|
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
Delaware
|
|
51-0619477
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
5 Sylvan Way, Suite 300
Parsippany, New Jersey, 07054
|
||
(Address and Zip Code of Principal Executive Offices)
|
||
|
|
|
(973) 254-3560
|
||
(Registrant’s Telephone Number, Including Area Code)
|
|
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
|
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
|
|
PACIRA PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2015
TABLE OF CONTENTS
|
||
|
|
Page #
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
|
|||||||
|
March 31,
2015 |
|
December 31,
2014 |
||||
|
|
|
(Note 2)
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
40,897
|
|
|
$
|
37,520
|
|
Restricted cash
|
—
|
|
|
1,509
|
|
||
Short-term investments
|
113,989
|
|
|
119,138
|
|
||
Accounts receivable, net
|
24,511
|
|
|
22,366
|
|
||
Inventories, net
|
36,264
|
|
|
29,263
|
|
||
Prepaid expenses and other current assets
|
4,089
|
|
|
4,461
|
|
||
Total current assets
|
219,750
|
|
|
214,257
|
|
||
Long-term investments
|
19,938
|
|
|
24,431
|
|
||
Fixed assets, net
|
67,206
|
|
|
60,632
|
|
||
Goodwill
|
25,381
|
|
|
23,761
|
|
||
Intangibles, net
|
323
|
|
|
403
|
|
||
Other assets
|
2,432
|
|
|
2,588
|
|
||
Total assets
|
$
|
335,030
|
|
|
$
|
326,072
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
5,565
|
|
|
$
|
6,758
|
|
Accrued expenses
|
25,296
|
|
|
28,311
|
|
||
Convertible senior notes
|
104,135
|
|
|
103,100
|
|
||
Current portion of royalty interest obligation
|
—
|
|
|
276
|
|
||
Current portion of deferred revenue
|
1,426
|
|
|
1,426
|
|
||
Income taxes payable
|
31
|
|
|
139
|
|
||
Total current liabilities
|
136,453
|
|
|
140,010
|
|
||
Deferred revenue
|
9,152
|
|
|
9,508
|
|
||
Other liabilities
|
5,404
|
|
|
5,409
|
|
||
Total liabilities
|
151,009
|
|
|
154,927
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, par value $0.001; 5,000,000 shares authorized, none issued and outstanding at
March 31, 2015 and December 31, 2014 |
—
|
|
|
—
|
|
||
Common stock, par value $0.001, 250,000,000 shares authorized; 36,343,731 shares issued and
outstanding at March 31, 2015; 36,150,620 shares issued and outstanding at December 31, 2014 |
36
|
|
|
36
|
|
||
Additional paid-in capital
|
492,898
|
|
|
481,334
|
|
||
Accumulated deficit
|
(308,885
|
)
|
|
(310,145
|
)
|
||
Accumulated other comprehensive loss
|
(28
|
)
|
|
(80
|
)
|
||
Total stockholders’ equity
|
184,021
|
|
|
171,145
|
|
||
Total liabilities and stockholders’ equity
|
$
|
335,030
|
|
|
$
|
326,072
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Revenues:
|
|
|
|
|
|
||
Net product sales
|
$
|
57,086
|
|
|
$
|
35,742
|
|
Collaborative licensing and development revenue
|
356
|
|
|
252
|
|
||
Royalty revenue
|
874
|
|
|
668
|
|
||
Total revenues
|
58,316
|
|
|
36,662
|
|
||
Operating expenses:
|
|
|
|
|
|
||
Cost of goods sold
|
17,580
|
|
|
18,127
|
|
||
Research and development
|
5,967
|
|
|
5,204
|
|
||
Selling, general and administrative
|
31,428
|
|
|
22,589
|
|
||
Total operating expenses
|
54,975
|
|
|
45,920
|
|
||
Income (loss) from operations
|
3,341
|
|
|
(9,258
|
)
|
||
Other (expense) income:
|
|
|
|
|
|
||
Interest income
|
155
|
|
|
42
|
|
||
Interest expense
|
(1,996
|
)
|
|
(2,107
|
)
|
||
Royalty interest obligation
|
(71
|
)
|
|
(120
|
)
|
||
Other, net
|
(117
|
)
|
|
(34
|
)
|
||
Total other expense, net
|
(2,029
|
)
|
|
(2,219
|
)
|
||
Income (loss) before income taxes
|
1,312
|
|
|
(11,477
|
)
|
||
Income tax expense
|
(52
|
)
|
|
—
|
|
||
Net income (loss)
|
$
|
1,260
|
|
|
$
|
(11,477
|
)
|
|
|
|
|
||||
Net income (loss) per share:
|
|
|
|
|
|
||
Basic and diluted net income (loss) per common share
|
$
|
0.03
|
|
|
$
|
(0.34
