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Portola Pharmaceuticals Inc (NASDAQ:PTLA)
Q2 2019 Earnings Call
Aug 7, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen. Welcome to Portola Pharmaceuticals' Conference Call. [Operator Instructions]. At the end of the Company's prepared remarks, we will open the call for questions and provide specific instructions. I would now like to turn the call over to Cara Miller, Portola's Vice President of Investor Relations and Corporate Communications. Please go ahead.

Cara Miller -- Vice President of Investor Relations and Corporate Communications

Thank you and good afternoon everyone. Today, we released our financial results of the second quarter 2019. The press release and accompanying slides which you can advance through the webcast, are available on the Investor Relations section of the Portola website. In the room with me today are Scott Garland, President and CEO; Mardi Dier, Chief Financial and Chief Business Officer; and Sheldon Koenig, our Chief Commercial Officer. Also with us this morning for the Q&A portion of the call are Pam Conley, Senior Vice President of Research, Jeff Myers, Vice President of Medical Affairs and Jeet Mahal, Vice President, Strategic Marketing.

Before we begin, I would like to remind you that remarks on this call will contain forward-looking statements. For a more detailed description of important risk factors that could cause our actual results to differ materially, please refer to our Annual Report on Form 10-K.

With that, I will turn the call over to Scott Garland.

Scott Garland -- President and Chief Executive Officer

Thank you, Tara. Hello, everyone, and thank you for joining us on our second quarter 2019 financial results call. This is an exciting and important time for Portola. We're operating from a position of strength, as illustrated by three key points I'd like to talk about today.

First, our team's exceptional execution on the launch of Andexxa is driving continued revenue growth. For the second quarter, net product revenues for Andexxa were $27.1 million, marking our fifth consecutive quarter of strong revenue. We also added 125 new accounts to our existing hospital base this quarter. There is continued strength and demand for Andexxa. In fact, 74% of our sales in the quarter came from reorders, reflecting real pull through and increasing use in patients.

In addition, our reorder rate remained steady at 55% for the quarter, in tandem with an incremental number of hospital adds that was beyond our expectations, and a significant percent of new hospitals coming on late in the quarter.

All this gives us great confidence in our execution and excitement for the long-term growth of our business. Sheldon will talk more about this in a moment. We recently conducted an extensive benchmarking analysis of nearly 50 hospital product launches over the last 30 years. Of those, ten went on to have sales between $600 million and $2.5 billion.

I'm proud to share that based on our first five quarters of revenue, Andexxa is one of the top five hospital drug launches over the last 30 years. We are clearly off to a fantastic start. Second, the US Factor Xa inhibitor market is large and growing. According to the most recent driven data available through June of 2018, approximately 5 million patients in the United States are taking a Factor Xa inhibitor.

Of these, approximately 150,000 patients are hospitalized each year with serious life threatening bleeds. Factor Xa inhibitors are an important medical advance. The use of these medicines and therefore the risk of related fleets continues to grow by double-digits every year.

For example, just last week, BMS reported 30% demand growth for Eliquis in the United States over the second quarter of last year. Because the need for Andexxa is directly related to the number of patients on the Factor Xa inhibitor as shown by slide 6, through market growth, label expansion and the genericization of Factor Xa inhibitors, we estimate that by 2025, the overall number of patients needing Factor Xa reversal in the US and Europe could exceed 700,000 patients.

In addition, awareness of the value of Andexxa is continuing to increase among healthcare practitioners as well as key government agencies like CMS. As we announced on Monday, CMS increased the maximum reimbursement amount of Andexxa NTAP from 50% to 65% or up to approximately $18,000. This is a very important milestone that will further expand Medicare beneficiary access to Andexxa.

Also last week, the Joint Commission known as JCAHO, the oldest and largest accrediting body for hospitals and med care [Phonetic] issued a new report on DOACs. The report directs accredited hospitals and critical care centers to stock anecdotes appropriate for the use with each type of anticoagulant.

Reports like these are making it clear that Andexxa is becoming the standard of care for patients on apixaban or rivaroxaban. Sheldon will talk more about this in a moment.

