Portola Pharmaceuticals, Inc.

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Mkt Cap 1.30B

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An ER Physician's Evaluation Of Portola's Q2 Earnings And Its Near-Term Catalyst


Experienced in the clinical setting, I attempt to translate the science and history behind PTLA's two immediate concerns, near-term catalyst AndexXa and Betrixaban.

I briefly highlight the Q2 earnings from Tuesday, but quickly turn to the recent history of the company.

Bullish comments from the CEO on the approval of AndexXa allow me to focus on the post-approval marketing strategy.

A review of the literature gives an idea of the market opportunity for AndexXa.


Similarly awkward to an ER physician writing his first article on a financial website, Portola Pharmaceuticals (NASDAQ:PTLA) found itself in a strange position on Tuesday afternoon, carefully picking its words, as it announced the second-quarter earnings results and provided a corporate update. With its CFO out for jury duty, and the FDA's decision on the company's potentially first approved medication AndexXa only days away, investors could only listen closely in an attempt to garner insight into the chance of approval, the Phase 4 trial, the marketing strategy, and the long-term picture.

Q2 Earnings

Quickly onto the earnings for the second quarter: Portola Pharmaceuticals reported EPS of -$1.02, which beat by $0.18 and reported revenue of $4.2M (+76.5% Y/Y), which missed by $0.18M.

Although Portola has no approved products in the US, it retains the rights to all its products ex-Japan. The Y/Y increase in revenue reflects a collaboration and licensing agreement that Portola entered with Bristol-Myers Squibb (NYSE:BMY); Pfizer, Inc. (NYSE:PFE); Bayer (OTCPK:BAYRY); Janssen Pharmaceutical (NYSE:JNJ); Daiichi Sankyo, Inc.; Lees Pharmaceutical (OTC:LPCUF); and Daiichi Sankyo Co., Ltd. (OTCPK:DSNKY) in Japan to develop and commercialize AndexXa (andexanet alfa).

The company's balance sheet remains relatively healthy, and as of June 30, 2016, cash, cash equivalents and investments totaled $353.6 million compared with cash, cash equivalents and investments of $460.2 million as of December 31, 2015.

Company Background

Portola Pharmaceuticals is a clinical-stage biopharmaceutical company based in San Francisco, California, which has three medications under clinical development, including AndexXa (andexanet alfa), a Factor Xa inhibitor antidote granted Breakthrough Therapy, Betrixaban, an oral Factor Xa inhibitor anticoagulant in Phase 3 development for the prevention of venous thromboembolism (VTE) in acute medically ill patients and Cerdulatinib, a Phase 2 candidate for hematologic, or blood, cancers and inflammatory disorders.

An Introduction to Novel Oral Anti-Coagulants

In an effort to simply explain the science and review the talking points from the Q2 corporate update, we begin with Portola's Novel Oral Anti-Coagulant (NOAC): Betrixaban.

Indications for the Use of NOACs

I think most investors can comprehend that there are certain medical conditions that require blood thinners or anticoagulants. The most common condition is atrial fibrillation, an arrhythmia of the heart, which can ultimately lead to an increased risk of stroke. The next indication for blood thinners or anticoagulation is prophylaxis and management of venous thromboembolism (which encompasses deep vein thrombosis (DVT) and pulmonary embolism (PE)). Other indications include stroke prevention in patients with a prior history of stroke, and prevention of DVT and PE after elective major orthopedic surgery.

The Need for Better, Safer Anticoagulants

In the past, Coumadin (warfarin) was used for these patients. However, there are multiple downsides to the use of Coumadin including increased risk of fatal bleeding, the need for regular monitoring, and complex warfarin pharmacokinetics. The pharmacokinetics of Coumadin, affected by multiple medication interactions, gastrointestinal disorders, and changes in diet, makes it difficult to keep blood coagulation levels normalized. After decades of problems with warfarin especially life-threatening bleeding, a new class of blood thinners with a different mechanism of action has emerged.

In 2010, one of the first NOACs developed (by Boehringer Ingelheim) was Pradaxa (dabigatran). Pradaxa is a direct thrombin inhibitor and is not important to this article, other than to acknowledge that it has a different mechanism of action. It also has its own antidote, Praxbind. Pradaxa has seen decreasing sales due to its increased numbers of side effects when compared to Direct Factor Xa inhibitors.

Direct Factor Xa Inhibitors

This new class of medications coined Direct Factor Xa inhibitors (Xai), based on their mechanism of action, include apixaban (Eliquis), rivaroxaban (Xarelto), and edoxaban (Savaysa) in the US market. Note also that the generic names all end in "xa-ban." These inhibitors work by preventing Factor Xa from cleaving prothrombin to thrombin. Thrombin in turn triggers a cascade that initiates clotting of the blood.

Direct Factor Xa Inhibitors is Big Business

The adoption of these medications is occurring at jaw-dropping pace with Pfizer noting in its Q2 earnings report that more than 3.5 million patients have already been prescribed Eliquis. Its distribution partner Bristol-Myers Squibb reported $1.9 billion in 2015 US sales and Q1 2016 sales that improved 200% year over year. Non-US sales of Eliquis are also up 72% y/y with $599 million USD in sales the first half of 2016. Similarly, Xarelto's US sales in 2015 were $1.5 billion. In the first half of 2016, US sales of Xarelto were $1.16 billion, up 27.2% year over year.

The Recent History of Betrixaban

In Q2 2016, Betrixaban, Portola's oral Factor Xai, completed its Phase 3 pivotal APEX trial. There were 7,500 patients enrolled in the study of the prevention of venous...