Wider-than-Expected Loss at Pacira, Revs Up - Analyst Blog

Shares of Pacira Pharmaceuticals, Inc. PCRX have been rising since the company reported first quarter results. Shares were up 6.8% in the last three trading sessions since the earnings release. Though Pacira's first quarter 2014 net loss per share of 34 cents was wider than the Zacks Consensus Estimate of a loss of 30 cents, it narrowed from a loss of 60 cents incurred in the year-ago quarter.

First quarter revenues rose 216.4% year over year to $36.7 million, in line with the Zacks Consensus Estimate.

Research and development expenses fell 11.9% year over year to $5.2 million. Selling, general and administrative expenses on the other hand soared 74.6% year over year to $22.6 million.

Quarter in Detail

Net revenues included product revenues, collaborative licensing and development revenues and royalty revenues. Net Exparel revenues were $34.4 million, up 12.7% sequentially. The increase was primarily due to higher demand for the drug.

Exparel, indicated for administration into the surgical site to produce postsurgical analgesia, was launched in the U.S. in Apr 2012. At the end of the reported quarter, 2,452 customers ordered Exparel since its launch, with roughly 330 customers each ordering more than $100,000. Pacira reported an average of 27 new accounts per week in the reported quarter.

Pacira is striving to expand Exparel's label. Pacira expects to submit a supplemental New Drug Application (sNDA) for femoral nerve-block in total knee arthroplasty in the second quarter of 2014 with a Prescription Drug User Fee Act (PDUFA) timeline of 10 months. The study met its primary endpoint of statistically significant reduction in cumulative pain scores over 72 hours compared to placebo in Feb 2014.

In Mar 2014, the U.S. Food and Drug Administration (FDA) approved of an additional manufacturing suite (Suite C) for Exparel.

In the reported quarter, Pacira has also signed a strategic co-production partnership deal with Patheon. Two additional manufacturing suites will be constructed at Patheon's facility. Pacira expects the first suite to begin production in two to three years. This first suite will increase total Exparel manufacturing capability to roughly $700 million.

Our Take

Pacira carries a Zacks Rank #3 (Hold). Demand for Pacira's Exparel has been solid since launch. Revenues from Exparel grew from $2.3 million in its first quarter of launch to $34.4 million in the reported quarter. In this quarter Pacira has made efforts to increase the manufacturing capacity of Exparel. This indicates an increasing demand for this drug. Pacira has also raised funds worth $110.4 million through a public offering, in order to fund mainly the Exparel capacity expansion activities at Patheon.

Some better-ranked stocks worth considering include Alexion Pharmaceuticals, Inc. ALXN, Impax Laboratories Inc. IPXL and Gilead Sciences Inc. GILD. Alexion Pharma and Gilead Sciences carry a Zacks Rank #1 (Strong Buy) while Impax Labs holds a Zacks Rank #2 (Buy).