September 19, 2017 19:12 E
`
`19:12 E '-
`
`BMO 9 Capital Markets
`
`Pacira Pharmaceuticals
`
`Specialty Pharmaceuticals
`
`PCRX-NSDQ
`
`Rat ng
`Market Perform
`
`Pr ce: Sep 19
`$35.70
`
`arget
`$40.00
`
`ota Rtn
`12%
`
`August Exparel Sales Up From July, but Still tracking
`Well Below 3Q Consensus
`
`Gary Nachman
`ga y nachman@bmo com
`
`N coe Ge In no, MPH
`n co e ge m no@bmo com
`Ann-Hunte Van K k
`
`ah vank k@bmo com
`ega Ent ty
`BMO (ap ta Markets (orp.
`
`Ana yst
`(212) 883-5113
`
`(212) 885-4187
`
`(212) 883-5176
`
`H
`
`b
`4
`1
`U
`
`Bottom line: Symphony sa es data for August were re eased ton ght, and Expare
`cont nues to track be ow expectat ons. August sa es were up 7.7% Y/Y and mproved
`from ju y, but sa es per se ng day were actua y down 0.4% from pr or month. We
`caveat that these th rd party data have not a ways been comp ete y re ab e n the
`past, a though the ast coup e of quarters have been very c ose to PCRX’s reported sa es
`(2017 spot on). We ma nta n our Market Perform.
`
`90
`80
`70
`60
`
`ZYR Price Volume Char
`
`Key Points
`
`- Accord ng to Symphony, Expare sa es for August were $22.9mm (+17% Y/Y), and
`$3 es per se ng day were $0.996mm, down 0.4% from ju y 2017 and at the owest
`eve s nce January of th 5 year (see Exh b t 1).
`
`-
`
`If Symphony’s ju y/August sa es are c ose to be ng accurate, then Expare w have
`
`to ramp up 5 gn f cant y to ach eve 3Q consensus of $72.5mm (our est mate 5
`$72.8mm). We project the Y/Y growth wou d have to be about 32% for September to
`ach eve our 30 est mate (see Exh b t 1), wh ch we th nk s a very un ke y scenar o.
`It cou d a so be very cha eng ng to ach eve the (U year gu dance for Expare
`(5290 310mm) even at the ower end of the range (we re current y at $292mm and
`consensus s $293mm). We are expect ng a more mean ngfu ramp for the rest of the
`year from the M partnersh p and typ ca seasona ty n 40 for procedures, but based
`on the Symphony data thus far 30 has been more cha eng ng than expected.
`
`- Aga n, we caveat that the th rd party sa es data (Symphony and IMS) are not
`a ways comp ete y re ab e and accurate, but they have genera y proven to be good
`nd cators espec a y n the ast quarter (IMS August sa es data w be ava ab e 9/29).
`In add t on, PCRX has h gh ghted that a at of the tra n ng that was tak ng p ace
`w th the JNj/DPS team as they beg n to promote Expare n the ortho space was
`substant a y comp eted by the end of August. hus, we wou d expect to see more
`of an nf ect on n the Expare trajectory n the th rd party data beg nn ng next month
`and progress ve y get better for the rest of the year and nto next year. However, the
`bar for ach ev ng that type of sa es trajectory appears to be gett ng h gher and may
`be much harder to reach.
`
`50
`.10 l
`30
`20
`
`Mar
`LHS Price (9/ R113 Volume (mm)
`
`Sep
`
`Mar
`
`Sep
`Source ractSet
`
`Company Description
`Pac a Pha maceut ca 5 s a spec a ty pha ma company w th
`p oducts nco po at ng DepoFoam de ve y techno ogy,
`wh ch 5 des gned to extended e ease adm n st at on
`of d ugs w thout a te ng the mo ecu 3 st uctu e The
`company’s ead p oduct, Expa e , ut zes DepoFoam
`techno ogy to de ve ong-act ng bup vaca ne to the
`t eatment of postsu 9 ca pa n
`
`Biogen Exhibit 2182
`PCRX-NSDQ
`Page 1 of 5
`P ease ele to pages 3 to 5 to mp0 tant D sc osu es, nc ud ng Ana yst 5 Ce tl cat on Mylan V. Blogen Resea (h
`IPR 2018-01403
`
`000
`000
`000
`
`ndust y
`Resea (h
`
`'—
`M
`
`Company
`Mode s
`
`

