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Reata (RETA) Q2 Earnings Miss, Revenues Down Y/Y, Stock Down

·5-min read

Reata Pharmaceuticals, Inc. RETA reported a loss of $2.02 per share in second-quarter 2022, wider than the Zacks Consensus Estimate of a loss of $1.90.

However, the above loss included stock-based compensation and a non-cash interest expense. Adjusted loss for the quarter was $1.36 per share, wider than the loss of $1.32 per share recorded in the year-ago period.

Total revenues, comprising collaboration revenues, were $0.76 million, down 6.1% year over year. Revenues missed the Zacks Consensus Estimate of $3 million.

Reata shares were down 32.6% on Monday at market close after it announced its second-quarter earnings and provided updates on its pipeline programs. Shares of Reata have declined 8.7% year to date compared with the industry’s decrease of 17.3%.

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Quarter in Detail

Adjusted research and development expenses were down 5.2% year over year to $33 million. Adjusted general and administrative expenses were $17.6 million, up 25.7% from the year-ago period.

The company had cash and cash equivalents and marketable securities of $481.5 million as of Jun 30, 2022, compared with $532 million as of Mar 31, 2022. The company expects its cash resources to fund operations through 2024-end.

Pipeline Update

Reata has developed its lead pipeline candidates — bardoxolone methyl (bardoxolone) and omaveloxolone — for rare forms of chronic kidney disease (“CKD”) and neurological diseases, respectively. Reata reacquired the development, manufacturing and commercialization rights for omaveloxolone and bardoxolone from AbbVie ABBV in 2019.

The company also reacquired ex-U.S. rights to bardoxolone, omaveloxolone and its proprietary Nrf2 product platform from AbbVie during the same time. With this move, Reata is likely to record total sales following potential launches instead of royalties, had the rights belonged to AbbVie.

Reata has developed omaveloxolone as a potential treatment for Friedreich’s ataxia (“FA”).

The FDA accepted its new drug application (NDA) for omaveloxolone for priority review in May.The NDA is seeking approval for the candidate as a treatment for patients with FA.

Reata had a mid-cycle meeting with the FDA in the first quarter, in which the FDA raised concerns regarding the strength of the omaveloxolone’s efficacy evidence. After which, the company submitted additional data from the long-term MOXIe extension study from the March 22 data that contained new, later time points and increased numbers of patients at later time points than the prior analysis.

The company also provided propensity score matched comparison of the mFARs subjects in the largest natural history study of the mFARS progression of omaveloxolone-treated patients in its MOXIe Extension study. The data exhibited that mFARS progression in patients treated with omaveloxolone was 55% slower compared with untreated patients in FA-XOMS study.

In addition, Reata submitted mechanistic action data validating Nrf2 in the pathophysiology of FA. Clinical biomarker data showing that omaveloxolone-induced Nrf2 activity in subjects of the MOXIe part II study was associated with improvements in mFARS scores was also submitted.

A decision from the FDA on the potential approval of omaveloxolone is expected by Nov 30, 2022. Reata has started commercial preparation to support the launch of omaveloxolone as a FA therapy in early 2023.

The company plans to file a regulatory application seeking approval for omaveloxolone as a treatment for FA patients in Europe in the fourth quarter of 2022.

Reata is evaluating bardoxolone for treating autosomal dominant polycystic kidney disease (ADPKD) in a late-stage study, FALCON. The company is currently enrolling patients in the phase III study. Based on the result of the data from the FALCON study, Reata will submit a regulatory filing with the FDA.

Reata filed a new drug application seeking approval ofbardoxolone as a treatment for patients with CKD caused by Alport syndrome in 2021. However, the FDA issued a complete response letter in February indicating that the NDA cannot be approved in its present form. Reata has requested a Type C meeting with the FDA to decide the next step forward for bardoxolone in the aforementioned indication.

Reata Pharmaceuticals, Inc. Price, Consensus and EPS Surprise


Reata Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Reata Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Reata Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Reata Pharmaceuticals, Inc. Quote


Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the same sector are Novavax NVAX and Sesen Bio SESN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Novavax’s earnings estimates for 2022 have remained steady at $27.23 over the past 30 days. Shares of NVAX have declined 59.9% year to date. Earnings of Novavax missed estimates in all of the last four quarters. NVAX delivered a negative earnings surprise of 184.49%, on average.

Sesen Bio’s loss estimates for 2022 have remained steady at 44 cents per share over the past 30 days. Shares of SESN have declined 10.5% year to date. Earnings of Sesen Bio beat estimates in three of the last four quarters and missed the mark on one occasion. SESN delivered an earnings surprise of 69.94%, on average.

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