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Portola Pharmaceuticals (NASDAQ:PTLA)

Q2 2014 Results Earnings Conference Call

August 06, 2014 04:30 PM ET

Executives

Alexandra Santos - Director of Investor Relations

Bill Lis - Chief Executive Officer

Dr. John Curnutte - EVP of Research & Development

Mardi Dier - Chief Financial Officer

Analysts

Jason Kantor - Credit Suisse

Geoffrey Peorges - Sanford C. Bernstein

Phil Nadeau - Cowen & Company

Operator

Good day, everyone, and welcome to the Portola Pharmaceuticals Second Quarter 2014 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 would now like to turn the call over to Alexandra Santos, Director of Investor Relations at Portola. Please proceed.

Alexandra Santos

Thank you, and welcome to Portola’s second quarter 2014 financial results conference call. Joining me on the call 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 second quarter 2014 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 contain 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 made 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 or other duplication or rebroadcast without the expressed written consent of Portola Pharmaceuticals is prohibited.

With that, I will now turn the call over to Bill Lis, CEO of Portola.

Bill Lis

Thank you, Alex. Good afternoon and thank you all for joining us. Today, I'll review second quarter achievements as well as our pipeline and strategy. We continue to focus on developing and commercializing our three wholly-owned and potentially life-saving treatment to patients with thrombosis and hematologic disorders. Our goal continues to be the same to build a significant growth company, targeting multibillion dollar hospitals and specialty markets, where we can be first to market or demonstrate benefits in patients with little no treatment option. In this regard, we have strong record of success, over the last two years, we've advanced three products discovered by Portola scientists, two of which are in Phase III clinical development. We've identified biomarkers and genetic markers to identify patients most likely to benefit from our drug candidate. And these strategies are supported by regulatory authorities. We believe this increases our probability as clinical regulatory and commercially success. And finally we have continued to build the proven management team that has significant experience, not only developing, but also commercializing successful therapeutics in the areas of thrombosis and hematologic cancers.

I'll now review highlights about that our pipeline and our second quarter achievements. Betrixaban is our oral once-daily Factor Xa inhibitor anticoagulant, which we are evaluating in a global pivotal Phase 3 study called APEX. APEX is designed to demonstrate superiority of Betrixaban compared to standard of care enoxaparin for the prevention of venous thromboembolism or VTE in acute medically ill patients. These are patients who are hospitalized for conditions such as heart failure, stroke, pulmonary disease severe infections, and these patients are at higher risk for blood clots.

Our goal for betrixaban is simple, we expect to be the first and only anticoagulant approved for in hospital and post discharge VTE prevention anesthesia population. Enoxaparin, previously known as Lovenox is a current standard of care but it’s limited to hospital use and has several additional limitations, it is costly as an injectable it’s associated with an increase in bleeding, injection side hematomas and has variability in blood levels due to its renal clearance. Importantly over 50% of the life-threatening clots occur following hospital discharge and there is no approved therapy during this period.

Using biomarkers, we believe we can identify patients who remain at extended VTE risk. APEX is the only pivotal trial evaluating a single anticoagulant of VTE prevention in these patients both in the hospital and both discharge settings.

In the second quarter this was our highest enrollment quarter for APEX to-date, study is now nearly 50% enrolled at over 450 global sites. This is a potential blockbuster drug. We estimate there are over 14 million acute medically ill patients who need extended VTE prophylaxis. Our competitive advantage with betrixaban is that it has the potential to demonstrate superiority compared to the standard of care, we are the first and only drug approved in hospital and outside of the hospital and we can drive significant revenue at a discounted price compared with existing standard of care therapies. We estimate there is an addressable market of up to $3 billion to $4 billion and we can execute commercially in the United States with a 100 to 150 person hospital sales force.

Now let me turn to andexanet alfa, a recombinant modified Factor Xa molecule that has the potential to be first in class Factor Xa inhibitor antidote. Andexanet is Phase III clinical development which we now refer to ANNEXA study group. Andexanet designated as an FDA breakthrough therapy is on track for BLA submission at the end of 2015 through an accelerated approval pathway using a biomarker in the pivotal studies.

