Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, an emerging growth company, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August ~~5, 2020,~~3, 2021, the registrant had ~~28,559,247~~31,464,327 shares of Class A common stock, $0.001 par value per share, and ~~5,045,092~~4,923,075 shares of Class B common stock, $0.001 par value per share, outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. ��We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, all statements, other than statements of historical or present facts, including statements regarding our future financial condition, future revenues, projected costs, prospects, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believe,” “will,” “may,” “might,” “estimate,” “continue,” “anticipate,” “intend,” “target,” “project,” “model,” “should,” “would,” “plan,” “expect,” “predict,” “could,” “seek,” “goals,” “potential,” and similar terms or expressions that concern our expectations, strategy, plans, or intentions. These forward-looking statements include, but are not limited to, statements about:

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Unless the context requires otherwise, references to “Reata,” “the Company,” “we,” “us,” or “our” in this Quarterly Report on Form 10-Q refer to Reata Pharmaceuticals, Inc. and its subsidiaries. We also have used several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below.

Abbreviated Term		Defined Term
AbbVie		AbbVie Inc.
ADPKD		Autosomal dominant polycystic kidney disease
AE		Adverse event
ALS		Amyotrophic lateral sclerosis
ANCOVA		Analysis of Covariance
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
ATP		Adenosine triphosphate
Bardoxolone		Bardoxolone methyl
BXLS		Blackstone Life Sciences, LLC
CARES Act		Coronavirus Aid, Relief, and Economic Security Act
CKD		Chronic kidney disease
COVID-19		Coronavirus disease
CRO		Contract research organization
DPNP		Diabetic peripheral neuropathic pain
eGFR		Estimated glomerular filtration rate
EMA		European Medicines Agency
ESKD		End stage kidney disease
Exchange Act		Securities Exchange Act of 1934
FA		Friedreich’s ataxia
~~FARA~~		~~Friedreich’s Ataxia Research Alliance~~
FASB		Financial Accounting Standards Board
FDA		United States Food and Drug Administration
FSGS		Focal segmental glomerulosclerosis
GFR		Glomerular filtration rate
IgAN		IgA nephropathy
~~IST~~IRS		~~Investigator-Sponsored Trial~~Internal Revenue Service
ITT		Intent to treat
KKC		Kyowa Kirin Co., Ltd.
MAA		Marketing Authorization Application
mFARS		Modified Friedreich’s Ataxia Rating Scale
MHLW		Japanese Ministry of Health, Labour and Welfare
mITT		Modified ITT
NDA		New Drug Application
~~NYU~~		~~New York University Grossman School of Medicine~~
PDUFA		Prescription Drug User Fee Act
PK		Pharmacokinetic
Registrational trial		An adequate and well-controlled trial designed to be sufficient to apply for regulatory approval of a drug candidate, although notwithstanding the Company’s design a regulatory agency may determine that further clinical studies or data are required
~~Sarbanes-Oxley Act~~REMS		~~The Sarbanes-Oxley Act of 2002~~Risk Evaluation and Mitigation Strategies
RSU		Restricted Stock Unit
SAE		Serious adverse event
SAP		Statistical analysis plan

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
	(unaudited)						(unaudited)
Assets
Cash and cash equivalents	$	610,419		$	664,324		$	755,707		$	818,150
Prepaid expenses and other current assets		7,830			4,952			11,971			6,960
Income tax receivable		22,218			—			—			22,228
Total current assets		640,467			669,276			767,678			847,338
Property and equipment, net		4,267			2,996			6,005			4,912
Other assets		7,670			10,148			3,929			5,348
Total assets	$	652,404		$	682,420		$	777,612		$	857,598
Liabilities and stockholders’ equity
Accounts payable		11,263			1,908			8,412			4,790
Accrued direct research liabilities		16,689			23,774			15,695			14,023
Other current liabilities		14,545			11,631			16,983			22,264
Current portion of payable to collaborators		—			150,000
Current portion of deferred revenue		4,688			4,701
Payable to collaborators								76,923			73,437
Deferred revenue								3,090			4,688
Total current liabilities		47,185			192,014			121,103			119,202
Other long-term liabilities		6,940			6,982			4,872			5,511
Term loan, net of debt issuance costs		—			155,017
Liability related to sale of future royalties, net		294,234			—			337,808			315,454
Payable to collaborators, net of current portion		70,055			66,862
Deferred revenue, net of current portion		2,363			4,688
Total noncurrent liabilities		373,592			233,549			342,680			320,965
Commitments and contingencies
Stockholders’ equity:
Common stock A, $0.001 par value: 500,000,000 shares authorized; issued and outstanding – 28,526,532 and 27,878,550 at June 30, 2020 and December 31, 2019, respectively		29			28
Common stock B, $0.001 par value: 150,000,000 shares authorized; issued and outstanding – 5,058,319 and 5,318,157 shares at June 30, 2020 and December 31, 2019, respectively		5			5
Common stock A, $0.001 par value: 500,000,000 shares authorized; issued and outstanding – 31,454,329 and 31,109,154 at June 30, 2021 and December 31, 2020, respectively								31			31
Common stock B, $0.001 par value: 150,000,000 shares authorized; issued and outstanding – 4,924,479 and 5,044,931 at June 30, 2021 and December 31, 2020, respectively								5			5
Additional paid-in capital		1,058,606			967,317			1,412,193			1,375,640
Accumulated deficit		(827,013	)		(710,493	)		(1,098,400	)		(958,245	)
Total stockholders’ equity		231,627			256,857			313,829			417,431
Total liabilities and stockholders’ equity	$	652,404		$	682,420		$	777,612		$	857,598

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30						June 30						June 30						June 30
	2020			2019			2020			2019			2021			2020			2021			2020
Collaboration revenue
License and milestone	$	1,169		$	7,813		$	2,338		$	15,539		$	803		$	1,169		$	1,598		$	2,338
Other revenue		1,904			20			2,088			64			1,418			1,904			1,568			2,088
Total collaboration revenue		3,073			7,833			4,426			15,603			2,221			3,073			3,166			4,426
Expenses
Research and development		36,783			29,554			84,436			55,668			40,066			36,783			74,946			84,436
General and administrative		16,600			11,706			37,387			21,744			21,998			16,600			42,703			37,387
Depreciation		284			232			562			401			287			284			561			562
Total expenses		53,667			41,492			122,385			77,813			62,351			53,667			118,210			122,385
Other income (expense), net		(16,990	)		(701	)		(20,804	)		(1,301	)		(13,223	)		(16,990	)		(25,780	)		(20,804	)
Loss before taxes on income		(67,584	)		(34,360	)		(138,763	)		(63,511	)		(73,353	)		(67,584	)		(140,824	)		(138,763	)
(Benefit from) provision for taxes on income		(3	)		20			(22,243	)		23
Benefit from (provision for) taxes on income														653			3			669			22,243
Net loss	$	(67,581	)	$	(34,380	)	$	(116,520	)	$	(63,534	)	$	(72,700	)	$	(67,581	)	$	(140,155	)	$	(116,520	)
Net loss per share—basic and diluted	$	(2.03	)	$	(1.14	)	$	(3.51	)	$	(2.12	)	$	(2.00	)	$	(2.03	)	$	(3.87	)	$	(3.51	)
Weighted-average number of common shares used in net loss per share basic and diluted		33,265,778			30,069,048			33,243,931			29,950,241			36,299,735			33,265,778			36,251,948			33,243,931

Three Months Ended June 30, 2020

Common Stock A

Common Stock B

Additional
Paid-In

Total
Accumulated

Total
Stockholders’

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance at March 31, 2020

28,166,652

$
28

5,070,271

$
5

$
988,046

$
(759,432
)

$
228,647

Net loss

—

—

—

—

—

(67,581
)

(67,581
)
Compensation expense
related to stock options

—

—

—

—

14,796

—

14,796

Exercise of options

—

—

7,135

—

365

—

365

Conversion of common stock
Class B to Class A

19,087

—

(19,087
)

—

—

—

—

Issuance of Common Stock

340,793

1

—

—

55,399

—

55,400

Balance at June 30, 2020

28,526,532

$
29

5,058,319

$
5

$
1,058,606

$
(827,013
)

$
231,627

	Three Months Ended June 30, 2021
	Common Stock A				Common Stock B					Additional Paid-In		Total Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Deficit			Equity
Balance at March 31, 2021		31,360,256	$	31		4,909,554		$	5	$	1,394,997	$	(1,025,700	)	$	369,333
Net loss		—		—		—			—		—		(72,700	)		(72,700	)
Compensation expense related to stock options		—		—		—			—		13,244		—			13,244
Exercise of options		—		—		106,818			—		3,952		—			3,952
Issuance of common stock upon vesting of restricted stock units		—		—		2,180			—		—		—			—
Conversion of common stock Class B to Class A		94,073		—		(94,073	)		—		—		—			—
Balance at June 30, 2021		31,454,329	$	31		4,924,479		$	5	$	1,412,193	$	(1,098,400	)	$	313,829

Six Months Ended June 30, 2020

Common Stock A

Common Stock B

Additional
Paid-In

Total
Accumulated

Total
Stockholders’

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance at December 31, 2019

27,878,550

$
28

5,318,157

$
5

$
967,317

$
(710,493
)

$
256,857

Net loss

—

—

—

—

$
—

(116,520
)

(116,520
)
Compensation expense
related to stock options

—

—

—

—

$
34,104

—

34,104

Exercise of options

—

—

47,351

—

$
1,786

—

1,786

Conversion of common stock
Class B to Class A

307,189

—

(307,189
)

—

$
—

—

—

Issuance of Common Stock

340,793

1

—

—

$
55,399

—

55,400

Balance at June 30, 2020

28,526,532

$
29

5,058,319

$
5

$
1,058,606

$
(827,013
)

$
231,627

	Three Months Ended June 30, 2019																	Six Months Ended June 30, 2021
	Common Stock A				Common Stock B					Additional Paid-In		Total Accumulated			Total Stockholders’			Common Stock A				Common Stock B					Additional Paid-In		Total Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Deficit			(Deficit)			Shares		Amount		Shares			Amount		Capital		Deficit			Equity
Balance at March 31, 2019		24,403,477	$	24		5,639,666		$	6	$	444,837	$	(449,477	)	$	(4,610	)
Balance at December 31, 2020																			31,109,154	$	31		5,044,931		$	5	$	1,375,640	$	(958,245	)	$	417,431
Net loss		—		—		—			—		—		(34,380	)		(34,380	)		—		—		—			—		—		(140,155	)		(140,155	)
Compensation expense related to stock options		—		—		—			—		4,483		—			4,483			—		—		—			—		27,923		—			27,923
Exercise of options		—		—		54,791			—		1,034		—			1,034			—		—		219,241			—		8,630		—			8,630
Issuance of common stock upon vesting of restricted stock units																			—		—		5,482			—		—		—			—
Conversion of common stock Class B to Class A		62,930		—		(62,930	)		—		—		—			—			345,175		—		(345,175	)		—		—		—			—
Balance at June 30, 2019		24,466,407	$	24		5,631,527		$	6	$	450,354	$	(483,857	)	$	(33,473	)
Balance at June 30, 2021																			31,454,329	$	31		4,924,479		$	5	$	1,412,193	$	(1,098,400	)	$	313,829

Six Months Ended June 30, 2019

Common Stock A

Common Stock B

Additional
Paid-In

Total
Accumulated

Total
Stockholders’

Shares

Amount

Shares

Amount

Capital

Deficit

Equity (Deficit)

Balance at December 31, 2018

24,000,683

$
24

5,728,175

$
6

$
435,452

$
(420,323
)

$
15,159

Net loss

—

—

—

—

—

(63,534
)

(63,534
)
Compensation expense
   related to stock options

—

—

—

—

8,710

—

8,710

Exercise of options

—

—

369,076

—

6,085

—

6,085

Conversion of common stock
   Class B to Class A

465,724

—

(465,724
)

—

—

—

—

Other shareholder
   transactions

—

—

—

—

107

—

107

Balance at June 30, 2019

24,466,407

$
24

5,631,527

$
6

$
450,354

$
(483,857
)

$
(33,473
)

	Three Months Ended June 30, 2020
	Common Stock A				Common Stock B					Additional Paid-In		Total Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Deficit			Equity
Balance at March 31, 2020		28,166,652	$	28		5,070,271		$	5	$	988,046	$	(759,432	)	$	228,647
Net loss		—		—		—			—		—		(67,581	)		(67,581	)
Compensation expense related to stock options		—		—		—			—		14,796		—			14,796
Exercise of options		—		—		7,135			—		365		—			365
Conversion of common stock Class B to Class A		19,087		—		(19,087	)		—		—		—			—
Issuance of Common Stock		340,793		1		—			—		55,399		—			55,400
Balance at June 30, 2020		28,526,532	$	29		5,058,319		$	5	$	1,058,606	$	(827,013	)	$	231,627

	Six Months Ended June 30, 2020
	Common Stock A				Common Stock B					Additional Paid-In		Total Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Deficit			Equity
Balance at December 31, 2019		27,878,550	$	28		5,318,157		$	5	$	967,317	$	(710,493	)	$	256,857
Net loss		—		—		—			—		—		(116,520	)		(116,520	)
Compensation expense related to stock options		—		—		—			—		34,104		—			34,104
Exercise of options		—		—		47,351			—		1,786		—			1,786
Conversion of common stock Class B to Class A		307,189		—		(307,189	)		—		—		—			—
Issuance of Common Stock		340,793		1		—					55,399					55,400
Balance at June 30, 2020		28,526,532	$	29		5,058,319		$	5	$	1,058,606	$	(827,013	)	$	231,627

	Six Months Ended						Six Months Ended
	June 30						June 30
	2020			2019			2021			2020
Operating activities
Net loss	$	(116,520	)	$	(63,534	)	$	(140,155	)	$	(116,520	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		562			401			561			562
Amortization of debt issuance costs and implied interest		4,163			678
Amortization of debt issuance costs and imputed interest								3,487			4,163
Non-cash interest expense on liability related to sale of future royalty		664			—			22,354			664
Stock-based compensation expense		34,104			8,710			27,923			34,104
Loss on extinguishment of debt		11,183			—			0			11,183
Changes in operating assets and liabilities:
Income tax receivable		(22,218	)		—
Prepaid expenses and other current assets and other assets		(1,815	)		(2,271	)
Income tax receivable and payable								22,228			(22,218	)
Prepaid expenses, other current assets and other assets								(4,995	)		(1,815	)
Accounts payable		9,355			312			3,550			9,355
Accrued direct research, other current, and long-term liabilities		(4,247	)		9,802
Accrued direct research, other current and long-term liabilities								(3,966	)		(4,247	)
Payable to collaborators		(150,000	)		—			0			(150,000	)
Deferred revenue		(2,338	)		(15,539	)		(1,598	)		(2,338	)
Net cash used in operating activities		(237,107	)		(61,441	)		(70,611	)		(237,107	)
Investing activities
Purchases of property and equipment		(384	)		(2,092	)		(462	)		(384	)
Net cash used in investing activities		(384	)		(2,092	)		(462	)		(384	)
Financing activities
Proceeds from issuance of common stock, net		55,399			—			0			55,399
Payments on long-term debt		(167,170	)		—			0			(167,170	)
Exercise of options		1,786			6,085			8,630			1,786
Proceeds from sale of future royalties, net		293,571			107			0			293,571
Net cash provided by financing activities		183,586			6,192			8,630			183,586
Net decrease in cash and cash equivalents		(53,905	)		(57,341	)		(62,443	)		(53,905	)
Cash and cash equivalents at beginning of year		664,324			337,790			818,150			664,324
Cash and cash equivalents at end of period	$	610,419		$	280,449		$	755,707		$	610,419
Supplemental disclosures
Cash paid for interest	$	8,021		$	4,153		$	0		$	8,021
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—		$	8,981
Purchases of equipment in accounts payable, accrued direct research, other current, and long-term liabilities	$	1,448		$	170		$	3,625		$	1,448

The Company’s mission is to identify, develop, and commercialize innovative therapies that change patients’ lives for the better. The Company focuses on small-molecule therapeutics with novel mechanisms of action for the treatment of severe, life-threatening diseases with few or no approved therapies. The Company’s lead programs are in rare forms of chronic kidney disease (CKD) and a rare neurological disease. The Company announced positive topline data from registrational trials for both of its lead product candidates, bardoxolone methyl (bardoxolone) in patients with CKD caused by Alport syndrome and omaveloxolone in patients with a neurological disorder called Friedreich’s ataxia (FA). Both bardoxolone and omaveloxolone activate the transcription factor Nrf2 to normalize mitochondrial function, restore redox balance, and resolve inflammation. Because mitochondrial dysfunction, oxidative stress, and inflammation are features of many diseases, the Company believes bardoxolone, omaveloxolone, and ~~omaveloxolone~~our next-generation Nrf2 activators have many potential clinical applications. Reata possesses exclusive, worldwide rights to develop, manufacture, and commercialize bardoxolone, omaveloxolone, and our next-generation Nrf2 activators, excluding certain Asian markets for bardoxolone in certain indications, which are licensed to Kyowa Kirin Co., Ltd. (KKC).

The Company’s consolidated financial statements include the accounts of all majority-owned subsidiaries. Accordingly, the Company’s share of net earnings and losses from these subsidiaries is included in the consolidated statements of operations. Intercompany profits, transactions, and balances have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021. The consolidated balance sheet at December 31, ~~2019,~~2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the annual consolidated financial statements and footnotes thereto of the Company.

The significant accounting policies used in the preparation of these condensed consolidated financial statements for the ~~three and~~ six months ended June 30, ~~2020~~2021 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except as noted below with respect to the Company’s liability related to sale of future royalties and as noted within the “Recent Accounting Pronouncements – Recently Adopted Accounting Pronouncements” section.

