OREANDA-NEWS.  Pacira Pharmaceuticals, Inc. (NASDAQ:PCRX) today provided updates on EXPAREL® (bupivacaine liposome injectable suspension) for postsurgical pain in the United States and announced consolidated financial results for the second quarter ended June 30, 2016.

“The second quarter marked another period of double-digit, year-over-year revenue growth as we advanced multiple initiatives to support EXPAREL in the latter half of this year and into 2017,” said Dave Stack, Chief Executive Officer and Chairman of Pacira. “Our aggressive investments in patient outreach and clinical development, as well as commercial and educational programs, are progressing as planned. For the rest of this year, we look forward to continuing the strong progress we’ve made with the Phase 4 randomized controlled trials in strategic orthopedic surgeries, Phase 3 nerve block studies, enhanced recovery protocols in soft tissue procedures and data presentations on bundled payments. We also anticipate increasing our public relations and advocacy efforts to bring attention to addressing the opioid epidemic by providing an alternative to opioids in the acute postsurgical setting, where epidemic often starts.”

Recent Highlights

  • Choices Matter Launches in Response to New Research Showing Opioid Addiction and Dependence After Surgery is Significantly Higher than Previously Known: Although the national focus of research has primarily been on opioid addiction as a result of their use to treat chronic pain, new research shows that even prescribing opioids for short-term postsurgical pain can put patients at serious risk, with one in ten patients surveyed indicating they’ve become addicted to or dependent on opioids after being exposed to these powerful medications following an operation. On August 1, Pacira launched the Choices Matter campaign to foster surgeon-patient dialogue and educate patients about their non-opioid options, empowering them to play an active role in the decision-making process related to their postsurgical pain management. The American Society for Enhanced Recovery and former star volleyball player, Gabrielle Reece, whose recent knee replacement surgery has made this issue personal, have joined the campaign.
     
  • Preparations in Support of Oral Surgery Launch are Underway: Pacira remains on track for the launch of EXPAREL in oral surgery at the American Association of Oral and Maxillofacial Surgeons (AAOMS) annual meeting in September, where the company will present the results of the study in third molar, or “wisdom teeth,” procedures. EXPAREL will provide an alternative to opioids for targeted oral and maxillofacial surgeries. In fact, a recent study in full arch surgery therapy (FAST) dental implant procedures showed that patients receiving EXPAREL experienced significantly less cumulative pain compared to patients receiving standard of care. With this launch, Pacira will also introduce a 10 mL vial and 4 vial package configuration of EXPAREL to the oral surgery marketplace.
     
  • Data Continue to Demonstrate Benefits of EXPAREL versus Bupivacaine Across Multiple Surgical Specialties, Including Soft Tissue Procedures: A study was recently published in Anaesthesia assessing patients who received ultrasound-guided transversus abdominis plane (TAP) blocks with EXPAREL versus non-liposomal bupivacaine for postsurgical pain control after undergoing laparoscopic hand-assisted donor nephrectomy. Patients who received EXPAREL experienced a significant decrease in maximal pain scores 24-48 and 48-72 hours after injection, as well as a significant reduction in opioid use 48-72 hours following injection. In July, the Foundation for Women’s Cancer hosted a webinar highlighting the importance of pain management as part of an enhanced recovery strategy for gynecologic oncology surgeries. Dr. Sean Dowdy presented data demonstrating that patients who received an enhanced recovery protocol (ERP) with EXPAREL for pain control for complex cytoreduction achieved a 90% reduction in opioid requirements compared to conservative management.

Second Quarter 2016 Financial Results

  • EXPAREL net product sales were $65.8 million in the second quarter of 2016, a 15% increase over the $57.0 million reported for the second quarter of 2015.
     
  • Total revenues were $69.6 million in the second quarter of 2016, an 18% increase over the $59.1 million reported for the second quarter of 2015.
     
  • Total operating expenses were $76.1 million in the second quarter of 2016, compared to $57.3 million in the second quarter of 2015.
     
  • GAAP net loss was $8.0 million, or $(0.21) per share (basic and diluted), in the second quarter, compared to GAAP net income of less than $0.1 million, or $0.00 per share (basic and diluted), in the second quarter of 2015.
     
  • Non-GAAP net income was $7.9 million, or $0.21 per share (basic) and $0.19 per share (diluted), in the second quarter of 2016, compared to non-GAAP net income of $8.4 million, or $0.23 per share (basic) and $0.20 per share (diluted), in the second quarter of 2015.
     
  • Pacira ended the second quarter of 2016 with cash, cash equivalents and short-term investments (“cash”) of $162.7 million.
     
  • Pacira had 37.2 million basic weighted average shares of common stock outstanding in the second quarter of 2016.
     
  • For non-GAAP measures, Pacira had 40.8 million diluted weighted average shares of common stock outstanding in the second quarter of 2016.

2016 Outlook

Pacira updates full year 2016 financial guidance as follows:

  • EXPAREL net product sales of $270 million to $280 million.
     
  • Non-GAAP gross margins of 70% to 73%.
     
