By Andrew McDonald, Ph.D. and Jerry Isaacson, Ph.D.
Pacira Pharmaceuticals (PCRX) is a biopharmaceutical focused on developing non-opioid products for pain management. The company's products are based on its DepoFoam technology, a liposomal drug delivery platform that allows for the extended release of injected drugs. On October 31, 2010, Pacira announced FDA approval of EXPAREL (bupivacaine liposome injectable suspension), indicated for the management of postoperative pain. The liposomal formulation of the drug allows for injection into the surgical site and slow release of the analgesic into the area.
The company announced the commercial availability of the product on April 9, 2012, and early sales numbers are promising. In order to gain a better understanding of the expected market potential of EXPAREL, we conducted a survey of general surgeons in our proprietary Expert Network. The results of the survey are summarized below, and full results can be found here.
Trading at a price of $16.25, Pacira stock has increased 59% in June, largely based on strong preliminary prescription sales data. With pro-forma cash of $118MM and debt of $28MM, Pacira has an enterprise value of $435MM. Wolter Kluwers reported $151k in April sales and an impressive $638k in sales for May. These numbers demonstrate fairly strong early uptake of EXPAREL, and are also strong considering that Pacira has so far fielded only 63 sales representatives.
We can compare the early Exparel launch to Affymax's (AFFY) treatment for anemia due to chronic kidney disease OMONTYS (peginesatide), which had $17k in May sales and has an enterprise value of $387MM. Pacira's launch also compares favorably to the launch of OFIRMEV (acetaminophen injection) by Cadence Pharmaceuticals (CADX). OFIRMEV was launched in January, 2011 and with a sales force of 147 hospital sales specialists and 13 field medical science liaisons the company reported first month sales of $40k.
Cadence reported $8.0MM in revenue from OFIRMEV in the first quarter of 2012. Other comparators for EXPAREL are Savient Pharmaceuticals' (SVNT) KRYSTEXXA and Optimer Pharmaceuticals' (OPTR) DIFICID (fidaxomicin). KRYSTEXXA was launched in February, 2011 and recorded first month sales of $4,600 with a sales force of 60 representatives. KRYSTEXXA sales have continued their early weakness, with Savient reporting sales revenue of $3.1MM for the Q1 2012. Optimer launched DIFICID in July, 2011 with a sales team of 275 representatives. The drug recorded $713k in sales in the first month and Optimer reported sales of $14.4MM in Q1 2012. These examples highlight the fact that sales in the first few months are indicative of the longer sales trend.
We solicited 6000 general surgeons who are part of our proprietary Expert Network to participate in an EXPAREL usage survey. We queried the physicians on their current and expected use of EXPAREL, and other treatments for postoperative pain. We received responses from 100 surgeons, 93 of whom routinely make decisions regarding postoperative pain management. Overall, the surgeons in our survey reported conducting approximately 3,260 surgical procedures requiring pain management per month. Respondents perform an average of 35 such procedures per month. Our survey confirmed that with its recent launch, EXPAREL is yet well known among surgeons, but the potential for adoption is very good.
The current standard of care for managing post-operative pain is the use of some type of opioid painkiller. 100% of surveyed surgeons reported using opiates in the treatment of postoperative pain. These physicians reported prescribing opiates for 77.4% of patients. 84% of surveyed surgeons reported using NSAIDs in the treatment of postoperative pain and among those physicians, NSAIDs were prescribed for 45% of patients. 85% of surveyed surgeons reported using local anesthetics/analgesics in the treatment of postoperative pain and prescribed them to 47% of patients. 38% of surveyed surgeons reported using elastomeric pumps in the treatment of postoperative pain. Among those physicians reporting prescribing elastomeric pumps, they were prescribed for 21% of patients.
In our survey, 52% (48/93) of surveyed surgeons were 'somewhat familiar' with EXPAREL and 10% (9/93) were 'very familiar', while 39% (36/93) had 'never heard of it'. At the point of our survey, only 3 of 93 surveyed surgeons had prescribed EXPAREL. Looking forward one year, 52% (48/93) of respondents said that they would use the drug, and they said they would use EXPAREL regularly - on average 17 times/month. 74% of survey respondents (66/89) intend to evaluate EXPAREL for potential adoption. The most important factor that surgeons will be looking at when evaluating EXPAREL is how effective the drug is at managing pain. If the drug is as effective in practice as it was in clinical trials then Pacira should be able to convince surgeons of the drug's effectiveness.
Coincidentally, one of the physician respondents to the survey was actually treated with EXPAREL following a surgical procedure. While this is one patient's anecdotal account, it is a powerful testament to the efficacy of the drug. In his own words,
I am a surgical oncologist and perform over 500 major surgical operations a year. I was recently involved in it, myself and was a patient. I fractured several cervical and thoracic vertebrae, my sternum and several ribs. I had extensive pulmonary contusions and a right pneumothorax. I was on extensive narcotics systemically but still could not breathe very well and was on a 100% non-rebreathing oxygen mask. The anesthesiologist let me know of and tried for the first time this long-acting new-product. This product was used under ultrasound guidance and was injected along the fractured thoracic vertebra and multiple ribs. This was truly effective and made the difference. I am now at home recovering and I required 3 injections of the long-acting 72 hour medication during my hospitalization and it made a very big difference; it may have made the difference. I was able to stay off the ventilator and I was able to breathe and my commentary contusions resolved and my pain was controlled. This works and I was fortunate not to have any side effects. These are my general views and I intend to use this product.
Based on the early sales results and the results of this survey we will be monitoring the launch of EXPAREL.