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Reata Pharma Shares Trading Higher After Reacquiring U.S. and Worldwide Licensing Rights

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Shares of Reata Pharmaceuticals are trading 12% higher today after the firm announced it had reacquired all licensing rights in the U.S. for bardoxolone methyl and worldwide rights for omaveloxolone and other next-generation Nrf2 activators from AbbVie.

Clinical-stage biopharmaceutical company Reata Pharmaceuticals Inc. (RETA:NASDAQ) yesterday announced the reacquisition of "development, manufacturing and commercialization rights concerning its proprietary Nrf2 activator product platform originally licensed to AbbVie Inc. (ABBV:NYSE) for territories outside of the United States with respect to bardoxolone methyl (bardoxolone) and worldwide with respect to omaveloxolone and other next-generation Nrf2 activators." The company advised that "as a result it now possesses exclusive, worldwide rights to develop, manufacture and commercialize bardoxolone methyl (bardoxolone), omaveloxolone, and all other next-generation Nrf2 activators, excluding certain Asian markets for bardoxolone which are licensed to Kyowa Kirin Co. Ltd."

The report outlined in the terms of the deal that "as consideration for the rights reacquired by Reata, AbbVie will receive a total of $330 million in cash, primarily for rights to bardoxolone. Reata will make an upfront payment of $75 million in 2019, with the remainder payable in installments in Q2/20 and in Q4/21. AbbVie will also receive low single-digit, tiered royalties from worldwide sales of omaveloxolone and certain next-generation Nrf2 activators, and no royalties on bardoxolone."

Warren Huff, Reata's CEO and president, commented, "AbbVie has been an excellent partner, and our collaboration was instrumental in the clinical development of bardoxolone and omaveloxolone...Regaining these rights will increase Reata's strategic flexibility and control regarding the development and commercialization of our lead drug candidates, and our next-generation Nrf2 activators. We have been actively preparing for the commercial launch of bardoxolone and omaveloxolone in the United States, and we will now expand our efforts to include these international territories as well."

Reata also reported that it amended its loan and security agreement with Oxford Finance LLC and Silicon Valley Bank with the overall term loan facility increasing by $30 million to $155 million. The company advised that the amendment will make $75 million available to Reata upon positive, topline, registrational data from either the CARDINAL study of bardoxolone methyl in patients with Alport syndrome or the MOXIe study of omaveloxolone in patients with Friedreich's ataxia.

The company also announced today that three abstracts highlighting clinical and nonclinical data for bardoxolone methyl (bardoxolone) will be presented at the American Society of Nephrology Kidney Week 2019 Annual Meeting scheduled for early November in Washington, D.C.

The firm notes that the three titles for the presentations are as follows: "Activation of the Keap1/Nrf2 pathway increases GFR by increasing glomerular effective filtration area without affecting the afferent/efferent arteriole ratio," by presenter Kengo Kidokoro, M.D. Ph.D., Department of Nephrology and Hypertension, Kawasaki Medical School, Kurashiki, Okayama, Japan; "Effect of Bardoxolone Methyl on Kidney Events in Patients with Chronic Kidney Disease Stage 4 and Type 2 Diabetes at High Risk of Adverse Kidney Outcomes," by presenter Christoph Wanner, M.D., Department of Medicine and Chief of the Division of Nephrology, University of Würzburg, Germany; and "A Cardiovascular Risk Mitigation Strategy on the Safety of Bardoxolone Methyl Post-BEACON," to be presented by Pablo E. Pergola, M.D., M.Ph., Research Director, Renal Associates, PA, San Antonio, TX.

The company explains that "bardoxolone is an experimental, oral, once-daily activator of Nrf2, a transcription factor that induces molecular pathways that promote restoration of mitochondrial function, reduction of oxidative stress, and inhibition of pro-inflammatory signaling. The FDA has granted orphan drug designation to bardoxolone for the treatment of Alport syndrome, autosomal dominant polycystic kidney disease, and pulmonary arterial hypertension. The European Commission has granted orphan drug designation to bardoxolone for the treatment of Alport syndrome. Bardoxolone is currently being studied in CARDINAL, a Phase 3 study for the treatment of Alport syndrome, FALCON, a Phase 3 study for the treatment of ADPKD, CATALYST, a Phase 3 study for the treatment of connective tissue disease-associated pulmonary arterial hypertension, and AYAME, a Phase 3 study for the treatment of diabetic kidney disease in Japan which is being conducted by Reata's licensee Kyowa Kirin Co., Ltd."

Reata Pharmaceuticals is based in Irving, Tex., and identifies its business as "a clinical-stage biopharmaceutical company that develops novel therapeutics for patients with serious or life-threatening diseases by targeting molecular pathways involved in the regulation of cellular metabolism and inflammation." Reata indicates that "its two most advanced clinical candidates, bardoxolone methyl and omaveloxolone, target the important transcription factor Nrf2 that promotes restoration of mitochondrial function, reduction of oxidative stress, and inhibition of pro-inflammatory signaling. Bardoxolone and omaveloxolone are investigational drugs, and their safety and efficacy have not been established by any agency." The company's lead candidates, bardoxolone methyl and omaveloxolone, are being evaluated in pivotal clinical trials for the treatment of a variety of chronic and genetic diseases including: Alport syndrome (AS); Friedreich's ataxia (FA); connective tissue disease-associated pulmonary arterial hypertension (CTD-PAH); and autosomal dominant polycystic kidney disease-chronic diseases (ADPKD). The company also is evaluating bardoxolone methyl for other rare forms of CKD, including: IgA nephropathy, type 1 diabetic CKD, and focal segmental glomerulosclerosis.

Reata Pharmaceuticals began the day with a market capitalization of about $2.6 billion with approximately 30.11 million shares outstanding. As of the close of business yesterday, the firm had a short interest of about 10.4%. RETA shares opened today at $87.23 (+$1.25, +1.45%) compared to yesterday's closing price of $85.98. The stock has traded today between $87.19 and $95.70/share and currently is trading at $96.62 (+$10.64, +12.37%).


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