Reata Pharmaceuticals (RETA) apparently received approval from the Food and Drug Administration late Tuesday for the treatment of neurological disorders. RETA shares skyrocketed, nearly tripling in value in after-hours trading.
Late Tuesday, the FDA dropped the label for Reata’s Skyclarys, formerly called omaveloxolone. While there’s no formal announcement yet, the label’s posting is seen as a sign of approval.
At least one analyst viewed the approval as a coin, assigning a 50% chance that the drug now called Skyclarys would pass the FDA.
Skyclarys treats Friedreich’s ataxia. Patients with this neurological disorder experience progressive difficulty walking.
The approval is based on a phase 3 trial called Moxie. Patients treated with Skyclarys showed statistically significant improvements in symptoms after 48 weeks. Usually, however, the FDA requires two late-stage placebo-controlled trials for drug approval.
RETA shares rose 189% in late trading after initially being halted. The shares hovered around 91.
In today’s stock market, RETA stock ended the regular trading session up 1% on 31.17.
RETA Stock: Reverberations in Neuroscience
Shares of Reata slipped Monday after news of Billy Dunn’s retirement. Dunn headed the FDA’s Office of Neuroscience.
Dunn was known for helping with the expedited adoption of biogenAduhelm’s (BIIB) controversial Alzheimer’s treatment. Aduhelm succeeded in one final phase examination, but failed in the other.
RBC Capital Markets analyst Brian Abrahams said Dunn’s retirement “could reverberate throughout the space”.
“In general, we believe that the loss of a more permissive, industry-friendly voice is a long-term negative, although there should be some degree of continuity in the short term that limits the effects,” he said.
Similarly, SVB Securities analyst Joseph Stringer noted that the decision around Reata’s Skyclarys probably came before Dunn’s departure. Teresa Buracchio, who had been acting deputy director of the Office of Neuroscience since November, succeeded Dunn.
Stringer maintained its market performance rating on RETA stock prior to the approval.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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