  • Non-GAAP research and development (R&D) expense of $60 million to $70 million.
     
  • Non-GAAP selling, general and administrative (SG&A) expense of $125 million to $135 million.
     
  • Stock-based compensation of $30 million to $35 million.

Today’s Conference Call and Webcast Reminder

The Pacira management team will host a conference call to discuss the company’s financial results and recent developments today, Thursday, August 4, 2016, at 9 a.m. ET. The call can be accessed by dialing 1-877-845-0779 (domestic) or 1-720-545-0035 (international) ten minutes prior to the start of the call and providing the Conference ID 12857671.

A replay of the call will be available approximately two hours after the completion of the call and can be accessed by dialing 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and providing the Conference ID12857671. The replay of the call will be available for two weeks from the date of the live call.

Non-GAAP Financial Information

This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP net income, non-GAAP cost of goods sold, non-GAAP gross margins, non-GAAP research and development (R&D) and non-GAAP selling, general and administrative (SG&A) expenses, because such measures exclude stock-based compensation, amortization of debt discount, loss on extinguishment of debt and a termination fee with CrossLink BioScience, LLC. These measures supplement our financial results prepared in accordance with GAAP. Pacira management uses these measures to better analyze its financial results, estimate its future cost of goods sold, gross margins, R&D and SG&A outlook for 2016 and to help make managerial decisions. In management’s opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance at Pacira and the company’s future outlook. Such measures should not be deemed to be an alternative to GAAP requirements or a measure of liquidity for Pacira. Non-GAAP net income measures are also unlikely to be comparable with non-GAAP disclosures released by other companies. See the tables below for a reconciliation of non-GAAP net income to GAAP net income (loss), and a reconciliation of our non-GAAP to GAAP 2016 financial guidance for gross margins, R&D and SG&A.

About Pacira

Pacira Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on the clinical and commercial development of new products that meet the needs of acute care practitioners and their patients. The company’s flagship product, EXPAREL® (bupivacaine liposome injectable suspension), indicated for single-dose infiltration into the surgical site to produce postsurgical analgesia, was commercially launched in the United States in April 2012. EXPAREL and two other products have successfully utilized DepoFoam®, a unique and proprietary product delivery technology that encapsulates drugs without altering their molecular structure, and releases them over a desired period of time. 

About EXPAREL®

EXPAREL (bupivacaine liposome injectable suspension) is currently indicated for single-dose infiltration into the surgical site to produce postsurgical analgesia. The product combines bupivacaine with DepoFoam®, a proven product delivery technology that delivers medication over a desired time period. EXPAREL represents the first and only multivesicular liposome local anesthetic that can be utilized in the peri- or postsurgical setting. By utilizing the DepoFoam platform, a single dose of EXPAREL delivers bupivacaine over time, providing significant reductions in cumulative pain score with up to a 45 percent decrease in opioid consumption; the clinical benefit of the opioid reduction was not demonstrated. 

Important Safety Information

EXPAREL is contraindicated in obstetrical paracervical block anesthesia. EXPAREL has not been studied for use in patients younger than 18 years of age. Non-bupivacaine-based local anesthetics, including lidocaine, may cause an immediate release of bupivacaine from EXPAREL if administered together locally. The administration of EXPAREL may follow the administration of lidocaine after a delay of 20 minutes or more. Other formulations of bupivacaine should not be administered within 96 hours following administration of EXPAREL. Monitoring of cardiovascular and neurological status, as well as vital signs should be performed during and after injection of EXPAREL as with other local anesthetic products. Because amide-type local anesthetics, such as bupivacaine, are metabolized by the liver, EXPAREL should be used cautiously in patients with hepatic disease. Patients with severe hepatic disease, because of their inability to metabolize local anesthetics normally, are at a greater risk of developing toxic plasma concentrations. In clinical trials, the most common adverse reactions (incidence greater-than or equal to 10%) following EXPAREL administration were nausea, constipation, and vomiting.

 

(Tables to Follow)

 

Pacira Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
  June 30,
 2016		   December 31,
 2015
ASSETS      
Current assets:      
Cash, cash equivalents and short-term investments $ 162,667     $ 158,965  
Accounts receivable, net 28,651     25,855  
Inventories, net 60,916     61,645  
Prepaid expenses and other current assets 5,755     6,117  
Total current assets 257,989     252,582  
Long-term investments —     13,462  
Fixed assets, net 99,282     90,324  
Goodwill 42,751     30,880  
Intangible assets, net —     81  
Other assets 677     406  
Total assets $ 400,699     $ 387,735  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 4,614     $ 8,739  
Accrued expenses 38,330     35,375  
Convertible senior notes (*) 106,388     104,040  
Current portion of deferred revenue 1,048     1,426  
Income taxes payable 58     208  
Total current liabilities 150,438     149,788  
Deferred revenue 7,747     8,082  
Other liabilities 14,163     11,473  
Total stockholders’ equity 228,351     218,392  
Total liabilities and stockholders’ equity $ 400,699     $ 387,735  
 
(*) The convertible senior notes are contractually due in 2019. However, because of certain conditions that were met during the three months ended June 30, 2016, the note holders can convert any time during the quarter ended September 30, 2016.
 