Currently there is no approved antidote for Factor Xa inhibitors. As of 12 months ended September 2013, there were approximately 50,000 U.S. hospital admissions for bleeding and patients taking these agents. Of these, there were approximately 20,000 bleeds from old Factor Xa inhibitors and 30,000 from enoxaparin. Based on these data and expected growth rates for Factor Xa inhibitor usage, we estimate that by 2020 up to 500,000 patients in the G7 countries could benefit from an antidote.

Recently we entered into a Phase III clinical collaboration agreement with Daiichi Sankyo to study their Factor Xa inhibitor edoxaban in the Phase III trial ANNEXA-E. We expect to start these studies in 2015 together with the agreements we have previously executed with BMS, Pfizer, J&J and Bayer. We now have Phase III agreements in place with all the manufacturers of Factor Xa inhibitors, all three agreements provide us with upfront in milestone base payments to help fund the development of andexanet while allowing us to retain 100% of commercial rights to the asset.

Also in the second quarter, we announced positive data from Phase II proof-of-concept study evaluating andexanet as an antidote to enoxaparin. Dr. John Curnutte, our Head of R&D will discuss these results in detail.

Our commercial strategy for andexanet will be the first product to the market with the U.S. launch expected in 2016, we will initially focus our patients with the most critical need for an antidote such as those with massive bleeds or need for immediate surgery.

As we move beyond 2016, we'll look to expand in bleeding and surgery patients. More broadly, simultaneously we're advancing our ex-U.S. Regulatory of commercial strategy and expect to provide more details once this is finalized.

Now, turning to cerdulatinib, our oral, dual Syk-JAK kinase inhibitor. Cerdulatinib as a single agent targets two key signaling pathways that can promote cancer cell growth. We are pleased with the progress of our initial Phase 1/2a proof-of-concept clinical study at cerdulatinib and patients with hematologic cancers. We expect to report our data from the Phase 1 trial by the end of the year and decide on next steps for the program.

Our strategy for this molecule is to get to the market by focusing on patients with certain selling mutations and diffuse large B-cell lymphoma as well as patients with chronic lymphocytic leukemia, following failure with other therapies. Strategy is to target specific population who have been successful with other agents such as (inaudible) and EGF receptive mutation or therapies for (inaudible) mutation.

Addressing clinical unmet needs and representing significant promotional opportunity, we estimate that the initial indications we're targeting for cerdulatinib represent an addressable G7 market of around $2 billion.

Now I'll turning the call over to Dr. John Curnutte, our Head of Research & Development to provide more detail about each of our clinical development programs. John?

Dr. John Curnutte

Good, thank you Bill. I'll start with the betrixaban, which we are studying in the global pivotal Phase 3 APEX study. We believe APEX has a high likelihood of success and we're optimistic about betrixaban’s potential for VTE Prevention in the acute medically ill patients population for the following reasons. First betrixaban’s properties are well suited for this patient population which may result in less major bleeding than that seen with other agents such as rivaroxaban in this indication.

Second, the pool when we did aggregate event rate in APEX remain on track with our expectations, meaning that we are enrolling the right patients. Third, we are using a biomarker D-dimer to identify patients who have risk of VTE and are more likely to benefit from betrixaban this is a strategy importantly supported by the FDA and the EMA.

A paper led by Dr. Michael Gibson on the prognostic association of an elevated blood level of D-dimer and risk of VTE was published in the July issue of the Journal of Thrombosis and Thrombolysis, the office of the paper evaluated 37 published articles including prospective and retrospective observational studies, clinical trials and systematic reviews. They found that an elevated blood level of D-dimer was independently associated with an increased risk of the first occurrence of VTE with a recurrence of VTE and with mortality.

In APEX as is typical for a large global outcomes trial, we are finalizing the formal statistical plan for the upcoming futility analysis as well as for the completion of the study. Accordingly we continue to have discussions with the agency specifically addressing the assessment of high risk biomarker positive patients that is those with elevated blood levels of D-dimer and then those over the age of 75. We believe these patients are the most likely to benefit expanded VTE prophylaxis with Betrixaban. We expect to share additional details about this statistical plan around year end.

