|
|
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
|
|
|
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
o
|
|
|
Emerging growth company
o
|
PACIRA PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2017
TABLE OF CONTENTS
|
||
|
|
Page #
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
|
|||||||
|
March 31,
2017 |
|
December 31,
2016 |
||||
|
|
|
(Note 2)
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
108,970
|
|
|
$
|
35,944
|
|
Short-term investments
|
274,729
|
|
|
136,653
|
|
||
Accounts receivable, net
|
27,702
|
|
|
29,937
|
|
||
Inventories, net
|
30,311
|
|
|
31,278
|
|
||
Prepaid expenses and other current assets
|
6,252
|
|
|
9,277
|
|
||
Total current assets
|
447,964
|
|
|
243,089
|
|
||
Fixed assets, net
|
102,571
|
|
|
101,016
|
|
||
Goodwill
|
48,829
|
|
|
46,737
|
|
||
Other assets
|
598
|
|
|
624
|
|
||
Total assets
|
$
|
599,962
|
|
|
$
|
391,466
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
9,373
|
|
|
$
|
7,511
|
|
Accrued expenses
|
34,900
|
|
|
36,666
|
|
||
Convertible senior notes
|
759
|
|
|
—
|
|
||
Current portion of deferred revenue
|
520
|
|
|
595
|
|
||
Income taxes payable
|
96
|
|
|
66
|
|
||
Total current liabilities
|
45,648
|
|
|
44,838
|
|
||
Convertible senior notes
|
265,992
|
|
|
108,738
|
|
||
Deferred revenue
|
7,357
|
|
|
7,487
|
|
||
Other liabilities
|
10,332
|
|
|
11,427
|
|
||
Total liabilities
|
329,329
|
|
|
172,490
|
|
||
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, 2017 and December 31, 2016 |
—
|
|
|
—
|
|
||
Common stock, par value $0.001, 250,000,000 shares authorized; 40,023,258 shares issued and
outstanding at March 31, 2017; 37,480,952 shares issued and outstanding at December 31, 2016 |
40
|
|
|
37
|
|
||
Additional paid-in capital
|
637,066
|
|
|
565,207
|
|
||
Accumulated deficit
|
(366,391
|
)
|
|
(346,238
|
)
|
||
Accumulated other comprehensive loss
|
(82
|
)
|
|
(30
|
)
|
||
Total stockholders’ equity
|
270,633
|
|
|
218,976
|
|
||
Total liabilities and stockholders’ equity
|
$
|
599,962
|
|
|
$
|
391,466
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
|||||||
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Revenues:
|
|
|
|
|
|
||
Net product sales
|
$
|
68,425
|
|
|
$
|
64,502
|
|
Collaborative licensing and milestone revenue
|
206
|
|
|
356
|
|
||
Royalty revenue
|
652
|
|
|
616
|
|
||
Total revenues
|
69,283
|
|
|
65,474
|
|
||
Operating expenses:
|
|
|
|
|
|
||
Cost of goods sold
|
24,581
|
|
|
20,278
|
|
||
Research and development
|
16,632
|
|
|
9,493
|
|
||
Selling, general and administrative
|
42,120
|
|
|
37,957
|
|
||
Total operating expenses
|
83,333
|
|
|
67,728
|
|
||
Loss from operations
|
(14,050
|
)
|
|
(2,254
|
)
|
||
Other (expense) income:
|
|
|
|
|
|
||
Interest income
|
514
|
|
|
252
|
|
||
Interest expense
|
(2,589
|
)
|
|
(1,868
|
)
|
||
Loss on early extinguishment of debt
|
(3,721
|
)
|
|
—
|
|
||
Other, net
|
10
|
|
|
48
|
|
||
Total other expense, net
|
(5,786
|
)
|
|
(1,568
|
)
|
||
Loss before income taxes
|
(19,836
|
)
|
|
(3,822
|
)
|
||
Income tax expense
|
(30
|
)
|
|
(32
|
)
|
||
Net loss
|
$
|
(19,866
|
)
|
|
$
|
(3,854
|
)
|
|
|
|
|
||||
Net loss per share:
|
|
|
|
|
|
||
Basic and diluted net loss per common share
|
$
|
(0.52
|
)
|
|
$
|
(0.10
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||
Basic and diluted
|
37,998
|
|
|
37,020
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
|
|||||||
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Net loss
|
$
|
(19,866
|
)
|
|
$
|
(3,854
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||
Net unrealized gain (loss) on investments
|
(52
|
)
|
|
101
|
|
||
Total other comprehensive income (loss)
|
