Why Pacira Pharmaceuticals Stock Is Already Up 56% This Year
Pacira Pharmaceuticals'(NASDAQ: PCRX) Exparel is helping battle back against the opioid abuse crisis. A local anesthetic, the use of Exparel during surgery can reduce pain, and decrease patients' reliance on opioids during their recovery.
In this clip of The Motley Fool's Industry Focus: Healthcarepodcast, analyst Kristine Harjes and Todd Campbell explain why growing use of Exparel is fueling market-beating returns this year, and what could be next for this biotech.
A transcript follows the video.
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Kristine Harjes:The next one that we want to talk about is uproughly the same amounts. It's56% year to date. This isPacira Pharmaceuticals. Is that how you pronounce this one?
Todd Campbell:I pronounce it differently, but we can go with that.I was just thinking like Pacific.
Harjes:Oh, OK,I could see that. Don't get it confused withPacific Biosciences. This one is PaciraPharmaceuticals. Ticker is PCRX.
Campbell:Yeah. Again,we have got a situation where we have got a company that has a drugon the market that's growing relatively quickly. It'sstable. It's not growing as quickly as Exelixis' drug Cabometyx. But11% year-over-year growth for their drug Exparel, which is aninteresting drug because it's usedto prevent pain inpatients who undergo procedures. What'sinteresting about this drug is it'snot an opiate. You and I havetalked about on the show beforesome of the problems that the country has right nowwith opiate abuse. As a result,doctors are prescribing opiates asinfrequently as they can.
Exparel works by beinginserted at the time of the procedure. It's kind of like when you numb your mouth when you're getting a filling. As a result, it not only helps to control pain, but it reduces the reliance by patients on opiates as they'rerecovering. We have got a company that has just inked a deal with aunit ofJ&J that's going to help get Exparel in front of more and more doctors. There's a lot of opportunities,theoretically, to expand the use of thisacross more and more procedure types. So, you get it used in kneeprocedures and shoulder procedures and soft-tissue procedures. That has some people thinking sales could growmeaningfully from where they are now. They did about $280 million in sales last year.
Harjes:They'redefinitely forecasting some pretty strong sales growth for this drug. The one thing that I would throw out there as a word of caution with this stock is valuation. They havepretty astronomical numbers. If you look at their price to sales, their P/E, it's all well above industry average.
Campbell:Yeah,it's a $1.8 billion market cap, whichisn't ridiculous if you want to say, what would be a takeout valuation, when you're talking about 10 times sales orsomething like that. But, yeah, it has a little bit of debtit's going to pay down. It's not a cheap stock. Of course,none of these are cheap stocks. They're fast growing, and that'spart of the reason that people are willing to paya little bit more of a premium to own them.
Kristine Harjes owns shares of Johnson and Johnson. Todd Campbell has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Exelixis and Johnson and Johnson. The Motley Fool recommends Pacific Biosciences of California. The Motley Fool has a disclosure policy.