On March 1, 2019 Portola Pharmaceuticals, Inc. (Nasdaq: PTLA) reported financial results for the three and twelve months ended December 31, 2018 and provided a corporate update (Press release, Portola Pharmaceuticals, MAR 1, 2019, View Source;p=RssLanding&cat=news&id=2389690 [SID1234533860]).

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"Today’s positive opinion on Ondexxya from the Committee for Medicinal Products for Human Use (CHMP) builds upon the momentum established in 2018, which included the U.S. Food and Drug Administration (FDA) approval of our breakthrough-designated, Factor Xa inhibitor reversal agent Andexxa, followed by three consecutive quarters of strong revenues and the approval of our Generation 2 manufacturing process. We also continued the build-out of our experienced leadership team and advanced our Syk/JAK inhibitor cerdulatinib," said Scott Garland, Portola’s president and chief executive officer. "With the full commercial launch of Andexxa now underway in the United States, the pending approval from the European Commission anticipated in early May, and the further extension of our cash runway, we look forward to continuing our positive momentum through 2019."

Quarter Ending Dec. 31, 2018 and Full Year 2018 Financial Results

Total revenues for the fourth quarter of 2018 were $15.3 million, compared with $9.8 million for the fourth quarter of 2017. This includes $14.0 million in net product revenues from Andexxa sales, $35 thousand in revenues from Bevyxxa sales and $1.2 million in collaboration and license revenues. Total revenues for the full year 2018 were $40.1 million, compared with $22.5 million for the full year 2017. Please see the tables at the end of this press release for a detailed breakdown of revenues.

Net loss attributable to Portola, according to generally accepted accounting principles in the U.S. (GAAP), was $88.5 million for the fourth quarter of 2018, or $1.34 net loss per share, compared with a net loss of $91.8 million, or $1.41 net loss per share, for the same period in 2017. Net loss for the full year 2018 was $350.2 million, or $5.31 net loss per share, compared with a net loss of $286.1 million, or $4.81 net loss per share, for the full year 2017. This includes the effect of two charges taken in the fourth quarter of 2018 related to the FDA approval for the Company’s Gen 2 manufacturing process. The first is a $9.2 million charge associated with the valuation of the Company equity that will be issued to Lonza, our Andexxa Gen 2 manufacturer ("manufacturing site charge"), and the second is a $10.3 million charge associated with the Andexxa Gen 1 product as hospitals transition to the Gen 2 product ("Gen 1 supply charge").

Non-GAAP net loss for the fourth quarter of 2018 was $69.0 million, or a non-GAAP basic and diluted loss per share of $1.04. For the full year 2018, non-GAAP net loss was $330.7 million, or non-GAAP basic and diluted loss per share of $5.01. Non-GAAP net loss and loss per share have been adjusted to remove the manufacturing site charge and the Gen 1 supply charge. Please see the reconciliation of GAAP to non-GAAP financial measures at the end of this release for more details.

Cash, cash equivalents and investments at December 31, 2018 totaled $317.0 million, compared with $534.2 million as of December 31, 2017.

Total operating expenses for the fourth quarter of 2018 were $102.5 million, compared with $95.7 million for the same period in 2017. Total operating expenses for the full year 2018 were $385.5 million, compared with $295.2 million for the full year 2017. This year-over-year increase was driven by the Company’s Gen 2 manufacturing expenses, the build-out of the Company’s field force, as well as the two charges outlined above in the fourth quarter.

Non-GAAP total operating expenses, which excludes the two charges outlined above, were $83.0 million for the fourth quarter of 2018, and $365.9 million for the full year 2018. Please see the reconciliation of GAAP to non-GAAP financial measures table at the end of this release for more details.

Stock-based compensation expense for the fourth quarter of 2018 was $19.8 million, compared with $10.9 million for the same period in 2017. Stock-based compensation expense for the full year 2018 was $55.4 million, compared with $43.3 million for the full year 2017. This year-over-year increase was driven mainly by the manufacturing site charge.

Cost of Sales (COS) for the fourth quarter of 2018 were $12.4 million, compared to $260 thousand for the same period in 2017. COS for the full year 2018 were $18.1 million, compared to $415 thousand for the same period in 2017. This year-over-year increase was driven by the launches of Andexxa and Bevyxxa, and the Gen 1 supply charge.

Research and development (R&D) expenses were $49.5 million for the fourth quarter of 2018, compared with $68.5 million for the fourth quarter of 2017. The decrease was driven primarily by the timing of manufacturing costs for Andexxa Gen 2 campaigns. R&D expenses were $216.2 million for the full year 2018, compared with $203.7 million for the full year 2017. This year-over-year increase was driven by expenses related to Andexxa Gen 2 manufacturing.

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2018 were $40.6 million, compared with $26.9 million for the same period in 2017. SG&A expenses for the full year 2018 were $151.2 million, compared with $91.1 million for the full year 2017. These increases were driven by the hiring of the Company’s field force to support the launches of Andexxa and Bevyxxa.
2019 Annual Financial Guidance
For the fiscal year 2019, Portola expects total R&D expenses to be between $125 million and $140 million, including stock-based compensation of approximately $22 million. Portola expects total SG&A expenses to be between $200 million and $215 million, including stock-based compensation expenses of approximately $36 million. These operating expenses are primarily for ongoing clinical trials, potential label enhancing studies for Andexxa, and support for the commercial launch of Andexxa in the U.S and launch activities in Europe.

Recent Achievements and Events

Received positive opinion on Ondexxya from CHMP.
Signed $125 million loan agreement with HealthCare Royalty Partners and Athyrium Capital Management.
Published full ANNEXA-4 study results in The New England Journal of Medicine following presentation of results at the International Stroke Conference (ISC) 2019.
Appointed 30+-year industry veteran Sheldon Koenig as chief commercial officer.
Completed cerdulatinib end-of-phase-2 meeting, which provided guidance on regulatory pathway for a peripheral T-cell lymphoma (PTCL) registrational study that is anticipated to begin by year-end.
Initiated broad U.S. launch of Andexxa following FDA approval of Gen 2 supply, and expanded sales force by approximately 40 representatives.
Upcoming Milestones

Anticipated receipt of C-code from The Centers for Medicare & Medicaid Services, allowing hospitals an additional reimbursement pathway for Andexxa.
European Commission decision on the marketing authorization application for Ondexxya expected in early May 2019.
Initiate discussions with the FDA on a number of potential label expansion opportunities including the addition of the ANNEXA-4 efficacy data, the inclusion of edoxaban and enoxaparin, and the potential initiation of a study in urgent surgery.
Conference Call Details
Portola will host a conference call today, Friday, March 1, 2019, at 8:30 a.m. ET, during which time management will discuss the fourth quarter and full year 2018 financial results, updates on the U.S. launch of Andexxa, and other matters. The live call can be accessed by phone by dialing (844) 452-6828 from the U.S. and Canada or 1 (765) 507-2588 internationally and using the passcode 6999805. The webcast can be accessed live on the Investor Relations section of the Company’s website at View Source It will be archived for 30 days following the call.

Use of Non-GAAP Financial Measures
This press release and the reconciliation table included herein include non-GAAP net loss, non-GAAP basic and diluted loss per share and non-GAAP operating expenses. The Company believes the presentation of non-GAAP financial measures provides useful information to management and investors regarding the company’s financial condition and results of operations. When viewed in conjunction with GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance and are better able to compare the Company’s performance between periods. In addition, these non-GAAP financial measures are among those that the Company uses as a basis for evaluating performance, allocating resources and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Financial Measures."