Sunday, September 27, 2015

FDA Nominee Served on Portola Pharmaceuticals Board

President Obama nominated Dr. Robert Califf to serve as head of the Food and Drug Administration (FDA).  Califf served on the board of directors for Portola Pharmaceuticals for three years.  His Portola bio stated:

Robert M. Califf, M.D. Robert Califf, age 63, has served as a member of our Board since July 2012. He has held various academic positions at Duke University Medical Center, including Vice Chancellor for Clinical and Translational Research since July 2012, Professor of Medicine since 1995 and Vice Chancellor for Clinical Research from July 2006 to June 2011. Dr. Califf was the founding director of the Duke Clinical Research Institute. He also currently serves as co-chair of the Clinical Trials Transformation Initiative, a partnership focused on improving the clinical trials system. Dr. Califf holds a B.S. in Psychology and an M.D. from Duke University. Because of Dr. Califf’s expertise in cardiology, clinical research, translational medicine and regulatory affairs, we believe he is able to make valuable contributions to our Board.
Dr. Califf earned $245,000 in director compensation in 2013 and $260,000 in 2014.  That $500,000 doesn't include half a year's board pay from 2012.   As of March 2014 Dr. Califf owned nearly 25,000 shares of Portola.  He resigned from the board January 26, 2015 to join the FDA as FDA Deputy Commissioner for Medical Products and Tobacco.  Portola closed at $29.64 a share that day.  Friday's close was $43.78.

Califf exercised board oversight for three share offerings in his short time on the board.  Portola went public in May 2013 garnering $131 million.  Their follow on public offering in October/November 2013 added another $121 million.  Did any board members did sell their pre-IPO accumulated shares in the follow on public offering?

We did not receive any proceeds from the sale of common stock by certain of our existing stockholders in the follow-on public offering. 
It's not clear which directors, if any, sold pre-IPO shares in this offering.  Another October 2014 stock offering produced $175 million for Portola.

The net proceeds from the offerings described above have been used and will be used, together with our cash, cash equivalents and investments, to fund continued advancement of our Betrixaban, Andexanet alfa and Cerdulatinib programs, anticipated to be approximately $200.0 million, with the balance to be used to fund working capital, capital expenditures and other general corporate purposes, which may include the acquisition or licensing of other products, businesses or technologies.
Under revenue Portola's 10-K stated:

Since inception, in connection with our agreements with Biogen Idec, Merck & Co., Inc., Novartis, BMS and Pfizer, Bayer and Janssen, Daiichi Sankyo and Lee’s, we have received payments in the aggregate amount of $219.7 million, as initial upfront payments, contingent consideration and a milestone payment of which $6.5 million is subject to a 50% refund provision, pursuant to our Phase 3 clinical collaboration agreement with BMS and Pfizer.
It's an increasingly complex healthcare world but I wonder about a simple question.  Should Dr. Califf be confirmed by the Senate what pressure FDA staff might feel to please their new boss?

Naked Capitalism did a fine job exploring Califf's ties and possible conflicts of interest outside Portola.  I chose to mine this one role.  I consider it significant as the board room is the locus of power, that along with the executive suite, interacts with political and regulatory bodies for the advancement of company priorities, which is overly characterized by greed in our wider corporate world.  In my experience healthcare is no exception.