(52
|
)
|
|
101
|
|
||
Comprehensive loss
|
$
|
(19,918
|
)
|
|
$
|
(3,753
|
)
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2017
(In thousands)
(Unaudited)
|
||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
Balance at December 31, 2016
|
37,481
|
|
|
$
|
37
|
|
|
$
|
565,207
|
|
|
$
|
(346,238
|
)
|
|
$
|
(30
|
)
|
|
$
|
218,976
|
|
Cumulative effect adjustment of the adoption of Accounting Standards Update 2016-09 (Note 2)
|
—
|
|
|
—
|
|
|
287
|
|
|
(287
|
)
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
62
|
|
|
—
|
|
|
852
|
|
|
—
|
|
|
—
|
|
|
852
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
7,400
|
|
|
—
|
|
|
—
|
|
|
7,400
|
|
|||||
Issuance of common stock upon
conversion of 2019 convertible senior notes |
2,480
|
|
|
3
|
|
|
120,463
|
|
|
—
|
|
|
—
|
|
|
120,466
|
|
|||||
Retirement of equity component
of 2019 convertible senior notes |
—
|
|
|
—
|
|
|
(125,811
|
)
|
|
—
|
|
|
—
|
|
|
(125,811
|
)
|
|||||
Equity component of 2022 convertible
senior notes issued, net |
—
|
|
|
—
|
|
|
68,668
|
|
|
—
|
|
|
—
|
|
|
68,668
|
|
|||||
Net unrealized loss on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
(52
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,866
|
)
|
|
—
|
|
|
(19,866
|
)
|
|||||
Balance at March 31, 2017
|
40,023
|
|
|
$
|
40
|
|
|
$
|
637,066
|
|
|
$
|
(366,391
|
)
|
|
$
|
(82
|
)
|
|
$
|
270,633
|
|
PACIRA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|||||||
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
|
|
|
(Note 2)
|
||||
Operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(19,866
|
)
|
|
$
|
(3,854
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation of fixed assets and amortization of intangibles
|
3,104
|
|
|
3,165
|
|
||
Amortization of unfavorable lease obligation and debt issuance costs
|
168
|
|
|
120
|
|
||
Amortization of debt discount
|
1,411
|
|
|
1,022
|
|
||
Loss on early extinguishment of debt
|
3,721
|
|
|
—
|
|
||
Loss on disposal of fixed assets
|
137
|
|
|
—
|
|
||
Stock-based compensation
|
7,400
|
|
|
8,490
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
2,235
|
|
|
(46
|
)
|
||
Inventories, net
|
967
|
|
|
(2,099
|
)
|
||
Prepaid expenses and other assets
|
3,051
|
|
|
(2,917
|
)
|
||
Accounts payable, accrued expenses and income taxes payable
|
(1,056
|
)
|
|
(6,227
|
)
|
||
Other liabilities
|
(1,061
|
)
|
|
(419
|
)
|
||
Deferred revenue
|
(205
|
)
|
|
(356
|
)
|
||
Net cash provided by (used in) operating activities
|
6
|
|
|
(3,121
|
)
|
||
Investing activities:
|
|
|
|
|
|
||
Purchases of fixed assets
|
(3,616
|
)
|
|
(7,053
|
)
|
||
Purchases of investments
|
(180,342
|
)
|
|
(67,843
|
)
|
||
Sales of investments
|
42,214
|
|
|
54,925
|
|
||
Payment of contingent consideration
|
(2,092
|
)
|
|
(1,904
|
)
|
||
Net cash used in investing activities
|
(143,836
|
)
|
|
(21,875
|
)
|
||
Financing activities:
|
|
|
|
|
|
||
Proceeds from exercise of stock options
|
852
|
|
|
3,041
|
|
||
Proceeds from 2022 convertible senior notes
|
345,000
|
|
|
—
|
|
||
Repayment of debt
|
(117,712
|
)
|
|
—
|
|
||
Payment of debt issuance and financing costs
|
(11,000
|
)
|
|
—
|
|
||
Costs for conversion of convertible senior notes
|
(284
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
216,856
|
|
|
3,041
|
|
||
Net increase (decrease) in cash and cash equivalents
|
73,026
|
|
|
(21,955
|
)
|
||
Cash and cash equivalents, beginning of period
|
35,944
|
|
|
56,984
|
|
||
Cash and cash equivalents, end of period
|
$
|
108,970
|
|
|
$
|
35,029
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
2,380
|
|
|
$
|
1,926
|
|
Cash paid for income taxes, net of refunds
|
$
|
—
|
|
|
$
|
142
