Reata Pharmaceuticals (RETA) recently made headlines when its stock jumped 175% in premarket trading following FDA approval of its new rare disease drug, SKYCLARYS™ Omaveloxolone. This drug is the first and only treatment for patients with Friedreich’s ataxia, a rare genetic disorder that affects the nervous system and can cause movement problems, vision and hearing loss, and other debilitating symptoms.
Investors have taken notice of the news, and for good reason. Reata’s new drug has the potential to make a significant impact on the lives of patients suffering from this rare disease. But what does this news mean for investors, and is it a good time to invest in Reata stock? Here’s a closer look at why RETA is a bullish stock to consider.
The FDA Approval and Its Implications
SKYCLARYS™ Omaveloxolone received accelerated approval from the FDA, marking the first time in Reata’s 21-year history that the company has received FDA approval for a drug. This approval is a significant milestone for the company, and it’s no surprise that investors are taking notice.
But what exactly does this approval mean for Reata’s bottom line? According to analysts, the drug has the potential to generate significant revenue for the company. In fact, it’s estimated that the drug could bring in $1 billion in peak sales for the company. This is due to the fact that Friedreich’s ataxia is an ultra-rare disease, affecting only about 5,000 people in the United States.
The Cost of the SKYCLARYS Drug
While the approval of SKYCLARYS™ Omaveloxolone is certainly good news for Reata, there is one potential downside to consider: the cost of the drug. According to reports, the drug will cost $370,000 per year. This price point has raised some concerns among patient advocacy groups and others, who worry that the high cost will make the drug inaccessible to many patients.
However, it’s worth noting that the high cost of the drug is not uncommon for drugs that treat rare diseases. In fact, many drugs that treat rare diseases are priced at similarly high levels. This is due to the fact that these drugs are typically developed for small patient populations, which means that the cost of development and manufacturing is spread out over a smaller number of patients.
The Potential for Future Drugs from Reata Pharmaceuticals
Another reason to consider investing in Reata stock is the company’s pipeline of drugs in development. Reata is currently working on several other drugs, including drugs for the treatment of pulmonary arterial hypertension and Alport syndrome. If these drugs are successful, they could generate significant revenue for the company and further boost the value of its stock.
In addition, the FDA’s recent approval of SKYCLARYS™ Omaveloxolone is an encouraging sign for the company’s other drugs in development. The approval demonstrates that the FDA is willing to approve drugs for rare diseases, even if they are not backed by extensive clinical trial data. This could make it easier for Reata to gain approval for its other drugs in development.
Why RETA Stock Is a Good Investment
Overall, there are several reasons to consider investing in Reata stock. The FDA’s approval of SKYCLARYS™ Omaveloxolone is a significant milestone for the company, and it has the potential to generate significant revenue for the company. In addition, Reata’s pipeline of drugs in development provides further potential for future growth.
Of course, it’s worth noting that investing in any stock comes with some degree of risk. Reata is a relatively small company, and its success is largely dependent on the success of its drugs in development. However, for investors who are willing to take on some risk, Reata stock presents a compelling opportunity.
It’s also worth noting that the market for rare disease drugs is growing rapidly. As more attention is paid to rare diseases and the need for effective treatments, companies like Reata that are focused on developing drugs for these diseases are likely to see increased demand for their products. This could further drive up the value of Reata stock in the coming years.
In addition, Reata is led by a strong management team with a track record of success. CEO Warren Huff has more than 30 years of experience in the pharmaceutical industry, and he has successfully led the company through multiple rounds of fundraising and clinical trials. With a strong leader at the helm, Reata is well-positioned to continue to grow and succeed in the years to come.
Finally, it’s worth noting that Reata stock is still relatively undervalued compared to other pharmaceutical companies. While the stock has seen a significant increase in value following the FDA’s approval of SKYCLARYS™ Omaveloxolone, it still has room to grow. This presents a great opportunity for investors who are looking to get in on the ground floor of a company with significant growth potential.
In conclusion, Reata Pharmaceuticals is a strong investment opportunity for investors who are willing to take on some risk. The FDA’s approval of SKYCLARYS™ Omaveloxolone is a significant milestone for the company, and its pipeline of drugs in development provides further potential for future growth. With a strong management team and a growing market for rare disease drugs, Reata is well-positioned to continue to succeed in the years to come.
