Post by tomsylver on Jul 15, 2017 14:15:24 GMT
Portola Pharmaceuticals: Is There Further Upside?
Jul. 13, 2017
Summary
* Portola has two potential blockbuster drugs in its portfolio.
* Based on the potential of Bevyxxa and AndexXa, the stock still has some upside.
* Main risk to the bullish case is AndexXa failing to get a regulatory nod.
By S. Mitra, MBA (ISB)
It has been a remarkable comeback for Portola Pharmaceuticals (PTLA). The stock had been beaten down in the biotech sell-off of early 2016 and continued to struggle as betrixaban results disappointed investors. However, Portola recently got a nod from the FDA for betrixaban (brand name Bevyxxa). The approval did raise some questions as the trial results released last year were not exceptional. But now that Bevyxxa is in the market, Portola has a strong chance of finding commercial success. Then there is andexanet alfa (AndexXa), a potential antidote for factor Xa inhibitors. AndexXa addresses an unmet medical need. While the drug was rejected by the FDA last year, there is a strong chance for approval the second time around. Based on the combined commercial potential of the two drugs, there is still further upside in Portola despite the recent surge.
Bevyxxa Approval
The recent surge in Portola shares was sparked by the approval of Bevyxxa. The approval did surprise a few considering the not so exceptional preliminary data released by Portola last year. The Phase 3 APEX study enrolled 7,513 patients. The study compared Bevyxxa to enoxaparin, which is the current standard treatment in acutely ill patients. The study consisted of three pre-specified patient groups. The highest risk cohort or Cohort 1 had patients with elevated D-dimer levels, the second Cohort had patients with elevated D-dimer levels or age ≥75 years. Finally, there was the overall study population.
The preliminary data disappointed as results from Cohort 1 failed to achieve statistical significance. However, the results from Cohort 2 and the overall study population showed that Portola’s Bevyxxa is better than enoxaparin at reducing venous thromboembolism in acutely ill patients.
Source: Portola Pharmaceuticals Press Release March 24, 2016
The problem was not so much the data but the study design. Below is a relevant excerpt from Portola’s press release last year:
"By protocol definition, primary efficacy analysis testing of Cohort 1 was done first and required a p value of 0.05 or less in order to test Cohort 2, which in turn required a p value of 0.05 or less in order to test the overall study population."
To sum up, the results of Cohort 1 meant that Portola should not proceed with testing the next cohort. But Portola was very close to the “gold standard” of 0.05 in p-value and therefore decided to test the next cohort and the overall study population. The fact that Portola first tested a subpopulation and not the entire population is where its study design failed. Had it first tested the overall study population first and then tested the subpopulations, the results would have been received very differently last year. In the end, the debate about the trial results is futile now that the drug has been approved.
In terms of commercial opportunity, Bevyxxa has huge potential. It is the only approved treatment in the home setting. Peak sales forecast for the drug are currently at $1 billion.
The Other Drug
Portola’s other drug also has huge commercial potential. AndexXa is an antidote for Factor Xa inhibitors. Portola, citing data from large Phase 3 trials, notes that around 1% to 3% of patients who are administered Factor Xa inhibitors experience a major bleeding event. In the U.S. alone, 90,000 patients were admitted for bleeding events in 2016, according to Portola. This is just for oral Factor Xa inhibitors. If the patients are taking enoxaparin, and the injectable Factor Xa inhibitor is taken into account then the figure goes to 150,000. If approved, AndexXaalso has the potential to be a blockbuster drug. But Portola still faces a hurdle with regards to its AndexXa.
The drug was rejected by the FDA last year. In its CRL, the agency asked for additional information with regards to manufacturing. The FDA also asked for additional data for including edoxaban and enoxaparin in the label. While the FDA’s decision was a setback, there is nothing in the CRL with regards to the drug’s safety. Based on this, there is a strong chance that the drug will be approved once Portola resubmits the application with data from the ANNEXA-4 study. Preliminary analysis from the trial showed that 79% of patients “achieved excellent or good hemostasis.” The preliminary analysis certainly suggests that AndexXa should get a nod from the FDA. The results though must be noted are from a single arm, open-label confirmatory study. Not having a control group does come as a surprise but the company has obviously designed the trial in consultation with the FDA. The single arm study therefore should not be a hindrance when Portola resubmits the application.
Portola Has Further Upside
With Bevyxxa already approved and a strong probability that AndexXa will also be approved, Portola has two potential blockbuster drugs in its portfolio. Despite the recent surge, Portola only has a market cap of around $3.6 billion. Considering the potential of the two drugs (peak sales combined of at least $2 billion) and the average price to sales ratio for the industry of around 4.6x sales for the industry, Portola still has some upside potential.
The main risk to the bullish case at this stage is AndexXa failing to get a nod from the FDA. While this cannot be completely ruled out, the probability is very small considering that the agency did not raise any safety issues in its CRL last year. The other risk is Portola failing to successfully commercialize the two drugs. The company does not have any experience in commercializing drugs. But it does have the necessary firepower in the form of a strong balance sheet to boost its commercial efforts.