On June 10, 2020, the Company entered into a Development and Commercialization Funding Agreement with an affiliate of Blackstone Life Sciences, LLC (BXLS) that provides funding for the development and commercialization of bardoxolone for the treatment of CKD caused by Alport syndrome, autosomal dominant polycystic kidney disease (ADPKD), and certain other rare CKD indications in return for future royalties (Development Agreement). The Company accounted for the Development Agreement as a sale of future revenues resulting in a debt classification, primarily because the Company has significant continuing involvement in generating the future revenue on which the royalties are based. The debt will be amortized under the effective interest rate method and, accordingly, the Company is recognizing non-cash interest expense over the estimated term of the Development Agreement. The liability related to sale of future royalties, and the debt amortization, are based

on the Company’s current estimate of future royalties expected to be paid over the estimated term of the Development Agreement. The Company will periodically assess the expected royalty payments and, if materially different than its previous estimate, will prospectively adjust and recognize the related non-cash interest expense. ~~The transaction costs associated with the liability will be amortized to non-cash interest expense over the estimated term of the Development Agreement.~~ ~~See Note 5,~~ ~~Liability Related to Sale of Future Royalties, of Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.~~

The Company categorizes its financial instruments measured at fair value into a three-level fair value hierarchy that prioritizes the inputs used in determining the fair value of the asset or liability. The three levels of the fair value hierarchy are as follows:

The Company has determined the fair value of the liability related to the sale of future royalties is based on the Company’s current estimates of future royalties expected to be paid to BXLS, over the life of the arrangement, which are considered Level 3. See Note 5, ~~Liability Related to Sale of Future Royalties, of Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.~~2020.

In ~~February 2016, the Financial Accounting Standards Board (FASB) issued Topic 842, amended by ASU 2018-11,~~ ~~Leases~~ (Topic 842): Targeted Improvements. The new guidance requires a lessee to recognize assets and liabilities for all leases with lease terms of more than 12 months and provide additional disclosures. Topic 842 requires adoption using a modified retrospective transition approach with either 1) transition provisions at the beginning of the earliest comparative period with its cumulative adjustment recognized to retained earnings at the beginning of the earliest period presented or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption. We adopted this standard on January 1,December 2019, using the cumulative-effect adjustment approach. We elected the package of practical expedients in transition for leases that commenced prior to January 1, 2019 whereby these contracts were not reassessed or reclassified from their previous assessment as of December 31, 2018.

~~In November 2018,~~ the FASB issued ASU ~~No. 2018-18,~~ ~~Collaborative Arrangements~~2019-12, Income Taxes (Topic ~~808) (ASU 2018-18). This~~740), Simplifying the Accounting for Income Taxes. The FASB issued this update ~~provides clarification on~~as part of its Simplification Initiative to improve areas of U.S. GAAP and reduce cost and complexity while maintaining usefulness. The main provision that impacts the ~~interaction between~~ ~~Revenue~~Company is the removal of the exception to the incremental approach of intra-period tax allocation when there is a loss from ~~Contracts with Customers~~ ~~(Topic 606)~~continuing operations and ~~Collaborative Arrangements (Topic 808) including the alignment of unit of account guidance between the two topics. This update~~income or gain from other items. ASU 2019-12 is effective ~~in fiscal years, including~~for annual periods, and interim periods within those annual periods, beginning after December 15, ~~2019, and early adoption is permitted.~~2020. The Company adopted this

standard on January 1, ~~2020 and its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosure.~~

~~In August 2018, the FASB issued ASU 2018-15,~~ 2021,~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~. This update requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. This guidance should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this standard on January 1, 2020 and its adoption did not have material impact to the Company’s consolidated financial statements and related ~~disclosure~~.disclosure.

Beginning in 2020, the Company’s collaboration revenue and deferred revenue have been generated primarily from licensing fees and reimbursements for expenses received under our exclusive license with KKC (the KKC Agreement).

In December 2009, the Company entered into an exclusive license with KKC to develop and commercialize bardoxolone in the licensed territory. The terms of the agreement include payment to the Company of a nonrefundable, up-front license fee of $35.0 million and additional development and commercial milestone payments. As of June 30, 2021, the Company has received $45.0 million related to regulatory development milestone payments from KKC and has the potential in the future to achieve another $52.0 million from regulatory milestones and $140.0 million from commercial milestones. The Company also has the potential to achieve tiered royalties ranging from the low teens to the low 20 percent range, depending on the country of sale and the amount of annual net sales, on net sales by KKC in the licensed territory. The Company is participating on a joint steering committee with KKC to oversee the development and commercialization activities related to bardoxolone. Any future milestones and royalties received are subject to mid to lower single digit percent declining tiered commissions to certain consultants as compensation for negotiations of the KKC Agreement.

The up-front payment and regulatory milestones are accounted for as a single unit of accounting. The Company regularly evaluates its remaining performance obligation under the KKC Agreement. Accordingly, revenue may fluctuate from period to period due to changes to its estimated performance obligation period and variable considerations. The Company began recognizing revenue related to the up-front payment upon execution of the KKC Agreement.

In March 2021, the Company’s performance obligation period under the KKC Agreement was extended to June 2022, which decreased quarterly revenue recognition by approximately $0.4 million prospectively.

In September 2010, the Company entered into a license agreement with AbbVie Inc. (AbbVie) (the AbbVie License Agreement) for an exclusive license to develop and commercialize bardoxolone in the Licensee Territory (as defined in the AbbVie License Agreement).

In December 2011, the Company entered into a collaboration agreement with AbbVie (the ~~AbbVie~~ Collaboration Agreement) to jointly research, develop, and commercialize the Company’s portfolio of second and later generation oral Nrf2 activators.

OnIn October 9, 2019, the Company and AbbVie entered into an Amended and Restated License Agreement (the Reacquisition Agreement) pursuant to which the Company reacquired the development, manufacturing, and commercialization rights concerning its proprietary Nrf2 activator product platform originally licensed to AbbVie in the AbbVie License Agreement and the ~~AbbVie~~ Collaboration Agreement. In exchange for such rights, the Company agreed to pay AbbVie $330.0 million, of which ~~$100.0~~total payments of $250.0 million ~~was paid~~have been made as of ~~December 31, 2019, $150.0 million was paid on~~ June 30, ~~2020, and~~2021, with the remaining $80.0 million ~~will be~~ payable on November 30, 2021. Additionally, the Company will pay AbbVie an escalating, low single-digit royalty on worldwide net sales, on a product-by-product basis, of omaveloxolone and certain next-generation Nrf2 activators. The execution of the Reacquisition Agreement ended our performance obligations under the Collaboration Agreement.

The Company recognized interest expense related to the Reacquisition Agreement of approximately ~~$1.6~~$1.8 million and $0$1.6 million, during the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$3.2~~$3.5 million and $0$3.2 million during the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. As of June 30, ~~2020,~~2021, the Company’s payable to collaborators was $80.0 million, with a present value of ~~$70.1 million.~~ $76.9 million.

The execution of the Reacquisition Agreement ended our performance obligations under the AbbVie Collaboration Agreement and included the write off of the remaining related deferred revenue balance, after which no further revenue was recognized. Accordingly, there was 0 revenue recognized in 2020. The Company recognized revenue related to the AbbVie Collaboration Agreement totaling approximately $6.6 million and $13.2 million during the three and six months ended June 30, 2019, respectively. The deferred revenue balance was $0 million as of June 30, 2020.

In December 2009, the Company entered into an exclusive license with KKC (the KKC Agreement) to develop and commercialize bardoxolone in the licensed territory. The Company received a nonrefundable, up-front license fee of $35.0 million in 2009 and regulatory milestones totaling $45.0 million in 2010, 2012, and 2018 and could receive additional regulatory milestones of $52.0 million and commercial milestones of $140.0 million, as well as tiered royalties ranging from the low teens to the low 20 percent range, depending on the country of sale and the amount of annual net sales, on net sales by KKC in the licensed territory.

The up-front payment and regulatory milestones are accounted for as a single unit of accounting. Revenue is being recognized ratably through December 2021, which is the estimated minimum period that is needed to complete the deliverables under the terms of the KKC Agreement. The Company began recognizing revenue related to the up-front payment upon execution of the KKC Agreement. The Company recognized collaboration revenue totaling approximately $1.2 million during each of the three months ended June 30, 2020 and 2019 and $2.3 million during each of the six months ended June 30, 2020 and 2019. As of June 30, 2020, the Company recorded deferred revenue totaling approximately $7.1 million of which approximately $4.7 million is reflected as the current portion of deferred revenue.

On October 9, 2019, the Company entered into the First Amendment to the Amended and Restated Loan and Security Agreement (the Amended Restated Loan Agreement)~~. Under the Amended Restated Loan Agreement, the Term A Loan principal amount was $80.0~~, under which it borrowed $155.0 million ~~and the Term B Loan availability was increased from $45.0 million to $75.0 million (collectively with the Term A Loan, the Term Loans). On~~as of December 20, ~~2019, the Company borrowed $75.0 million under the Term B Loan resulting in a principal balance of the Term Loans of $155.0 million.~~

2019. On June 24, 2020, the Company paid off the total outstanding balance of the ~~Term Loans~~term loans under the Amended Restated Loan Agreement (Term Loans) prior to the maturity date. The payoff consisted of (i) the outstanding principal balance of $155.0 million, (ii) exit fees of $6.7 million, which has been partially accrued up to the date of repayment, (iii) prepayment fees of $5.4 million, and (iv) accrued and unpaid interest of $1.0 million. At the time of payoff, all liabilities and obligations under the Amended Restated Loan Agreement were terminated. ~~In connection with the payoff of the Term Loans, the~~The Company ~~recorded a loss on extinguishment of debt of $11.2~~recognized approximately $4.3 million and $8.3 million in interest expense, during the three months and six months ended June 30, 2020, respectively. NaN interest expense was recognized in 2021 as the term loan was paid off in June 2020.

On June 24, 2020, the Company closed on the Development and Commercialization Funding Agreement with ~~BXLS.~~an affiliate of Blackstone Life Sciences, LLC (BXLS), which provides funding for the development and commercialization of bardoxolone for the treatment of CKD caused by Alport syndrome, autosomal dominant polycystic kidney disease (ADPKD), and certain other rare CKD indications in return for future royalties (the Development Agreement). The Development Agreement includes a $300.0 million payment by an affiliate of BXLS in return for various percentage royalty payments on worldwide net sales of bardoxolone, once approved in the United States or certain specified European countries, by Reata and its licensees, other than KKC. The royalty percentage will initially be in the mid-single digits and, in future years, can vary between higher-mid single digit percentages to low-single digit percentages depending on various milestones, including indication approval dates, cumulative royalty payments, and cumulative net sales. Pursuant to the Development Agreement, we have granted BXLS a security interest in substantially all of our assets.

In addition, concurrent with the Development Agreement, the Company entered into a common stock purchase agreement ~~(Purchase~~(the Purchase Agreement) with affiliates of BXLS to sell an aggregate of 340,793 shares of the Company’s Class A common stock at $146.72 per share for a total of $50.0 million.

The Company concluded that there were 2 units of accounting for the consideration received, comprised of the liability related to the sale of future royalties and the common shares. The Company allocated the $300.0 million from the Development Agreement and $50.0 million from the Purchase Agreement between the two units of accounting on a relative fair value basis at the time of the transaction. The Company allocated ~~$294.2~~$294.5 million, which includes $0.8 million in transaction costs incurred, in transaction consideration to the liability, and $55.5 million to the common shares. The Company determined the fair value of the common shares based on the closing stock price on the June 24, 2020, the closing date of the Development Agreement. The effective interest rate under the Development Agreement, including transaction costs, is approximately ~~13.7%~~13.8%.

The following table shows the activity within the liability related to sale of future royalties for the six months ended June 30, ~~2020:~~2021:

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30						June 30						June 30						June 30
	2020			2019			2020			2019			2021			2020			2021			2020
Other income (expense), net
Investment income	$	501		$	1,705		$	2,555		$	3,502		$	13		$	501		$	93		$	2,555
Interest expense		(5,644	)		(2,413	)		(11,512	)		(4,810	)		(1,773	)		(5,644	)		(3,487	)		(11,512	)
Non-cash interest expense on liability related to sale of future royalty		(664	)		—			(664	)		—			(11,429	)		(664	)		(22,354	)		(664	)
Other income (expense)		—			7			—			7			(34	)		0			(32	)		0
Loss on extinguishment of debt		(11,183	)		—			(11,183	)		—			0			(11,183	)		0			(11,183	)
Total other income (expense), net	$	(16,990	)	$	(701	)	$	(20,804	)	$	(1,301	)	$	(13,223	)	$	(16,990	)	$	(25,780	)	$	(20,804	)

Interest income consists primarily of interest generated from our cash and cash equivalents.

Interest expense consists primarily of ~~interest on our borrowing activities under our loan agreements and~~ the imputed interest from amount due to AbbVie under the Reacquisition ~~Agreement.~~Agreement and interest on its Term Loans in 2020.

Non-cash interest expense consists of recognition of interest expense based on the Company’s current estimate of future royalties expensed to be paid over the estimated term of the Development Agreement.

Other income (expense) consists primarily of gains and losses on foreign currency ~~exchange and sales of assets.~~exchange.

In June 2020, the Company paid off the Term Loans and recorded a loss on the extinguishment of debt of $11.2 million, which consisted primarily of prepayment fees, exit fees and unamortized debt issuance costs.

The Company’s headquarters are located in Plano, Texas, where it leases approximately 122,000 square feet of office ~~space.~~space, with lease terms extending through June 30, 2022 and an option to renew up to three months. The Company leases additional office and laboratory space of approximately 34,890 square feet located in Irving, ~~Texas. The~~Texas, with lease terms ~~for the Irving~~extending through April 30, 2022 and ~~Plano offices extend through October 31, 2022 with~~ an option to renew up to ~~six months and through April 30, 2022 with~~ four successive three-month~~-period renewal options,~~ periods.

The Company has elected to net the amortization of the right-of-use assets and the reduction of the lease liabilities principal in accrued direct research and other current and long-term liabilities in the consolidated statements of cash flows. During the three and six months ended June 30, 2021, cash paid for amounts included for the measurement of lease liabilities was $0.8 million and $1.6 million, respectively. During the three and six months ended June 30, 2021, the Company recorded operating lease expense of $0.8 million and $1.6 million, respectively.

Supplemental balance sheet information related to the Company’s operating leases is as follows:

Maturities of lease liabilities by fiscal year for the Company’s operating leases:

The Company has an additional lease of a single-tenant, build-to-suit building of approximately 327,400 square feet of office and laboratory space located in Plano, Texas with an initial lease term of 16 years. The Company entered into the lease agreement on October 15, 2019 (the 2019 Lease Agreement), and at the Company’s option, it may renew the lease for two consecutive five-year renewal periods or one ten-year renewal period. The Company does not have control of the space or the construction prior to completion of construction. Therefore, 0 right-of-use or lease liabilities were recorded in connection with the 2019 Lease Agreement as of June 30, ~~2020.~~2021. Under the First Amendment to the Lease Agreement executed in May 2020, the landlord will fund the Company’s leasehold improvements up to $31.3 million, of which the Company has recorded a leasehold incentive obligation of approximately ~~$1.7~~$3.3 million as other long-term liabilities as of June 30, ~~2020.~~

~~At June 30, 2020,~~2021. The initial annual base rent will be determined based on the ~~weighted average incremental borrowing rate and~~project cost, subject to an initial annual cap of approximately $13.3 million, which may increase in certain circumstances. Beginning in the ~~weighted average remaining~~third lease ~~term for~~year, the ~~operating leases held by~~base rent will increase 1.95% per annum each year. In addition to the annual base rent, the Company ~~were 9.6%~~will pay for taxes, insurance, utilities, operating expenses, assessments under private covenants, maintenance and ~~2.3 years, respectively. During the three~~repairs, certain capital repairs and ~~six months ended June 30, 2020, cash paid for amounts included for the measurement of lease liabilities was $1.0 million~~replacements, and $1.9 million, respectively. During the three and six months ended June 30, 2020 the Company recorded operating lease expense of $1.0 million and $1.9 million, respectively. The Company has elected to net the amortization of the right-of-use assets and the reduction of the lease liabilities principal in accrued direct research and other current and long-term liabilities in the consolidated statements of cash flows.

~~Supplemental balance sheet information related to the Company’s operating leases is as follows:~~

~~Maturities of lease liabilities by fiscal year for the Company’s operating leases:~~

On March 27, 2020, the United States enacted the ~~Coronavirus Aid, Relief, and Economic Security Act (the~~ CARES ~~Act).~~Act. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the ~~United States~~U.S. economy and to provide assistance to individuals, families, and businesses affected by COVID-19. Accordingly, under its provisions, ~~for the six months ended June 30,~~in March 2020, the Company recognized a tax ~~benefit~~benefits and ~~receivable of $22.1~~receivables totaling $22.2 million associated with the ability to carryback an applicable prior year’s net operating losses to a preceding year, ~~to generate~~which had previously been fully reserved by its valuation allowance. During the second quarter of 2021, the Company received a ~~refund.~~total of $22.9 million from the IRS, $22.2 million of the income tax receivable plus $0.7 million in interest.

~~For the three months ended June 30, 2020, the Company’s~~The following table summarizes income tax (benefit) expense and effective income tax ~~rate was a benefit of 0.0% compared to 0.0% for the three months ended June 30, 2019.~~ rate:

The Company’s effective tax rate for the three months and six months ended June 30, ~~2020~~2021, varies with the statutory rate primarily due to valuation allowances on deferred taxes. For the six months ended June 30, 2020, the Company’s effective tax rate was a benefit of 16.0% compared to 0.0% for the six months ended June 30, 2019. The Company’s effective tax rate for the six months ended June 30, 2020 varies with the statutory rate primarily due to the favorable impact associated with the CARES Act and changes in the valuation allowance related to certain deferred tax assets generated or utilized in the applicable period.

