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Good day, ladies and gentlemen, and welcome to the Reata Fourth Quarter and Financial Results and Update on Development Programs. And audio recording of the webcast will be available shortly after the call today on Reata’s website at reatapharma.com in the investor section.
Before the company proceeds with its remarks, please note the forward-looking statements disclosure in the company's press release. The company will be making forward-looking statements on today's call. There are many factors that could cause results to differ from expectations, including those noted in the company's SEC filings. Today’s statements are not guarantees of future outcomes.
Please also note that any comments made on today's call speak only as of today, February 28, 2019, and may no longer be accurate at the time of any webcast, replay or transcript rereading. Following the prepared remarks, we will open the call up for questions. [Operator Instructions]
I would now like to introduce your host for today's call, Vinny Jindal, Vice President of Strategy. You may begin.
Thanks Demetrius. Hello and welcome to Reata management’s call to discuss Reata’s fourth quarter 2018 financial results and to provide a review of our development programs. This morning, we issued a press release with a summary of these results, and the press release can be found on the Investors section of our website at reatapharma.com. I’m joined today by our Chief Executive Officer, Warren Huff; Chief Medical Officer, Colin Meyer; and our Chief Financial Officer, Jason Wilson.
I'll now turn the call over to Warren.
Thanks, Vinny. Good morning, everyone, and thank you for joining us. I’d like to begin our call today's by reviewing the significant progress we made during 2018 in advancing our development pipeline, which now includes three ongoing pivotal programs and our fourth pivotal in autosomal dominant polycystic kidney disease that we plan to launch later this year. In 2018, we completed enrollment in two pivotal trials for rare and severe disease. CARDINAL studying bardoxolone, and chronic kidney disease caused by Alport syndrome and MOXie studying omaveloxolone in Friedreich’s ataxia. There are no proof therapies for either of these deadly diseases and we’re currently positioned to have the first FDA approved treatments for these patients. We expect to report topline results from both studies in the second half of this year.
Regarding our Alport syndrome program, in 2018, we reported long term results from the phase 2 portion of cardinal demonstrating that patients with bardoxolone experienced a significant improvement in eGFR after 48 weeks of treatment and a significant retained eGFR benefit following four weeks of drug patrol. The retained eGFR benefit suggests that long term treatment with bardoxolone may safely delay improvement in kidney failure in patients’ with Aplort syndrome. The FDA has provided us with written guidance that are statistically significant, placebo-corrected, retained eGFR benefit after one year of treatment, may support accelerated approval and a retained eGFR benefit after two years treatment may support full approval.
In 2018, we also completed enrollment in all cohorts of PHOENIX, a 12-week phase 2 trial designed to generate proof of concept data in four rare forms of CKD including autosomal dominant polycystic kidney, IgA nephropathy, FSGS and CKD caused by type 1 diabetes. We’ve reported positive results from all four cohorts with each cohort meeting its primary end point of an increase in eGFR week 12. Across the 103 patients enrolled in PHOENIX, mean eGFR increased by 7.8 ml per minute in week 12, with 88% of patients demonstrating an improvement from baseline from eGFR.
There was no significant change in urinary protein and mean blood pressure decreased significantly, providing strong evidence that bardoxolone’s effect on kidney function is not mediated during increase in glomerular blood pressure. Importantly, these improvements were observed in patients who kidney function was actively declining despite most patients entering on optimized standard of care. We’ve now observed significant improvements in kidney function across seven distinct forms of CKD, a finding which strongly supports our thesis that bardoxolone addresses a common final pathway of progression in chronic kidney disease is driven by inflammation in fibrosis and the impairment of mitochondrial function.
Based on the results of PHOENIX and the historic correlation we’ve observed between eGFR increases at week 12 and a retained eGFR benefit of one year, we announced plans to initiate a pivotal study for bardoxolone in ADPKD which will begin in mid-2019 and we announce our intention to pursue the other rare forms of CKD commercially.
Turning to our Friedreich's ataxia program, in 2018 we announced that we completed enrollment in the pivotal part 2 portion of MOXIe, a trial of omaveloxolone in Friedreich's ataxia. In the dose ranging part of MOXIe, we observed at the optimal dose of 160 mg daily a statistically significant improvement in modified mFARS versus baseline week 12, and a placebo corrected improvement in modified mFARS scores which approached significance with a p value of 0.6. Based on the results of part 1 and the design of part 2 MOXIe, we are optimistic that omav has the potential to become the first approved therapy for patients with FA.
