Reata Pharmaceuticals, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Riata Pharmaceuticals second quarter 2021 financial results and update on development programs conference call. An audio recording of today's webcast will be available shortly after the call today in the investor section of Riata's website at riatapharma.com. Before the company proceeds with its remarks, please note that the forward-looking statements disclosure in the company's press release. The company will be making forward-looking statements on today's call. There are many factors that could cause results to differ from expectations, including those noted in the company's SEC filings. On today's conference call, non-GAAP financial measures will be used to help investors understand the business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in Reata's earnings release and presentation from today, which can be found on RIADA's website. 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, August 9th, 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 for questions. We ask that you please limit yourself to one question and one follow-up so we can accommodate as many questions as possible. We are joined today by RIADA's Chief Executive Officer Warren Huff, Chief Research and Development Officer Colin Meyer, and Chief Operating and Chief Financial Officer Monmeet Soni. At this time, I would like to turn the conference call over to Warren Huff, Chief Executive Officer of RIADA.

Thanks. Good afternoon, everyone, and thank you for joining us today. We have several important updates that we'll be sharing with you today. First, we'll provide a regulatory update for ovambaloxone for Friedreich's ataxia. Second, we'll provide a regulatory update and a clinical update for bardoxalone in rare forms of CKD. I'll give a brief overview and then hand the presentation over to Colin for more detail. We'll start with an update on our omaviloxelone program in patients with Friedreich's ataxia on slide four. As you know, FA is a rare disease characterized by a progressive loss of motor function with patients often requiring a wheelchair by their mid-20s and having a median survival of 35 years. There are no approved therapies for FA. We've reported results from the MOXIE Part 2 study, the baseline controlled study, in the delayed start analysis, each of which met their primary endpoint and provide evidence of the effectiveness of OMAD in patients with FA. We've provided this data to the FDA and we're pleased to report that in May of this year, we received a communication from the FDA suggesting that a pre-MDA meeting is the most appropriate format for a discussion of the development program. During the second quarter of this year, we withdrew our request for a type C meeting and requested a pre-NDA meeting with the FDA. The pre-NDA meeting request has been granted, and the meeting has been scheduled during the third quarter of this year. We submitted briefing materials for the meeting, and we recently received a communication from the division requesting the estimated date of our NDA submission for their planning purposes. We're pleased with the FDA's continued engagement with us in determining a path forward for the program, and pending the outcome of the pre-NDA meeting, we're planning to submit the NDA for OMAV for the treatment of patients with FA during the first quarter of 2022. Additionally, as a result of the recent regulatory progress, in the second quarter, we reinitiated our commercial readiness activities for OMAV. Turning to Bardoxalon on slide five, As all of you know, our new drug application for Vardoxelone for the treatment of patients with chronic kidney disease caused by Alport syndrome has been accepted for filing and is currently under review by the FDA. In connection with the review of the NDA, the FDA recently completed a bioresearch monitoring inspection where we did not receive any observations. We've recently completed the mid-cycle communication review meeting with the FDA, and we continue to prepare for the advisory committee meeting, which has been tentatively scheduled for December the 8th, 2021. The PDUFA date for the NDA is February 25th, 2022. Additionally, we're pleased to report that in July of this year, Kaiwa Kiran, our strategic collaborator in CKD in Japan, submitted an NDA in Japan to the Ministry of Health, Labor, and Welfare for bardoxalon for the treatment of patients with CKD caused by Alport syndrome. Based on this submission, we've earned a milestone payment, and if approved for commercial sales, KKC is required to pay us royalties on net sales of bardoxalon and its territory. Next slide. The purpose of the mid-cycle meeting is for the FDA to provide us with an update of the status of the NDA review, including any issues identified. The mid-cycle communication meeting with the FDA was focused on clinical and statistical review issues. While we've not yet received formal minutes from the FDA, in the preliminary agenda for