Portola Pharmaceuticals' (NASDAQ:PTLA) investors would probably like a mulligan on 2016. After the company experienced two painful setbacks to key programs, shares lost 56.4% of their value last year. Those losses were tough to swallow, but investors savvy enough to buy shares when they fell are enjoying a pleasant turn of events in 2017. Optimism that Portola Pharmaceuticals can overcome last year's setbacks has sent its shares up an eye-popping 47% already this year. 

The driving forces

Portola Pharmaceuticals has two highly anticipated clinical-stage programs under review by the U.S. Food and Drug Administration (FDA). The first is AndexXa, an agent that can reverse the anticoagulant effect of multibillion-dollar blockbuster drugs like J&J's Xarelto and Bristol-Myers Squibb and Pfizer's Eliquis. Those anticoagulants are increasingly being used in patients with life-threatening conditions like atrial fibrillation, and following knee and hip surgery. In clinical trials, AndexXa was an effective antidote to them.

A businessman with arms raised stands as money falls down around him.

Image source: Getty Images.

Because of the drug's solid efficacy and safety, it was anticipated that the FDA would green-light AndexXa when it weighed in with a decision last August. However, rather than approve it, the FDA decided it wanted to see more proof of AndexXa's ability to reverse the effects of other anticoagulants. It also asked for more insight into the company's manufacturing plans.

Fortunately, Portola Pharmaceuticals says it's about ready to resubmit AndexXa's application to the FDA. Recently, it reported a $50 million financing deal with an investment firm, and as part of that announcement, it indicated it will refile AndexXa in the second quarter. If management makes good on its plans, then an FDA decision could come in late 2017 or early 2018.

Portola Pharmaceuticals shares also stumbled last year because of a clinical-trial setback for betrixaban. Betrixaban is an anticoagulant that works similarly to Xarelto and Eliquis, but that Portola Pharmaceuticals is studying in a different indication. Specifically, betrixaban is being evaluated for use in post-acute patients as a prophylaxis to prevent clots. 

Unfortunately, the company reported mixed results from a large phase 3 trial early last year that cast doubt on betrixaban's ability to win over regulators. The trial was designed to evaluate efficacy in a small subset of patients most likely to develop clots. If successful in that population, then its efficacy could be evaluated in the larger patient population participating in the trial. Unfortunately, betrixaban missed the mark for statistical significance in the smaller patient population, and despite demonstrating robust efficacy in the larger patient population, the poor performance in the smaller population caused a lot of uncertainty over how the FDA would interpret the study results. 

Fortunately, it seems the FDA is willing to look beyond the results of the smaller subset to the larger patient population. The company announced in December that betrixaban was accepted by the FDA for priority review, and in February, it reported that a mid-cycle review by the FDA concluded that an advisory committee meeting to dissect the data wasn't necessary. Although that doesn't guarantee an approval, it suggests betrixaban's odds of making it to market are better now than they were last year. An FDA decision is expected on June 24.

Looking ahead

Approvals of AndexXa and betrixaban hold transformative potential for Portola Pharmaceuticals. Currently, the company doesn't have any drugs on the market, and conceivably, it could have two blockbuster drugs on the market. 

Obviously, a lot can and does go wrong in biotech, and that means that investors could still be dealt disappointments that could cause shares to collapse again. As a result, risk-averse investors might want to consider other investments. However, if you're a risk-tolerant investor, buying Portola Pharmaceuticals shares could still make sense.

Todd Campbell owns shares of Pfizer and Portola Pharmaceuticals. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Johnson and Johnson. The Motley Fool has a disclosure policy.