The ongoing catalyst study of bardoxolone in connective tissue disease associated with pulmonary arterial hypertension is also proceeding as planned, and we expect topline data from this study to be available in the first half of 2020. Based on the results observed in our phase 2 LARIAT trial and the design of the CATALYST trial, we believe that bardoxolone has the potential to become the first therapy approved specifically for patients with CTD-PAH.
Before turning the call over to Jason to review our financial results, I’d like to highlight some recent personnel developments. Last month, we announced the appointment of Dr. Geoff Block as Vice President of Nephrology. Dr. Block is a world renowned nephrologist with over 20 years of experience conducting clinical research in treating patients with CKD and he has served as one of our lead investigators and external advisor for a number of years. Geoff’s extensive experience of standing in the nephrology community provides him with a unique perspective that will allow him to serve as a critical interface between our internal developments, medical affairs within the global nephrology community.
Additionally, we continue to grow our commercial leadership team with the industry veterans who have significant product launch experience. Dale Hooks, who recently joined Reata as Vice President, Global Commercial Operations. Dale has over 25 years of experience in commercial biotech and has held senior level roles in marketing, sales, operations and business unit leadership with Genentech and Clovis Oncology. Dr. Keith Ward, our Chief Development Officer recently informed us of his intention to retire and submitted his resignation effective March 8. Keith has reached a point where he’s financial able to retire and he plans to use this as an opportunity to spend more time with his family. Part of his transition to retirement, Keith will work with us as a consultant for the next several months to ensure smooth and successful transition. We certainly will miss Keith and we wish him well in the new phase of his life.
Most of Keith’s job functions will be assumed by Joel Proksch, who is being promoted to Chief Development Officer. Joel’s been with the company for seven years, recently serving as Senior Vice President, Regulatory Affairs and Development.
With that I’ll now turn the call over to Jason to provide a summary of our financials for the fourth quarter and full year of 2018.
Thanks Warren. This morning we reported financial results for the fourth quarter and the full year of 2018. Net loss for the quarter was 25.6 million or $0.86 per share, compared to a net loss of 16.7 million or $0.64 per share for the same period last year. The increase in net loss for the three months period is due to both an increase in expenses and decrease in revenue. The decrease in revenue is related to license and collaboration agreements. We signed three license and collaboration agreements in 2009, ’10 and ’11, and the upfront payments for these agreements was deferred and recognized over a period of development that is our performance obligation.
In 2017, we finished recognizing revenue from the 2010 license agreement, so it is no longer being recognized in 2018. The higher expenses are primarily driven by an increase in research and development due to clinical and manufacturing activities and an increase in personnel expenses to support the expanded development activities. For the 12 months period ended December 31, 2018, net loss was 80.5 million or $2.91 per share, and this compares to a net loss of 47.7 million or $1.99 per share in the prior year. The increased net loss for the year is primarily due to the increase in expenses related to clinical and manufacturing activities, development activities for earlier stage assets to expand our product candidate portfolio, and in personnel expenses to support expanded development activities.
Our cash based operating expenses or non-GAAP measure we define as total expenses excluding stock based compensation expense and depreciation expense were 30.5 million and 119.5 million for the 3 and 12 months ended, December 31, 2018 respectively, compared to 24.6 million and 88 million for the same periods ended December 31, 2017. A reconciliation of this non-GAAP measure to total expenses can be found attached to the press release filed this morning. We expect our cash based operating expenses will continue to increase as we advance our product candidates in to additional development, continue to grow the company and prepare for commercialization.
At December 31, 2018, we had $337.8 million in cash and cash equivalents. We expect our current cash to fund our operations through and beyond the data readouts for all three of our ongoing registration of clinical trials.
And with that I’ll turn the call back over to Warren.
Thanks Jason. 2019 has the potential to be a transformative year for Reata. If positive, data from our registrational studies in Alport syndrome from Friedreich's ataxia that we expect in the second half of 2019 could support our transition from a development stage company to a fully commercial enterprise. We’ve already begun the commercial, regulatory and clinical manufacturing activities to support the filing of a new drug application for bardoxolone for Alport syndrome and omav for Friedreich's ataxia. Our commercial launch preparation activities are underway, and we’re well positioned to make the transition if data from our pivotal studies are positive.
That concludes our prepared remarks, and now I’ll turn the call over to the operator for questions.
[Operator Instructions] And our first question comes from Yigal Nochomovitz with Citigroup. You may proceed.
I had a question on the clinical timing, obviously you’ve highlighted that you’re going to have the phase 3 for Friedreich's ataxia and CARDINAL in the second half, but if you look at the timelines on the clinical trials obviously the CARDINAL study and its enrollment, I believe that November and a similar timeframe to the MOXIe study, CARDINAL’s 32 week end point and MOXIe’s 24 week end point, it would seem that you could conclude that we get MOXIe first possibly in the third quarter and then CARDINAL in the fourth quarter. So I just want to understand if that’s a fair appraisal of the timelines or if there’s some particular reason why you wouldn’t want to commit to that order of events and quarterly reporting of those two studies?
