FDA Approval of Drug May Have Made This Bay Area Pharma a New M&A Target

June 27, 2017
(Last Updated: June 29, 2017 at 05:40am PT)

Could the Bay Area’s Portola Pharmaceuticals be the next hot acquisition target? Recent good news has upped the company’s cachet and may make it a desirable buy.

Only yesterday, the company announced that the U.S. Food and Drug Administration (FDA) had approved Bevyxxa (betrixaban). The drug is the first and only anticoagulant for hospital and extended duration prophylaxis of venous thromboembolism (VTE) in adult patients who have been hospitalized for an acute medical illness.

Portola expects to launch the drug between August and November 2017. It is also being evaluated by the European Medicines Agency’s Committee for Human Medicinal Products (CHMP). Wall Street analysts project it to be a future blockbuster with $1 billion in sales by 2023.

“Bevyxxa represents a major advance for the field of thrombosis,” said C. Michael Gibson, APEX Executive Committee Member and Steering Committee Chairman, professor at Harvard Medical School and chairman of the PERFUSE Study Group, in a statement. “It is the first therapy to demonstrate a reduction in the incidence of VTE in these high-risk patients without a significant increase in major bleeding. With this approval, we are finally able to help protect these patients from this often fatal, yet preventable condition.”

Todd Campbell, for The Motley Fool, writes, “Because Bevyxxa is an anticoagulant that could displace the use of Lovenox in acute, medically ill patients who are being released form hospitals, and Lovenox was once a top seller with $3 billion in annual sales, I wouldn’t be too surprised if suitors come knocking on Portola Pharmaceuticals’ door.”

In addition to Bevyxxa, the company is awaiting approval on Andexxa in late July. Andexxa, if approved, will be the first drug approved that can reverse factor Xa anticoagulants. Campbell writes, “Currently, Eliquis and Xarelto aren’t being prescribed in patients at risk of bleeding events because there’s no FDA-approved antidote. Therefore, an approval would not only help solidify the use of this class of drugs, but it could also help expand their use in more patients.”

Per Portola, 1 to 3 percent of patients on oral factor Xa inhibitors have a major bleeding event. Another 1 percent requires emergency surgery. The company projects a potential market for Andexxa at approximately 90,000 per year in the U.S.

And in an odd bit of synergy, this could help other drug companies. Campbell writes, “Andexxa’s importance hasn’t been lost on factor Xa drugmakers. J&J , Pfizer , and Bristol-Myers all helped finance Andexxa’s trials, and in the case of Pfizer and Bristol-Myers, they’ve ponied up money to license rights to Andexxa in Japan. Pfizer and Bristol-Myers also agreed to loan Portola Pharmaceuticals $25 million each last December to continue development of Andexxa, which will be paid back from royalties on Andexxa sales.”

The conclusion, at least on the part of Campbell, is that a company with a factor Xa franchise, an established sales team, and plenty of money—which does describe J&J, Pfizer and Bristol-Myers Squibb—might find Portola an attractive target.

Portola Pharmaceuticals is currently trading for $55.10. That gives it a market cap of about $3.2 billion. That likely means any sales would be in the $5 billion range, a price that many pharmaceutical companies fit into the “bolt-on” category.