Pacira Pharmaceuticals’ (PCRX) third-quarter 2014 loss of 5 cents per share was wider than the Zacks Consensus Estimate of a loss of a penny but much narrower than the year-ago loss of 41 cents per share.
Third-quarter revenues soared 123.8% year over year to $52 million, but missed the Zacks Consensus Estimate of $54 million. The year-over-year increase in revenues was primarily due to higher demand of Exparel.
Pacira’s net revenues comprise product revenues, collaborative licensing and development revenues and royalty revenues. Exparel revenues were $50.2 million, up from $20 million in the year-ago quarter, primarily driven by higher demand. Collaboration and license agreement revenues and royalty revenues were $0.3 million and $0.8 million, respectively.
Till date, 3,062 customers ordered Exparel since its launch. In the reported quarter, Pacira gained 247 new customers who ordered Exparel. The strong demand is being driven by new accounts and growth within existing accounts due to continued adoption in soft tissue procedures as well as rapid adoption in orthopedic procedures.
Meanwhile, Pacira is working on the label expansion of Exparel. The company is currently seeking FDA approval for Exparel in femoral nerve-block in total knee arthroplasty with a response due by Mar 5, 2015.
Research and development expenses decreased 25.8% to $4.4 million from the year-ago quarter. Selling, general and administrative expenses increased 84.2% year over year to $28.2 million.
Our Take
Third-quarter results were disappointing as wider losses came in than expected and revenues missed estimates. Shares were down 13.9% following the release of results.
Last month, Pacira suffered a setback on the receipt of a warning letter from the FDA’s Office of Prescription Drug Promotion (OPDP) regarding certain promotional materials on Exparel. OPDP accused the company of making misleading statements related to Exparel in educational technique flashcards (administration guides). These materials improperly suggested the use of Exparel for off-label uses which are not approved by the FDA. Moreover, the promotional advertisements violate FDA requirements by overstating the efficacy of Exparel. The company is currently working with the FDA to resolve such issues.
Nevertheless, we expect 2015 to be a catalyst rich year for Pacira as the company has an important regulatory event in Mar 2015. A potential label expansion of Exparel will boost sales.
Pacira currently carries a Zacks Rank #2 (Buy). Other well-placed stocks in the health care sector are Valeant Pharmaceuticals (VRX), Lannett Inc. (LCI) and Auxilium Pharmaceuticals (AUXL). All these stocks sport a Zacks Rank #1 (Strong Buy).
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