Reata Pharmaceuticals Inc (RETA) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Reata Pharmaceuticals Fourth Quarter and Full Year 2020 Financial Results and Update on Development Programs Conference Call. An audio recording of today's webcast will be available shortly after the call today on Reata's website at reatapharma.com in the Investors section.

Before the company proceeds with its remarks, please note that forward-looking statements disclosed in the company's press release. The company will be making forward-looking statements on today's call, and there are many factors that could cause results to differ from expectations, including those noted in the company's SEC filings. Today's statements are not guarantees of future outcomes.

Please also note that any comments made on today's call apply only as of today, March 1, 2021, and may no longer be accurate at the time of any webcast replay or transcript rereading. Following the prepared remarks, we will open the call up for questions.

Following the prepared remarks, we will open the call up for questions. We ask that you please limit yourself to one question so that we can accommodate as many questions as possible.

We are joined today by the company's Chief Executive Officer, Warren Huff; Chief Research and Development Officer, Colin Meyer, Chief Operating and Chief Financial Officer, Manmeet Soni.

At this time, I'd like to turn the conference call over to Warren Huff, Chief Executive Officer of Reata.

Thank you. Good morning, everyone, and thank you for joining us today. We have a full agenda of information to share, and I'll begin with our most recent updates, starting on Slide 4.

I'm pleased to report that Reata submitted its new drug application for bardoxolone in Alport syndrome. The completion of our NDA follows from the positive Phase III year 2 data we reported just 3.5 months ago. This marks a major milestone for our company. It's the first NDA Reata has submitted in its history. More importantly, this NDA marks a major milestone for Alport syndrome patients who have a devastating disease for which there is no approved therapy.

On behalf of everyone at Reata, I extend my deepest thanks to the patients who participated in our clinical trials and also their families. As a serious genetic condition, Alport syndrome can have far-reaching effects on the families who face it. For them, most of all, we're committed to seeing the regulatory process through to completion.

As you'll see from our Reata At A Glance slide, we have a number of updates to share today beyond the submitted NDA. Among other topics, we'll highlight the progress of the FALCON study of bardoxolone in autosomal dominant polycystic kidney disease. I'm very pleased with the momentum we see in FALCON enrollment across sites worldwide. Colin will walk through those details. He'll also discuss the MERLIN trial of bardoxolone in rapidly progressing forms of CKD.

Continuing with recent updates, I want to acknowledge the patient petition that we received from the Friedreich's ataxia community a few weeks ago. More than 74,000 Friedreich's ataxia patients, their families, physicians, researchers and others came together to express their desire for a regulatory path forward for omav.

As you know, we issued a response to the petition in which we emphasized our hope to be able to advance omav further through the regulatory process, pending direction from the FDA. We've requested a Type C meeting to carry the discussion forward. At that meeting, we plan to present additional 72-week data that we believe supports omav's potential as a disease-modifying therapy in Friedreich's ataxia. Colin will offer a top line overview of these data as part of his comments on this call. He'll also offer insights into work underway to develop additional assets in our expanding neurology portfolio.

I want to emphasize the strength of our company's position as we move further into 2021. The onset of the COVID-19 pandemic in 2020 imposed significant challenges for Reata at a crucial interval. Our company's mission, to develop therapies that can change patients' lives for the better, will continue to fuel us on the road ahead.

Colin will now discuss updates to our development pipelines.

Thanks, Warren. I'll provide a top line review of progress in our development programs last year, followed by a review of updates for our FALCON trial in ADPKD, our MERLIN trial in CKD patients at risk of rapid progression, the regulatory status of omav and FA and an update on RTA 901.

As we've discussed previously, Alport syndrome is the second most common hereditary form of CKD, which is caused by mutations and collagen that promote inflammation, fibrosis and loss of kidney function. The misdiagnosis rate has been reported to be as high as 62%. And due to the rapid loss of kidney function, patients have a high likelihood of kidney failure. In the most severe forms of the disease, patients have a 100% (inaudible) of kidney failure with a median age of kidney failure of 25 years.

As shown in the next slide, our NDA contains data from 3 separate Alport syndrome trials that contain just under 200 unique patients, including the Phase II and Phase III CARDINAL studies as well as the ongoing EAGLE open-label extension study that is continuing to accumulate data. The EAGLE extension study allows patients who complete CARDINAL to receive open-label bardoxolone until the drug is commercially available. At this time, we have enrolled 100 patients in the EAGLE extension study.

Next slide. Unlike most rare disease development programs that contain a relatively small data set, based on the extensive development history, our NDA contains data from multiple clinical trials and disease states that have enrolled over 3,000 patients, which support Alport syndrome NDA. We have shown improvements in kidney function, as measured by estimated GFR or eGFR, measured GFR and creatinine clearance, demonstrating that the changes in eGFR represent as assessed by (inaudible), represents a true change in kidney function.

We have shown reductions in inflammatory biomarkers, supporting bardoxolone's anti-inflammatory mechanism of action. We have observed sustained improvements in eGFR for up to 3 years in Alport syndrome patients.

Prior to our Alport syndrome trials, we have shown sustained improvements in eGFR for 1 year and significant improvements in off-treatment eGFR in 2 prior trials. In the CARDINAL Phase III and a prior diabetic CKD trial, we observed a reduction in the risk of kidney failure outcomes.

