Reata shares soar after surprise FDA approval for rare disease drug

(Reuters) – Shares in U.S. biotech firm Rita Pharmaceuticals Inc more than doubled in premarket trading on Wednesday, a day after the Food and Drug Administration (FDA) approved a rare disease drug and ended a year of uncertainty over its future.

The drug Skyclaris 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 Reata’s first approved product.

The approval follows years of friction between Riata and the FDA, which said in 2020 that data from a mid-phase trial were insufficient to support approval. In 2022, the regulator extended its review after Reata submitted additional analysis.

“We’ve followed some dramatic stories in the past, but the Riata Odyssey belongs in the Hall of Fame,” said Baird analyst Brian Skorney.

The FDA has previously approved drugs for neurological conditions based on limited data, such as Biogen Inc’s Alzheimer’s drug Aduhelm and Amylix’s ALS drug.

The approvals were made under the leadership of Billy Dunn, who resigned from the agency on Monday after which Riata shares fell 30% as investors fretted over the prospect of approvals under a new department head.

The company values ​​the drug at a wholesale acquisition cost of $370,000 annually.

Shares of Reata rose 174.2% to $85.47 before the bell.

(Reporting by Aditya Samal in Bengaluru; Editing by Shweta Agarwal and Uttaresh Venkateswaran)