Portola Pharma Risk-Reward Is Questionable

Credit Suisse has downgraded Portola Pharmaceuticals Inc (NASDAQ: PTLA) to Neutral from Outperform on balanced risk/reward following the recovery in shares since late March.

The brokerage also cut its price target by $3 to $30 on "more conservative assumptions around the uptake of Andexanet Alfa following a series of conversations with experts in the field."

"We now assign a 40 percent POS to FDA approval of Betrixaban. We are encouraged by the totality of the APEX data and do believe the overall benefit/risk for the product is likely favorable," analyst Vamil Divan wrote in a note.

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However, the analyst continues "to believe it will be very challenging for regulators to approve the product when the only registrational study conducted for it failed to meet the primary endpoint."

The analyst also trimmed estimate for peak probability-adjusted global end user sales for Andexanet Alfa to $1 billion in 2030 from about $1.7 billion.

"Beyond Betrixaban, we believe approval for Andexanet on or before the Aug 17 PDUFA data is widely anticipated and expect initial uptake of the product will take time, limiting major upside for the stock on the news," Divan noted.

The analyst now sees 2016 loss of $4.38 a share versus prior estimate of $3.58.

Shares of Portola fell 1.27 percent to $27.15 at time of writing.