What happened
Shares of Pacira Pharmaceuticals (PCRX 4.12%), which focuses on developing medicines to be used in the ambulatory or surgical setting, surged by as much as 24% during Wednesday's trading session following the early-morning release of the biopharmaceutical company's third-quarter operating results. As you can probably surmise by the move higher, Pacira was able to gallop past Wall Street's consensus estimates where it counts, despite mixed results.
So what
For the quarter, Pacira generated $66.8 million in net product sales, which was solely derived from its post-surgical analgesic Exparel. Though there were two fewer selling days in the third quarter, Pacira recognized a 3% increase in year-over-year sales in the third quarter. With the additional $171,000 in other product sales, including DepoCyte, as well as $358,000 in royalty revenue, Pacira generated $67.3 million in total sales.
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With regard to its bottom line, the company reported a net loss of $7.6 million, or $0.19 per share, which was significantly lower than the $22.2 million it had lost in the third quarter of 2016.
Comparably, Wall Street had been looking for $69 million in total sales, meaning the company was a bit light in this regard. However, its net loss was $0.07 per share narrower than the Street had expected.
Pacira also updated its full-year guidance, albeit it lowered its full-year net product sales forecast for Exparel. The company now expects full-year sales to range between $280 million and $285 million in 2017, which is down from a previous forecast calling for $290 million to $310 million. It appears the impacts of hurricanes Harvey and Irma on the southern U.S., which represents about 20% of Pacira's business, is to blame for the reduction.
Now what
There aren't many biotech stocks with the potential to grow quicker than Pacira Pharmaceuticals through 2020. That growth is going to be dependent on the company's ability to secure new label indications for Exparel, as well as advance its pipeline. If the company can successfully build on its existing relationships and continue to command strong pricing power in a highly competitive post-surgical analgesic space, it could nearly double sales between 2016 and 2020.
The danger? As noted, Pacira is essentially a one-trick pony for the moment. The company is wholly reliant on the growth of Exparel, and would be in serious trouble if it experienced any sales slowdown or pricing issues with its lead drug. There are always inherent risks of investing in companies with a single approved drug.
While I do believe there's modest upside left in Pacira, I'd wait on the sidelines until we see clear-cut evidence of a return to high single-digit or low double-digit Exparel sales growth following the negative impact of the hurricanes.
