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The 2 Nasdaq Biotech Stocks to Watch Thursday

By Dan Caplinger – Dec 9, 2021 at 9:00AM

Key Points

  • The Nasdaq gave up a bit of ground Thursday morning after huge gains earlier in the week.
  • Aurinia Pharmaceuticals saw a nice rise after positive news for its lupus treatment.
  • Shares of Reata Pharmaceuticals plunged further, adding to losses on Monday on an adverse vote from an FDA advisory panel.

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The market is getting close to new highs again, but choppy performance is likely.

After three days of strong gains, Wall Street looks ready to take a bit of a break. Thursday morning brought modest pullbacks in most major stock indexes, as market participants turn their attention to economic data over the next couple of days to guide their longer-term strategies. As of 8:15 a.m. ET, futures on the Nasdaq Composite (^IXIC) were down 54 points to 16,338, giving back just a small portion of the index's advance since early Monday.

Biotech stocks have been a key driver of the Nasdaq's advance over the past year and a half. These stocks are notoriously volatile, because news can lead to big gains or gut-wrenching disappointment. Investors are seeing a bit of both Thursday morning, as Aurinia Pharmaceuticals (AUPH -2.57%) and Reata Pharmaceuticals (RETA -0.02%) just released information that sent their shares moving. Below, we'll talk about both biotechs and which one is moving higher.

Researcher looking through a microscope in a lab.

Image source: Getty Images.

Aurinia gets confirmation

Shares of Aurinia Pharmaceuticals were up more than 9% Thursday morning. The Canadian biopharmaceutical company got good news in its continuation study of a key treatment.

Aurinia concentrates on autoimmune disorders, and its Lupkynis treatment has already received approval from the U.S. Food and Drug Administration (FDA) for treating patients with active lupus nephritis, a serious complication that many patients with lupus suffer. Aurinia has been conducting a continuation study, dubbed Aurora 2, to study the long-term safety and tolerability characteristics of taking Lupkynis.

The study results were encouraging. Over 36 months, efficacy levels for the treatment remained stable, and no unexpected safety signals arose. Adverse events were comparable between the control group and study participants who received Lupkynis, and measurements of protein levels in urine samples were lower in those receiving the drug throughout the three-year period.

With up to half of lupus sufferers expected to develop lupus nephritis, having a treatment that patients can take for an extended period without adverse effects is crucial. It now appears that Lupkynis could be that treatment option, and investors in Aurinia are pleased at the outcome, especially to the extent it might feed acquisition rumors going forward.

Reata gets bad news

Elsewhere, shares of Reata Pharmaceuticals took their second big hit of the week. After falling 38% on Monday, the biotech company's stock was down almost 40% more in premarket trading Thursday morning.

Reata announced late Wednesday that an FDA advisory committee had voted against recommending approval for its bardoxolone treatment for patients suffering from chronic kidney disease as a result of Alport syndrome. Specifically, the panel said that evidence provided by Reata failed to demonstrate that bardoxolone is effective in slowing the progression of kidney disease in Alport patients and that the benefits of the treatment outweigh its risks.

As Reata noted, the FDA isn't required to agree with the decisions of advisory committees, so this isn't a full-blown rejection of bardoxolone. Nevertheless, the news came as a shock for Reata shareholders, even though the early release of some briefing documents related to the advisory committee meeting had led to Monday's drop in the stock.

With few treatment options for Alport patients, Reata had been more optimistic that regulators would give bardoxolone positive consideration. Now, the company will work closely with regulators to try to appease concerns and provide additional data. The FDA is expected to make a final decision by late February 2022, and until then, Reata shareholders will have to wait to see if the company can turn an early no into a yes.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns and recommends Reata Pharmaceuticals, Inc. The Motley Fool has a disclosure policy.

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