Portola Pharmaceuticals' CEO Discusses Q4 2013 Results - Earnings Call Transcript

Feb.27.14 | About: Portola Pharmaceuticals (PTLA)

Portola Pharmaceuticals, Inc. (NASDAQ:PTLA)

Q4 2013 Earnings Conference Call

February 27, 2014 4:30 PM ET


Alexandra Santos – Director, IR

Bill Lis – CEO

John Curnutte – EVP, Research and Development

Mardi Dier – EVP and CFO


Jason Kantor – Suisse

Wen Shi – Sanford Bernstein


Good day, everyone, and welcome to the Portola Pharmaceuticals Fourth Quarter and Year End 2013 Financial Results Conference Call. This call is being recorded. At the end of the company’s prepared remarks, we will open the call for questions. And we will provide specific instructions at that point.

I’d now like to turn the call over to Alexandra Santos, Director of Investor Relations at Portola Pharmaceuticals. Please go ahead.

Alexandra Santos

Thank you. And welcome to Portola’s fourth quarter and year end 2013 financial results conference call. Joining me on the call today for the prepared remarks are Bill Lis, Chief Executive Officer; Dr. John Curnutte, Executive Vice President of Research & Development; and Mardi Dier, Chief Financial Officer.

We issued our fourth quarter and year end press release earlier today, a copy of which can be found at www.portola.com in the Investor Relations section.

Before we begin, I would like to remind you that various remarks that we make on this call contains forward-looking statements subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied. All forward-looking statements made on this call are based on beliefs of Portola as of this date only. Future events or simply the passage of time may cause these beliefs to change.

For a more detailed description of our risks that impact these forward-looking statements, please refer to our most recent Quarterly Report on Form 10-Q filed with the SEC. Please be aware that you should not place undue reliance on the forward-looking statements made today.

Finally, this conference call is the property of Portola Pharmaceuticals, Inc., and any taping, other duplication or rebroadcast without the express written consent of Portola Pharmaceuticals is prohibited.

Bill Lis

Thank you, Alex. And thanks everyone for joining us today for our fourth quarter and year-end 2013 financial results call. It’s Bill Lis, CEO of Portola.

2013 was a very successful year for Portola. We executed on a series of important milestones. We continued to build an enduring company with the goal of bringing to market three wholly-owned and potentially groundbreaking treatments for patients with blood clot and blood cancer.

We have a clear strategy focused on using biomarkers or genetic approaches at our clinical development programs. We believe this approach will increase the probability of our clinical, regulatory and commercial success of each of our late stage pipeline products. Additionally, we currently have cash on hand until the second quarter of 2016, this provides us with sufficient capital to independently advance our three wholly-owned assets, the value creating clinical manufacturing milestones.

Now, I will review highlights from our portfolio. First, betrixaban, this is our once daily oral Factor Xa inhibitor has the potential to be the first clinical anticoagulant approved for both hospital and post-discharge prevention of venous thromboembolism or VTE in the acute medically ill patients. This is an area of high unmet medical need. We continued to successfully advance our pivotal APEX study as the only thrombosis study to use biomarkers to identify in old patients most likely to benefit from this therapy.

In January, we communicated that enrollment has been delayed due to slower than anticipated study side initiation in the second half of 2013, since then, however, we have executed on our plan. We have increased our active study sites to over 400 expect to achieve our target of 425 to 450 total sites soon. We now also increased total enrollment to over 30% and we are confident we can complete the enrollment by the end of 2015.

Importantly, the blinded aggregate event rate in APEX is on track with our expectations. We believe investigators are enrolling the right patients to potentially demonstrate superiority over the standard of care without a significant increase in bleeding. This is important because we believe this is what differentiates and distinguishes betrixaban from what we are seeing with XARELTO in [indiscernible] trial.

We also believe that betrixaban have effect a very unique in value – compelling value proposition. First, we have the opportunity to find and own the multi-billion dollar acute medically ill market with a drug that has unique properties and the potential for low rate of bleeding. We expect, we can expand this market even at a reduced acquisition price compared to the current standard of care enoxaparin.

Now, we can execute on this opportunity with a focused hospital based sales force. Our second product candidate andexanet alfa is our FDA designated breakthrough therapy for which we are pursuing an accelerated approval pathway. And andexanet alfa is a truly first-in-class agent designed active antidote to reserve the anticoagulation activity of Factor Xa inhibitor-treated patients who are suffering either a major bleed or require emergency surgery.