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||
Basic
|
36,235
|
|
|
33,711
|
|
||
Diluted
|
41,779
|
|
|
33,711
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net income (loss)
|
$
|
1,260
|
|
|
$
|
(11,477
|
)
|
Other comprehensive income:
|
|
|
|
|
|
||
Net unrealized gain on investments
|
52
|
|
|
—
|
|
||
Total other comprehensive income
|
52
|
|
|
—
|
|
||
Comprehensive income (loss)
|
$
|
1,312
|
|
|
$
|
(11,477
|
)
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2015
(Unaudited)
(In thousands)
|
||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Income (Loss) |
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
Balances at December 31, 2014
|
36,151
|
|
|
$
|
36
|
|
|
$
|
481,334
|
|
|
$
|
(310,145
|
)
|
|
$
|
(80
|
)
|
|
$
|
171,145
|
|
Exercise of stock options
|
193
|
|
|
—
|
|
|
4,047
|
|
|
—
|
|
|
—
|
|
|
4,047
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
7,517
|
|
|
—
|
|
|
—
|
|
|
7,517
|
|
|||||
Net unrealized gain on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
52
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,260
|
|
|
—
|
|
|
1,260
|
|
|||||
Balances at March 31, 2015
|
36,344
|
|
|
$
|
36
|
|
|
$
|
492,898
|
|
|
$
|
(308,885
|
)
|
|
$
|
(28
|
)
|
|
$
|
184,021
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Operating activities:
|
|
|
|
|
|
||
Net income (loss)
|
$
|
1,260
|
|
|
$
|
(11,477
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
||
Depreciation of fixed assets and amortization of intangibles
|
2,743
|
|
|
2,603
|
|
||
Amortization of unfavorable lease obligation and debt issuance costs
|
122
|
|
|
122
|
|
||
Amortization of debt discount
|
1,035
|
|
|
1,035
|
|
||
Loss on disposal of fixed assets
|
—
|
|
|
8
|
|
||
Stock-based compensation
|
7,517
|
|
|
3,975
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Restricted cash
|
1,509
|
|
|
1,633
|
|
||
Accounts receivable, net
|
(2,145
|
)
|
|
(1,379
|
)
|
||
Inventories
|
(7,001
|
)
|
|
193
|
|
||
Prepaid expenses and other current assets
|
372
|
|
|
237
|
|
||
Accounts payable and accrued expenses
|
(4,316
|
)
|
|
(1,531
|
)
|
||
Royalty interest obligation
|
(276
|
)
|
|
(181
|
)
|
||
Other liabilities
|
29
|
|
|
278
|
|
||
Deferred revenue
|
(356
|
)
|
|
(252
|
)
|
||
Net cash provided by (used in) operating activities
|
493
|
|
|
(4,736
|
)
|
||
Investing activities:
|
|
|
|
|
|
||
Purchases of fixed assets
|
(9,237
|
)
|
|
(3,808
|
)
|
||
Purchases of short-term investments
|
(49,937
|
)
|
|
(18,946
|
)
|
||
Sales of short-term investments
|
59,631
|
|
|
32,772
|
|
||
Payment of contingent consideration
|
(1,620
|
)
|
|
(999
|
)
|
||
Net cash provided by (used in) investing activities
|
(1,163
|
)
|
|
9,019
|
|
||
Financing activities:
|
|
|
|
|
|
||
Proceeds from exercise of stock options
|
4,047
|
|
|
1,964
|
|
||
Net cash provided by financing activities
|
4,047
|
|
|
1,964
|
|
||
Net increase in cash and cash equivalents
|
3,377
|
|
|
6,247
|
|
||
Cash and cash equivalents, beginning of period
|
37,520
|
|
|
12,515
|
|
||
Cash and cash equivalents, end of period
|
$
|
40,897
|
|
|
$
|
18,762
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||
Cash paid for interest, including royalty interest obligation
|
$
|
2,297
|
|
|
$
|
2,251
|
|
Cash paid for income taxes
|
$
|
160
|
|
|
$
|
—
|
|
|
Three Months Ended
|
||
|
March 31,
|
||
|
2015
|
|
2014
|
Largest customer
|
29%
|
|
32%
|
Second largest customer
|
29%
|
|
29%
|
Third largest customer
|
28%
|
|
23%
|
|
86%
|
|
84%
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Raw materials
|
$
|
10,355
|
|
|
$
|
9,263
|
|
Work-in-process
|
12,511
|
|
|
8,617
|
|
||
Finished goods
|
13,398
|
|
|
11,383
|
|
||
Total
|
$
|
36,264
|
|
|
$
|
29,263
|
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Machinery and laboratory equipment
