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Reata (RETA) Soars on Potential Omaveloxolone NDA Filing

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Reata Pharmaceuticals, Inc. RETA announced that the FDA has asked the company to request a pre-NDA meeting to discuss study data for one of its lead pipeline candidates, omaveloxolone. The regulatory authority has also requested the company to withdraw its request for a more general Type C meeting, which was scheduled later in the second quarter to discuss the future development path for omaveloxolone as a potential treatment for Friedreich’s ataxia (“FA”), including a second pivotal study.

The suggestion of a pre-NDA meeting from the Division of Neurology Products 1 of the FDA boosted investor sentiments for a potential new drug application (“NDA”) filling, seeking approval for omaveloxolone much sooner than previously anticipated.

Shares of Reata surged almost 24% on May 19, following the encouraging regulatory update. However, the company’s shares are down 17% so far this year compared with the industry’s 5.4% decrease.

Previous Updates

On its first-quarter earnings call earlier this month, Reata announced that the FDA has accepted its request for a Type C meeting. Moreover, previous meetings with the FDA have always resulted in requests for additional data since the completion of the first pivotal study — MOXIe — on omaveloxolone in 2019. The FDA had previously stated that data from a single pivotal study was not sufficient to support an NDA. The company has conducted a baseline-controlled study as well as additional exploratory analyses for omaveloxolone following the MOXIe study to support an NDA filing. Reata was also planning to start a second pivotal study in the second half of 2021, based on the outcome from the planned Type C meeting.

Potential Pre-NDA Meeting Timeline

Following a preliminary review of briefing materials for the upcoming Type C meeting, the FDA changed its stance and stated that a pre-NDA meeting is the most appropriate format for a discussion of the development program.

Meanwhile, Reata needs to withdraw its Type C meeting request and make a fresh request for a pre-NDA meeting. The FDA normally schedules a pre-NDA meeting within 60 days of a request. This likely suggests thatthe meetingmaybe scheduled in the second half of 2021. A positive outcome may lead to an NDA filing for omaveloxolone by the end of this year.

Pre-NDA Meeting Benefits

Please note that a second pivotal study on omaveloxolone for treating FA will take a year or more to complete. Moreover, the study will also increase the operating expenses for the company, hurting Reata’s profits. However, if the FDA allows an NDA filling following the pre-NDA meeting, the pivotal study will not be required, which may lead to an approval for omaveloxolone in 2022 and also reduce anticipated operating expenses, benefiting both the top and the bottom-lines going forward.

We note that Reata has already filed an NDA application seeking approval for its another lead pipeline candidate, bardoxolone methyl, as a potential treatment for patients with chronic kidney disease (“CKD”) caused by Alport syndrome. The FDA accepted the NDA filing last month and a decision on the candidate’s approval is expected by Feb 25, 2022.

With positive development on the omaveloxolone front, Reata may get two approved drugs next year targeting indications with significant unmet needs and with no or one FDA-approved therapies. Some analysts believe that the company’s shares may again reach or cross its all-time high going forward.

Reata Pharmaceuticals, Inc. Price

Reata Pharmaceuticals, Inc. Price
Reata Pharmaceuticals, Inc. Price

Reata Pharmaceuticals, Inc. price | Reata Pharmaceuticals, Inc. Quote

Zacks Rank & Stocks to Consider

Reata currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the biotech sector include Repligen RGEN, BioNTech BNTX and Bellerophon Therapeutics BLPH. While Repligen and BioNTech sport a Zacks Rank #1 (Strong Buy), Bellerophon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Repligen’s earnings per share estimates have moved up from $1.91 to $2.21 for 2021 and from $2.23 to $2.53 for 2022 in the past 30 days. The company delivered an earnings surprise of 54.69%, on average, in the last four quarters.

BioNTech’s earnings per share estimates have improved from $17.88 to $29.44 for 2021 and from $5.86 to $21.34 for 2022 in the past 30 days. The company delivered an earnings surprise of 70.52%, on average, in the last four quarters.

Bellerophon’s loss per share estimates have narrowed from $2.75 to $2.69 for 2021 and from $2.31 to $2.27 for 2022 in the past 30 days. The company delivered an earnings surprise of 13.62%, on average, in the last four quarters.

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