As it prepares to issue pivotal Phase II data on a promising drug to treat chronic kidney disease, Reata Pharmaceuticals has selected Abbott Laboratories Inc. as its ex-U.S. partner to market the compound in Europe, Latin America and other geographies.

The deal's large upfront component displays Abbott's great confidence in Reata's compound, bardoxolone methyl, which if approved could be the first treatment known to reverse the progression of chronic kidney disease. For its $450 million commitment, plus milestone payments and royalties, Abbott will receive rights to bardoxolone everywhere outside the U.S. except certain Asian markets Reata has already pledged to Kyowa Hakko Kirin in a prior agreement (Also see "Reata Sells Asian Rights to CKD Drug, But Plans To Remain A Solo Act In U.S." - Scrip, 8 January, 2010.).

Milestone payments built into the new agreement could add $350 million to its value, and Reata will receive royalties on sales in Abbott's territories. The deal structure stands in moderate contrast to Reata's January 2010 agreement with KHK, which included a much smaller upfront component of just $35 million, although it included milestone payments that could drive its value as high as $272 million, plus royalties. If bardoxolone is approved, Reata will market the drug on its own in the U.S.

Reata chief executive Warren Huff said that deal predated new Phase IIb results that represent "a more mature data set," causing the terms to be "naturally front-loaded." He described it as a late-stage asset and added, "There's just one more study to do." Reata will fund the upcoming Phase III trial itself.

Abbott will also take an equity stake of undisclosed size in Reata. Existing Reata stakeholders received no liquidity in the deal. Reata has raised $180 million in private funding to date, including a $78 million round from Cardinal Investment's CPMG and Novo A/S that was completed in July 2010. Other investors include Texas firms Ojai Goliad and StarTech Ventures, where Huff served as an entrepreneur-in-residence prior to the launch of Reata (Also see "Reata Sets Sights On 2012 Bardoxolone Launch With $78 Million Financing In Hand" - Pink Sheet, 12 July, 2010.).

Huff described the partnering process as competitive among numerous potential partners, including some who pressed for an outright acquisition. "We're just not for sale," he said.

Abbott executives could not be reached for comment. The addition of bardoxolone would enhance the Big Pharma's relatively small renal portfolio, which already includes Zemplar (paricalcitol), a hyperparathyroidism treatment for patients suffering from kidney failure. The company is also conducting a Phase II study exploring the use of Xinlay (atrasentan), a drug that regulators rejected as a cancer treatment, but which may have benefits in chronic kidney disease.

Reata chose Abbott in part for its international capabilities in the renal sector, as well as a deep understanding of the company's biological intellectual property and strong financial terms. Huff said. Abbott markets Zemplar in 24 countries, including many locales in Europe and Latin America.

Abbott also will receive international rights to other indications and second-generation molecules derived from bardoxolone, including potential uses of the compound to treat cardiovascular disease and type II diabetes--also therapeutic areas in which it has a presence.

A Drug That Could Reverse CKD

Originally developed with oncology in mind, bardoxolone is an antioxidant inflammation inhibitor that acts on a transcription factor known as nuclear factor (erythroid-derived 2)-like 2, or Nrf2. As a regulator of the production of numerous proteins, Nrf2 is linked to a variety of inflammatory disorders as well as oxidative stress, an excess of cell-damaging reactive oxygen species in the body.

Clinical data from Phase IIa studies on bardoxolone suggested that the drug boosted renal function in type II diabetes patients who were potential candidates for dialysis in the future. Reata is preparing to issue Phase IIb data at the American Society of Nephrology conference in November. A planned Phase III study, slated to begin late in 2010 or early in 2011, will further study bardoxolone's effect on glomerular filtration rate, which measures the amount of filtered fluid passing through the kidney per unit of time.

Huff said he could not discuss the data itself yet, but investigators will present studies of patients receiving the once-daily oral treatment after six months at the November ASN meeting in Denver, with 12-month data to follow. Earlier data suggested that 70 percent of patients who began short-term studies with Stage 4 chronic kidney disease improved to Stage 3 by the end of the studies.

Reata will still have to pay for the upcoming Phase III trial on its own, although the $450 million in fresh capital will cover those costs and then some. Huff said the company had $100 million on its balance sheet prior to the deal - at least enough to get close to an NDA - and that its days of private fundraising are likely over. It has received at least one milestone payment from the KHK deal as well.

The company has no imminent plan to conduct an IPO, although Huff noted, "I'm sure we will be a public company somewhere along the way."

The new money will also allow Reata to further develop the rest of its pipeline. The startup has preclinical programs investigating uses of antioxidant inflammation modulators to treat multiple sclerosis and neurodegenerative disorders such as Alzheimer's, Parkinson's, Huntington's, and Lou Gehrig's (ALS) diseases, as well as a protein-folding stabilizer to treat ALS. Huff said Reata is not yet seeking partners for any of those programs, which are not covered under the new agreement.

- Paul Bonanos ( p.bonanos@elsevier.com )

Abbott Pays $450MM Up-Front For Rights To Reata's CKD Drug

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