The $10 Billion Reason That This Tiny Biotech Stock Could Soar

Portola Pharmaceuticals recently announced that its phase 3 trial for its factor Xa anticoagulant betrixaban will complete enrollment by year end. If Portola can demonstrate that betrixaban can control bleeding in hospital and post-discharge patients, it could become a big player in the $10 billion market for anticoagulants.

Displacing a long-standing leaderWarfarin has been usedfor decades by doctors to help keep blood flowing freely in heart disease and post-operative patients. However, warfarin's dominance is fading in the wake of the launch of a new class of anticoagulants: factor Xa inhibiting medicines from Johnson & Johnson , Bristol-Myers Squibb , and Pfizer .

As doctors become more adverse to warfarin's drawbacks, which include frequent dose adjustments and the risk of brain hemorrhage, sales of factor Xa drugs have taken off. In 2014, J&J's Xarelto sales soared 76% to $1.5 billion and Bristol-Myers and Pfizer's Eliquis sales surged by 430% to $774 million.

The sheer size of the anticoagulant market and the success being enjoyed by these major drugmakers could indicate that if Portola can bring betrixaban to market, there could be plenty of room for it to compete.

Source: Portola Pharmaceuticals

Another weaponBetrixaban could prove to be a valuable weapon in reducing the life threatening blood clots.

Portola is studying betrixaban for use in hospital and post-discharge prevention of blood clots in acute medically ill patients. Those patients include those hospitalized for medical conditions including heart failure, stroke, infection, or heart disease. According to Portola, betrixaban's total addressable market includes more than 20 million high-risk acute condition patients.

Betrixaban is an oral, once-daily medicine and it is being evaluated head-to-head against Sanofi's injectible drug Lovenox. Lovenox generated $1.7 billion in sales in 2014 and enjoyed sales of more than $3 billion per year before losing patent protection in 2010.

Portola's study is recruiting patients at 450 sites worldwide and is roughly 65% enrolled. Given that company expects to have the trial fully enrolled by year end, results from this phase 3 trial should be available in early 2016.

Growing the marketJ&J, Bristol-Myers, and Pfizer are already enjoying rapid growth for their factor Xa drugs, but demand could head even higher if another of Portola's drugs, andexanet alfa, wins over regulators.

Factor Xa drugs work differently than warfarin and as a result there isn't an effective reversal agent for them.

Because there isn't an antidote, some doctors have held off from prescribing factor Xa drugs to frail patients who might be more prone to accidents or emergency surgery. That's created a drag on prescription growth for the category; however, recent news that Portola's andexanet alfa effectively reversed the effects of both Xarelto and Eliquis during phase 3 trials suggests that this headwind may end up disappearing.

In addition to andexanet alfa's potential to increase the use of factor Xa drugs like Xarelto and Eliquis, Portola also thinks that betrixaban could ease doctors' minds even further.

Betrixaban has a chance to compete as a best-in-class therapy thanks to a 19-25 hour half life, a low peak-to-trough variability in concentration, and no significant CYP3A4 metabolism. Since CYP3A4 is a liver enzyme that can be activated or deactivated by many drugs, the lack of CYP3A4 metabolism could mean that betrixaban has fewer drug-to-drug interactions than competing factor Xa drugs.

For comparison, Xarelto's half-life ranges from between five and nine hours for those age 20-45 years and 11-13 hours for those who are elderly. Also, Xarelto isn't recommended for use in patients taking CYP3A4 inhibitors such as certain HIV medications.

Looking aheadWe're still a ways off from knowing whether or not betrixaban's phase 3 trial is a success, but betrixaban and andexanet alfa could position Portola as a leading player in the anticoagulant market. That suggests that investors might want to keep a close eye on this one.

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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. 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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