Sure Yigal. Clinical trial stock up is not updated in real time, and so whenever we make changes it’s not necessarily indicative of when things actually occurred. And secondly, as you mentioned, the read-outs, the pivotal read-out for CARDINAL is week 52 and for MOXIe it’s not week 24, its week 48, and so as of right now we’re sticking with our guidance of having pivotal read-outs for both trials in the second half of this year.
And then the more general question around some of the competitive dynamics with respect to ADPKD, obviously the Otsuka drug Jynarque seems to be launching exceptionally well and it has a, I would characterize it as a very modest benefit. So I’m just curious what you’re assuring and I totally accrue your [KOL] network regarding receptivity for that PKD drug and more specifically what were you learning about the PKD market that could be helpful to you as you move through the phase 3 and start to put together a commercial value proposition for bardoxolone and PKD?
Sure. So I think that the general [KOL] community is encouraged that there is now a first treatment for patients with PKD. I would say its dependent to - the level of enthusiasm is dependent upon particular nephrologist and so those who participate in the clinical trials appear to be using more so than physician who are not in these clinical trials and so most of the expenses that we’re targeting for our FALCON pivotal trial are not actively using Tolvaptan. So I’m sure you’re aware there’s over 100,000 patients diagnosed with PKD and so even though the numbers are quite good for Tolvaptan, the actual number of patients on the drug are relatively small. But we can step back and think about that drug competitively versus bardoxolone, we do not use them as competitors and so the FALCON trial will be the only ongoing pivotal trial in ADPKD that allows patients to be on background Tolvaptan once their mechanism is really different, and so we think that early broad acceptance at least in a subset of these patients with Tolvaptan is encouraging for a potential uptake of bardoxolone.
Hi Yigal, this is Warren. I just had one general comment, and I think it just shows that there’s been so little development for any of these severe or rare forms of CKD that it suggests that there’s going to be significant uptake for any meaningful new therapy. These patients have had nothing but blood pressure medications, there were even no novel mechanism for decades. There’s just a huge unmet need here.
And our next question comes from Adam Walsh with Stifel. You may proceed.
I just got a couple of quick ones, the first one is on ADPKD, maybe you can just discuss the gaining factors to initiate the pivotal trial in the mid-year and then also compare and contrast the trial design that you’re thinking about to be pivotal CARDINAL trial that’s ongoing now. And then just as one other, in terms of Dr. Geoff Block joining the company, can you speak to his early outreach to nephrology community and how you would expect that to ramp and playout overtime?
The gaining activity to starting our FALCON trial ADPKD is the same as any of our trials, and so it starts with obviously design, meeting with regulators, receiving feedback, which we already have, and now it’s just execution operationally, and so identifying all the sites or heavily leveraging our existing work of nephrology sites in the US and globally and so all that is underway. Obviously kits where drug supply has to be made and packaged soon at the sites and contracting at all the local investigators for the (inaudible) and obviously at quarter views and so statutory standard and we do that obviously with all of our trials, and so we’re on track to initiate dosing mid-year, and so that’s all going very well.
As far as comparing and contrasting as a design of FALCON to the ongoing CARDINAL trial on Alport syndrome, they are very similar. So the total duration is the same, so two years with a one-year critical read-out that could support accelerated approval using the same eGFR based end points. The eligibility criteria are similar in the same eGFR range of 30 to 90. There’s a slight difference on how we define eGFR eligibility for FALCON that heavily mirrors the price study of Tolvaptan. We simply ensure that patients with eGFR as the higher end and those patients have been actively progressing and documented loss of eGFR 2 ml per minute per year prior (inaudible) entry, other than that they are very similar obviously with background Tolvaptan being allowed there is some language ensuring that those patients were able to tolerate Tolvaptan before they enter our trial. And so overall, its uses the same basic design, same titration schedule, same visit schedule and it leverages once again our operational knowhow in CKD.
And then lastly, to address your question about Geoff Block joining; so he’s been fantastic between our VP of Medical affairs and myself and Geoff, we have relationships with many if not most of the notable global KOLs and so it’s been a pleasure having joined our team and extending relationships that we previously did not have. And so we see our enthusiasm obviously with him joining as he’s treated approximately 50 patients in clinical trials dating back several years and so he has first-hand experience with the drug and it provides a pretty compelling rationale for others to actually join our programs.