Third, yesterday, we announced our first sales of Ondexxya [Phonetic] in Europe, marking the official launch of Ondexxya in our Wave 1 countries. Achieving these sales milestones in advance of our planned timelines demonstrates excellent execution from our team in Europe as well as strong initial demand in the market.

As you may recall, the number of patients in our Wave 1 countries is equal to or potentially even greater than the 150,000 estimated patients in the United States. These three drivers launch execution and expanding U.S. market and strong demand in Europe, all reinforce our confidence in the long-term potential of Andexxa.

Before turning it over to Sheldon to talk more about our launch progress in the U.S. and Europe, I want to provide a few update on our label expansion plans for Andexxa as well as an update on our SYK/JAK inhibitor cerdulatinib. I'll start with Andexxa.

We are on track to initiate a registrational study in urgent surgery later this year or in early 2020 based on the timing of our discussions with the FDA. We estimate that approximately 60,000 patients on rivaroxaban or apixaban in the United States must undergo urgent surgery each year and could benefit from the use of Andexxa.

In addition, we're working with the FDA on plans for potential inclusion of other Factor Xa inhibitors in our label. We're also continuing to generate new data [Phonetic] that support Andexxa's unique position as the only agent approved for the reversal of apixaban or rivaroxaban and endorsed by multiple clinical practice guidelines.

We recently presented compelling in-vitro data demonstrating that Four-Factor PCCs do not resolve thrombin generation in plasma treated with Factor Xa inhibitors except at very low levels of anticoagulation. In contrast, data from the same thrombin generation assay demonstrated that Andexxa fully corrected the inhibition of thrombin generation by apixaban or rivaroxaban across a broad range of inhibitor concentrations.

These data further support the unique mechanism of action of Andexxa as distinct from PCCs which are effective in reversing warfarin, but not approved for the reversal of the Factor Xa inhibitors.

Adding to this growing body of evidence, we are -- we will be presenting new subsets in the ANNEXA-4 study at major medical meetings this year. Moving to Cerdulatinib, in June we presented data on cerdulatinib in combination with rituximab in follicular lymphoma at two international hematology conferences.

In a group of heavily pre-treated patients, Cerdulatinib achieved a 45% overall response rate as a single agent and 62% overall response rate in combination with Rituximab. Cerdulatinib was generally well tolerated with a manageable AE profile.

As mentioned previously, we plan to start a registrational study for cerdulatinib in PTCL by year-end. This is an important and exciting time for Portola and for the patients we serve. We are confident in our strategy and execution in this growing market and we continue to expand our launch and drive value. And with that, I'll turn the call over to Sheldon for a detailed update on our launch progress.

Sheldon Koenig -- Executive Vice President, Chief Commercial Officer

Thank you, Scott and hello everyone. I'd like to start by echoing Scott's enthusiasm about the success of this launch and the long-term potential for this important medicine. The team is executing well and we have some significant updates to share.

First, we continue to optimize our targeting efforts, based on the number of key analytics, including Factor Xa inhibitor usage by zip code and hospital discharge data on patients with serious life threatening bleeds requiring hospitalization.

As a result, we have expanded our hospital targets to 2,100, which represents about 80% of the market potential. Second, as Scott mentioned, we are consistently increasing our hospital base and have added 125 accounts in the second quarter. Adding new accounts is just one part of ensuring continued growth.

The second component is deepening utilization within existing accounts and we are seeing encouraging trends. As Scott mentioned, our reorder rate in the second quarter was approximately 55%. More importantly, reorders in the second quarter grew to 74% of our total Andexxa revenues reflecting real pull through and increasing use in patients.

Additionally, we have had several important developments on the reimbursement front. First, as Scott mentioned, CMS has increased the NTAP reimbursement for Andexxa to a maximum of 65% or approximately $18,000, effective October 1st of this year.

This decision is important for two reasons. First, it will expand patient access to Andexxa, and second, it underscores the breakthrough innovation Andexxa represents and the clinical value of rapidly reversing the anti-anticoagulation effects of apixaban and rivaroxaban.

