What happened

Reata Pharmaceuticals (RETA) was having a terrible Tuesday, with its stock trading down by nearly 17% in late afternoon action. It scored earnings beats in its second quarter, but there was one notable cause for concern.

So what

After market hours on Monday, Reata published its second-quarter earnings. Revenue for the developer of drugs for rare diseases fell by 28% on a year-over-year basis to $2.22 million. Net loss for the period was $72.7 million, or $2 per share, a bit deeper than the year-ago deficit of $67.6 million.

Gloved and masked medical researchers using microscopes in their work.

Image source: Getty Images.

On average, though, prognosticators following the biotech were expecting worse. The average analyst projection for revenue was $1.25 million, and for per-share net loss it was $2.08.

That apparently positive news was tempered by Reata's accompanying update on its current clinical programs. While its omaveloxolone, a drug aimed at genetic disorder Friedreich's Ataxia, will happily be the subject of a pre-New Drug Application meeting with the Food and Drug Administration at some point this quarter.

On the down side, Reata said that regarding bardoxolone -- targeting a form of chronic kidney disease (CKD) -- "the FDA identified four significant clinical and statistical review issues for us to address."

Now what

This doesn't necessarily mean the end of bardoxolone; Reata believes that "each of the identified issues is addressable with additional data and analyses." Still, biotech investors are a grumpy bunch when a program triggers regulatory concern. Perhaps, then, this gives some room for Reata bulls to invest in the company on the cheap.