Now let me turn to our Factor Xa antidote an FDA designated breakthrough therapy, andexanet alfa. At Portola, we were among the firsts to see the major need for a Factor Xa inhibitor and antidote and have the right team of scientists in place to create a solution. We believe andexanet has the potential to be a universal antidote for Factor Xa inhibitors, because of the robust reversal activity and safety profile demonstrated in three Phase 2 proof-of-concept studies.

Following positive Phase 2 data demonstrating reversal of activity with apixaban and rivaroxaban. We initiated Phase 3 ANNEXA A and ANNEXA R studies respectively. These randomized double-blind placebo-controlled studies are designed to evaluate the efficacy and safety of andexanet alfa in rapidly reversing anticoagulation following an IV bolus and in sustaining net effect through a continuous infusion. The first date of readout from these studies is on track for year end with additional readouts expected in the first half of 2015.

During the second quarter, we also announced positive data from our Phase 2 proof-of-concept study evaluating andexanet is an antidote for enoxaparin, which is a low molecular weight heparin. The results which were presented in both oral and poster sessions at ISTH demonstrated that andexanet immediately and significantly reverse the anticoagulation activity of enoxaparin and was well tolerated. These Phase 2 data are important because they are the first to demonstrate that andexanet can reverse in indirect Factor Xa inhibitor in addition to its demonstrated ability to group two reverse direct Factor Xa inhibitors such as rivaroxaban and apixaban.

As a result of our accelerated approval pathway we have the potential to take this agent from IND to BLA in approximately 3.5 years. Given this extraordinarily rapid pace of clinical development our manufacturing work has been a key focus for us as we advance through the standard processes to prepare for a potential BLA filing. Our strategy to expand our manufacturing collaboration with CMC biologics from clinical supply to commercial supply to support potential U.S. product launch remains on track. Simultaneously we are continuing to work with Lonza to develop an improved manufacturing process to increase yield. And we expect to introduce commercially the enhanced manufacturing process approximately 24 months following launch.

Now turning to cerdulatinib our potent dual Syk-JAK kinase inhibitor. This agent has the potential for broad activity in hematologic cancers because it blocks the B cell receptor pathway via Syk and key cytokine receptors via JAK. Current therapies have demonstrated limited activity in patients with certain types of B-cell lymphomas that have growth promoting mutations. This lack of clinical response can be reproduced in vitro with patients drive cell lines.

In this setting cerdulatinib has shown activity while these other agents have not. Our goal that is to translate these in vitro findings to patients. We have also shown in ex vivo studies that cerdulatinib can arrest the growth of CLL cells from a patient who relapsed on ibrutinib if his cells no longer responded to this drug due to required resistance mutation.

Now, currently we are evaluating cerdulatinib in an ongoing open label Phase 1/2 study in patients with chronic lymphocytic leukemia and B-cell non-Hodgkins lymphoma.

In June at ASCO we presented pharmacokinetic and pharmacodynamic data from the first three dose cohorts in the dose escalation part of the Phase I study. The results showed cerdulatinib has a favorable pharmacokinetic profile with a half life of 14 to 18 hours and in whole blood assays B-cell antigen receptor mediated Syk in cytokine mediated JAK stat signaling for both dose dependently inhibited up to 80% when compared with the pre-dose levels of receptors signaling.

Later this month we will be presenting an abstract at The American Society of Hematology Meeting on lymphoma biology. The data further confirmed that the broad preclinical activity seem with cerdulatinib in defuse large B-cell lymphoma is attributed to the inhibition of both Syk and JAK pathways. We anticipate having the full data set from the Phase I portion of the study later this year and we will use these results to drive our decisions around the expansion phase of the trial.

So, in summary, we believe we have a unique set of product candidates that are potentially lifesaving therapies for patients we can identify using genetics and biomarkers. We believe this approach increases the probability of clinical, regulatory and commercial success of these product candidates.

Now I’ll turn the call over to Mardi, who will review the financial results for the second quarter.

Mardi Dier

Thank you, John. In the second quarter 2014, collaboration revenue earned under our agreements with BMS-Pfizer, J&J-Bayer, Daiichi Sankyo and Lee's Pharmaceuticals was $2.4 million compared to $2.6 million for the second quarter of 2013.