Pacira Pharmaceuticals, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2016   2015   2016   2015
Net product sales:                
EXPAREL   $ 65,753     $ 56,977     $ 129,505     $ 112,927  
DepoCyt(e)   1,934     1,085     2,684     2,219  
Total net product sales   67,687     58,062     132,189     115,146  
Collaborative licensing and milestone revenue   1,356     356     1,713     713  
Royalty revenue   597     730     1,212     1,604  
Total revenues   69,640     59,148     135,114     117,463  
                 
Operating expenses:                
Cost of goods sold   23,053     18,929     43,331     36,509  
Research and development   9,362     3,649     18,855     9,616  
Selling, general and administrative   43,669     34,752     81,626     66,180  
Total operating expenses   76,084     57,330     143,812     112,305  
Income (loss) from operations   (6,444 )   1,818     (8,698 )   5,158  
                 
Other (expense) income:                
Interest income   324     177     576     332  
Interest expense   (1,733 )   (1,940 )   (3,601 )   (3,935 )
Loss on early extinguishment of debt   —     (51 )   —     (51 )
Royalty interest obligation   —     —     —     (71 )
Other, net   (47 )   43     1     (74 )
Total other expense, net   (1,456 )   (1,771 )   (3,024 )   (3,799 )
Income (loss) before income taxes   (7,900 )   47     (11,722 )   1,359  
Income tax expense   (58 )   (39 )   (90 )   (91 )
Net income (loss)   $ (7,958 )   $ 8     $ (11,812 )   $ 1,268  
                 
Net income (loss) per share:                
Basic and diluted net income (loss) per common share   $ (0.21 )   $ 0.00     $ (0.32 )   $ 0.03  
Weighted average common shares outstanding:                
Basic   37,181     36,481     37,101     36,358  
Diluted   37,181     41,445     37,101     41,612  
                         
Pacira Pharmaceuticals, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share amounts)
(unaudited)
 
  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2016   2015   2016   2015
               
GAAP net income (loss) $ (7,958 )   $ 8     $ (11,812 )   $ 1,268  
               
Non-GAAP adjustments:              
  Stock-based compensation 7,665     7,296     16,155     14,813  
  Loss on extinguishment of debt —     51     —     51  
  Non-cash debt discount amortization 1,022     1,024     2,044     2,058  
  CrossLink contract termination fee 7,184     —     7,184     —  
  Total Non-GAAP adjustments 15,871     8,371     25,383     16,922  
               
Non-GAAP net income $ 7,913     $ 8,379     $ 13,571     $ 18,190  
               
GAAP basic and diluted net income (loss) per common share $ (0.21 )   $ 0.00     $ (0.32 )   $ 0.03  
               
Non-GAAP basic net income per common share $ 0.21     $ 0.23     $ 0.37     $ 0.50  
Non-GAAP diluted net income per common share $ 0.19     $ 0.20     $ 0.33     $ 0.44  
               
Weighted average common shares outstanding - basic 37,181     36,481     37,101     36,358  
Weighted average common shares outstanding - diluted 40,841     41,445     40,992     41,612  
               
Cost of goods sold reconciliation:              
GAAP cost of goods sold $ 23,053     $ 18,929     $ 43,331     $ 36,509  
  Stock-based compensation expense (1,610 )   (1,586 )   (3,159 )   (2,689 )
Non-GAAP cost of goods sold $ 21,443     $ 17,343     $ 40,172     $ 33,820  
               
Research and development reconciliation:              
GAAP research and development $ 9,362     $ 3,649     $ 18,855     $ 9,616  
  Stock-based compensation expense (1,015 )   (561 )   (1,908 )   (2,070 )
Non-GAAP research and development $ 8,347     $ 3,088     $ 16,947     $ 7,546  
               
Selling, general and administrative reconciliation:              
GAAP selling, general and administrative $ 43,669     $ 34,752     $ 81,626     $ 66,180  
  Stock-based compensation expense (5,040 )   (5,149 )   (11,088 )   (10,054 )
  CrossLink contract termination fee (7,184 )   —     (7,184 )   —  
Non-GAAP selling, general and administrative $ 31,445     $ 29,603     $ 63,354     $ 56,126  
                               
Pacira Pharmaceuticals, Inc.
Reconciliation of GAAP to Non-GAAP 2016 Financial Guidance
(dollars in millions)
 
GAAP to Non-GAAP Guidance   GAAP   Stock-Based
Compensation		   CrossLink
Contract
Termination
Fee		   Non-GAAP   Previous
Non-GAAP
EXPAREL net product sales   $270 to $280   —   —   $270 to $280   Not Provided
Gross margin   67% to 70%     3 %   —   70% to 73%   Not Provided
Research and development expense   $63 to $74   $3 to $4   —   $60 to $70   $60 to $70
Selling, general and administrative expense   $152 to $166   $20 to $24   $ 7     $125 to $135   $125 to $135
Stock-based compensation   $30 to $35   —   —   $30 to $35   $35 to $40