the meeting, the FDA identified four significant clinical and statistical review issues for us to address. We discussed these issues with the FDA during the meeting, and we believe each is addressable. FDA invited us to submit clarifying questions and our responses in follow-up submissions to the NDA, which, of course, we plan to do. I'll briefly review the issues and our planned responses and then hand the presentation over to Colin to provide more detail. Importantly, the FDA did not designate any safety issues as significant issues. Based on its current review, the FDA noted during the meeting that it does not currently believe a risk evaluation and mitigation strategies or RIMS program is needed for bardoxelone. Throughout the history of the development of bardoxelone and because of its novel effects on EGFR and other parameters, questions have been raised about the safety of long-term use of the drug in CKD patients. We and our partners and collaborators have generated a substantial amount of preclinical data delineating the mechanism of action of bardoxaline, and we've collected a large amount of clinical data, including data in patients treated for two to three years, to address these issues. We believe this large data set may be the reason that there were no safety issues listed as significant in the mid-cycle communication. The lack of significant safety issues to date is important in evaluating the benefit-risk assessment for approval. With respect to the clinical and statistical issues, we believe each issue raised by the Division is addressable. First, we've always known that the key question regarding the efficacy of Bardoxelone and Alport syndrome and other forms of CKD is one of the large improvements in EGFR on treatment will translate into a delay in the need for dialysis or transplant. We would have been very surprised if this issue was not being submitted to the ADCOM. We believe that the two-year data in the cardinal trial demonstrate that in the second year of treatment, which we believe is the most predictive of future results, Bardoxelone patients' EGFR declines from its peak at a rate slower than placebo patients. This reduced rate of decline is on top of a large absolute placebo-corrected improvement in EGFR from 7 to 17 EGFR points, depending on the treatment group. Based on the progression rate of these patients, this represents two to four years of delay to kidney failure. Patients on continuous treatment at goal dose did not have a decline in EGFR during this period, suggesting a potential long-term delay in kidney failure. Turning to the second topic, the FDA indicated that it did not appear that a pre-specified covariate for treatment duration was used in the primary analysis, and this would affect the significance of the results. We clarified in the meeting that the covariate was included in the analysis, that the exclusion of it would have improved the significance of the result, and that the primary analysis was performed in accordance with the SAP. Turning to the third topic, the FDA conducted a series of post hoc sensitivity analyses to test the significance of the year two key secondary results under a variety of scenarios. including using off-treatment EGFR values at week 104, irrespective of time off drug, and excluding all off-treatment values collected less than 28 days after the last dose. These are post hoc analyses, and because Alport syndrome is a rare disease, Cardinal had limited power to show effects and sensitivity analyses that might be observed in much larger trials for more prevalent diseases. The week 104 analysis effectively included many patients that had been off treatment for a minimum of 88 weeks. The less than 28-day analysis excludes nearly one-half of the trial participants, violates randomization principles, and results in modeled estimates that meaningly differ from observed week 104 HEFR changes. Despite these issues, the treatment effect in the sensitivity analyses always favored baroxalone. Finally, the FDA raised an issue regarding the effect of COVID-19 pandemic on Cardinal. The FDA acknowledged that COVID-19 did not significantly impact treatment visits, data collection, or study drug dispensation. They noted that there were significant differences between the patients that finished pre and post COVID. The difference between treatment groups pre and post COVID was driven by the enrollment of a larger number of pediatric patients late in the trial so that they ended the trial in the post-COVID subgroup. This group had more rapid disease progression and increased the overall rate of progression in the post-COVID placebo group. As I stated earlier, we believe that each of these issues are addressable, and the FDA invited us to submit clarifying questions and to address each of the issues in a follow-up submissions to the NDA, which of course we plan to do. I'll hand the presentation over to Colin now to provide greater detail on the issues and our planned responses.

