Reata Pharmaceuticals (RETA) is coming off a hot streak in which its stock price climbed 30% between January 29 and February 4 before dipping again, as rumors of a buyout by Amgen (AMGN) sent investors scrambling to snap up shares.
Investors read into comments by Amgen chairman and CEO Robert A. Bradway, who cited renal diseases as an area where the biotech giant was looking to grow its pipeline.
“We have not found in our own discovery research efforts that we’ve been able to find the kind of game-changing innovation that we want to invest in,” Bradway told investors on Amgen’s quarterly conference call. “We’re not investing in discovery research in nephrology right now, but we are going to look for business development opportunities there.”
Joseph P. Schwartz of SVB Leerink—one of GEN Edge’s Ten Life Science Analysts to Watch in 2020—observed that nephrology is the first of Amgen’s six commercial franchises, where the company has shown R&D and commercial leadership for decades. As a result, he said, Amgen would appear a logical buyer for Reata, whose top pipeline candidates have indications in rare chronic kidney disease (CKD) and neurology (Friedreich’s ataxia, FA).
It’s not the first time Amgen has generated takeover fever lately: Alexion Pharmaceuticals shares surged 15% over a week last August on similar speculation linked to Amgen.
At the close of trading Wednesday, Reata shares were still triple their price at the start of October, before the company announced two positive data clinical readouts that sent shares zooming 81% through November 11. Bardoxolone methyl (bardoxolone) met its primary and key secondary endpoints in the Phase III portion of the CARDINAL trial (NCT03019185) in patients with CKD caused by Alport syndrome. Earlier, Reata announced that omaveloxolone met its primary endpoint in the registrational Part 2 portion of the MOXIe Phase II trial (NCT02255435) of change in the modified Friedreich’s Ataxia Rating Scale (mFARS) relative to placebo after 48 weeks of treatment.
Warren Huff, Reata’s president and CEO, discussed the clinical progress of omaveloxolone and bardoxolone, as well as the company’s approach to drug development, before the stock surge in an exclusive interview with GEN Edge during the recent J.P. Morgan conference in San Francisco (edited for length and clarity):
GEN EDGE: What sort of commercial ramp-up is Reata looking to carry out?
WARREN HUFF: These are ideal first launches. Alport syndrome is a rare deadly form of CKD, and FA is similar. These are rare diseases. We don’t need large sales or medical affairs forces to address these. And we’ve always kept the U.S. rights and planned to launch our own products.
We’re in the process of preparing for commercialization processes: Manufacturing scale-up. Filling our medical affairs. All our commercial leadership is in place. We hired Dawn Bir, who launched Imbruvica for Pharmacyclics in the U.S. as chief commercial officer and executive vice president. Manmeet Soni joined us from Alnylam [as CFO and executive vice president].
How did Reata get interested in treating Alport syndrome?
We had programs years ago in diabetic CKD and had demonstrated that our pharmacology could produce frank improvements in kidney function through a novel mechanism which really hadn’t been observed before. This is a huge health issue, a massive problem. [According to the American Association of Kidney Patients, chronic disease kidney care costs U.S. taxpayers $68 billion, two-thirds of the total $99 billion spent on kidney care.]
Almost all the work for many years had been done in blood pressure medication, so there hasn’t been a lot of innovation outside of that. Some of this has been because the clinical endpoints have been extremely difficult. For many years, the regulatory agencies said you need to demonstrate that you essentially delayed dialysis or the need for dialysis or transplant, because the rate of decline is so low, it requires you to treat patients that are at or near dialysis to be able to do a clinically tractable study.
This has begun to change, through better validated endpoints that allow you to treat earlier-stage patients emerged. Also, regulatory flexibility around rare forms of CKD has emerged, and this got us interested in the space.
What accounted for the positive results seen in bardoxolone in Alport syndrome?
