DOMA Perpetual Sends Letter to Board of Directors of Pacira Biosciences to Immediately Accelerate and Increase its Share Buyback Program to Enhance Return to Shareholders
DOMA Perpetual Capital Management, holding about 4% of Pacira Biosciences (NYSE: PCRX) stock, sent a letter to the company's Board urging for an accelerated and increased stock repurchase program. The letter criticizes Pacira's capital allocation strategy and M&A track record, calling for a focus on enhancing shareholder returns. DOMA recommends:
1. Completing the current $150 million buyback before Q3 earnings
2. Approving a new $300 million buyback in Q4
3. Buying back $200 million of stock before year-end
4. Continuing buybacks into 2025
DOMA believes Pacira's $400 million cash balance (59% of market cap) is inefficient and sees the current stock price as an opportunity to create significant shareholder value. They project potential EPS of $5 in 2025 and $11 by 2027, with a stock price potentially reaching $75/share in the near term and $165/share by 2027.
DOMA Perpetual Capital Management, che detiene circa il 4% delle azioni di Pacira Biosciences (NYSE: PCRX), ha inviato una lettera al Consiglio della società chiedendo un programma di riacquisto di azioni accelerato e aumentato. La lettera critica la strategia di allocazione del capitale di Pacira e il suo track record nelle fusioni e acquisizioni, chiedendo un focus sull'aumento dei ritorni per gli azionisti. DOMA consiglia:
1. Completare il riacquisto attuale da 150 milioni di dollari prima degli utili del terzo trimestre
2. Approvare un nuovo riacquisto da 300 milioni di dollari nel quarto trimestre
3. Riacquistare 200 milioni di dollari di azioni entro la fine dell'anno
4. Continuare i riacquisti nel 2025
DOMA crede che il saldo di cassa di 400 milioni di dollari di Pacira (59% della capitalizzazione di mercato) sia inefficiente e vede il prezzo attuale delle azioni come un'opportunità per creare valore significativo per gli azionisti. Prevedono un EPS potenziale di 5 dollari nel 2025 e 11 dollari entro il 2027, con un prezzo delle azioni che potrebbe raggiungere i 75 dollari per azione nel breve termine e 165 dollari per azione entro il 2027.
DOMA Perpetual Capital Management, que posee alrededor del 4% de las acciones de Pacira Biosciences (NYSE: PCRX), envió una carta a la Junta de la compañía instando a un programa de recompra de acciones acelerado y ampliado. La carta critica la estrategia de asignación de capital de Pacira y su historial en fusiones y adquisiciones, pidiendo un enfoque en mejorar los retornos para los accionistas. DOMA recomienda:
1. Completar el actual programa de recompra de 150 millones de dólares antes de los ingresos del tercer trimestre
2. Aprobar una nueva recompra de 300 millones de dólares en el cuarto trimestre
3. Recomprar 200 millones de dólares en acciones antes de fin de año
4. Continuar con las recompras hasta 2025
DOMA considera que el saldo de 400 millones de dólares en efectivo de Pacira (59% de la capitalización de mercado) es ineficiente y ve el precio actual de las acciones como una oportunidad para crear un valor significativo para los accionistas. Proyectan un EPS potencial de 5 dólares en 2025 y 11 dólares para 2027, con un precio de las acciones que podría alcanzar los 75 dólares por acción en el corto plazo y 165 dólares por acción para 2027.
DOMA Perpetual Capital Management는 Pacira Biosciences (NYSE: PCRX) 주식의 약 4%를 보유하고 있으며, 회사 이사회에 가속화된 주식 매입 프로그램을 촉구하는 편지를 보냈습니다. 이 편지는 Pacira의 자본 배분 전략과 인수합병 실적을 비판하며, 주주 수익을 향상시키는 데 집중할 것을 요청합니다. DOMA는 다음과 같이 권장합니다:
1. 3분기 실적 발표 전 현재 1억 5천만 달러 규모의 매입 완료
2. 4분기에 새로운 3억 달러 규모의 매입 승인
3. 연말 전에 2억 달러 규모의 주식 매입
4. 2025년까지 매입 지속
DOMA는 Pacira의 4억 달러 현금 잔고(시장 가치의 59%)가 비효율적이라고 생각하며, 현재 주가를 주주 가치를 창출할 수 있는 기회로 보고 있습니다. 그들은 2025년의 EPS가 5달러, 2027년에는 11달러가 될 것으로 예상하며, 주가는 단기간에 주당 75달러, 2027년까지는 주당 165달러에 이를 수 있다고 봅니다.
