What Was Behind Portola Pharmaceuticals' 45% Pop?

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On June 23, Portola Pharmaceuticals (NASDAQ: PTLA) jumped 45% on the news that its first commercial drug, Bevyxxa, secured FDA approval. Healthcare and biotech investors take note: Bevyxxa has a massive potential patient pool, and its drug class is already raking in billions of dollars a year.

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In this clip from Industry Focus, Motley Fool healthcare analyst Kristine Harjes and contributor Todd Campbell explain what exactly Bevyxxa does, how it's different (and better) than its competition, and why it's such an exciting drug for both patients and the company.

A full transcript follows the video.

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This video was recorded on June 28, 2017.

Kristine Harjes: The first thing we're going to talk about today is maybe a little bit self-congratulatory, it's maybe a bit of a victory lap, but, if you've been listening to the show for a while, you've heard us talk about Portola Pharmaceuticals. Portola finally had some really good news after a long period of time watching this stock and at times being kind of disappointed by it. They finally got their first drug approved by the FDA on Friday, and the stock experienced a 45% pop.

Todd Campbell: Yeah, I think it's safe to say that Portola is a fan favorite of Kristine and I. We've talked about it in the past, and I know a lot of listeners have had a lot of questions over the last couple days, and those questions have stemmed by the FDA approval of their first commercial drug, a drug named Bevyxxa.

Harjes: Yes. I still want to call it by its old name, so excuse me if I do call it betrixaban, it now has an official market name, which is Bevyxxa. This is a pretty big deal. This is the company's first FDA-approved drug. It looks like it has the potential to be a blockbuster, meaning $1 billion in sales or more. I've seen some estimates that count up to $3 billion annually. Definitely something we'll be watching over the next couple quarters to see how it ramps up. Todd, do you want to talk a little bit about what makes the drug so exciting?

Campbell: I think why we were interested in this company to begin with -- they have two drugs, we'll get to the second drug in a minute -- but one of the reasons that I know I was interested in this company is because the drug they were working on was targeting the same mechanism of action that has already been proven to be effective by Johnson & JohnsonBristol-Myers Squibb, and Pfizer. Basically, what we're talking about is a new anticoagulant, and it belongs to a class of drugs called factor 10a, or Xa, drugs. What they do is help prevent blood clots in patients who maybe have undergone surgery, like knee surgery or hip surgery, or suffer from atrial fibrillation. Now, with this approval -- Bevyxxa, not the other ones -- can be used in the treatment of acute medically ill patients who have been discharged from the hospital. That's a very large and important market. We'll explain that in a second. But I think the big takeaway to frame the whole conversation is, factor Xa drugs, there's some already on the market, they rack up billions of dollars a year in sales. Now we have a new drug coming out of Portola that's launching into another new indication, and it too could end up being an important blockbuster drug.

Harjes: One point that I really want to emphasize is that this is a new indication. When you look at the Xa inhibitors that are already approved, they're not approved for patients that have already been released from hospitals. So, this is the first time that you have an oral Xa inhibitor that is approved for preventative use in these patients. So, what it's looking to do here is displace a drug called Lovenox, which was at one point a $3-billion-plus annual sales drug. This was something that was taken, and it wasn't the best drug. It's an injection, it comes with the risk of hemorrhage. So, when you look at the clinical trial results, Bevyxxa was tested against Lovenox, and it reduced clotting better, and it also didn't have the added risk of bleeding events. This is an enormous phase 3 trial of 7,500 patients. So, it really does have the opportunity here to displace this long-standing drug that's been on the market for quite a while, and that makes a lot of money.

Campbell: Yeah. Last year, Kristine, we were a little nervous that maybe the FDA wouldn't give a green light to this drug following the trial results only because the trial results were really mixed. You had these multiple cohorts, and it had a statistical significance across the entire group of patients, but in one subset of patients it didn't, and people were worried that because it didn't in that one subset maybe the FDA would frown on the entirety of the data. Obviously that wasn't the case. It's been approved. And that's great news for doctors and patients, because as you said, Lovenox is not a fantastic drug. It is a standard of care still, and that's why in the trial, Portola went head-to-head up against it. I think, now, what we're going to see -- time will tell. This drug will get launched somewhere between August and November, according to management. I think what we'll see is that doctors will relatively quickly start transitioning patients over to this. Because if you think about it, Kristine, these are very sick patients. They've had strokes or heart attacks, something pretty drastic has landed them in the hospital. And they're older patients, so they're a little bit frail. And when they're being released from the hospital, a lot of times, you have mobility concerns, they're going to be in the bed for a while, which of course increases the risk of blood clots. Portola said when they announced to fanfare that they won the approval that there are 24 million people in the G7 countries who get admitted to hospitals with conditions, and 1 million of those people, when they are released from the hospitals, end up returning because they have a blood-clotting event that theoretically could be prevented by the use of this newly approved drug. So, this is a massive indication. The U.S. is just the start. I imagine we'll see the potential to roll this out in other countries like in Europe and Japan. On the conference call last week, a question was, "Are you still going to go in alone in marketing this drug?" Management says, in the U.S., absolutely. Their plan is to commercialize it themselves. They're hiring their own sales team to do that. They'll be rolling those out. Overseas, the doors seem to be left a little bit open, maybe talking to one of the other players out there about licensing.

Kristine Harjes owns shares of JNJ and Portola Pharmaceuticals. Todd Campbell owns shares of PFE and Portola Pharmaceuticals. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends JNJ. The Motley Fool has a disclosure policy.