Next slide. Chronic inflammation is integral to progressive decline of kidney function associated with numerous forms of chronic kidney disease, or CKD, including Alport syndrome. Cone inflammatory stimuli, such as (inaudible), increase the production of ROS, resulting in glomerular (inaudible) dysfunction, pathogenic (inaudible) cell contraction and impaired podocyte function. These effects reduce the glomerular surface area for filtration, or CSS, which in turn reduces single Nephron GFR.

In addition, chronic inflammation drives kidney remodeling by activating NF (inaudible) , TGF-beta and other profibrotic mediators. Over time, these chronic processes result in the complete loss of function of individual nephrons.

Nrf2 is a transcription factor with anti-inflammatory and tissue protector effects that is suppressed in many forms of CKD. Genome-wide analysis from kidney biopsies across 9 different forms of CKD validate the association between impaired Nrf2 activity and reduced kidney function across multiple forms of CKD, including Alport syndrome.

Next slide. We have conducted a large number of nonclinical studies to elucidate the mechanism of action bardoxolone, which is novel. Our academic collaborators and we have conducted sophisticated imaging experiments in living animals to demonstrate that bardoxolone acutely increases single (inaudible) GFR by restoring the filtration surface area in the kidney, reversing inflammation via construction. We have shown that this effect is not associated with any changes in (inaudible) tone, demonstrating that this effect is not associated with increases in intracameral pressure or hyperfiltration.

Lastly, we have demonstrated that bardoxolone methyl has anti-fibrotic effects and improves kidney structure and function in response to pressure overload and multiple classical animal models of CKD caused by hydro filtration, hypertension, high protein, diabetes and dyslipidemia.

Next slide. Turning to supportive upward syndrome specific clinical data that are contained in the NDA, recall that the Cardinal Phase III study was a randomized, double-blind, placebo-controlled 2-year trial.

The trial enrolled a broad range of patients with eGFR from 30 to 90 ml per minute and age from 12 to 70 years. The primary endpoints were the on-treatment changes in eGFR at week 48 and 100 and the key secondary endpoints were the off-treatment eGFR changes at weeks 52 and 104. We believe the on-treatment changes in eGFR represent the full clinical benefit of bardoxolone, and the off-treatment changes were included to determine that bardoxolone's EGFR profile is consistent with disease modification integral to (inaudible).

As shown on the next slide, and previously discussed, CARDINAL met it's primary endpoints, demonstrating large, clinically meaningful improvements in on treatment eGFR with significant p-values. It is important to recognize the distinction between the ITT and the MITT populations. The ITT analysis includes all available eGFR values from all patients even if they discontinue drug. This is a very conservative analysis since it is diluted by patients who discontinued drug and are no longer benefiting from the drug.

To understand the treatment effected by bardoxolone, while patients are actually receiving drugs, we prospectively defined the MITT population, which excludes eGFR values once patients discontinue bardoxolone. In clinical practice, when patients are receiving bardoxolone, the MITT eGFR improvement is likely most representative of the actual clinical benefit.

As we discussed during our last call, the MITT eGFR change over time in the second year separated for the bardoxolone patients compared to the placebo patients.

As you can see on the next slide, all prespecified subgroups favored bardoxolone. We observed a treatment effect in pediatric patients, adults, males, females, patients with high and low proteinuria across the eGFR range study, in all major genetic subtypes and on top of standard of care ACE inhibitors (inaudible).

As shown on the following slide and previously discussed, CARDINAL also met its key secondary off-treatment endpoints, the persistent significant increase in eGFR, following wash out, observed twice in CARDINAL provides evidence that the on-treatment eGFR improvement is consistent with a beneficial and not harmful profile. While we believe the on-treatment effect represents the clinical benefits, the off-treatment improvements demonstrate disease modification. This off-treatment endpoint was previously used to support the approval of Tolvaptan for ADPKD.

Next slide. Due to the relatively small size of the CARDINAL trial, which was conducted in a rare disease population, it was not powered to show a difference in the off-treatment eGFR from year 1 to year 2. Additionally, the patients included in each analysis are slightly different due to dropouts, so these independent endpoints aren't directly comparable.

To understand the relationship between the off-treatment change after year 1 and 2, we performed a longitudinal off-treatment eGFR slope analysis. This effectively uses pair values from patients to generate individual slopes. These are then used to estimate the population for each treatment group.

As you can see in the figure, the dotted lines represent the off-treatment slopes and shows a 50% slower slope for bardoxolone. This suggests that bardoxolone is slowing disease progression by 50%.

As I mentioned earlier, bardoxolone has a novel mechanism of action, and sustained increases in eGFR have not been observed in CKD studies with any other intervention. The one intervention that has been shown to increase eGFR, amlodipine, does so by increasing pressure, causing hyperfiltration.

In the African-American Study of Kidney Disease, also known as AASK, the initial eGFR increase was small and transient The increase in eGFR was only 4 mL per minute and peaked at 6 months of treatment. After this time, eGFR declined quickly and more rapidly than was observed in the other treatment groups.

We performed a quartile analysis by eGFR change at week 12 in CARDINAL to determine what happens to the patients who have the largest acute changes in eGFR after 2 years of treatment. As you can see in the table, the quartile with the largest eGFR change had a very large increase in eGFR of 27 mL per minute at week 12. And after 2 years of treatment, these patients had the largest on- and off-treatment changes at weeks 100 and 104, relative to all other bardoxolone placebo quartiles.

