Reata Pharmaceuticals scrapped a chronic kidney disease program and announced a delay for its first commercial product on Wednesday, and RETA stock plummeted.
The Food and Drug Administration approved Reata's Skyclarys for patients age 16 and older with Friedreich's ataxia in February. Friedreich's ataxia is a progressive neuromuscular disease. But the drug's launch has been delayed until August due to an impurity found in the manufacturing process, SVB Securities analyst Joseph Schwartz said in a report.
Now, the FDA will have to review supplemental materials from Reata. This will push Skyclarys' launch out to August from expectations for a May or June launch, Schwartz said. But, about 500 patients have filled out start forms to request Skyclarys treatment.
"Considering there are an estimates 4,500 addressable FA patients in the U.S., we believe this initial launch metric is encouraging," he said. "However, we also note that it remains to be seen how many and how quickly these patients can get on commercial drug once Skyclarys becomes available."
On today's stock market, RETA stock crashed 14.2% to end the regular session at 90.38.
RETA Stock: Revenue In Line
Reata reported $195,000 in collaboration revenue — roughly in line with views for $200,000 — but still hasn't put up any Skyclarys sales. Skyclarys sales are expected to start slowly, but come within striking distance of blockbuster status in 2028.
The company also reported a loss of $3.14 per share, widening from a $2.03 loss a share in the same three months last year. RETA stock analysts had forecast a loss of $2.39 per share.
Meanwhile, Reata scrapped development of bardoxolone in patients with chronic kidney disease. After three years, there was no difference in the occurrence of end-stage renal disease among recipients of bardoxolone vs. a placebo. Based on this, Reata and its partner Kyowa Kirin opted to end the program.
The FDA has already once rejected bardoxolone for chronic kidney disease, SVB's Schwartz said.
"Thus we think the Street had already written off this program, " he said.
Highly Rated Biotech Stock
Schwartz kept his market perform rating on RETA stock.
The company didn't provide sales guidance for the year, though it did say existing cash, equivalents and securities, plus a new $275 million debt facility would be sufficient to fund operations through the end of 2026. For 2023, Wall Street called for a loss of $8.80 per share and $42.5 million in sales.
Shares have a best-possible IBD Digital Relative Strength Rating of 99. This means Reata shares trade in the top 1% of all stocks when it comes to 12-month performance. The biotech stock catapulted nearly 199% on March 1 after the FDA signed off on Skyclarys.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