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Issuance of common stock from conversion of 2019 convertible senior notes
|
$
|
120,466
|
|
|
$
|
—
|
|
Retirement of equity component of 2019 convertible senior notes
|
$
|
(125,811
|
)
|
|
$
|
—
|
|
Equity component of the 2022 convertible senior notes
|
$
|
70,930
|
|
|
$
|
—
|
|
Net increase in accrued fixed assets
|
$
|
1,179
|
|
|
$
|
1,554
|
|
|
Three Months Ended
March 31, |
||
|
2017
|
|
2016
|
Largest customer
|
35%
|
|
33%
|
Second largest customer
|
29%
|
|
28%
|
Third largest customer
|
25%
|
|
27%
|
|
89%
|
|
88%
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Raw materials
|
$
|
12,966
|
|
|
$
|
11,742
|
|
Work-in-process
|
7,709
|
|
|
11,621
|
|
||
Finished goods
|
9,636
|
|
|
7,915
|
|
||
Total
|
$
|
30,311
|
|
|
$
|
31,278
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Machinery and laboratory equipment
|
$
|
34,399
|
|
|
$
|
34,309
|
|
Leasehold improvements
|
33,814
|
|
|
33,787
|
|
||
Computer equipment and software
|
6,509
|
|
|
5,623
|
|
||
Office furniture and equipment
|
1,606
|
|
|
1,606
|
|
||
Construction in progress
|
66,855
|
|
|
63,201
|
|
||
Total
|
143,183
|
|
|
138,526
|
|
||
Less: accumulated depreciation
|
(40,612
|
)
|
|
(37,510
|
)
|
||
Fixed assets, net
|
$
|
102,571
|
|
|
$
|
101,016
|
|
(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 E.U. 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
(met June 2016); and
|
(v)
|
$32.0 million
when annual net sales collected reach
$500.0 million
.
|
|
Carrying Value
|
||
Balance at December 31, 2016
|
$
|
46,737
|
|
Percentage payments on collections of net sales of DepoBupivacaine products
|
2,092
|
|
|
Balance at March 31, 2017
|
$
|
48,829
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
2.375% convertible senior notes due 2022
|
$
|
345,000
|
|
|
$
|
—
|
|
Deferred financing costs
|
(8,661
|
)
|
|
—
|
|
||
Discount on debt
|
(70,347
|
)
|
|
—
|
|
||
Total debt, net of debt discount and deferred financing costs
|
$
|
265,992
|
|
|
$
|
—
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
3.25% convertible senior notes due 2019
|
$
|
819
|
|
|
$
|
118,531
|
|
Deferred financing costs
|
(8
|
)
|
|
(1,276
|
)
|
||
Discount on debt
|
(52
|
)
|
|
(8,517
|
)
|
||
Total debt, net of debt discount and deferred financing costs
|
$
|
759
|
|
|
$
|
108,738
|
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Contractual interest expense
|
$
|
1,189
|
|
|
$
|
963
|
|
Amortization of debt issuance costs
|
201
|
|
|
153
|
|
||
Amortization of debt discount
|
1,411
|
|
|
1,022
|
|
||
Capitalized interest (Note 4)
|
(212
|
)
|
|
(270
|
)
|
||
Total
|
$
|
2,589
|
|
|
$
|
1,868
|
|
|
|
|
|
||||
Effective interest rate on convertible senior notes
|
7.48
|
%
|
|
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, 2017
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
2.375% convertible senior notes due 2022
(1)
|
|
$
|
265,992
|
|
|
$
|
—
|
|
|
$
|
357,722
|
|
|
$
|
—
|
|
3.25% convertible senior notes due 2019
(2)
|
|
$
|
759
|
|
|
$
|
—
|
|
|
$
|
1,567
|
|
|
$
|
—
|
|
March 31, 2017 Debt Securities
|
|
Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair Value
(Level 2) |
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
|
$
|
46,285
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
46,276
|
|
Commercial paper
|
|
45,232
|
|
|
6
|
|
|
(6
|
)
|
|
45,232
|
|
||||
Corporate bonds
|
|
183,294
|
|
|
8
|
|
|
(81
|
)
|
|
183,221
|
|
||||
Total
|
|
$
|
274,811
|
|
|
$
|
14
|
|
|
$
|
(96
|
)
|
|
$
|
274,729
|
|
December 31, 2016 Debt Securities
|
|
Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair Value
(Level 2) |
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