Deferred tax assets are regularly reviewed for recoverability by jurisdiction and valuation allowances are established based on historical and projected future taxable losses and the expected timing of the reversals of existing temporary differences. The ~~Company’s~~Company has recorded valuation allowances against the majority of its deferred tax assets ~~have been fully offset by a valuation allowance at~~as of June 30, ~~2020,~~2021, and the Company expects to maintain ~~this~~these valuation ~~allowance~~allowances until there is sufficient evidence that future earnings can be achieved, which is uncertain at this time.

The following table summarizes ~~stock-based~~time-based and performance-based stock compensation expense reflected in the consolidated statements of ~~operations:~~operations (in thousands):

	Three Months Ended June 30				Six Months Ended June 30				Three Months Ended				Six Months Ended
	2020		2019		2020		2019		June 30				June 30
	(in thousands)								2021		2020		2021		2020
Research and development	$	7,527	$	1,659	$	19,044	$	3,350	$	5,263	$	7,527	$	12,071	$	19,044
General and administrative		7,269		2,824		15,060		5,360		7,981		7,269		15,852		15,060
	$	14,796	$	4,483	$	34,104	$	8,710
Total stock compensation expense									$	13,244	$	14,796	$	27,923	$	34,104

The following table summarizes ~~RSUs~~RSU activity as of June 30, ~~2020,~~2021, under the Second Amended and Restated Long Term Incentive Plan (LTIP Plan) ~~agreement and standalone option agreements:~~

	Number of RSUs		Weighted-Average Grant Date Fair Value		Number of RSUs			Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2020		50,000	$	72.70
Outstanding at January 1, 2021						108,551		$	115.54
Granted		24,751	$	184.00		277,300			121.02
Vested		—	$	—		(5,482	)		184.18
Forfeited		—	$	—		(26,041	)		129.87
Outstanding at June 30, 2020		74,751	$	109.55
Outstanding at June 30, 2021						354,328		$	117.69

As of June 30, 2020, the performance targets for the performance-based RSUs have not been met. Accordingly, the fair value related to these performance-based RSUs of approximately $4.2 million has not been recognized. During the quarter ended June 30, 2020, the Company recognized $0.3 million in2021, total unrecognized compensation expense related to ~~time-based RSUs.~~RSU and performance-based RSUs awards that were deemed probable of vesting was approximately $8.6 million, which excludes 282,992 shares of unvested performance-based RSUs that were deemed not probable of vesting totaling unrecognized stock-based compensation expense of $32.0 million.

The following table summarizes stock option activity as of June 30, ~~2020, and changes during the six months ended June 30, 2020,~~2021, under the LTIP Plan and standalone option agreements:

	Number of Options			Weighted-Average Exercise Price		Number of Options			Weighted- Average Price
Outstanding at January 1, 2020		4,038,949		$	41.24
Outstanding at January 1, 2021							4,306,269		$	79.47
Granted		973,999		$	203.19		828,524			123.74
Exercised		(47,351	)	$	37.51		(219,241	)		38.34
Forfeited		(171,917	)	$	94.68		(192,203	)		125.36
Outstanding at June 30, 2020		4,793,680		$	72.27
Exercisable at June 30, 2020		2,240,699		$	33.31
Expired							(37,729	)		202.89
Outstanding at June 30, 2021							4,685,620		$	86.32
Exercisable at June 30, 2021							2,409,185		$	50.60

Stock-based compensation expense for the three and six months ended June 30, ~~2020,~~2021, included accelerated recognition of expense of $1.4 million, due to modifications of outstanding stock options as a result of ~~the death of~~ an ~~executive and employees~~employee who entered into a consulting ~~agreements~~agreement at the termination of employment, which ~~were~~was considered to be non-substantive services. ~~Accordingly, the Company recognized $2.9 million and $10.0 million for the three and six months ended June 30, 2020, respectively.~~

As of June 30, ~~2020, the Company has~~2021, total unrecognized compensation expense related to stock options was approximately ~~303,000~~$116.0 million, which excludes 481,550 shares of unvested performance-based stock options ~~for which the performance targets have~~that were deemed not ~~been met. Accordingly, the fair value related to these performance-based stock options~~probable of ~~approximately $34.1 million has not been recognized.~~vesting totaling unrecognized stock-based compensation expense of $48.7 million.

The total intrinsic value of all outstanding options and exercisable options at June 30, ~~2020~~2021 was ~~$448.7~~$313.4 million and ~~$278.2~~$232.2 million, respectively.

~~The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:~~

Three Months Ended
June 30

Six Months Ended
June 30

2020

2019

2020

2019

(in thousands, except share and per share data)

Numerator

Net loss

$
(67,581
)

$
(34,380
)

$
(116,520
)

$
(63,534
)
Denominator

Weighted-average number of common shares
used in net loss per share – basic

33,265,778

30,069,048

33,243,931

29,950,241

Dilutive potential common shares

—

—

—

—

Weighted-average number of common shares
used in net loss per share – diluted

33,265,778

30,069,048

33,243,931

29,950,241

Net loss per share – basic

$
(2.03
)

$
(1.14
)

$
(3.51
)

$
(2.12
)
Net loss per share – diluted

$
(2.03
)

$
(1.14
)

$
(3.51
)

$
(2.12
)

The number of weighted average options that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive represented ~~4,793,680~~4,685,620 and ~~3,845,874~~4,793,680 shares as of June 30, 2021 and 2020, respectively.

In 2010, we adopted an Employee Investment Plan, qualified under Section 401(k) of the Internal Revenue Code, which is a retirement savings plan covering substantially all of our U.S. employees (the Plan). The Plan is administered under the “safe harbor” provision of ERISA. Under the Plan, an eligible employee may elect to contribute a percentage of their salary on a pre-tax basis, subject to federal statutory limitations. Beginning in January 2019, the Company implemented a discretionary employer matching contribution of $1.00 for every $1.00 contributed by a participating employee up to $6,000 and ~~2019, respectively.~~$5,000 annually in 2021 and 2020, respectively, which such matching contributions become fully vested after four years of service. The Company recorded expense of $0.4 million and $0.3 million for the three months ended June 30, 2021, and 2020, respectively, and $1.2 million and $0.9 million for the six months ended June 30, 2021 and 2020, respectively which includes the Company’s contributions and administrative costs.

From time to time, the Company is a party to legal proceedings in the course of its business, including the matters described below. The outcome of any such legal proceedings, regardless of the merits, is inherently uncertain. In addition, litigation and related matters are costly and may divert the attention of our management and other resources that would otherwise be engaged in other activities. If the Company were unable to prevail in any such legal proceedings, its business, results of operations, liquidity and financial condition could be adversely affected. The Company recognizes accruals for litigations to the extent that it can conclude that a loss is both probable and reasonably estimable and recognizes legal expenses as incurred.

On October 15, 2020, Toshif Patel filed a complaint for alleged violation of federal securities laws against the Company, its Chief Executive Officer and its Chief Financial Officer in the United States District Court for the Eastern District of Texas. The complaint purports to bring a federal securities class action on behalf of a class of persons who acquired the Company’s common stock between October 15, 2019 and August 7, 2020. The complaint alleges, among other things, that the defendants made false and misleading statements regarding the sufficiency of its MOXIe Part 2 study results to support a single study marketing approval of omaveloxolone for the treatment of FA in the United States. The plaintiff seeks, among other things, the designation of this action as a class action, an award of unspecified compensatory damages and interest, costs, and expenses, including counsel fees and expert fees.

The Company believes that the allegations contained in the complaint are without merit and intends to defend the case vigorously. The Company cannot predict at this point the length of time that this action will be ongoing or the liability, if any, which may arise therefrom.

ASC 460, Guarantees, requires that, upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligations it assumes under that guarantee.

As permitted under Delaware law and in accordance with the Company’s bylaws, officers and directors are indemnified for certain events or occurrences, subject to certain limits, while the officer or director is or was serving in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has obtained director and officer insurance that limits its exposure and may enable recoverability of a portion of any future amounts paid. The Company believes the fair value for these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of June 30, 2021.

The Company has certain agreements with licensors, licensees, and collaborators that contain indemnification provisions. In such provisions, the Company typically agrees to indemnify the licensor, licensee, or collaborator against certain types of third-party claims. The Company accrues for known indemnification issues when a loss is probable and can be reasonably estimated. There were 0 accruals for expenses related to indemnification issues for any period presented.

In July 2021, KKC announced the submission of a New Drug Application (NDA) in Japan for bardoxolone in patients with CKD caused by Alport syndrome. The Company earned a $5.0 million milestone related to this event that will be recognized in the third quarter of 2021.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes and other financial information appearing in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, operations, and product candidates, includes forward-looking statements that involve risks and uncertainties. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under the ~~heading~~headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” and discussed elsewhere in this Quarterly Report on Form 10-Q.

We are a clinical-stage biopharmaceutical company focused on identifying, developing, and commercializing innovative therapies that change patients’ lives for the better. We concentrate on small-molecule therapeutics with novel mechanisms of action for the treatment of severe, life-threatening diseases with few or no approved therapies. Our lead programs are in rare forms of ~~chronic kidney disease (CKD)~~CKD and a rare neurological disease. We ~~have~~ announced positive topline data from registrational trials for both of our lead product candidates, bardoxolone ~~methyl (bardoxolone)~~ in patients with CKD caused by Alport syndrome and omaveloxolone in patients with a neurological disorder called Friedreich’s ataxia (FA). Both bardoxolone and omaveloxolone activate the transcription factor Nrf2 to normalize mitochondrial function, restore redox balance, and resolve inflammation. Because mitochondrial dysfunction, oxidative stress, and inflammation are features of many diseases, we believe bardoxolone and omaveloxolone have many potential clinical applications. We possess exclusive, worldwide rights to develop, manufacture, and commercialize bardoxolone, omaveloxolone, and our next-generation Nrf2 activators, excluding certain Asian markets for bardoxolone in certain indications, which are licensed to KKC.

~~Following~~On April 26, 2021, we announced that the ~~announcement~~U.S. Food and Drug Administration (FDA) accepted for filing the NDA for bardoxolone for the treatment of ~~positive, year one data from the Phase 3 CARDINAL study of bardoxolone in~~ patients with CKD caused by Alport syndrome, ~~in November 2019, we have been engaged in discussions with the U.S. Food~~ and Drug Administration (FDA) regarding the Year 1 efficacy and safety results. We have had a Type C meeting where the FDA expressed concerns with basing an NDA for accelerated approval on the Year 1 data and recommended that we consider submitting the NDA with Year 2 data based, in part, on the assumption that there would not be much delay in NDA submission. Following the Type C meeting, we provided written responses, and engaged in follow up informal meetings, that we believe addressed the FDA comments regarding the Year 1 results. Accordingly, we recently requested and were granted a pre-NDA meetingis currently under review by the FDA. The FDA ~~to discuss the NDA submission content and plans.~~

~~Our plan has been, and continues to be, to submit the NDA for bardoxolone in Alport syndrome during fourth quarter~~completed a bio-research monitoring inspection of 2020 for accelerated approval based on the one-year data from the Phase 3 portion of CARDINAL. If the second-year results are available during an acceptable time frame, we may be able to submit the second-year data to the NDA during the review process and before the FDA makes a determination about accelerated approval. This may extend the PDUFA date, but couldReata. We did not receive any observations. We also result in consideration of full approval, rather than accelerated approval. Alternatively, the FDA could recommend that we wait for the second-year data from CARDINAL to file the NDA. This would permit us to file for full approval but would delay the filing until the first quarter of 2021 compared to our current guidance of filing by the end of this year. This timing assumes that we can complete the activities necessary to provide the Year 2 data to the FDA on a timely basis and is, of course, subject to uncertainty resulting from the COVID-19 pandemic. As a result of the measures taken in response to the pandemic, and based on current operational metrics, at this time we believe that the timeline for Year 2 data availability is unlikely to be affected by COVID-19.

Following the announcement of the positive data from the MOXIe Part 2 study in October 2019, we have planned, subject to discussion with regulatory authorities, to proceed with a submission for marketing approval of

~~omaveloxolone for the treatment of FA in the United States. We~~ recently completed a ~~Type C~~mid-cycle communication meeting ~~in which~~with the FDA. While we have not yet received formal minutes from the FDA, ~~provided us with guidance that it does not have any concerns with the reliability of the modified Friedreich’s Ataxia Rating Scale (mFARS) primary endpoint results~~ in the MOXIe Part 2 study. Nevertheless, the FDA is not convinced that the MOXIe Part 2 results will support a single study approval without additional evidence that lends persuasiveness to the results. In preliminary ~~comments~~agenda for, and during, the meeting, the FDA identified four significant clinical and statistical review issues. We believe each of these issues are addressable with additional data and analyses, and the FDA invited us to address its identified issues in follow-up submissions to the NDA. We plan to address each of the issues through the submission of additional data and analyses to the NDA. See Programs in Chronic Kidney Disease – Bardoxolone in Patients with CKD Caused by Alport Syndrome below.

The FDA made additional information requests and identified a few additional issues that were not deemed significant. The FDA did not designate any safety issues as significant issues, and it stated that, based on its current review, it does not believe a Risk Evaluation and Mitigation Strategies (REMS) program is needed. We were notified that we would be receiving comments in writing regarding Chemistry, Manufacturing, and Controls (CMC), and we will ~~need to conduct a second pivotal trial that confirms the mFARS results of the MOXIe Part 2 study with a similar magnitude of effect.~~

~~In response to the preliminary comments, the Friedreich’s Ataxia Research Alliance (FARA), key FA clinicians, and we provided the FDA with information to demonstrate that it will~~not be difficult to conduct an additional, prospective clinical trial in FA because of the very slow progression rate of FA, the limited number of FA patients available for clinical research, the small number of clinical trial investigators who can conduct the mFARS exam, and the impact of the COVID-19 pandemic on the ability to conduct neuroscience clinical trials. Thus, conducting an additional pivotal study would result in a long delay in the availability of a potentially effective therapy to patients with a progressive, life-threatening disease with no treatment options. The FDA acknowledged the unmet need of patients with FA, reiterated its commitment to facilitate the development of omaveloxolone within the constraints of the regulatory standards, and emphasized its willingness to consider all available options to meet the regulatory standards.receiving any nonclinical comments. The FDA also ~~acknowledged~~advised us that ~~launching a new, neuroscience clinical trial now may not be possible because of~~an Advisory Committee meeting is tentatively scheduled for December 8, 2021. The Prescription Drug User Fee Act (PDUFA) date, the ~~COVID-19 pandemic.~~

At the Type C meeting, to address the FDA’s requirement, FARA, key opinion leaders, and Reata proposed a second study (the “crossover study”) to provide additional evidence of effectiveness. The study would measure the effect of omaveloxolone on mFARS in patients who were previously randomized to placebo in the MOXIe Part 2 study and are being treated with omaveloxolone in the MOXIe open-label extension study. The FDA ~~acknowledged that a study like the proposed crossover study could provide important additional information and asked us to submit a design~~action date for the ~~crossover study~~application, is scheduled for ~~their consideration.~~February 25, 2022.

If the FDA accepts this approach, we expect to complete the crossover study as early as the fourth quarter of this year. Assuming that the FDA views the crossover study data as sufficiently positive to provide confirmatory evidence, our plan would be to submit an NDA during the first quarter of 2021. If the FDA rejects the proposal or if the data are not supportive, we will evaluate whether it is feasible to conduct a second pivotal study in FA patients as suggested by the FDA. Regardless of the interaction with the FDA, weWe also plan to pursue marketing approval outside of the United States.

~~On June 24, 2020, we closed~~ We plan to submit a ~~Development and Commercialization Funding Agreement (Development Agreement)~~Marketing Authorization Application (MAA) with ~~an affiliate~~the European Medicines Agency (EMA) in the fourth quarter of ~~Blackstone Life Sciences, LLC (BXLS) that provides funding~~2021 for ~~the development and commercialization~~marketing approval of bardoxolone for the treatment of CKD caused by Alport syndrome ~~autosomal dominant polycystic kidney disease (ADPKD),~~in the European Union.

On July 27, 2021, KKC, our strategic collaborator in CKD in Japan, submitted an NDA in Japan to the Ministry of Health, Labour and ~~certain other rare~~Welfare (MHLW) for bardoxolone for the treatment of patients with CKD ~~indications. The Development Agreement includes~~caused by Alport syndrome. Based on this submission, we have earned a ~~$300~~$5 million milestone payment byunder the ~~Blackstone affiliate in return~~KKC Agreement. If approved for ~~various percentage royalty payments~~commercial sales, KKC is required to pay us royalties on ~~worldwide~~ net sales of bardoxolone ~~by Reata and~~in its ~~licensees, other than KKC. The royalty percentage will initially be in~~territory ranging from the ~~mid-single digits and in future years can vary between higher-mid single digit percentages~~low teens to ~~low-single digit percentages~~the low 20% range depending on ~~various milestones, including indication approval dates, cumulative royalty payments,~~the country of sale and ~~cumulative~~the amount of annual net sales. ~~Pursuant to the Development Agreement, we have granted BXLS a security interest~~

Bardoxolone in ~~substantially all of our assets.~~Patients with Autosomal Dominant Polycystic Kidney Disease (ADPKD)

~~In addition, affiliates of BXLS paid us an aggregate of $50.0 million to purchase an aggregate of 340,793 shares of our Class A common stock, par value $0.001 per share, at $146.72 per share.~~

In connection with the closing of the Development Agreement, we fully paid off our senior loan with Oxford Finance LLC and Silicon Valley Bank that included $155.0 million in principal and $12.1 million in exit and prepayment fees.