|
$
|
30,167
|
|
|
$
|
29,697
|
|
Computer equipment and software
|
3,932
|
|
|
3,754
|
|
||
Office furniture and equipment
|
1,001
|
|
|
1,001
|
|
||
Leasehold improvements
|
26,560
|
|
|
26,350
|
|
||
Construction in progress
|
28,323
|
|
|
19,944
|
|
||
Total
|
89,983
|
|
|
80,746
|
|
||
Less: accumulated depreciation
|
(22,777
|
)
|
|
(20,114
|
)
|
||
Fixed assets, net
|
$
|
67,206
|
|
|
$
|
60,632
|
|
(i)
|
$10.0 million
upon the first commercial sale in the United States (met April 2012);
|
(ii)
|
$4.0 million
upon the first commercial sale in a major EU country (United Kingdom, France, Germany, Italy and Spain);
|
(iii)
|
$8.0 million
when annual net sales collected reach
$100.0 million
(met September 2014);
|
(iv)
|
$8.0 million
when annual net sales collected reach
$250.0 million
; and
|
(v)
|
$32.0 million
when annual net sales collected reach
$500.0 million
.
|
|
Carrying Value of Goodwill
|
||
Balance at December 31, 2014
|
$
|
23,761
|
|
Percentage payments on collections of net sales of EXPAREL
|
1,620
|
|
|
Balance at March 31, 2015
|
$
|
25,381
|
|
March 31, 2015
|
|
Gross
Carrying Value |
|
Accumulated
Amortization |
|
Intangible
Assets, Net |
|
Estimated
Useful Life |
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
||||||
Core technology
|
|
$
|
2,900
|
|
|
$
|
(2,577
|
)
|
|
$
|
323
|
|
|
9 Years
|
Developed technology
|
|
11,700
|
|
|
(11,700
|
)
|
|
—
|
|
|
7 Years
|
|||
Trademarks and trade names
|
|
400
|
|
|
(400
|
)
|
|
—
|
|
|
7 Years
|
|||
Total intangible assets
|
|
$
|
15,000
|
|
|
$
|
(14,677
|
)
|
|
$
|
323
|
|
|
|
December 31, 2014
|
|
Gross
Carrying Value |
|
Accumulated
Amortization |
|
Intangible
Assets, Net |
|
Estimated
Useful Life |
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
||||||
Core technology
|
|
$
|
2,900
|
|
|
$
|
(2,497
|
)
|
|
$
|
403
|
|
|
9 Years
|
Developed technology
|
|
11,700
|
|
|
(11,700
|
)
|
|
—
|
|
|
7 Years
|
|||
Trademarks and trade names
|
|
400
|
|
|
(400
|
)
|
|
—
|
|
|
7 Years
|
|||
Total intangible assets
|
|
$
|
15,000
|
|
|
$
|
(14,597
|
)
|
|
$
|
403
|
|
|
|
Year
|
|
Future Amortization Expense
|
||
2015 (remaining nine months)
|
|
$
|
242
|
|
2016
|
|
81
|
|
|
Total
|
|
$
|
323
|
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Debt:
|
|
|
|
||||
Convertible senior notes
|
$
|
120,000
|
|
|
$
|
120,000
|
|
Discount on debt
|
(15,865
|
)
|
|
(16,900
|
)
|
||
Total debt, net of debt discount
|
104,135
|
|
|
103,100
|
|
||
Royalty interest obligation
|
—
|
|
|
276
|
|
||
Total debt and financing obligations
|
$
|
104,135
|
|
|
$
|
103,376
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Contractual interest expense
|
$
|
967
|
|
|
$
|
975
|
|
Amortization of debt issuance costs
|
155
|
|
|
155
|
|
||
Amortization of debt discount
|
1,035
|
|
|
1,035
|
|
||
Total
|
$
|
2,157
|
|
|
$
|
2,165
|
|
Effective interest rate
|
7.19
|
%
|
|
7.22
|
%
|
•
|
Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
|
•
|
Level 2—Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
|
•
|
Level 3—Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
|
Financial Liabilities Carried at Historical Cost
|
|
Carrying Value
|
|
Fair Value Measurements Using
|
||||||||||||
March 31, 2015
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Convertible senior notes *
|
|
$
|
104,135
|
|
|
$
|
—
|
|
|
$
|
429,075
|
|
|
$
|
—
|
|
March 31, 2015
|
|
Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair Value
(Level 2) |
||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
|
$
|
38,377
|
|
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
$
|
38,373
|
|
Commercial paper
|
|
1,749
|
|
|
1
|
|
|
—
|
|
|
1,750
|
|
||||
Corporate bonds
|
|
73,884
|
|
|
2
|
|
|
(20
|
)
|
|
73,866
|
|
||||
Subtotal
|
|
114,010
|
|
|
4
|
|
|
(25
|
)
