At a price of $35.80 on 10/4/2016, Pacira Pharmaceuticals is the next Big Bet Stock Pick.
PCRX has been beaten down on concerns that are now behind us. There are several catalysts that could push its share price significantly higher in the following years, including:
– Rising awareness about the opioid epidemic. Exparel is a non-opioid drug used for post-surgical pain management. There could be continued media, physician, and patient focus on reducing exposure to opioids and this is a secular growth trend in Exparel’s favor. Pacira has recently launched an awareness campaign which should help with those efforts.
– Increased focus on reduced healthcare costs. Exparel was shown to reduce the length of stay in the hospital, saving the system more than $1,000 per patient.
– Exparel’s oral surgery launch in late September.
– Nerve block trial results in 1H 2017. If successful, it should significantly expand Exparel’s addressable market.
– Introduction of a 10ml vial and a four-pack (as opposed to the 40ml vial and ten-pack that was only available), which should increase the uptake in the retail environment.
– International expansion. The company could announce one or more regional partnerships in the following months.
– Pacira has spent several quarters evaluating acquisition targets and could pull the trigger in the following quarters.
Long-term biotech bulls believe the sector will significantly outperform the general market over the next few years. The Hillary impact on drug pricing issues and the upcoming referendum vote in California (also about drug pricing) mean the issue could be overblown and already overly discounted considering the attractiveness of small and mid-cap biotech stocks.
Focusing on companies with innovative and differentiated products that should retain their pricing power in the following years, or which are developing or selling products that lead to significant patient benefits or lower healthcare costs is where long term money can be made in this market environment.
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