Conversely, the bardoxolone patients who had the smallest acute changes at week 12 had the smallest improvements at the end of 2 years. These data are very important since they demonstrate that acute increases in eGFR are not associated with accelerated progression of kidney disease long-term and/or opposite pattern of hyperfiltration.

Turning to Slide 19. As we've discussed previously, the largest improvements in eGFR across all prespecified subgroups were observed in the pediatric patients. These patients have the most severe mutations and progress at the fastest rate. The improvements in eGFR, at weeks 100 and 104 were large, clinically meaningful and even statistically significant within the subgroup. Notably, in most forms of CKD, 2 years of treatment may represent only 10% or less of patients remaining dialysis through time since it often takes decades for patients to progress to kidney failure.

However, in these patients with very rapid progression, the 2-year duration of treatment represents approximately 30% of these patients remaining dialysis through time.

Next slide. We've previously shown the proteinuria data measured as urinary albumin to creatinine ratio, or UACR, across all patients. Initial increases were observed in the bardoxolone group that were mathematically accounted for by the change in eGFR, which would be expected to increase UACR.

Importantly, UACR did not worsen over time and the values returned to placebo levels during the 2 off-treatment periods. In the overall population, which was primarily adults, there was only a slight worsening in UACR in the placebo patients despite the large losses of eGFR. The pediatric UACR data are shown on this slide and demonstrate a meaningful worsening of UACR in the placebo patients over the 2-year duration of the trial. These patients had a doubling of UACR, whereas the bardoxolone-treated pediatric patients had no change from baseline.

By week 104, UACR levels in the bardoxolone-treated pediatric patients will reduce when compared to the placebo pediatric patients. We believe the pediatric data highlights the overall data set and provide evidence that bardoxolone has a clinically meaningful and disease-modifying profile.

Moving on to other topics. On Slide 21, though it's unfamiliar with bardoxolone's profile, sometimes ask if it is consistent with hyperfiltration. As shown on this slide, in our extensively studied in nonclinical and clinical studies, the profile is opposite of hyperfiltration.

Hyperfiltration is caused by increases in pressure within the kidney that cause damage, including increased permeability to albumin and worsening of fibrosis. We have shown that bardoxolone acutely increases GFR by increasing glomerular surface area, without affecting integral [nerve] pressure or permeability to albumin.

In the gold standard model of hyperfiltration, defined as nephrectomy, we observed preservation of kidney function and reduced fibrosis. As mentioned a few minutes ago, the clinical eGFR profile of hyperfiltration clinically is associated with transient, small increases in eGFR, followed by accelerated decline of eGFR after 6 months of treatment.

Off-treatment eGFR changes are worse than placebo and hyperfiltration increases kidney failure composite events. Bardoxolone's eGFR profile is associated with large, sustained increases in eGFR for at least 3 years, persistent improvements in off-treatment eGFR and a reduction of kidney failure composite events.

The UACR profile of hyperfiltration was associated with initial increases in UACR that are out of proportion to changes in eGFR and continue over time. Off-treatment values are higher than placebo due to the loss of glomerular integrity. Bardoxolone's profile demonstrates an initial increase that is accounted for by increases in eGFR, plateaus after the initial increase and returns to baseline within 4 weeks of stopping drug. Therefore, the profile of bardoxolone is novel and differentiated from hyperfiltration. We believe we have fully addressed this issue, and there is no evidence that supports that bardoxolone's mechanism of action is due to hyperfiltration.

Next slide. Clinically, we have observed increases in ALT and AST, which is associated with reductions in tolerability even or improvement in liver function. While ALT and AST are used clinically as biomarkers of liver toxicity, as seen on the left part of the slide, they are expressed in numerous tissues other than the liver, including fat tissue, the kidney, muscle, the brain, lungs and others.

They have an important role in energy metabolism included biosynthesis, which are fundamental processes associated with interactor activation. Genetic suppression of Nrf2 is associated with lower tissue expression in serum active ALT, whereas its genetic activation of Nrf2 generally increases ALT production and activity.

We have shown in cells from multiple tissues, including the liver, muscle, colon, macrophages and kidney that bardoxolone increases production of ALT and AST, demonstrating that these increases are due to pharmacological increases in production and noninjury.

Next slide. The clinical profile of ALT, AST and bilirubin is consistent with data that we have published from our prior trials in diabetic CKD. ALT and AST levels peak approximately 2 weeks after patients reach their goal dose. Levels then trend down to a new steady state likely as a new bilirubin has reached. And during the off-treatment periods, the levels returned to baseline and placebo levels.

Across our entire development program and clinical trials conducted to date, we have not observed any cases of high flaw, which is associated with large increases in total bilirubin and impaired liver function. Instead, we have observed reductions in total bilirubin were improvements in liver function.

In CARDINAL, we conservatively implemented stopping criteria in accordance with FDA guidance, and a total of 6 patients met these criteria. Notably, none of these patients had any evidence of liver entry. We have relaxed these criteria in our ongoing FALCON trial to further reduce these discontinuations. The draft proposed Alport syndrome label provides guidance for monitoring and management that we believe will minimize discontinuations due to these increases.