|
|
113,989
|
|
||||
Long-term:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
19,945
|
|
|
9
|
|
|
(16
|
)
|
|
19,938
|
|
||||
Total
|
|
$
|
133,955
|
|
|
$
|
13
|
|
|
$
|
(41
|
)
|
|
$
|
133,927
|
|
December 31, 2014
|
|
Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair Value
(Level 2) |
||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
|
$
|
15,009
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
15,000
|
|
Commercial paper
|
|
1,747
|
|
|
3
|
|
|
—
|
|
|
1,750
|
|
||||
Corporate bonds
|
|
102,430
|
|
|
—
|
|
|
(42
|
)
|
|
102,388
|
|
||||
Subtotal
|
|
119,186
|
|
|
3
|
|
|
(51
|
)
|
|
119,138
|
|
||||
Long-term:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
24,463
|
|
|
10
|
|
|
(42
|
)
|
|
24,431
|
|
||||
Total
|
|
$
|
143,649
|
|
|
$
|
13
|
|
|
$
|
(93
|
)
|
|
$
|
143,569
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Cost of goods sold
|
|
$
|
1,103
|
|
|
$
|
494
|
|
Research and development
|
|
1,510
|
|
|
1,577
|
|
||
Selling, general and administrative
|
|
4,904
|
|
|
1,904
|
|
||
Total
|
|
$
|
7,517
|
|
|
$
|
3,975
|
|
|
|
|
|
|
||||
Stock-based compensation from:
|
|
|
|
|
||||
Stock options (employee awards)
|
|
$
|
6,309
|
|
|
$
|
2,409
|
|
Stock options (consultant awards)
|
|
997
|
|
|
1,566
|
|
||
Employee stock purchase plan
|
|
211
|
|
|
—
|
|
||
Total
|
|
$
|
7,517
|
|
|
$
|
3,975
|
|
Stock Options
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|||
Outstanding at December 31, 2014
|
|
4,677,856
|
|
|
$
|
35.78
|
|
Granted
|
|
92,550
|
|
|
98.22
|
|
|
Exercised
|
|
(193,111
|
)
|
|
20.96
|
|
|
Forfeited
|
|
(70,644
|
)
|
|
47.05
|
|
|
Outstanding at March 31, 2015
|
|
4,506,651
|
|
|
37.41
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Net unrealized gains (losses) from available for sale investments:
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
(80
|
)
|
|
$
|
5
|
|
Other comprehensive income before reclassifications
|
|
52
|
|
|
—
|
|
||
Amounts reclassified from accumulated other comprehensive income
|
|
—
|
|
|
—
|
|
||
Balance at end of period
|
|
$
|
(28
|
)
|
|
$
|
5
|
|
|
Three Months Ended
|
||||||
March 31,
|
|||||||
2015
|
|
2014
|
|||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
1,260
|
|
|
$
|
(11,477
|
)
|
Denominator:
|
|
|
|
||||
Weighted average shares of common stock outstanding—basic
|
36,235
|
|
|
33,711
|
|
||
Computation of diluted securities:
|
|
|
|
||||
Dilutive effect of stock options
|
1,885
|
|
|
—
|
|
||
Dilutive effect of convertible notes
|
3,652
|
|
|
—
|
|
||
Dilutive effect of warrants
|
6
|
|
|
—
|
|
||
Dilutive effect of employee stock purchase plan
|
1
|
|
|
—
|
|
||
Weighted average shares of common stock outstanding—diluted
|
41,779
|
|
|
33,711
|
|
||
Net income (loss) per share:
|
|
|
|
||||
Basic and diluted net income (loss) per share of common stock
|
$
|
0.03
|
|
|
$
|
(0.34
|
)
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2015
|
|
2014
|
||
Weighted average number of stock options
|
1,323
|
|
|
3,866
|
|
Conversion premium on the Notes
|
—
|
|
|
3,071
|
|
Weighted average number of warrants
|
—
|
|
|
58
|
|
Total
|
1,323
|
|
|
6,995
|
|
Year
|
|
Aggregate Minimum Payments
|
||
2015 (remaining nine months)
|
|
$
|
4,738
|
|
2016
|
|
7,263
|
|
|
2017
|
|
7,459
|
|
|
2018
|
|
7,660
|
|
|
2019
|
|
7,876
|
|
|
2020 through 2028
|
|
11,787
|
|
|
Total
|
|
$
|
46,783
|
|
•
|
EXPAREL is a liposome injection of bupivacaine, an amide-type local anesthetic indicated for administration into the surgical site to produce postsurgical analgesia, and was approved by the FDA on October 28, 2011. We commercially launched EXPAREL in April 2012. We drop-ship EXPAREL directly to the end user based on orders placed to wholesalers or directly to us, and we have no product held by wholesalers.