~~In March 2020, we temporarily paused enrollment of new~~We are currently enrolling patients in ~~the global~~FALCON, an international, multi-center, randomized, double-blind, placebo-controlled Phase 3 ~~FALCON~~ trial studying the safety and efficacy of bardoxolone in patients with ADPKD ~~due~~randomized one-to-one to active drug or placebo. The protocol currently specifies that the study will enroll approximately 550 patients in a broad range of ages, 18 to 70 years old, with an estimated glomerular filtration rate (eGFR) between 30 to 90 mL/min/1.73 m². The current primary endpoint is the off-treatment eGFR change from baseline versus placebo at Week 52, which represents 48 weeks of treatment followed by a four-week withdrawal period. At 52 weeks, patients resume treatment for a second 48-week period to Week 100 followed by a second four-week withdrawal period to Week 104. The key secondary endpoint is the off-treatment eGFR change from baseline versus placebo at Week 104.

We recently had a Type B meeting with the FDA regarding the ADPKD development program. We have not yet received minutes from the meeting, however, based on the discussion in the meeting, we are considering amendments to the ~~emergence~~FALCON protocol. We currently plan to modify the protocol so that the primary endpoint will be the Year 2 off-treatment analysis, and we will not unblind the trial until completion of ~~COVID-19 as a global public health threat.~~Year 2. In addition, we will add an eight-week off-treatment visit to the study, and we will incorporate the FDA’s feedback on data related to patients who discontinued treatment early in the study. We may need to increase the patient sample size from the current target of 550 patients. More than 370 patients are currently enrolled in the study. We continue to expect to enroll 550 patients in the FALCON study by the end of 2021. However, if we decide to increase the target enrollment, we will provide updated guidance on our enrollment timeline. See Programs in Chronic Kidney Disease – Bardoxolone in Patients with ADPKD below.

MERLIN is a multi-center, double-blind, placebo-controlled, Phase 2 trial to evaluate the safety and efficacy of bardoxolone in patients at risk of rapidly progressing CKD due to multiple etiologies including IgA Nephropathy (IgAN), focal segmental glomerulosclerosis (FSGS), type 1 diabetic CKD (T1D CKD), type 2 diabetic CKD (T2D CKD), hypertensive CKD, and others. The primary endpoint of the trial is change in eGFR from baseline to Week 12. We have completed enrollment in the MERLIN trial and expect to have top-line data in the fourth quarter of 2021. If the results of this study are positive, we would potentially proceed to a larger Phase 3 trial with similar eligibility criteria. Patients at risk for rapid progression experience a significant risk of progressing to end-stage kidney disease (ESKD) and are a population with high unmet need across multiple forms of CKD.

During the first quarter of 2021, we submitted results from the Delayed-Start Analyses to the FDA. These additional exploratory analyses analyzed data from the registrational Part 2 portion of the MOXIe Phase 2 trial of omaveloxolone in patients with FA (MOXIe Part 2) and the open-label extension study (the MOXIe Extension). In these analyses, parallel trajectories between the patients randomized to placebo (placebo-to-omaveloxolone group) and those randomized to omaveloxolone (omaveloxolone-to-omaveloxolone group) in the double-blind period from MOXIe Part 2, through 48 weeks in the MOXIe Extension could provide evidence of disease-modifying activity. A total of ~~approximately 300~~73 out of 75 (97%) patients ~~worldwide.~~without pes cavus who completed MOXIe Part 2 enrolled in the MOXIe Extension. A longitudinal analysis used to calculate annualized slopes incorporating all available data from the MOXIe Extension showed similar slopes in Modified Friedreich’s Ataxia Rating Scale (mFARS) for the placebo-to-omaveloxolone group (0.59 points per year) when compared to the omaveloxolone-to-omaveloxolone group (0.41 points per year) with no significant difference between slopes (p=0.75). The resulting parallel trajectories

between both treatment groups are consistent with disease-modifying activity. We ~~began~~requested and were granted a Type C meeting to ~~lift~~discuss whether the ~~screening hold~~data would support an NDA submission.

On May 19, 2021, we received a communication from the FDA suggesting that, after a preliminary review of briefing materials for the Type C meeting, including the Delayed-Start Analyses, a pre-NDA meeting is the most appropriate format for a discussion of the development program for omaveloxolone in ~~FALCON in June 2020,~~FA. The FDA also suggested that we withdraw the current Type C meeting request and ~~currently, all sites are able to screen patients and approximately half are able to randomize patients. The first patients have now reached~~instead request a pre-NDA meeting. During the second ~~year~~quarter of 2021, we withdrew our request for a Type C meeting and requested a pre-NDA meeting with the ~~trial.~~FDA. The ~~measures we implemented to~~pre-NDA meeting request has been granted, a pre-NDA meeting has been scheduled during the ~~conduct~~third quarter of ~~FALCON in response to COVID-19 have been effective,~~this year, and we ~~anticipate no meaningful impact~~have submitted briefing materials for the meeting. We recently received a communication from the FDA requesting the estimated date of our NDA for its planning purposes. We plan to submit the NDA during the first quarter of 2022.

~~Beginning in the first quarter of 2020, in accordance with recommendations from~~We continue to closely monitor and adhere to COVID-19 guidance issued by local, state, and national ~~health authorities,~~authorities. Since May 2021, we ~~implemented and continue~~rolled out a voluntary return-to-office program, including flexible work schedules. We plan to ~~enforce work-from-home measures and additional safety protocols~~have all employees to ~~protect employees and~~return to the ~~broader community and to ensure business continuity. These measures include restricting on-site staff to only those required to execute their job responsibilities and limiting~~office by the ~~number~~end of staff working in our research and development laboratory. We also continue to limit in-person meetings and business travel. We will continue to monitor this dynamic situation closely and will take additional measures as required to preserve the ~~safety of our employees and the broader community.~~

The Phase 3 CARDINAL trial of bardoxolone in patients with CKD caused by Alport syndrome is fully enrolled and ongoing. As previously announced, we are in the process of completing the Year 2 portion of our CARDINAL Phase 3 study. As COVID-19 emerged as a pandemic with serious public health implications during the first3rd quarter of ~~2020, we undertook a series of measures to protect the health and safety of patients and health care workers involved~~2021, assuming no significant changes are required in our ongoing clinical studies, while maintaining the conduct of our studies in accordance with guidance provided by the FDA and the European Medicines Agency. For example, we have implemented the use of at-home visits as an alternative to in-clinic visits when necessary to collect blood draws and to assess patient safety. We also arranged for home delivery of the study drug to patients.

At this time, approximately 60% of the 157 patients randomized to the CARDINAL Phase 3 cohort have completed the Year 2 final off-treatment visit. The last study visits are anticipated to occur during the fourth quarter of 2020, which is consistent with our pre-COVID-19 timeline. Currently, almost all sites are allowing on-site or remote monitoring.

Patients who participated in the CARDINAL study may be eligible to enroll in an open-label extension study known as EAGLE. We are implementing procedures for the conduct of EAGLE that are similar to those being used in CARDINAL to ensure continued access to bardoxolone and appropriate safety monitoring.

The MOXIe Part 2 trial was completed prior to the onset of the COVID-19 pandemic. Patients who participated in MOXIe Part 1 or 2 were eligible to enroll in an open-label extension portion of the study. We are implementing procedures for the conduct of the MOXIe extension study that are similar to those being used in our other ongoing studies to ensure continued access to omaveloxolone and appropriate safety monitoring.

Researchers at NYU Grossman School of Medicine (NYU) are initiating an Investigator-Sponsored Trial (IST), known as BARCONA, to study the effect of bardoxolone in patients suffering from COVID-19. Serious complications of COVID-19 are caused by excessive, systemic inflammation, which can result in dysfunction of the lungs, kidneys, and other organs. Acute kidney injury has been reported to occur in up to 28% of all hospitalized COVID-19 patients, and in up to 72% of patients who do not survive COVID-19. Bardoxolone and its analogs have demonstrated anti-inflammatory activity in animal models of acute lung and kidney injury, have increased survival in models of systemic inflammation, suppress replication of several types of viruses and have shown improvements in kidney function in multiple clinical trials that enrolled over 3,000 patients with various forms of chronic kidney disease.

The Phase 2 BARCONA study is a randomized, placebo-controlled, double-blind trial that will enroll 40 patients with a primary endpoint of safety and treatment duration of up to 29 days in hospitalized patients. Major exclusion criteria include patients who are intubated and on invasive mechanical ventilation for three or more days, prior hospitalization for heart failure, or estimated glomerular filtration rate (eGFR) <30 ml/min/1.73 m². To further mitigate any safety risk, enrollment will be paused after enrollment of the initial five patients to assess safety. As with all trials conducted at NYU, the trial will be overseen by a Data Safety Monitoring Board that meets every other week.

We were involved in the design of the trial, have a representative on the study’s executive steering committee, and are providing drug supply, as requested by NYU. Any further enrollment in a potential Phase 3 trial will be gated based on an assessment of Phase 2 safety and activity, as well as feasibility of conducting a Phase 3 trial.pandemic management protocols.

The following chart outlines each of our programs by indication and ~~phase:~~phase of development:

In addition, KKC, our strategic collaborator in CKD, is currently conducting its registrational trial of bardoxolone in diabetic (type 1 and 2) CKD in Japan. KKC completed patient enrollment in this trial in June 2019 and expects to have topline data in the first half of 2022.

~~NYU has initiated an IST (Phase 2/3 trial) of bardoxolone in COVID-19 patients called BARCONA.~~

*~~The CARDINAL study reported one-year data in November 2019 and is an ongoing two-year study.~~NDA under review. NDA accepted for filing on April 26, 2021, with a PDUFA date of February 25, 2022.

**See discussion ~~above~~below under ~~“Regulatory Update-Omaveloxolone for Friedreich's Ataxia”~~“Omaveloxolone in Patients with FA”.

We are developing bardoxolone for the treatment of patients with CKD caused by Alport syndrome, ADPKD, and certain ~~rare~~other forms of ~~CKD.~~CKD that, in the aggregate, affect more than 700,000 patients in the United States. CKD is characterized by a progressive worsening in glomerular filtration rate (GFR), which is the rate at which the kidney filters waste products from the ~~blood, called the glomerular filtration rate (GFR).~~blood. When GFR ~~gets too low,~~drops below approximately 15 mL/min/1.73 m², patients

develop ~~end-stage kidney disease (ESKD)~~ESKD and require dialysis or a kidney transplant to survive. Dialysis leads to a reduced quality of life and increases the likelihood of serious and life-threatening complications. The five-year survival rate for hemodialysis patients is ~~only~~ approximately 42%.

~~Estimated glomerular filtration rate (eGFR)~~eGFR is an estimate of GFR that nephrologists use to track the decline in kidney function and progression of CKD. In 11 separate CKD clinical trials, bardoxolone has been shown to improve eGFR in patients with diverse etiologies of CKD. We believe that bardoxolone treatment has the potential

to delay or prevent GFR declines that cause the need for dialysis or a transplant in patients with Alport syndrome, ADPKD, and other rare forms of CKD.

We are developing bardoxolone for the treatment of patients with CKD caused by Alport syndrome, ADPKD, and other rare forms of CKD that, in the aggregate, affect more than 700,000 patients in the United States.

Alport syndrome is a rare, genetic form of CKD caused by mutations in the genes encoding type IV collagen, which is a major structural component of the glomerular basement membrane in the kidney. The kidneys of patients with Alport syndrome progressively lose the capacity to filter waste products out of the blood, which can lead to ESKD and the need for chronic dialysis treatment or a kidney transplant. Alport syndrome affects both children and adults. In patients with the most severe forms of the disease, approximately 50% progress to dialysis by age 25, 90% by age 40, and nearly 100% by age 60. ~~According to the~~

The Alport Syndrome Foundation estimates that Alport syndrome affects approximately 30,000 to 60,000 people in the United States. ~~There~~According to data provided by IQVIA in April 2020, there are ~~currently no approved therapies to treat~~approximately 14,000 projected patients diagnosed with Alport syndrome in all stages of CKD ~~caused by~~in the United States. However, recent literature suggests that a large number of patients with Alport ~~syndrome.~~syndrome are either undiagnosed or misdiagnosed with other forms of CKD. To help nephrologists identify the genetic basis of various forms of CKD, including Alport syndrome, Reata and Invitae Corporation are sponsoring the KIDNEYCODE® genetic testing program.

InOn November ~~2019,~~9, 2020, we announced that the Phase 3 CARDINAL study met its primary and key secondary endpoints at the end of Year 2. The Phase 3 portion of ~~the~~ CARDINAL ~~study of bardoxolone in~~was an international, multi-center, double-blind, placebo-controlled, randomized registrational trial that enrolled 157 patients with CKD caused by Alport syndrome ~~met its primary~~at approximately 50 study sites in the United States, Europe, Japan, and ~~key secondary Year 1 endpoints. After 48 weeks~~Australia. Patients were randomized one-to-one to bardoxolone or placebo.

At Week 100, in the intent to treat (ITT) population, which included eGFR values for patients who either remained on or discontinued study drug, patients treated with bardoxolone had a statistically significant improvement compared to placebo in mean change from baseline in eGFR of 7.7 mL/min/1.73 m² (p=0.0005). Patients treated with bardoxolone experienced a mean change from baseline in eGFR of -0.8 mL/min/1.73 m², while patients treated with placebo experienced a mean change from baseline in eGFR of -8.5 mL/min/1.73 m².

In the modified ITT (mITT) analysis, which assessed the effect of receiving treatment by excluding values after patients discontinued treatment, patients treated with bardoxolone had a statistically significant improvement compared to placebo in mean change from baseline in eGFR at Week 100 of ~~9.50~~11.3 mL/min/1.73 m² (p<0.0001). In the mITT analysis, patients treated with bardoxolone experienced a mean increase from baseline in eGFR of 1.7 mL/min/1.73 m², while patients treated with placebo experienced a mean decline from baseline in eGFR of -9.6 mL/min/1.73 m².

At Week ~~52,~~104 (four weeks after ~~48 weeks~~last dose in second year of ~~treatment and four weeks of off-treatment period,~~treatment), patients in the ITT population treated with bardoxolone had a statistically significant improvement compared to placebo in mean change from baseline in eGFR of ~~5.14~~4.3 mL/min/1.73 m² (p=~~0.0012)~~0.023). Patients treated with bardoxolone experienced a mean change from baseline in eGFR of -4.5 mL/min/1.73 m², while patients treated with placebo experienced a mean change from baseline in ~~the placebo arm~~eGFR of ~~CARDINAL lost an average of 6.1~~-8.8 mL/min/1.73 m². The ~~retained benefit~~primary endpoint was analyzed using mixed-model repeated measures with no imputation, and the key secondary endpoint was analyzed using analysis of covariance with treatment-based multiple imputation for missing data.

Bardoxolone was generally reported to be well tolerated in this study, and the safety profile was similar to that observed in prior trials. Eight patients (10%) receiving bardoxolone and 15 patients (19%) receiving placebo experienced a treatment-emergent serious adverse event (SAE). No SAEs were reported in pediatric patients treated with bardoxolone. No fluid overload SAEs or major adverse cardiac events were reported in patients

treated with bardoxolone. Blood pressure, a sensitive measure of fluid status, was not significantly different between the two groups. Weight loss was more pronounced in patients with a higher body mass index, and mean decreases in weight were not observed in pediatric patients. The urinary albumin-to-creatinine ratio (UACR) was not significantly different between treatment groups at Week 100 or Week 104.

The reported adverse events (AEs) were generally mild to moderate in intensity, and the most common AEs observed more frequently in patients treated with bardoxolone compared to patients treated with placebo were muscle spasms and increases in aminotransferases which are thought to be associated with the pharmacology of the drug. Muscle spasms were generally transient and were associated with reductions of creatine kinase, which is evidence of improved energy metabolism and inconsistent with muscle injury.

Additionally, on November 9, 2020, we reported results from the long-term extension EAGLE study, in which the change from baseline in eGFR was assessed for the 14 patients with Alport syndrome who were treated with bardoxolone for three years (two years in CARDINAL and one year in EAGLE), with four-week off-treatment periods occurring at Weeks 48 and 100. Bardoxolone treatment resulted in a mean increase from baseline in eGFR of 11.5 mL/min/1.73 m² at Year 1, 13.3 mL/min/1.73 m² at Year 2, and 11.0 mL/min/1.73 m² at Year 3. This sustained improvement of kidney function is notable when compared to the CARDINAL study population’s expected yearly eGFR decline of 5.1 mL/min/1.73 m², which was calculated based on five-year historical eGFR data before patients entered the study.

On April 26, 2021, we announced that the FDA accepted for filing the NDA for bardoxolone for the treatment of patients with CKD caused by Alport syndrome, and the NDA is currently under review by the FDA. The FDA completed a bioresearch monitoring inspection of Reata. We did not receive any observations. We also recently completed the mid-cycle communication meeting with the FDA and were advised that an Advisory Committee meeting is tentatively scheduled for December 8, 2021. The PDUFA date, the FDA action date for the application, is scheduled for February 25, 2022.

The purpose of the mid-cycle communication meeting is for the FDA to provide the Sponsor with an update of the status of the NDA review, including any issues identified. As is customary with the review of all NDAs, the FDA may identify other issues, it may request additional information as it continues to review the NDA, and it may elect to delay the date of the Advisory Committee meeting or the PDUFA date.

While we have not yet received formal minutes from the FDA, in the preliminary agenda for, and during, the meeting, the FDA identified four significant clinical and statistical review issues as discussed below. The FDA made additional information requests and identified a few additional issues that were not deemed significant. The FDA did not designate any safety issues as significant issues, and it stated that based on its current review, it does not believe a REMS program is needed. We were notified that we would be receiving comments in writing regarding CMC, and we will not be receiving any nonclinical comments. We believe each of these issues are addressable with additional data and analyses, and the FDA invited us to address its identified issues in follow-up submissions to the NDA. The following is a description of the significant issues discussed at the meeting and our approach to addressing each of the issues.