Thanks, Warren. Turning to slide 9, as Warren mentioned, we recently completed the mid-cycle communication meeting with the FDA, and they identified four significant review issues which were discussed in the meeting. Importantly, the FDA did not designate any safety issues as significant issues. As is customary with review of all NDAs, the FDA may identify other issues and it may request additional information as it continues to review the NDA. The issues the FDA identified were clinical and statistical and include four topics, acute pharmacodynamic effects versus slowing of decline in kidney function, treatment duration as a covariate in week 104 analysis, and sensitivity analysis for off-treatment analysis window duration, and the impact of the COVID-19 pandemic. I will provide additional information about each of these issues that were discussed in the next slide. Thank you. Regarding the first topic, the FDA question whether the observed EGFR increases suggests a slower rate of loss of kidney function in the rhodoxone group as compared to the placebo group. During the mid-cycle communication meeting, the FDA clarified that its preliminary analysis was computed using two distinct chronic EGFR slopes, a slope in year one based on EGFR data from week 12 to week 48, and a slope in year two based on week 64 to week 100. The FDA noted that the observed changes in EGFR loss in the baroxone group starting at week 12 and year one after full manifestation of acute EGFR increase, did not suggest a slower rate of loss of kidney function in the placebo group. As I'll explain shortly, the loss of EGFR from weeks 12 to 48 in year one is explained by the loss of EGFR in bardoxaline patients who discontinued early in the study. Importantly, the rate of EGFR loss from week 64 after full manifestation of the acute EGFR increase to week 100, in year two is lower in the bradoxaline patients than the placebo patients. The FDA did not comment specifically on the rate of EGFR decline in year two of treatment. As I just mentioned, the loss of EGFR observed in patients treated with radoxalone from week 12 to week 48 in year 1 is explained by the loss of EGFR in patients randomized to radoxalone who discontinued treatment, and most discontinuations occurred early in the study. As shown in the figure on the top right of slide 10, patients who discontinued treatment experienced an acute increase in EGFR that was maximal at week 12 and returned to placebo levels by week 36. This loss of the initial acute EGFR effect after discontinuation of drug contributed to the apparent EGFR decline during year one in the intent to treat analysis. As shown in the chart on the bottom of slide 10, Data from year two of Cardinal showed that our Oxfam-treated patients that restarted treatment at week 52 experienced a smaller EGFR loss from week 64 to week 100 compared to the patients on placebo. This was observed in patients in the intended treat population, patients in the pre-specified modified ITT or MITT analysis, patients who achieved Goldos, and patients who did not achieve Goldos. Importantly, patients who remained on varoxilone treatment and maintained their goal dose on average did not progress, while patients receiving placebo continued to decline. In addition to the reduced rate of EGFR decline in year two, varoxilone patients experienced large, absolute placebo-corrected improvements in EGFR at week 100 across all analysis subgroups. based on the historical weight of EGFR loss for these patients. This separation would translate to a delay in kidney failure of at least two to four years. For those patients who are maintained on their goal dose and did not progress, kidney failure could be potentially delayed long-term if they continue to not progress. Lastly, data from EGLE demonstrates treated with baroxone and cardinal are sustained above baseline in the third year of treatment and beyond. We believe these analyses demonstrate that in continuously treated patients, EGFR diverges from placebo over time and could delay kidney failure. Next slide. In the FDA's preliminary communication for the meeting, the FDA questioned whether we had followed the pre-specified analysis model for analyzing week 104 off-treatment values. During the meeting, we explained and the FDA acknowledged that our analysis was conducted in accordance with and did not deviate from the pre-specified SAP, which included treatment duration as a covariate. All clinical studies use an analysis model to compute the treatment effect and p-value. The analysis model incorporates observed data as well as data sets that are generated for missing data. The process of generating data sets for missing data is called the imputation step, and it uses available reference data to produce these data sets. The statistical analysis plan or SAT for Cardinal pre-specified that change from baseline and EGFR for patients treated with Vardoxilone would be compared to placebo week 104 using an analysis of covariance or ANCOVA model. Both the imputation step and the analysis model