We achieved several milestones in this program with the possibility of going from IND to BLA in only four years. I will now run through a list of those milestones.

We announced positive results from two separate Phase 2 studies demonstrating immediate dose dependent and well-tolerated reversal of anticoagulation activity for both in Factor Xa inhibitor Eliquis and XARELTO and andexanet alfa demonstrated that it can provide temporary reversal of an IV bolus infusion for a prolonged reversal with an extended infusion, this is really important as it allows flexibility for clinicians to reverse these agents and restore anticoagulation if needed.

We reached an agreement with the FDA on our regulatory path for an accelerated approval. Also we recently extended our clinical collaboration agreement with BMS-Pfizer for Eliquis and J&J-Bayer for XARELTO through this creative collaboration we were able to secure additional funding for Phase 3 clinical program. We also retained all decision-making commercial rights to andexanet alfa.

Our third product candidate Cerdulatinib, is an innovative oral, dual Syk-JAK inhibitor. Our strategy with this compound is a benefit to identify genetically-defined patients for a dual Syk-JAK activity mainly through a clinically meaningful response. Last year, we’ve advanced cerdulatinib into a clinical trial and began enrolling patients with chronic lymphocytic leukemia and non-Hodgkin lymphoma in a Phase 1/2 study. Our goal is to commercialize all of our products independently at least in the United States with a hospital-based and specialty-based sales force.

Now, I’ll turn it over to John to give a more detailed overview of the three wholly-owned assets. John?

John Curnutte

Thank you, Bill. We have three potentially groundbreaking clinical assets that are all targeting areas of high unmet needs in the areas of thrombosis and other hematologic disorders. In first, we are developing betrixaban for the prevention of VTE in the acute medically ill patients in the hospital and post-discharge settings. We believe betrixaban has the potential to succeed in this patient population in part due to its validated mechanism of action, but most importantly due to its properties that differentiated from the other anticoagulants.

First, it has the longest half-life making it a true once-daily therapy allowing for a narrow peak-to-trough concentration ratio that helps maintain a less variable anticoagulant effect over the course of the day. Second, it has a lowest venal clearance of all the Factor Xa inhibitors, which may result in a lower rate of bleeding. And finally, it is not metabolized in the liver by CYP3A4, which may result in a reduced potential for drug and drug interactions.

Now, these properties are critically important for acute medically ill patients, who are often renally compromised and on multiple concomitant medications. We believe betrixaban has the potential to demonstrate efficacy without the significant increase in the rate of major bleeding as it’s seen with XARELTO in this target population in the MAGELLAN stay.

Now, while we expect the initiation of another trial evaluating XARELTO in the acute medically ill population, I would parenthetically further validating the urgent unmet need and opportunity here. We believe we have a drug with differentiated properties that allow for a better safety profile.

We also believe, we’ve got the right clinical development strategy to succeed. Our global pivotal Phase 3 APEX trial uses a biomarker approach to identify patients that are most likely to benefit specifically those patients with elevated blood levels of D-dimer were those over the age of 75. In previous trials, these two patient populations have been shown, they have the highest risk of VTE and the greatest response to treatment.

So, in summary, we believe betrixaban will be the first anticoagulant approved for this indication has the properties that can demonstrate a lower rate of bleeding and can be coupled with the biomarker for clinicians to identify their patients most likely to benefit.

Now, moving on to andexanet alfa. This innovative drug was graded breakthrough designation by the FDA in 2013 and has the potential to be our first approved drug. It is the only agent that has demonstrated in humans the reversal of Factor Xa inhibitors as measured by anti-Factor Xa levels to goal standard for measuring anticoagulation with these drugs. Andexanet alfa could address in urgent unmet need that has been gaining public attention. An analysis of the FDA’s database of adverse events was highlighted today by the British Medical Journal, which noted that even normally manageable bleeding becomes a very serious concern for patients on these drugs.

We have now reported data from two Phase 2 proof-of-concept studies, one with Eliquis and the other was XARELTO. Results show that andexanet alfa immediately reversed the anti-Factor Xa activity. This reversal can be temporary through the administration of an intravenous bolus or can be sustained with the addition of an extended infusion. In clinical practice for example, patients with bleeding due to an interventional procedure may require only a short acting reversal of their anticoagulant while those who need emergency surgery may require long acting reversals. Andexanet alfa is able to address both of these scenarios.