Next slide. Regarding changes in body weight. We have previously shown in nonclinical models that this effect is due to metabolic reprogramming, resulting in utilization of stored fuels in the form of fat, increased energy production and reduced weight due to fat loss. We have shown in 4 prior trials that changes in eGFR are not due to changes in creatinine production or excretion, demonstrating that weight loss is not due to muscle loss.

We have also shown that weight loss is dependent on baseline BMI. In the CARDINAL trial, there was no correlation between weight and eGFR change. Further, in the prespecified subgroups of BMI lower than or higher than 30, the eGFR change was almost identical despite the large difference in weight loss of 1.9 versus 7.1 kilograms. In summary, eGFR increases with bardoxolone are not get a weight or muscle loss and reflect true increases in GFR.

Next slide. In conclusion, our Alport syndrome program has been conducted in a rare severe form of CKD with no approved therapies. Our Phase III CARDINAL trial hit its primary and key secondary endpoints. Demonstrated disease-modifying activity and an acceptable safety profile is supported by a large safety database of over 3,000 patients. We are pleased to have submitted our first NDA and we believe that, if approved, bardoxolone may be the first therapy to preserve kidney function with disease-modifying effects in patients with Alport syndrome.

Next slide. Turning to our ADPKD development program. ADPKD is the second -- I'm sorry, is the most common hereditary form of CKD, with approximately 140,000 diagnosed patients in the U.S. Despite standard of care, including blood pressure control and one approved drug, patients still lose kidney function at a fast rate. Because of this, a high percentage of patients ultimately progressed to kidney failure.

Our Phase III FALCON trial is currently enrolling patients. Enrollment was passed last year before COVID, and we have been able to resume enrollment at most sites. Currently, over 220 patients have been enrolled. We are planning to increase the sample size of FALCON to 550 patients from 300, primarily to account for the increased variability in the second year of the CARDINAL trial, so that we can maintain the same statistical powering assumptions.

We are not changing the estimated treatment effect to dropout estimate or any other parameters, and this change will make the trial similar in size to other ADPKD trials. Similar to the CARDINAL trial, the trial is 2 years in total duration, and the key endpoints are at the end of the first and second year of treatment. Even with the sample size increase, we expect enrollment to be complete by the end of 2021.

Turning to Slide 30. We recently initiated MERLIN, a double-blind, placebo-controlled Phase II trial evaluating the safety and efficacy of bardoxolone in patients at risk of rapidly progressing CKD due to multiple etiologies, including common and rare forms of CKD, such as diabetic CKD, hypertensive CKD, IgA nephropathy, FSGs and others.

We plan to enroll approximately 70 patients, aged 18 to 70, with EGFR between 20 to 60 mL per minute and 1 of several risk factors for progression. The primary endpoint of MERLIN is a change in eGFR from baseline to week 12.

Enrollment began in February last month, and they are expected in the second half of this year. If results of the study are positive, our plan would be to potentially proceed to a larger Phase II trial in this population of patients at high-risk for progression to kidney failure.

Now let's move to our program in Friedreich's ataxia. FA is a rare disease characterized by progressive loss of motor function with a median survival of 35 years. There are an estimated 5,000 patients in the U.S. out of 4,000 diagnosed and these patients have no approved therapies.

On our last call, I stated that we submitted a baseline controlled study to FDA in response to their request for additional analyses to increase the persuasiveness for the MOXIe Part 2 data. After their internal review, they stated that these analyses did not strengthen the results, and they recommended an initial analysis.

We have named these analyses, the delayed start analysis, and it compares patients initially randomized placebo and in omav to each other in the extension. We believe this analysis is intended to determine if omav's profile is consistent with disease modification.

FDA stated that the potential for these analyses to sufficiently strengthens the study results was questionable, due to the small number of patients available for analysis.

Next slide. The results of the delayed start analyses are shown on the next slide. We compared the rate of change in mFARS in the extension for the patients initially randomized to omav versus those originally randomized to placebo. We conduct the analysis using 2 populations. First, we used all available data in the extension to compute annualized rates of mFARS change, and 73 out of 82 or 89% of patients who enrolled to MOXIe Part 2 contributed to this analysis.

Notably, this is higher than the 14 part 2 patients who contributed to the baseline control study. Second, we analyzed patients who completed 1.5 years in the extension, which includes a total of 20 patients. 11 of these patients have received omav for a total of 2.5 years.

As can be seen in the figure on the left, which includes data from all extension patients, once patients entered the extension, those initially randomized to omav progressed at a very slow rate of approximately 0.5 mFARS points per year after another 1.5 years of follow-up.

Patients initially randomized to placebo progressed about 1.5 points from their initial baseline of MOXIe Part 2 to baseline extension, also progressed at a rate of approximately 0.5 mFARS per year in extension, which is slower than the prior rate of progression. And the extension, the slopes are generally parallel, and there's no significant difference between them.

Most important, patients initially randomized to placebo did not catch up with the patients who were initially randomized to omav. If omav only provided symptomatic treatment, they will be able to achieve the same treatment response relative to the initial baseline. However, patients who initially received omav have been able to maintain better absolute empire scores, demonstrating that the first verve treatment in MOXIe Part 2 provided a treatment benefit, which is the hallmark of disease-modifying activity.

