What happened?

Shares of Pacira BioSciences (NASDAQ:PCRX) are soaring on Monday and are up by 17.5% as of 12:10 p.m. EDT, and this despite the company not reporting any news. We can attribute Pacira's good fortune to one of its potential competitors in the market for postoperative pain, Heron Therapeutics (NASDAQ:HRTX), failing to earn approval from the U.S. Food and Drug Administration (FDA) for its lead pipeline candidate, HTX-011. 

So what

Heron Therapeutics announced that it had received a complete response letter (CRL) from the FDA regarding its New Drug Application (NDA) for HTX-011. The health industry regulator did not have any concerns with HTX-011's safety or efficacy, but it rejected the drug's application and requested more information from the company regarding several "nonclinical issues." Heron expects this setback to be little more than a temporary hiccup: The company still believes that HTX-011 will earn FDA approval.

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Image source: Getty Images.

However, the immediate approval of HTX-011 would have meant competition for Pacira BioSciences' Exparel, since both HTX-011 and Exparel are nonopioid medications used to treat postoperative pain. With HTX-011 failing to receive the green light from health industry regulators, it isn't surprising that investors rushed to load up on shares of Pacira BioSciences, thus sending its stock price higher. Meanwhile, Heron Therapeutics is having a bad day on the market today, with its shares down by more than 20% as of midday trading. 

Now what 

During the first quarter, Exparel's revenue came in at $101.3 million, an 11.8% year-over-year increase. Exparel's revenue will likely continue to grow, especially given the FDA's decision to reject Heron's application for HTX-011 as a treatment for postoperative pain. But if Heron Therapeutics ends up earning FDA approval for HTX-011 after all, Pacira BioSciences' stock will come crashing down. Investors will want to keep an eye on both of these healthcare stocks in the coming months. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.