Total operating expenses for the second quarter of 2014 were $33.9 million compared with $24.5 million for the second quarter of 2013. Total operating expenses for the second quarter of 2014 included stock-based compensation of $2.4 million compared with $1.2 million for the second quarter of 2013.

R&D expenses were $29 million for the second quarter of 2014 compared with $20.8 million for the second quarter of 2013, as we continue to support our Phase 3 APEX study of betrixaban, multiple Phase 3 ANNEXA studies and Phase 2 proof-of-concept studies of andexanet alfa and our Phase 1/2 clinical study of cerdulatinib.

G&A expenses for the second quarter 2014 were $4.9 million compared with $3.7 million for the second quarter of 2013. This increase was a result of greater stock-based compensation, increased headcount to support our growth, higher legal and professional fees to support general corporate activities and public company related expenses.

For the second quarter of 2014, we reported net loss of $31.4 million or $0.76 net loss per share compared with the net loss of $21.6 million or $1.47 net loss per share for the same period in 2013. Shares used to compute net loss per shares attributable to common stockholders for approximately 41.2 million for the second quarter of 2014 compared with approximately 14.7 million for the same period in 2013.

As of June 30, 2014 cash, cash equivalents and investments totaled $285.9 million which includes $6.6 million received from collaboration partners during the second quarter compared with cash, cash equivalents and investments of $319 million as of December 31, 2013.

We believe we are capitalized upon significant development milestones including APEX enrollment completion, andexanet alfa Phase 3 data and subsequent BLA filing and the completion of our Phase 1/2 of cerdulatinib. We continue to evaluate a number of strategic options with respect to funding our pre-commercial and commercial launch plans for both our anticipated first product to market andexanet alfa and for betrixaban shortly thereafter.

I will now turn the call back over to Bill.

Bill Lis

Thank you, Mardi. Looking ahead, we expect numerous development and regulatory milestones for each of the three wholly owned programs to drive not only potential near-term but long-term value. I’ll review those. For betrixaban, we expect to conduct additional APEX safety reviews by the Independent Safety Monitoring Committee, expect to complete its utility analysis of APEX study in early 2015, complete the patient enrollment by the end of 2015 with top-line results shortly thereafter in early 2016.

For andexanet alfa, we have a number of them; among them are Phase 2 milestones, We expect to present full data from the Phase 2 study of apixaban at the European Society of Cardiology Congress otherwise known as ESC, on August 30, 2014; report Phase 2 proof-of-concept data with edoxaban later this year, initiate Phase 2 proof-of-concept study with betrixaban in 2015, among the Phase 3 regulatory and critical milestone, we expect to report initial date from the Phase 3 ANNEXA study in the fourth quarter of this year, report full data from our ongoing Phase 3 ANNEXA-A and ANNEXA-R studies in the first half of 2015, initiate Phase 3 ANNEXA-E studies with edoxaban in 2015, initiate a Phase 3B a post marketing or confirmatory study in late 2014 or early 2015 and file BLA for conditional approval under accelerated approval pathway at the end of 2015. And for cerdulatinib, we expect to present a poster at the American Society of Hematology meeting on Lymphoma and Biology on August 11 this summer and report data from the ongoing Phase 1 trial in patients with B-cell non-Hodgkin's lymphoma, chronic lymphocytic leukemia later this year.

So, in conclusion, we believe we can build a thriving company with our portfolio of wholly-owned assets, targeting large hospital and specialty-based indications. This is an exciting time for Portola as we start to prepare for the potential commercialization of our first product and our second product sooner after. We are in a unique position to leverage the clinical and commercial synergies between betrixaban and andexanet, two potentially groundbreaking products and to achieve success in the multibillion dollar anticoagulant market.

In addition, we're making important progress to advance a few of the targeted therapies in blood cancers with our dose Syk JAK inhibitor. We're really keenly focused on execution and we look forward to presenting data from all of our programs this year and next year and also into 2016.

Now we’ll open the call to questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from the line of Jason Kantor with Credit Suisse. Please proceed.