The analysis on the right, which includes all patients with completed 1.5 years in extension, showed similar findings. The data at each time point contains the same patients, with the exception of e100, which has some missing values due to site closures related to COVID-19.

In this completer subset, the 11 patients who have received 2.5 years of treatment have, on average, not progressed. The patients initially randomized placebo who progress on receiving placebo have also, on average, not progressed during the 1.5 years on omav during the extension, consistent with the analysis that includes all patients, the patients originally randomized to placebo did not catch up with those initially randomized omav, which demonstrates the disease-modifying profile.

Next slide. From a regulatory perspective, we have requested a Type C meeting with the FDA to discuss the delayed start analyses and the development program. Pending discussions with FDA and EMA, we plan to initiate a second pivotal trial of omav in the second half of 2021 to support approval.

Turning to Slide 37. We believe the MOXIe results provide prudent concept for the use of omav in other neurological diseases that have a common pathophysiology of mitochondrial dysfunction and oral inflammation. omav and analogs have shown activity in numerous nonclinical models as well as patient biopsy samples, and we believe that pharmacology is applicable to a broad set of neurological diseases, including other movement disorders, such as PSP, Parkinson's disease and Huntington's disease as well as other diseases that affect neuromuscular function and memory.

Now on Slide 39. Our earlier-stage pipeline includes RTA 901, which is wholly owned by Reata. RTA 901 is a highly potent selective oral small molecule C terminal modulator of HSP 90. HSP 90 is a molecular chaperone that facilitates the folding and stability of many proteins critical for cellular viability. HSP 90 also regulates the expression of HSP 70, another molecular chaperone that promotes cell survival in response to stress and affects mitochondrial function.

In terminal HSP 90 inhibitors previously developed as anti-cancer agent increased HSP sublet expression, but also inhibit client protein folding, which results in cytotoxicity. In contrast, RTA 901 increases transcription of HSP 70 without inhibiting client protein folding, resulting in robust site of protection in the absence of cellular toxicity. This biology is distinct from our interactor-activator program but has many parallels.

Next slide. RTA 901 has demonstrated activity in multiple models of diabetic neuropathy. It has been shown to reduce pain acutely in models of painful diabetic neuropathy. Most notably, RTA 901 treatment results in recovery of lost sensation and models of Instant State Diabetic Nephropathy, which is a novel and differentiated profile from other agents that have targeted diabetic nephropathy.

Next slide. Of the approximately 4 million U.S. patients with moderate or severe diabetic peripheral neuropathic pain, approximately half of those treated do not achieve an adequate pain reduction with available therapies. We have completed Phase I SAD and MAD studies in healthy volunteers have demonstrated an acceptable safety profile with no safety signals, drug discontinuations or SAEs, while achieving appropriate safety margins.

In the second quarter of this year, we are planning to initiate 2 additional clinical pharmacology studies to support the launch of the Phase II study in the fourth quarter of this year. This study will be a randomized, placebo-controlled dose-ranging study using a standardized pain scale.

I'll now turn the call over to Manmeet to provide a summary of our financials for the fourth quarter and full year 2020.

Thanks, Colin, and good morning, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the fourth quarter and full year of 2020.

I will start on Slide 43. With our cash balance, we maintained a solid balance sheet ending 2020 with approximately $818.2 million in cash and cash equivalents. This includes cash proceeds coming from our financing completed in December 2020, amounting to approximately $277.5 million in net proceeds.

Our GAAP net loss for the fourth quarter of 2020 was $65.8 million or $1.90 per share on both basic and diluted basis as compared to a net loss of $186.9 million or $5.91 per share on both basic and diluted basis for the same period of the prior year.

Our GAAP net loss for the year ended December 31, 2020, was $247.8 million or $7.35 per share on both basic and diluted basis as compared to a net loss of $290.2 million or $9.54 per share on both basic and diluted basis for the prior year. The decrease in net loss was primarily due to re-acquired license rights expense incurred in 2019 and is offset by an increase in operating expenses in 2020.

In addition, our R&D expenses increased due to R&D activities and higher personnel and equity compensation expenses due to increase in headcount. Increases in our G&A expenses were driven by higher personnel and equity compensation expense due to increase in headcount to prepare for commercial launch and to support growth in our development activities.

We have made all necessary investments to ensure the strong and successful commercial launch of products loan later this year, pending FDA review and approval.

Moving to revenues. Our collaboration revenues were $3.2 million during the fourth quarter of 2020 as compared to $2.7 million in the fourth quarter of 2019. The increase was related to reimbursement from KKC related to manufacturing and nonclinical study.

Moving to non-GAAP measures on Slide 44. Our non-GAAP R&D expenses were $32.7 million for the fourth quarter of 2020 as compared to $36.7 million for the same period of the year prior. Our non-GAAP G&A expenses were $12.3 million for the fourth quarter of 2020 as compared to $13.4 million for the same period of the year prior.

To summarize, our non-GAAP operating expenses were $45.2 million during the fourth quarter of 2020 with multiple pivotal programs and substantial preclinical activities, reflective of the strength and potential of Reata's pipeline.

In keeping with our current guidance, our year-end cash balance of $880 million is expected to fund our operations through mid-2024.

