Okay, that's very helpful. And then in terms of omaveloxolone, beyond Friedreich's ataxia, what are your thoughts now in terms of other indications, potentially for that, for that compound?

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

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Sure. And so there are a few different settings that all basically underlie omave's effect on mitochondrial function. One of those, which is fairly obvious is other forms of ataxia and so that would be a natural setting to seek. But there's a whole series of other neurological conditions, many of which are rare with no approved drugs where mitochondrial dysfunction has been shown -- should be the root cause. We have data from patient biopsies showing that in ALS, omave can rescue mitochondrial function. We also have data from patient biopsies from Richard Parkinson's disease that omave can rescue mitochondrial function. We also have very intriguing data in various epilepsy models pre-clinically that is quite striking. And so there is a series of indications that we're currently triaging but there's many -- just like in the nephrology space with bardoxolone, there are many different forms of neurological disease that have a common basically pathogenesis of mitochondrial dysfunction that we think omave could affect.

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Operator [32]

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Ladies and gentlemen, this now concludes our Q&A portion of today's call. As a reminder, an audio recording of today's webcast will be available shortly after the call today on Reata's website at reatapharma.com in the Investors section. Ladies and gentlemen, thank you for attending today's call. This now concludes our program and you may all disconnect. Everyone, have a great day.