Jason Kantor - Credit Suisse

Thanks for taking my question and congratulations on the progress across programs. I had two questions, first on cerdulatinib you mentioned a market opportunity of $2 billion. I was just wondering if you can help better define what exactly you see is the opportunity there? What line of therapy and what indications and if you’re going after specific mutations what frequency do you think that those are existing in the population?

And then separately you talked about developing a statistical analysis plan for the APEX study. I guess I am wondering, how should we be thinking about that are you looking to add additional to primary endpoints or change the analysis in a way that you might get to the data earlier or what are you trying to signal here? I am a little bit unclear on that.

Bill Lis

Yes. So first of all, Jason, those two really good questions. So, first let me answer the question on cerdulatinib where we’re really focused on the patient that has specific mutation so either pre-existing mutations and the DLBCL patient populations I think John has discussed this previously with you Jason those with the NFkB driver mutations where we’ve shown in cell lines we have activity. And then also in patients that had an acquired mutation to possibly ibrutinib as it becomes more of a current standard care in chronic lymphocytic leukemia. As we start to look at those patient population and do estimates and really what we do is we take some estimates based on what's in the report and in literature and then what’s been seen in similar categories. For example, we saw for example with Gleevec, what percentage of patients had an active mutation and where a follow on agent was able to shown activities.

So with that kind of the background and that's really where we focused first. And then the question is, can we get to the market first there and then maybe expand. But if you just use those two premises which have come up with potentially in diffuse large B-cell lymphoma maybe about 25,000 patients within addressable market. And then in chronic lymphocytic leukemia where PI3 kinase inhibitor and potentially BTK inhibitors will be predominant about 20,000 patients and that's really -- and then you put a relative price on it, that's consistent with the pricing today therapies and that's where you come up with this addressable market.

Does that makes sense. I mean.

Jason Kantor - Credit Suisse

Yeah. And do you think that you’d be moving forward just with a Phase II program at some point that would be specific selection of patients with these acquired or pre-existing biomarkers so we can get some…

Bill Lis

Okay. I mean that's our goal. John has given a little bit of flavor. I mean we still some decisions to make but that's really the goal, maybe Johnnie you can talk to how…

Dr. John Curnutte

Yes, Jason. That is our thinking and certainly where we are right now is we're still -- we've still not achieved maximum tolerated dose which is good news, so we're still dose escalating in our Phase I study. And of course getting all the PK and very importantly the PD data, so we're not yet at that point Jason where we're able to sit down or make that final decision about the expansion cohort, what would they look like et cetera. But what certainly is on our shortlist and what drove this, the project and where these in vitro data with the cell lines including some of the data we're going to be showing that ASH in form of biology meeting in another week. That continues to point toward DLBCL to those DLBCL patients that have these driver mutations and where the cerdulatinib appears at least in vitro, they have a special set of activities that you don't see with the other agents.

So that’s certainly one and you’ve seen the other data obviously in the relapsed ibrutinib patients in vitro or ex- (inaudible) data where we took the primary malignant lymphocytes and showed we could stop proliferation. So those right now, if we had kind of predict would be on our ultra-shortlist of areas we would want to expand into and our subsequent work.

Bill Lis

John, I think it’s safe to say, I mean we can do this. You know now Jason I think you know this as well, we can do some of the generic screening, we can do some other (inaudible) to narrow in these patients. So I think for us we're still trying to make a determination, it's maybe what percentage of patients or operationally just how we go about that. Is that fair to say, John.

Dr. John Curnutte

Absolutely, yes Bill.

Bill Lis

Yes.

Dr. John Curnutte

Right.

Bill Lis

So that's …

Jason Kantor - Credit Suisse

And on the plan?

Bill Lis

Yes. So that's another great question. So what we've done is, so as you know we've been focused on the D-dimer patients in age greater than 75 patients from the start. We mentioned all the letters we might get finishing those I think John mentioned, his article, he is on our Executive Committee and then other numbers of our Executive Committee really published that paper on D-dimer. So we've been focused there, we've had discussions with the agencies FDA, EMA. What's interesting is since we started the clinical trials two things happened Jason and that is one there has been a guidance document that puts out we can send you a copy of it’s called a draft guidance document for industry enrichment strategies for clinical trial and it really says companies have to start moving towards biomarkers in ways to enrich population to find out those that have the greatest benefit. So once that was published it enhanced our discussions with the FDA.

