Shares of Pacira Pharmaceuticals, Inc. PCRX were down 9.6% after the company received a subpoena from the U.S. Department of Justice, U.S. Attorney’s Office for the District of New Jersey.
The subpoena relates to Pacira’s marketing and promotional practices for its lead product Exparel. The department wants the company to produce a broad range of documents related to the same.
We remind investors that Exparel was approved by the FDA in 2011 and launched in 2012. It is a liposome injection of bupivacaine, which is indicated for administration into the surgical site to produce postsurgical analgesia.
Pacira suffered a setback in 2014 when it received a warning letter from the FDA’s Office of Prescription Drug Promotion (OPDP) regarding certain promotional materials on Exparel. The letter accused the company of making misleading statements related to the drug in educational technique flashcards (administration guides) and a journal advertisement submitted under Form FDA-2253. The OPDP claimed that Pacira’s activities misbranded Exparel and violated the Federal Food, Drug and Cosmetic (FD&C) Act. The OPDP therefore requested the company to take immediate actions to stop the violation of the FD&C Act.
Our Take
Pacira currently carries a Zacks Rank #5 (Strong Sell). The going hasn’t been good for Pacira in recent times. Exparel sales came in at $188.5 million, accounting for 95% of total sales in 2014. We note that Pacira is entirely dependent on Exparel for growth. Hence, the subpoena will remain a major overhang on the shares.
Last month too, Pacira received a complete response letter (CRL) from the FDA following a review of its supplemental new drug application (sNDA) for Exparel. Pacira was seeking to expand Exparel’s label to include nerve block to produce postsurgical analgesia.
We expect investor focus to remain on further updates on the subpoena and the CRL.
Some better-ranked stocks in the health care sector include Mallinckrodt plc MNK, ArQule, Inc. ARQL and Valeant Pharmaceuticals VRX. All three sport a Zacks Rank #1 (Strong Buy).
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