DOMA Perpetual Capital Management, détenant environ 4% des actions de Pacira Biosciences (NYSE: PCRX), a envoyé une lettre au conseil d'administration de l'entreprise demandant un programme de rachat d'actions accéléré et augmenté. La lettre critique la stratégie d'allocation de capital de Pacira et son bilan en matière de fusions et acquisitions, appelant à se concentrer sur l'amélioration des retours pour les actionnaires. DOMA recommande :
1. D'achever le rachat actuel de 150 millions de dollars avant les résultats du troisième trimestre
2. D'approuver un nouveau rachat de 300 millions de dollars au quatrième trimestre
3. De racheter 200 millions de dollars d'actions avant la fin de l'année
4. De continuer les rachats jusqu'en 2025
DOMA estime que la trésorerie de 400 millions de dollars de Pacira (59% de la capitalisation boursière) est inefficace et perçoit le prix actuel des actions comme une occasion de créer une valeur significative pour les actionnaires. Ils prévoient un BPA potentiel de 5 dollars en 2025 et de 11 dollars d'ici 2027, avec un prix de l'action atteignant potentiellement 75 dollars par action à court terme et 165 dollars par action d'ici 2027.
DOMA Perpetual Capital Management, das etwa 4% der Aktien von Pacira Biosciences (NYSE: PCRX) hält, hat einen Brief an den Vorstand des Unternehmens gesendet und ein beschleunigtes und erhöhtes Aktienrückkaufprogramm gefordert. Der Brief kritisiert die Kapitalallokationsstrategie und die M&A-Bilanz von Pacira und fordert einen Fokus auf die Verbesserung der Rendite für die Aktionäre. DOMA empfiehlt:
1. Die aktuelle Rückkaufmaßnahme über 150 Millionen Dollar vor den Ergebnissen des dritten Quartals abzuschließen
2. Im vierten Quartal einen neuen Rückkauf über 300 Millionen Dollar zu genehmigen
3. Vor Jahresende 200 Millionen Dollar an Aktien zurückzukaufen
4. Die Rückkäufe bis 2025 fortzusetzen
DOMA glaubt, dass Paciras Bargeldbestand von 400 Millionen Dollar (59% der Marktkapitalisierung) ineffizient ist und sieht den aktuellen Aktienkurs als Gelegenheit, signifikanten Wert für die Aktionäre zu schaffen. Sie prognostizieren ein potentielles EPS von 5 Dollar im Jahr 2025 und 11 Dollar bis 2027, während der Aktienkurs kurzfristig 75 Dollar pro Aktie und bis 2027 165 Dollar pro Aktie erreichen könnte.
- Pacira has a strong cash position of $400 million, about 59% of its market capitalization
- The company has an approved $150 million stock buyback program
- Pacira generates healthy free cash flow, estimated at over $160 million for the next twelve months
- The NOPAIN Act is expected to drive significant growth in Exparel sales and net income
- Potential for EPS to reach $5 in 2025 and $11 by 2027, according to DOMA's projections
- DOMA criticizes Pacira's Board for an ineffective capital allocation strategy
- The company is described as having a 'dismal M&A track record'
- Pacira's stock price has experienced a 'dramatic collapse'
- The company is facing patent litigation issues
- Current market capitalization is described as reflecting a 'distressed scenario'
Insights
This letter from DOMA Perpetual to Pacira's board is highly significant. They're pushing for an aggressive share buyback program, citing Pacira's
Key points:
- Urging completion of the current
$150 million buyback before Q3 earnings - Proposing an additional
$300 million buyback in Q4 - Projecting potential EPS of
$5 in 2025 and$11 by 2027 - Criticizing the board's M&A strategy and capital allocation
This activist approach could lead to significant near-term price action and long-term value creation if implemented. However, it also highlights underlying concerns about Pacira's patent litigation and market position.
