Reata shares hit 1-year high after surprise FDA nod for rare disease drug (updated)

Reata Pharmaceuticals

01/03/2023 15:19

(Updates with regular hour moves, adds analyst comments)
       March 1 (Reuters) - Shares of Reata Pharmaceuticals Inc
 RETA.O  soared 175% to hit a one-year high in early trading on
Wednesday, after the U.S. Food and Drug Administration (FDA)
approved its rare disease drug and ended years of uncertainty
over its future.
    The U.S. biotech firm's shares jumped to $86, their highest
since December 2021. With 3.3 mln trades — three times the
50-day moving average — the stock was also among the highest
percentage gainers across U.S. exchanges.
    Reata's drug Skyclarys is the first approved treatment for
Friedreich's Ataxia, a rare genetic disorder that causes
progressive damage to the nervous system and can lead to
premature death. It is also the company's first approved
product.
    The nod follows years of back and forth between Reata and
the FDA. In 2020, the regulator had said the data from a
mid-stage trial was not enough to support an approval. In 2022,
the FDA extended its review after Reata submitted more analyses.
    SVB Securities' analyst Joseph Schwartz viewed the approval
as a surprise, given the agency's past concerns, and said the
nod is similar to the "contentious and largely political"
approval of Sarepta Therapeutics'  SRPT.O  muscle disorder drug
Exondys 51 in 2019.
    The FDA has previously approved drugs for neurological
conditions based on limited data such as for Biogen Inc's
 BIIB.O  Alzheimer's drug Aduhelm and Amylyx's  AMLX.O  ALS drug
but those were made under the leadership of Billy Dunn, who
resigned from the agency on Monday.  
   Reata's shares had tumbled 30% following Dunn's resignation
as investors had fretted about the possibility of approval under
a new division head.
    "We've followed some pretty dramatic stories in the past,
but the Reata odyssey is in the Hall of Fame," said Baird
analyst Brian Skorney. 
    The company has priced the drug at a wholesale acquisition
cost of $370,000 annually.

 (Reporting by Aditya Samal in Bengaluru; editing by Shweta
Agarwal and Uttaresh Venkateshwaran)
 ((Aditya.Samal@thomsonreuters.com;))