|
$
|
9,012
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
9,010
|
|
Commercial paper
|
|
39,530
|
|
|
8
|
|
|
(15
|
)
|
|
39,523
|
|
||||
Corporate bonds
|
|
88,141
|
|
|
11
|
|
|
(32
|
)
|
|
88,120
|
|
||||
Total
|
|
$
|
136,683
|
|
|
$
|
19
|
|
|
$
|
(49
|
)
|
|
$
|
136,653
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2017
|
|
2016
|
||||
Cost of goods sold
|
|
$
|
1,375
|
|
|
$
|
1,549
|
|
Research and development
|
|
658
|
|
|
893
|
|
||
Selling, general and administrative
|
|
5,367
|
|
|
6,048
|
|
||
Total
|
|
$
|
7,400
|
|
|
$
|
8,490
|
|
|
|
|
|
|
||||
Stock-based compensation from:
|
|
|
|
|
||||
Stock options (employee awards)
|
|
$
|
5,917
|
|
|
$
|
6,856
|
|
Stock options (consultant awards)
|
|
53
|
|
|
274
|
|
||
Restricted stock units (employee awards)
|
|
1,223
|
|
|
1,085
|
|
||
Employee stock purchase plan
|
|
207
|
|
|
275
|
|
||
Total
|
|
$
|
7,400
|
|
|
$
|
8,490
|
|
Stock Options
|
|
Number of Options
|
|
Weighted Average Exercise Price
|
|||
Outstanding at December 31, 2016
|
|
5,207,743
|
|
|
$
|
42.16
|
|
Granted
|
|
63,650
|
|
|
43.99
|
|
|
Exercised
|
|
(62,056
|
)
|
|
13.73
|
|
|
Forfeited
|
|
(122,168
|
)
|
|
55.49
|
|
|
Expired
|
|
(28,351
|
)
|
|
75.63
|
|
|
Outstanding at March 31, 2017
|
|
5,058,818
|
|
|
42.02
|
|
Restricted Stock Units
|
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Unvested at December 31, 2016
|
|
364,403
|
|
|
$
|
52.85
|
|
Granted
|
|
2,063
|
|
|
44.30
|
|
|
Vested
|
|
(326
|
)
|
|
62.73
|
|
|
Forfeited
|
|
(18,535
|
)
|
|
57.81
|
|
|
Unvested at March 31, 2017
|
|
347,605
|
|
|
52.47
|
|
|
|
Three Months Ended
March 31, 2017 |
Expected dividend yield
|
|
None
|
Risk free interest rate
|
|
2.09%
|
Expected volatility
|
|
54.0%
|
Expected term of options
|
|
5.75
|
|
|
Three Months Ended
March 31, |
||||||
Net unrealized gains (losses) from available for sale investments:
|
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
|
$
|
(30
|
)
|
|
$
|
(52
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(52
|
)
|
|
101
|
|
||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
||
Balance at end of period
|
|
$
|
(82
|
)
|
|
$
|
49
|
|
|
Three Months Ended
March 31, |
||||||
2017
|
|
2016
|
|||||
Numerator:
|
|
|
|
||||
Net loss
|
$
|
(19,866
|
)
|
|
$
|
(3,854
|
)
|
Denominator:
|
|
|
|
||||
Weighted average common shares outstanding
|
37,998
|
|
|
37,020
|
|
||
Net loss per share:
|
|
|
|
||||
Basic and diluted net loss per common share
|
$
|
(0.52
|
)
|
|
$
|
(0.10
|
)
|
|
Three Months Ended
March 31, |
||||
|
2017
|
|
2016
|
||
Weighted average number of stock options
|
5,112
|
|
|
4,324
|
|
Weighted average number of RSUs
|
353
|
|
|
205
|
|
Conversion premium on the 2019 Notes
|
1,624
|
|
|
2,749
|
|
Weighted average number of warrants
|
—
|
|
|
3
|
|
Weighted average ESPP purchase options
|
38
|
|
|
23
|
|
Total
|
7,127
|
|
|
7,304
|
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Loss before income taxes:
|
|
|
|
||||
Domestic
|
$
|
(19,320
|
)
|
|
$
|
(3,499
|
)
|
Foreign
|
(516
|
)
|
|
(323
|
)
|
||
Total loss before income taxes
|
$
|
(19,836
|
)
|
|
$
|
(3,822
|
)
|
Year
|
|
Aggregate Minimum Payments
|
||
2017 (remaining nine months)
|
|
$
|
5,925
|
|
2018
|
|
8,063
|
|
|
2019
|
|
8,272
|
|
|
2020
|
|
6,389
|
|
|
2021
|
|
1,207
|
|
|
2022 through 2028
|
|
7,545
|
|
|
Total
|
|
$
|
37,401
|
|
•
|
EXPAREL is a liposome injection of bupivacaine, an amide-type local anesthetic indicated for single-dose administration into the surgical site to produce postsurgical analgesia. EXPAREL was approved by the FDA in October 2011 and commercially launched 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, or US, and Europe.