And our next question comes from Maury Raycroft with Jefferies. You may proceed.
For CARDINAL and PHOENIX, you guys break out patients by greater than 300 AGR and less than 300 AGR and those patients get different doses maxing out at 20mgs or 30 mgs. I’m just wondering if you are commenting on any efficacy difference on eGFR based on the different max doses there.
We have not seen any meaningful differences in eGFR change based on max dose. In prior trials we had the same max dose, since it’s a 20 mg there was a difference. We also noted this in a dose ranging trial that we conducted before BEACON, where at a given dose patients with higher loss of proteinuria have lesser response. We believe this is likely due to a few factors which includes the patients have a lot of proteinuria and so more information it probably need more proteinuria to suppress a little or large amount of proteinuria. We also believe that if patients high levels of proteinuria they probably have more fibrosis, and so there is potentially less capacity for those patients to show an acute improvement, and then lastly our drug is heavily protein bound and there appears to be lower exposures in patients with higher levels of proteinuria because more of the drug is lost in the urine when patients are excreting high levels of protein. So for all those reasons we conducted a series of analysis from our BEACON trial so also our current trial and simply identified that if we were able to ratchet the patients with higher levels of proteinuria up to a higher dose they should have a similar effect and that's being borne out in our ongoing trials, both CARDINAL and PHOENIX. And for that reason we don't break it out, but we see similar efficacy regardless of (inaudible) status.
So you don’t anticipate that variable playing to the B3 CARDINAL setting at all.
No, and in fact we think its favorable, and that we now see similar efficacy across the different groups.
The other question was just on, if you can provide a status update with the relationship with Kirin and as far as the AYAME study goes, the phase 3 AYAME study, I’m seeing its up and running but only one side is posted on clinicaltrials.gov as of December 12. Any comments on how Kirin anticipate rolling out that study and will it only be recruiting in Japan or will it be recruiting in other regions as well?
I’ll comment on the relationship and then let Colin comment on the AYAME program. Our relationship with Kirin has been excellent, as you know they have got commercial and development rights to bardoxolone in Japan and Southeast Asia. They have been very supportive to us in conducting the CARDINAL trial as well as the CATALYST trial in PAH and as you question they are conducting their own pivotal phase 3 study in diabetic nephropathy in AYAME. Colin you want to comment on their status?
Sure. And I think similar comments before and their clinicaltrials.gov is not actively updated by many and now it appears to be the same for KHK. They began enrolling their trial in the second quarter and I don’t believe they’ve commented publicly on the status, but they’re making great progress. So I think they estimate that they will have data in the first half of 2022, and gives Japan the only trial that we’ve been working real closely with them.
Notably they are cooperating, they now newly validated end-to-end points for large CKD studies including 30% decline in eGFR
And our next question comes from Brian Skorney with Baird. You may proceed.
This is Jack dialing on for Brian. I was wondering if you could go in to a little bit of detail with respect to plans to build out a sales force around bardoxolone as we come to the pivotal trial readouts of the CARDINAL study in the second half of this year?
As you can see we’ve been adding our commercial leadership. We brought in a while ago our Chief Commercial Officer, Dawn Bir who launched IMBRUVICA in the United States for Pharmacyclics and Dawn’s been putting the key members of senior team in place. And I think as you know we’ve retained a 100% of the commercial rights for the CKD applications of bardoxolone in the United States and we plan to build a specialty sales force directly targeting the nephrology community, and we’ve been really working on all the front to prepare for that launch. We’ve been doing market assessment of kind of the current deals, we’ve made progress in terms of our payer plan, preliminary work has been done on the sale force sizing and how we will stage that all as well.
And our next question comes from Charles Duncan with Cantor. You may proceed.
I had a question on bardoxolone and then a follow-up on omaveloxolone. The first is bardoxolone, I’m just kind of wondering when you think maybe a premature question, but when you think about Tolvaptan and its clinical benefit as well as specifically the patient that its approved for, is that a good metric in terms of considering potential pricing for bardoxolone, or do you think that there are call it, different drivers to clinical value in which you anticipate mechanistically as well as potentially a clinical benefit out of bardoxolone to drive kind of different levels of pricing. Now I’m not really asking you about pricing, I’m asking you about pharmacoeconomic value so far for bardoxolone.
I think Charles Tolvaptan it is a good benchmark, but as you alluded to the profile is very distinct between Tolvaptan and bardoxolone. The mechanism is completely different, so we do not view Tolvaptan as competitor, but when you think about the efficacy profile in the pivotal trial reprise which serves as the basis for approval here in the US for April of last year in the one year trial the retained benefit was about 1.27 ml per minutes. Our placebos were down about 3.6 ml per minute and Tolvaptan patients were down about 2.4, and so they were still down from baseline.