What’s very interesting about our pharmacology is that it treats the inflammatory basis of the disease; it doesn’t treat blood pressure. These patients are all on blood pressure medications, optimal blood pressure control. Our drug treats their mitochondrial dysfunction, which drives the inflammatory processes in the kidney. And when we give it, we see this acute recovery of their glomerular filtration rate (GFR). That’s maintained versus the placebos.
The data that we reported in November  was one-year data from a two-year study. We showed that on-drug, patients had a frank improvement in their GFR at week 48 of about +5, 4.5 or 5 points, while the placebos were down about 4.5 or 5 points.
This is a key point: Remarkably, we removed the drug for four weeks, and then we measure their GFR with the drug removed. You might ask, why would you do that? Think of it as a way to measure the effect on the structure of the kidney over the year. At week 52 there’s no acute pharmacologic effect. The drug has been removed. If the drug was protecting the kidney, then it would be functioning better than placebo. If it was harming the kidney, it would be worse than placebo. And if it was only symptomatic, and having no structural effect, then we would be unchanged from placebo after withdrawal.
We showed that when you withdrew the drug, the patients were essentially at baseline and maintained the baseline, while the placebos were down 6 points. The drug essentially protected the kidney from damage over that year. That’s important because the regulatory agencies view that as a very strong evidence that you modified the course of the disease, or that the treatment will actually delay or prevent dialysis.
Is there any way to know how long a delay in dialysis is attainable?
No, but they didn’t progress. They were up from baseline on treatment, or statistically unchanged from baseline after a year. We’ll have two-year data near the end of this year, and that will give us another window.
But the other thing that’s important about this is that the placebos were down 6. Let me put this in context: 6 is the average. If you look at the distribution of the declines across the placebo group, about 50% of them declined at essentially 12 or more on average in the year. These are from baseline GFRs of around 60. You go on dialysis at about 15. These are young people, young men, and middle-aged people that are facing dialysis in 3 to 5 years.
If they don’t decline, they’re not going on dialysis. That’s the key. What drives you on dialysis is these acute declines that happen over time, and so, if you’re able to delay or prevent those, you’re very likely to reduce their risk of ever being on dialysis.
The CARDINAL study data showed a reversal in five different kidney diseases after one year.
We have done Phase II data in addition to Alport syndrome. We’ve done the PHOENIX study (NCT03366337), where we tested four additional types of chronic kidney disease. We have positive data showing GFR improvements in autosomal dominant polycystic kidney disease, in IgA [immunoglobulin A] nephropathy, in focal segmental glomerulosclerosis [FSGS], and in CKD caused by type 1 diabetes. And they all had, basically this acute improvement in GFR that is the signature of the effect of the drug.
On the basis of that data, we have initiated a second registrational study in patients with autosomal dominant polycystic kidney disease (ADPKD) in a study called FALCON (NCT03918447). That’s currently accruing patients. And it has virtually identical design to our Alport syndrome or CARDINAL study. While we’re pursuing approval with CARDINAL data for Alport syndrome, we’re conducting the FALCON study for ADPKD. And we’ve said that we’ll pursue IGA nephropathy, FSGS, and type 1 diabetic CKD as well, though we haven’t given any timing for those studies.
What is the clinical program for omaveloxolone?
It works with the same mechanism of action, so targets Nrf2 [Nuclear factor erythroid-2-related factor 2], improves mitochondrial function, and lowers activation of inflammatory genes. And we had in a registrational study in a terrible disease, Friedreich’s ataxia. There have been a large number of clinical programs I think we counted like 15 clinical programs, all failures. People have never really been able to affect the course of the disease.
We conducted a 100-patient placebo controlled multinational study and reported the results in October. It was a 48-week, evenly randomized trial. And the endpoint is a measure of neurologic function developed for Friedreich’s ataxia patients. It’s called the modified Friedreich’s ataxia rating scale.