|
•
|
Total revenues increased
$3.8 million
, or
6%
, in the three months ended
March 31, 2017
, compared to the same period in 2016, primarily driven by EXPAREL net product sales of
$67.7 million
, which were up
$3.9 million
, or
6%
versus the same period in 2016.
|
•
|
In March 2017, we completed a private offering of $345.0 million of 2.375% convertible senior notes due 2022, or 2022 Notes. The net proceeds from the issuance of the 2022 Notes were approximately $334.0 million. The 2022 Notes accrue interest at a rate of 2.375% per year. We used a portion of the proceeds from the 2022 Notes to retire $117.7 million of our 3.25% convertible senior notes due 2019, or 2019 Notes. See Note 6,
Debt
, to our consolidated financial statements included herein for further information related to these transactions.
|
•
|
In March 2017, we launched a collaboration with Trinity Health focused on developing standardized procedure-specific enhanced recovery protocols and pain protocols that will include using opioid alternatives when appropriate. The two organizations will also develop physician- and patient-facing educational materials and generate data to track progress.
|
•
|
In March 2017, we announced that our Phase 4 study of EXPAREL in patients undergoing total knee arthroplasty, or TKA, achieved statistical significance for its co-primary endpoints of opioid reduction (p=0.0048) and postsurgical pain control (p=0.0381). EXPAREL also achieved statistical significance for key secondary endpoints, including time to first opioid use and the percentage of patients who did not require any opioids to treat their postsurgical pain. The trial compared EXPAREL-based local analgesia infiltration to standard bupivacaine-based local analgesia infiltration, each as part of a standard multi-modal analgesic protocol. The results from the study will be submitted as a series of publications in peer-reviewed medical literature.
|
•
|
In March 2017, the US Patent and Trademark Office issued US Patent 9,585,838. The claims of the patent related to the production of multivesicular liposomes. This is the third EXPAREL patent listed in the FDA’s Orange Book. The patent expiration date is December 24, 2021.
|
•
|
In January 2017, we entered into a co-promotion agreement with DePuy Synthes Sales, Inc., or DePuy Synthes, part of the Johnson & Johnson family of companies, to support promotion, education and training for EXPAREL in orthopedic procedures. DePuy Synthes field representatives, specializing in joint reconstruction, spine, sports medicine and trauma, will play the lead commercial role in the hospital surgical suite and ambulatory surgery center settings. The Pacira team will focus on soft tissue surgeons in key specialties and anesthesiologists, and continue to act as the overall EXPAREL account manager.
|
|
Three Months Ended
March 31, |
|
% Increase / (Decrease)
|
||||||
|
|
||||||||
|
2017
|
|
2016
|
|
|||||
Net product sales:
|
|
|
|
|
|
||||
EXPAREL
|
$
|
67,701
|
|
|
$
|
63,752
|
|
|
6%
|
DepoCyt(e) and other product sales
|
724
|
|
|
750
|
|
|
(3)%
|
||
Total net product sales
|
68,425
|
|
|
64,502
|
|
|
6%
|
||
Collaborative licensing and milestone revenue
|
206
|
|
|
356
|
|
|
(42)%
|
||
Royalty revenue
|
652
|
|
|
616
|
|
|
6%
|
||
Total revenues
|
$
|
69,283
|
|
|
$
|
65,474
|
|
|
6%
|
|
Three Months Ended
March 31, |
|
