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Why Portola Pharmaceuticals Skyrocketed 54% in June

By Todd Campbell - Jul 5, 2017 at 9:01PM

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A less-than-expected FDA approval sent shares soaring higher last month.

What happened

Investors weren't banking on FDA approval of Portola Pharmaceuticals (PTLA) first commercial drug, Bevyxxa, so when regulators issued a green light last month, it caused the company's shares to surge 54% higher, according to S&P Global Market Intelligence.

So what

Bevyxxa belongs to a new class of factor Xa anticoagulants that have been quickly winning away market share from long-standing drugs, including warfarin and Lovenox.

Gold and silver pills spill out of a large gold and silver pill onto a pile of money.

Image source: Getty Images.

In 2016, Portola Pharmaceuticals reported somewhat mixed results from a phase 3 trial evaluating Bevyxxa in acute medically ill patients who have been discharged from the hospital. The study showed Bevyxxa reduced the risk of blood clots versus Lovenox across all the patients in the trial, however, it failed to deliver a statistically significant benefit in a small group of patients. That led some to question whether the FDA would green light it.

Despite the question mark, Portola Pharmaceuticals' filed for FDA approval of Bevyxxa and its application was given a priority review by regulators. On June 23, the FDA gave Bevyxxa an official go ahead, clearing the way for the company to launch it later this year.

Now what

The approval is important because while competing factor Xa's bring in billions of dollars in sales every year, they've yet to win FDA approval in this big patient population. Portola Pharmaceuticals estimates that 24 million acutely ill medical patients are hospitalized in the G7 countries every year who are at risk of blood clots. Currently, in spite of widespread use of Lovenox (the standard of care in this indication), there are more than 1 million cases of clotting events per year, and unfortunately, 150,000 people pass away because of them.

Lovenox was bringing in about $3 billion per year in sales at its peak, and while Bevyxxa may not hit those levels, oral dosing and its ability to lower clot risk without increasing major bleeds has me thinking it could be a $1 billion blockbuster. Investors won't have to wait too long to find out if I'm right. The company plans to launch it no later than November, and that means it could begin making a big impact on Portola Pharmaceuticals top line in 2018.

 

Todd Campbell owns shares of Portola Pharmaceuticals. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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