|
•
|
DepoCyt(e) is a sustained release liposomal formulation of the chemotherapeutic agent cytarabine and is indicated for the intrathecal treatment of lymphomatous meningitis. DepoCyt(e) was granted accelerated approval by the FDA in 1999 and full approval in 2007. We sell DepoCyt(e) to our commercial partners located in the United States and Europe.
|
•
|
Total revenues increased
$21.7 million
, or
59%
, in the quarter ended
March 31, 2015
, as compared to the same period in 2014, primarily driven by EXPAREL product sales of
$56.0 million
. Our gross margin improved to
70%
in the three months ended
March 31, 2015
, up from
50%
for the same period in 2014. Additionally, we had net income for the second consecutive quarter on a GAAP (U.S. Generally Accepted Accounting Principles) basis of $1.3 million. This resulted in a basic and diluted net income per share of $0.03 in the first quarter of 2015 as compared to a net loss of $0.34 per share in the first quarter of 2014.
|
•
|
In March 2015, Pacira announced receipt of a Complete Response Letter from the FDA following a review of its sNDA for the use of EXPAREL in nerve block to provide postsurgical analgesia.
|
•
|
In April 2015, we received a subpoena from the U.S. Department of Justice, U.S. Attorney’s Office for the District of New Jersey, requiring the production of a broad range of documents pertaining to marketing and promotional practices related to EXPAREL. We intend to cooperate with the government’s inquiry. We can make no assurances as to the time or resources that will need to be devoted to this inquiry or its final outcome, or the impact, if any, of this inquiry or any proceedings on our business, financial condition, results of operations and cash flows.
|
•
|
In September 2014, we received a warning letter from the FDA’s Office of Prescription Drug Promotion, or OPDP, pertaining to certain promotional aspects of EXPAREL, and in February 2015, an agreement was reached with the OPDP on the content and mechanisms for distribution of corrective action, which will consist of a Dear Healthcare Provider Letter and a corrective journal advertisement. We are actively working to ensure that our sales force and other promotional channels communicate the following points to customers thoroughly and accurately:
|
•
|
EXPAREL is indicated for administration into the surgical site to produce postsurgical analgesia. FDA approval of EXPAREL was based on pivotal trials conducted in excisional hemorrhoidectomy and bunionectomy surgical models, and thus, the basis for assessment of safety and efficacy was limited to those two procedures.
|
•
|
Regarding duration of efficacy in the hemorrhoidectomy trial, EXPAREL demonstrated a significant reduction in pain intensity scores compared to placebo for up to 24 hours. The primary endpoint of the study, cumulative pain scores over the first 72 hours, was statistically superior to placebo, however there was minimal to no difference in pain intensity scores between EXPAREL and placebo from 24 to 72 hours. There was a cumulative decrease in opioid consumption through 72 hours, the clinical benefit of which was not demonstrated.
