Shares of Reata Pharmaceuticals Inc (RETA.O) tripled in value on Wednesday after the U.S. Food and Drug Administration (FDA) approved its rare disease drug, ending years of uncertainty over its future.
The U.S. biotech firm’s shares jumped to $93, the highest since late 2021, on more than 16 million shares traded, a record one-day volume for the stock. It had closed at $31.17 on Tuesday.
Reata’s drug Skyclarys is the first approved treatment for Friedreich’s Ataxia, a rare genetic disorder that causes progressive damage to the nervous system and can lead to premature death. It is also the company’s first approved product.
The nod follows years of back and forth between Reata and the FDA. In 2020, the regulator had said data from a mid-stage trial was not enough to support an approval. In 2022, the FDA extended its review after Reata submitted more analyses.
SVB Securities’ analyst Joseph Schwartz viewed the approval as a surprise, given the agency’s past concerns, and said the nod is similar to the “contentious and largely political” approval of Sarepta Therapeutics’ (SRPT.O) muscle disorder drug Exondys 51 in 2019.
The FDA had previously approved drugs for neurological conditions based on limited data such as for Biogen Inc’s Alzheimer’s drug Aduhelm and Amylyx’s (AMLX.O) ALS drug, but those were made under the leadership of Billy Dunn, who resigned from the agency on Monday.
Reata’s shares had tumbled 30% following Dunn’s resignation as investors fretted about the possibility of approval under a new division head.
“We’ve followed some pretty dramatic stories in the past, but the Reata odyssey is in the Hall of Fame,” said Baird analyst Brian Skorney.
The company has priced the drug at a wholesale acquisition cost of $370,000 annually.