Johnson & Johnson (NYSE:JNJ) is one of the globe's biggest drugmakers, so it may be a bit surprising to learn that J&J has a lot riding on the success of Portola Pharmaceuticals (NASDAQ:PTLA), a small cap biotech company that is developing an antidote to J&J's multibillion dollar anticoagulant drug Xarelto.
For decades, patients who had received hip surgery or who suffered from heart disease were prescribed warfarin to keep their blood flowing freely. However, despite its long-standing use, warfarin, which is sold under the brand name Coumadin, is far from a perfect drug. Patients taking warfarin need to be tested regularly, and the drug poses a risk of brain hemorrhage.
As a result, drugmakers including J&J spent big money developing next generation anti-coagulants that work differently in the body than warfarin. For example, while warfarin keeps the body from using vitamin K to clot blood, J&J's Xarelto inhibits clotting by interfering with factor Xa, an enzyme that also plays a key role in a patient's ability to develop blood clots.
Since Xarelto's target is different, its impact on patients has been different too, and that's prompted doctors to embrace it because it reduces monitoring and the risk of brain hemorrhage. However, factor Xa inhibiting drugs like Xarelto do have one big drawback: They don't have an antidote.
Warfarin patients who suffer a bleeding episode can simply be prescribed vitamin K, but the options available for patients taking factor Xa drugs like Xarelto are far more limited. As a result, many doctors still avoid prescribing Xarelto and other factor Xa drugs, including Bristol Myers Squibb and Pfizer's Eliquis, in frail patients with multiple diseases or who are at risk of falling.
Solving a problem
Since doctors are limiting their use of Xarelto, J&J's sales are being crimped. For that reason, J&J and the other factor Xa drugmakers have been helping Portola fund research into a factor Xa reversal agent that could be administered in ERs and other settings to halt the anticoagulant effects of these drugs.
So far, the results from this research have been encouraging. Last year, Portola announced positive phase 3 results showing that its reversal agent, andexanet alfa, successfully counteracted Eliquis -- and this month, Portola has announced that phase 3 trials were similarly successful at reversing the effects of Xarelto. In this study, andexanet alfa both significantly and immediately reversed Xarelto's activity, and was well tolerated by patients receiving it. J&J and Portola have a second study ongoing, from which data should be announced midyear that may or may not confirm andexanet alfa's effectiveness, too.
With sales tracking at roughly $1.6 billion a year, Xarelto is already a top seller, but eliminating the antidote headwind that's holding back prescription volume could still significantly boost J&J's revenue. However, a potential eventual approval of andexanet alfa should also be a big win for Portola. According to Portola, between 1% and 4% of patients currently being treated with factor Xa inhibitors may experience a major bleeding episode that would require treatment with a reversal agent like andexanet alfa, and an additional 1% may also need such treatment due to emergency surgery. That suggests that andexanet alfa could become a big seller too.
Todd Campbell is long Portola Pharmaceuticals. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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