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Why Reata Pharmaceuticals Stock Is Skyrocketing Today

By Eric Volkman - May 19, 2021 at 2:34PM

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The company might soon be taking a very big step toward FDA approval of an important pipeline drug.

What happened

As of midafternoon Wednesday, shares of Reata Pharmaceuticals (RETA 0.29%) were up by a whopping 22.7%. That was on the back of very promising news on the regulatory front for the clinical-stage biotech.

So what

Reata disclosed that it received a notice from the Food and Drug Administration stating that a pre-New Drug Application (NDA) meeting is the most appropriate forum to discuss the company's omaveloxolone. This is a drug candidate that treats Friedreich's ataxia, a genetic disease that can cause difficulty in walking and impaired speech, among other effects.

Patient conferring with a doctor.

Image source: Getty Images.

The regulator has three types of meetings for discussing investigational drugs with applicants: A, B, and C. In the FDA's words, a Type A meeting is when "needed to help an otherwise stalled product development program proceed." Type B covers end-of-clinical-trial-phase discussions and pre-NDA talks. Type C is a catchall for meetings not covered by the other types.

Reata had requested a Type C meeting, so the FDA's notice could represent a big step toward potential approval for omaveloxolone. The biotech said it will follow the regulator's suggestion to withdraw its current request for a Type C meeting, and file one for a pre-NDA meeting "as soon as practicable."

Now what

Friedreich's ataxia is a rare disease that has no known cure; there is also no drug approved to treat it. Omaveloxolone has performed well in clinical trials, so if approved it will be a real advance in the fight against the disorder -- not to mention a boon for Reata.


Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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