Expert Financial Analysis and Reporting

Portola Pharmaceuticals announced today that the FDA has given the go-ahead for the commercial launch of Bevyxxa (betrixaban). This drug was approved in the US on June 23, 2017 and at the time Portola said that it expected to launch Bevyexxa in the US in the September to November time frame. However, in early September the Company alerted investors to a manufacturing issue that could delay the launch. Management said that it hoped to launch in November, but also said that the launch could be delayed until 1Q, 2018. It also acknowledged that there was an (unlikely) scenario in which the delay could be longer. See this link for more details.

This drama over the potential launch date led to a decline in stock price from a high of $66.04 on July 21. 2017 to the recent low of $47.02 on December 15, 2017. This decline was aided by a spurious attack article by Adam F-stein in late September. See this link.  When all is said and done, the launch of Bevyexxa has effectively been delayed from the September to November 2017 time frame to early January 2018 so that the fundamental outlook on July 21 when the stock was trading at $66.04 was essentially the same as today when it is trading at $50.03.

The FDA has set a PDUFA date for AndexXa of February 2, 2018. I expect approval on that date followed shortly thereafter by a launch.

Portola is in the highly enviable position of potentially having two major drug launches in the US in 2018. Street expectations for US sales of Bevyexxa are over $100 million in 2018 and over $200 million in 2019. Street expectations for AndexXa are over $80 million in 2018 and over $200 million in 2019. I always approach sales estimates in the first year of a US launch with trepidation as artificial barriers to adoption and reimbursement can blunt uptake of drugs, even those with unique product attributes like Bevyexxa and particularly AndexXa. Doubtless the US sales curves during 2018 will be the key drivers of the stock and there is the potential for disappointment.

Whatever happens to sales in 2018, Portola now has derisked the approval of Bevyexxa and should shortly de-risk the approval of AndexXa. These are extremely valuable assets. If Portola were to so choose, I think that it could sell the company to a large number of larger biopharm companies for a significant premium over the current market capitalization of $3.3 billion. I think that this largely negates downside risk in the event that first year sales of Bevyexxa and AndexXa are deemed disappointing.

I believe the stock has enormous upside over the longer term. My sales estimate for Bevyxxa in 2020 is $1.3 billion and it is $910 million for AndexXa.  Based on this, I have a 2021 price target of $426. See my initiation report of May 4, 2017 for more details on these projections and my price target thinking. There is one other possibility to consider in the short term and that would be a takeover of the Company within the next year. These two drugs would be a major boost to the product portfolio virtually and large multinational firm, whose pipelines in most cases are lackluster. I guesstimate that such a takeover, if it were to occur, could be at over $100. I think that Portola will be one of the top performing biotechnology stocks in 2018.