Reata looks to outsmart Abbvie again

Note to Abbvie management: the next time a biotech partner offers you $330m out of the blue to buy back rights to some minor shared assets, consider that it might be on to something.

Yesterday’s unexpectedly positive readout for Reata’s omaveloxolone in Moxie, a Friedreich’s ataxia study, came just four days after the biotech had struck a deal to reacquire the project from Abbvie. While it might seem inconceivable that the junior partner did not have at least some inkling that the study was about to read out positively, Reata today denied that this was the case.

“Neither Abbvie nor us had access to the results” before last week’s deal was done, Reata’s chief executive, Warren Huff, told analysts on a call today. The question yet to be answered is whether $330m was money well spent; however smart the buyback might have been omaveloxolone alone might not justify it.

Stifel analysts reckon the global market for Friedreich’s ataxia, a notoriously hard indication to crack, is worth over $3bn, but sellside consensus collected by EvaluatePharma sees omaveloxolone revenue forecasts translating to only $27m of NPV.

The much bigger test of the buyback is bardoxolone, Reata’s lead, for which a phase III study in Alport syndrome, reading out by the end of 2019, is a crucial binary outcome. Reata this morning traded up 45%.

Surprise

This likely reflects the surprising nature of omaveloxolone’s Friedreich’s win in Moxie. The study's first part had been a bust, but Reata seized on an activity signal in a secondary endpoint.

That endpoint was the modified Friedreich’s ataxia rating scale (mFARS), and Reata redesigned Moxie to increase its chances of success: mFARS replaced peak work during maximal exercise as the primary endpoint, the treatment period was increased from 12 to 48 weeks, and only the 80% of the subjects without pes cavus entered into the primary analysis.

Pes cavus is a foot deformity that occurs in some Friedreich’s patients, and was blamed for the failure in Moxie’s first part. Part two hit on mFARS in the 82 subjects without pes cavus and – perhaps surprisingly – in the 103 all-comers too.

Two obvious questions are whether omaveloxolone’s potential label could be limited to subjects without pes cavus, and whether mFARS is an approvable metric. On an analyst call today Reata stated that the FDA had indicated in writing that mFARS was an “approval primary endpoint” in Friedreich’s, but that the breadth of any approval would be up to the agency.

Omaveloxolone’s safety profile will also raise questions, especially its effect on elevating the liver enzymes alanine transaminase and aspartate transaminase. Reata argues that increases in aminotransferases are a pharmacological effect of omaveloxolone, and that the elevations in Moxie were not associated with liver injury.

Abbvie had licensed bardoxolone and omaveloxolone for a remarkable $850m up front, but in 2012 the former bombed in chronic kidney disease after a heart failure signal. Reata then seemed to outfox its partner by repositioning bardoxolone for rare forms of kidney disease, thanks partly to money Abbvie had irreversibly pledged.

The big pharma group held data and rights to opt back in, but likely saw $330m as a way to recoup from Reata some of its sunk cost, given that the rare diseases where the two assets now held promise were of little interest to it. Whether Abbvie might have decided differently had it seen the Moxie data will remain a mystery.