Alexion Pharmaceuticals has agreed to buy Portola Pharmaceuticals in a $1.4 billion deal that brings it a first-in-class therapy for treating life-threatening bleeding.
According to financial terms announced Tuesday, Boston-based Alexion (NASDAQ: ALXN) will pay $18 for each outstanding share of Portola (NASDAQ: PTLA). That price is a a nearly 132 percent premium to Monday’s closing price. But even though the offer values the South San Francisco-based biotech at $1.4 billion, it’s still a relative discount. Shares of Portola have been trading more than 65 percent below where they were a year ago.
Portola has won the FDA nod for two products. In 2017, the FDA approved betrixaban (Bevyxxa), an anticoagulant that blocks the blood-clotting protein factor Xa. Factor Xa inhibitors are used for reducing stroke risk and treating pulmonary embolism and deep vein thrombosis. Betrixaban’s approval made it one of several such drugs available on the market and late last year, Portola decided to discontinue the drug after failing to find a buyer.
The jewel of the Portola acquisition is andexanet alfa (Andexxa), a drug that reverses the effects of anticoagulants. An estimated 3 to 5 percent of patients treated with factor Xa inhibitors experience serious bleeding, according to an Alexion investor presentation. Andexanet alfa is the only approved factor Xa reversal agent in the US and Europe.
Portola reported that andexanet alfa generated $111.5 million in sales last year. But the drug fell short of sales expectations, and the company’s share price has suffered as a consequence. Alexion must now show that it can turn the Portola drug into a winner. The Massachusetts company calculates that the market for factor Xa reversal will grow from 17.7 million US and European patients this year to 26 million in 2025. The product is also designated by the FDA as an orphan drug, which gives it seven years of marketing exclusivity starting from its 2018 approval. Alexion CEO Ludwig Hantson said on a Tuesday conference call that the drug has the potential to become the global standard of care for patients needing to treat bleeding episodes.
“Andexxa has currently only penetrated 3 percent of its indicated patient population so there’s substantial room for growth within the existing label,” Hantson said.
The Portola products will join Alexion’s portfolio of rare disease drugs. The company’s top medicine, eculizumab (Soliris), treats paroxysmal nocturnal hemoglobinuria (PNH), a rare disease in which part of the immune system destroys red blood cells. That drug generated more than $3.9 billion in global sales last year. Alexion has also been working to build up sales of eculizumab’s successor, a PNH drug called ravulizumab (Ultomiris).
Andexanet alfa is not exactly a rare disease drug. SVB Leerink analyst Geoffrey Porges noted on the conference call that the drug is reserved for emergencies and it’s intended for one-time use, whereas patients take Alexion’s drugs chronically. But Hantson said that andexanet alfa can be sold via the hospital connections that Alexion has already established from selling its PNH drugs. He added that the Portola drug diversifies and complements Alexion’s portfolio. “The neurology aspect is who we are, hematology is who we are,” Hantson said.
In a Tuesday afternoon research note, Porges pointed to the drug’s label as a possible explanation for the drug’s poor sales. That label lacks efficacy data on the product’s ability to stop bleeding but it does carry black box warning cautioning physicians and patients that its use increases risks that include arterial or venous thromboembolism, stroke, cardiac arrest, and sudden death. He added that most factor Xa gastrointestinal bleeding can be managed by supportive care while the effect of the factor Xa-blocking drug wears off.
“This potentially less risky treatment alternative therefore reduces the likelihood that treating physicians would choose a novel agent that could paradoxically induce the type of clotting events that factor Xa inibitors were initiated to prevent in the first place,” Porges wrote.
Meanwhile, Alexion is looking ahead to bringing andexanet alfa to patients in more countries. In addition to going beyond the initial European launch of seven countries, the company also has the opportunity to bring the drug to Japan. Last month, Bristol Myers Squibb (NYSE: BMY) and Pfizer (NYSE: PFE) terminated an agreement covering the development and commercialization of andexanet alfa in Japan, which Portola says is the third largest market for factor Xa inhibitors behind the US and the five largest European countries. Aradhana Sarin, Alexion’s chief financial officer, said that Japan has 2.5 million factor Xa inhibitor patients today.
The Alexion and Portola boards of directors have approved the acquisition. The companies expect to close the deal in the third quarter of this year.