Pacira to Issue Notes

Pacira Pharmaceuticals, Inc. ( PCRX - Snapshot Report ) recently announced its intention to raise funds through the issuance of convertible senior notes due 2019 worth $100 million. Initial buyers will have a 30-day option of buying additional notes worth $10 million.

Other details like the interest rate, conversion rate, and offer price will be provided at the time of pricing of the offering.

Pacira, however, laid out its plans for the utilization of the funds that will be raised. About $30 million of the net proceeds will be used for the repayment of all outstanding debt under its senior secured credit facility. At the end of the third quarter of 2012, the company had long-term debt of $24.9 million. On May 10, 2012, Oxford Finance had provided the company with a $27.5 million senior secured term loan.

The balance of the net proceeds from the offering will be used for the commercialization of Exparel, additional development of Exparel and general corporate purposes. Exparel is indicated for administration into the surgical site to produce postsurgical analgesia.

Exparel gained US Food and Drug Administration (FDA) approval in Oct 2011 and was launched in Apr 2012. In the third quarter of 2012, Exparel revenues were $4.6 million, accounting for 54.1% of total revenues. Pacira is trying to expand Exparel’s label for additional indications like ileostomy reversal, open and laparoscopic colectomy procedures, as well as a wide range of plastic surgery usage and TAP (Transverse Abdominis Plane) infiltration.

We currently have a Neutral recommendation on Pacira. The stock carries a Zacks Rank #3 (Hold). Right now, Valeant Pharmaceuticals International, Inc. ( VRX - Snapshot Report ) looks more attractive with a Zacks Rank #1 (Strong Buy).