Portola Pharmaceuticals Inc (NASDAQ:PTLA) is riding high on the back of a couple of key announcements late this week. The company is up close to 10% on February, and more than 20% year to date. The most recent gains derive from two developments that – at first glance – seem somewhat unrelated, but which are likely tied in to one another to a certain degree. We’ll get in to why and how shortly, but first, let’s kick things off with an introduction to Portola.

The company is a development stage biotechnology entity with a focus on the production and – eventual – commercialization of hematologic and inflammatory conditions. The company’s lead target indication, and the one that will account for the majority of this discussion, is called betrixaban. It’s targeting a condition called venous thromboembolism (VTE), but not as a responsive therapy; instead, through what’s called prophylaxis. For those not familiar with this term, it’s a medical jargon way of describing a treatment that aims to prevent a condition before it develops. With a condition like VTE, there are certain indicative factors that point towards a person that might have a higher chance of developing the condition. As such, Portola is targeting these individuals (acutely ill patients) with its prophylaxis betrixaban.

As a quick note, VTE is the formation of blood clots in the vein. Betrixaban is an anticoagulant, so it aims to prevent blood clots by thinning the blood.

So what is the latest news?

The company just reported that the FDA has informed it that it does not plan to hold an advisory panel meeting to discuss the drug. In its release detailing the announcement, the company has painted this development in a positive light – essentially, that because th agency doesn’t need a panel’s input, the chances of approval are higher. That’s sort of true, and sort of not. It means the agency doesn’t have any major uncertainties surrounding the drug’s safety or efficacy (if it did, it would bring these in front of the panel). That’s the good side of the story. The not so good side is that just because it doesn’t have major uncertainties, doesn’t mean there are no factors that might stop it giving the drug a regulatory green light.

Anyway, markets are leading towards the positive inference, and if we were forced to come down on one side of the fence or the other, we’d probably do the same. The data is strongly supportive of efficacy, and in this acutely ill target population (so patients that have had strokes, cardiovascular events, that sort of thing) there is an unmet need. If we were to come up with a negative point, it would be that this group have higher safety concerns, and this will play into the FDA’s decision.

Anyway, the PDUFA date for the drug, which is under priority review, comes in on June 24, 2017. Let’s see how it plays out.

Looking at the second announcement, the company just reported that it has entered into a $150 million royalty agreement with HealthCare Royalty Partners for the development and commercialization of AndexXa (andexanet alfa), a drug candidate for Factor Xa inhibitors. This is the same sort of MOA as the above discussed betrixaban but incorporated into a different asset. Basically, the terms of the deal will Portola pick up $50 million cash (this is already in the bag) and then become eligible for a further $100 million cash tied to certain development milestones (but primarily linked to approval of the drug when it comes up for PDUFA).

At this end of the biotechnology space, and there are some that will argue that Portola’s circa $1.5 billion valuation excepts it from a small cap biotech classification, but for us this is far from true, capital is king. Company’s either raise cash through equity issue, or form partnerships to fund development. The former is dilutive, and as such, negative. The latter is not always ideal (a company will generally have to give up some rights to forward earnings) but it is not dilutive, and as such, is preferable to shareholders.

That’s why this company is up right now, and why market sentiment looks set to maintain a floor on these gains near term.