NEW YORK, Feb. 28, 2020 /PRNewswire/ -- Today, prominent investor rights law firm Bernstein Litowitz Berger & Grossmann LLP ("BLB&G") filed a class action lawsuit for violations of the federal securities laws in the U.S. District Court for the Northern District of California against Portola Pharmaceuticals, Inc. ("Portola" or the "Company") and certain of the Company's senior executives and directors (collectively, "Defendants") on behalf of investors in Portola common stock between January 8, 2019 and February 26, 2020, inclusive (the "Class Period").
BLB&G filed this action on behalf of its client, the Southeastern Pennsylvania Transportation Authority, and the case is captioned Southeastern Pennsylvania Transportation Authority v. Portola Pharmaceuticals, Inc., No. 3:20-cv-01501 (N.D. Cal.). The complaint is based on an extensive investigation and a careful evaluation of the merits of this case and asserts claims arising under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. A copy of the complaint is available on BLB&G's website by clicking here. This case is related to a previously-filed securities class action pending against Portola captioned Hayden v. Portola Pharmaceuticals Inc., No. 3:20-cv-00367 (N.D. Cal.).
Portola's Alleged Fraud
Based in South San Francisco, California, Portola is a biopharmaceutical company that develops and commercializes novel therapeutics for thrombosis, other hematologic disorders, and inflammation. Portola's lead drug is Andexxa. Andexxa reverses the effects of two kinds of blood thinners, apixaban and rivaroxaban, thereby restoring a patient's clotting ability—with potential applications including when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding. Andexxa gained FDA approval for a limited launch in May 2018, and for a broad commercial launch in December 2018, which Portola began on January 8, 2019. Expected to be a blockbuster drug for Portola, Andexxa comprises nearly 100% of the Company's revenues and is vital to the Company's financial performance and future business prospects.
The complaint alleges that, throughout the Class Period, Defendants falsely touted the drug's potential, claiming "strong demand" for and deepening utilization of Andexxa by hospitals and other healthcare providers. These statements had their intended effect and the price of Portola shares rose significantly during the Class Period. In addition, while Portola shares were trading at these elevated levels, on August 13, 2019, the Company conducted a public offering of 9.24 million shares priced at $28 per share, amassing over $250 million in proceeds. In reality, Andexxa's astronomically high wholesale price of up to $49,500 per dose prevented many of Portola's clients from adopting the drug. Consequently, a number of Portola's first Andexxa customers—"Tier 1" hospitals that had received the drug as early as May 2018 as part of the limited launch—had drastically curtailed use of Andexxa following utilization and budget reviews. As a result of Defendants' misrepresentations, shares of Portola's common stock traded at artificially inflated prices during the Class Period.
The truth began to emerge on January 9, 2020, when Portola announced the Company's financial results for the fourth quarter and full year 2019 which missed consensus estimates by 30%. The Company stated that it expected global net revenues from Andexxa to be approximately $28 million for the fourth quarter 2019 and approximately $111 million for the full year 2019, significantly below consensus estimates of $41.2 million for the fourth quarter. The Company attributed the negatively impacted net sales of Andexxa in the fourth quarter to "flat quarter over quarter demand due to a decrease in utilization" by hospital customers "following drug utilization reviews in an effort to manage pharmacy budgets." Portola also attributed the poor results to a $5 million reserve adjustment for "short-dated product," meaning that a substantial amount of expiring Andexxa inventory had been returned by customers. On a conference call held that day, the Company's CEO, Defendant Scott Garland, described "reduction in reordering post utilization review" by "early adopting Tier 1 accounts."
Then, after the close of market on February 26, 2020, Portola announced its financial results for the fourth quarter and full year 2019 and held a conference call that revealed in more detail the serious problems with customers' adoption of Andexxa. Specifically, Portola reported a fourth-quarter loss of $96.7 million, or a loss of $1.24 per share, compared to a loss of $88.5 million, or a loss of $1.34 per share, in the same period a year ago—falling far short of analyst estimates of a loss of $0.84 per share. Portola disclosed that its outsized loss for the quarter encompassed a $27.5 million charge arising from its decision to discontinue operations related to the Bevyxxa drug, a secondary product of the Company. On a conference call held that day, Defendant Garland revealed that the Company was forced to cease Bevyxxa commercialization efforts and undertake an internal restructuring in order to focus its efforts on handling the problems related to Andexxa. As a result of these disclosures, the price of Portola common stock declined precipitously.
Pursuant to the January 16, 2020 notice published in connection with the Hayden action, under the Private Securities Litigation Reform Act of 1995, investors who purchased Portola common stock during the Class Period may, no later than March 16, 2020, seek to be appointed as Lead Plaintiff for the Class. Any member of the proposed Class may seek to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed Class.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Michael D. Blatchley of BLB&G at 212-554-1281, or via e-mail at firstname.lastname@example.org.
BLB&G is widely recognized worldwide as a leading law firm advising institutional investors on issues related to corporate governance, shareholder rights, and securities litigation. Since its founding in 1983, BLB&G has built an international reputation for excellence and integrity and pioneered the use of the litigation process to achieve precedent-setting governance reforms. Unique among its peers, BLB&G has obtained several of the largest and most significant securities recoveries in history, recovering over $33 billion on behalf of defrauded investors. More information about the firm can be found online at www.blbglaw.com.
Michael D. Blatchley
Bernstein Litowitz Berger & Grossmann LLP
1251 Avenue of the Americas, 44th Floor
New York, New York 10020
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SOURCE Bernstein Litowitz Berger & Grossmann LLP