Pacira negative patent ruling most likely outcome, says JPMorgan

JPMorgan keeps an Overweight rating on Pacira BioSciences after catching up with the company’s Chief Legal Officer, Tony Molloy, ahead of Judge Cox Arelo’s upcoming ruling on the ‘495 patent infringement lawsuit, which is expected on or before August 1. The analyst believes an unfavorable ruling for Pacira is the most likely outcome, which the firm believes could send shares lower following FDA approval for generic Exparel last week. JPMorgan estimates a 70% probability that the Judge either rules the patent is not infringed or that the patent itself is invalid, and says the shares in this scenario could decline to the $10-$17 range with generics likely entering soon after. On a favorable ruling, the shares could rise to the $27-$32 range with a path to advance further from there as the story refocuses on the opportunity to expand Exparel use, the analyst tells investors in a research note. After a 25% decline last week, the firm thinks Pacira shares now trade in a “reasonable range ahead of the mostly binary outcome/ruling.”