Based on its preliminary analyses of available pharmacokinetic and eGFR data, the FDA questioned whether the observed eGFR increases suggest a slower rate of loss of kidney function in the bardoxolone group as compared to the placebo group. During the mid-cycle communication meeting, the FDA clarified that its preliminary analysis was computed using two distinct “chronic” eGFR slopes: a slope in Year 1 based on eGFR data from Week 12 to Week 48 and a slope in Year 2 based on Week 64 to Week 100. The FDA noted that the observed changes in eGFR loss in the bardoxolone group starting at Week 12 in Year 1 (after full manifestation of the acute eGFR increase) did not suggest a slower rate of loss of kidney function than the placebo group. As explained in greater detail below, the loss of eGFR from Weeks 12 to 48 in Year 1 is explained by the loss of eGFR in bardoxolone patients who discontinued early in the study. Importantly, the rate of eGFR loss from Week 64 (after full manifestation of the acute eGFR increase) to Week 100 in Year 2 is lower in the bardoxolone patients than the placebo patients. The FDA did not

comment specifically on the rate of eGFR decline in Year 2 of treatment. The FDA also did not comment on the off-treatment eGFR effects at Week 104 except to note that a critical ongoing review issue is whether these eGFR effects demonstrate an irreversible effect on kidney function or a reversible pharmacodynamic effect.

The loss of eGFR from Week 12 to Week 48 in Year 1 of CARDINAL is explained by the loss of eGFR in patients randomized to bardoxolone who discontinued treatment, and most discontinuations occurred early in the study. As shown in the figure below, patients who discontinued treatment experienced an acute increase in eGFR that was maximal at Week 12 and returned to placebo levels by Week 36. This loss of the initial acute eGFR effect after discontinuation of drug contributed to the apparent eGFR decline rate from Week 12 to Week 36 during Year 1 in the ITT analysis. Notably, after discontinuation, these patients performed like placebo patients. At the end of the study, their mean change from baseline was -8.4 ± 8.6 mL/min/1.73 m² compared to -7.8 ± 10.6 in the placebo arm, respectively, and we believe this establishes that there was no deleterious effect of bardoxolone treatment on kidney function.

Patients who Discontinued Bardoxolone Progressed at Same Rate as Placebo Patients in Year 2

D/C (Discontinued): Change from baseline in eGFR for 26 bardoxolone patients who discontinued treatment by Week 100. (n) represents the number of D/C patients with eGFR values at each timepoint.

The purpose of chronic slope analyses is to compare average rates of eGFR change, after the onset of acute pharmacodynamic effects, to predict longer-term effects on kidney function. The NKF-FDA-EMA Scientific Working Group demonstrated that an accurate estimation of the rate of kidney function decline or chronic slope relies on long durations of follow-up (e.g., two to three-year periods of continuous dosing) to reliably predict a treatment effect on longer term clinical outcomes (Levey, 2020). CARDINAL was not designed to evaluate chronic slope because there is an off-treatment period between Weeks 48 and 52, so there was no chronic or continuous treatment to evaluate.

Moreover, the rate of kidney function decline from Week 12 to Week 36 in Year 1 was not observed in Year 2 or in the available data from Year 3 of the EAGLE ongoing long-term open-label extension study. We believe that this empirically establishes that any analysis performed of the Year 1 chronic slope is not predictive of the future rate of eGFR decline on bardoxolone treatment. Instead, we believe that the rate of decline in eGFR during the second year of treatment is most predictive of the rate of decline in Year 3 and beyond.

Data from Year 2 of CARDINAL show that bardoxolone-treated patients that restarted study drug at Week 52 experienced an acute increase in eGFR that was maximal at Week 64, twelve weeks after re-starting treatment and experienced a lower eGFR loss from Week 64 to Week 100 compared to the patients on placebo (as noted in the table below). This includes patients in the following groups: ITT population, patients in the prespecified mITT analysis, patients who achieved goal dose, and patients who did not achieve goal dose. Importantly, patients who remained on drug (i.e., mITT) and maintained their goal

dose had large reductions in their rate of decline versus placebo. In addition to the reduced rate of eGFR decline in Year 2, bardoxolone patients experienced large, absolute placebo-corrected improvements in eGFR at Week 100 across all analysis groups. Lastly, data from EAGLE demonstrate increases in eGFR in patients treated with bardoxolone in CARDINAL are sustained above baseline in the third year of treatment and beyond.

All Bardoxolone Patient Subgroups Progressed at a Slower Rate Relative to Placebo in Year 2

We believe that the rate of decline in eGFR during the second year of treatment is most predictive of the rate of long-term disease progression. In addition, as noted above, bardoxolone-treated patients experienced a lower eGFR loss from Week 64 to Week 100 compared to the patients on placebo and this was in addition to a large, absolute placebo-corrected improvement in eGFR at Week 100 across all analysis groups. We believe these analyses demonstrate that in continuously treated patients, eGFR diverges from placebo over time and should delay ESKD.

All clinical studies use an analysis model to compute the treatment effect and p-value. The analysis model incorporates observed data, as well as datasets that are generated for missing data. The process of generating datasets for missing data is called the imputation step, and it uses available reference data to produce these datasets. The statistical analysis plan (SAP) for CARDINAL pre-specified that change from baseline in eGFR for patients treated with bardoxolone would be compared to placebo at Week 104 using an Analysis of Covariance (ANCOVA) model. Both the imputation step and the analysis model can include covariates, or independent variables between patients, such as treatment group or baseline characteristics. The SAP pre-specified that missing data would be imputed for patients without Week 104 eGFR values based on their treatment group.

During the mid-cycle communication meeting, the FDA raised the question whether or not the proportion of two-year exposure to treatment was included as a covariate in the ANCOVA analysis model. During the meeting, we confirmed that this treatment duration covariate was included in the ANCOVA model used for the Week 104 analysis, and the FDA acknowledged that the analysis was conducted in accordance with, and did not deviate from, the pre-specified SAP. We noted that when the treatment duration covariate is excluded from the analysis the treatment effect and p-value are improved relative to the primary analysis.

During the meeting, we also discussed how the imputation step was conducted. The FDA suggested that the treatment duration covariate could have been included in the imputation step if a cap were included to limit extreme values. We noted that the SAP did not specify covariates for the imputation step and, therefore, neither the treatment duration covariate nor a cap was included in the imputation step of the analysis.

We explained that due to sparse reference data across the full range of treatment durations, inclusion of the treatment duration covariate in the imputation step would have resulted in over 30% of imputed eGFR values falling outside the range of observed eGFR values. Many of these values would have been extreme and exceeded biological plausibility. For example, the maximum change from baseline in the observed data was an increase of 28 mL/min/1.73 m², while the maximum change from baseline in the imputed data would have been nearly four-times larger, with an increase of 105 mL/min/1.73 m². We

therefore explained that, while the addition of these extreme values would not have affected the overall treatment effect at Week 104, it would have artificially more than doubled the standard error and inflated the p-value. For these reasons, we followed the pre-specified SAP methodology for the imputation step.

CARDINAL pre-specified the Year 2 off-treatment analysis window to include eGFR values obtained at least 14 days after last dose, which is supported by pharmacokinetic and extensive off-treatment data demonstrating that the resolution of acute eGFR increases occurs by 14 days after the last dose. In CARDINAL, there was no association between the magnitude of off-treatment eGFR values and the post-dose period in Year 2. These results establish that values collected in the earlier part of the analysis window did not bias or affect the conclusions of the off-treatment endpoint.

Alport syndrome is a rare disease, which limited the overall size of CARDINAL. The study, therefore, had limited power to show treatment effects that meet conventional levels of statistical significance in certain sensitivity analyses for more prevalent diseases. Nevertheless, the FDA has conducted a series of sensitivity analyses to test the significance of the Year 2 key ~~regulatory endpoint~~secondary results under a variety of scenarios.

The FDA conducted a sensitivity analysis to assess the impact of the analysis window on the results of the Year 2 off-treatment endpoint. One of the FDA’s sensitivity analyses included off-treatment eGFR values approximately 104 weeks after randomization, irrespective of time off-drug, which resulted in loss of statistical significance for the result. Approximately one-half (12/26) of discontinuations in patients treated with bardoxolone occurred within the first 16 weeks of treatment, and these patients were therefore off-treatment for a minimum of 88 weeks at the time of their Week 104 assessment. When patients discontinued bardoxolone, their eGFR trajectory was similar to placebo patients. Including these patients that had been off active drug for a long period of time inherently dilutes the treatment effect in the sensitivity analysis. Despite this, the treatment effect in the analysis favored bardoxolone even when including these patients in the Week 104 analysis. Furthermore, based on the precedent established in the REPRISE study of tolvaptan for the treatment of patients with ADPKD, we powered CARDINAL to assess the off-treatment effect of bardoxolone by including eGFR values collected at least 14 days after last dose, rather than powering the trial to include eGFR values 104 weeks after randomization for all patients including those who discontinued treatment early.

Two of the FDA’s other sensitivity analyses only included values collected ≥28 days after last dose. These analyses excluded nearly one-half of the trial participants and ~~FALCON studies. Based~~violated randomization principles, which resulted in modeled estimates that meaningfully differed from observed Week 104 eGFR changes. We performed sensitivity analyses similar to those performed by the FDA that included more available off-treatment eGFR data by using a cutoff of at least 21 days after last dose. The results for these new analyses were similar to the primary Week 104 analyses and will be provided to the FDA as a follow-up to this meeting.

The FDA acknowledged that COVID-19 did not significantly impact treatment visits, data collection, or study drug dispensation. However, the FDA noted that there appeared to be discrepancies between the trial’s findings when analyzed according to Year 2 data collected in patients pre-COVID versus post-COVID, with the study findings driven by the post-COVID subgroup. We utilize March 1, 2020 as the date of the start of the global COVID-19 pandemic to define the pre- versus post-COVID periods. Due to timing of study conduct, 31% of Week 104 assessments were conducted pre-COVID, and 69% of Week 104 assessments were conducted post-COVID.

Given the relatively small sample size in CARDINAL, the study had limited power to show treatment effects in small subgroups. The sample size of the study and the limited number of assessments that occurred during the pre-COVID period precludes over interpretation of pre- versus post-COVID analyses.

Although differences were observed for the pre- and post-COVID results for the Week 104 endpoint, we noted that the point estimate for the change from baseline in eGFR at Week 104 is similar across both periods for bardoxolone-treated patients. The difference between treatment groups pre- and post-COVID was driven by the inclusion of a larger number of pediatric patients in the post-COVID subgroup. These patients generally had more rapid disease progression, enrolled later in the trial, and, therefore, had Week 104 assessments conducted during COVID.

During the mid-cycle communication meeting, the FDA did not communicate significant issues about any safety topics, and it stated that, based on ~~these positive results, and subject to discussions with regulatory authorities, we~~its current review, it does not believe a REMS is needed.

We plan to ~~proceed with~~address each of these issues through the submission of ~~regulatory filings this year~~additional data and analyses to the NDA.

We also plan to pursue marketing approval outside of the United States. We plan to submit an MAA with the EMA in the fourth quarter of 2021 for marketing approval of bardoxolone for the treatment of CKD caused by Alport syndrome in the ~~United States.~~European Union.

On July 27, 2021, KKC, our partner in Japan, submitted an NDA in Japan to the MHLW for bardoxolone for the treatment of patients with CKD caused by Alport syndrome. Based on this submission, we have earned a $5 million milestone payment under the KKC Agreement. If approved for commercial sales, KKC is required to pay us royalties on net sales of bardoxolone in its territory ranging from the low teens to the low 20% range depending on the country of sale and the amount of annual net sales.

Bardoxolone in ~~ADPKD~~Patients with Autosomal Dominant Polycystic Kidney Disease (ADPKD)

ADPKD is a rare and serious hereditary form of CKD caused by a genetic defect in PKD1 or PKD2 genes leading to the formation of fluid-filled cysts in the kidneys and other organs. Cyst growth can cause the kidneys to expand up to five to seven times their normal volume, leading to pain and progressive loss of kidney function. ADPKD affects both men and women of all racial and ethnic groups and is the leading inheritable cause of kidney failure with an estimated diagnosed population of 140,000 patients in the United States. Despite current standard of care treatment, an estimated 50% of ADPKD patients progress to ESKD and require dialysis or a kidney transplant by 60 years of age.

~~In a Phase 2 study called PHOENIX,~~ ~~bardoxolone demonstrated a statistically significant increase from baseline in mean eGFR of 9.3~~ ~~mL/min/1.73 m~~² ~~(p<0.0001) after 12 weeks of treatment in 31~~We are currently enrolling patients ~~with ADPKD. Available historical data for 29 of these patients showed an average annual decline~~ ~~in eGFR~~ ~~of 4.8~~ ~~mL/min/1.73 m~~² ~~in the three-year period prior to study entry. The United States Food and Drug Administration (FDA) has provided us with written guidance that, in patients with ADPKD, an analysis of eGFR~~ ~~during the off-treatment period~~ demonstrating an improvement versus placebo after one year of bardoxolone treatment may support accelerated approval, and an improvement versus placebo after two years of treatment may support full approval. In May 2019, we began enrollment in FALCON, an international, multi-center, randomized, double-blind, placebo-controlled Phase 3 trial studying the safety and efficacy of bardoxolone in ~~approximately 300~~ patients with ~~ADPKD.~~ADPKD randomized one-to-one to active drug or placebo. The ~~enrollment of new~~protocol currently specifies that the study will enroll approximately 550 patients ~~was temporarily paused~~ in ~~March of 2020 due to safety concerns related to the COVID-19 global pandemic, and~~ ~~the screening hold in FALCON was lifted in June 2020 at some sites.~~ ~~The trial will enroll~~ a broad range of ~~patients from~~ages, 18 to 70 years old, with an eGFR between 30 to 90 mL/min/1.73 m²m². The current primary endpoint is the off-treatment eGFR change from baseline versus placebo at

Week 52, which represents 48 weeks of treatment followed by a four-week withdrawal period. At 52 weeks, patients resume treatment for a second 48-week period to Week 100 followed by a second four-week withdrawal period to Week 104. The key secondary endpoint is the off treatment eGFR change from baseline versus placebo at Week 104.

We recently had a Type B meeting with the FDA regarding the ADPKD development program. We have not received minutes from the meeting yet, however, based on the discussion in the meeting, we are considering amendments to the FALCON protocol. Based on our experience during the CARDINAL trial in Alport syndrome patients, we requested the FDA’s input regarding the feasibility of using Year 1 data to support early submission and accelerated approval. We acknowledged with the FDA that, like our experience in CARDINAL, the timing of clinical study milestones at Year 1 and the required regulatory interactions prior to an initial submission may not allow sufficient time, as previously noted by the FDA, to submit the initial application before Year 2 data are available. Thus, while the study uses an efficient study design that is intended to support an early submission, its ability to support an early NDA may not be possible.

In response to our inquiry, we were notified by the FDA that it is unlikely that results from the first year of the trial would support an application for accelerated approval. As such, the FDA recommended against unblinding the trial after the first year and conducting the proposed Year 1 analysis. The FDA instead encouraged us to specify the Year 2 off-treatment analysis as the primary endpoint. We plan to modify the protocol so that the primary endpoint will be the Year 2 off-treatment analysis, and we will not unblind the trial until completion of Year 2.

The FDA also questioned whether an off-treatment period of 28 days is adequate to ensure resolution of bardoxolone’s acute, reversible, eGFR increases. We provided information in our pre-meeting materials demonstrating resolution by 14 days after the last dose, and the FDA noted that it had not reviewed the largest dataset from two short-term studies demonstrating resolution within 28 days. These studies are not confounded by any long-term effects of bardoxolone treatment or meaningful disease progression. We have since further clarified and provided this additional data to the FDA. In order to confirm that the acute eGFR increases resolve within 28 days, we will be adding an eight-week off-treatment visit to the study.

Our current SAP specifies that patients who do not receive at least one dose of study drug in the second year will be considered missing in the Week 104 analysis. The FDA recommended also evaluating the key efficacy endpoint using eGFR values obtained at specified timepoints (i.e., 104 weeks after randomization), regardless of whether a patient discontinued study treatment at an earlier timepoint. This is similar to one of the sensitivity analyses conducted by the FDA during review of our Alport syndrome NDA. We will be incorporating the FDA’s feedback and submitting the revised SAP for the FDA review.

Based on the above discussion, we may need to increase the patient sample size from the current target of 550 patients. More than 370 patients are currently enrolled in the study. We continue to expect to enroll 550 patients in FALCON by the end of 2021. However, if we decide to increase the target enrollment, we will provide updated guidance on our enrollment timeline.

Bardoxolone in ~~Other Rare Forms~~Patients with CKD at Risk of ~~CKD~~Rapid Progression

~~Three additional rare~~MERLIN is a multi-center, double-blind, placebo-controlled, Phase 2 trial to evaluate the safety and efficacy of bardoxolone in patients at risk of rapidly progressing CKD due to multiple etiologies including IgAN, FSGS, T1D CKD, T2D CKD, hypertensive CKD, and others. The study includes patients with eGFR between 20 and 60 mL/min/1.73 m², and patients must meet at least one of the following criteria: UACR ≥ 300 mg/g; eGFR decline at a rate of ≥ 4 mL/min/1.73 m² in prior year; or hematuria defined as > 5-10 red blood cells per high power field (manual method), documented history of positive urinary dipstick for blood in prior year, or macroscopic hematuria in prior 3 years. The primary endpoint of the trial is change in eGFR from baseline to Week 12.

We have completed enrollment in the MERLIN trial. We expect to have top-line data in the fourth quarter of 2021. If the results of this study are positive, we would potentially proceed to a larger Phase 3 trial with similar

eligibility criteria. Patients at risk for rapid progression experience a significant risk of progressing to ESKD and are a population with high unmet need across multiple forms of CKD.

