Andexxa - Portola Pharmaceuticals
The Science
Intravenous andexanet alfa, coagulation factor Xa (recombinant), inactivated-zhzo or Andexxa® is a first-in-class modified factor Xa protein that has been developed by Portola Pharmaceuticals as an antidote to reverse anticoagulant effects of direct or indirect factor Xa inhibitors.
In May 2018, Andexxa received FDA approval in the USA for use in patients that have been treated with rivaroxaban and apixaban, two factor Xa inhibitors. It is currently undergoing regulatory review for use in the EU, approval is expected in February 2019.
Direct or Indirect factor Xa inhibitors are powerful anticoagulants for the prevention and treatment of thromboembolism and stroke prevention in atrial fibrillation. These agents have been shown to be more effective than vitamin K antagonists such as warfarin but nonetheless the risk of complications is still high and a reversing agent would be beneficial.
Andexxa is a first in class therapy for reversing the anticoagulative effects of these Xa inhibitors. Andexxa acts as a decoy and binds to factor Xa inhibitors, neutralising the anticoagulant effects of factor Xa inhibitors by preventing the inhibitors from binding to endogenous factor Xa
The dosing regime for Andexxa is a single bolus of 400mg or 800mg followed by a 120 minute continuous infusion of 480mg or 960mg respectively. The dose depends on the amount of factor Xa inhibitor given and the time that it was given.
The Opportunity
Andexxa has already received approval for marketed use. This approval was based on two Phase III ANNEXA studies (ANNEXA-R and ANNEXA-A), which evaluated the safety and efficacy of the drug. Continued approval for the drug may be contingent upon post marketing Phase IV non-interventional study results although it would be expected that Andexxa pass.
Results from these studies showed that Andexxa rapidly and significantly reversed anti-Factor Xa activity. The mean decreases from baseline were 97% for Rivaroxaban (ANNEXA-R) and 92% for Apixaban (ANNEXA-A). Interim data from the ongoing Phase IV ANNEXA-4 study shows that Andexxa rapidly and significantly reversed anti-Factor Xa activity by 90% and 93% for Rivaroxaban and Apixaban respectively.
The Market for anti-Factor Xa inhibitors has been growing at a relatively steady rate. In 2016 there were 7,058,562 prescriptions for Rivaroxaban and 5,833,149 for Apixaban. As both are used to treat stroke, thromboembolism etc, I would assume these would keep growing due to a general worldwide aging population with unhealthy habits.
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| Rivaroxaban |
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| Apixaban |
Even with all of these prescriptions for Rivaroxaban and Apixaban, there were only 117,000 admissions to hospital for uncontrolled Factor Xa related bleeding in 2016. This would suggest that for the most part, the drugs are doing their jobs. However there is a market for when they don't.
Due to Andexxa's trial results, it is the first line of treatment for treating uncontrolled Factor Xa related bleeding. Meaning it is one of the only drugs that can be prescribed for the 117,000 patients. The main reason other treatments have been used thus far is due to the limited availability of Andexxa, but with Portola hiring 150 Medical Sales Reps to push Andexxa across the US, I can't imagine this would be a problem in the future.
The cost of Andexxa is $49,500 for the higher dose and $24,750 for the lower dose. I do not know the exact statistics of how many patients need the higher dose and how many need the lower dose as this depends on the amount of Rivaroxaban or Apixaban they have received. If we take a mean of the two amounts we get $37,125 cost per patient.
Now best case scenario is that all 117,000 patients receive Andexxa, this would equal about $4,343,625,000 in sales each year. Worst case scenario lets say 50% of patients receive Andexxa, this would equal $2,171,812,500 in sales each year. To be fair I am going to take the average of these two values to do my calculations, this is $3,257,718,750.
I found this chart made by thetruecostofhealthcare.org that gives us a bit more insight into the percentage of sales converted to profits by big pharma companies. The data set it looked at was the 13 largest pharmaceutical companies over 7 years. I will assume Portola follows the same revenue split for my calculations.
19% of $3,257,718,750 is $618,966,562 in profits a year. If we take this and take away the ~$353,000,000 that Portola lost over the last year, this leaves us with $265,966,562 earnings
If we divide the earnings by the 66,434,000 outstanding shares, we get an EPS of 4.00. By taking the current share price of $27.24 and dividing by the EPS, we can find out the P/E ratio, in this case it is 6.80. Next years earnings will no doubt be larger as Andexxa gets EU and Japanese approval and after sales of Bevyxxa (another drug made by Portola) are factored in.