In April, we received our new C-code allowing for outpatient reimbursement and in June, we began participating in Federal Supply Schedule pricing which ensures access across the Veterans Administration or VA health system. The VA is one of the largest healthcare systems in the US and we are excited to share a number of VA hospitals have already ordered Andexxa now that this pricing is available.

Finally Andexxa continues to gain support from leading KOLs in the medical community and healthcare outcome experts. Andexxa is now recommended on 16 medical society guidelines, including nine in Europe and has been recognized by the Joint Commission in two separate ways.

Joint Commission is an independent, non-profit organization that accredits and certifies nearly 21,000 healthcare organizations including hospitals in the US and is recognized nationwide as a symbol of quality and performance standards. In early July, the Joint Commission updated National Patient Safety goals for anticoagulation therapy, which require credit institutions to use evidence-based practice guidelines for the reversal of anti-coagulation and advices providers to be aware of appropriate reversal agents for each medication. And, as Scott mentioned, just last week, the Joint Commission issued a Sentinel Event Alert issue 61. Importantly, that report noted that stopping bleeding in patients taking DOACs requires different intervention than from warfarin, again this highlights the unique role of Andexxa as the only approved reversal agent for apixaban or rivaroxaban.

Moving to our progress in Europe, we were thrilled to share with you yesterday the first sales of Ondexxya in Europe which underscore the experience and execution of our team in Europe and initial demand for this novel therapy. As you know, launching in Europe is a country-by-country process and it happens in stages.

These first sales in Austria and the UK mark our official launch and the availability of Ondexxya for ordering in Austria, the UK, the Netherlands, Sweden, Denmark and Finland. Germany is also part of our Wave 1 launch and we expect Ondexxya to be available there later this year.

Reimbursement discussions with health authorities in key countries like Germany and the UK are under way. We plan to submit our dossier to AMNOG later this year, which will allow us to start Ondexxya sales in Germany as we work through the process, which we expect to be completed later next year.

In addition, we are making progress in applying for the new which is similar to the NTAP payment we have in the US and allows for German hospitals to receive supplemental payments from Ondexxya.

In the UK, we have submitted our clinical and economic dossier to NICE and we are on the agenda for review and a meeting late in the first quarter of 2020. We expect the process to be complete and full reimbursement to be in place by the second half of 2020.

In closing, we are incredibly proud of the progress we have made in the US and in Europe. The need for Andexxa is well defined, and we remain confident in the market opportunity in front of us. With that, I will turn the call over to Mardi for a review of the financials.

Mardi C. Dier -- Executive Vice President, Chief Financial Officer and Chief Business Officer

Thank you, Sheldon, and hello everyone. Please refer to our press release issued today for a summary of our financial results for the second quarter, and I'll touch on the highlights.

Our second quarter results reflect the fifth consecutive quarter of strong launch, execution and growing demand for Andexxa. Total revenues were $28.4 million for the second quarter driven by $27.1 million in net revenues of Andexxa.

Total GAAP operating expenses for the second quarter were $92.4 million, down from $107.7 million for the same period in the prior year. This decrease is driven primarily by our Gen 2 manufacturing costs now being capitalized into inventory.

Research and development expenses for the second quarter were $33.7 million compared to $66.4 million for same period in 2018. This number include the $3.1 million impairment charge taken during the second quarter related to the discontinuation of an early development program.

The year-over-year decrease in R&D expense is mainly due to the Gen 2 manufacturing cost I just mentioned. On a non-GAAP basis, R&D expenses for the second quarter were $30.4 million, which excludes the impairment charge I just previously discussed.

SG&A expenses for the second quarter were $53.7 million compared to $40.2 million for the same period in 2018. This increase is mainly due to the expansion of our sales force and other commercial related activities for the launch of Andexxa in the US and Ondexxya in Europe.

Cash, cash equivalents and investments as of June 30th, 2019 totaled $274 million compared to $317 million at December 31st, 2018. We have cash available to fund our operations through the end of 2020. As shown in the Q1 and Q2 results, we continue to see strong growth in Andexxa, demand and sales in the first six months of 2019.

