What happened

Monday was one of the worst days in the history of Reata Pharmaceuticals' (RETA) stock. After trading in the shares was halted in the morning due to volatility, they closed the session down by nearly 38%. There was good reason for the volatility, and for that monster price slide.

So what

This was all triggered by a briefing document the Food and Drug Administration (FDA) released concerning bardoxolone methyl, Reata's chronic kidney disease drug candidate. On Wednesday, there's a meeting scheduled during which an FDA Advisory Committee is to discuss the company's New Drug Application for the treatment.

A scientist working on a lab sample.

Image source: Getty Images.

In the document, the FDA cites numerous concerns about Reata's filing. It seems particularly concerned about the clinical data on the estimated glomerular filtration rate, which is an important measure of kidney functionality. It also happens to be the primary endpoint of Reata's latest clinical trial on the medication.

The biotech filed its NDA at the beginning of March, supported by efficacy and safety data from a phase 3 clinical trial. The study aimed to judge the viability of bardoxolone in treating chronic kidney disease caused by an affliction called Alport Syndrome.

Now what

Reata hasn't yet formally responded to the FDA's briefing document. The regulator's worries on their own don't make for  surprising news -- in August, the company admitted that the FDA had pointed out four specific issues that it needed to address in its submission. Yet Reata said that these concerns would be "addressable with additional data and analyses." Monday's vertigo-inducing price swoon seems to indicate otherwise.

Analysts following the stock have taken note. Baird's Brian Skorney chopped his price target on the stock from $212 per share to $110 per share. (He is, however, maintaining his outperform -- i.e., buy -- recommendation on it, which makes some sense given that it closed Monday at less than half his new target price.)

Annabel Samimy of Stifel (SF -1.53%) rather understated the case in a new research note in which she wrote that the FDA is "taking a rather negative tone" on the bardoxolone NDA. Nevertheless, Samimy remains bullish on the stock, and is maintaining her $240 per share price target and buy recommendation.