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Expert Financial Analysis and Reporting

Portola: Critical Upcoming Catalysts Have the Potential to Cause a Sharp Upward Move in the Stock (PTLA,  Buy, $29.19)

Investor focus is totally on Andexxa at this point in time as the disappointing 2Q, 2018 sales results for Bevyxxa have caused investors to write it off and cerdulatinib is barely a blip on their radar screen. In contrast to the negative view on Bevyxxa, I believe that it will become a very meaningful product for Portola, but we are not likely to see any significant catalysts for some time, even perhaps a year. As I pointed out in my September 10, 2018 report "Reiteration of Buy Recommendation" I believe that the stock is quite attractive based only on the prospects for Andexxa. Events related to Andexxa then have great potential to move the stock.

Andexxa Catalysts

There are two major catalysts for Andexxa on the near term horizon. The product was approved in the US on May 3, 2018 and launched in late May. It was approved using an inefficient manufacturing process that Portola dubs Gen 1 that sharply limits the supply of the drug. Initially, the Company is only targeting 40 hospitals in the US because of this supply issue. Portola has developed a much more efficient manufacturing process which should be able to adequately meet demand in the US and Europe (if approved) which it calls Gen 2. Management suggests that this will allow them to target over 600 hospitals in the US and over 400 in Europe. As I discussed in my September 10 report, there are strong reasons to beleive that Andexxa will rapidly penetrate its addressable market. The Bevyxxa launch does not portent anything for the Andexxa launch.

One major Andexxa catalyst to watch is approval of the Gen 2 process in the US. The Company filed a prior approval supplement (PAS) on August 31, 2018. The Company stated that it expected a standard six month review which would suggest approval in late February or early March of 2019 allowing for a first quarter launch of Andexxa made by the Gen 2 process. On September 11, Portola announced that the FDA had assigned a PDUFA date of December 31, 2010 which is two months earlier than company guidance. So one big catalyst for Andexxa and the company occurs on or before December 31, 2018.

Andexxa received a positive trend vote from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency in February 2018. Pending the submission of additional data requested by the CHMP including essentially the same Gen 2 data accepted by the FDA, Portola has guided that a final CHMP approval on Andexxa made with Gen 2 is expected in 4Q, 2018. This is a second big catalyst for Andexxa.

Naming on New CEO Could be Important for the Stock

Investors were unsettled by the announcement on June 4, 2018 that CEO Bill Lis was retiring, raising concern that Portola at this critical time is rudderless. The Company is actively searching for a new CEO. I believe that with its outstanding product portfolio that the CEO position at Portola is a plum assignment that should allow the Company to pick and choose from among many outstanding candidates. It is possible that the announcement of a new CEO could come in the near future and could be another major catalyst for the stock.


Cerdulatinib could step out of the shadows as the Company has said that they hope to meet with the FDA following completion of a phase 2a study around the end of the year. With FDA input they then hope to initiate a pivotal trial in the United States thereafter in refractory, peripheral T-cell lymphoma. This could shine some light on this currently ignored product. In my opinion, the initiation of this trial would compare very favorable to other lead products of emerging oncology companies which can result in market capitalizations of $500 million or more. If investors assigned the same value to cerdulatinib, it could conceivably add as much as $7 per share. The latter estimate assumes that Portola sells $400 million of equity at $30 per share resulting in the issuance of over 13 million new shares.



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