Reata Pharmaceuticals Tumbles on Possible FDA Approval Delay

Reata Pharmaceuticals beat Wall Street estimates but says an FDA filing for one of its drugs could be delayed indefinitely.
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Reata Pharmaceuticals  (RETA) - Get Report shares were tumbling Monday after the biotech beat Wall Street's second-quarter expectations but warned that a filing for one of its treatments could be delayed.

Shares of the Plano, Texas, company at last check were off 33% to $104.19.

Reata said that filing of a U.S. marketing application for omaveloxolone, a treatment for Friedreich's ataxia, would be delayed indefinitely if the U.S. Food and Drug Administration requires a second pivotal study. 

That would be due to the limited availability of patients with the disorder, the small number of clinical trial investigators who can conduct the proper exams, and the impact of the coronavirus pandemic on the company's ability to conduct neuroscience clinical trials.

Friedreich's Ataxia is a rare genetic disease that causes difficulty walking, a loss of sensation in the arms and legs, and impaired speech.

"The FDA acknowledged the unmet need of patients with FA, reiterated its commitment to facilitate the development of omaveloxolone within the constraints of the regulatory standards, and emphasized its willingness to consider all available options to meet the regulatory standards," the company said. 

During a meeting with the FDA, Reata said it proposed a second study to provide additional evidence of effectiveness. 

"If the FDA accepts this approach, we expect to complete the crossover study as early as the fourth quarter of this year," the company said. "If the FDA rejects the proposal or if the data are not supportive, we will evaluate whether it is feasible to conduct a second pivotal study in FA patients as suggested by the FDA."

Regardless of the interaction with the FDA, Reata said, "we plan to pursue marketing approval outside of the United States."

Reata Pharmaceuticals reported a loss of $67.7 million, or $2.03 a share, compared with $34.4 million, or $1.14, in the year-earlier period. The Zacks consensus estimate called for a loss of $2.22.

The company reported revenue of $3.1 million, compared with $7.8 million.