And interestingly when the patients were on Tolvaptan before the drug was withdrawn, they were actually doing more spend placebo. And so in the context of bardoxolone what we’ve in our trials is that it increases and improves GFR when patients are on drug and we’ve seen that that’s been durable for the longest duration we’ve tested which is actually after about two and a half years of one of our trials. (inaudible) the portion of that affect is retained and its above baseline and so it’s a very different paradigm. We believe bardoxolone at least in the trials we’ve tested so far on average has halted if not recovered progression from patients versus slowing progression across the population.
So from efficacy perspective its very different, and then from a safety perspective since our BEACON trial and we’ve figured out how to appropriately use our drug, using (inaudible) based design and following patients carefully and its had a very good safety profile without any major safety signals or tolerability issues. And so we see it as a different profile from Tolvaptan which in some patients is not more tolerated because of the large amount of [mockery] due to the mechanism of that drug. So overall we agree with you, so it’s a very different paradigm. We won’t comment specifically on pricing except to say it serves as a good benchmark.
That’s helpful, and it sounds like there are a lot of other considerations when you go to set pricing in terms of creating pharmacoeconomic value for that drug. Let me ask you another question regarding omaveloxolone, at least where you’ve got a lot of patient experience with bardoxolone, but I guess my question is, on omav fast forwarding to possibly positive data late in the second half it seems like on omav, is that necessary and sufficient to drive an NDA for omav? And then secondarily back to the question and I think someone was partially asking that is the commercialization strategy on the omav, do you think that your salesforce will be able to accommodate both drugs or would there be a separate sales force for omav?
Charles I’ll come along on both of those. We’ve perceived guidance obviously from the FDA that they designed part 2 of MOXIe could support approval in Friedreich’s Ataxia for omav if positive. And we’re in the process of conducting the additional work around omav to support NDA submission if the study is positive. I neglected to mention in the prior question that we have similar commercial activities of running for Friedreich’s Ataxia and while the senior leadership of the commercial team would obviously be the same for both application, the medical affairs functions and the commercial sales functions would definitely be separate. We would need a separate sales force targeting the neurology community for omav and would not see the same force representing the two product in the two different specialties.
[Operator Instructions] And we have a question comes from Matt Kaplan with Ladenburg Thalmann. You may proceed.
We’ve been spending a lot of time on bardoxolone, I just wanted to zero in a little bit more on omaveloxolone, given the phase 3 readout later this year. Can you give us a sense in terms - just remind us in terms part 2 of the MOXIe study, what we’re looking for in terms of the change and the (inaudible) for this patient population, (inaudible) patients in the study and how its powered?
Sure Matt, the modified FARS score is the primary end point of the trial and the modified FARS is a neurological exam that’s used by the neurologist. You see these patients detract their progression. There is a large amount of data generated in a natural history study that’s enrolled a few thousand patients and track these patients for up to 10 years to demonstrate how these patients progress in terms of their modified FARS scores. What’s known is that these patients typically progress at a rate of about 1 to 2 points annually. And so we’ve powered our trial to be able to check what we think is a clinically meaningful change, which is about 1.2 points, and so assuming that this variability is in line with our expectations and if we 1.2 difference, the trial should show statistical significant and that would represent approximately 6 months or one year of progression for the patient.
And then in terms of omaveloxolone beyond Friedreich’s Ataxia, what are your thoughts now in terms of other indications potentially for that compound?
Sure. There are a few different settings, they all basically underline omav’s effect on mitochondrial functions. One of those which is fairly obviously to other forms of Ataxia and so that would be a natural setting to seek. But there is a whole series of other neurologic conditions many of which are rare, with new improved drugs where mitochondrial functions has been shown in to the (inaudible). We have data from patient biopsies showing that (inaudible) omav can rescue mitochondrial function. We also have a (inaudible) biopsies from Parkinson’s disease that omav can rescue mitochondrial function. We also have very intriguing in various epilepsy models pre-clinically that’s (inaudible) striking. And so there’s a series of indications that we’re currently (inaudible) but there are many, just like in the nephrology space with bardoxolone. There are many different forms of neurological disease that have a common basically pathogenesis of mitochondrial dysfunction that we think omav could affect.
Ladies and gentlemen, this now concludes our Q&A portion of today’s call. As a reminder, an audio recording of today’s webcast will be available shortly after the call today on Reata’s website at reatapharma.com in the investor section. Ladies and gentlemen, thank you for attending todays call. This now concludes our program, and you may all disconnect. Everyone have a great day.