Pacira’s Exparel “Hit Where It Needed to Most”

Pacira Pharmaceuticals Inc (NASDAQ:PCRX) shares were falling 12% yesterday after the drug maker’s pain medicine failed to meet a primary efficacy endpoint in one of its two Phase 3 femoral nerve block trial. Yet, consider the grand scheme, argues H.C. Wainwright Corey Davis, who believes this is one stumbling block in a multi-layer race to the “finals.”

As far as Davis sees it, Pacira is still “moving on to the finals,” having just the right data to deliver a response to the FDA’s Complete Response Letter (CRL) from back in March 2015. In other words, the drug maker will soon be re-filing its sNDA in the indication of nerve block. The miss of reduction in AUC cumulative pain scores throughout 72 hours will not detract from Pacira’s overall promising prospects.

In fact, the analyst believes what counted more was the primary endpoint of reduction in AUC cumulative pain scores over 48 hours as well as secondary endpoints of reduction in total postsurgical opioid consumption through 48 hours, total number of opioid-free patients through 48 hours, and reduction in time to first opioid rescue use through 48 hours. Here, Pacira came through, and Davis finds this will tackle every deficiency listed in the FDA’s CRL from two years prior. Besides, “femoral nerve blocks are a quickly fading market anyway,” comments Davis.

With this in mind, the analyst reiterates a Buy rating on shares of PCRX with a $59 price target, which represents a 12.5% increase from where the stock is currently trading. (To watch Davis’ track record, click here.)

Davis explains, “As a result of the FDA requests, Pacira had initiated two new nerve block studies: 1) a replica of the original successful femoral nerve block study; and 2) a ‘brachial plexus’ nerve block study. The former is what missed its primary endpoint but this was due to a protocol violation at a single center; when patients from this center were excluded, the trial did indeed achieve statistical significance (p<0.03). Specifically, the violation was certain surgeons failing to inject patients into the posterior capsule (not from failing to perform the actual nerve block properly). We find it odd that this violation caused the study to fail since both active drug and placebo patients would have failed to receive the posterior injection. The brachial plexus study was also announced this morning and was an overwhelming success. Therefore the company has everything it now needs to respond to the CRL and we expect the refiling to occur later in Q3 with an approval and launch in early 2018.”

TipRanks analytics indicate PCRX as a Strong Buy. Out of 9 analysts polled by TipRanks in the last 3 months, 7 are bullish on Pacira stock while 2 remain sidelined. With a return potential of nearly 45%, the stock’s consensus target price stands at $61.71.

Exact Sciences Hands in Another “Wow” Quarter

EXACT Sciences Corporation (NASDAQ:EXAS) shares are surging 8% today thanks to yesterday’s impressive quarterly print that not only outperformed expectations, especially on strength of gross margin. Not only did the biotech firm raise expectations for its long-term goals on gross margins up to 75%+, but Canaccord analyst Mark Massaro has every confidence Exact can transcend even a margin of 80%.

In reaction, the analyst reiterates a Buy rating on EXAS while lifting the price target from $42 to $45, which represents a 12.5% increase from current levels. (To watch Massaro’s track record, click here.)

“EXAS delivered another terrific quarter and is executing on all cylinders, reporting a major beat-and-raise above the ‘blowout’ case we previewed. Given the major beat particularly on the GM line, we are getting a much faster and clearer glimpse of the operating leverage this business has. We are introducing our 2021 EPS of $1.60/ share, which assumes $901M in revenue, GM of 77%, and tests completed of 2M. What’s more, our model still does not include (1) an acceleration in doc ordering or doc utilization now that UNH and AET are in contract; (2) contribution from 100 new salespeople by Q3/17; (3) Cologuard reordering, or (4) any additional test launches beyond Cologuard,” comments the analyst.

Massaro surmises by pointing ahead to four key catalysts for Exact investors to anticipate: “1) More commercial payor wins; 2) additional data on liquid biopsies (lung, liver, pancreatic, etc.); 3) Q3 results; 4) partnership optionality. We’re pleased to host EXAS at the Canaccord Genuity Growth Conference Wed Aug. 9 in Boston.”

For the second quarter, Exact delivered a 171% year-over-year rise in revenues to $57.6 million, which handily “toppled” the analyst’s projections calling for $51.6 million as well as the Street’s of $49.7 million. Additionally, the biotech firm yielded volumes of 135,000 that marked a strong 172% year-over-year rise, which “crushed” Massaro’s forecast of 117,000. Operating expenses of $71.1 million aligned with the analyst’s estimate $70.5ME. Exact closed the quarter with $483 million in cash with its noninvasive colon cancer screening test Cologuard covered by 235 million lives.

TipRanks analytics show EXAS as a Strong Buy. Based on 9 analysts polled by TipRanks in the last 3 months, 8 rate a Buy on Exact stock while 1 maintains a Hold. The 12-month average price target stands at $40.78, marking a 9% upside from where the stock is currently trading.