Pacira stock downgraded amid eVenus approval concerns

On Wednesday, Barclays shifted its stance on Pacira Pharmaceuticals (NASDAQ:) stock, downgrading from Overweight to Equalweight and slashing the price target to $25 from $38.

The move follows the recent approval of eVenus, which poses a significant risk to the sales trajectory of Pacira’s leading product, Exparel. Exparel is a substantial revenue generator for Pacira, accounting for 78% of the company’s revenues according to Barclays’ 2024 estimates.

The approval of eVenus could lead to the launch of a generic version of Exparel by eVenus and its partner Fresenius Kabi. Although there is ongoing litigation surrounding the 495 Patent, the expiration of the 30-month stay could allow for an At-Risk Launch, which Barclays sees as a low-probability event. Nevertheless, the potential for this launch creates uncertainty for Pacira.

Barclays notes that while there are additional patents in place to safeguard Exparel, it is likely that these too will be challenged in time. This prospect introduces the risk of persistent negative news that could affect the stock’s performance. Despite this, there is some near-term upside anticipated from the implementation of NOPAIN in 2025, which is expected to benefit the company.

The NOPAIN Act is a legislative initiative aimed at reducing opioid use by increasing access to non-opioid pain management therapies. The implementation of NOPAIN could provide a boost to Exparel sales, as it is a non-opioid pain relief drug. However, the overshadowing patent concerns seem to be a primary factor in Barclays’ reassessment of Pacira’s stock outlook.

In other recent news, Pacira BioSciences reported Q1 2024 revenue of $149 million, slightly below consensus estimates, with its flagship product, Exparel, accounting for $118 million. The company also launched a private placement of $250 million in convertible senior notes due in 2029, expected to yield net proceeds of approximately $242 million.

In spite of FDA’s approval of a generic version of Exparel by eVenus Pharmaceutical, RBC Capital and Truist Securities maintained their positive ratings on Pacira, citing ongoing patent litigations as a significant factor.

Pacira is also undergoing management changes, including the appointment of a new Chief Commercial Officer and Chief Business Officer. Dr. Gary Pace will retire from the company’s Board of Directors, effective June 2024, and will enter into a consulting agreement with Pacira.

The company’s Annual Meeting resulted in the election of four Class I directors and the ratification of KPMG LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2024.

Analysts from firms including RBC Capital Markets, Barclays, JMP Securities, and Piper Sandler have given Pacira various ratings, with price targets ranging from $38.00 to $57.00. The company’s revenue growth is projected to be almost 10% annually, rising to approximately $1.25 billion by 2030. These are among the recent developments for Pacira.

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