|
|
Three Months Ended
|
|
% Increase / (Decrease)
|
||||||
|
March 31,
|
|
|||||||
|
2015
|
|
2014
|
|
|||||
Net product sales:
|
|
|
|
|
|
||||
EXPAREL
|
$
|
55,951
|
|
|
$
|
34,401
|
|
|
63%
|
DepoCyt(e)
|
1,135
|
|
|
1,341
|
|
|
(15)%
|
||
Total net product sales
|
57,086
|
|
|
35,742
|
|
|
60%
|
||
Collaborative licensing and development revenue
|
356
|
|
|
252
|
|
|
41%
|
||
Royalty revenue
|
874
|
|
|
668
|
|
|
31%
|
||
Total revenues
|
$
|
58,316
|
|
|
$
|
36,662
|
|
|
59%
|
|
Three Months Ended
|
|
% Increase / (Decrease)
|
||||||
|
March 31,
|
|
|||||||
|
2015
|
|
2014
|
|
|||||
Clinical studies
|
$
|
1,958
|
|
|
$
|
1,775
|
|
|
10%
|
Product development, medical information and other
|
2,499
|
|
|
1,852
|
|
|
35%
|
||
Stock-based compensation
|
1,510
|
|
|
1,577
|
|
|
(4)%
|
||
Total research and development expense
|
$
|
5,967
|
|
|
$
|
5,204
|
|
|
15%
|
% of total revenues
|
10
|
%
|
|
14
|
%
|
|
|
|
Three Months Ended
|
|
% Increase
|
||||||
|
March 31,
|
|
|||||||
|
2015
|
|
2014
|
|
|||||
Sales and marketing
|
$
|
18,008
|
|
|
$
|
14,182
|
|
|
27%
|
General and administrative
|
8,516
|
|
|
6,503
|
|
|
31%
|
||
Stock-based compensation
|
4,904
|
|
|
1,904
|
|
|
158%
|
||
Total selling, general and administrative expenses
|
$
|
31,428
|
|
|
$
|
22,589
|
|
|
39%
|
% of total revenues
|
54
|
%
|
|
62
|
%
|
|
|
|
Three Months Ended
|
|
% Increase / (Decrease)
|
||||||
|
March 31,
|
|
|||||||
|
2015
|
|
2014
|
|
|||||
Interest income
|
$
|
155
|
|
|
$
|
42
|
|
|
269%
|
Interest expense
|
(1,996
|
)
|
|
(2,107
|
)
|
|
(5)%
|
||
Royalty interest obligation
|
(71
|
)
|
|
(120
|
)
|
|
(41)%
|
||
Other, net
|
(117
|
)
|
|
(34
|
)
|
|
244%
|
||
Total other expense, net
|
$
|
(2,029
|
)
|
|
$
|
(2,219
|
)
|
|
(9)%
|
|
Three Months Ended
|
|
% Increase / (Decrease)
|
||||||
|
March 31,
|
|
|||||||
|
2015
|
|
2014
|
|
|||||
Income tax expense
|
$
|
52
|
|
|
$
|
—
|
|
|
N/A
|
Effective tax rate
|
4
|
%
|
|
—
|
|
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
493
|
|
|
$
|
(4,736
|
)
|
Investing activities
|
(1,163
|
)
|
|
9,019
|
|
||
Financing activities
|
4,047
|
|
|
1,964
|
|
||
Net increase in cash and cash equivalents
|
$
|
3,377
|
|
|
$
|
6,247
|
|
•
|
our ability to successfully continue to expand the commercialization of EXPAREL;
|
•
|
the cost and timing of expanding our manufacturing facilities for EXPAREL and our other product candidates, including costs associated with certain technical transfer activities and the construction of manufacturing suites at Patheon’s Swindon, United Kingdom facility;
|
•
|
the extent to which the holders of our Notes elect to convert the Notes;
|
•
|
the cost and timing of potential milestone payments to Skyepharma;
|
•
|
the costs of performing additional clinical trials for EXPAREL, including the pediatric trials required by the FDA as a condition of approval, and costs of development for our other product candidates; and
|
•
|
the extent to which we acquire or invest in products, businesses and technologies.