Disclosure: I am/we are long PTLA.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Jul. 13, 2017
Summary
* Portola has two potential blockbuster drugs in its portfolio.
* Based on the potential of Bevyxxa and AndexXa, the stock still has some upside.
* Main risk to the bullish case is AndexXa failing to get a regulatory nod.
By S. Mitra, MBA (ISB)
It has been a remarkable comeback for Portola Pharmaceuticals (PTLA). The stock had been beaten down in the biotech sell-off of early 2016 and continued to struggle as betrixaban results disappointed investors. However, Portola recently got a nod from the FDA for betrixaban (brand name Bevyxxa). The approval did raise some questions as the trial results released last year were not exceptional. But now that Bevyxxa is in the market, Portola has a strong chance of finding commercial success. Then there is andexanet alfa (AndexXa), a potential antidote for factor Xa inhibitors. AndexXa addresses an unmet medical need. While the drug was rejected by the FDA last year, there is a strong chance for approval the second time around. Based on the combined commercial potential of the two drugs, there is still further upside in Portola despite the recent surge.
Bevyxxa Approval
The recent surge in Portola shares was sparked by the approval of Bevyxxa. The approval did surprise a few considering the not so exceptional preliminary data released by Portola last year. The Phase 3 APEX study enrolled 7,513 patients. The study compared Bevyxxa to enoxaparin, which is the current standard treatment in acutely ill patients. The study consisted of three pre-specified patient groups. The highest risk cohort or Cohort 1 had patients with elevated D-dimer levels, the second Cohort had patients with elevated D-dimer levels or age ≥75 years. Finally, there was the overall study population.
The preliminary data disappointed as results from Cohort 1 failed to achieve statistical significance. However, the results from Cohort 2 and the overall study population showed that Portola’s Bevyxxa is better than enoxaparin at reducing venous thromboembolism in acutely ill patients.
Source: Portola Pharmaceuticals Press Release March 24, 2016
The problem was not so much the data but the study design. Below is a relevant excerpt from Portola’s press release last year:
"By protocol definition, primary efficacy analysis testing of Cohort 1 was done first and required a p value of 0.05 or less in order to test Cohort 2, which in turn required a p value of 0.05 or less in order to test the overall study population."
To sum up, the results of Cohort 1 meant that Portola should not proceed with testing the next cohort. But Portola was very close to the “gold standard” of 0.05 in p-value and therefore decided to test the next cohort and the overall study population. The fact that Portola first tested a subpopulation and not the entire population is where its study design failed. Had it first tested the overall study population first and then tested the subpopulations, the results would have been received very differently last year. In the end, the debate about the trial results is futile now that the drug has been approved.
In terms of commercial opportunity, Bevyxxa has huge potential. It is the only approved treatment in the home setting. Peak sales forecast for the drug are currently at $1 billion.
The Other Drug
Portola’s other drug also has huge commercial potential. AndexXa is an antidote for Factor Xa inhibitors. Portola, citing data from large Phase 3 trials, notes that around 1% to 3% of patients who are administered Factor Xa inhibitors experience a major bleeding event. In the U.S. alone, 90,000 patients were admitted for bleeding events in 2016, according to Portola. This is just for oral Factor Xa inhibitors. If the patients are taking enoxaparin, and the injectable Factor Xa inhibitor is taken into account then the figure goes to 150,000. If approved, AndexXaalso has the potential to be a blockbuster drug. But Portola still faces a hurdle with regards to its AndexXa.
The drug was rejected by the FDA last year. In its CRL, the agency asked for additional information with regards to manufacturing. The FDA also asked for additional data for including edoxaban and enoxaparin in the label. While the FDA’s decision was a setback, there is nothing in the CRL with regards to the drug’s safety. Based on this, there is a strong chance that the drug will be approved once Portola resubmits the application with data from the ANNEXA-4 study. Preliminary analysis from the trial showed that 79% of patients “achieved excellent or good hemostasis.” The preliminary analysis certainly suggests that AndexXa should get a nod from the FDA. The results though must be noted are from a single arm, open-label confirmatory study. Not having a control group does come as a surprise but the company has obviously designed the trial in consultation with the FDA. The single arm study therefore should not be a hindrance when Portola resubmits the application.
Portola Has Further Upside
With Bevyxxa already approved and a strong probability that AndexXa will also be approved, Portola has two potential blockbuster drugs in its portfolio. Despite the recent surge, Portola only has a market cap of around $3.6 billion. Considering the potential of the two drugs (peak sales combined of at least $2 billion) and the average price to sales ratio for the industry of around 4.6x sales for the industry, Portola still has some upside potential.
The main risk to the bullish case at this stage is AndexXa failing to get a nod from the FDA. While this cannot be completely ruled out, the probability is very small considering that the agency did not raise any safety issues in its CRL last year. The other risk is Portola failing to successfully commercialize the two drugs. The company does not have any experience in commercializing drugs. But it does have the necessary firepower in the form of a strong balance sheet to boost its commercial efforts.
Disclosure: I am/we are long PTLA.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
