The complaint asserts claims for violations of the Securities Exchange Act of 1934 against Portola Pharmaceuticals, Inc. (“Portola,” or the “Company”), and certain of its senior executives. The complaint also brings forth claims for violations of the Securities Act of 1933 against Portola, certain of the Company’s officers and directors, and the Company’s underwriters in connection with the Company’s August 2019 secondary stock offering (the “Offering”) (collectively, “Defendants”). The complaint alleges that Defendants made false and misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired Portola common stock during the Class Period, including shares acquired pursuant or traceable to the Offering.
Portola is a biopharmaceutical company that develops and commercializes treatments for thrombosis (clotting of the blood), other hematologic (blood) diseases, and inflammation. Portola’s main product, Andexxa, is used for patients treated for blood clotting when anticoagulation needs to be reversed due to life-threatening or uncontrolled bleeding. During the Class Period, Defendants touted Andexxa’s revenues and prospects, calling it one of the most successful drug launches in the past 30 years and emphasizing the “strong demand for Andexxa.”
However, unbeknownst to investors, the Company’s statements concerning Andexxa were false and misleading. Rather than having “strong demand,” Andexxa’s astronomically high wholesale price of up to $49,500 per dose forced many of Portola’s clients to curtail their use of Andexxa after performing utilization reviews of the drug’s cost-effectiveness. This caused Andexxa’s quarterly sales growth to Tier 1 hospitals, Portola’s most important accounts, to collapse and become “flat.” Furthermore, Portola manipulated Andexxa net product revenue by understating its reserves for product returns.
The truth began to emerge on January 9, 2020, when Portola announced preliminary revenues that fell short of analyst expectations by a wide margin and the Company was forced to admit that demand for Andexxa was falling dramatically due to the utilization reviews and the short shelf life of an earlier version of the product. In addition, Portola disclosed that it was taking a substantial charge of $5 million for unused and returned Andexxa previously recognized as revenue and incorporated into the Company’s revenue growth numbers. On this news, the Company’s share price fell approximately 40%. On February 22, 2020, the Company held a conference call revealing in more detail the serious problems with customers’ adoption of Andexxa and confirmed investors’ concerns after the Company’s preliminary announcement in January. On this news, the Company’s share price declined approximately 19%.
On April 22, 2020, the Court appointed Alameda County Employees’ Retirement Association as Lead Plaintiff. Saxena White serves as counsel for Additional Plaintiff Oklahoma Firefighters Pension and Retirement System.
On August 31, 2021, Lead Plaintiff filed the third amended consolidated complaint to include new, detailed allegations to support loss causation. Defendants’ filed their motion to dismiss on September 21, 2021.
On January 20, 2022, the Court denied Defendants’ motion to dismiss the third amended consolidated complaint, finding Lead Plaintiff adequately pled loss causation and that the “Company’s disclosure on February 28, 2020” amounted to “a corrective disclosure of its prior 2018 revenue figures.” Additionally, “the statements identified in the complaint leading up to that date . . . partially reveal[ed] the truth about” the Company’s “noncompliance with GAAP reporting rules.”
On February 17, 2022, Lead Plaintiff filed the motion for class certification. The briefing schedule for this motion was completed on June 2, 2022. A hearing on the motion for class certification was scheduled for July 7, 2022, however on June 9, 2022, the parties filed a stipulation to vacate the hearing, having agreed to settle the case for $17,500,000.
On September 19, 2022, Lead Plaintiff filed the motion for preliminary approval of settlement. On October 31, 2022, the Court issued an order preliminarily approving the settlement. Briefing in support of final approval is due on January 26, 2023, and the Court has set a final approval hearing for March 2, 2023.
