Pacira Pharmaceuticals ( PCRX ) collapsed to a five-year low Friday after U.S. regulators voted against recommending its biggest moneymaking drug for a key expansion in regional anesthesia.
[ibd-display-video id=3151711 width=50 float=left autostart=true] In morning trading on the stock market today , Pacira crashed 16.1%, near 30.30, hitting its lowest point since July 2013. That defied a fractional jump in the broader biotech group as stocks climbed for the sixth day running.
Analysts had counted on the Food and Drug Administration's approval to expand revenue of its local anesthetic, called Exparel . But on Thursday an FDA panel voted 6-4 against recommending the approval of Exparel as a regional pain drug.
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"It should be noted that the five anesthesiologists on the panel voted 4-1 against approval," Needham analyst Serge Belanger wrote in a note. "It now seems unlikely that FDA will approve the label expansion, even for a narrow indication, without additional studies."
Belanger downgraded Pacira stock to a hold rating from buy.
Exparel was tested as a regional anesthetic in patients following shoulder and knee surgeries . Panelists discussed the risk of falls in patients after knee surgery and whether Exparel could be approved for blocking specific nerves, Piper Jaffray analyst David Amsellem said.
"There was concern that usage via a femoral nerve block (after knee surgery) could prolong quadriceps weakness, thereby inhibiting the extent to which a patient can ambulate, and to the extent that a patient is ambulating, increasing the risk of a fall," he said in a note.
But Amsellem kept his overweight rating and 49 price target on Pacira, saying the absence of a label expansion won't prevent Pacira from enjoying steady long-term volume growth of the drug.
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Exparel brought in $78.7 million in fourth-quarter sales, accounting for nearly all of $79.1 million in total revenue, Pacira said in a preliminary release last month.
Mizuho analyst Irina Koffler suggested Dow's Johnson & Johnson ( JNJ ) could acquire Pacira for its base business and potential cost synergies. But, following the FDA panel on Exparel, "the likelihood of takeout is now somewhat lower," she said in a note to clients.
Pacira said it will work with the FDA to address outstanding panel concerns ahead of the full FDA meeting in April.
The ultimate goal, Chief Executive Dave Stack said in a written statement, is to offer "additional flexibility in the way Exparel can be administered so that clinicians and patients alike have increased opportunity to realize the benefits of long-lasting non-opioid pain control."
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