Pacira Pharmaceuticals, Inc. (NASDAQ:PCRX) is drawing a considerable amount of attention in the biotechnology space as we start a fresh week of trading, with the activity rooted in an event that hit press shortly before markets closed out for the session last Friday.
Here is what happened.
For anybody not familiar with Pacira, this one is a New Jersey-based healthcare company with a market capitalization of around $1.37 billion and that currently trades for just shy of $34 a share on the NASDAQ. It’s got a relatively wide focus as far as pipeline is concerned but, primarily, Pacira is working on the bringing of assets to market that target pain management and it’s in one of these assets that the recent action is rooted.
So, specifically, the asset is called Exparel and the company was trying to get it approved in a target indication of patients that have just undergone upper extremity surgeries. The drug itself is a bupivacaine liposomal injectable solution and it was initially approved when back in 2011 in a target indication of the management of postsurgical pain. Back then, the road to approval was relatively rocky, with the company submitting its new drug application (NDA) during the middle of 2010 before an FDA acceptance at the end of that year and a subsequent three month extension time before the review completed and the approval came in at the end of October 2011.
With its latest efforts, and on the back of a supplemental new drug application (sNDA), Pacira had the chance to increase its potential revenue base substantially and the company supported the sNDA with what looked to be some relatively convincing data ahead of its submission.
Just as was the case previously, however, things haven’t been plain sailing.
Earlier this year, a committee convened to discuss the approvability (or otherwise) of the drug and, on the back of that meeting, there was a negative recommendation suggesting that the drug might not be suitable for introduction to the market in this indication.
This negative recommendation let markets to believe that the asset wouldn’t be approved and, as is generally expected on the back of this sort of development, Pacira took a real hit to its market capitalization when the recommendation was announced.
So what just happened?
Well, as per reports on Friday, the FDA has approved the drug in this expanded indication and the company will now be able to start marketing Exparel for patients that, as mentioned above, have just undergone upper extremity surgeries.
It is a nerve block type asset, which means it’s essentially a targeted local analgesia type product and there’s an existing market already in place and waiting for this sort of treatment, meaning this program and its approval could be a real boost for Pacira going forward.
There is also a macro factor in play here, one rooted in the opioid epidemic that is currently hanging over the US market.
Opioid abuse, which very often derives from an addiction to opioids that sets in after surgery patients come off standard prescription postsurgical pain management assets, is a major issue in the US markets right now and it’s one that the FDA, as well as many other regulatory and legal authorities, are trying to curb as quickly as possible. The introduction of non-opioid pain management assets is one of the major ways in which said authorities are going about this effort and this, as mentioned above, presents Pacira with what is essentially a ready-made market base of physicians that will prefer to prescribe this sort of asset over opioid-based assets in this patient population.
And that’s why this is such a big deal for this company right now.
Not only have we seen what amounts to a surprise approval for a legacy asset for Pacira, it’s an approval that could have a real impact on the company’s ability to generate revenues over the next five years given the problem it helps overcome.
Pacira picked up a 14% upside revaluation on the back of the news and there is a good chance that we will see this upside strength continue as the company heads into early week trading this week.