Give Reata Pharmaceuticals full marks for not throwing in the towel on its lead kidney disease project, bardoxolone. Six years after the asset bombed in phase III the group has pulled a rabbit out of the hat, reporting positive results in rare forms of the condition and bouncing back with a 65% share price surge yesterday.
The icing on the cake is the structure of Reata’s long-standing deal with Abbvie, which has so far pumped $1bn into its biotech partner. Abbvie does not yet have rights to the bardoxolone uses in question, and opting in would trigger the payment of yet more cash to Reata.
Not missing a trick, Reata used the share price gain to sell more equity, announcing a $200m raise after yesterday’s market close. Today the group boasts a $2bn valuation – quite the comeback given the dire straits in which it had found itself in late 2012, when it was still privately held.
Rare disease secret
Reata turned things around by repositioning bardoxolone as a rare disease asset, allaying adverse event fears, and taking full advantage of the money Abbvie had irreversibly pledged.
Investors were sufficiently convinced to launch Reata on the public markets in a $61m flotation two years ago. Their reward came yesterday, with bardoxolone yielding positive data in the phase II studies Cardinal, in chronic kidney disease (KD) due to Alport syndrome, and Phoenix, in autosomal dominant polycystic KD.
Both trials were uncontrolled, and showed an increased estimated glomerular filtration rate versus baseline in bardoxolone-treated subjects. Cardinal also showed this benefit being retained after four weeks off drug – a secondary, FDA-accepted endpoint for rare forms of chronic KD, according to Reata.
Chronic KD due to Alport and autosomal dominant polycystic KD are both genetic orphan diseases, and Leerink analysts reckon the latter is the much larger of the two. Cardinal has a phase III part that is placebo-controlled and will yield data next year; the phase II readout derisked phase III, Leerink said.
Just as important in Cardinal and Phoenix was the mild to moderate nature of adverse events. Stifel analysts wrote that this should allay concerns over hyperfiltration, a long-held Reata bear thesis that is likely now laid to rest.
|Selected bardoxolone studies|
|Study||Disease||Primary endpoint||Trial ID|
|Cardinal||Chronic KD due to Alport syndrome||Phase II: increase in eGFR from baseline at 12wk (uncontrolled)||NCT03019185|
|Phase III: increase in eGFR from baseline at 48wk (placebo-controlled)|
|Phoenix||Autosomal dominant polycystic KD||Increase in eGFR from baseline at 12wk (uncontrolled)||NCT03366337|
|Source: Clinicaltrials.gov & company filings. eGFR=estimated glomerular filtration rate.|
Reata’s 2012 disaster concerned the phase III Beacon trial in the broad setting of diabetes-related chronic KD; this trial had to be terminated early because of an increased risk of heart failure, which was later put down to fluid overload (Reata bursts Abbott’s bubble, October 19, 2012).
But Reata later identified three major risk factors, and on the basis that patients displaying these could be avoided it proposed developing bardoxolone in more tightly defined indications; the FDA agreed.
The company’s real stroke of genius was to retain Abbvie, and to tap it for more and more cash along the way. The US big pharma group first licensed bardoxolone in a deal that has so far netted Reata $600m in cash and an equity purchase.
Next Abbvie handed across $400m in a preclinical collaboration for follow-on molecules including omaveloxolone – a deal that was among the biggest ever for an asset at phase I or earlier. When bardoxolone’s Beacon trial was canned Abbvie took a step back but did not terminate the alliance.
Crucially, Reata states that Abbvie never opted in to development in rare KDs, including chronic KD caused by Alport syndrome. Doing so would result in development costs being split equally, in return for a pre-agreed up-front fee plus a share of costs already incurred.
If Abbvie does opt in Reata can be said to have turned the biotech dream into reality.