What happened

Shares of Reata Pharmaceuticals (RETA) had soared 11.8% higher as of 11 a.m. ET on Tuesday. The big gain came after the drugmaker provided its third-quarter update prior to the opening of trading.

Reata reported Q3 collaboration revenue of $540,000 and a net loss of $79 million, or $2.16 per share. However, investors didn't focus on the company's financial results. Instead, the big news in the update related to the company's recent meeting with the Food and Drug Administration (FDA) about the review process for omaveloxolone as a potential treatment for patients with the rare genetic disease Friedreich's ataxia. 

The FDA didn't request any additional data. The agency confirmed that it doesn't currently plan to convene an advisory committee meeting to review Reata's New Drug Application (NDA) for omaveloxolone. Also, it told the company that no issues related to risk management have been found so far in the review.

So what

Does all of this mean that FDA approval for omaveloxolone is a slam dunk? No. However, it's certainly encouraging that the review process appears to be moving along well.

The FDA did tell Reata that a drug-drug interaction clinical study will probably be required. But this wouldn't prevent omaveloxolone from potentially winning approval. Overall, the news was positive. It's understandable why the biotech stock rose in response.

Now what

Reata said that the PDUFA date for the FDA's decision on omaveloxolone is now Feb. 28. This date reflects a three-month delay resulting from the company submitting additional data and analysis to the agency. Reata is already gearing up for a commercial launch of the drug as a treatment for Friedreich's ataxia, pending approval. It also plans to file with the European Medicines Agency for approval of omaveloxolone this year.