Essentially, we showed that after 48 weeks of treatment, patients treated with Omaveloxolone recovered neurologic function, and maintained it through week 48, while patients on placebo had a placebo improvement, then lost that, and progressed by week 48. And we showed a statistically significant improvement in the mFARS with a P value of 0.014. And we believe that this is the first—I think it’s the largest interventional study in FA patients—and the first to report a positive result on the primary endpoint.
How is omaveloxolone designed to work?
When you have an inflammatory response, when a normal healthy person or animal, you have an inflammatory threat, get an infection or you have a wound, your mitochondria switch out of producing ATP, and they take the oxygen that they would otherwise reduce to produce ATP, and they become reactive oxygen generators. As they set the biochemical environment to an oxidative environment, and this works essentially to activate inflammatory genes like NF-kB and the inflammasome, which then essentially produce your inflammatory mediators.
The target of our drug Nrf2 likely evolved to switch all of this off and restore things back to homeostasis when the inflammatory threat was ameliorated or was no longer needed. So, it’s a transcription factor and it has largely—its targets have largely three functions: First, it switches mitochondrial ATP production back on, and reduces the production of reactive oxygen from the mitochondria. It produces your anti-oxidant detoxification enzymes, essentially to mop up the reactive oxygen. And it directly suppresses the transcriptional activity of key pro-inflammatory genes like NF-kB.
It’s chronically suppressed, so in many chronic diseases, it’s suppressed. A very common phenotype is, you have some inflammatory stimulus, autoimmune disease, a genetic mutation, diabetes, whatever. And it drives chronic mitochondrial dysfunction, chronic inflammation, driving fibrosis and remodeling, and Nrf2 is suppressed. And we’re looking for those settings to just come in, and pharmacologically activate Nrf2, to try to restore homeostasis, reducing the activation of inflammatory genes, and restoring mitochondrial function.
That’s why it might work in diverse settings like chronic kidney disease, and a neurodegenerative disease, because even though they are really different cells and organs, the underlying molecular biology in the diseases is similar. There’s mitochondrial dysfunction driving chronic inflammation.
How will Reata develop omaveloxolone now that the Phase III MOXIe study is completed?
At this point, it, we’ll just be going back to the regulators to see if we can use that data to support a new drug application. We do think it’s proof of concept, though, for using the pharmacology to treat a number of other neurodegenerative diseases, and we have good preclinical data in diseases like ALS, Huntington’s disease, familial Parkinson’s, Alzheimer’s disease, and also epilepsy.
Will your company venture into some of these indications?
Absolutely. We really feel like the FA data is actually proof of concept for this approach of improving mitochondrial function as a treatment for these various types of neurodegenerative diseases.
How soon before we start seeing in your pipeline a treatment in ALS, Alzheimer’s, and other neuro indications?
We’re evaluating that. Colin Meyer, MD, (chief medical officer and executive vice president, product development) is leading that effort. It’s a complicated triage of the best biologic fit. What are the competitive products? What does the clinical program look like? I think this year, we’ll have mapped out what our development plans will be in the neural space.
How closely is the Aducadumab issue weighing in to Reata’s decision to go ahead in Alzheimer’s? Many candidates have failed.
I’m not an expert in the field. But that always felt to me like they were treating the downstream effects of metabolic and inflammatory processes. Our pharmacology is very different. I think the metabolic impairments in Alzheimer’s patients, and particularly some of the subtypes, are really well documented. It’s frequently referred to as type 3 diabetes. I think a lot of that work would support that improvements in mitochondrial function could lead to direct improvements in cognitive function in those patients.
More important, we’ve focused in recent years on rare, orphan settings, because of the clinical tractability of the development programs. We probably wouldn’t start by biting off Alzheimer’s. Familial Parkinson’s is a good [candidate]: Six or seven proteins have been shown to cause Parkinson’s when mutated… It’s unusual to have positive results in two different disease categories, really with very similar pharmacology.
How much capital has been raised since the IPO?
We went public in May 2016 and we’ve raised about $750 million in three public offerings. We raised about $500 million off the two data points to help fund us through our product launches.