In terms of our commercial readiness. With our submission of NDA and anticipated PDUFA later this year, we have taken concerted steps to ensure launch readiness by Q4 of this year. We continue to ramp up our broad-based disease education efforts, including a newly launched disease education website, alportsyndrome.com, designed for prescribers and patients. Our field directors of market access are on track for hiring in the second quarter.

We continue to advance our payer engage strategy with the goal of achieving broad and timely payer recoverage of bardoxolone. Finally, we are in the final stages of building our logistics infrastructure with a patient hub, specialized pharmacy and distributor network and third party logistics, all aimed at full launch readiness for bard in the U.S. by fourth quarter of 2021, with a longer-term aim of supporting multiple launches over the next several years.

With that, I will turn the call over to Warren, who will take us to Slide 47.

Thanks, Mahmeet. As our presentation today indicates, we're making significant progress across our broadening set of programs, including our late-stage and earlier pipeline programs. We've now fulfilled a major regulatory milestone for bardoxolone in Alport syndrome. We remain dedicated to advancing omav in Friedreich's ataxia. We look forward to the year ahead into maximizing the opportunities that it presents to our company.

That concludes our prepared remarks, and I'd like to thank everyone who dialed in. I'll now turn the call over to the operator for questions.

(Operator Instructions) Our first question today comes from Yigal Nochomovitz from Citigroup.

I had one with respect to the second Friedreich's ataxia Phase III trial. Could you comment on how that study may potentially differ from MOXIe Part 2? And will the data and learnings from the delayed start analysis that you did from MOXIe Part 2 impact the design of the second FA Phase 3?

Thanks, Yigal. So you're asking about the potential design of a second pivotal study in Friedrich's ataxia? Colin, could you take that sure?

Sure. And so I think, yes, the prior MOXIe Part 2 data plus the delayed start analysis as well as our baseline controlled study, we'll inform the next design. And so we need to have discussions with FDA to determine specifically what we would need to do to put all the obligations in order to get the approval. And so I think we'll provide more guidance after our Type C meeting.

Okay. Got it. And then just one follow-up, with respect to the increased enrollment in FALCON, can you just comment on whether that was internal decision? Or was that the result of any FDA feedback? Or possibly seeing any of the pooled and blinded data that would suggest that the variability is greater than you previously anticipated?

Yes. So you're asking about the -- whether the increase in the sample size was based on any FDA feedback or overall analysis of the variability? Actually, I'll respond directly to that. It wasn't in response to FDA feedback. It was directly in response to what we observed in variability in the year 2 of the CARDINAL study and -- which may be related to the pandemic environment that we're in. And so we felt it was simply prudent to increase the sample size to preserve the statistical power if we observe a similar rate of variability.

Our next question comes from Maury Raycroft from Jefferies.

Congrats on the progress. First one is going to be on Friedreich's ataxia, too. Just wondering if we can get a better sense of if you could still file for approval after the Type C meeting? And prior to during the second study? I guess, can you run through possible scenarios for outcomes from the Type C meeting?

Sure. I'll take that. Obviously, the position of the agency has been to date, that we need to increase the persuasiveness statistically of the result or we need to provide additional data from the long-term extension or perform a second pivotal study.

The purpose of that Type C meeting that we just requested is to put that question directly to them, and there are multiple outcomes. They could potentially see the additional analysis in supporting the conclusion that it's disease-modifying. If they reach that conclusion, then there would be an ethical problem with conducting a second pivotal study. And then they might permit us to submit an NDA based on the existing clinical package.

However, they make it find that, that data doesn't support a conclusion that it's disease-modifying and require us to conduct a second pivotal study. And so it's just -- it's up to the FDA.

Got it. Okay. And just to clarify for the ongoing FALCON study. Are you seeing anything with dose reductions, discontinuations or anything else from the study that would also provide some reason to upsize that study?

Colin, would you like to take that?

Yes, Maury. So as I mentioned during my prepared remarks, there's no data that would suggest that we need to change our assumptions for dropouts, treatment effect or anything else. It's solely based upon the variability from the CARDINAL trials in Alport syndrome.

As Warren said, we noted higher variability or standard deviation of change in estimated GFR in year 2 of CARDINAL. And so we're not sure if that's going to happen in the FALCON trial, but we thought it would be prudent to increase the sample size. There's no other data that suggested that our assumptions may be long. But since standard deviation is a critical input into the power calculations, we wanted to make sure that we accounted for a potential increase, if we were to observe it.

Then from an enrollment perspective, we, today, disclosed for the first time the number of patients we've enrolled. And despite having to pause enrollment due to COVID, we have made substantial progress. We've enrolled over 220 patients. And since most of our sites are able to still enroll patients, the incremental time to increase enrollment in all those additional patients is not that long. And so this makes a trial.

Overall, we believe, robust and similar in size to other PKD trials and accounts for any potential increase in variability that you could observe.

Our next question comes from Annabel Samimy from Stifel.

I have a couple. So can you talk about what specifically you're doing to address the discontinuation from AST and ALT in the ADPKD trial? It seems to be a big question amongst physicians to control the discontinuation. And then a follow-on, on omav, what is it specifically? Do you know that the FDA would be looking at to determine whether it is disease modifying? Did that change -- that difference between the slopes need to be statistically significant and enough they're parallel?

I'll take the second question first, Colin, and then would you comment on FALCON? We believe that the analysis that they suggested is based on guidance that they've given for these type of analysis in the Alzheimer's setting.