`

`BMO 9 Capital Markets
`
`Exhibit 1: Exparel Symphony and IMS Sales Data
`Jan 2017
`Feb 2017
`1017
`
`Mar 2017
`
`Apr 2017
`
`Jun 2017
`
`Jul 2017
`
`May 2017
`2017
`
`Aug 2017
`3017
`
`Sep 2017
`
` ms Reported Sales
`
`YOY Change
`IMS Quarter
`PCRX reported I BMO Estimate
`Adjustment
`IMS 010 change
`
`Sales per selling day
`MIM Change
`IMS Quarterly Sales/Day
`QIQ change
`Symphony Reported Sales
`YOY Change
`Symphony Quarter
`PCRX reported / BMO Estimate
`Adjustment
`Symphony QIQ change
`
`Sales per selling day
`MIM Change
`Symphony Quarterly Sales/Day
`QIQ change
`
`20,397,749
`4.5%
`
`22,003,181
`1.4%
`
`$971,321
`-21.2%
`
`20,634,1 79
`4.9%
`
`21 ,319,797
`-1.5%
`
`$982,580
`-6.6%
`
`$1 ,122,095
`14.2%
`
`26,616,641
`9.0%
`69,017,571
`$67,701,000
`0.98
`-2.8%
`
`—1.0%
`23,742,91 3
`7.4%
`65,696,889
`$67,701,000
`
`3.8%
`$3,183,898
`—2.4%
`
`22,543,382
`5.7%
`
`21,663,390
`2.5%
`
`27,128,974
`9.2%
`71,335,746
`
`20,201,683
`—1.7%
`
`21,623,643
`10.0%
`
`30,938,816
`20.0%
`72,764,142
`
`$1,186,494
`-1.9%
`
`_
`
`$1,010,084
`-18_1%
`
`21 ,993,864
`2.9%
`
`23,409,531
`8.7%
`
`11.2%
`69,498,065
`
`20,006,061
`4.6%
`
`22,911 .686
`7.7%
`
`29,833,176
`32.0%
`72,750,923
`
`$1,157,572
`7.3%
`
`$1,064,070
`43.1%
`
`_
`
`$1,000,303
`—8_7%
`
`Source: Symphony Health, IMS, BMO Capital Markets, Company Reports
`
`Page 2 of 5
`Pac a Pha maceut (a s Page 2
`
`Septembe 19, 2017
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`

