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Expert Financial Analysis and Reporting

Portola: Approval of Gen 2 Manufacturing Process for AndexXa is a Significant Positive (PTLA, Buy, $18.75)

Portola received approval for the Prior Approval Supplement (PAS) for the Gen 2 manufacturing process for AndexXa on the PDUFA date of December 31, 2018. Management had expressed confidence in approval but in dealing with the FDA, it is never over until it’s over. AndexXa was launched in June 2018 using the inefficient Gen 1 process which could not support a full launch so that only 100 out of a possible 1,500 US hospitals were able to have access to AndexXa. Portola has said that in anticipation of approval of the PAS that it has built up an AndexXa inventory (manufactured with Gen 2) that can supply up to two years of anticipated demand. It has not specified what level of sales this might be.

Clearly, the ability to open up the launch of AndexXa to more hospitals in the US is a major positive. It could also bode well for European approval of Ondexxya (the brand name in Europe). In the US, the FDA was just reviewing whether Gen 2 is comparable to Gen 1. In Europe the CHMP and EMA are reviewing Gen 2 as part of the basis for initial approval. In February 2018, the agencies required that Portola include Gen 2 into the review package dossier so that they potentially could go straight to approval. Portola thought that the agencies might provide an opinion in December 2018. However, they requested more data and this pushed the potential opinion date to February 2019 which could then be followed with the EMA counsel approving it about two months later in April or May of 2018.

Portola reported $7.7 million of AndexXa sales in 3Q, 2018 (period ended September 30). At an estimated price of $28,000 per dose this would represent shipments that could treat about 275 patients ($7.7 million divided by the $28,000 estimated price per patient). Management has said that most of the sales occurred in September without defining most. I am guessing that was perhaps $4 to $5 million. Management provided no numerical guidance on sales going forward so this is all we have to work on. In we annualize quarterly sales of $7.7 million this suggests an annualized sales rate of $31 million. If we annualize my guesstimated September sales number of $4 to $5 million, the annualized sales rate would be $48 to $60 million. The uncertainty for investors is whether the September burst of sales reflected actual usage or inventory building.

Portola has scheduled a conference call on January 7 at 10:00 AM (EST) to give an update on the Company and perhaps to provide some vague guidance for 2019. It is still too early in the AndexXa launch for the Company to go out on a limb and predict sales. I will be closely watching for information about 4Q, 2018 sales of AndexXa. If this shows that September 2018 sales were due to actual demand that continued into 4Q, 2018, I think this could be a catalyst for the stock. I would refer you to a December 23, 2018 update report on Portola for more detailed analysis.

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