And basically, what you're looking for is to see that the patients that crossed over to the long-term extension study from active basically maintained a benefit over time versus the patients that crossed over to the long-term extension from placebo.

So you actually want those slopes to be parallel and there to not be statistical significance between them. And that's -- we believe that, that's what the data shows. The key question will just be is the -- are the patient numbers high enough and is the confidence around that data is strong enough to convince them that, that is evidence of a disease-modifying effect? We think it is. But again, that -- the decision of the FDA's.

Great. And then on the ALT and a few changes?

Yes. So as I disclosed a few minutes ago, we had 6 patients who met criteria in standard FDA guidance that, I believe, probably almost all companies follow during clinical trials.

And if patients had an elevation of a certain magnitude, and meet certain criteria, we had been requiring patients who permanently discontinued study broad. So they could not restart. But based upon our extensive safety database and consultation with hepatologists, and as we've now published, we believe that these changes are pharmacological changes consistent with activation of Nrf2 and very distinct from a profile of liver injury.

And so the FALCON protocol, we do not require permanent discontinuations. And so if patients will hit a certain threshold that would have required from a discontinuation, we simply give the patients a drug holiday and they come back to the clinic and start at a lower dose. And so it's a very straightforward way to manage these elevations.

Our next question comes from Brian Skorney from Baird.

Thanks for all the granularity in the presentation. My question is really on sort of the differences across the different populations? And how we could kind of think about the results from FALCON, with the increase in enrollment size? We've seen in BEACON, and we've seen in CARDINAL, at least, some sort of numerical benefits in terms of progression downstate renal disease or partner. Kirin is powered at about a little more than twice the size of FALCON in diabetic kidney disease.

So I'm just wondering if we kind of think about the ADPKD patient population, what the rate of progression to eGFR is in this patient population, relative to diabetic kidney disease and all 4? And at this scale if we sort of saw a reduction in progression to ESRD on par with the numerical reduction we saw in CARDINAL, would this be a statistically valuable secondary endpoint?

Colin, do you want to take that?

Yes. So I think we predefined it in CARDINAL because we thought it would be helpful to characterize that the composite that's now used in trials like our Japanese partners beyond the trial. And so we don't -- we're not changing the size so that can be power for that endpoint. But it would potentially increase our chances of showing statistical separation in CARDINAL with 157 patients. The p-value is 0.086, I believe and the hazard ratio was about 0.5.

And so in ADPKD patients progressed at a slower rate, and there's not as many of the patients who have extremely large losses. For instance, the patient in CARDINAL have the largest losses, a placebo patient lost about 50 mL per minute over 2 years. And so we don't expect patients to have that extreme of losses. But potentially, if things go the right way, that could be a very valuable endpoint for us.

Our next question comes from Charles Duncan from Cantor Fitzgerald.

Congrats, Warren and team, on the bardoxolone filing in Alport. I had a question on omav, and I apologize if I missed this. I'm juggling multiple calls this morning.

But in terms of the Type C meeting, can you give us a little bit more color on that timing? And would you wait for the meeting minutes to be able to disclose what you plan to do. And I saw in your press release that you plan to start a second study in the second half. When do you think you could operationalize that? Just a little bit more color on the playing forward with omav.

Sure. We can't comment on the timing. But in fact, we don't normally comment on the exact timing of the meetings, but we have submitted the meeting request. And then what we say publicly after the meeting really depends on -- and how quickly do that depends on what we hear. If something is obviously very material, then we generally release it even before we get the minutes. But normally, we will -- prudent dictates that you wait to get their minutes before you comment.

That makes sense to me. And then in terms of the study timing, when can you operationalize that?

So we believe that we could have it operationalized by Q4.

Okay. But it -- it could potentially be earlier depending upon what the -- what happens in the interactions with the FDA.

Yes. And then regarding the agency, I mean, appreciate what you mentioned in terms of the Alzheimer's space. And the kind of the setup for disease modification. It seems like in some ways, talking -- we're seeing what's going on in the Alzheimer's space. That paradigm is somewhat being thrown out in Alzheimer's disease modification versus symptomatic.

And so it seemed to be that symptomatic therapy in FA would be quite valuable as well. Do you have an argument for that to go to the agency with?

Yes. The point about the analysis is not whether or not a purely symptomatic treatment would be approvable. It clearly would be approvable. And they haven't indicated that there would be any problem with the approval of omav for FA, if the treatment was only symptomatic. In fact, I made clear that, that's not the case.

The question really goes to the ethicalness of conducting a second study. Once you've demonstrated in a randomized controlled trial, a disease-modifying activity, then it's much more difficult to ethically justify a second randomized controlled trial.

Especially in an orphan indication. Appreciate taking the question.

Yes, exactly. Especially in a deadly disease with no approved therapy. Yes, exactly.

Our next question comes from Joseph Schwartz from SVB Leerink.

Great. Thanks so much for the detailed update. I was wondering if you could talk about the patient inclusion methodology and criteria that you've proposed to the FDA for your proposed Alport indication in the NDA for bardoxolone? And how many patients with these characteristics would you estimate or addressable at the sites that you're targeting or focusing on for commercialization?

Right. Just so you're asking about like what patients would be included essentially in the label?