Regarding safety, andexanet alfa has been well-tolerated in the Phase 2 studies that have included now more than 90 healthy volunteers no thrombotic events, serious adverse events or immunobodies that cross react with Factor Xa or Factor X have been observed. Now based on these Phase 2 studies and discussions with the FDA, we planned to initiate registration enabling Phase 3 studies with Eliquis and XARELTO in the first half of this year. These studies will be similar in design to our Phase 2 studies, it will be conducted under an accelerated approval pathway using biomarker endpoints for conditional approval. Now these biomarkers will include anti-Factor Xa levels, the plasma free fraction of the anticoagulant in thrombin generation.

The first part of these Phase 3 studies will administer andexanet alfa as an IV bolus, while the second part will evaluate andexanet alfa dose as a bolus plus infusion. We planned to enroll approximately 35 healthy volunteers in each cohort. Our Phase 3 clinical trial material will be produced at CMC Biologics. Simultaneously we are continuing to advance the commercial-scale manufacturing process at Lonza Group. This is progressing as planned and we have initiated our first 10,000 leaner run with them and our comparability testing will begin immediately after this run. We certainly look forward to keeping you appraised with the multiple milestones expected with as much needed breakthrough therapy.

Finally, turning to our third program cerdulatinib, this drug targets two type of pathways, those involving Syk kinase and others involving JAK kinase. Both pathways are involved in tumor cell survival. This unique dual mechanism of action may address unmet needs in chronic lymphocytic leukemia and non-Hodgkin lymphoma patients with genetically driven abnormalities in these pathways.

Now, based on the strong in-vitro activity, we have seen as well as the recent approvals with drugs that target just one of these pathways. We have moved to cerdulatinib into clinical testing. Our open-label multi-center Phase 1/2 proof-of concept studies includes two parts. Phase 1 will determine the maximum tolerated dose and we expect to report proof-of-activity data in mid-year. Phase 2a is a cohort expansion study that will be completed in the second half of 2015.

So in summary, we have made important progress with all three of our novel programs and expect to report proof-of concept and pivotal clinical trial data this year and next.

I will now turn the call over to Mardi, who will review the financial results for the year.

Mardi Dier

Thank you, John. Collaboration revenue for the year ended December 31, 2013 was $10.5 million earned under Portola’s collaborations with BMS-Pfizer, J&J-Bayer, Daiichi Sankyo and Lee’s Pharmaceuticals. Collaboration revenue for the year ended December 31, 2012 was $72 million as a result of a termination of the Novartis agreement.

Total operating expenses for the year ended December 31, 2013 were $94.7 million, compared with $61.2 million for 2012. Total operating expenses at 2013 included $5 million of non-cash stock-based compensation expense. Research and development expenses were $79.3 million for 2013, as compared with $49.7 million for 2012, as we continue to support our Phase 3 APEX study of betrixaban, multiple Phase 2 proof-of-concept studies of andexanet alfa and initiation of our Phase 1/2 clinical study of cerdulatinib.

G&A expenses for the year ended December 31, 2013 were $15.4 million compared with a $11.5 million for 2012 as we increased our headcount to support our growth which resulted in higher head count related cost and including stock-based compensation.

Our annual guidance for 2014, total operating expense is between $145 million and $150 million excluding stock-based compensation. These expenses will be primarily in support of our ongoing and planned Phase 3 registration study for our two lead programs, and the andexanet study of betrixaban and the Phase 3 studies of andexanet alfa. And the manufacturing work to produce andexanet alfa at commercial scale. Additionally, we will be supporting the initiation of a Phase 4 study of andexanet alfa and additional Phase 2 proof-of-concept study for andexanet alfa and the expansion cohorts of the Phase 1/2 cerdulatinib study.

For the fourth quarter of 2013, we reported a net loss of $25.1 million or $0.63 net loss per share compared with the net loss of $13.8 million or $10.02 net loss per share for the same period in 2012. Net loss for the year ended December 31, 2013 was $83.4 million or $3.65 net loss per share compared with net income of $11.4 million and no net income for share for the year ended December 31, 2012 and all of the available income was attributable to both preferred shareholders in that period.

Cash, cash equivalents and investments at December 31, 2013 totaled $319 million, compared with $137.4 million as of December 31, 2012. We expect to end 2014 with a cash, cash equivalents and investment balance in a range of $185 million to $200 million. We currently have a cash available in the second quarter of 2016 that we will use independently advance our three 100% owned assets to value creating clinical and manufacturing milestones.

After we received Phase 3 data from the andexanet alfa Phase 3 study at the end of 2014 and the beginning of 2015, we will look to incorporate and communicate our commercial launch plan for this important first to market asset for Portola.

