Sympathy Move: Portola Upgraded After Competitor Reports Sour Data

Portola Pharmaceuticals Inc PTLA, a biotech focusing on thrombosis, other hematological disorders and inflammation, received a one-notch upgrade from Credit Suisse. 

The Analyst

Analyst Vamil Divan upgraded Portola from Underperform to Neutral and raised the price target from $28 to $34.

The Thesis

At the European Society of Cardiology meeting, Johnson & Johnson JNJ and Bayer AG (ADR) BAYRY reported disappointing data for Xarelto, an oral anticoagulant medication tested in an acute medically ill population, Divan said in a Sunday note. (See the analyst's track record here.) 

The negative data from the MARINER study derisks Portola's Bevyxxa by putting out a potentially strong rival in the post-hospital discharge market for the foreseeable future, the analyst said. 

Portola may now have to build the market on its own without any assistance from Johnson & Johnson, Divan said. The adoption rate is likely to be slow, he said. 

Even after according Bevyxxa a 100-percent share, Credit Suisse trimmed its peak sales estimate for Bevyxxa from $550 million to $400 million, citing slower market penetration.

"We still await better commercial execution from the Portola team but are comfortable moving to a Neutral rating and a $34 target price," Divan said. 

Credit Suisse sees further longer-term potential upside if Bevyxxa and Andexxa achieve the level of commercial success the sell-side firm previously believed was possible.

Credit Suisse maintained its 2018 loss per share estimates for Portola and widened its loss estimate for 2019 and 2020.

The Price Action

Portola shares were down 2 percent at $27.60 at the time of publication Monday. 

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