Reata Pharmaceuticals, Inc. (Nasdaq: RETA) (“Reata,” the “Company,”
or “we”), a clinical-stage biopharmaceutical company, today
announced financial results for the quarter ended March 31, 2020,
and provided an update on the Company’s business and product
development programs.
Recent Company Highlights
Reata recently announced changes to its clinical
programs and operations as a result of the COVID-19 pandemic.
For each clinical development program, Reata
developed and implemented changes designed to mitigate risk to
patients; comply with regulatory, institutional, and government
guidance; and maintain the integrity of our ongoing clinical
studies. At this time, we expect that data collection for the
ongoing CARDINAL study of bardoxolone methyl (bardoxolone) in
chronic kidney disease caused by Alport syndrome will not be
significantly impacted by the COVID-19 pandemic. We have
observed no significant data loss during this period.
When the FALCON trial for bardoxolone in ADPKD
was paused in March, we implemented adjustments similar to those
implemented for CARDINAL. We have observed no significant
data loss in the FALCON trial to date. For the FALCON study,
we have been able to continue treatment of patients enrolled in the
study, but because in-clinic visits are necessary to enroll new
patients, we have had to pause enrollment of new patients into the
study. Clinical trial sites are starting to reopen, and we
are hopeful that we may be able to resume screening of patients for
FALCON as early as this quarter at some sites.
Additionally, we do not believe that the
COVID-19 pandemic will have a significant impact on our ability to
execute on the planned New Drug Application submissions for
bardoxolone in Alport syndrome or omaveloxolone in Friedreich’s
ataxia.
First Quarter Financial
Highlights
Cash and Cash Equivalents
On March 31, 2020, we had cash and cash
equivalents of $624.5 million, as compared to $664.3 million at
December 31, 2019.
Collaboration Revenue
Collaboration Revenue was $1.4 million in the
first quarter of 2020, as compared to $7.8 million for the same
period of the year prior. Revenue for the first quarter of 2020
included $1.2 million from the Kyowa Kirin Co., Ltd. license
agreement and $0.2 million from other sources.
GAAP and Non-GAAP Research and Development
(R&D) Expenses
R&D expenses according to generally accepted
accounting principles in the U.S. (GAAP) were $47.7 million for the
first quarter of 2020, as compared to $26.1 million for the same
period of the year prior.
Non-GAAP R&D expenses were $36.1 million for
the first quarter of 2020, as compared to $24.4 million for the
same period of the year prior.1
GAAP and Non-GAAP General and Administrative
(G&A) Expenses
GAAP G&A expenses were $20.8 million for the
first quarter of 2020, as compared to $10.0 million for the same
period of the year prior.
Non-GAAP G&A expenses were $13.0 million for
the first quarter of 2020, as compared to $7.5 million for the same
period of the year prior.1
GAAP and Non-GAAP Net Loss
The GAAP net loss for the first quarter of 2020
was $48.9 million, or $1.47 per share, on both a basic and diluted
basis, as compared to a GAAP net loss of $29.2 million, or $0.98
per share, on both a basic and diluted basis, for the same period
of the year prior.
The increase in GAAP net loss is driven
primarily by an increase in expenses, offset by an income tax
benefit. Higher expenses were driven by an increase in research and
development activities, including personnel-related costs to
support this growth. Under the provisions of the Coronavirus
Aid, Relief, and Economic Security Act (the “CARES Act”), we
recognized a tax benefit of $22.1 million.
The non-GAAP net loss for the first quarter of
2020 was $29.6 million, or $0.89 per share on both a basic and
diluted basis, as compared to a non-GAAP net loss of $24.9 million,
or $0.84 per share, on both a basic and diluted basis, for the same
period of the year prior.1
Reiterates Cash Guidance
The Company reiterated that it expects existing
cash and cash equivalents to be sufficient to enable it to fund
operations through the end of 2021.
_________________1 See “Use of Non-GAAP
Financial Measures” below for a description of non-GAAP financial
measures and a reconciliation between GAAP and non-GAAP R&D
expenses, GAAP and non-GAAP G&A expenses, and GAAP and non-GAAP
net loss, respectively, appearing later in the press
release.Non-GAAP Financial Measures
This press release contains non-GAAP financial
measures, including non-GAAP R&D expenses, non-GAAP G&A
expenses, non-GAAP operating expenses, non-GAAP net loss and
non-GAAP net loss per common share – basic and diluted. These
measures are not in accordance with, or an alternative to, GAAP,
and may be different from non-GAAP financial measures used by other
companies.
The Company defines non-GAAP R&D expenses as
GAAP R&D expenses less stock-based compensation expense,
non-GAAP G&A expenses as GAAP G&A expenses less stock-based
compensation expense, non-GAAP operating expenses as GAAP operating
expenses less stock-based compensation expense and reacquired
license rights expense, non-GAAP net loss as GAAP net loss plus
stock-based compensation expense and reacquired license rights
expense, and non-GAAP net loss per common share – basic and diluted
as GAAP net loss per common share – basic and diluted plus
stock-based compensation expense and reacquired license rights
expense. During the three months ended March 31, 2020 and
2019, the Company did not incur any reacquired license rights
expense; therefore, this expense is not included in the
reconciliations below for the measures for non-GAAP operating
expenses, non-GAAP net loss, and non-GAAP net loss per common share
– basic and diluted for these periods. The Company has
excluded the impact of stock-based compensation expense, which may
fluctuate from period to period based on factors including the
variability associated with performance-based grants for stock
options and restricted stock units and changes in the Company’s
stock price, which impacts the fair value of these awards.
