Reata is a clinical-stage biopharmaceutical company that focuses on small-molecule therapeutics. One of its two lead product candidates is bardoxolone methyl (“bardoxolone”), which is being developed for multiple indications, including chronic kidney disease caused by Alport syndrome. On March 1, 2021, Reata announced that it had submitted its New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for bardoxolone as a treatment of chronic kidney disease (“CKD”) caused by Alport syndrome (“AS”). The Phase 3 CARDINAL study was purportedly designed to measure the efficacy and safety of bardoxolone. The primary endpoint for Year 2 was the change from baseline in estimated glomerular filtration rate (“eGFR”) after 100 weeks of treatment (end-of-treatment). The key secondary endpoint for Year 2 was the change from baseline in eGFR at Week 104 (four weeks after last dose in second year of treatment). On December 6, 2021, the FDA released briefing documents in advance of an Advisory Committee meeting for the Company’s NDA for bardoxolone, stating that throughout the clinical development, the agency had repeatedly questioned the validity of Reata’s study design because bardoxolone’s pharmacodynamic effect on kidney function would make the results difficult to assess the effectiveness of the drug. Though the FDA agreed that Reata’s Phase 3 study met its endpoints, “the FDA review team d[id] not believe the submitted data demonstrate that bardoxolone is effective in slowing the loss of kidney function in patients with AS and reducing the risk of progression to kidney failure.” On this news, the Company’s stock price fell $29.77, or 38%, to close at $48.92 per share on December 6, 2021, on unusually heavy trading volume. Then, on December 8, 2021, the FDA’s Advisory Committee unanimously decided that bardoxolone was not effective based on the submitted data. On this news, the Company’s stock price fell $25.31, or 46%, to close at $29.11 per share on December 9, 2021, on unusually heavy trading volume. The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the FDA had raised concerns regarding the validity of the clinical study designed to measure the efficacy and safety of bardoxolone for the treatment of chronic kidney disease caused by Alport syndrome; (2) that, as a result, there was a material risk that Reata’s NDA would not be approved; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
The alleged class includes: All persons and entities that purchased or otherwise acquired Reata securities, and/or sold Reata put options, between November 9, 2020 and December 8, 2021, inclusive.
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