Pharmaceutical company Pacira seeks to boost its market leader position in the non-opioid pain management sector in its latest acquisition.
Pacira BioSciences Inc. (Nasdaq: PCRX) is set to acquire biopharmaceutical company Flexion Therapeutics, Inc. (Nasdaq: FLXN) in a $427.5 million deal announced on October 11, which will expand Pacira’s market position for non-opioid pain management.
Under the agreement, Pacira will acquire Flexion for $8.50 per share in cash and “one non-tradeable contingent value right (CVR) worth up to $8.00 per share in cash.” Accordingly, the CVR is payable in accordance if certain sales and/or regulatory targets are met on or before December 31, 2030, like “$1.00 per share upon U.S. FDA approval of FX201.”
According to the press release, Flexion is “focused on the development and commercialization of novel, non-opioid therapies for the treatment of patients with musculoskeletal conditions.” Its main product is Zilretta, to treat osteoarthritis knee pain via extended-release corticosteroid. Pacira’s products include Exparel, a non-opioid injection acting as local postsurgical analgesia, as well as Iovera, a non-opioid pain treatment reducing pain via cold therapy cryoanalgesia. As noted in the filing, Exparel’s net product sale in Q3 2021 is $121.9 million, and Iovera’s is $4.2 million. Meanwhile, the expected Zilretta net sales for Q3 2021 is $21 to $23 million.
Pacira cited Flexion’s “(i)nnovative non-opioid portfolio,” including Zilretta, in explaining the acquisition, which fits with Pacira’s “mission to provide an opioid alternative to as many patients as possible and address medical needs along the neural pain pathway.” Zilretta will now allow Pacira to help treat osteoarthritis knee pain. Furthermore, the companies purportedly have corresponding sales call points and clinical-stage pipelines that complement each other.
Both Pacira and Flexion’s respective boards unanimously approved the reverse triangular merger. The deal will generate revenue immediately and is expected to be accretive to full-year 2022 earnings and more accretive after that. The deal is expected to close by the end of the year.
Before the announcement, on October 8, Pacira’s stock price was $47.97; it rose to $50.76 on the October 11 on the day the deal was announced and on October 12 it increased to $52.01 and more than a week later on October 20 it finished at $53.11. Meanwhile, Flexion’s share prices greatly increased following the news of the announcement and have been stable since then. On October 8, Flexion’s stock price was $5.78, and on October 11 when the deal was announced the stock rose to $9.17 and the day after on October 12 it was $9.30. In the week since the announcement, the stock has been pretty consistent between $9.30 and $9.45.
Pacira is represented by Perkins Coie LLP and its financial advisor is J.P. Morgan Securities LLC.
Flexion is represented by Cooley LLP; the lead financial advisor is Lazard Frères & Co. LLC with Goldman Sachs also as a financial advisor.
