On Tuesday, Truist Securities reaffirmed its Buy rating and $45.00 stock price target for Pacira Pharmaceuticals (NASDAQ:PCRX), even as the company faced a potential challenge with the FDA's approval of a generic version of its lead drug, Exparel, by eVenus Pharmaceutical.
Despite the approval, Truist Securities anticipates that eVenus will not be able to launch its generic product until at least the late 2030s due to ongoing patent litigations.
Pacira Pharmaceuticals, whose stock fell 20% today compared to a 1% decrease in the XBI, is currently engaged in a patent infringement lawsuit against eVenus, a subsidiary of Jiangsu Hengrui Medicine Company (600276-CN; NR).
The trial for the '495 patent, which began on February 14, 2024, is expected to have a ruling before August 1, 2024. If eVenus were to receive a favorable ruling, an appeal by Pacira could lead to an additional 30-month stay.
Exparel is a significant contributor to Pacira's revenue, accounting for approximately 79% of the company's estimated 2024 revenue. Truist Securities suggests that the current market reaction to the FDA approval may be excessive and advises investors to stay the course.
The firm also notes that the approval does not equate to eVenus's ability to launch the product commercially, as the company has faced previous issues with the FDA regarding manufacturing facility deficiencies.
In addition to the '495 patent, Pacira has filed additional patents that eVenus would need to contest. To market a generic version of Exparel before the original patent expires in 2041, eVenus would have to successfully challenge all existing and newly issued patents. Truist Securities expects that a settlement will likely be reached regarding the timing of exclusivity, potentially allowing a generic launch around 2039-2040.
Truist Securities' stance remains firm despite the potential for eVenus to launch its product "at risk," which could result in a damages lawsuit from Pacira. The firm compares the situation to a similar case where the FDA approved a generic for Xifaxan by Norwich, yet the company cannot launch due to ongoing litigation, mirroring the predicament faced by Pacira and eVenus.
In other recent news, Pacira BioSciences, Inc. reported Q1 2024 revenue of $149 million, with Exparel sales at $118 million, slightly below consensus estimates. The company launched a private placement of $250 million in convertible senior notes due in 2029, with net proceeds of approximately $242 million expected.
Management changes are underway, including the hiring of a new Chief Commercial Officer (CCO) and Chief Business Officer (CBO). In addition, Dr. Gary Pace has decided to retire from the company's Board of Directors, effective June 30, 2024, and will enter into a consulting agreement with Pacira.
As part of recent developments, the 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 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 recent developments reflect the ongoing changes in Pacira's operations and strategic direction, and it is important for investors to keep an eye on these updates.
InvestingPro Insights
Amid the uncertainty surrounding Pacira Pharmaceuticals' patent litigation, investors may find solace in some of the company's underlying financial metrics. According to InvestingPro data, Pacira's market capitalization stands at a robust $1 billion, with a forward-looking P/E ratio of 21.04, suggesting that the market has confidence in its earnings potential. The company's gross profit margin for the last twelve months as of Q1 2024 remains high at 61.8%, indicating strong operational efficiency.
InvestingPro Tips highlight that analysts predict Pacira will be profitable this year, and the company has been profitable over the last twelve months. Moreover, the valuation implies a strong free cash flow yield, which can be a sign of the company's ability to generate cash and potentially reinvest in its business or pay down debt.
Investors looking for more in-depth analysis and additional InvestingPro Tips can explore further insights on https://www.investing.com/pro/PCRX, where there are 7 more tips listed to help inform their investment decisions. Don't forget to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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