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Investors Business Daily
Investors Business Daily
Technology
ALLISON GATLIN

Reata Surges 12% Over Three Days; CEO Reflects On The Tricky Path To Launch A First-Ever Drug

Reata Pharmaceuticals Chief Executive Warren Huff says Friedreich's ataxia is "the worst disease." Now, RETA stock investors are watching the company launch a treatment — finally.

The company faced an uphill battle to launch the drug, now called Skyclarys. Though the Food and Drug Administration approved it in February, Reata couldn't launch Skyclarys until Wednesday when the FDA signed off on an updated manufacturing process.

For patients with Friedreich's ataxia, the Skyclarys launch is a long time coming. Friedreich's ataxia, or FA, is an inherited neuromuscular disease. Patients are generally diagnosed in their early teens and have a life expectancy of 15-20 years.

"Patients progress from being clumsy to using a walker to a wheelchair to being bedridden, and it's a fatal disease," Huff told Investor's Business Daily. "It's been a devastating thing."

On today's stock market, RETA stock popped 2.1% to close at 100.90. On Wednesday, after the FDA approved Reata's supplemental application, shares surged 7%. Reata shares have risen 12% over the past three trading days.

RETA Stock: Targeting The Mitochondria

Skyclarys is the first treatment approved for Friedreich's ataxia.

Friedreich's ataxia is marked by dysfunction in mitochondria, the cellular producers of energy. The idea behind Skyclarys is to "brute force the mitochondrial function back on" to produce a clinical benefit, Huff said.

Reata tested Skyclarys over 48 weeks. Patients who received Skyclarys showed significantly lower impairment on a scale of symptoms than placebo recipients. The most common side effects include elevated liver enzymes, headache, nausea, abdominal pain, fatigue, diarrhea and muscle pain.

But RETA stock plummeted when the company said it would delay Skyclarys' launch after finding an impurity in the manufacturing process. The supplement filed requested the FDA raise the limit on how much of that impurity could show up in the process. On Wednesday, the FDA signed off on the new limit. The approval came close to two months early.

Huff says the FDA is sensitive to the fact that a longer delay could be devastating for patients with a severe disease like Friedreich's ataxia. As of the end of the first quarter, more than 500 patients had filed requests to start Skyclarys treatment. The drug is also under review in Europe.

Shares Near A Buy Point

There are around 22,000 patients worldwide with Friedreich's ataxia, Huff estimated.

Now, Reata is looking at other diseases that could benefit from mitochondrial improvement. The company is also testing a treatment for diabetic neuropathy, with results due in 2024.

RETA stock has a perfect IBD Relative Strength Rating of 99. This means shares rank in the leading 1% of all stocks in terms of 12-month performance.

Shares are nearing a buy point at 105.55 out of a cup-with-handle base, according to MarketSmith.com.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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