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Pacira: Exparel Approval Easy, Selling Painkiller Harder Challenge

PARSIPPANY, NJ. (TheStreet) -- Pacira Pharmaceuticals (PCRX) received U.S. approval to sell a long-acting post-surgical painkiller but now must convince hospitals that using the new drug can help patients and save them money.

Shares of Pacira rose as much as 20% to over $12 in Monday's pre-market session on news of the U.S. Food and Drug Administration approval of Exparel was released. The Pacira stock pop didn't last long. Shares are up just 3% to $10.48 in mid-morning trading.

The volatility in Pacira trading Monday follows a typical pattern in which investors move quickly from loving a company seeking drug approval to being wary of the same company once the approved drug has to be launched commercially.

In Pacira's case, the post-approval selling may be accelerated by the additional challenge facing the company of selling Exparel to hospitals, which can be a more complicated and lengthy process than selling drugs to individual doctors.

Exparel is a long-acting formulation of the painkiller bupivicaine that's been used for 20 years following soft tissue or orthopedic surgical procedures. In Exparel, the bupivicaine is surrounded by tiny spheres or bubbles of fat and water. As the tiny "DepoFoam" spheres dissolve, they release the bupivicaine slowly into the surgical wound, extending the pain relief from hours to days.

Hospitals perform 24 million surgical procedures annually in which Exparel could be used, Pacira says.

Exparel will cost more than regulaor bupivicaine, both of which are typically injected into a wound just before it's closed. Pacira says surgeons and hospitals will save money overall using Exparel for post-surgical care because patients will require fewer opioid painkillers following surgery. Use of opioids is not only expensive for hospitals but it also causes significant side effects for patients, Pacira says.

Pacira's challenge is to convince hospitals that adopting Exparel to replace standard (and cheaper) bupivicaine is good for patients and for their bottom line. To make that argument, the company has commissioned health care economic studies to demonstrate Exparel's value. Additional studies are also planned.

Getting a new drug added to a hospital's so-called "formulary" can take time, and even if a new drug is added to the formulary doesn't necessarily guarantee that doctors will it. Cadence Pharmaceuticals (CADX) has found it relatively easy to convince hospitals to add its injectable acetaminophen Ofirmev to formularies but generating revenue has been much more difficult and the company's stock price has suffered for it.

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