Yes, essentially. And just in order to exclude patients that are too far advanced or otherwise not well-suited for treatment, ventures you've found early on in development in the type 2 diabetic CKD studies?

Yes. Sure. Colin, would you like to comment on that?

Sure. We think that the label would likely, in general, reflect that patients that we enrolled in CARDINAL and so there is a broad age and GFR range. Recall that the eligible criteria for age as well as 12, high 70. eGFR, 30 to 90. And as you know, above 90% is basically normal.

And we enroll patients with all genetic subtypes. And then as you alluded to, the excluded patients who had a significant cardiovascular history and BNP over 200 picograms per mL, indicating that those patients were already retaining fluid.

And as I think I've mentioned probably a couple of years ago, since we completed enrollment, very few patients discontinued -- or I'm sorry, were not eligible to enroll because of significant cardiovascular history or elevated BMP. And so we think that those patients would represent a very small proportion of patients with Alport syndrome.

And in general, we'll have to, obviously, negotiate the label with FDA to figure out specifically what it states. And so they made all hard lines with some of the criteria or it could be less open for interpretation by the treating physician.

But overall, we believe that it's likely to represent a large percentage of patients who have impaired kidney function, who have not reached the need for dialysis or transplant.

Joe, this is Manmeet. And I can give you some numbers for the [hair], right? In terms of the total overall prevalence opportunity, I think we believe bad could address the high unmet need in the estimated population of 30,000 to 60,000 patients with Alport syndrome in the United States and approximately 30,000 to 60,000 patients in the EU 5.

But if you look at the claims data, which came in recently through the IQVIA claims data, there are approximately 14,000 projected patients diagnosed with Alport syndrome in all the stages of CKD in the United States. And as you know, with like with many other rare diseases, and this is -- there is no approved therapy, right, there is no incentive for physicians to diagnose and identify patients. And we believe many patients go unrecognized or undiagnosed or even misdiagnosed until treatment will be a label.

And so we are deeply committed in identifying those patients. And as you remember, last year, we initiated a genetic testing program, kidney code, which was initiated to improve the accuracy and timeliness diagnosis in the United States. And we were pretty impressed, right, with the initial data which we received, and you would have seen our papers in the ASN where many new patients were diagnosed through that kidney code. And those patients were earlier misdiagnosed.

So I think it's too early to give you a specific number today, but we believe the opportunity is pretty big, and it will continue to expand as we continue with our commercialization efforts and with our medical affair teams which we have already initiated to make sure the education and awareness and genetic testing is available to physicians, and that will keep expanding the market by itself.

Colin or Warren, do you want to add anything?

No, I think you covered it.

(Operator Instructions) Our next question comes from [Matt Catlin] from Ladenburg Thalmann.

Congrats on the progress. I wanted to -- if you could give us more information in terms of your strategy with the launch of the MERLIN study in rapidly progressing patients with CKD. And in the context of your plans to initiate additional studies in other CKD indications, which you've studied before in terms of IgA nephropathy, type 1 diabetes, and FSGS. What are your thoughts in terms of how MERLIN fits in? And that indication fits into your kind of regulatory strategy for bardoxolone?

Yes. So Matt, you're asking about how MERLIN fits into our overall development strategy in CKD?

And Colin you like -- would you like to comment on that, Colin?

Sure. And so as we've demonstrated in Phoenix, in CARDINAL, we've observed activity in multiple forms of CKD, it's 6 or 7 now. And we decided to pursue Phase III studies with 2 of those indications, obviously, Alport syndrome first and at ADPKD, second.

But as we think about how we progress further with development, there's really the 2 main paths. One is to do single indication studies. So another FALCON, another CARDINAL which, in general, would probably require 300, 400, maybe 500 patients each, depending upon the education and powering assumptions.

The other opportunity is to do a single study that allows us to enroll patients with multiple different etiologies who have this common theme of likely some intrinsic defect in the kidney that puts them at a very high lifetime risk of progression to kidney failure, where we can also exclude patients who perhaps have significant cardiovascular morbidities that may be targeted by other agents, such as ACE inhibitors, ARBs, SGLT2 inhibitors, et cetera.

And so this -- the data from Cardinal really struck us in that some of these patients have substantial loss of kidney function despite receiving ACE inhibitors and ARBs. And once again, the pediatric data really highlights that with losses of 15 mL per (inaudible) in 2 years.

And so we thought about a way that we can, once again, enroll patients with a common phenotype who meets one of the few eligibility criteria for rapid risk of progression, where we can really increase the value to patients as well as to prescribers for use of bardoxolone and differentiate the drug versus other agents that affect blood pressure or have cardiovascular (inaudible).

And so the MERLIN trial is a way for us to tune up eligibility criteria, look at enrollment across sites and try to figure out how best we could operationalize a future Phase III trial that, if we did proceed, would likely allow sufficient patients to be able to power it for actual outcomes, composite, which would obviously be a very strong label, if we're able to demonstrate a difference in outcomes.

And ladies and gentlemen, at this point, I would like to thank you. And I'm showing no further questions in the question queue at this time.

Ladies and gentlemen, thanks for your participation in today's conference call. As a reminder, an audio recording of the call will be available shortly after the conference call on Reata's website at reatapharma.com in the Investors section. Thank you very much for your participation. You may now disconnect your lines.