Our operating expenses are in line with our 2019 guidance and we have cash through 2020. As we look toward the third quarter, we expected to build on the momentum we have built so far this year.

With that, I'll turn the call back over to Scott for closing remarks.

Scott Garland -- President and Chief Executive Officer

Thank you, Mardi. In the first half of the year, our concentration has been on three drivers of success for Portola. Launched execution, and expanding US market and strong demand in Europe. Building on those achievements as we head into the second half of the year, we're focused on expanding our hospital base and deepening account usage in the United States, or launch progress in Europe and bringing this important medicines to patients around the globe.

We're very pleased with the launch of Gen 2 and Andexxa thus far and the potential for Ondexxya in Europe. We look forward to updating you on future calls. I want to thank you for your continued interest in Portola. And with that, I'll turn it over to questions, operator?

Questions and Answers:

Operator

[Operator Instructions]. Our first question or comment comes from the line of Matthew Phipps from William Blair. Your line is open.

Matthew Phipps -- William Blair -- Analyst

Hi. Thanks for taking my question, and just congrats on the real continued strong execution this year. I wanted to touch a little bit on the new hospital adds in the US. You mentioned 125 in the quarter, and that's obviously a little bit of an uptick from the previous quarters, but you did mention Scott, that some of them just came in kind of late in the quarter. Do you think that affects Q3's new hospital adds and then also Sheldon, you mentioned an increasing utilization trend with existing accounts. I think if you were [Phonetic] -- do you think this is kind of a natural progression of these traditions expanding beyond maybe just ICH patients initially to treating more patients or is there any other color you can give us there?

And then lastly, how should we think about the rollout in Europe? And is there similarities in the US, obviously some pricing works going to happen here with NICE in Germany and such, but can you give us any kind of guidance I guess without real [Indecipherable].

Scott Garland -- President and Chief Executive Officer

Yeah, sure Matt. Why don't I actually ask Sheldon to take all three of those? [Speech Overlap]

Sheldon Koenig -- Executive Vice President, Chief Commercial Officer

Yeah. Hey, Matt. Thank you for your question. So let me just start with the reorders. As I mentioned, again, we exceeded our expectations by having 125 new accounts for this quarter. This is something that as we continue our rollout, as you know, in April we added additional 40 representatives, which gives us a total of approximately 116.

So this is something that we will continue to monitor. That 125 new accounts, again, one thing I want to talk about is the fact that many of them did come in late quarter, and as it relates to how that will affect quarters moving forward, I'm not really going to comment on, but what I do want to bring to your attention again is that 74% of the revenue of second quarter came from reorders.

And so that really again gives us confidence in our pull through and demand that we're seeing for Andexxa. And so, one last thing is that 74% of revenue from reorder that's also we're seeing that growing over quarter-on-quarter basis. As it relates to Europe, and so we were very early in the stages of Europe. Again, we're thrilled with the fact that we were able to report our first sales yesterday in Europe.

Again, this really speaks to the execution and the team that we put into place in Europe, and we'll be following this closely over the next quarters and we'll continue to update you.

Scott Garland -- President and Chief Executive Officer

And then, Matt, I think you asked about whether or not we're increasing use beyond intracranial hemorrhage patients. Little bit too early to tell in the quarter, we do track that, we do track it with a chart [Speech Overlap], what we have said in the past and what's very encouraging is that we are definitely seeing usage in patients outside of the intracranial hemorrhage space whether or not that is going to continue going forward. Certainly expect that, but it's still bit too early to tell.

Matthew Phipps -- William Blair -- Analyst

Okay, thanks.

Scott Garland -- President and Chief Executive Officer

Okay.

Operator

Thank you. Our next question or comment comes from the line of Matthew Harrison from Morgan Stanley. Your line is open.

Scott Garland -- President and Chief Executive Officer

Matt, are you there?

Operator

You may need to unmute your phone sir. [Speech Overlap]. Mr. Harrison, are you there? I'll return him to the queue.

Cara Miller -- Vice President of Investor Relations and Corporate Communications

[Speech Overlap]. He's just got dropped. I feel like he's going to go back in the queue. Okay.

