What happened

After the company reported second-quarter financial results that were shy of expectations, Portola Pharmaceuticals (PTLA) shares slid 18.3% on Thursday.

So what

In the wake of receiving the Food and Drug Administration's approval for its second drug, Portola Pharmaceuticals is in the midst of transitioning from a clinical-stage wannabe into a commercial-stage company. 

A man in a suit watches as a giant red arrow crashes through a cement floor.


Its second-quarter revenue of $4 million indicates a sluggish start for Bevyxxa, an anticoagulant that launched in January 2018, and Andexxa, a factor Xa anticoagulant reversal agent that won FDA approval in May. Andexxa sales were $2.2 million and Bevyxxa sales were just $33,000 in the quarter. The remaining $1.7 million in revenue came from payments from collaborators. Analysts had been expecting total revenue above $6 million.

Sales were dwarfed by soaring spending in support of its commercial drug launches. Operating expenses totaled $107.7 million in Q2, up from $69.6 million in the same quarter last year. The anemic revenue and increasing operating expenses caused a net loss of $106.2 million, or $1.61 net loss per share, which was worse than the $69.7 million, or $1.22 net loss per share, net loss last year.

The company also said it has yet to find a new CEO following the departure of Bill Lis on Aug. 1.

Now what

Andexxa's ability to reverse the anticoagulant activity of factor Xa drugs is important because factor Xas are being increasingly prescribed because they require less monitoring and have fewer dietary restrictions than Warfarin, a common anticoagulant that's been used for decades. 

According to Portola, there are over 100,000 hospitalizations because of bleeding events in factor Xa patients per month, and that suggests a significant market opportunity for Andexxa.

Bevyxxa is a factor Xa anticoagulant that was approved by the FDA to help prevent clotting in patients who've been hospitalized because of an acute illness and are at an increased risk of clots following their discharge. The drug is attempting to displace the former blockbuster drug Lovenox in this patient population. However, management concedes that it's taking a long time to convince hospitals to change their use of Lovenox to Bevyxxa. Although Bevyxxa demand could benefit as more insurance plans add it to their drug formularies, the challenges associated with changing physician prescribing behavior have management guiding for little improvement in Bevyxxa revenue over the next couple quarters. 

Overall, these drugs target big market opportunities, but without a proven CEO at the helm, there's concern these drugs could fail to live up to projections. For this reason, it's hard to recommend this stock to new investors until a CEO is hired and sales begin to increase. Nevertheless, the potential to profit from these drugs remains big enough for me to continue holding shares in my diversified portfolio.