% Increase / (Decrease)
|
||||||
|
|
||||||||
|
2017
|
|
2016
|
|
|||||
Clinical development
|
$
|
10,763
|
|
|
$
|
4,335
|
|
|
148%
|
Product development and other
|
5,211
|
|
|
4,265
|
|
|
22%
|
||
Stock-based compensation
|
658
|
|
|
893
|
|
|
(26)%
|
||
Total research and development expense
|
$
|
16,632
|
|
|
$
|
9,493
|
|
|
75%
|
% of total revenues
|
24
|
%
|
|
14
|
%
|
|
|
|
Three Months Ended
March 31, |
|
% Increase / (Decrease)
|
||||||
|
|
||||||||
|
2017
|
|
2016
|
|
|||||
Sales and marketing
|
$
|
25,176
|
|
|
$
|
20,338
|
|
|
24%
|
General and administrative
|
11,577
|
|
|
11,571
|
|
|
—%
|
||
Stock-based compensation
|
5,367
|
|
|
6,048
|
|
|
(11)%
|
||
Total selling, general and administrative expenses
|
$
|
42,120
|
|
|
$
|
37,957
|
|
|
11%
|
% of total revenues
|
61
|
%
|
|
58
|
%
|
|
|
|
Three Months Ended
March 31, |
|
% Increase / (Decrease)
|
||||||
|
|
||||||||
|
2017
|
|
2016
|
|
|||||
Interest income
|
$
|
514
|
|
|
$
|
252
|
|
|
104%
|
Interest expense
|
(2,589
|
)
|
|
(1,868
|
)
|
|
39%
|
||
Loss on early extinguishment of debt
|
(3,721
|
)
|
|
—
|
|
|
N/A
|
||
Other, net
|
10
|
|
|
48
|
|
|
(79)%
|
||
Total other expense, net
|
$
|
(5,786
|
)
|
|
$
|
(1,568
|
)
|
|
269%
|
|
Three Months Ended
March 31, |
|
% Increase / (Decrease)
|
||||||
|
|
||||||||
|
2017
|
|
2016
|
|
|||||
Income tax expense
|
$
|
30
|
|
|
$
|
32
|
|
|
(6)%
|
Effective tax rate
|
0
|
%
|
|
(1
|
)%
|
|
|
|
|
Three Months Ended
March 31, |
||||||
Consolidated Statement of Cash Flows Data:
|
|
2017
|
|
2016
|
||||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
6
|
|
|
$
|
(3,121
|
)
|
Investing activities
|
|
(143,836
|
)
|
|
(21,875
|
)
|
||
Financing activities
|
|
216,856
|
|
|
3,041
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
73,026
|
|
|
$
|
(21,955
|
)
|
•
|
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, England facility;
|
•
|
the timing of and extent to which the holders of our 2022 Notes elect to convert their notes;
|
•
|
the cost and timing of potential milestone payments to Skyepharma, which could be up to an aggregate of $36.0 million if certain milestones pertaining to net sales of DepoBupivacaine products, including EXPAREL, are met;
|
•
|
costs related to legal and regulatory issues;
|
•
|
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, 2017
|
|
Returns Allowances
|
|
Prompt Payment Discounts
|
|
Wholesaler Service Fees
|
|
Volume
Rebates and Chargebacks |
|
Total
|
||||||||||
Balance at December 31, 2016
|
|
$
|
1,346
|
|
|
$
|
595
|
|
|
$
|
735
|
|
|
$
|
1,124
|
|
|
$
|
3,800
|
|
Provision
|
|
178
|
|
|
1,394
|
|
|
1,053
|
|
|
895
|
|
|
3,520
|
|
|||||
Payments/Credits
|
|
(274
|
)
|
|
(1,436
|
)
|
|
(1,202
|
)
|
|
(968
|
)
|
|
(3,880
|
)
|
|||||
Balance at March 31, 2017
|
|
$
|
1,250
|
|
|
$
|
553
|
|
|
$
|
586
|
|
|
$
|
1,051
|
|
|
$
|
3,440
|
|
March 31, 2016
|
|
Returns Allowances
|
|
Prompt Payment Discounts
|
|
Wholesaler Service Fees
|
|
Volume
Rebates and Chargebacks |
|
Total
|
||||||||||
Balance at December 31, 2015
|
|
$
|
1,733
|
|
|
$
|
625
|
|
|
$
|
745
|
|
|
$
|
797
|
|
|
$
|
3,900
|
|
Provision
|
|
166
|
|
|
1,302
|
|
|
982
|
|
|
418
|
|
|
2,868
|
|
|||||
Payments/Credits
|
|
(289
|
)
|
|
(1,412
|
)
|
|
(1,195
|
)
|
|
(601
|
)
|
|
(3,497
|
)
|
|||||
Balance at March 31, 2016
|
|
$
|
1,610
|
|
|
$
|
515
|
|
|
$
|
532
|
|
|
$
|
614
|
|
|
$
|
3,271
|
|
Exhibit No.