If we say next years earnings are $618,966,562, the profits from Andexxa without the loss that Portola made over the last year, then by multiplying by the P/E ratio of 6.80 we could see a Market Cap of $4,208,972,622. This would equate to a share price of $63.36, a 132% upside to the the Share Price on January 25th.
Portola looks like a company that has reached an inflection point just as its two main marketed drugs have received approval. In the past it has been held up through its large cash reserves that have been built through funding and share offerings. Now is the first time it has a marketed drug thus it may be well on its way to becoming profitable.
During writing I have seen estimates for Q1 2019 EPS at -1.04, considering the EPS a quarter ago was -5.40, I see this as a very good sign.
I believe sales will begin to rapidly increase for Portola, not just in the US but if it gains EU approval in Feb 2019 and consequently Japanese approval, not to mention any other countries. Andexxa is the first line treatment with no competitors on the horizon for an indication that is growing year on year.
Portola still has Bevyxxa sales on top of Andexxa sales, which I didn't even take into account in my calculations. Admittedly these are predicted to be smaller than Andexxa's but not negligible by any means.
With the potential Portola has, a buyout could always be on the horizon. I believe Andexxa has the potential to eventually be a blockbuster. We will just have to wait and see how its sales in 2019 go.
I am long $PTLA
-OC
Disclaimer:
Due to Andexxa's trial results, it is the first line of treatment for treating uncontrolled Factor Xa related bleeding. Meaning it is one of the only drugs that can be prescribed for the 117,000 patients. The main reason other treatments have been used thus far is due to the limited availability of Andexxa, but with Portola hiring 150 Medical Sales Reps to push Andexxa across the US, I can't imagine this would be a problem in the future.
The cost of Andexxa is $49,500 for the higher dose and $24,750 for the lower dose. I do not know the exact statistics of how many patients need the higher dose and how many need the lower dose as this depends on the amount of Rivaroxaban or Apixaban they have received. If we take a mean of the two amounts we get $37,125 cost per patient.
Now best case scenario is that all 117,000 patients receive Andexxa, this would equal about $4,343,625,000 in sales each year. Worst case scenario lets say 50% of patients receive Andexxa, this would equal $2,171,812,500 in sales each year. To be fair I am going to take the average of these two values to do my calculations, this is $3,257,718,750.
 |
| Proportional Percentage of Big Pharma Revenue, 19% converted to Profits, higher than R&D. (http://truecostofhealthcare.org/the_pharmaceutical_industry/) |
I found this chart made by thetruecostofhealthcare.org that gives us a bit more insight into the percentage of sales converted to profits by big pharma companies. The data set it looked at was the 13 largest pharmaceutical companies over 7 years. I will assume Portola follows the same revenue split for my calculations.
19% of $3,257,718,750 is $618,966,562 in profits a year. If we take this and take away the ~$353,000,000 that Portola lost over the last year, this leaves us with $265,966,562 earnings
If we divide the earnings by the 66,434,000 outstanding shares, we get an EPS of 4.00. By taking the current share price of $27.24 and dividing by the EPS, we can find out the P/E ratio, in this case it is 6.80. Next years earnings will no doubt be larger as Andexxa gets EU and Japanese approval and after sales of Bevyxxa (another drug made by Portola) are factored in.
If we say next years earnings are $618,966,562, the profits from Andexxa without the loss that Portola made over the last year, then by multiplying by the P/E ratio of 6.80 we could see a Market Cap of $4,208,972,622. This would equate to a share price of $63.36, a 132% upside to the the Share Price on January 25th.
The Conclusion
Portola looks like a company that has reached an inflection point just as its two main marketed drugs have received approval. In the past it has been held up through its large cash reserves that have been built through funding and share offerings. Now is the first time it has a marketed drug thus it may be well on its way to becoming profitable.
During writing I have seen estimates for Q1 2019 EPS at -1.04, considering the EPS a quarter ago was -5.40, I see this as a very good sign.
I believe sales will begin to rapidly increase for Portola, not just in the US but if it gains EU approval in Feb 2019 and consequently Japanese approval, not to mention any other countries. Andexxa is the first line treatment with no competitors on the horizon for an indication that is growing year on year.
Portola still has Bevyxxa sales on top of Andexxa sales, which I didn't even take into account in my calculations. Admittedly these are predicted to be smaller than Andexxa's but not negligible by any means.
With the potential Portola has, a buyout could always be on the horizon. I believe Andexxa has the potential to eventually be a blockbuster. We will just have to wait and see how its sales in 2019 go.
I am long $PTLA
-OC
Disclaimer:
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company who is mentioned in this article. This article is not investment advice, and can't be relied upon by anyone for any reason except, arguably, entertainment purposes. I am not an investment advisor.
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