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Reata Pharmaceuticals (NASDAQ:RETA) stock didn’t blink an eye after the FDA stuck it with a CRL because whatever damage was to be done had been done by the Advisory Committee rejection in December. I think that’s a positive way to describe an otherwise devastating situation.
The situation has been characterized by in-depth FDA analysis of how the study fails stat sig under a certain necessary condition (see my previous article), lack of a strong safety profile, disconnect between FDA and management statements, invalidation of the rest of the bardoxolone pipeline, as well as major hurdles with the pipeline of Reta’s other asset – omaveloxolone.
Finally, in February, the FDA did what it was pretty much supposed to do – it rejected the NDA with a CRL where it basically said what it had said before – it needed to see additional data on both safety and efficacy. This generally means a new trial, especially given the history here. I would say the molecule is pretty much dead in the water.
Strangely, however, the stock is up nearly 30% since its December lows. I don’t know what investors are hoping for. Reata has started a running NDA submission for its second asset. I find it hard to call this an asset right now, given what I wrote earlier:
Reata does have another asset – omaveloxolone – targeting Friedreich’s Ataxia, where it has produced positive pivotal data. However, the FDA has requested a second pivotal study, saying that the 2019 data wasn’t good enough. The company planned – and then abandoned – such a study, and is planning to file with the old study data in Q1 2022.
So the FDA asked for a second study, but they decided to submit an NDA based on the first study, and probably some extra analysis, which is why the “rolling” submission. I don’t know what’s so positive about that.
Well, there’s another bit of good news; laughable, but in this market, a COO buying 16k worth of shares at the stock’s worst price point is being called a major positive. So be it. This major event was reported in early January.
Looking further, we see Goldman Sachs coming out with a buy rating 3 days ago, which really saw the stock attain its month-long high. What was Goldman’s angle? The reason given by veteran analyst Madhu Kumar is that they are bullish on the prospects of omaveloxolone in Friedreich’s Ataxia, because the analysts “highlight their confidence in the approval for Omaveloxolone due to favorable data from a mid-stage trial and lack of approved drugs for the condition.” There is no mention of the need once raised for a second pivotal trial, and no clarification that rarity of a disease is never a measure of probability of approval.
Let me investigate the backstory. In Q2, 2020, RETA management described the situation here:
We recently completed a Type C meeting, in which the FDA provided us with guidance that it does not have any concerns with the reliability of the mFARS primary endpoint results in the MOXIe Part 2 study. Nevertheless, they’re not convinced that the MOXIe Part 2 results will support approval based on a single study without additional evidence that lends persuasiveness to the results.
In preliminary comments for the meeting, the FDA stated that we’ll need to conduct a second pivotal trial that confirms the mFARS results of the MOXIe Part 2 study with a similar magnitude of effect.
As a way out, the company came up with the proposal for a crossover study:
[As] an alternative to a second adequate and placebo controlled pivotal study FARAH key FA clinicians and we propose the second study, the crossover study that could serve as additional evidence of effectiveness. The study would measure the effect of Omav on mFARS in patients who were previously randomized to placebo in the MOXIe Part 2 study and are being treated with Omav in the MOXIe open label extension study.
The above was in August. In November, we see the following news:
[The FDA] completed its internal review of the Baseline-Controlled Study results of omaveloxolone for the treatment of patients with Friedreich’s ataxia (“FA”) and concluded that the results do not strengthen the results of Part 2 of the MOXIe study. The FDA proposed some additional exploratory analyses using patients randomized to placebo during the MOXIe Part 2 study, but stated that the potential for these analyses to strengthen the study results was questionable due to the small number of patients available for analysis. The FDA stated that they remain interested in reviewing the results of the additional exploratory analyses as those may inform the future development program.
The Company plans to submit to the FDA the analyses that they proposed and to request a meeting with the FDA to discuss the development program. In addition, based on the FDA’s conclusion, the Company is considering the next steps for the development program, including whether to conduct a second pivotal study in patients with FA.
So, by November, the FDA had agreed to additional exploratory analyses but was not sure if that would suffice.
6 months after the above, the FDA seemed to have relented, and instead of a Type C meeting, they asked Reata to request a pre-NDA meeting. By September, the company was ready to file an NDA, and they had no plans to conduct a second trial. To be noted though:
The FDA indicated that the appropriate approval pathway would be a matter of review after submission of the NDA. In response to our questions about the contents of the filing and because of the seriousness of the indication, the FDA exercised its discretion subject to review to permit us to submit the results of certain nonclinical and clinical studies after approval.
As was said at the time:
“Omaveloxolone could be the first drug approved for the treatment of Friedreich’s ataxia-actually the first drug approved for any ataxia,” said Dr. Susan Perlman, MD, Professor, Department of Neurology, David Geffen School of Medicine, University of California, Los Angeles, CA. “The MOXIe Part 2 study with omaveloxolone is the first to demonstrate a significant improvement in neurological function in patients with Friedreich’s ataxia. While not a cure, if approved, Friedreich’s ataxia would finally become a treatable disease, something the Friedreich’s ataxia community has been working towards for a long time.”
One problem investors have with Reata is the disconnect between what it says the FDA has said and what the FDA actually said:
But FDA briefing documents spelled out concerns about the design of Cardinal; the agency said it had raised these concerns during the course of bardoxolone’s development.
This appears to be at odds with the picture painted by Reata. During the group’s first-quarter results call its chief R&D officer, Colin Myer, said: “We’ve been transparent with our discussions with the agency dating back to our pre-IND meeting [in] Alport syndrome…They gave us the design for the Alport syndrome trial, which we’ve executed.”
This apparent disconnect led to usually supportive sellside analysts from Leerink concluding today: “The bardoxolone saga highlights the pitfalls of relying on a management team’s characterisation of what the FDA has said they will require for the approval of a drug.”
This is a worry that carries forward to omaveloxolone, because however you look at it, there’s a change in the FDA’s stance towards a second trial as reported by the company, and this will unravel only when we have the FDA briefing docs. As a Leerink analyst put it:
It is difficult to have much confidence in the regulatory outlook for omaveloxolone since there is even less information about what the FDA will require for approval, and we must rely on the company’s rendition.
Given what we just discussed, I will avoid Reata until I see those briefing documents.
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