What happened

Its first-quarter financial results bested industry watchers' outlook. However, investors walked away from the news disappointed that the company's not making faster progress. As a result, Portola Pharmaceuticals (PTLA) shares were trading 14.5% lower at 12:15 p.m. EDT on Wednesday.

So what

Portola Pharmaceuticals investors have endured a lot over the past two years. The company secured Food and Drug Administration approval for two distinct drugs that launched to fanfare. Sales for one of them, though, haven't materialized and sales for the other have been slow to ramp up.

A man in a shirt and tie sits with his head in his hands in front of a wall displaying a chart of a declining share price.


On Thursday, management reported first-quarter financial results showing revenue jumped 236% year over year to $22.2 million, driven product sales of $20.3 million for Andexxa, the only FDA-approved medication to reverse the anti-coagulation effects of the billion-dollar blockbuster drugs Xarelto and Eliquis.

Andexxa's sales growth was encouraging, but sales of Portola Pharmaceuticals' second drug, Bevyxxa, remained a rounding error in the quarter at just $77,000 (yes, thousand).

The company's revenue remained unable to offset its spending in the period. Its GAAP loss was $78.2 million, or $1.17 net loss per share. Operating expenses were $95.8 million, up from $91.9 million for the same period in 2018.

Management came into 2019 expecting to spend over $125 million on research and development, plus more than $200 million on selling, general, and administrative expenses in 2019. Portola Pharmaceuticals finished the quarter with $323 million in cash on its balance sheet.

The significant cash burn remains concerning, but investors may also be disappointed that Portola Pharmaceuticals hasn't licensed European rights to Ondexxa to help offset its costs and improve its balance sheet. Though the company has said it's willing to entertain a licensing arrangement, no company appears to be jumping at the chance.

Now what

There are some encouraging signs: The number of hospitals stocking Andexxa increased to 300 from 200, and the percentage of hospitals reordering it improved to 55% from 50% quarter over quarter. Andexxa's sales were 45% higher in Q1 than they were in Q4. Management says it expects to add a similar number of hospitals in the upcoming quarters. The European approval more than doubles the number of patients Andexxa can address to over 280,000 per year, so that could help increase revenue in the future as well.

Furthermore, the company remains committed to advancing a lymphoma drug in its pipeline, cerdulatinib, into registrational studies, pending the FDA signing off on proposed dosing. 

Nevertheless, Portola Pharmaceuticals has a lot of question marks associated with it. It's got enough cash on its balance sheet and sources of financing in place to last it until late in 2020, but Andexxa's sales will need to go up considerably from here -- or a licensing deal will need to be struck -- to avoid future capital raises. Launching in Europe should help, but management doesn't expect product sales there until later this year and there's no telling how fast uptake will be.