ESALF - Reata in selloff ahead of FDA decision on lead asset as top agency official departs

Reata Pharmaceuticals ( NASDAQ: RETA ) lost ~32% on Monday to reach the lowest level in over four months as a key FDA official leaves the agency while the company awaits the U.S. approval for its Friedreich's ataxia ((F.A.)) therapy, omaveloxolone.

Earlier in the day, multiple news outlets reported that FDA's neuroscience chief Billy Dunn who presided over notable drug approvals for Alzheimer's and amyotrophic lateral sclerosis (ALS) is leaving the agency.

In an email to FDA staff, Peter Stein, head of the regulator's Office of New Drugs, announced Dunn's departure. "It was with regret that I announce the departure of Dr. Billy Dunn, Director of the Office of Neuroscience," Stein wrote, adding that Teresa Buracchio, the acting deputy director of the FDA's Office of Neuroscience, will succeed him in an acting capacity.

Dunn "has been known for his flexibility in approving drugs based on more limited/mixed data for high unmet need conditions, as well as a proponent for considering biomarkers," RBC Capital Markets in a research note.

In August, the FDA extended the review period for the company's New Drug Application (NDA) for omaveloxolone in FA by three months, granting February 28, 2023, as the new action date citing the need for more time to review additional data.

However, RBC analysts, Brian Abrahams and Leonid Timashev expect some continuity to limit near-term impact and investors to use "any potential weakness as a buying opportunity for SRPT, as well as BIIB and EWTX."

Edgewise Therapeutics ( EWTX ) is advancing Phase 2 studies for Duchenne muscular dystrophy and Duchenne muscular dystrophy (DMD). Meanwhile, Sarepta ( SRPT ) is on the decline as the gene therapy company is set to hear about its marketing application for DMD candidate SRP-9001 for ambulant individuals by May 29

Under Dunn's leadership at the FDA's Office of Neuroscience, Biogen ( BIIB ) and Eisai ( OTCPK:ESALF ) ( OTCPK:ESAIY ) won the U.S. approval for Leqembi for Alzheimer's disease in early January, while Amylyx ( AMLX ) won approval for its ALS medication AMX0035.

Read: Seeking Alpha contributor Stephen Ayers reasons why Reata ( RETA ) will likely receive a Complete Response Letter for omaveloxolone.

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