Pacira Pharmaceuticals reports net loss of $9.8 million for first quarter 2011

May 11 2011

Pacira Pharmaceuticals, Inc. (NASDAQ: PCRX), an emerging specialty pharmaceutical company, today announced financial results for the first quarter ended March 31, 2011, provided an update on the execution of its pre-commercial and launch strategies for EXPAREL™, and reiterated 2011 financial guidance.

"During the first quarter we have continued to work closely with hospitals and physicians to evaluate the clinical and favorable economic impact EXPAREL may offer patients and the healthcare system," said David Stack, president and chief executive officer of Pacira Pharmaceuticals, Inc. "Our retrospective health economics research studies are well underway and are successfully demonstrating that the postsurgical use of opioid analgesia often leads to increased, and often avoidable, resource utilization. At the same time, we are pushing forward with a number of targeted prospective clinical studies to examine the impact of utilizing EXPAREL instead of morphine administered in a PCA (patient controlled analgesia) setting. We believe that these programs, combined with our robust pipeline of awareness and educational activities, will position EXPAREL for rapid adoption among key opinion leaders should it receive approval from the U.S. Food and Drug Administration (FDA) later this year."

Financial Highlights

• Net loss for the quarter ended March 31, 2011 was $9.8 million, or $0.98 per share, compared with $5.4 million, or $9.39 per share, for the quarter ended March 31, 2010.
• Total revenues for the quarter ended March 31, 2011 were $3.9 million compared with $4.8 million for the first quarter of 2010. The $0.9 million decrease was primarily attributable to $1.2 million decline in supply revenue, from $2.9 million in the first quarter of 2010 to $1.7 million in the first quarter of 2011 and reflects the variable nature of product orders from Pacira's commercial partners and Pacira's practice of running periodic manufacturing campaigns to increase manufacturing efficiency, which results in supply revenue not falling uniformly within quarters; offset by a $0.2 million increase in collaborative licensing and development revenue resulting from higher reimbursable development activity and a $0.1 million increase in royalties revenue resulting from higher end user sales in the first quarter of 2011 compared with the same period of 2010.
• Total operating expenses for the quarter ended March 31, 2011 were $11.0 million compared with $9.4 million for the same period of 2010. The $1.6 million increase was primarily attributable to $2.8 million increase in selling, general and administrative expenses, due to hiring of commercial personnel in the fourth quarter of 2010 and preparation for the launch of EXPAREL, stock based compensation expense recognized in connection with certain stock options becoming exercisable upon the completion of Pacira's initial public offering in February 2011 and certain expenses associated with public company operations; offset by $1.1 million decrease in research and development expenses relating to the close out of the company's two pivotal Phase 3 clinical trials for EXPAREL.
• Cash used in operating activities and for the purchase of fixed assets used in investing activities ("cash burn") was approximately $5 million for the quarter ended March 31, 2011.
• As of March 31, 2011, Pacira had unrestricted cash and cash equivalents of $59.3 million compared with $26.1 million on December 31, 2010. Pro forma cash on December 31, 2010 was approximately $64 million. The pro forma cash calculation included proceeds from the company's initial public offering (IPO) net of underwriters' discounts and commissions.  
• At March 31, 2011 there were approximately 17.2 million shares of common stock outstanding.

Full Year 2011 Financial Guidance

Pacira is reiterating its 2011 financial guidance and currently expects to achieve revenue in the range of $14 and $16 million for the full-year ending December 31, 2011.  This revenue expectation excludes the impact of potential sales of EXPAREL should it receive approval from the FDA in the third quarter of 2011 and be commercialized by Pacira in the fourth quarter of 2011.  The company also expects cash burn, excluding the impact of any future partnerships, asset monetizations or other cash generating activities unrelated to its current operations, to be approximately $30 million cumulatively through the third quarter of 2011, and, approximately $25 million in the fourth quarter of 2011.  These cash burn expectations are based upon the assumption that EXPAREL will receive FDA approval in the third quarter of 2011, and that Pacira will commercialize EXPAREL in the fourth quarter of 2011, and include a $10 million milestone payment in the fourth quarter of 2011 to Skye Pharmaceuticals due upon the first commercial sale of EXPAREL.  

Recent Developments

• Entered into a Partner Program Agreement with Novo Nordisk:  In January 2011 Pacira entered into an agreement with Novo Nordisk A/S (Novo), pursuant to which Pacira granted Novo Nordisk rights to develop, manufacture and commercialize formulations of a Novo Nordisk proprietary drug using Pacira's DepoFoam® drug delivery technology. Pacira received an upfront license fee of $1.5 million and is entitled to receive up to $24 million in development-based milestone payments and up to an additional $20 million in sales-based milestone payments. Pacira is also entitled to single-digit royalties on sales of any Novo Nordisk product resulting from this development agreement.
• Presented new Phase 3 EXPAREL data at two medical meetings: In January 2011 data from Pacira's Phase 3 multicenter, randomized, double-blind, parallel group, placebo-controlled bunionectomy trial was presented at the 2011 American Academy of Orthopaedic Surgeons Annual Meeting and the Orthopaedic Research Society's 57th Annual Meeting. The data demonstrated that the median time to first use of opioid rescue medication was 7.2 hours for patients treated with EXPAREL compared with 4.3 hours for patients on placebo (p<0.0001) and that patients treated with EXPAREL had comparable safety in wound healing and significantly improved efficacy in pain reduction compared to patients treated with placebo.  
• Completed an IPO:  On February 8, 2011, Pacira sold an aggregate of 6 million shares of its common stock at $7.00 per share resulting in 2011 net proceeds of approximately $37 million.
• Presented new Phase 1 study data on subjects with hepatic impairment: In March 2011, data from Pacira's Phase 1 study evaluating EXPAREL in subjects with moderate, stable hepatic impairment was presented at the 2011 American Society for Clinical Pharmacology and Therapeutics 112th Annual Meeting. Results from the Phase 1 open-label, parallel group volunteer study demonstrated that the differences in plasma exposure of EXPAREL between subjects with moderate, stable hepatic impairment compared to subjects with normal hepatic function were small and unlikely to require a dose adjustment of EXPAREL.
• Presented new preclinical study data on the administration of EXPAREL via peripheral nerve block and on the compatibility of EXPAREL with Lidocaine: In April 2011, new data from two preclinical studies were presented at the Experimental Biology 2011 Annual Meeting. Results from the two preclinical studies demonstrated that EXPAREL was safe when administered in animals as peripheral nerve block and that EXPAREL may be locally administered after waiting 20 minutes following local administration of lidocaine, without potential for an interaction. Additional studies are underway to further investigate the potential use of EXPAREL in peripheral nerve block.  

If EXPAREL is granted a broad postsurgical pain label by the FDA, Pacira would be positioned to address a U.S. market opportunity of approximately 25 million infiltration and elastomeric bag procedures per year. Based upon the current PDUFA date and potential FDA approval timeline, Pacira plans to commercialize EXPAREL in the U.S. in the fourth quarter of 2011. Beyond infiltration, the company expects to develop EXPAREL for use in nerve block and epidural administration procedures, which collectively represent an additional 14 million annual opportunities per year.  Pacira believes there are multiple product opportunities for EXPAREL in the future as well as significant potential for its DepoFoam technology platform, which supports an additional pipeline of development assets and partnering opportunities.

SOURCE Pacira Pharmaceuticals, Inc.