Pacira Pharmaceuticals PCRX reported second-quarter 2015 adjusted earnings of 3 cents per share (excluding one-time items), missing the Zacks Consensus Estimate of 4 cents. The company had reported a loss of 11 cents in the year-ago quarter.
Revenues soared 25.4% year over year to $59.1 million, but missed the Zacks Consensus Estimate of $64 million.
The Quarter in Detail
Pacira’s net revenue comprises product revenues, collaborative licensing and development revenues, and royalty revenues. The company’s lead product, Exparel, generated revenues of $57 million, up 26.9% year over year. DepoCyt(e) revenues were at $1.1 million, down 3.1% year over year.
Collaborative licensing and development revenue were up 10.6% to $0.4 million, while royalty revenue came in at $0.7 million, down 9.8% year over year.
Research and development (R&D) expenses dropped 30% to $3.6 million from the year-ago quarter. Selling, general and administrative (SG&A) expenses, however, increased 39.9% year over year to $34.8 million.
We note that in Apr 2015, Pacira received a subpoena from the U.S. Department of Justice of the Attorney’s Office for the District of New Jersey asking the company to provide a broad range of documents pertaining to the marketing and promotional practices related to Exparel. The company said on its second-quarter 2015 call that it is working with the regulatory agencies on a high-priority basis.
Pipeline Update
Pacira is working on expanding Exparel’s label. In May 2015, Pacira announced that the end-of-review process with the FDA’s Division of Anesthesia, Analgesia and Addiction Products of the Center for Drug Evaluation and Research regarding the supplemental New Drug Application for Exparel for administration as a nerve block to provide postsurgical analgesia was complete.
By 2015-end, the company intends to initiate additional phase III studies for upper- and lower-extremity nerve blocks to study the potential use of Exparel in a broad spectrum of nerve blocks instead of a single nerve block.
Meanwhile, Pacira is developing Exparel for use in oral surgery. The company intends to evaluate the product, administered as an infiltration, to provide post-surgical analgesia in oral surgery. The program is slated for completion by early-2016.
Additionally, in May 2015, Pacira announced that its proposed approach to demonstrate comparability and provide adequate data in support of the DepoFoam spray manufacturing process for Exparel was deemed acceptable by the FDA. Pacira now intends to pursue manufacturing DepoFoam-based products using the spray process.
For 2015, Pacira expects R&D expenses of $20 million–$25 million and SG&A expenses in the range of $115 million–$125 million.
Our Take
Pacira’s second-quarter results were disappointing with the company missing on both the bottom and top lines. However, we are pleased with the company’s efforts to expand Exparel’s label. Label expansion of the drug should help boost revenues.
Pacira currently carries a Zacks Rank #4 (Sell). We expect investor focus on further regulatory updates on the subpoena on Exparel.
Some better-ranked stocks in the health care sector are Valeant Pharmaceuticals International, Inc. VRX, Alcobra Ltd. ADHD and Anacor Pharmaceuticals, Inc. ANAC. While Valeant carries a Zacks Rank #1 (Strong Buy), Alcobra and Anacor hold a Zacks Rank #2 (Buy).
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