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$PCRX -- A Primer on Pacira Pharma

publication date: Apr 26, 2011
author/source: Mike Havrilla
Pacira Pharma (NASDAQ:PCRX) is a specialty pharmaceutical company that completed its initial public offering (IPO) for 6 million shares @$7.00 (with 17.2 million shares of common stock outstanding) in FEB 2011 that is developing its lead product candidate EXPAREL (bupivacaine extended-release liposome injection) (300mg / 20mL) as a novel formulation of an approved drug designed to be a long-acting (72 hours vs. 7 hours for standard bupivacaine), non-opiate pain drug following surgical procedures. Below is a summary of the upcoming regulatory and clinical catalysts for EXPAREL…
1.) In DEC 2010, the 505(b)(2) NDA was accepted for a standard 10-month review by FDA w/ a PDUFA action goal date of 7/28/11…seeking approval for post-surgical analgesia (pain relief) by local administration, novel formulation of approved drug bupivacaine
2.) Expects to begin Phase 2 / 3 clinical trials during 2H11 for a nerve block indication to support a potential sNDA filing (estimated $10M cost and 18-month development timeline for this indication)
$PCRX reported total revenue in 2010 of $14.6 million (M) as compared to $15M in 2009, reflecting a decline in licensing revenue. The Company’s total operating expenses in 2010 were $36.9M vs. $43.6M in 2009, reflecting decreased R&D expenses upon completion of pivotal Phase 3 trials for EXPAREL in 2009. $PCRX ended 2010 with $64.6M in cash / equivalents and has total debt of $26.25M outstanding in the form of a term loan (Hercules Credit Facility) (other debt was converted into shares of common stock at the time of IPO).
If approved by the FDA during 3Q11, $PCRX plans to commercialize EXPAREL during 4Q11 and has provided guidance for projected revenue of $14-16M in 2011 which excludes potential EXPAREL sales if approved this year and reflects royalties / supply revenue for two DepoFoam based drugs (DepoCyt and DepoDur). $PCRX expects a cash burn rate of $30M through 3Q11 and potential cash burn of $25M during 4Q11 to support the commercialization of EXPAREL if it is approved by the FDA.
I did not receive a return phone call from the Company’s investor relations firm in regard to the following questions:
1.) Status of expected or scheduled pre-approval inspection (PAI) by FDA as part of ongoing review of the NDA for EXPAREL
2.) Expected pricing for EXPAREL
3.) Status (if known) of major investors’ plans following the expiration of lock-up period (i.e. shares become freely tradable) on 8/1/11 for 12.2M shares of common stock
I am currently tracking $PCRX and may buy shares as the expected late July FDA decision date approaches (i.e. within a month or two) for a potential run-up play ($10-12 price target) and would consider holding some shares through the decision ($15-18 price target upon FDA approval) since the product is based on an established drug and drug delivery technology (DepoFoam).
Disclosure: Mark is long $PCRX