|
March 31, 2015
|
|
Returns Allowances
|
|
Prompt Pay Discounts
|
|
Wholesaler Service Fees
|
|
Volume
Rebates and Chargebacks |
|
Total
|
||||||||||
Balance at December 31, 2014
|
|
$
|
1,559
|
|
|
$
|
575
|
|
|
$
|
588
|
|
|
$
|
321
|
|
|
$
|
3,043
|
|
Provision
|
|
117
|
|
|
1,139
|
|
|
830
|
|
|
350
|
|
|
2,436
|
|
|||||
Payments/Credits
|
|
(21
|
)
|
|
(1,108
|
)
|
|
(934
|
)
|
|
(412
|
)
|
|
(2,475
|
)
|
|||||
Balance at March 31, 2015
|
|
$
|
1,655
|
|
|
$
|
606
|
|
|
$
|
484
|
|
|
$
|
259
|
|
|
$
|
3,004
|
|
March 31, 2014
|
|
Returns Allowances
|
|
Prompt Pay Discounts
|
|
Wholesaler Service Fees
|
|
Volume
Rebates and Chargebacks |
|
Total
|
||||||||||
Balance at December 31, 2013
|
|
$
|
897
|
|
|
$
|
313
|
|
|
$
|
266
|
|
|
$
|
402
|
|
|
$
|
1,878
|
|
Provision
|
|
181
|
|
|
706
|
|
|
500
|
|
|
327
|
|
|
1,714
|
|
|||||
Payments/Credits
|
|
(86
|
)
|
|
(693
|
)
|
|
(467
|
)
|
|
(82
|
)
|
|
(1,328
|
)
|
|||||
Balance at March 31, 2014
|
|
$
|
992
|
|
|
$
|
326
|
|
|
$
|
299
|
|
|
$
|
647
|
|
|
$
|
2,264
|
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
†
|
|
Third Amendment to Master Distributor Agreement, dated February 20, 2015, between Pacira Pharmaceuticals, Inc. and CrossLink BioScience, LLC. *
|
|
|
|
10.2
+
|
|
Employment Agreement, dated November 29, 2012, between Pacira Pharmaceuticals, Inc. and Kristen Williams. *
|
|
|
|
10.3
+
|
|
Amendment No. 1 to Employment Agreement, dated March 13, 2013, between Pacira Pharmaceuticals, Inc. and Kristen Williams. *
|
|
|
|
10.4
+
|
|
Amendment # 4 to Services Agreement, dated November 17, 2014, among Pacira Pharmaceuticals, Inc., MPM Asset Management LLC and Gary Patou. *
|
|
|
|
10.5
+
|
|
Amendment # 5 to Services Agreement, dated March 17, 2015, among Pacira Pharmaceuticals, Inc., MPM Asset Management LLC and Gary Patou. *
|
|
|
|
31.1
|
|
Certification of President, Chief Executive Officer and Chairman pursuant to Rule 13a-14(a) and 15d-14(a), as amended. *
|
|
|
|
31.2
|
|
Certification of Senior Vice President, Chief Financial Officer and Head of Technical Operations pursuant to Rule 13a-14(a) and 15d-14(a), as amended. *
|
|
|
|
32.1
|
|
Certification of President, Chief Executive Officer and Chairman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
|
|
|
|
32.2
|
|
Certification of Senior Vice President, Chief Financial Officer and Head of Technical Operations pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
|
|
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of Pacira Pharmaceuticals, Inc. for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Loss; (iv) the Consolidated Statement of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) the Condensed Notes to Consolidated Financial Statements. *
|
|
|
PACIRA PHARMACEUTICALS, INC.
(REGISTRANT)
|
|
|
|
|
|
|
Dated:
|
April 30, 2015
|
/s/ DAVID STACK
|
|
|
David Stack
|
|
|
President, Chief Executive Officer and Chairman
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
Dated:
|
April 30, 2015
|
/s/ JAMES SCIBETTA
|
|
|
James Scibetta
|
|
|
Senior Vice President, Chief Financial Officer
and Head of Technical Operations
|
|
|
(Principal Financial Officer)
|
|
|
|
|
PACIRA PHARMACEUTICALS, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ David Stack
|
|
|
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Name: David Stack
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Title: CEO
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CROSSLINK BIOSCIENCE, LLC
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By:
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/s/ Thomas Fleetwood
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Name: Thomas Fleetwood
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Title: President
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1.
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In consideration for the services described in this Agreement, Master Distributor shall be entitled to a performance based payment (the “
Performance Based Payment
”) equal to [**] of Pacira’s [**] Net Sales of Product in the United States.
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a.
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“
Net Sales
” shall mean Product net sales as calculated using generally accepted accounting principles consistent with Pacira’s external financial reporting which, for clarity, is total product sales net of allowances for sales returns, prompt payment discounts, volume rebates and distribution service fees payable to wholesalers. For the purposes of calculating Net Sales, Pacira shall exclude any Net Sales amounts associated with the sale of Product for [**] uses.
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b.
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Pacira shall calculate and pay Master Distributor the estimated Performance Based Payment for each [**] during the Term within 30 days following the end of each such [**]. The [**] payment shall be an estimate of actual sales because the parties recognize that Pacira’s earnings/revenue is Pacira’s Confidential Information and is considered material non-public information. Therefore, to protect against earnings/revenue data being released prior to public disclosure, the below ‘estimate and later true-up’ payment schedule will be adopted for the remainder of the Term as provided below:
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c.
