Pacira Biosciences to Snap Up Flexion Therapeutics; Shares Pop

New Jersey-based pharmaceutical company Pacira Biosciences, Inc. (PCRX) has signed an agreement to acquire biopharmaceutical firm Flexion Therapeutics, Inc. (FLXN) for $8.50 per share in cash and one non-tradable contingent value right (CVR) worth up to $8 per share in cash.

The CVR will be payable on the achievement of certain sales and/or regulatory milestones on or before December 31, 2030. Shares of Pacira jumped 5.8% to close at $50.76 on Monday, while Flexion’s shares closed 58.7% higher at $9.17.

Pacira develops and produces non-opioid pain management and regenerative health solutions. Headquartered in Massachusetts, Flexion manufactures and sells novel local therapies for the treatment of patients with musculoskeletal conditions.

The Chairman and CEO of Pacira, Dave Stack, said, “Importantly, this acquisition creates diversification and growth to our topline while providing what we would expect to be meaningful synergies that should result in substantial near- and long-term accretion to our cash flows and earnings.”

The MD and CEO of Flexion, Michael Clayman, said, “This combination with Pacira offers Flexion stakeholders excellent prospects for value creation, particularly as the contingent value rights provide the opportunity to continue to benefit from the ongoing success of Flexion’s products and programs.”

The transaction is likely to close in the fourth quarter. Furthermore, the companies have released preliminary financial results for the third quarter. (See Analysts’ Top Stocks on TipRanks)

EXPAREL’s net product sales totaled $121.9 million and net product sales of iovera amounted to $4.2 million. Meanwhile, ZILRETTA’s net sales are expected to range from $21 million to $23 million.

Last week, Northland Securities analyst Tim Chiang maintained a Hold rating on Pacira and reduced the price target to $57 from $66 (12.3% upside potential) due to uncertainty on the regulatory and legal front.

The analyst is of the view that additional EXPAREL patents could be listed in the Orange Book before the end of 2021.

Overall, the stock has a Strong Buy consensus rating based on 8 Buys and 2 Holds. The average Pacira Biosciences price target of $79.67 implies 57% upside potential. Shares have lost 25.3% over the past six months.

Two months ago, Needham analyst Serge Belanger reiterated a Buy rating on Flexion with a price target of $18 (96.3% upside potential).

The analyst said, “The impact of the Delta COVID variant flareup varies widely across geographies but has yet to reach a level where Flexion would step away from its 2021 Zilretta sales guidance of $120 million – $130 million.

Overall, the stock has a Strong Buy consensus rating based on 6 Buys and 1 Hold. The average Flexion Therapeutics price target of $15.83 implies 72.6% upside potential. Shares have lost 21.1% year-to-date.