Evercore ISI analyst Joshua Schimmer says the issues "read trivial" and would be a buyer of Heron amid weakness
Shares of Pacira (PCRX) are on the rise on Monday after Heron Therapeutics (HRTX) announced that it received a Complete Response Letter from the Food and Drug Administration on June 26 regarding its New Drug Application for HTX-011 for the management of postoperative pain. Commenting on the news, JPMorgan calls the development "a clear positive" for Pacira. The company sells Exparel as a pain treatment.
CRL FOR PAIN TREATMENT: Heron Therapeutics announced that it received a Complete Response Letter from the Food and Drug Administration on June 26 regarding its New Drug Application for HTX-011 for the management of postoperative pain. The CRL stated that the FDA is unable to approve the NDA in its present form based on the need for additional non-clinical information, Heron said in a statement.
It added, "Based on the complete review of the NDA, the FDA did not identify any clinical safety or efficacy issues or CMC issues. There are four non-clinical issues in the CRL, none of which relate to any observed toxicity. Three relate to confirming exposure of excipients in preclinical reproductive toxicology studies, and the fourth relates to changing the manufacturing release specification of the allowable level of an impurity based on animal toxicology coverage. We do not believe that any of the issues are significant barriers to ultimate approval, as all of the excipients have extensive histories of use in pharmaceuticals and the specification can be revised. The company will request a Type A meeting to obtain agreement with the Agency on our responses and resubmit the application as quickly as possible."
ISSUES 'READ TRIVIAL': Commenting on the news, Evercore ISI analyst Joshua Schimmer said he would be a buyer of Heron Therapeutics amid the weakness following the receipt of a CRL from the FDA as he believes the issues "read trivial." The analyst believes Heron will request a Type A FDA meeting within 30 days, can hopefully quickly make a resubmission with a two-month review and possibly still get approval by year-end. He has an Outperform rating and $70 price target on Heron shares.
'CLEAR POSITIVE' FOR PACIRA: JPMorgan analyst Chris Schott told investors that he views the news that Heron Therapeutics has received a CRL for HTX-011 as “a clear positive for Pacira,” enabling Exparel to further entrench itself ahead of any competition and raising questions around HTX-011's profile and time to approve. More broadly on the Pacira story, while COVID-19 will obviously pressure near-term results, the analyst sees several factors, including increased use among anesthesiologists and further penetration in outpatient, supporting strong Exparel uptake in 2021-plus. He has a Neutral rating on Pacira's shares.
PRICE ACTION: In afternoon trading, shares of Pacira have jumped almost 18% to $51.93, while Heron’s stock has plunged over 27% to $14.45.