Peter Schreiber Media
Passila Biosciences (NASDAQ: PCRX), four investment banks downgraded the company after a court ruled against the company over the patent validity of its lead drug, Exparel.
JPMorgan downgraded its rating to “underweight” and said the ruling was “the worst ever” Exparel accounts for about 80% of Pacira’s revenue and is its main growth driver. It added that “the vast majority” of Exparel’s revenue would “likely be eroded” if PCRX fails to successfully defend its other patents.
“Our shares are set to rise significantly over the foreseeable future as we believe investors will turn their attention to other, cleaner stories in the space,” JPMorgan added in the report, lowering its price target to $10 from $45. Dollar.
Raymond James, which downgraded the stock to market perform, said he was “disappointed” that it was unable to reach a settlement with the company before the decision.
While Raymond James believes the sell-off following the decision was “somewhat excessive when considering Pacira’s valuation,” the company said it will take a wait-and-see approach until it learns more about the situation.
RBC said it downgraded its rating to sector perform in part due to “a potentially protracted legal defense, the viability of eVenus to commercialize its generics, and the vulnerability of Exparel to consolidate its position.” It also lowered its price target from USD 37 lowered to USD 14.
Meanwhile, Piper Sandler downgraded its rating to neutral, citing the potential risk of eVenus launching a generic version of Exparel. It noted that while eVenus is not a well-known generics company in the U.S. market, it is a subsidiary of Chinese pharmaceutical company Jiangsu Hengrui and partners with distributor Fresenius Kabi.
“Our logic is as follows: If the parties are well-capitalized enough to meet Exparel’s needs broadly, then we presume they are well-capitalized enough to take on the liability risk,” Piper said.
Piper said it does not rule out another drugmaker applying to launch a generic version of Exparel. The investment bank lowered its price target to $11 from $42.