The letter provides an optimistic view on Pacira's ongoing patent litigation, contrasting with market pessimism. DOMA believes the combined probabilities favor Pacira winning at least one patent case or reaching a settlement. They argue the current stock price reflects an overly pessimistic scenario.
Key legal considerations:
- Multiple patent cases in the pipeline, including appeals
- Potential for settlements
- Risk assessment for generic competitors entering the market 'at-risk'
- Jurisdiction considerations (cases outside New Jersey may be more favorable)
While DOMA's stance is optimistic, investors should note that patent litigation outcomes remain uncertain and could significantly impact Pacira's future. The board's response to this pressure and any updates on legal proceedings will be important to watch.
DOMA's letter highlights significant growth potential for Pacira, particularly driven by the NOPAIN Act. Key market factors include:
- Expansion of Medicare coverage from 2.3 million to 6 million annual procedures
- Potential for private insurance to follow Medicare coverage, opening up 12 million more procedures annually
- Projected revenue and net income doubling or tripling by 2027
- Increasing focus on non-opioid pain management solutions
The letter suggests Pacira is well-positioned to capitalize on these trends, potentially becoming a blockbuster drug. However, this optimistic outlook contrasts with the current market valuation, indicating either a significant mispricing or market concerns not fully addressed by DOMA. Investors should closely monitor Exparel's market penetration and the impact of the NOPAIN Act on Pacira's financials in the coming quarters.
Believes Pacira's Cash Balance of
Emphasizes the Current Stock Price Offers an Extraordinary Opportunity to Create Meaningful Return for Shareholders
The letter can be downloaded here
The full text of the letter follows:
September 24, 2024
To the Board Members of Pacira Biosciences:
DOMA Perpetual Capital Management is an asset manager focused on generating long-term value for its investors. DOMA and its owners now control about
In our view, Pacira's Board demonstrates an ineffective capital allocation strategy, maintains a dismal M&A track record and lacks strategic oversight. As shareholders, it is not our preference to discuss these issues publicly nor to endeavor to overhaul the Board. Present circumstances – including the dramatic collapse of Pacira's stock price and how the Company has handled patent litigation and its communication to shareholders regarding the situation thus far – have pushed us to publish this letter.
We believe this Board must re-focus on enhancing shareholder return, giving back hundreds of millions of dollars to shareholders in the form of accelerated buybacks while quickly expanding Exparel to blockbuster status. Additionally, the Board should pause all future M&A activity until proper shareholder return has been achieved. This Board's track record plainly illustrates why it should not be allowed to continue to roll the dice on any strategy that amounts to gambling with shareholder money.
Before considering any other capital-intensive activities, all cash flow should be utilized for buying back stock. After completing the currently approved
We do not perceive the current legal situation with the pessimism and dread favored by some analysts. Following a studied analysis, we believe the combined independent probabilities of Pacira winning at least one of its future patent cases and/or a potential settlement of the current case to be the most likely outcome and we maintain a high degree of confidence in Pacira's promising future. The fact that this view does not match the current market capitalization of the Company presents a large – and fleeting – opportunity to increase the speed and size of the currently approved buyback program.