The other similar thing that happened is that you may know XARELTO was approved not in the United States as you know, it’s still undergoing review and some challenges but outside the United States the EMA took a look at patients with a positive biomarker that being (inaudible). So a different population, a different blood market but Factor Xa inhibitor stays and they said we are going to approve you just for these particular patients. So that’s where the majority of the benefit is derived.

And so all we said is as we go through our final statistical plan, it’s clear that the agencies want to look at the overall population and then they are going to want to look at specific population that we are studying. And so then statistically how do we go about that. I think you made some inferences as to maybe how you would do that, and I think we are just finalizing that now. But it’s clear both agencies have a big interest there. We have had an interest from the start. The good thing is as you know as we stratified based on these patients they prospectively are enrolled in the clinical trials using these biomarkers. And this is unique. This is not what has been done in the past.

And so I think it becomes a little bit collaborative for us to start talking to the agencies and say okay how statistically are we going to take a look at the final statistical plan and the data release. And that’s about what I can say now and I think we’ll when we finalize this towards the end of the year we’ll just let everybody know some of the more of the specifics. But the whole statistical analysis plan as you know this is pretty, it’s kind of customary the way we are doing it. And it is usually done around this time of the clinical trial anyway so there is nothing unusual about the timing of what we are doing maybe what the end result there maybe, but we’ll let you know by the end of the year. Does that answer your question?

Jason Kantor - Credit Suisse

Alright. Thanks.

Operator

Your next question comes from the line of Geoffrey Peorges with Sanford C. Bernstein. Please proceed.

Geoffrey Peorges - Sanford C. Bernstein

Yes, thanks very much for taking the question and congratulations also on the progress. John, Bill, I wonder if you could talk a little bit more about where you are on manufacturing, specifically try to give us more color what you think your number of patients or number dose units that you could supply in ‘16 assuming the regulatory timeline you outlined and in 2017, 2018 before you transition to the Lonza process.

And then Bill, if you could comment a little on your thoughts on the cost of goods and the pricing given that you are going to have such small scale volume in that context.

And I just wanted to follow up John your comments on APEX, if I could, but maybe we can talk on andexanet and manufacturing first?

Bill Lis

Yes, so I will make comment first. But I think with respect to let’s say, which one should I take first, supply. Geoff is that, I think what you asked. I think the best way to answer this is that we think we can address the U.S. market at launch especially and I think we've had the discussion before. So actually we focus on what we call the massive bleed and the urgent or immediate surgical procedures.

So that's where we're focused right now. If you start to take a look at some of those numbers Geoff, so you saw that there was 20,000 patients currently on a Factor Xa inhibitor that are bleeding. And then if you take a look, you'll say, okay, those are the immediate one, which ones are the massive and the immediate ones, tt's a certain percentage of those, there of that variety. So that's how we tend to look at it. And then as we expand CMC into 2017 and 2018, that’s when we start being able to have supply for kind of a broader range of major bleeds, maybe all the admitted hospital patients, some percentage of the admitted hospital patients and then globally. I think if you look at your own guidance and we look at the consensus but I think the best way to answer is, to put this more broadly for investors at this point is if we look at consensus for what you all have put down for revenue, we think we’re well within that guidance. So, if you think about that as a number of patients that you can treat, I think that’s where we’re very comfortable, not only in 2016 consensus, 2017 and certainly 2018 consensus. I think right now that’s probably the best way for me to answer that question.

I think what will help answer that question more thoroughly, Jeff, is going to be what does your label look like? And they’re going to give us a broader label or more narrow label because we’ve only -- we get our conditional approval based on healthy volunteer data in just the beginning of the Phase 4 trial data, but we’re just going to get bleeding patients or we’re going to get bleeding and surgery patients first or do we have to wait until we collect more additional data. So I go with the (inaudible) statement of what I said first, and then with the caveat that there is still a few things that are little bit unknown from the data including the ultimate safety profile as well. I think we feel pretty confident right now that we would get as far label as we would want but I think that remains to be seen until we produce the full data set. So, I know that’s a long way of answering your question with respect to supply. The second part of the question that you asked I think was from a pricing standpoint.

