Just How “Undervalued” Is Portola Pharmaceuticals (PTLA)? Cowen Chimes In

Cowen's Phil Nadeau takes the FDA victory for Portola in bullish stride, betting on broad adoption kicking off next year.


The clapping around Wall Street can be heard for Portola Pharmaceuticals (NASDAQ:PTLA) as shares leap 25% following a broad label FDA win for AndexXa: an antidote for blood thinners rivaroxaban and apixaban in life-threatening or uncontrolled bleeding circumstances. This makes PTLA’s asset not only the first therapeutics to be marked as an antidote for factoring Xa inhibitors, but likewise the sole antidote in the market.

Cowen analyst Phil Nadeau commends a label he sees as not only broad, but likewise “favorable,” with the drug priced at $27.5K per patient, ahead of the analyst’s own expectations. This is a drug that meets a “major unmet need,” asserts Nadeau, who adds: “While the early launch will be supply constrained, we anticipate broad adoption beginning in 2019. We view shares as undervalued for Bevyxxa and AndexXa.”

On the heels of the FDA’s nod to AndexXa’s Biologics License Application, the analyst reiterates an Outperform rating on PTLA stock with a $65 price target, which implies a 53% upside from current levels. (To watch Nadeau’s track record, click here)

“Following PTLA’s disclosure earlier this year that the FDA was contemplating requiring a pre-approval randomized trial for AndexXa, last night’s news came as welcome relief. Though there was a clear unmet need for AndexXa and its safety and efficacy was well established by the available data, the FDA’s request had us concerned. We are impressed that management convinced the Agency of AndexXa’s positive benefit-risk and that the randomized trial can be conducted post approval,” notes Nadeau.

True, the drug does come with a black box warning, which has left investors somewhat “disappointed,” considering German firm Boehringer Ingelheim’s just-approved FDA reversal agent Praxbind “does not share a similar warning.” That said, “patients with major bleeds have an approximate 15% risk of death, with the mortality rate for intracranial hemorrhages nearly 1 in 2 (43%),” writes Nadeau, who argues: “Therefore we think the black box and underlying 11-18% risk of thrombosis will be unlikely to dissuade physicians from using AndexXa in severe cases.”

Glancing ahead, AndexXa’s launch this year will start off constrained by capacity instead of demand, and as such, Nadeau acknowledges narrowed prospective upside to short-term expectations. All the same, long-term forecasts have strong opportunity to take an upturn. Nadeau surmises on a bullish note, anticipating a domestic revenue of $390 million by 2026 that takes under account that just 12,000 patients in the U.S. are on therapy- a number that has good odds to “prove conservative.”

TipRanks indicates the Street views this drug maker as a strong bullish bet. Out of 6 analysts polled in the last 3 months, 5 are bullish on PTLA stock while 1 remains sidelined. With a return potential of 29%, the stock’s consensus target price stands at $53.80.

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