If Management and the Board believe in the Company's IP – as recent stock purchases made by the CEO and Board members would indicatev – they should aggressively push to finish the
We believe there are several incorrect assumptions affecting Pacira's stock price. The market is factoring in a scenario in which the generic-drug developer is willing to risk hundreds of millions or billions of dollars to engage in a multi-year legal battle, develop production capabilities and attempt an "at risk" entrance into the market. An at risk entrance requires that same company to have cash reserves in the billions for potential legal liabilities in the event Pacira wins just one future patent case. The scenario also assumes providers will overwhelmingly choose to purchase a generic version of Exparel from a foreign company with no history of manufacturing or developing the drug at scale. Finally, this scenario requires Pacira to lose every single patent case in the pipeline, including appeals. Many of the patent cases still to be argued are for in-process patents, which have yet to be fully granted, as well as patent cases that will go to trial outside of
We believe Pacira's current stock price represents an enormous opportunity for shareholder return – a potential return so significant it could rival the rollout of the NOPAIN Act. Pacira has
To underscore the magnitude of the current opportunity of this stock price, let's look at the numbers. We can use Wall Street analysts average net income numbers from Bloomberg:
We expect Pacira to experience massive growth in sales and net income as Medicare coverage from the NOPAIN Act drives up access from 2.3 million annual procedures to about 6 millionxiv. Private insurance coverage, which typically follows Medicare by about twelve months, may arrive ahead of schedule; coverage for safe, effective, non-opioid pain management is good for patients, good for providers and an effective tool for curtailing the opioid epidemic that the US is working hard to overcomexv. Private insurance coverage of Exparel will open the door to an additional 12 million procedures annuallyxvi, a number that should fully impact the Company in 2026 and 2027. By the end of 2027, Pacira's revenues will likely have more than doubled – if not tripled – along with its net incomexvii. This would put the Company's net income to north of
Pacira's Board – despite its legal and fiduciary duty to its shareholders – has failed to generate any shareholder return. The fear in the market has provided the Company with an immense opportunity. It would be a critical mistake if Management and the Board do not buy back stock aggressively, finishing the approved
Management and this Board must act to take advantage of Pacira's irrationally depressed stock price, buying back as many shares as possible at the fastest pace allowed. Choosing to ignore the golden opportunity created by timing, share price, market fear and potential revenue growth would be a clear indication that we need to take a more active role.
Sincerely,
Pedro Escudero
CEO & CIO
DOMA Perpetual Capital Management LLC
Disclaimer
This letter has been prepared by DOMA Perpetual Management LLC and its affiliates ("DOMA"). The views expressed herein reflect the opinions of DOMA and are based on publicly available information with respect to Pacira Biosciences Inc. ("Pacira Biosciences, Inc." or the "Company"). DOMA recognizes that there may be confidential information in the possession of the Company that could lead it or others to disagree with DOMA's conclusions. DOMA reserves the right to change or modify any of such views or opinions at any time and for any reason and expressly disclaims any obligation to correct, update, or revise the information contained herein or to otherwise provide any additional materials.
For the avoidance of doubt, this press release was not produced by any person that is affiliated with Pacira Biosciences Inc., nor was its content endorsed by Pacira Biosciences Inc. This press release is provided merely as information and is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security nor as a recommendation to purchase or sell any security. One or more funds managed by DOMA currently beneficially owns shares of the Company.
Some of the materials in this press release contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "potential," "could," "opportunity," "estimate," "plan," "once again," "achieve," and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained herein that are not historical facts are based on DOMA's current expectations, speak only as of the date of these materials and involve risks, uncertainties and other factors that may cause actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of DOMA.
i Pacira Biosciences 10-Q 06/30/2024 Company Filing, DOMA Perpetual Internal Calculations
ii Pacira Biosciences Company Filings
iii DOMA Perpetual Internal Calculations
iv Pacira Biosciences Jefferies Global Healthcare Conference 2024 Presentation
v Pacira Biosciences Company Filings
vi Pacira Biosciences Company Filings
vii Pacira Biosciences 10-Q 06/30/2024 Company Filing
viii DOMA Perpetual Internal Calculations
ix DOMA Perpetual Internal Calculations
x Bloomberg L.P. (2024). Retrieved September 2024 from Bloomberg Database
xi DOMA Perpetual Internal Calculations
xii DOMA defines a "non-demanding PE" as a PE multiple that is below Pacira's historical average 1-year forward P/E ratio of 29x derived from data on Bloomberg
xiii DOMA Perpetual Internal Calculations
xiv Pacira Biosciences Jefferies Global Healthcare Conference 2024 Presentation
xv Centers for Disease Control and Prevention. (2024, April 5). Understanding the opioid overdose epidemic. https://www.cdc.gov/overdose-prevention/about/understanding-the-opioid-overdose-epidemic.html
xvi Pacira Biosciences Q1 2024 Earnings Call
xvii DOMA Perpetual Internal Calculations
xviii DOMA Perpetual Internal Calculations
xix DOMA Perpetual Internal Calculations
xx DOMA defines a "non-demanding PE" as a PE multiple that is below Pacira's historical average 1-year forward P/E ratio of 29x derived from data on Bloomberg
xxi DOMA Perpetual Internal Calculations
Media Contact: eric@domaperpetual.com
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SOURCE DOMA Perpetual
FAQ
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