can include covariates or independent variables between patients, such as treatment group or baseline characteristics. During the meeting, we discussed how the imputation step was conducted. The FDA suggested the treatment duration covariate could have been included in the imputation step. We noted that the SAP did not specify covariates for the imputation step, and therefore, a treatment duration covariate was not included in the imputation step of the analysis. We further explained that due to sparse reference data across the full range of treatment durations, Inclusion of the treatment duration covariate in the imputation step would have resulted in over 30% of imputed EGFR values falling outside the range of observed EGFR values. Many of these values would have been extreme and exceeded biological plausibility. For example, the maximum change from baseline in the observed data was an increase of 28 nil per minute. while the maximum change from baseline in the imputed data would have been nearly four times larger with an increase of 105 mL per minute. We therefore explained that while addition of these extreme values would not have affected the overall treatment effect at week 104, it would have artificially more than doubled the standard error and inflated the p-value. Again, importantly, During the meeting, the FDA acknowledged that the primary analysis was conducted in accordance with and did not deviate from the pre-specified SAP. Turning to slide 12. In Cardinal, we pre-specified the year two off treatment analysis window to include EGFR values obtained at least 14 days after last dose. which is supported by pharmacokinetic and extensive off-treatment data demonstrating that the resolution of acute EGFR increases occurs by 14 days after the last dose. As shown in the table on the bottom of slide 12, we observed no association between the magnitude of off-treatment EGFR values in the post-dose period in year two. These results established that values collected in the earlier part of the analysis window did not bias or affect the conclusions of the off-treatment endpoint. Alport syndrome is a rare disease which limited the overall size of the trial. The study, therefore, had limited power to show treatment effects that meet conventional levels of statistical significance in certain sensitivity analyses for more prevalent diseases. Nevertheless, the FDA has conducted a series of post hoc sensitivity analyses to test the significance of the year two key secondary results under a variety of scenarios, including using off-treatment EGFR values at week 104, irrespective of time off drug. Approximately one half, or 12 out of 26, of discontinuations for patients treated with baroxone occurred within the first 16 weeks of treatment. And these patients were therefore off treatment for a minimum of 88 weeks at the time of their week 104 assessment. When patients discontinued baroxalone, their EGFR trajectory was similar to placebo patients. Including these patients that had discontinued for a long period of time inherently dilutes the treatment effect in the sensitivity analysis. Despite this, the treatment effect in the analysis favored baroxalone, even when including these patients in the week 104 analysis. Furthermore, based on the precedent established in the reprise study of Tolvaptin for the treatment of patients with ADPKD, we power Cardinal to assess the off-treatment effect of Baroxone by including EGFR values collected at least 14 days after the last dose, rather than powering the trial to include EGFR values 104 weeks after randomization for all patients, including those that discontinued treatment early. Two of the FDA's other sensitivity analyses only included values collected at least 28 days after the last dose. These analyses excluded nearly one-half the trial participants in violated randomization principles, which resulted in modeled estimates that meaningfully differed from observed week 140 GFR changes. However, the treatment effect in these analyses favored baroxaline. We performed sensitivity analyses similar to those performed by the FDA that included more available off-treatment EGFR data by using a cutoff of at least 21 days after the last dose. The results for these new analyses were similar to the primary week 104 analyses, and we provided to the FDA as a follow-up to this meeting. Moving to slide 13, as COVID-19 emerged as a pandemic with serious public health implications, During the first quarter of 2020, we took steps to protect the health and safety of patients and healthcare workers involved in the ongoing cardinal trial, while also maintaining the conduct of our studies in accordance with guidance provided by the FDA and the EMA. Due to the timing of study conduct, 31% of year two week 104 assessments were conducted pre-COVID or before March 1st, 2020. and 69% of week 104 assessments were conducted after the start of the global pandemic. In our mid-cycle communication meeting, we were pleased that the FDA acknowledged that COVID-19 did not significantly impact treatment