IPO of the Week: Reata Pharmaceuticals

Josef Schuster
Dr. Josef Schuster is the founder of Chicago-based IPOX Schuster LLC and chief architect of the IPOX® Indexes. The IPOX methodology is implemented in an IPO and spin-off strategy at Catalyst Funds. Before founding IPOX, Dr. Schuster pursued his academic work on European IPOs in the Financial Markets Group (FMG) at the London School of Economics (LSE), where he completed his MSc and PhD and conceived the idea to start IPOX. He regularly appears in the media as an expert in global New Listings and respective investment products.

Company Description

Founded in 2002, Reata Pharmaceuticals is an Irving, Texas-based biopharmaceutical company. The late clinical stage company focuses on small-molecule therapeutics by targeting molecular pathways that regulate cellular metabolism and inflammation. The three lead product candidates are for the treatment of a form of chronic kidney disease (CKD), a form of degenerative neuromuscular disease called Friedreich’s ataxia (FA), and a form of pulmonary arterial hypertension (CTD-PAH).

Business Model

Reata Pharmaceuticals generates revenues primarily from licensing fees (include upfront payments and milestone payments) received under collaborations with AbbVie and Kyowa Hakko Kirin (KHK). The company did not generate any revenue from sales of commercial products to date. Other revenues recognized include reimbursement for expenses incurred to obtain supplies.

IPO History

On 5/26/2016, Reata Pharmaceuticals launched on Nasdaq led by Citigroup, Cowen & Co and Piper Jaffray. The biopharmaceutical company sold 5.5 million shares with a 15% over-allotment option fully exercised, a 37.5% increase from the original plan. The IPO was priced at $11.00 per share, below its expected range of $14.00 – $16.00/share. The shares opened at $11.06/share and closed the first day higher at $13.07. Existing stockholders purchased $29.2 million of shares in the offering. Reata Pharmaceuticals was included in the IPOX® 100 U.S. Portfolio on 6/21/2019 and currently weighs approximately 0.2% of the portfolio.

Historical Performance

Growth Outlook

Industry Comparison