I will now turn the call back over to Bill.

Bill Lis

Thanks Mardi. Looking ahead the next few years we really will be focused on execution as we aim to achieve a number of important clinical manufacturing milestones for each of our programs. I will go through them briefly.

For betrixaban, we plan to conduct our third planned APEX data safety monitoring committee review in the first half of 2014. We expect the futility analysis will be completed in early 2015. And we expect to complete the patient enrollment by the end of 2015 in the top line results available shortly thereafter which is a 35-day end point and a 60-day follow-up period.

For andexanet alfa, we have a series of clinical manufacturing milestones. First, we expect to initiate two separate pivotal Phase 3 studies with Eliquis and XARELTO in the first half of 2014. We will report out initial data from those studies in the fourth quarter of this year in 2014 and that additional data in the first half of 2015 to support an accelerated approval pathway anticipate initiating the Phase 4, confirmatory study at the end of 2014 or early 2015.

We expect to report Phase 2 data with additional Factor Xa inhibitors in 2014 and 2015, this will include enoxaparin, Savaysa and also betrixaban. I conferred with all of our clinical activity, we will continue to advance commercial scale manufacturing process at Lonza. And finally, we expect to file our BLA for conditional approval at the end of 2015, again, a remarkable achievement going from IND to BLA in about four short years.

Cerdulatinib, we expect to report Phase 1 proof-of-activity data in 2014 as John said and we expect to complete Phase 2a proof-of-concept portion of the trial in 2015.

In closing Portola had an exceptional year in 2013 with many financial and clinical successes. We executed on our milestones in pursuit of our goal bringing three wholly-owned assets in thrombosis and hematologic disorders to the market independently. We also have fourth compound, that’s a highly potent and selective Syk inhibitor which partnered with Biogen Idec and its being studied in allergic asthma.

Our strategy is to increase the probability of success of each of our programs by using biomarkers and genetics to identify patients who will mostly likely benefit from our drugs and we are well on our way to executing on this strategy. We believe that our target approach is the first of its kind in the field of thrombosis and really differentiates us as a company.

Finally, we believe, we have sufficient capital to independently advance our three late stage wholly-owned compound.

And with that we will open it up to questions. Operator?

Question-and-Answer Session


Ladies and gentlemen, we will now open up the line for the question-and-answer portion of the call. [Operator Instructions] Our first question comes from Jason Kantor with Suisse.

Jason Kantor – Suisse

Great. Thanks for taking the question and congrats on all the progress. I had two questions. One on in andexanet alfa, are you planning in your regulatory filing to basically file with for all Factor Xa inhibitors and so what amount of data you need for Phase 3 for all of them, or will this just be for Eliquis and XARELTO at that time?

Bill Lis

Yes. I will answer first and John, if you have any other comments. First thanks for joining Jason in your question. The expectation is that we will get labeling for each of the Factor Xa inhibitors upon completion of a Phase 3, specific Phase 3 clinical program or trial with each of them Jason. So we will have to do an independent trial for each one of them to gain what we call the conditional approval those will be the healthy volunteer PK/PD studies.

So this year will be Eliquis and XARELTO, so that part of that – those two should be ready for submission. And then as we said, we expect to complete not only Phase 2 study but Phase 3 studies for the other Factor Xa inhibitors there after that will include Daiichi’s Savaysa that will also include enoxaparin as we said previously and then also betrixaban.

Jason Kantor – Suisse

The filing will just be XARELTO and Eliquis.

Bill Lis

Well, I think at this point that’s the way we see it. I think we see how things progress. It could include others. But at this point that’s the way we see it.

Jason Kantor – Suisse

Okay. And then on the Syk JAK –

Bill Lis

Because those are the two approved, Jason because those are the two approved Factor Xa inhibitors. And the question will be we add enoxaparin to that and lastly see where Savaysa is as far as its regulatory path for approval. And then obviously, betrixaban you saw that we expect that in filing for that NDA for sometime in 2016.

Jason Kantor – Suisse

Got it. And then with the Syk JAK inhibitor, are you finding that you are getting any patients in the study who have failed prior ibrutinib at this point or other PRT kinase drugs?

John Curnutte

Jason, John Curnutte here. Good question, we are in our second cohort of this and at the present time, we have not had the opportunity to study patients who failed the two drugs that you mentioned. But we do have a number of patients with CLL and diffuse large cell – B-cell lymphoma then it failed multiple level of therapies however.

