Saturday, April 13, 2013

Portola Pharmaceuticals Files For A $150 Million IPO, About 18 Months After End Of Merck's Betrixaban R&D Support

To be clear, I think Portola's future is bright. Even so, I can now whole-heartedly applaud the early 2011 Whitehouse Station decision to terminate its R&D relationship with Portola, now that all the material facts are being made public -- as Portola re-files with the SEC -- for an IPO that's been in draft form since December of 2012.

Just for a sense of scale, here -- in 2010, Merck's payments to Portola were 76 percent of Portola's total revenue; in 2011 that declined to 40 percent (due to agreement termination, per page F-10 of Portola's SEC filing of Friday). To be sure, Portola has other signifcant collaborators now -- including Lee's Pharmaceuticals (based in the UK), but it sure looks like Merck made a smart decision to tie this one off early. It could have cost Merck a half-billion dollars, had it run its full course.

From Portola's SEC Form S-1, filed Friday, then -- a salient bit:
. . . .In March 2011, we [Portola] agreed to a plan for Merck to return to us all rights to Betrixaban and terminate our agreement with Merck effective September 30, 2011. In connection with the termination of our agreement with Merck, we recognized revenue of $8.3 million, consisting of $5.3 million of upfront license fees and $3.0 million for reimbursement of research and development expenses. Our total Merck revenue for 2011 of $31.4 million included the foregoing amounts, as well as an additional $16.1 million of upfront license fees and $7.0 million for reimbursement of research and development expenses. We have no further performance obligations under our agreement with Merck. For 2010, we recognized total revenue from Merck of $26.7 million. . . .

As a result of the termination of the agreement, all remaining deferred revenue was recognized immediately, as no further performance obligations remained upon termination. As of the time of termination, no milestones had been achieved and no royalties had been triggered under our agreement with Merck. . . .
We will keep you posted, but as you can see from the SEC filing, the usual suspects are named as the deal's underwriters.

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