Operator

Our next question or comment comes from the line of Yigal Nochomovitz, it's from Citigroup. I apologize. Your line is open.

Yigal Nochomovitz -- Citigroup -- Analyst

No worries. Thanks. Good afternoon and thanks for taking the question. Scott, you mentioned very interestingly, some of the other hospital launches that you've compared very well against. Could you give us just a little bit more detail as to what those five launches were over the last 30 years and if those were pure hospital launches or if there were some mix of hospital and outpatient or clinic sales for those? Thanks.

Scott Garland -- President and Chief Executive Officer

Yes, Yigal. We looked at 50 total hospital drug launches over the last 30 years. I don't actually have all top 10 in front of me, I do know they included Lovenox, they included Cubicin, they included Activase, they included a number of drugs that went on to be highly successful.

But I can't remember exactly what the top ten are. We can certainly follow up with you Yigal with the list and provide that to you offline.

Yigal Nochomovitz -- Citigroup -- Analyst

Okay, great. Thank you. And then regarding NTAP, I believe in the press release on that, you would get either two or three years. Could you just clarify whether that, how -- what determines the range on two versus three years for NTAP and then once that expires, is the expectation that the full cost of Andexxa is going to be incorporated into the DRG rates or only what was reimbursed under the NTAP and then more broadly what -- how will Portola play a role in advocating for the DRG recalibration and do you have a seat at the table in those discussions? Thank you.

Scott Garland -- President and Chief Executive Officer

All right, I'll give that one to Sheldon.

Sheldon Koenig -- Executive Vice President, Chief Commercial Officer

Yeah, hi Yigal. Thanks for the question. So as it relates to NTAP, first of all, again, we're really excited moving from 50% to 65%. This reinforces what we have always stated before, as it relates to how Andexxa is really realized as a breakthrough therapy and is a new technology.

As we know, it's not easy to get the NTAP designation, few products to receive it. Related to the timing of two to three years and also legislation and policy as it pertains to how this will fit into a DRG or a DRG carve out we recently hired a Vice President of Market Access who has a lot of experience in this area and in policy and we're currently now working with CMS. And then, we can update you in future quarters of how this will play out.

Yigal Nochomovitz -- Citigroup -- Analyst

Okay, great. And then just final question from me is with respect to the the C-Code that was issued I believe on the first day of 2Q '19. So I was wondering if you could comment on the percent of the volume is going -- getting reimbursed through partly on the outpatient angle [Phonetic]. Thank you.

Scott Garland -- President and Chief Executive Officer

Sure. So that has -- as we mentioned earlier, the C-code was effective as of April 1st of this year 2019. Unfortunately CMS is not as fast as we would like, as far as giving us data, so we still have to wait some time and we'll definitely update you. I can provide you though an anecdote of how the C-code works and recently we just heard a report of a patient who is in a community-based hospital, of who presented with an intracranial hemorrhage and was started with Andexxa and airlifted to a Tier 1 institution and the physicians were just amazed by how this patient was doing.

As we do get new data though as it relates to CMS, the utilization of the C-Code, I'm sorry, we will definitely share that with you.

Yigal Nochomovitz -- Citigroup -- Analyst

Understood. Thanks for taking the questions.

Scott Garland -- President and Chief Executive Officer

Thank you, Yigal.

Operator

Thank you. We'll try Mr. Matthew Harrison from Morgan Stanley. Once again, your line is open.

Matthew Harrison -- Morgan Stanley -- Analyst

Hey, good afternoon. Thanks for taking the question. I appreciate it. I guess maybe two from me -- and sorry I may not have heard that. So I apologize if I ask you again, but on your -- can you just talk about the components of the reimbursement process in Europe that you're going to have to go through and just broadly, how we should think about your ability to add and stock hospitals if you get online in each country there. And then for the US, I don't know if someone asked this, but can you just talk about the rate of your ability to continue to add hospitals, do you continue expect that to increase quarter-over-quarter, or do you think 100 to 125 is a pretty steady rate? Thanks.