Both the FALCON and MERLIN trials draw from the results of our Phase 2 study called PHOENIX, an open-label, multi-center Phase 2 trial evaluating the safety and efficacy of bardoxolone in patients with ADPKD, IgAN, T1D CKD, ~~were studied~~or FSGS completed in ~~PHOENIX, including IgA nephropathy (IgAN), type 1 diabetic CKD (T1D CKD), and focal segmental glomerulosclerosis (FSGS).~~2019. In each of these ~~Phase 2~~ cohorts, patients treated with bardoxolone ~~demonstrated~~experienced a statistically significant increase from baseline in mean eGFR after 12 weeks of treatment. The most commonly reported AE across all cohorts was muscle spasms, which were not associated with clinical signs or symptoms of muscle injury. The overall rate of SAEs was low, with three patients reporting treatment-emergent SAEs, none of which were reported as related to bardoxolone. We plan to pursue development opportunities in each of these rare and serious forms of CKD, asmaintaining our intent to expand the commercial ~~indications.~~

~~The FDA has granted orphan drug designation to bardoxolone~~indications for ~~the treatment of Alport syndrome and ADPKD, and the European Commission has granted orphan drug designation to bardoxolone for the treatment of Alport syndrome.~~bardoxolone.

Prior to our CARDINAL Phase 3 trial, clinical trials enrolling over 2,000 patients exposed to bardoxolone have demonstrated consistent, clinically meaningful improvement in kidney function across several disease states as measured by eGFR and other markers of kidney function. Specifically, we have observed statistically significant increases in eGFR in all Phase 2 and Phase 3 clinical trials in ~~numerous~~seven distinct patient populations treated with bardoxolone, including patients with pulmonary hypertension and CKD caused by ~~type 2 diabetes (T2D CKD),~~T2D CKD, Alport syndrome, ADPKD, IgAN, T1D CKD, and FSGS.

We believe these data, in addition to the CARDINAL Phase 3 ~~one-year~~ data, support the potential for bardoxolone to delay or prevent GFR declines that cause the need for dialysis or kidney transplant, and eventually death in patients with Alport syndrome and other forms of CKD.

Additional observations from the prior clinical trials of bardoxolone include the following:

We are developing omaveloxolone for the treatment of patients with FA, an inherited, debilitating, and degenerative neuromuscular disorder that is ~~typically~~normally diagnosed during adolescence and ~~typically leads~~can lead to premature death. Patients with FA experience progressive loss of coordination, muscle weakness, and fatigue, which commonly ~~progresses~~leads to motor incapacitation and wheelchair reliance. Symptoms generally occur in children, with patients requiring a wheelchair by their teens or early ~~20s.~~twenties. FA affects approximately 5,000 children and adults in the United States and 22,000 individuals globally. There are currently no approved therapies to treat FA.

Our Phase 2 trial, called MOXIe, was a two-part, international, multi-center, randomized, double-blind, placebo-controlled registrational trial that studied the safety and efficacy of omaveloxolone in patients with FA. Additionally, patients who completed the study and met eligibility requirements could participate in the MOXIe Extension during which investigators and patients remained blinded to prior treatment assignments. In October 2019, we announced that ~~the registrational part~~Part 2 ~~portion of the MOXIe Phase 2 trial of omaveloxolone~~ in patients with FA met its primary endpoint of change in mFARS relative to placebo after 48 weeks of treatment. Patients treated with omaveloxolone (150 mg/day) demonstrated a statistically significant, placebo-corrected 2.40 point mean improvement (decrease) in mFARS after 48 weeks of treatment (p=0.014). Patients treated with omaveloxolone demonstrated improvement relative to placebo in every subcategory measured under mFARS. Omaveloxolone treatment was generally reported to be well-tolerated.

The FDA ~~and~~provided us guidance that, although it does not have concerns with the ~~European Commission have granted orphan drug designation to omaveloxolone for~~reliability of the ~~treatment of FA.~~

~~As discussed above under “Regulatory Update-Omaveloxolone for Friedreich’s Ataxia,” the FDA will consider whether a crossover study of omaveloxolone using placebo patients~~mFARS primary endpoint results from MOXIe Part 2, ~~who~~it was not convinced that the results from MOXIe Part 2, as a single study, were ~~crossed over~~sufficient to support approval. The FDA stated that we would need to conduct a second pivotal trial that confirms the mFARS results of MOXIe Part 2 with a similar magnitude of effect. As an alternative, to increase the persuasiveness of MOXIe Part 2 results, we completed additional analyses, including the Delayed-Start Analyses.

During the first quarter of 2021, we submitted results from the Delayed-Start Analyses to the FDA. These additional exploratory analyses analyzed data from MOXIe Part 2 and the MOXIe Extension. In these analyses, parallel trajectories between the patients randomized to placebo (placebo-to-omaveloxolone group) and those randomized to omaveloxolone ~~treatment~~(omaveloxolone-to-omaveloxolone group) in the double-blind period from MOXIe Part 2 through 48 weeks in the MOXIe ~~extension study~~Extension could ~~serve as additional confirmatory evidence. If~~provide evidence of disease-modifying activity. A total of 73 out of 75 (97%) patients without pes cavus who completed MOXIe Part 2 enrolled in the ~~FDA accepts the proposal, we could have completed~~MOXIe Extension. A longitudinal analysis used to calculate annualized slopes incorporating all available data from the ~~crossover study~~MOXIe Extension showed similar slopes in mFARS for the ~~fourth~~placebo-to-omaveloxolone group (0.59 points per year) when compared to the omaveloxolone-to-omaveloxolone group (0.41 points per year) with no significant difference between slopes (p=0.75). The resulting parallel trajectories between both treatment groups are consistent with disease-modifying activity. We requested and were granted a Type C meeting to discuss whether the data would support an NDA submission.

On May 19, 2021, we received a communication from the FDA suggesting that, after a preliminary review of briefing materials for the Type C meeting including the Delayed-Start Analyses, a pre-NDA meeting is the most appropriate format for a discussion of the development program for omaveloxolone in FA. The FDA also suggested that we withdraw the current Type C meeting request and instead request a pre-NDA meeting. During the second quarter of 2021, we withdrew our request for a Type C meeting and requested a pre-NDA meeting with the FDA. The pre-NDA meeting request has been granted, a pre-NDA meeting has been scheduled during the third quarter

of this ~~year. Assuming that~~year, and we have submitted briefing materials for the ~~crossover study data are sufficiently positive to provide confirmatory evidence,~~meeting. We recently received a communication from the FDA requesting the estimated date of our NDA submission for its planning purposes. We plan ~~would be~~ to submit anthe NDA during the first quarter of 2021. If the FDA rejects the proposal or if the data are not supportive, we will evaluate whether it is feasible to conduct a second pivotal study on FA patients as suggested by the FDA. Regardless of the interaction with the FDA, we plan to pursue marketing approval outside of the United States.2022.

~~In addition,~~Omaveloxolone is a promising platform molecule. Because mitochondrial dysfunction is a key feature of many neurological and neuromuscular diseases, we believe omaveloxolone may be broadly applicable to treat such diseases by activating Nrf2 to normalize and improve mitochondrial function and ATP production.

Based on our understanding of the pathophysiology of neurological diseases, characterized by mitochondrial dysfunction, inflammation, and oxidative stress, we believe omaveloxolone may be applicable to diseases such as progressive supranuclear palsy, Parkinson’s disease, frontotemporal dementia, Huntington’s disease, Amyotrophic lateral sclerosis (ALS), Alzheimer’s disease, and epilepsy. Consistent with this, we have observed compelling activity of omaveloxolone and our other Nrf2 activators in preclinical models of many of these diseases.

Our Nrf2 activators reduced seizure frequency in refractory, progressive epilepsy models and restored mitochondrial function in patient biopsy samples and preclinical models of FA, ALS, familial and sporadic Parkinson’s disease, ~~dementia, epilepsy, Huntington’s disease,~~ and ~~amyotrophic lateral sclerosis (ALS),~~frontotemporal dementia. In clinical trials, improvements in neuromuscular function have been observed in FA patients treated with omaveloxolone as assessed by mFARS rating scale, and improvements in mitochondrial function, as measured by reductions in blood lactate and heart rate, have been observed in patients with primary mitochondrial disease. Accordingly, we believe that omaveloxolone has the potential to treat a number of neurological and neuromuscular diseases that currently have few or no effective therapies, and we plan to pursue the development of omaveloxolone and our other Nrf2 activators for one or more of these diseases.

~~We are also developing RTA 901 in neurological indications.~~ RTA 901 is the lead product candidate from our Hsp90 modulator ~~program.~~program, which includes highly potent and selective C-terminal modulators of Hsp90. We have observed favorable activity of RTA 901 in a range of preclinical models of neurological disease, including models of diabetic neuropathy, neuroinflammation, and neuropathic pain.

Historically, other companies have explored N-terminal Hsp90 inhibitors for cancer therapeutics; however, this approach has been associated with multiple adverse effects including peripheral neuropathy and ocular toxicity. Binding at the C-terminus of Hsp90 leads to increased transcription of Hsp70, a cytoprotective and molecular chaperone gene, which facilitates cell survival in response to stress without the deleterious activities of N-terminal inhibition.

In preclinical rodent disease models, we observed that RTA 901 administered orally once-daily rescued existing nerve function, restored thermal and mechanical sensitivity within four weeks, and improved nerve conductance velocity and mitochondrial function. These effects are dose-dependent, reversible, and HSP70-dependent.

We ~~have~~ completed a Phase 1 single and multiple ascending dose trial of oral, once-daily RTA 901 in healthy adult volunteers to evaluate the safety, tolerability, and pharmacokinetic ~~profile~~(PK) profile. The PK was linear up to the highest doses evaluated with a half-life ranging from two to nine hours, and exposures were easily achievable in 10-fold excess of ~~RTA 901 administered orally, once-daily~~those necessary for efficacy in ~~healthy adult volunteers, and no~~multiple animal models. No safety or tolerability concerns were reported. WeDue to slight delays in clinical drug supply, we now plan to ~~continue development for~~initiate additional Phase 1 studies to evaluate the PK and drug-drug interaction potential of RTA 901 in ~~neurological diseases, such as~~the fourth quarter of 2021 and a randomized, placebo-controlled Phase 2 study in diabetic ~~neuropathy.~~peripheral neuropathic pain (DPNP) in the first half of 2022.

There are about four million patients with moderate to severe DPNP in the United States, and about two million adult patients diagnosed with DPNP seek treatment annually. We are the exclusive licensee of RTA 901 and ~~have~~maintain worldwide commercial rights.

In addition to our lead programs, we are developing ~~RTA 1701, the lead product candidate from our~~a proprietary series of RORγt inhibitors for the potential treatment of a broad range of autoimmune, inflammatory, and fibrotic diseases. We have ~~completed~~conducted a Phase 1 trial to evaluate the safety, tolerability, and ~~pharmacokinetic~~PK profile of RTA 1701 in healthy adult volunteers. NoRTA 1701 had no safety ~~or tolerability~~ concerns, ~~were reported,~~was well tolerated, and we observed an acceptable ~~pharmacokinetic~~PK profile. ~~We plan~~Plasma concentrations were achieved that are associated with efficacy in preclinical models of autoimmune disease. Due to ~~continue~~RTA 1701’s ADME (absorption, distribution, metabolism, and excretion) properties and the potential for drug-drug interactions at clinically relevant concentrations, we have discontinued the development ~~for~~of RTA 1701 and are proceeding with the development of follow-on molecules in the 1700 series. We have identified follow-on molecules that do not have these liabilities, and we are conducting studies to determine the new lead molecule. We remain committed to developing RORγt inhibitors for the treatment of autoimmune, inflammatory, orand fibrotic diseases. We retain all rights to our RORγt inhibitors, which are not subject to any existing commercial collaborations.

We are in the process of building the commercial infrastructure in the United States necessary to effectively support the commercialization of our product candidates, if and when we receive regulatory approval of such product candidates in the United States and Europe. Our ability to launch bardoxolone and omaveloxolone is dependent on the acceptance and successful defense of an NDA and MAA and approval by the FDA and EMA, respectively.

In the United States, we have hired commercial leaders, are expanding quality and compliance functions to support commercialization, and are building the organization, infrastructure, systems, and processes necessary for the launch of bardoxolone, including sales, marketing, market access, patient support, and distribution. We have also recently hired a team of payer account directors focused on educating private and public payers about Alport syndrome, disease severity, and the need to treat diagnosed patients. Their role is to facilitate coverage and reimbursement of bardoxolone for Alport syndrome upon approval.

We have reinitiated our launch readiness efforts for omaveloxolone in FA in the United States. We are efficiently building core functions for our bardoxolone program to also support the planned launch of omaveloxolone for FA.

If and when we receive regulatory approval for our product candidates, we plan to utilize a specialty pharmacy distribution model to support product availability to patients, with a patient-centered hub to support on-label utilization, ease of access, and patient education and compliance. We also completed preliminary field force sizing and structure for our sales teams and have launched disease awareness campaigns to educate physicians about Alport syndrome and FA. Trade names for bardoxolone and omaveloxolone have been selected.

To date, we have focused most of our efforts and resources on developing our product candidates and conducting preclinical studies and clinical trials. We have historically financed our operations primarily through revenue generated from our collaborations with AbbVie and KKC, from sales of our securities, ~~with~~ secured loans, and ~~most recently from~~ a strategic financing from BXLS. We have not received any payments or revenue from collaborations other than nonrefundable upfront, milestone, and cost sharing payments from our collaborations with AbbVie and KKC, from the Development Agreement with BXLS, and from reimbursements of expenses under the terms of our agreement with KKC. We have incurred losses in each year since our inception, other than in 2014. As of June 30, ~~2020,~~2021, we had ~~$610.4~~$755.7 million of cash and cash equivalents and an accumulated deficit of ~~$827.0~~$1,098.4 million. We continue to incur significant research and development and other expenses related to our ongoing operations. Despite contractual product development commitments and the potential to receive future payments from KKC, we anticipate that we will continue to incur losses for the foreseeable future, and we anticipate that our losses will increase as we continue our development of, seek regulatory approval for, and ~~potential commercialization of~~potentially commercialize our product candidates. If we do not successfully develop and obtain regulatory approval of our existing product candidates or any future product candidates and effectively manufacture, market, and sell any products that are

approved, we may never generate revenue from product sales. Furthermore, even if we do generate revenue from product sales, we may never again achieve or sustain profitability on a quarterly or annual basis. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. Our failure to become and remain profitable could depress the market price of our Class A common stock and could impair our ability to raise capital, expand our business, diversify our product offerings, or continue our operations.

Our revenue to date has been generated primarily from licensing fees received under our collaborative license agreements and reimbursements for expenses. We currently have no approved products and have not generated any revenue from the sale of products to date. In the future, we may generate revenue from product sales, royalties on product sales, reimbursements for collaboration services under our current collaboration agreements, or license fees, milestones, or ~~other~~ upfront payments if we enter into any new collaborations or license agreements. We expect that our future revenue will fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any such payments and sales.

Our license and milestone revenue has been generated primarily from the KKC Agreement, the AbbVie License Agreement, and the ~~AbbVie~~ Collaboration Agreement and consists of upfront payments and milestone payments. License revenue recorded with respect to the KKC Agreement, the AbbVie License Agreement, and the ~~AbbVie~~ Collaboration Agreement consists solely of the recognition of deferred revenue. Under our revenue recognition policy, collaboration revenue associated with upfront, non-refundable license payments received under our license and collaboration agreements are deferred and recognized ratably over the expected term of the performance obligations under each agreement. Under the Reacquisition Agreement, we no longer have performance obligations under the AbbVie License Agreement and the ~~AbbVie~~ Collaboration Agreement. WeUnder the KKC Agreement, we only expect to recognize the deferred revenue ~~under the KKC Agreement, which extends~~ through ~~2021.~~mid-2022.

The largest component of our total operating expenses has historically been our investment in research and development activities, including the clinical development of our product candidates. From our inception through June 30, ~~2020,~~2021, we have incurred a total of ~~$859.4~~$1,008.9 million in research and development expense, a majority of which relates to the development of bardoxolone and omaveloxolone. We expect our research and development expense to continue to increase in the future as we advance our product candidates through clinical trials and expand our product candidate portfolio. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and we consider the active management and development of our clinical pipeline to be crucial to our long-term success. The actual probability of success for each product candidate and preclinical

program may be affected by a variety of factors, including the safety and efficacy data for product candidates, investment in the program, competition, manufacturing capability, and commercial viability.

Research and development costs are expensed as incurred. Costs for certain development activities such as clinical trials are highly judgmental and are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites.

We base our expense accruals related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and ~~contract research organizations (CROs)~~CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing costs, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates.

To date, we have not experienced material changes in our estimates of accrued research and development expenses after a reporting period. However, due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical trials and other research activities.

Currently, KKC has allowed us to conduct clinical studies of bardoxolone in certain rare forms of kidney diseases in Japan and has reimbursed us the majority of the costs for our CARDINAL study in Japan and is paying for the costs of a certain number of patients as the in-country caretaker in our FALCON study in Japan. ~~We reduced our expenses by $0.0 million and $0.3 million for KKC’s share of CARDINAL costs for the six months ended June 30, 2020 and 2019, respectively.~~

	Three Months Ended June 30				Six Months Ended June 30				Three Months Ended				Six Months Ended
	2020		2019		2020		2019		June 30				June 30
	(unaudited; in thousands)								2021		2020		2021		2020
Bardoxolone methyl	$	9,736	$	10,713	$	23,653	$	19,393
									(in thousands)
Bardoxolone									$	14,979	$	9,736	$	26,365	$	23,653
Omaveloxolone		8,313		5,676		14,942		11,479		482		8,313		2,954		14,942
RTA 901		750		719		1,961		1,055		3,121		750		3,827		1,961
RTA 1701		479		653		1,874		982
Other research and development expenses		17,505		11,793		42,006		22,759
Other research and development expenses⁽¹⁾										21,484		17,984		41,800		43,880
Total research and development expenses	$	36,783	$	29,554	$	84,436	$	55,668	$	40,066	$	36,783	$	74,946	$	84,436

(1) RTA 1701 expenses have been included in other research and development expenses due to development updates in the program. See discussion in Other Clinical Programs section above.