`

`BMO 9 Capital Markets
`
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`W6 06/30/16
`07/2016
`08/04/16
`$140
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`.-
`-_
`S120
`$100
`$80
`$60
`$40
`$20
`Oct 2014
`
`
`
`Jan 2015
`
`Apr 2015
`
`Jul 2015
`
`0d 2015
`
`Jan 2016
`
`Apr 2016
`
`Jul 2016
`
`Oct 2016
`
`Jan 2017 Apr 2017
`
`Jul 2017
`
`
`
`
`
`Target Pr ce
`GosngPrice
`Outperform (0?); Market Perform (Mkt); Underperfonn (Und); Speculative (S); Suspended (Spd); Not Rated (NR); Restricted (ll)
`Source: FadSet, BMO Capital Market
`
`IMPORTANT DISCLOSURES
`
`Analyst's Certification
`
`I, Gary Nachman, hereby cert fy that the v ews expressed n th 5 report accurate y ref ect my persona v ews about the subject secur t es or
`ssuers. I a so cert fy that no part of my compensat on was, s, or w be, d rect y or nd rect y, re ated to the spec fc recommendat ons or v ews
`expressed n th 5 report.
`
`Ana ysts who prepared th 5 report are compensated based upon (among other factors) the overa prof tab ty of 8M0 Cap ta Markets and
`the r aff ates, wh ch nc udes the overa prof tab ty of nvestment bank ng serv ces. Compensat on for research 5 based on effect veness n
`generat ng new deas and n commun cat on of deas to c ents, performance of recommendat ons, accuracy of earn ngs est mates, and serv ce
`to c ents.
`
`Ana ysts emp oyed by 8M0 Nesb tt Burns Inc. and/or 8M0 Cap ta Markets l m ted are not reg stered as research ana ysts w th FINRA. hese
`ana ysts may not be assoc ated persons of 8M0 Cap ta Markets Corp. and therefore may not be subject to the FINRA Ru e 2241 restr ct ons on
`commun cat ons w th a subject company, pub c appearances and trad ng secur t es he d by a research ana yst account.
`
`Methodology and Risks to target Price/Valuation for Pacira Pharmaceuticals (PCRX-NSDQ)
`
`Methodology: Our pr ce target of $40 5 based on our DCF us ng a d scount rate of 9.5% and ext mu t p e of 6x 2021E EBI DA.
`
`Risks: 1) Caut ous feedback from phys c ans on ncreas ng use of Expare , 2) cont nued pushback from hosp ta formu ar es as they face cost
`pressures and the need to have better everage n the hosp ta sett ng, 3) potent a compet t on to Expare from other ong act ng bup vaca ne
`products down the road, 4) expectat ons that are very h gh for the Expare sa es trajectory and uncerta nty regard ng the potent a mpact from
`N partnersh p and nerve b ock nd cat on, and 5) h gher spend ng eve 5 nc ud ng roya tes to M that w cr mp prof tab ty f Expare sa es
`don't acce erate qu ck y enough.
`
`Distribution of Ratings (September 18, 2017)
`
`Rat ng catego y
`
`BMO at n
`
`9
`
`BMOCM US
`Un ve se'
`
`Un ve se
`
`BMOCM US 8
`C ents“
`
`BMOCM US 8
`C ents‘“
`
`BMOCM
`Un ve se"""
`
`BMOCM B
`C ents“'“
`
`Sta M ne
`
`' Ref ects rat ng d str but on of a compan es covered by BMO Cap ta Markets Corp. equ ty research ana ysts.
`
`“ Ref ects rat ng d str but on of a compan es from wh ch 8M0 Cap ta Markets Corp. has rece ved compensat on for Investment Bank ng serv ces
`as percentage w th n rat ngs category.
`
`compan es from wh ch BMO Cap ta Markets Corp. has rece ved compensat on for Investment Bank ng
`“' Ref ects rat ng d str but on of a
`serv ces as percentage of Investment Bank ng c ents.
`
`““ Ref ects rat ng d str but on of a compan es covered by BMO Cap ta Markets equ ty research ana ysts.
`
`“'“ Ref ects rat ng d str but on of a compan es from wh ch BMO Cap ta Markets has rece ved compensat on for Investment Bank ng serv ces
`as percentage of Investment Bank ng c ents.
`
`Ratings Key (as of October 2016)
`
`We use the to ow ng rat ngs system def n t ons:
`
`Page 3 of 5
`Pac a Pha maceut ca 5 Page 3
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`Septembe 19, 2017
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`

`

`BMO 9 Capital Markets
`
`0P Outperform Forecast to outperform the ana yst’s coverage un verse on a tota return has 5;
`Mkt Market Perform Forecast to perform rough y n ne w th the ana yst’s coverage un verse on a tota return bas s;
`Und Underperform Forecast to underperform the ana yst’s coverage un verse on a tota return has 5;
`(S)
`Specu at ve nvestment;
`Spd Suspended Coverage and rat ng suspended unt coverage 5 re nstated;
`NR No Rated No rat ng at th s t me; and
`R Restr cted D ssem nat on of research s current y restr cted.
`
`8M0 Cap ta Markets seven op 15 sts gu de nvestors to our best deas accord ng to d fferent object ves (CON large Cap, CDN Sma Cap, US
`large Cap, US Sma Cap, Income, (DN Guam, and US Quant have rep aced the op P ck rat ng).
`
`Prior 8M0 Capital Markets Rating System
`
`(April 2013 - October 2016)
`htt
`:
`research oba .bmoca ta marketscom documents 2013 ratn ke
`
`2013 to 2016. df
`
`(january 2010 - April 2013)
`htt
`:
`research oba.bmoca ta markets.com documents 2013
`
`ror ratn s stem. df
`
`Other Important Disclosures
`
`
`Important Dsc osures on the stocks dscussed n ths report, pease go to httpzflresearchg oba .bmocap ta markets.com/Pub (1
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`Septembe 19, 2017
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`BMO 9 Capital Markets
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`Pac a Pha maceut ca 5 Page 5
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`A membe of BMO 9 Financial Group
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`Septembe 19, 2017
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