Citi Sees 'Too Much Risk' In Portola Pharma, Downgrades To Neutral

Portola Pharmaceuticals Inc PTLA's failure to “proactively mitigate risk with FDA” was the reason for the “surprising” CRL for Andexanet, despite the drug having received breakthrough designation.

Citi’s Yigal Nochomovitz downgraded the rating on the company from Buy to Neutral, while lowering the price target from $40 to $24.

Surprising CRL

A breakthrough designation is expected to accelerate interactions with the FDA. Therefore, Nochomovitz believes the CRL indicates that management “did not proactively ask FDA upfront the right questions to sufficiently identify sources of potentially incomplete or missing elements of the BLA.”

The CRL for Andexanet flagged three key areas: manufacturing, clinical data and the need for more time to review the ANNEXA-4 amendment.

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Management Not Proactive

Portola Pharma is expected to be able to resolve any lingering “noncritical” manufacturing issues that might come up during the post-approval period, although the FDA appears to need resolution now.

According to the Citi report, “Mgmt indicated this aspect of the CRL was “not too surprising” given limited data in healthy volunteers and from ANNEXA-4 for edoxaban/enoxaparin.”

The FDA asked for varying data analyses, as well as conducting additional secondary endpoint analysis.

Overhang On Stock

“Even so, we are struggling to understand why clinical data issues known or potentially knowable to mgmt were not addressed and resolved with the FDA prior to the CRL,” Nochomovitz stated.

Until there is more clarity from the FDA, the analyst expects the CRL to be an overhang.

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