The program-specific expenses summarized in the table above include costs that we directly allocate to our product candidates. Our other research and development expenses include research and development salaries, benefits, stock-based compensation and preclinical, research, and discovery costs, which we do not allocate on a program-specific basis.

General and administrative expenses consist primarily of employee-related expenses for executive, operational, finance, legal, compliance, and human resource functions. Other general and administrative expenses include personnel expense, facility-related costs, professional fees, accounting and legal services, depreciation

expense, other external services, and expenses associated with obtaining and maintaining our intellectual property rights.

We anticipate that our general and administrative expenses will increase in the future as we prepare for our potential commercialization of our product candidates. We have also incurred, and anticipate incurring in the future, increased expenses associated with being a public company, including exchange listing and SEC requirements, director and officer insurance ~~premium,~~premiums, legal, audit and tax fees, compliance with the Sarbanes-Oxley Act of 2002, regulatory compliance programs, and investor relations costs. Additionally, if and when we believe the first regulatory approval of one of our product candidates appears likely, we anticipate an increase in payroll and related expenses as a result of our preparation for commercial operations, especially for the sales and marketing of our product candidates.

Other income (expense) includes interest and gains earned on our cash and cash equivalents, interest expense on ~~term loans,~~our Term Loans, amortization of debt issuance costs, imputed interest on long term payables, loss on extinguishment of debt, gain on termination of lease, foreign currency exchange gains and losses, gains and losses on sales of assets, and non-cash interest expense on liability related to the sale of future royalties.

Provision for taxes on income consists of net loss, taxed at federal tax rates and adjusted for certain permanent differences. ~~We maintain a full valuation allowance against our net~~Realization of deferred tax ~~assets.~~assets is generally dependent upon future earnings by jurisdiction, of which the timing and amount are uncertain for the majority of our deferred tax assets, and valuation allowances are maintained against them. Changes in ~~this~~ valuation ~~allowance~~allowances also affect the tax provision.

Comparison of the Three Months Ended June 30, ~~2020~~2021, and ~~2019~~2020 (unaudited)

The following table sets forth our results of operations for the three months ended June 30:

	2020			2019			Change $			Change %
	(in thousands)												2021			2020			Change $			Change %
Collaboration revenue
License and milestone	$	1,169		$	7,813		$	(6,644	)		(85	)	$	803		$	1,169		$	(366	)		(31	)
Other revenue		1,904			20			1,884		**				1,418			1,904			(486	)		(26	)
Total collaboration revenue		3,073			7,833			(4,760	)		(61	)		2,221			3,073			(852	)		(28	)
Expenses
Research and development		36,783			29,554			7,229			24			40,066			36,783			3,283			9
General and administrative		16,600			11,706			4,894			42			21,998			16,600			5,398			33
Depreciation		284			232			52			22			287			284			3			1
Total expenses		53,667			41,492			12,175			29			62,351			53,667			8,684			16
Other income (expense), net		(16,990	)		(701	)		(16,289	)	**				(13,223	)		(16,990	)		3,767		**
Loss before taxes on income		(67,584	)		(34,360	)		(33,224	)		(97	)		(73,353	)		(67,584	)		(5,769	)		(9	)
(Benefit from) provision for taxes on income		(3	)		20			(23	)		(115	)
Benefit from (provision for) taxes on income														653			3			650		**
Net loss	$	(67,581	)	$	(34,380	)	$	(33,201	)		(97	)	$	(72,700	)	$	(67,581	)	$	(5,119	)		(8	)
** Percentage not meaningful

License and milestone revenue represented approximately ~~38%~~36% and ~~100%~~38% of total revenue for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and consisted ~~primarily~~ of the recognition of KKC deferred revenue. ~~License~~The decrease in license and milestone revenue ~~decreased by $6.6~~is primarily due to the extension of our performance obligation period under the KKC Agreement in the first quarter of 2021. Accordingly, the quarterly recognition of the deferred revenue under the KKC Agreement was reduced from $1.2 million ~~or 85%~~to $0.8 million.

Other revenue decreased during the three months ended June 30, ~~2020~~,2021, compared to the three months ended June 30, ~~2019,~~2020, primarily due to ~~the Reacquisition Agreement~~a decrease in October 2019, which ended our performance obligations under the AbbVie Collaboration Agreement and resulted in the writing off of the related remaining deferred revenue balance, after which no further revenue was recognized. Total revenue of $1.2 million was recognized during the three months ended June 30, 2020 from deferred revenue related to the KKC Agreement.

Other revenue increased by $1.9 million for the three months ended June 30, 2020, compared to the three months ended June 30, 2019. The increase was primarily due to $1.6 million in revenue recognized for reimbursements of expenses from ~~KKC.~~

~~The following table summarizes the sources of our revenue~~KKC for ~~the three months ended June 30:~~manufacturing and non-clinical study expenses incurred.

The following table summarizes our expenses, as a percentage of total expenses, for the three months ended June 30:

	2020		% of Total Expenses			2019		% of Total Expenses			2021		% of Total Expenses			2020		% of Total Expenses
	(in thousands)										(in thousands)
Research and development	$	36,783		68	%	$	29,554		71	%	$	40,066		64	%	$	36,783		68	%
General and administrative		16,600		31	%		11,706		28	%		21,998		35	%		16,600		31	%
Depreciation		284		1	%		232		1	%		287		1	%		284		1	%
Total expenses	$	53,667				$	41,492				$	62,351				$	53,667

Research and development expenses increased by ~~$7.2~~$3.3 million, or ~~24%~~9%, for the three months ended June 30, ~~2020,~~2021, compared to the three months ended June 30, ~~2019.~~2020. The increase was primarily due to ~~$8.5 million in~~ increased ~~personnel-related~~spend related to ongoing clinical study expenses related to bardoxolone and RTA 901 and medical affairs activities for bardoxolone to support disease awareness and education activities. The remaining changes included an increase in personnel and personnel-related costs to support the growth of our development activities, ~~and accelerated recognition of~~offset by decreased stock-based compensation expense ~~from employees who entered into consulting agreements at the termination of employment; $1.6 million in increased manufacturing costs~~due to ~~support product registration offset by a decrease in clinical study expenses related to stopping the CATALYST study and its extension study; and $2.3 million in decreased medical affairs expenses.~~accelerated expense recognized during 2020.

Research and development expenses, as a percentage of total expenses, was ~~68%~~64% and ~~71%~~68% for the three months ended June 30, ~~2020~~2021, and ~~2019,~~2020, respectively. The decrease of 3%4% was ~~primarily~~ due to athe proportionately larger increase in general and administrative expenses, which ~~includes personnel and stock-based compensation expenses and rent and office expenses~~included increases in commercial readiness activities that had previously been decreased due to ~~support growth~~delays in our ~~development and commercial readiness activities.~~regulatory submission.

General and administrative expenses increased by ~~$4.9~~$5.4 million, or ~~42%~~33%, for the three months ended June 30, ~~2020,~~2021, compared to the three months ended June 30, ~~2019.~~2020. The increase was primarily due to ~~$6.1 million in~~ increased spend related to commercial readiness activities and personnel and ~~stock-based compensation expenses, offset by a decrease of $0.6 million~~personnel-related costs to support growth in ~~marketing and commercialization expenses.~~

General and administrative expenses, as a percentage of total expenses, was ~~31%~~35% and ~~28%~~31%, for the three months ended June 30, ~~2020~~2021, and ~~2019,~~2020, respectively. The increase of 3%4% was due to the proportionately larger increase in general and administrative expenses, compared to research and development expenses.

Other income (expense), net decreased by $3.8 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020. The decrease was primarily due to decreased interest expense and loss on extinguishment of debt due to the payoff on our Term Loans in 2020, offset by an increase in non-cash interest expense on liability related to the sale of future royalties.

Benefit from taxes on income was immaterial for the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

The following table sets forth our results of operations for the six months ended June 30:

	2021			2020			Change $			Change %
Collaboration revenue
License and milestone	$	1,598		$	2,338		$	(740	)		(32	)
Other revenue		1,568			2,088			(520	)		(25	)
Total collaboration revenue		3,166			4,426			(1,260	)		(28	)
Expenses
Research and development		74,946			84,436			(9,490	)		(11	)
General and administrative		42,703			37,387			5,316			14
Depreciation		561			562			(1	)		(0	)
Total expenses		118,210			122,385			(4,175	)		(3	)
Other income (expense), net		(25,780	)		(20,804	)		(4,976	)	**
Loss before taxes on income		(140,824	)		(138,763	)		(2,061	)		(1	)
Benefit from (provision for) taxes on income		669			22,243			(21,574	)		(97	)
Net loss	$	(140,155	)	$	(116,520	)	$	(23,635	)		(20	)

License and milestone revenue represented approximately 50% and 53% of total revenue for the six months ended June 30, 2021 and 2020, respectively, and consisted of the recognition of KKC deferred revenue. The decrease in license and milestone revenue is primarily due to the extension of our performance obligation period under the KKC Agreement in the first quarter of 2021.

Other revenue decreased in the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily due to a decrease in reimbursements of expenses from KKC for manufacturing and non-clinical study expenses incurred.

The following table summarizes our expenses, as a percentage of total expenses, for the six months ended June 30:

Research and development expenses decreased by $9.5 million, or 11%, for the six months ended June 30, 2021, compared to the six months ended June 30, 2020. The decrease was primarily due to decreased clinical and manufacturing activities completed in 2020 related to omaveloxolone and RTA 1701, offset by increased clinical activities for RTA 901. The remaining changes included decreased stock-based compensation expense due to accelerated expense recognized during 2020, offset by an increase in personnel and personnel-related costs to support the growth of our development activities.

Research and development expenses, as a percentage of total expenses, was 63% and 69% for the six months ended June 30, 2021, and 2020, respectively. The decrease of 6% was due to the proportionately larger increase in general and administrative expenses, which included increases in commercial readiness activities that

had been decreased due to delays in our regulatory submission and a larger increase in personnel and personnel-related costs compared to research and development.

General and administrative expenses increased by $5.3 million, or 14%, for the six months ended June 30, 2021, compared to the six months ended June 30, 2020. The increase was primarily due to increased spend related to commercial readiness activities and personnel and personnel-related costs to support growth in our development activities.

General and administrative expenses, as a percentage of total expenses, was 36% and 30%, for the six months ended June 30, 2021, and 2020, respectively. The increase of 6% was due to the proportionately larger increase in general and administrative expenses, compared to research and development expenses.

Other income (expense), net increased by ~~$16.3~~$5.0 million for the ~~three~~six months ended June 30, ~~2020,~~2021, compared to the ~~three~~six months ended June 30, ~~2019.~~2020. The increase was primarily due to ~~$11.2 million from~~ ~~loss on~~ ~~debt extinguishment,~~ ~~$3.2 million of additional~~increased non-cash interest expense ~~attributable to additional borrowings under the Term B Loan drawn in December 2019 and the payable due to collaborator~~on liability related to the ~~Reacquisition Agreement in October 2019,~~sale of future royalties and ~~$1.2 million in~~ decreased ~~investment~~interest income earned due to ~~declining~~lower market rates, offset by decreased interest ~~rates.~~expense and loss on extinguishment of debt due to the payoff on our Term Loans in 2020.

Benefit from taxes on income ~~was immaterial for the three months ended June 30, 2020 and 2019.~~

~~The following table sets forth our results of operations for the six months ended June 30:~~

2020

2019

Change $

Change %

(in thousands)

Collaboration revenue

License and milestone

$
2,338

$
15,539

$
(13,201
)

(85
)
Other revenue

2,088

64

2,024

**

Total collaboration revenue

4,426

15,603

(11,177
)

(72
)
Expenses

Research and development

84,436

55,668

28,768

52

General and administrative

37,387

21,744

15,643

72

Depreciation

562

401

161

40

Total expenses

122,385

77,813

44,572

57

Other income (expense), net

(20,804
)

(1,301
)

(19,503
)

**

Loss before taxes on income

(138,763
)

(63,511
)

(75,252
)

(118
)
(Benefit from) provision for taxes on income

(22,243
)

23

(22,266
)

**

Net loss

$
(116,520
)

$
(63,534
)

$
(52,986
)

(83
)
** Percentage not meaningful

~~License and milestone revenue represented approximately 53% and 100% of total revenue~~decreased by $21.6 million for the six months ended June 30, 2020, and 2019, respectively, and consisted primarily of the recognition of deferred revenue. License and milestone revenue decreased by $13.2 million or 85% during the six months ended June 30, 2020,2021, compared to the six months ended June 30, 2019, primarily due to the Reacquisition Agreement in October 2019, which ended our performance obligations under the AbbVie Collaboration Agreement and resulted in the writing off of the related remaining deferred revenue balance, after which no further revenue was recognized. Total revenue of $2.3 million was recognized during the six months ended June 30, 2020, ~~from deferred revenue related to the KKC Agreement~~.

Other revenue increased by $2.0 million for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was primarily due to $1.6 million in revenue recognized for reimbursements of expenses from KKC.

~~The following table summarizes the sources of our revenue for the six months ended June 30:~~

~~The following table summarizes our expenses, as a percentage of total expenses, for the six months ended June 30:~~

Research and development expenses increased by $28.8 million, or 52%, for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was primarily due to $21.7 million in increased personnel-related expenses related to the growth of our development activities and accelerated recognition of stock-based compensation expense as a result of the death of an executive and employees who entered into consulting agreements at the termination of employment; $9.9 million in increased manufacturing costs to support product registration and increased clinical, clinical pharmacology, and toxicity study expenses to support our registrational programs, as well as our RTA 901 and RTA 1701 programs, which were offset by a decrease in clinical study expenses related to stopping the CATALYST study and its extension study; and $2.7 million in decreased medical affairs and research expenses.

Research and development expenses, as a percentage of total expenses, was 69% and 71% for the six months ended June 30, 2020 and 2019, respectively. The decrease of 2% was primarily due to a proportionately larger increase in general and administrative expenses, which includes personnel and stock-based compensation expenses and rent and office expenses to support growth in our development and commercial readiness activities.

General and administrative expenses increased by $15.6 million, or 72%, for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was primarily due to $14.2 million in increased personnel and stock-based compensation expenses, $0.6 million in increased insurance expenses, and $0.5 million in increased marketing and commercialization expenses.

General and administrative expenses, as a percentage of total expenses, was 30% and 28%, for the six months ended June 30, 2020 and 2019, respectively. The increase of 2% was primarily due to a proportionately larger increase in general and administrative expenses, compared to research and development expenses.

~~Other income (expense), net increased by $19.5 million for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was primarily due to~~ ~~$11.2 million from~~ ~~loss on~~ ~~debt extinguishment,~~ $6.7 million of additional interest expense attributable to additional borrowings under the Term B Loan drawn in December 2019 and the payable due to collaborator related to the Reacquisition Agreement in October 2019,~~and $1.0 million in decreased investment income due to declining interest rates.~~

~~Benefit from taxes on income increased by $22.2 million for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was~~ primarily due to a tax ~~refund we have filed for under the provisions of the CARES Act.~~benefit recognized in 2020.

Since our inception, we have funded our operations primarily through collaboration and license agreements, the sale of preferred and common stock, secured loans, and the sale of future royalties. Through June 30, ~~2020,~~2021, we have raised gross cash proceeds of $476.6 million through the sale of convertible preferred stock and $780.0 million from payments under license and collaboration agreements. We also obtained ~~$944.7~~$1,222.1 million in net proceeds from our initial public offering, follow-on offerings, and the sale of our Class A common stock under the Purchase Agreement, and $299.0 million in net proceeds from the sale of future royalties under the Development Agreement. We ~~also obtained $151.6 million in net proceeds from our Amended Restated Loan Agreement, which we paid off in June 2020. We~~ have not generated any revenue from the sale of any products. As of June 30, ~~2020,~~2021, we had available cash and cash equivalents of approximately ~~$610.4~~$755.7 million. Our cash and cash equivalents are invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.

The following table sets forth the primary sources and uses of cash for each of the six months ended June 30:

Net cash used in operating activities was $70.6 million for the six months ended June 30, 2021, consisting primarily of a net loss of $140.2 million adjusted for non-cash items including stock-based compensation expense of $27.9 million, non-cash interest expense on liability related to sale of future royalty of $22.4 million, depreciation, amortization of issuance costs, and imputed interest expense of $4.0 million, and a net increase in operating assets and liabilities of $15.2 million. The significant items in the change in operating assets that impacted our use of cash in operations include a decrease of $22.2 million in income tax receivable due to the receipt of a CARES Act refund and an increase of $3.6 million in accounts payable due to timing of payments, offset by an increase of $5.0 million in prepaid expense, other current assets, and other assets due to insurance premium paid and a decrease of $4.0 million in accrued direct research and other current and long-term liabilities primarily due to the change in timing of bonus payments from December to March of the following year, which began with the December 2020 payments being delayed to March 2021.

Net cash used in operating activities was $237.1 million for the six months ended June 30, 2020, consisting primarily of a net loss of $116.5 million adjusted for non-cash items including stock-based compensation expense of $34.1 million, loss on extinguishment of debt of $11.2 million, depreciation and amortization expense of $4.7 million, and a net increase in operating assets and liabilities of $171.3 million. The significant items in the change in operating assets that impacted our use of cash in operations were an increase in income tax receivable of $22.2 million and a decrease in payable to collaborators of $150.0 million for a payment made on June 30, 2020, under the Reacquisition Agreement.

Net cash used in ~~operating~~investing activities consisted of purchases of property and equipment. Net cash used in investing activities for the six months ended June 30, 2021 and 2020 were not significant.

