Portola Pharmaceuticals (PTLA) is a biotech company that is developing therapeutics related to blood conditions. The firm currently has three products in the pipeline: an anticoagulant (betrixaban), an antidote for anticoagulants (andexanet alfa), and a blood cancer treatment (cerdulatinib).
|Product Type||Antidote for Xa Inhibitor||Xa Inhibitor (Anticoagulant)||Cancer Treatment|
|Compound||Large Molecule (Biologic)||Small Molecule||Small Molecule|
|Treats (Indication)||Bleeding associated with Factor Xa Inhibitor use||Venous Thromboembolism (VTE) prophylaxis||Chronic lymphocytic leukemia (CLL) & non-Hodgkin lymphoma (NHL)|
|Stage||Phase III: ANNEXA Study||Phase III: APEX Study||Phase 1/2a Study|
|Market||100,000+ patients in G7
500,000+ patients by 2020
|22 million patients in G7 indicated for anticoagulant to prevent VTE.||100,000 new diagnoses of leukemia and lymphoma in US annually|
|Timeline||End-2015: BLA Filing
Mid-2016: FDA Approval
|Early-2016: Phase III Data
2016: NDA filing
2017: FDA Approval
|FDA Designations||"Breakthrough Therapy"
Andexanet alfa is an antidote for anticoagulants. Anticoagulants reduce the clotting effect of blood. Legacy anticoagulants were compounds called heparin and warfarin. These anticoagulants can be difficult to control, resulting in too much or too little anticoagulant effect, but they had antidotes for reversing the effect. These legacy products are being replaced by Factor Xa inhibitors that significantly improve safety and efficacy. Annually, millions of patients use Factor Xa inhibitors and the number is expected to grow substantially. However, Factor Xa inhibitors do not currently have a reversal agent. 1-4% of patients treated with a Xa inhibitor suffer major bleeding and an additional 1% may require a reversal agent because they require emergency surgery.
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Andexanet alfa, if approved, would be the first universal antidote for Factor Xa inhibitors. Portola worked in collaboration with Factor Xa inhibitor manufacturers Bristol Myers Squibb and Pfizer (apixaban/Eliquis®), Bayer& Janssen (rivaroxaban/Xarelto®), and Daiichi Sankyo (edoxaban/Savaysa®). Portola retains 100% of worldwide commercialization rights.
Betrixaban is an oral, once-daily Factor Xa inhibitor targeting Venous Thromboembolism (VTE) prophylaxis. VTE are blood clots in acute medically ill patients who are hospitalized for heart failure, stroke, infection, rheumatic disorders, or pulmonary disease. There are 22 million of such patients each year in the G7 countries. The current therapy is hospital-based enoxaparin (Lovenox®) injection to prevent VTE. However, one million patients still suffer VTE and over 150,000 die every year. Data shows that 50% of life-threatening blood clots occur after hospital discharge and the standard 10 days of therapy from enoxaparin. If approved, betrixaban would be the first approved therapy for VTE beyond this period. Existing Factor Xa inhibitors have failed to gain approval for treating the acute medically ill.
Cerdulatinib is a treatment for blood cancer. More specifically, it is an oral kinase inhibitor that targets the Syk and JAK tumor survival pathways to treat chronic lymphocytic leukemia and non-Hodgkin lymphoma. Inhibition of Syk has been shown to directly impact a tumor’s internal survival signaling pathway. Inhibition of JAK can block supportive survival signals a tumor receives from its micro-environment. Portola believes Cerdulatinib may result in greater clinical benefit in patients with hematologic cancers than that seen with single pathway agents.
Probabilities of success are calculated based on empirical findings published in Clinical Pharmacology & Therapeutics. These probabilities are used as average benchmarks for the following analysis.
|Empirical POS||Small Molecule||Large Molecule|
|Phase I to Approval||13%||32%|
|Phase II to Approval||21%||38%|
|Phase III to Approval||56%||71%|
|Submission to Approval||91%||96%|
Andexanet alfa has completed its Phase III ANNEXA Part 1 studies. The ANNEXA-A and ANNEXA-R Part 1 studies demonstrated that andexanet alfa administered in a single intravenous (IV) bolus with apixaban and rivaroxaban achieved >90% reduction in anti-Factor Xa activity and was well tolerated, with no serious or severe adverse events, no thrombotic events, and no observed antibodies to Factor X or Xa. The studies met all primary and secondary endpoints with high statistical significance (p<0.0001).
The company is proceeding with Part 2 studies that evaluate a bolus plus continuous infusion of andexanet alfa. Portola is also currently conducting a Phase 4 confirmatory study with patients receiving apixaban, rivaroxaban, edoxaban, or enoxaparin and suffer acute major bleed. The studies are on track for submitting a Biologic Application (BLA) under Accelerated Approval by end of 2015.
Betrixaban is enrolling for its Phase III APEX trial, which is scheduled to publish data in early 2016. The enrollment has been increased to 7,500 patients from 6,850 and the study has been structured to use biomarkers to focus initially on D-Dimer positive patients. D-Dimers are protein fragments in the blood that indicate a risk for thrombosis. The increase sample size and structure of the trial are the result of knowledge gained from failed trials involving other Factor Xa inhibitors in the past. Designing the trial around D-Dimer positive patients who are at high risk of blood clots increases the likelihood of favorable results.
Although Factor Xa inhibitor products on the market today (such as rivaroxaban) fail for the acute medically ill patients targeted by betrixaban,the results of the APEX studies are expected to reflect the positive results of the earlier studies due to betrixaban’s pharmacokinetic profile. Phase III studies often take 2.5 years to conduct, but PTLA was granted “Fast Track” designation by the FDA on October 13, 2015 and is on track for a 2016 filing of a New Drug Application (NDA).
Cerdulatinib is currently in a Phase 1/2a trial involving chronic lymphocytic leukemia (CLL) and B-cell non-Hodgkin lymphoma (NHL) patients. In vitro studies suggest that cerdulatinib’s method of action, inhibiting the Syk and JAK signaling pathways, may be a potent treatment for hematologic malignancies (blood cancers) in which other treatments (such as ibrutinib) failed or relapse occurs due to mutations.
Reducing forecasted POS-adjusted gross profit of the three projects by R&D, SG&A, and tax expenses (35% assumption) results in operating cashflow with a present value of $3.5 billion. Assuming a near 100% equity capital structure of 52.56 million shares results in a valuation of $60.02 per share.
This valuation excludes any “collaboration and license revenue” that Portola receives from its partners. Since these payments are irregular, they were excluded from the valuation, resulting in a downward biased equity valuation. This bias is counterbalanced by treatment of tax provisions for 2019.
PTLA is currently trading at over a 20% discount to the DCF valuation because the market is likely underestimating the significance of andexanet alfa. The indication that andexanet alfa treats is not a widely known problem, but it is a very large problem. Factor Xa inhibitors are growing in use to tens of millions of patients per year. With even 2% of patients requiring an antidote translates to significant value for PTLA shareholders. Betrixaban will potentially gross $1 billion per year for its currently targeted indication and sales can grow further if it is approved for other indications. Even with an 18% POS for cerdulatinib, it adds significant value that should not be ignored.
|Price per day||$10.00||$10.30||$10.61||$10.93||$11.26||$11.59||$11.94||$12.30||$12.67||$2.00||$2.06||$2.12||$2.19||$2.25|
|Days per patient||35||35||35||35||35||35||35||35||35||35||35||35||35||35|
|Revenue per patient||$24.0k||$24.7k||$25.5k||$26.2k||$27.0k||$27.8k||$28.7k||$29.5k||$30.4k||$31.3k|