Expert Financial Analysis and Reporting

Investment Thesis

Portola issued a press release on August 3, 2017 that reported it had just resubmitted the BLA for AndexXa, which is in line with prior management guidance. I anticipate a six month review and US approval in 1Q, 2018. If so, it will represent the second approval of a potential blockbuster for Portola following the June 23, 2017 approval of Bevyxxa (betrixaban). In my opinion, these products have extraordinary commercial potential. I initiated coverage of Portola with a buy on May 4, 2017: see Portola Pharmaceuticals: Initiating Coverage with a Buy (PTLA, $40.05)   In that report, I projected that in 2022 betrixaban would achieve worldwide sales of $1.3 billion and AndexXa $910 million. In the same report, I estimated a price target of $426 per share in 2021. (Note: this report requires a subscription in order to be accessed on my website.)

My estimates for Bevyxxa are based only on the potential for use in its initial indication for acute medically ill patients; it is the only oral Factor Xa inhibitor approved for this indication. Some investors believe that my sales estimates are conservative because they give no potential for future approval and use in other key indications which have led to blockbuster sales for Eliquis, Xarelto and Savaysa. These include:

• reducing the risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation,
• treatment of deep vein thrombosis (DVT),
• treatment pulmonary embolism (PE),
• reduction in the risk of recurrence of DVT and of PE and
• prophylaxis of DVT, which may lead to PE in patients undergoing knee or hip replacement surgery.

Because of the superior pharmacokinetics of Bevyexxa relative to the other oral Factor Xa inhibitors, some argue that it has the potential to gain meaningful share in these indications even though it is the fourth drug to come to market. They maintain that this means that my estimates could be quite conservative. I tend to agree with them.

In the press release, Portola estimated the addressable patient population for AndexXa in the US as 150,000 which is more than double the estimate I used in making the 2022 sales projection. Again, it appears that my sales estimate might be significantly low.

At this point, I am not going to readjust my sales estimates for Bevyxxa and AndexXa. Let me remind you that these are estimates and are not carved in stone. It just gives me greater confidence that my 2022 sales estimates are achievable and that my $426 price target for 2021 is not as aggressive as it appears at t first blush.

AndexXa BLA Resubmitted

Portola announced on August 3, 2017 that it had resubmitted the BLA for AndexXa (andexanet alfa). It addresses a critical unmet medical need to treat uncontrolled or life-threatening bleeding from the use of the widely used anti-coagulants that inhibit Factors Xa in the clotting cascade. There are the oral, direct acting Factor Xa inhibitors Eliquis (apixaban), Xarelto (rivaroxaban) and Savaysa (edoxaban) as well as Lovenox (enoxaparin) which is an injectable, indirect Factor Xa inhibitor.

AndexXa has been granted breakthrough status by the FDA. Portola submitted a BLA in early 2016 but received a CRL in August 2016 based on issues about manufacturing. There were no questions on the clinical data that required new trial data. I am expecting a six month review and if the manufacturing issues have been addressed, it should be approved in 1Q, 2018. This is in line with my expectations.

Addressable Patient Population

Portola estimates that in the US in 2016 there were 90,000 patients treated with Factor Xa inhibitors who were admitted to the hospital. In addition, Portola believed another 60,000 other patients could also benefit each year. This represents an addressable patient population of 150.000. In my initiation report, I estimated the addressable market as half that number.

Possible Price Addressable Market as Determined by Sales

Portola has not commented on the price that it will charge for AndexXa, but we can look at comparable products to come up with an estimate.

• Kcentra (non-activated 4-factor prothrombin complex concentrate) is indicated for the urgent reversal of vitamin K antagonists in adult patients with acute major bleeding or who need for urgent surgery or other invasive procedure. It is priced at $10,000 per treatment.
• Voraxaze (glucarpidase) is used in patients who develop kidney failure while receiving high doses of methotrexate. It is an enzyme that breaks down methotrexate in the body so the drug can be easily eliminated when the kidneys are not working properly. It is priced at $50,000 per treatment.
• Praxbind (idarucizumab) which was approved in 2015 is the antidote for the anticoagulant Pradaxa (dabigatran) which inhibits thrombin rather than factor Xa. Praxbind is priced at $3,500 per treatment.

We have a range of potential prices from comparable products that fall in a range of $3,500 to $50,000 per patient. I think that I would rule out the $3,500 price for Praxbind because Boehringer Ingleheim developed both it and Pradaxa. Pradaxa was locked in a battle for market share with Xarelto and Eliquis, which at that time obviously had no antidote. The low price of Praxbind afforded a safety advantage for Pradaxa so that the low price was intended to boost market share of Pradaxa. I think that AndexXa is likely to be priced at about $20,000 per treatment. If so, the addressable market in the US would be as much as $3 billion and a comparable $3 billion amount internationally.