FDA Risk For Portola Pharma's Thrombosis Treatment Sends Morgan Stanley To Sideline

Portola Pharmaceuticals Inc PTLA plunged Thursday after the release of its fourth-quarter results. The company reported a narrower-than-expected loss for Q4 and provided a corporate update.

The Analyst

Morgan Stanley analyst Matthew Harrison downgraded shares of Portola Pharma from Overweight to Equal-weight and lowered the price target from $65 to $30, suggesting roughly 30-percent downside from current levels.

The Thesis

Portola indicated that the FDA could require a randomized study for AndexXa, its antidote for Factor Xa inhibitor treated patients with life-threatening bleeding, Harrison said in a Thursday note. (See the analyst's track record here.) 

The analyst construed the statement as suggesting the study may be required after FDA approval. 

Following the submission of additional data on AndexXa at the behest of the FDA, the regulatory agency extended the review period for the biologics license application by 90 days, moving the PDUFA date from Feb. 3 to May 4. 

"If [the] FDA requires a pre-approval randomized study, the AndexXa program would be delayed multiple years," Harrison said. 

"Nonetheless, given the limited information and significant setback a pre-approval trial would represent, we see no other option than to move to the sidelines pending clarity from the FDA." 

The firm views further FDA communication and data from the ANNEXA-4 study on March 12 as Portola's next catalysts.

The Price Action

Portola shares were up about 30 percent over the past year through Wednesday.

The stock was down 26.18 percent at $31.24 at the time of publication mid-morning Thursday. 

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