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What: Shares of Portola Pharmaceuticals (NASDAQ:PTLA), a clinical-stage biotech focused primarily on hematologic diseases, are down by more than 18% as of 10:40 a.m. EDT in response to the news that the FDA has rejected the application for its drug AndexXa. 

So what: Portola announced late last night that the FDA has issued a Complete Response Letter (CRL) regarding its application of andexanet alfa (AndexXa), the company's Factor Xa antidote.

The FDA's rejection decision was based on three primary factors:

  • The agency wanted additional information related to drug's manufacturing.
  • The FDA asked for additional data to support inclusion of Daiichi Sankyo's Savaysa (edoxaban) and Sanofi's Lovenox (enoxaparin) in the label.
  • The agency stated it needs additional time to finalize its review of clinical amendments to Portola's post-marketing commitments, which were only recently submitted. 

Bill Lis, Portola's CEO, said the company was committed to getting these issues address as quickly as possible:

Because AndexXa addresses an urgent unmet medical need, we and the FDA are committed to resolving the outstanding questions and determining appropriate next steps. Portola's goal is to define the most expedient path to approval so we can meet the needs of these patients who have no alternative. We plan to meet with the FDA as soon as possible.

Now what: There's no doubt this news came as quite a shock to the company and the investment community. Just last week, management was touting on its second-quarter earnings call that they were in preparation mode for a U.S. commercial launch. In addition, the FDA had granted AndexXa with both a Breakthrough Therapy designation and Orphan Drug status, and it also agreed to an accelerated approval. Those designations came because there are currently no FDA-approved Factor Xa antidotes on the market, but there is clearly a medical need for one.

This news is certainly a huge blow for Portola, but it's also quite disappointing for Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb, and Pfizer, too. That's because some providers are holding off on prescribing Factor Xa inhibitors like J&J's Xarelto and Bristol/Pfizer's Eliquis because there isn't an approved antidote available. That isn't stopping those drugs from racking up billions in annual sales, but it is slowing down their growth. These pharma giants were hoping that the approval of AndexXa would change all of that (which is why they were willing to throw money at Portola and asked for nothing in return), but it looks like they, too, will have to wait a big longer. 

Portola's management held an investor call earlier today to talk about the CRL, and while they didn't have a lot of specific information to share, they did state they hope to resubmit the application before the end of the year. The company was also asked about its financing position, and management reiterated it had $354 million in cash as of end of the second quarter.

It's no surprise to see shares are crashing in the wake of this news, especially since this is the second time this year Portola has released disappointing news. While there's no doubt that there will be huge demand for AndexXa if it wins approval, potential investors might want to hold off buying on this dip until we have more clarity around the timing of a resubmission.

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