Bill Lis

And I think Jason, that was not the expectation going into the study that we will do that. We had really loved to, I mean based on genome sequencing that would be more part of the second phase or the expansion of cohort. I think we might get lucky to get one of those types of patients in. But, really wasn’t something we have set as a goal.

Jason Kantor – Suisse

Got it. Okay. Thank you.


Our next question comes from Geoffrey Peorges with Sanford Bernstein.

Wen Shi – Sanford Bernstein

Hi. Thanks for taking the question. This is actually Wen Shi for Geoff. I have two questions. The first one for betrixaban, right, we talked about by using our biomarker trial design, you are limiting the patient population potentially eligible. So I think we talked about maybe like 14 out of 21 million or something to that effect, I was just wondering based on your experience with patient enrollment, do you have more or less confidence in terms of that number, are you still thinking about that’s a realistic size of the market that you can capture or using it as trial design? Maybe that’s the first question.

Bill Lis

Yes. It’s a great question because that’s how we follow pretty closely. We know the types of patients who are getting in the clinical trial, I think if you take a look at the proportionate of patients and what we see in the clinical trial. And again, as we continue to look at broadly at the epidemiology of these patients population, it’s another area where we think we are just really on track. We think that what we targeted as far as the patients population somewhere around 12, 14 or so million patients of what we call the 22 to 24 million that currently have a Class I recommendations for hospital use.

We think its stands. We think what we have projected and what we expect stands and so that’s a population that we derived but we take ultimately it will be our potential market more than 35 days duration or extended duration. Does that answer your question Wen?

Wen Shi – Sanford Bernstein

Yes, definitely yes. Another on the antidote, is the Phase 2 Lovenox study is still on track for Q1? And then also if you think about the eventual commercial opportunities for the oral novex [ph], the reversal of novex versus the reversal of Lovenox, how you compare those potentials? Thank you.

John Curnutte

Yes. Wen, this is John. With regard to where we are with enoxaparin, those studies are underway and we are expecting to have data that we can share mid-year on that. So stay tuned on that front.

As we get those data from the enoxaparin, Lovenox studies we will certainly look at that as how would possibly play into the therapy along the orals and the injectables perhaps I will let Bill comment on the relative market capabilities of those two indications.

Bill Lis

Yes. Wen, it’s a really good question. If you remember how we done it previously, we said, we have done a projection in 2014 or 2020. At this point we said, on if we take analyst projections, it looks as though about 20 million patients, or just over if we take the major G-7 countries will be on an oral Factor Xa inhibitor and maybe still around 10 million or little less than 10 million will be on enoxaparin. So that’s we stated previously before. I think now we will just to look to see how it plays out.

Certainly is a sign as Factor Xa inhibitors are picking steam and so maybe we are on course for just that. But I think that will play itself out over the last – over the next several months. So as you can see that’s a two-third market to Factor Xa inhibitors, a one-third for the antidote to enoxaparin another injectable Factor Xa inhibitors, does that make sense to you.

Wen Shi – Sanford Bernstein

Yes. But I thought enoxaparin have a higher bleeding rate in oral, is that right or not?

Bill Lis

It’s really not. It’s really, really not. I mean think about it in the XARELTO trials, the record trials, look through the record experience of orthopedic surgery. XARELTO actually had a numerically higher bleeding rate. So that’s what’s been shown, if you take a look at Eliquis results. It’s probably just about the same maybe numerically a little less. They are probably just about the same.

The interesting think about the novel oral anticoagulants, I think it’s clear versus warfarin that there is a significant improvement and at least fatal bleeding and intracranial bleeding and maybe those are the most important bleeds. So if you take a look at GI bleed, across the landscape of the oral compounds and that includes [indiscernible] as well. The incidence of GI bleeding is always numerically higher.

Betrixaban probably as a – as you know qualitatively as the lowest, and we think that’s because of the PK/PD profile of betrixaban. But certainly it’s still in the same ranges that you see with enoxaparin.

Wen Shi – Sanford Bernstein

Okay. Great. Thank you very much.


[Operator Instructions] We will now conclude the Q&A portion of the call. I would like to turn the call back over to Bill Lis for closing remarks.

Bill Lis

Yes. Again, I just like to thank everybody for joining us today and your interest in Portola. We look forward to seeing some of you in the next week at the Cowen Healthcare Conference in Boston and the Credit Suisse One-on-One Healthcare Conference in London.


And this concludes today’s fourth quarter and year end 2013 financial results conference call for Portola Pharmaceuticals. You may now disconnect.

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