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Within [**] of the close of a [**], Pacira shall provide Master Distributor with a separate written report for each Approved Sub-Distributor detailing the current box sales totals of Products purchased within each Sub-Distributor Territory during the applicable [**] by specific account for the purposes of facilitating Master Distributor’s payments to each Sub-Distributor. Master Distributor will treat all reports as Pacira’s Confidential Information and only share with each Sub-Distributor that specific Sub-Distributor’s reported information on an as-needed basis.
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d.
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All payments made under this Agreement shall be in U.S. dollars.
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2.
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In the event that any Sub-Distributor is no longer an Approved Sub-Distributor under this Agreement (e.g., due to termination of such Sub-Distributor’s applicable contract with Master Distributor), Pacira shall make an adjustment to the Performance Based Payments by subtracting a percentage reflecting the excluded Sub-Distributor’s portion of the Territory from the base commission percentage of [**] as follows:
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3.
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By way of example and not in limitation of the foregoing, in the event [**] has been removed from the scope of this Agreement, the Performance Based Payment shall thereafter be [**] of Pacira’s [**] Net Sales (calculated as [**]).
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4.
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Within ninety days of removal of the former Approved Sub-Distributor, Master Distributor will present one or several sub-distributor candidates to Pacira for approval pursuant to Section 2.02 of the Agreement. Upon approval, the percentage of [**] Net Sales will be increased back to the level attained prior to removal of the former Approved Sub-Distributor.
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5.
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Pacira, Master Distributor and each Sub-Distributor shall identify and develop a list of target accounts within each Sub-Distributor Territory and each Sub-Distributor shall work collaboratively within those accounts with Pacira as outlined below. Such target list shall include, at a minimum, the accounts that each Sub- Distributor has been reporting as of January 31, 2015.
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6.
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Pacira will work with Master Distributor (and Master Distributor shall in turn work with each Sub-Distributor) to mutually agreed upon and implement new weekly reporting tools regarding each Sub-Distributor’s activities under this Agreement. Pacira will compile such reports (with information to be provided regularly to Master Distributor) to include but not be limited to, the following:
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a.
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Reporting of face-to-face and phone related meetings between the Sub-Distributor representatives and Pacira sales representatives and other Pacira personnel;
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b.
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Reporting of Sub-Distributor facilitated introductions and relationship building with surgeons within targeted accounts;
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c.
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Reporting of all leads for new accounts or new surgeons generated by the Sub-Distributor representatives;
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d.
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Reporting of participation in all Sub-Distributor or Pacira sponsored programs; and
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e.
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All other cooperative efforts by the Sub-Distributor representative to support the Product and participate cooperatively with Pacira sales representatives and other Pacira personnel.
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7.
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For [**] periods only, Master Distributor shall report to Pacira by the [**] following the end of the [**], surgeon customers (by medical centers) that have, to the knowledge of Master Distributor, used the Product in the Territory for [**] (the “[**]
Report
”). Commencing [**] and continuing until the end of the Term, and notwithstanding any provision in the Agreement to the contrary, neither the [**] Report, the [**] report generated by the Master Distributor and Sub-Distributor filed representatives prior to [**], nor anything comparable to these reports will be required of Master Distributor or any Sub-Distributor.
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1.
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Section 4(a) is hereby amended to add that the amount of Monthly Services Fee as of April 1, 2015 is $20,904.
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1.
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I have reviewed this quarterly report on Form 10-Q of Pacira Pharmaceuticals, Inc. (the “Registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
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4.
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The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
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5.
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The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
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Date:
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April 30, 2015
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/s/ David Stack
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David Stack
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President, Chief Executive Officer and Chairman
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(Principal Executive Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q of Pacira Pharmaceuticals, Inc. (the “Registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
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4.
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The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
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5.
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The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
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Date:
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April 30, 2015
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/s/ James Scibetta
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James Scibetta
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Senior Vice President, Chief Financial Officer
and Head of Technical Operations
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(Principal Financial Officer)
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Date:
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April 30, 2015
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/s/ David Stack
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David Stack
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President, Chief Executive Officer and Chairman
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(Principal Executive Officer)
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Date:
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April 30, 2015
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/s/ James Scibetta
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James Scibetta
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Senior Vice President, Chief Financial Officer
and Head of Technical Operations
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(Principal Financial Officer)
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