On Wednesday, Barclays shifted its stance on Pacira Pharmaceuticals (NASDAQ:PCRX) stock, downgrading from Overweight to Equalweight and slashing the price target to $25 from $38.
The move follows the recent approval of eVenus, which poses a significant risk to the sales trajectory of Pacira's leading product, Exparel. Exparel is a substantial revenue generator for Pacira, accounting for 78% of the company's revenues according to Barclays' 2024 estimates.
The approval of eVenus could lead to the launch of a generic version of Exparel by eVenus and its partner Fresenius Kabi. Although there is ongoing litigation surrounding the 495 Patent, the expiration of the 30-month stay could allow for an At-Risk Launch, which Barclays sees as a low-probability event. Nevertheless, the potential for this launch creates uncertainty for Pacira.
Barclays notes that while there are additional patents in place to safeguard Exparel, it is likely that these too will be challenged in time. This prospect introduces the risk of persistent negative news that could affect the stock's performance. Despite this, there is some near-term upside anticipated from the implementation of NOPAIN in 2025, which is expected to benefit the company.
The NOPAIN Act is a legislative initiative aimed at reducing opioid use by increasing access to non-opioid pain management therapies. The implementation of NOPAIN could provide a boost to Exparel sales, as it is a non-opioid pain relief drug. However, the overshadowing patent concerns seem to be a primary factor in Barclays' reassessment of Pacira's stock outlook.
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