visits, data collection, or study drug dispensation. However, the FDA noted that there appeared to be differences for the week 104 endpoint when analyzed according to data collected in patients pre-COVID versus post-COVID, with the study findings driven by the post-COVID subgroup. The difference between treatment groups pre- and post-COVID was driven by the inclusion of a larger number of pediatric patients in the post-COVID subgroup. This group had more rapidly progressive disease, enrolled later in the trial, and therefore had week one of four assessments conducted during the post-COVID period. Importantly, although differences were observed for the pre- and post-COVID results, the point estimate for the change from baseline in EGFR at week 104 is similar across both periods for rhodoxone-treated patients. Next slide. During the mid-cycle communication meeting, the FDA did not communicate significant issues about any safety topics. Prior safety topics that we have disclosed and discussed on previous calls were not mentioned in writing or during the mid-cycle communication review meeting. Additionally, no new safety signals have been identified in the ongoing EGLE extension study. Based on its current review, the FDA stated that it does not believe a risk evaluation and mitigation safety program, or REMS, will be needed for paroxysmin. Moving on to our other programs in CKD on slide 16, we're also evaluating the safety and efficacy of our oxalone for the treatment of patients with ADPKD, the most common hereditary form of CKD, the Phase III Falcon trial. Falcon has a similar trial design to the Cardinal trial, and it's enrolling patients with Stage II to III CKD across approximately 100 sites globally. We recently had a Type B meeting with the FDA regarding the ADPKD development program. We have not received minutes from the meeting yet. However, based on the discussion in the meeting, we are considering amendments to the Falcon protocol. Based on our experience during the cardinal trial in Alport syndrome patients, we requested the FDA's input regarding the feasibility of using year one data to support early submission and accelerated approval. We acknowledged with the FDA that, like our experience in Cardinal, the timing of clinical study milestones at year one and the required regulatory interactions prior to an initial submission may not allow sufficient time, as previously noted by the FDA, to submit the initial application before year two data are available. Thus, while the study uses an efficient study design that is intended to support an early submission, its ability to support an early NDA may not be possible. In response to our inquiry, the FDA indicated that it is unlikely that the results from the first year of the trial would support an application for assorted approval. As such, the FDA recommended against unblinding the trial after the first year in conducting the proposed year one analysis. The FDA instead encouraged us to specify the year two off treatment analysis as the primary endpoint. We plan to modify the protocol so that the primary endpoint will be the year two off treatment analysis. and we will not unblind the trial until after its completion. Our current SAP specifies that patients who do not receive at least one dose of study drug in this second year will be considered missing in the week 104 analysis. The FDA recommended also evaluating the key efficacy endpoint using EGFR values obtained at specified time points, for example, 104 weeks after randomization, regardless of whether a patient discontinued study treatment at an earlier time point. This is similar to one of the sensitivity analyses conducted by the FDA during review of her Alport syndrome NDA. We will be incorporating the FDA's feedback and submitting the revised SAP for the FDA to review. We want to be sure that we power Falcon for the new FDA comment on discontinued patients. As a result, we may or may not need to increase the sample size from the current target of 550 patients. More than 370 patients are currently enrolled in the study. We continue to expect to enroll 550 patients in Falcon by the end of 2021. However, if we decide to increase the target enrollment, we'll provide updated guidance on our enrollment timeline. Moving to slide 17. Merlin is a double-blind, placebo-controlled Phase II trial 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, IgG nephropathy, FSGS, and others. The primary endpoint of Merlin is the change in EGFR from baseline to Week 12. We have completed enrollment in the Merlin trial and expect to have top-line data in the fourth quarter of 2021. If the results of this study are positive, we would potentially proceed to a larger phase three trial with similar eligibility criteria. Patients at risk for rapid progression experience a significant risk of progressing to end-stage kidney disease in a population with high unmet need across multiple forms of CKD. With that, I would like to turn the presentation over to Nanit to provide a financial and operational update.