Geoffrey Peorges - Sanford C. Bernstein

Yes, the overall economics. Yes.

Bill Lis

Yes. I think the way we see pricing again is still we’ve seen, we believe we have a lot of leverage here. And that's why we’ve become very comfortable with the consensus on revenue for the initial launch years and out launch years. And we continue to look at this pricing based on what the cost for -- what’s the cost of a bleed. And as you know, the publish data thus far from the Phase 3 trials is around $50,000. It’s interesting. If you start to look at we now call a subset of the bleeds, the massive bleeds; now, 15% to 20% of them are costing hospitals over $100,000 right now. These are the bleeds (inaudible) and still on Lovenox.

So, we think we have a lot of pricing leverage. And I think we're going to wait and see the final data set and to see what our final label looks like. Because the nice thing is, is we think we have some leeway here as to if have a narrow indication, we're still good with consensus revenue, if we have more broad, maybe if the pricing is little bit different, we're still comfortable with it.

So, I think that's how we're looking upon it today and probably next year at this time is when you're going to start to get from us a lot more detail about that.

Geoffrey Peorges - Sanford C. Bernstein

Great, Bill. Thanks. Can I just ask John a full of question about his comments on APEX? Specifically, you mentioned the statistical analysis. I know that something still to come by the end of the year but would you envisage for example if the study didn't hit its primary endpoint in the total population but did hit statistical significance in either the elevated D-dimer patients and/or the over 75 patients, would that still be fileble an approval given your discussions with the agencies?

Bill Lis

Yes, Jeff, let me take that. There is a good probability and possibility of that. And again we go to the guidance document. We’ve had some initial discussions with the agency and then we go to XARELTO and our discussions -- we go to our discussions with EMA. And what they did with XARELTO and ACS, remember, in ACS [serotonin] were capture, but that was looked at pro-retrospectively not prospectively as we're doing in it.

And as you remember the FDA and the EMA had a little bit issue with ACS. They said where is the net clinical benefit? Is it as good as you said it is? And then in the United States, they continue to say well we want to see some more data or I think J&J and the agency are still just having those discussions.

But in the EMA, they said, we can make this a little bit easier. We'll look at and you're going to look at the briefing documents and if you look at the communications on it, they said, we’ll look at [serotonin] only patients. And we see that that patient population had a greater net clinical benefit, you get your approval there. The good thing for us is, if it was the total population or the D-dimer only patient population, it’s still significant commercial opportunity for us, so maybe one that maybe increases our probability of commercial success.

So that's the way we answer your question. What’s interesting is, this is kind of new data. The FDA just put out this guidance document, discussions around these things, have just started more recently versus in the beginning of its clinical trial, same thing with the EMA. They made their decision on ACS after we started our clinical trial as well. So it’s kind of a new dawn and a new day and maybe we were just skating to the park. So I don't think we want to say too much more at this point. I think probably by the end of the year we will be in a much better position to say more about it. But your questions are again spot on. John, do you want to add…

Geoffrey Peorges - Sanford C. Bernstein

Thanks very much.

Dr. John Curnutte

No. That's fine Bill. Good.

Operator

Your next question comes from the line of Phil Nadeau with Cowen & Company. Please proceed.

Phil Nadeau - Cowen & Company

Good afternoon thanks for taking my questions. First the ANNEXA trials depending on which sentence I read in the press release, it looks like either we are going to get data both A and R by the end of the year or just A? But then you have to clarify will we get data from both of those around the same time or will R be more like a 2015 event?

Dr. John Curnutte

Good hi Phil John here. So we will definitely have data for ANNEXA-A and that will be -- we are planning on releasing all of that data for the first part of the next A remember that’s the bolus only portion. The ANNEXA-R we’ll certainly have data by the end of the year but whether or not we’ll have the right forum to share that data, we’ll have to kind of see the exact timing. So that’s the clarification there. And then what we have indicated is that for the part two of both studies, the A and the R which is as you know the Bolus Plus Infusion those data will be coming out in the first half of 2015. So I hope that clarifies it a little bit.