Net cash provided by financing activities was ~~$61.4~~$8.6 million for the six months ended June 30, ~~2019,~~2021, primarily consisting ~~primarily~~ of a net loss of $63.5 million adjusted for non-cash items including stock-based compensation expense of $8.7 million, depreciation and amortization expense of $1.1 million, and a net decrease in operating assets and liabilities of $7.7 million. The significant items in the change in operating assets that impacted our use of cash in operations include increases in accrued direct research and other current and long-term liabilities of $9.8 million due to activities related to clinical trials and personnel-related activities, an increase in prepaid expenses and other current assets of $3.2 million due to increases in prepaid subscriptions and insurance premiums, and decreases in amounts earned or due from collaboration agreements of $0.9 million and deferred revenue of $15.5 million. The decrease in deferred revenue is due to the ratable recognition of revenue over the expected term of the performance obligations under our collaboration agreements with AbbVie and KKC, which resulted in recognition of $15.5 million of license and milestone revenue.

~~Net cash used in investing activities of $0.4 million and $2.1 million for the~~ ~~six months ended June 30, 2020 and~~ ~~2019, respectively, were primarily due to capital expenditures in connection with an expansion of our office space and purchase of property and equipment.~~

Net cash provided by financing activities was $183.6 million for the six months ended June 30, 2020, primarily due to $55.4 million and $293.6 million in funding received from the Purchase Agreement and Development Agreement with BXLS, respectively, and $1.8 million from options exercised, offset by $167.2 million to pay off our Term Loans.

~~Net cash provided by financing activities was $6.2 million~~ ~~for the six months ended June 30, 2019, were primarily due to option exercises.~~

To date, we have not generated any revenue from product sales. We do not know when or whether we will generate any revenue from product sales. We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize one or more of our current or future product candidates. We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. We are subject to all the risks related to the development and commercialization of novel therapeutics, including those described under the heading “Risk Factors” included in our most recent Annual Report on Form 10-K, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. We continue to incur additional costs associated with operating as a public company. We anticipate that we will need substantial additional funding in connection with our continuing operations.

OnIn July 2021, KKC announced the submission of an NDA in Japan for bardoxolone in patients with CKD caused by Alport syndrome. We earned a $5.0 million milestone related to this event that will be recognized in the third quarter of 2021.

In December 2020, we closed a follow-on underwritten public offering of 2,000,000 shares of our Class A common stock for gross proceeds of $281.7 million. Net proceeds to us from the offering were approximately $277.5 million, after deducting underwriting discounts and commissions and offering expenses.

In October 2020, we entered into a lease agreement with the owner of our headquarters and offices located in Plano, Texas, with lease terms extending through June ~~24,~~30, 2022 and an option to renew up to three months. We recorded approximately $4.8 million as a right-of-use asset and lease liability in October 2020.

In June 2020, we closed on the Development Agreement and Purchase Agreement, each dated June 10, 2020, under which certain ~~Blackstone~~BXLS entities paid us an aggregate of $350.0 million in exchange for future royalties on bardoxolone and an aggregate of 340,793 shares of our Class A common stock at $146.72 per share.

OnIn June ~~24,~~ 2020, we paid off our Term Loans, ~~with Oxford Finance LLC and Silicon Valley Bank,~~ which included payments for principal of $155.0 million, prepayment fees of $5.4 million, exit fees of $6.7 million, and accrued and unpaid interest of $1.0 million.

OnIn March ~~27,~~ 2020, the United States enacted the CARES Act. Under its provisions, ~~for the six months ended June 30, 2020,~~ we recognized a tax benefit and receivable of ~~$22.1~~$22.2 million associated with the ability to carryback an applicable prior year’s net operating losses to a preceding year to generate a refund.

On November 18, 2019, we closed a follow-on underwritten public offering of 2,760,000 shares of our Class A common stock for gross proceeds of $505.1 million. Net proceeds to us from the offering were approximately $491.9 million, after deducting underwriting discounts and commissions and offering expenses.

OnIn October ~~15,~~ 2019, we entered into the 2019 Lease Agreement, relating to the lease of approximately 327,400 square feet of office and laboratory space located in Plano, Texas. The term of the ~~Lease~~lease is estimated to commence mid-2022, when construction is completed, and continue for 16 years, with up to 10 years of extension at our option. The initial annual base rent will be determined based on the project cost, subject to an initial annual cap of approximately $13.3 million, which may increase in certain circumstances. Beginning in the third lease year, the base rent will increase 1.95% per annum each year. In addition to the annual base rent, we will pay for taxes, insurance, utilities, operating expenses, assessments under private covenants, maintenance and repairs, certain capital repairs and replacements, and building management fees.

OnIn October 9, 2019, we and AbbVie entered into the Reacquisition Agreement pursuant to which we reacquired the development, manufacturing, and commercialization rights concerning our proprietary Nrf2 activator product platform originally licensed to AbbVie in the AbbVie License Agreement and the ~~AbbVie~~ Collaboration Agreement. In exchange for such rights, we will pay AbbVie $330.0 million, of which ~~$100.0~~total payments of $250.0 million ~~was paid~~have been made as of ~~December 31, 2019, $150.0 million was paid on~~ June 30, ~~2020, and~~2021, with the remaining $80.0 million is payable on November 30,

2021. We will also pay AbbVie an escalating, low single-digit royalty on worldwide net sales, on a product-by-product basis, of omaveloxolone and an identified list of certain next-generation Nrf2 activators. ~~The termination of our deferred revenue balance will not have an impact on our cash flow.~~

In November 2017, we entered into an at-the-market equity offering sales agreement with Stifel, Nicolaus & Company, Incorporated, that established a program pursuant to which it may offer and sell up to $50.0 million of its Class A common stock from time to time in at-the-market transactions. In November 2019, we suspended the program in connection with the November 2019 equity offering, which remains suspended until we notify Stifel otherwise. To date, no sales have been made under our at-the-market offering program.

Our longer term liquidity requirements will require us to raise additional capital, such as through additional equity, debt, or royalty financings or collaboration arrangements. Our future capital requirements will depend on many factors, including the receipt of milestones under our KKC Agreement and the timing of our expenditures related to clinical trials. We believe our existing cash and cash equivalents will be sufficient to enable us to fund our operations through ~~the end of 2023.~~mid-2024. However, we anticipate opportunistically raising additional capital before that time through equity offerings, collaboration or license agreements, additional debt financings, or royalty financings in order to maintain adequate capital reserves. In addition, we may choose to raise additional capital at any time for the further development of our existing product candidates and may also need to raise additional funds sooner to pursue other development activities related to additional product candidates. Decisions about the timing or nature of any financing will be based on, among other things, our perception of our liquidity and of the market opportunity to raise equity, debt, or royalty financing. Additional securities may include common stock, preferred stock, or debt securities. We may explore strategic collaborations or license arrangements for any of our product candidates. If we do explore any arrangements, there can be no assurance that any agreement will be reached, and we may determine to cease exploring a potential transaction for any or all of the assets at any time. If an agreement is reached, there can be no assurance that any such transaction would provide us with a material amount of additional capital resources.

Until we can generate a sufficient amount of revenue from our product candidates, if ever, we expect to finance future cash needs through public or private equity or debt offerings, ~~commercial~~ loans, royalty financings, and collaboration or license transactions. The outbreak of COVID-19 has caused significant disruption of global

financial markets, which may reduce our ability to access capital, which could negatively affect our liquidity. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of one or more of our product candidates. If we raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders or increased fixed payment obligations, and any such securities may have rights senior to those of our common stock. If we incur indebtedness or obtain royalty financing, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell, or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct our business, and any such debt or royalty financing could be secured by some or all of our assets. Any of these events could significantly harm our business, financial condition, and prospects. For a description of the numerous risks and uncertainties associated with product development and raising additional capital, see “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020.~~and in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, under “Part II, Item 1A. Risk Factors.”~~

Our forecast of the period through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Our future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to:

If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition, and results of operations could be materially adversely affected.

~~As of June 30, 2020, there~~We have ~~been no material changes, outside of the ordinary course of business, in our outstanding~~various contractual obligations ~~from those disclosed within “Management’s Discussion~~ and ~~Analysis of Financial Condition and Results of Operations”, as contained in our Annual Report on Form 10-K for year ended December 31, 2019, except for those discussed below.~~

~~Below are~~other commitments that require payments at certain specified periods. The following table summarizes our contractual obligations and commitments as of June 30, ~~2020~~2021 (unaudited):

	Payments due by period								Payments due by period
	Less than 1 year		1 to 3 years		4 to 5 years		Total		Less than 1 year		1 to 3 years		4 to 5 years		6 years and beyond		Total
	(in thousands)								(unaudited, in thousands)
Operating lease obligations ⁽¹⁾	$	3,787	$	5,918	$	—	$	9,705
Operating lease obligations⁽¹⁾									$	2,914	$	16,810	$	27,036	$	166,033	$	212,793
Payable to collaborators		—		80,000		—		80,000		80,000		—		—		—		80,000
Total contractual obligations	$	3,787	$	85,918	$	—	$	89,705	$	82,914	$	16,810	$	27,036	$	166,033	$	292,793

The terms of the Development Agreement require us to pay potential future royalty payments based on product development success. The above table excludes such obligations as the amount and timing of such obligations are unknown or uncertain, which are further described in Note 5, Liability Related to Sale of Future Royalties, to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

As of June 30, ~~2020,~~2021, we have several on-going clinical trials in various stages. Under agreements with various CROs and clinical trial sites, we incur expenses related to clinical trials of our product candidates and potential other clinical candidates. The timing and amounts of these disbursements are contingent upon the achievement of certain milestones, patient enrollment, and services rendered or as expenses are incurred by the CROs or clinical trial sites. Therefore, we cannot estimate the potential timing and amount of these payments, and they have been excluded from the table above.

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with ~~United States generally accepted accounting principles.~~U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, accrued research and development expenses, income taxes, and stock-based compensation. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in Note 2 of Part I, Item 1 of this Quarterly Report on Form 10-Q and in Part I, Item 7, “Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2019. During the three months ended June 30, 2020, we entered into the Development Agreement with an affiliate of BXLS. As a result, we recorded a liability related to sale of future royalties that are based on our current estimate of future royalties expected to be paid over the estimated term of the Development Agreement and non-cash interest expense over the estimated term of the Development Agreement.10-K. There have been no ~~other~~ changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Since our inception, we have not had any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements, and we have not engaged in any other off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

For a discussion of recent accounting pronouncements, please see Note 2, Summary of Significant Accounting Policies, of Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

We are exposed to market risks in the ordinary course of our business. These market risks are principally limited to interest rate fluctuations. We had cash and cash equivalents of ~~$610.4~~$755.7 million at June 30, ~~2020,~~2021, consisting primarily of funds in operating cash accounts. The primary objective of our investment activities is to preserve principal and liquidity while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of our investment portfolio, we do not believe an immediate increase of 100 basis points in interest rates would have a material effect on the fair market value of our portfolio, and accordingly we do not expect a sudden change in market interest rates to affect materially our operating results or cash flows.

We contract with research, development, and manufacturing organizations and investigational sites globally. Generally, these contracts are denominated in United States dollars. However, we may be subject to fluctuations in

foreign currency rates in connection with agreements not denominated in United States dollars. We do not hedge our foreign currency exchange rate risk.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, ~~2020.~~2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, ~~2020,~~2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, during the ~~three~~six months ended June 30, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~We are not currently subject~~For a discussion of material pending legal proceedings, please read Note 11, Commitments and Contingencies – Litigation, to ~~any material legal proceedings.~~our condensed consolidated financial statements included in Part I, Item I, “Financial Statements (Unaudited),” of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

In addition to other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors and other cautionary statements described under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December ~~31, 2019, and our Quarterly Report on Form 10-Q for the quarter ended March~~ 31, 2020, which could materially affect our businesses, financial condition, or future results. Additional risks and uncertainties currently unknown to us, or that we currently deem to be immaterial, also may materially adversely affect our business, financial condition, or future results. There have been no material changes in our risk factors from those described in the Annual Report on Form 10-K for the year ended December 31, ~~2019 and the Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2020.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware		11-3651945
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5320 Legacy Drive Plano, Texas		75024
(Address of principal executive offices)		(Zip Code)

-
		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		1
DEFINED TERMS		3
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	45
	Consolidated Balance Sheets	45
	Consolidated Statements of Operations	56
	Consolidated Statements of Stockholders’ Equity (Deficit)	67
	Consolidated Statements of Cash Flows	78
	Notes to Unaudited Consolidated Financial Statements	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3441
Item 4.	Controls and Procedures	3541
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	3542
Item 1A.	Risk Factors	3542
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3542
Item 3.	Defaults Upon Senior Securities	3542
Item 4.	Mine Safety Disclosures	3642
Item 5.	Other Information	3642
Item 6.	Exhibits	3743
Signatures		3844

	Liability Related to Sale of Future Royalties
	(in thousands)
Transaction date balance	$	294,454
Non-cash interest expense recognized, net of transaction cost amortization		664
Balance at June 30, 2020		295,118
Less: Unamortized transaction cost		(884	)
Carrying value at June 30, 2020	$	294,234

	Liability Related to Sale of Future Royalties
	(in thousands)
Balance at December 31, 2020	$	316,305
Non-cash interest expense recognized		22,322
Balance at June 30, 2021		338,627
Less: Unamortized transaction cost		(819	)
Carrying value at June 30, 2021	$	337,808

		As of June 30,
	Balance Sheet Classification	2021			2020
		(in thousands, except for years and %)
Non-current right-of-use assets	Other assets	$	3,796		$	7,653
Current lease liabilities	Other current liabilities	$	2,970		$	3,452
Non-current lease liabilities	Other long-term liabilities	$	962		$	5,212

Weighted-average remaining lease term (in years)			1.3			2.3
Weighted-average discount rate			8.1	%		9.6	%

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

Abbreviated Term		Defined Term
SEC		U.S. Securities and Exchange Commission
T1D CKD		Type 1 diabetic CKD
T2D CKD		Type 2 diabetic CKD
UACR		Urinary albumin-to-creatinine ratio

	Six Months Ended June 30, 2019
	Common Stock A				Common Stock B					Additional Paid-In		Total Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Deficit			Equity (Deficit)
Balance at December 31, 2018		24,000,683	$	24		5,728,175		$	6	$	435,452	$	(420,323	)	$	15,159
Net loss		—		—		—			—		—		(63,534	)		(63,534	)
Compensation expense related to stock options		—		—		—			—		8,710		—			8,710
Exercise of options		—		—		369,076			—		6,085		—			6,085
Conversion of common stock Class B to Class A		465,724		—		(465,724	)		—		—		—			—
Other shareholder transactions		—		—		—			—		107		—			107
Balance at June 30, 2019		24,466,407	$	24		5,631,527		$	6	$	450,354	$	(483,857	)	$	(33,473	)

	As of June 30, 2021
	(in thousands)
2021 (remaining six months)	$	1,585
2022		2,570
Total lease payments		4,155
Less: Imputed interest		(223	)
Present value of lease liabilities	$	3,932

	Balance Sheet Classification	As of June 30, 2020
		(in thousands)
Non-current right-of-use assets	Other assets	$	7,653
Current lease liabilities	Other current liabilities		3,452
Non-current lease liabilities	Other long-term liabilities		5,212

	As of June 30, 2020
	(in thousands)
2020 (remaining six months)	$	2,063
2021		4,142
2022		3,500
Total lease payments		9,705
Less: Imputed interest		(1,041	)
Present value of lease liabilities	$	8,664

Mean eGFR Change from Baseline (mL/min/1.73 m²)	Placebo ITT	Bardoxolone Methyl
Mean eGFR Change from Baseline (mL/min/1.73 m²)	Placebo ITT	ITT	mITT	Goal Dose	Below Goal Dose
Week 100 – Week 64	-3.34	-3.06	-2.30	0.17	-3.18
Week 100 CFB difference between treatment groups	-	7.65	11.29	16.77	7.14

Year 2 (Week 104)	Days Post-Dose
Change from Baseline in eGFR (mL/min/1.73 m²)	≥14 to <21 Days	≥21 to <28 Days	≥28 to <35 Days	≥35 Days
N	1	20	27	8
Mean (SD)	-3.80	-4.25 (16.2)	-4.37 (10.5)	-0.18 (13.1)
Median	-3.8	-2.3	-5.4	-2.1

Exhibit Number		Description

3.1		Thirteenth Amended and Restated Certificate of Incorporation, dated May 11, 2016 (incorporated by reference to Exhibit 3.7 to the Company’s Form S-1 (File No. 333-208843), filed with the SEC on May 16, 2016).

3.2		Second Amended and Restated Bylaws, dated as of December 7, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K (File No. 001-37785), filed with the SEC on December 7, 2016).

10.1*		~~First Amendment to Lease Agreement, dated as of May 27, 2020.~~

10.2†#*		~~Common Stock Purchase Agreement between the Company and BXLS V – River L.P, dated as of June 10, 2020.~~

10.3†#*		~~Development and Commercialization Funding Agreement between the Company and BXLS V – River L.P, dated as of June 10, 2020.~~

10.4+*		~~Fourth Amended and Restated Non-Employee Director Compensation Policy, dated as of June 10, 2020.~~

~~10.5+~~		Indemnification Agreement by and between the Company and Martin W. Edwards, dated as of August 3, 2020 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K (File No. 001-37785), filed with the SEC on July 31, 2020).

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

Date: August ~~10, 2020~~9, 2021	REATA PHARMACEUTICALS, INC.

	By:	/s/ J. Warren Huff
	Name:	J. Warren Huff
	Title:	Chief Executive Officer and President

	By:		/s/ Manmeet S. Soni
	Name:		Manmeet S. Soni
	Title:		Chief Operating Officer, Chief Financial Officer, and Executive Vice President