What happened

After reporting encouraging midstage trial results for a drug in development for rare forms of chronic kidney disease (CKD), Reata Pharmaceuticals (NASDAQ:RETA) saw its shares soar 65% higher on Monday.

So what

Last year, Reata Pharmaceuticals reported intriguing 12-week data for bardoxolone in Alport syndrome, a rare genetic disease that increases the reabsorption of protein in the kidney, causing inflammation and fibrosis.

A person arranges cut up pieces of paper into an upwardly ascending arrow.

Image source: Getty Images.

At the time, management said that over 80% of patients saw a clinically meaningful improvement in estimated glomerular filtration rate (eGFR). On Monday, updated data was unveiled showing that bardoxolone's benefit persisted for 48 weeks. The company also announced that eGFR after a four-week discontinuation period provided evidence that bardoxolone may delay or prevent kidney failure in these patients.

The potential to delay kidney failure is particularly interesting because the Food and Drug Administration has shown a willingness to award accelerated approval to kidney cancer drugs targeting rare causes, if evidence of delay after a long treatment period is witnessed.

The company also reported data today from one cohort of patients in a separate phase 2 trial evaluating bardoxolone in multiple, rare CKD indications. Specifically, bardoxolone improved eGFR in patients with autosomal dominant polycystic kidney disease (ADPKD), suggesting it may work in patients with other rare forms of CKD, too.

Now what

A 150-person phase 3 trial in Alport syndrome is enrolling, and data from that study is expected in the second half of 2019. If one-year data from this trial is similar to what's been observed in the phase 2 trial, management thinks it could secure an early OK from regulators. A full OK could be granted following two-year data.

A success would be welcomed because there aren't any FDA-approved treatments on the market for Alport syndrome yet. The Alport Syndrome Foundation estimates between 30,000 to 60,000 patients in the U.S. have Alport syndrome, and most of those patients will develop CKD. However, bardoxolone's addressable market could be much bigger than that. According to Reata management, the total population of people with the rare forms of CKD it's studying in its trials exceeds 700,000.

There's a big commercial opportunity in CKD, but some caution may be wise. The Alport syndrome trial involved only 30 patients, and the ADPKD trial only enrolled 31 patients. Proving bardoxolone is safe in more patients will be important because a high rate of cardiac adverse events were observed in a 2,000-patient CKD study that temporarily derailed bardoxolone in 2012. Reata's using a risk mitigation program to screen patients for its Alport syndrome trial and, so far, there haven't been any concerning safety signals observed. But only time will tell if that clean safety profile holds up.