Phil Nadeau - Cowen & Company

Yes that’s helpful. And what is the what’s the forum for the A data that you are going to release, is that just going to be a press release or there something else that you are targeting?

Dr. John Curnutte

We are looking for an opportunity presented at a international meeting.

Phil Nadeau - Cowen & Company

Okay.

Bill Lis

Yes I think so it’s Bill, I think again as you think John located with advances around A and R you know what we like to do, we like to find a really nice forum scientific Congress to present these data and the question is that they are material data than we could have we’ll some press release and some guidance around it and then hopefully the presentation will follow up. But it’s pretty special data to it we have to obviously balance our responsibilities from a dual standpoint and disclosure and then also the right scientific forum to present. So, I think that's what you are going to see, I'm surprise to say it John that will have data from both, it is stage though remember just like the Phase 2 study, one does come month or so after it, does that answer your question more completely?

Phil Nadeau - Cowen & Company

Yes, that's very helpful. Thank you. And my second question on andexanet is on confirmatory study. Have you made progress in narrowing down the indication and potentially end points for that trial? Any more information -- can you give us any more information on the likely designed?

Dr. John Curnutte

Right. So, I think as we have said before Phil, we have had verbal agreement with the FDA on the indication the design and whatnot of the study, including the end points, the primary and secondary end points. And we have now taken all of that advice, all are those discussions, we distilled it into a protocol. And we have now shared that with the FDA.

So, we don't have anything further to say right now. Because obviously we need to know parse through the written documents, the expensive protocol that we've written. But it’s surprising to say that as we said publicly we actually have come, I think to a very good place with the agency in terms of its design, it's medical bleeding and I think end points that they are very comfortable with Haemostatic end points. Remember the goal of the study is twofold, one is to get that co-relation between that drop in the anti-Factor Xa that has been the hallmark of all of the Phase 2 studies that dramatic in deepdrop in anti Xa levels and correlate that with the haemostatic control that’s the key confirmatory piece. And of course in the study it’s the ability to now assess the safety of the drug which has been terrific in healthy volunteers now to extend that to acute bleeding patients.

Bill Lis

Yes. I think the take on message is that we’re very pleased with our collaboration the breakthrough that the nation has certainly been helpful and where it puts us on from an overall standpoint from a timeline standpoint as well, we’re very confident we’ll start the trial on time and we’re real confident that will fulfill our requirement for the BLA not only for the Phase 3 study but for the post marketing or Phase 3b study as well so.

Phil Nadeau - Cowen & Company

Okay, great. One last question for Mardi, Mardi your expenses were a bit lower in Q2 than we’ve been modeling, we do model at pretty aggressive ramp particularly on the R&D expenses in the back half of the year. Is that reasonable given where you are with the trials or is there any reason to believe that expenses could be somewhat lower than we project?

Mardi Dier

No, no, we think the expenses are as we that will follow the range of a given guidance at the year-end earnings call and we’re still on track for that. So, you’re still going to see some ramp in both the Phase 3 study for andexanet and as we continue to ramp in the last half of enrollment for APEX, so I think your assumption is fair.

Phil Nadeau - Cowen & Company

Okay, great. Thanks for taking my questions.

Operator

(Operator Instructions). There are no further questions. The Q&A portion of the call is now concluded. I will now like to turn the call back over to Bill Lis for closing remarks.

Bill Lis

Again, so I thank everybody for joining us and your interest in Portola. We’ll look forward to seeing you at number of scientific congresses coming up with European Society of Cardiology Conference in Barcelona at the end of month, American Heart Association meeting in November or ASH in December. Hopefully we'll have some important data presented to you at those times. So, thanks everybody. Have a nice day.

Operator

This concludes today's second quarter 2014 financial results conference call for Portola Pharmaceuticals. You may now disconnect.

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Source: Portola Pharmaceuticals' (PTLA) CEO Bill Lis on Q2 2014 Results - Earnings Call Transcript

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