The Company has excluded the impact of reacquired license
rights expense because the Company believes its impact makes it
difficult to compare its results to prior periods and anticipated
future periods.
Because management believes certain items such
as stock-based compensation expense and reacquired license rights
expense can distort the trends associated with the Company’s
ongoing performance, the following measures are often provided,
excluding special items, and utilized by the Company’s management,
analysts, and investors to enhance consistency and comparability of
year-over-year results, as well as to industry trends, and to
provide a basis for evaluating operating results in future periods:
non-GAAP net loss; non-GAAP net loss per common share – basic and
diluted; non-GAAP R&D expenses; non-GAAP G&A expenses; and
non-GAAP operating expenses.
The Company believes the presentation of these
non-GAAP financial measures provides useful information to
management and investors regarding the Company’s financial
condition and results of operations. When GAAP financial
measures are viewed in conjunction with these non-GAAP financial
measures, investors are provided with a more meaningful
understanding of the Company’s ongoing operating performance and
are better able to compare the Company’s performance between
periods. In addition, these non-GAAP financial measures are
among those indicators the Company uses as a basis for evaluating
performance, allocating resources and planning and forecasting
future periods. These non-GAAP financial measures are not
intended to be considered in isolation or as a substitute for GAAP
financial measures. A reconciliation between these non-GAAP
measures and the most directly comparable GAAP measures is provided
later in this press release.
Conference Call Information
Reata’s management will host a conference call
on May 11, 2020 at 4:30 PM ET. The conference call will be
accessible by dialing (844) 348-3946 or (213) 358-0892
(international) using the access code: 6936548. The webcast
link is https://edge.media-server.com/mmc/p/5a3us7n3.
First quarter 2020 financial results to be
discussed during the call will be included in an earnings press
release that will be available on the company’s website shortly
before the call at http://reatapharma.com/investors/ and will be
available for 12 months after the call. The audio recording
and webcast will be accessible for at least 90 days after the event
at http://reatapharma.com/investors/.
About Reata Pharmaceuticals,
Inc.
Reata is 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’s two most advanced clinical candidates,
bardoxolone and omaveloxolone, target the important
transcription factor Nrf2 that promotes the resolution of
inflammation by restoring mitochondrial function, reducing
oxidative stress, and inhibiting pro-inflammatory signaling.
Bardoxolone and omaveloxolone are investigational
drugs, and their safety and efficacy have not been established by
any agency.
Contact:Reata Pharmaceuticals, Inc.(972)
865-2219http://reatapharma.com
Investors:Vinny JindalVice President, Corporate
Communications and Strategy(469)
374-8721ir@reatapharma.comhttp://reatapharma.com/contact-us/
Forward-Looking Statements
This press release includes certain disclosures
that contain “forward-looking statements,” including, without
limitation, statements regarding the success, cost and timing of
our product development activities and clinical trials, our plans
to research, develop and commercialize our product candidates, our
plans to submit regulatory filings, and our ability to obtain and
retain regulatory approval of our product candidates. You can
identify forward-looking statements because they contain words such
as “believes,” “will,” “may,” “aims,” “plans,” “model,” and
“expects.” Forward-looking statements are based on Reata’s
current expectations and assumptions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks, and changes in circumstances that may differ
materially from those contemplated by the forward-looking
statements, which are neither statements of historical fact nor
guarantees or assurances of future performance. Important factors
that could cause actual results to differ materially from those in
the forward-looking statements include, but are not limited to, (i)
the timing, costs, conduct, and outcome of our clinical trials and
future preclinical studies and clinical trials, including the
timing of the initiation and availability of data from such trials;
(ii) the timing and likelihood of regulatory filings and approvals
for our product candidates; (iii) whether regulatory authorities
determine that additional trials or data are necessary in order to
obtain approval; (iv) the potential market size and the size of the
patient populations for our product candidates, if approved for
commercial use, and the market opportunities for our product
candidates; and (v) other factors set forth in Reata’s filings with
the U.S. Securities and Exchange Commission, including the detailed
factors discussed under the caption “Risk Factors.” in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2019.