|
|
Description
|
|
|
|
4.1
|
|
Indenture, dated March 13, 2017, between Pacira Pharmaceuticals, Inc. and Wells Fargo Bank, National Association.(1)
|
|
|
|
4.2
|
|
Form of Global 2.375% Convertible Senior Notes due 2022.(1)
|
|
|
|
10.1 †
|
|
Co-Promotion Agreement, dated January 24, 2017, between Pacira Pharmaceuticals, Inc. and DePuy Synthes Sales, Inc.*
|
|
|
|
10.2 +
|
|
Executive Employment Agreement, dated April 11, 2016, between Pacira Pharmaceuticals, Inc. and Robert Weiland.*
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer and Chairman pursuant to Rule 13a-14(a) and 15d-14(a), as amended.*
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.*
|
|
|
|
32.1
|
|
Certification of 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 Chief Financial Officer 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, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income (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:
|
May 4, 2017
|
/s/ DAVID STACK
|
|
|
David Stack
|
|
|
Chief Executive Officer and Chairman
|
|
|
(Principal Executive Officer)
|
|
|
|
Dated:
|
May 4, 2017
|
/s/ CHARLES A. REINHART, III
|
|
|
Charles A. Reinhart, III
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
Definition
|
Location
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Accountant
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12.2
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Annual Training Goal
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4.6(iii)
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Base Commission
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5.1(i)
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CGL
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10.2
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CMS
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11.1(iii)
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Claim
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10.1(i)
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Committees
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3.1
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Compliance Policies
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4.9
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Confidential Information
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11.1(i)
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Confidentiality Agreement
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11.1(v)
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DePuy Synthes
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Preamble
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Discloser
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11.1(i)
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Dispute
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15.6
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Effective Date
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Preamble
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Enforcement Action
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9.3(ii)
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Files and Work Papers
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11.1(ii)
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Indemnified Persons
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10.1(i)
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JSC
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3.1
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JCC
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3.1
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Overpayment Amount
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5.3(ii)
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Pacira
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Preamble
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Party/Parties
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Preamble
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Prior Agreements
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15.3
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Product
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Background
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Recipient
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11.1(i)
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Recipient’s Representatives
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11.1(ii)
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Commission Payment
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5.1
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Stark Law
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4.9
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Term
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13.1
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Training Certification
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4.6(iii)
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Training Records
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4.6(iii)
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Volume Forecast
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4.4
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(i)
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Shall not perform any actions that are prohibited by National, International and other anti-corruption laws, including without limitation the U.S. Foreign Corrupt Practices Act, (collectively “
Anti-Corruption Laws
”) that may be applicable to one or both Parties to this Agreement;
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(ii)
|
Shall not, directly or indirectly, make any payment, or offer or transfer anything of value, or agree or promise to make any payment or offer or transfer anything of value, to a government official or government employee, to any political party or any candidate for political office or to any other third party related to the transaction with the purpose of influencing decisions related to this Agreement and/or its business in a manner that would violate Anti-Corruption Laws;
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(iii)
|
Shall not retain any government official or government employee in the performance of this Agreement unless it has been pre-approved in writing by the other Party. Furthermore, each Party shall notify the other writing in the event the notifying Party becomes aware that any person engaged in the performance of this Agreement becomes a government official or employee, a political party official or a candidate for political office. The requirements of this subsection shall not apply with respect to employees of an intermediary that is a government owned entity; and
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(iv)
|
Agree that if a Party fails to comply with any of the provisions of this
Exhibit D
such failure shall be deemed to be a material breach of this Agreement and, upon any such failure, the non-breaching Party shall have the right to terminate this Agreement with immediate effect upon written notice to the other Party.
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1.
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The Parties shall first attempt in good faith to resolve any Dispute by confidential mediation in accordance with the then current
Mediation Procedure
of the International Institute for Conflict Prevention and Resolution (“
CPR Mediation Procedure
”) (www.cpradr.org) before initiating arbitration. The CPR Mediation Procedure shall control, except where it conflicts with these provisions, in which case these provisions control. The mediator shall be chosen pursuant to CPR Mediation Procedure. The mediation shall be held in New York, New York.
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2.
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Either Party may initiate mediation by written notice to the other Party of the existence of a Dispute. The Parties agree to select a mediator within 20 days of the notice and the mediation will begin promptly after the selection. The mediation will continue until the mediator, or either Party, declares in writing, no sooner than after the conclusion of one full day of a substantive mediation conference attended on behalf of each Party by a senior business person with authority to resolve the Dispute, that the Dispute cannot be resolved by mediation. In no event, however, shall mediation continue more than 60 days from the initial notice by a Party to initiate meditation unless the Parties agree in writing to extend that period.
