Reata bursts Abbott’s bubble

The surge in Abbott Laboratories’ share price had to end sooner or later, and a blowup in its alliance with Reata Pharmaceuticals – one of the most lucrative licensing deals of recent years – did the job.

A phase III trial of the companies’ most advanced project, bardoxolone methyl, has had to be terminated after serious adverse events and deaths were reported in patients taking the kidney disease agent. Abbott had done everything but actually buy Reata, shelling out $850m to access bardoxolone and related molecules. Yesterday’s news combined with earlier disappointing quarterly revenue figures to knock the Illinois group’s share price off the $72.47 all-time high hit this week.

While neither bardoxolone nor the Abbott/Reata tie-up has been written off – yet – they have been dealt a serious blow, and the signs are not good. In announcing the termination of the phase III Beacon trial Reata said it had yet to figure out whether there was any way to continue development of either bardoxolone or the similarly acting follow-up oral antioxidant inflammation modulators in the alliance.

Beacon extinguished

Beacon had begun in June 2011, aiming to recruit 2,000 patients with chronic kidney disease or type 2 diabetes and test whether bardoxolone delayed their progression to end-stage renal disease versus placebo.

It was stopped on the recommendation of its independent data-monitoring committee, which reported the safety imbalance between the active and placebo arms. Reata said all other studies of bardoxolone in chronic kidney disease would also be halted; lists eight ongoing phase I or II studies, including a large phase II trial in 180 volunteers to test bardoxolone’s effect on cardiovascular parameters.

The project was thought to have potential in diabetic nephropathy as well as chronic kidney disease, a large but competitive therapy area in which marketed treatments focus on slowing the development of other risk factors.

Reata has not disclosed the precise nature of the serious adverse events or how many deaths there were, but, given the robustness of bardoxolone’s prior development programme, it is strange that no red flags had gone up earlier. According to, two phase I and three phase II studies, some placebo-controlled, have been completed in a total of 474 subjects.

It also remains to be seen how the foul-up affects related treatment approaches. Bardoxolone targets the Nrf2 (Nuclear factor-like 2) transcription factor, whose activation promotes an antioxidant/anti-inflammatory response that is a primary defence against oxidative stress; its suppression has been implicated in chronic kidney disease, Reata says.

Interestingly, Biogen Idec’s potential multiple sclerosis blockbuster BG-12 has been reported in scientific literature to exert an antioxidant effect by activating the Nrf2 pathway.

Dim view

Consensus estimates had forecast total bardoxolone sales of $525m by 2018, and EvaluatePharma calculated a 75% risk-adjusted NPV of $1.4bn to Abbott. The market took an even dimmer view of proceedings, sending the Illinois group’s stock down 3.5% yesterday, wiping a massive $3.8bn off the market cap and leaving the stock down 7% since the all-time high hit on 16 October.

Abbott had licensed rights to bardoxolone outside the US and Asia two years ago, paying the privately-held Reata $450m upfront in a deal worth up to a combined $800m. It followed this up last December with a $400m payment for global rights to Reata’s follow-up antioxidants.

In terms of signing fees the new deal was the second-most lucrative licensing alliance of 2011 (Single-product deals stand out as licensing slows in 2012, August 21, 2012). Bardoxolone rights in Japan and part of Asia are held by Kyowa Hakko Kirin.

Abbott management will no doubt face criticism for sinking such an amount of irreversible upfront cash into a mid-stage deal, and clearly Reata had driven a hard bargain.

The biotech company’s investors, which include Novo A/S, will surely see $850m as not a bad return on the $180m they had put in over the past 10 years.

Study Trial ID
Beacon NCT01351675

To contact the writer of this story email Jacob Plieth in London at

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