The forward-looking statements speak only as of the date made and,
other than as required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
Consolidated Statements of Operations |
|
(unaudited) |
|
|
(in thousands, except share and per share
data) |
Collaboration revenue |
|
|
|
|
|
|
|
|
License and milestone |
|
$ |
1,169 |
|
|
$ |
7,726 |
|
Other revenue |
|
|
184 |
|
|
|
44 |
|
Total collaboration revenue |
|
|
1,353 |
|
|
|
7,770 |
|
Expenses |
|
|
|
|
|
|
|
|
Research and development |
|
|
47,653 |
|
|
|
26,114 |
|
General and administrative |
|
|
20,787 |
|
|
|
10,038 |
|
Depreciation |
|
|
278 |
|
|
|
170 |
|
Total expenses |
|
|
68,718 |
|
|
|
36,322 |
|
Other income (expense), net |
|
|
(3,814 |
) |
|
|
(600 |
) |
Loss before taxes on income |
|
|
(71,179 |
) |
|
|
(29,152 |
) |
(Benefit from) provision for taxes on income |
|
|
(22,240 |
) |
|
|
2 |
|
Net loss |
|
$ |
(48,939 |
) |
|
$ |
(29,154 |
) |
Net loss per share—basic and diluted |
|
$ |
(1.47 |
) |
|
$ |
(0.98 |
) |
Weighted-average number of common shares used in net loss per
share basic and diluted |
|
|
33,222,085 |
|
|
|
29,830,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As ofMarch 31,
2020(unaudited) |
|
|
|
As ofDecember 31, 2019 |
|
|
|
|
|
|
|
(in
thousands) |
|
Condensed Consolidated Balance Sheet Data |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
624,488 |
|
|
$ |
664,324 |
|
Working
capital |
|
|
451,016 |
|
|
|
477,262 |
|
Total
assets |
|
|
664,198 |
|
|
|
682,420 |
|
Term loan
(including current portion, net of issuance cost) |
|
|
155,506 |
|
|
|
155,017 |
|
Payable
to collaborators |
|
|
218,440 |
|
|
|
216,862 |
|
Deferred
revenue (including current portion) |
|
|
8,220 |
|
|
|
9,389 |
|
Accumulated deficit |
|
|
(759,432 |
) |
|
|
(710,493 |
) |
Total stockholders’
equity (deficit) |
|
$ |
228,647 |
|
|
$ |
256,857 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to
Non-GAAP Financial MeasuresThe following table presents
reconciliations of non-GAAP financial measures to the most directly
comparable GAAP financial measures (in thousands, except for per
share data) (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
|
2020 |
|
|
|
2019 |
|
Reconciliation of GAAP to Non-GAAP Research and
development: |
|
|
|
|
|
|
|
|
|
GAAP Research and development |
|
|
$ |
47,653 |
|
|
$ |
26,114 |
|
Less: Stock-based compensation expense |
|
|
|
(11,516 |
) |
|
|
(1,691 |
) |
Non-GAAP Research and development |
|
|
$ |
36,137 |
|
|
$ |
24,423 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP General and
administrative: |
|
|
|
|
|
|
|
|
|
GAAP General and administrative |
|
|
$ |
20,787 |
|
|
$ |
10,038 |
|
Less: Stock-based compensation expense |
|
|
|
(7,791 |
) |
|
|
(2,536 |
) |
Non-GAAP General and administrative |
|
|
$ |
12,996 |
|
|
$ |
7,502 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Operating
expenses: |
|
|
|
|
|
|
|
|
|
GAAP Operating expenses |
|
|
$ |
68,718 |
|
|
$ |
36,322 |
|
Less: Stock-based compensation expense |
|
|
|
(19,307 |
) |
|
|
(4,227 |
) |
Non-GAAP Operating expenses |
|
|
$ |
49,411 |
|
|
$ |
32,095 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Net loss: |
|
|
|
|
|
|
|
|
|
GAAP Net loss |
|
|
$ |
(48,939 |
) |
|
$ |
(29,154 |
) |
Add: Stock-based compensation expense |
|
|
|
19,307 |
|
|
|
4,227 |
|
Non-GAAP Net loss |
|
|
$ |
(29,632 |
) |
|
$ |
(24,927 |
) |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Net loss per common
share-basic and diluted: |
|
|
|
|
|
|
|
|
|
GAAP Net loss per common share-basic and diluted |
|
|
$ |
(1.47 |
) |
|
$ |
(0.98 |
) |
Add: Stock-based compensation expense |
|
|
|
0.58 |
|
|
|
0.14 |
|
Non-GAAP Net loss per common share-basic and diluted |
|
|
$ |
(0.89 |
) |
|
$ |
(0.84 |
) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, 2020 |
|
|
|
December 31, 2019 |
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Operating
expenses |
|
|
|
|
|
|
|
|
GAAP Operating expenses |
|
$ |
68,718 |
|
|
$ |
187,103 |
|
Less: Stock-based compensation expense |
|
|
(19,307 |
) |
|
|
(12,291 |
) |
Less: Reacquired license rights expense |
|
|
- |
|
|
|
(124,398 |
) |
Non-GAAP Operating expenses |
|
$ |
49,411 |
|
|
|
50,414 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Net loss |
|
|
|
|
|
|
|
|
GAAP Net loss |
|
$ |
(48,939 |
) |
|
$ |
(186,942 |
) |
Add: Stock-based compensation expense |
|
|
19,307 |
|
|
|
12,291 |
|
Add: Reacquired license rights expense |
|
|
- |
|
|
|
124,398 |
|
Non-GAAP Net loss |
|
$ |
(29,632 |
) |
|
$ |
(50,253 |
) |
|
|
|
|
|
|
|
|
|
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