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3.
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Any period of limitations, whether contractual or established by law, that would otherwise expire between the initiation of mediation and its conclusion shall be extended until 20 days after the conclusion of the mediation.
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1.
|
If the Parties fail to resolve the Dispute in mediation, and a Party desires to pursue resolution of the Dispute, the Dispute shall be submitted by either Party for resolution in arbitration pursuant to the then current CPR Non-Administered Arbitration Rules (“
CPR Rules
”) (www.cpradr.org), except where they conflict with these provisions, in which case these provisions control. The arbitration will be held in New York, New York. All aspects of the arbitration shall be treated as confidential.
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2.
|
The arbitrators will be chosen from the CPR Panel of Distinguished Neutrals, unless a candidate not on such panel is approved by both Parties. Each arbitrator shall be a lawyer with at least 15 years’ experience with a law firm or corporate law department of over 25 lawyers or who was a judge of a court of general jurisdiction. To the extent that the Dispute requires special expertise, the Parties will so inform CPR prior to the beginning of the selection process.
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3.
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The arbitration tribunal shall consist of three arbitrators, of whom each Party shall designate one in accordance with the “screened” appointment procedure provided in CPR Rule 5.4. The chair will be chosen in accordance with CPR Rule 6.4.
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4.
|
If, however, the aggregate award sought by the Parties is less than $5 million and equitable relief is not sought, a single arbitrator shall be chosen in accordance with the CPR Rules.
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5.
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Candidates for the arbitrator position(s) may be interviewed by representatives of the Parties in advance of their selection, provided that all Parties are represented.
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6.
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The Parties agree to select the arbitrator(s) within 45 days of initiation of the arbitration. The hearing will be concluded within nine (9) months after selection of the arbitrator(s) and the award will be rendered within 60 days of the conclusion of the hearing, or of any post-hearing briefing, which briefing will be completed by both sides within 45 days after the conclusion of the hearing. In the
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7.
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The hearing will be concluded in ten hearing days or less. Multiple hearing days will be scheduled consecutively to the greatest extent possible. A transcript of the testimony adduced at the hearing shall be made and shall be made available to each Party.
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8.
|
The arbitrator(s) shall be guided, but not bound, by the
CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration
(www.cpradr.org) (“
Protocol
”). The Parties will attempt to agree on modes of document disclosure, electronic discovery, witness presentation, etc. within the parameters of the Protocol. If the Parties cannot agree on discovery and presentation issues, the arbitrator(s) shall decide on presentation modes and provide for discovery within the Protocol, understanding that the Parties contemplate reasonable discovery.
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9.
|
The arbitrator(s) shall decide the merits of any Dispute in accordance with the law governing this Agreement, without application of any principle of conflict of laws that would result in reference to a different law. The arbitrator(s) may not apply principles such as “amiable compositeur” or “natural justice and equity.”
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10.
|
The arbitrator(s) are expressly empowered to decide dispositive motions in advance of any hearing and shall endeavor to decide such motions as would a United States District Court Judge sitting in the jurisdiction whose substantive law governs.
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11.
|
The arbitrator(s) shall render a written opinion stating the reasons upon which the award is based. The Parties consent to the jurisdiction of the United States District Court for the district in which the arbitration is held for the enforcement of these provisions and the entry of judgment on any award rendered hereunder. Should such court for any reason lack jurisdiction, any court with jurisdiction may act in the same fashion.
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12.
|
Each Party has the right to seek from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc. to avoid irreparable harm, maintain the status quo, or preserve the subject matter of the Dispute. Rule 14 of the CPR Rules does not apply to this Agreement.
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1.
|
I have reviewed this quarterly report on Form 10-Q of Pacira Pharmaceuticals, Inc. (the “Registrant”);
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2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
Date:
|
May 4, 2017
|
/s/ David Stack
|
|
|
David Stack
|
|
|
Chief Executive Officer and Chairman
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Pacira Pharmaceuticals, Inc. (the “Registrant”);
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
Date:
|
May 4, 2017
|
/s/ Charles A. Reinhart, III
|
|
|
Charles A. Reinhart, III
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
Date:
|
May 4, 2017
|
/s/ David Stack
|
|
|
David Stack
|
|
|
Chief Executive Officer and Chairman
|
|
|
(Principal Executive Officer)
|
Date:
|
May 4, 2017
|
/s/ Charles A. Reinhart, III
|
|
|
Charles A. Reinhart, III
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|