Scott Garland -- President and Chief Executive Officer

Yeah, let me take number two around the rate of hospital adds and then I'll have Sheldon comment on the European adds. Obviously the 125 adds that we have this quarter was ahead of expectations. I've been saying all along we expect a linear uptake in hospital adds, pretty much 100 a quarter.

So the fact that we added 125 was something we feel really good about. In terms of how that's going to look going forward. It's little hard to say, and I don't want to give any forward-looking guidance.

I will tell you we're really happy with what we're seeing both in terms of new account adds as well as deepening [Phonetic] of utilization and we'll certainly give you updates as we move forward. But moving to Europe and the European reimbursement process, I'll turn that over to Sheldon.

Sheldon Koenig -- Executive Vice President, Chief Commercial Officer

So hi, Matt. Thanks for the question. So, as you know, the reimbursement environment in Europe is a country-by-country basis. As I mentioned we've currently just submitted our NICE dossier for the UK and that will be under review in 2020.

We hope to submit our dossier for the AMNOG process, which will take place in Germany and that will happen sometime in the September-October timeframe. Again, we're really early here, as it relates to Europe and where -- where we have started, and it's great to see these first sales and the interest and we'll continue to update you as we move forward through this. But strong execution in Europe and we'll continue to update you.

Mardi C. Dier -- Executive Vice President, Chief Financial Officer and Chief Business Officer

I'll just make one comment. Hi, this is Mardi. On the AMNOG process, once we're able to submit the dossier, which will happen soon, then we're able to, we have a year of free pricing or we pursue [Phonetic] pricing period before we start negotiation with the health authorities. So we'll be able to sell in Germany very soon.

Matthew Harrison -- Morgan Stanley -- Analyst

Great.

Mardi C. Dier -- Executive Vice President, Chief Financial Officer and Chief Business Officer

Anything else, Matt?

Matthew Harrison -- Morgan Stanley -- Analyst

No, no, that's it. Thank you very much.

Mardi C. Dier -- Executive Vice President, Chief Financial Officer and Chief Business Officer

Okay.

Operator

Thank you. Our next question or comment comes from the line of Philip Nadeau from Cowen & Company. Your line is open.

Philip Nadeau -- Cowen & Company -- Analyst

Good evening, and thanks for taking my questions and congrats on the progress. Two from me. First, it looks like in this quarter with about 400-stock hospitals and $27 million of revenue, you did about 67,500 per stock hospital, which is consistent with the revenue per stock hospital in the past. Does it concern among investors that over time as you get later doctors to stock a drug, their utilization is going to be less than the people who have stocked already. So the revenue curve is going to -- going to begin to plateau or decelerate. What are your -- what are your thoughts on that concern that's in the market.

Scott Garland -- President and Chief Executive Officer

Yeah. Phil, let me go ahead and answer that question. That's definitely not what we're seeing. As you look at this average account for usage per month, it's important to remember the mix of accounts that have been coming on over time.

So as we move from our early supplier program into our Gen-2 launch, we're seeing more and more Tier 2 and Tier 3 accounts come online. So that mix is important when you're thinking about how you -- how you calculate that average use per patient per month. What we are seeing is we've looked at a cohort of our institutions, large important institutions that came on earlier at EAP [Phonetic] and actually what we're seeing is increased usage over time or deepening usage over time.

There's nothing that we're seeing today that makes us concerned about a lack of pull through or plateauing of our utilization.

Philip Nadeau -- Cowen & Company -- Analyst

Do you have more Tier 1 hospitals to add over time, so are you -- is the number [Phonetic] of hospitals that get added in the next few quarters going be similar to what's happened in the last few?

Scott Garland -- President and Chief Executive Officer

I would expect the mix to stay somewhat consistent, although we do have more penetration, more opportunity to grow in the Tier 1 accounts. The other thing I wanted to point out, which is driving our usage as well. If you think there is really three things, the account adds that are driving the usage. There's deepening of usage in existing accounts, but then there is the underlying growth of the Factor Xa market, that's significant.

And that's something we want to put on the call today, I'd reiterate that BMS recorded a 30% increase in volume for ELOQUENT over the prior year. So those three things are really driving the growth right now.

Philip Nadeau -- Cowen & Company -- Analyst

Perfect. And then second question is on the addition of the -- or the increase in the new technology add-on from 50% to 65% of cost, do you have a sense of how many hospitals out there today are limiting utilization because that the payment was only 50% of cost and/or how many hospitals are out there who did not, begin to stock Andexxa because the New Technology Add On Payment was too small of a percentage of cost?

Scott Garland -- President and Chief Executive Officer

So we've always heard that NTAP again as somewhat advantageous again really highlights the value of Andexxa unfortunately, we don't have the data yet, as it relates to the utilization of an NTAP. We do make institutions aware of NTAP, they're interested in this and as we get that information, and once we get it we'll supply it. Similar to the C-Code there is a delay in the timing of actually getting that type of data.

Philip Nadeau -- Cowen & Company -- Analyst

Perfect. Thanks for taking my questions.

Scott Garland -- President and Chief Executive Officer

Thanks, Phil.

Operator

Thank you. Our next question or comment comes from the line of Jay Olson from Oppenheimer. Your line is open.

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

So, hey congrats on the quarter and thanks for taking my questions. A couple of them. First one is about the reorder rate, which seem to have stabilized at 55%. Is that related to the fact that you added a large number of new hospitals toward the end of the quarter, and so they wouldn't -- not have needed to reorder, or do you think that 55% is more of a long-term steady state reorder rate?

Scott Garland -- President and Chief Executive Officer

Yeah. It is definitely because of the incremental account adds that we have this quarter and the fact that they came on late. We do expect that reorder rate to continue to go up. One of the challenges of the reorder rate is that it's heavily influenced by the denominator and as the denominator increased incrementally in this quarter and the timing of which these accounts came on, they don't have enough time to actually reorder.

So that is one of the challenges that's associated with this reorder rate. That's why we provided the percentage of our revenues that are coming from reorder and we're seeing a very steady increase in that over time, but that essentially explains it. We definitely expect the reorder rate to continue to increase.

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

Great. Thank you. That's very helpful. And then I think earlier this year, you had mentioned that you were making Andexxa available on consignment. Can you just talk about how that's going and how may that -- may have impacted demand?

Scott Garland -- President and Chief Executive Officer

Sheldon?

Sheldon Koenig -- Executive Vice President, Chief Commercial Officer

Yeah. So as we started the consignment earlier this year, and again this is something that allows hospitals and patients to have greater access just another way of having access to Andexxa. This is something that is really operationalized through our specialty distributors, it still represents a small portion of our business.

Mardi C. Dier -- Executive Vice President, Chief Financial Officer and Chief Business Officer

And Jay, just to clarify, consignment is an arrangement between the specialty distributors and the hospitals. It's not something that we own or provide. It's really a financial arrangements. So when Sheldon said it provides more access, it really allows the hospitals to have Andexxa on site before they pay for it, but that's -- the specialty distributors underwrite that, so to speak and provide that service for the hospitals.

And I'll just mention one other thing that from a demand standpoint, it's transparent to us. The way we look at stocking is how much inventory does specialty distributors have, and just between first and second quarter, that stayed steady at about two weeks of demand and we think that will continue.

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

Great. Thanks for the additional color. Appreciate it.

Operator

Thank you. [Operator Instructions]. I'm showing no additional audio questions in the queue at this time, I would like to turn the conference back over to management for any closing remarks.

Scott Garland -- President and Chief Executive Officer

Thank you for your continued interest in Portola, and have a great rest of week. Thanks.

Operator

[Operator Closing Remarks].

Duration: 33 minutes

Call participants:

Cara Miller -- Vice President of Investor Relations and Corporate Communications

Scott Garland -- President and Chief Executive Officer

Sheldon Koenig -- Executive Vice President, Chief Commercial Officer

Mardi C. Dier -- Executive Vice President, Chief Financial Officer and Chief Business Officer

Matthew Phipps -- William Blair -- Analyst

Yigal Nochomovitz -- Citigroup -- Analyst

Matthew Harrison -- Morgan Stanley -- Analyst

Philip Nadeau -- Cowen & Company -- Analyst

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

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