Orbimed Still Selling Pacira

Between April and June of this year, Orbimed Advisors sold 18% of its shares of Pacira Pharmaceuticals Inc (NASDAQ:PCRX), finishing the second quarter with exactly 2 million shares in its portfolio according to its 13F filing. According to a more recent filing with the SEC, Orbimed has continued selling shares during the third quarter and as of September 25th owned just over 1.6 million shares, placing it just under the 5% ownership mark. We cannot be sure, but we would guess that is about what the fund closed the third quarter with- meaning that Orbimed cut its stake 20% in the last three months.

Pacira Pharmaceuticals Inc (NASDAQ:PCRX)

Pacira Pharmaceuticals Inc is a development-stage pharmaceutical company whose drugs incorporate the firm’s own drug delivery technology. It went public in February 2011 and the stock has since risen 154%, including doubling in price this year. Its market capitalization is now about $580 million (with sufficient volume for most investors to take a position in the stock). With Orbimed having owned shares at least since the beginning of the year according to our database of past13F filings (find more stocks owned by Orbimed Advisors), we could see their sales being partly driven by profit taking. We would recommend any investors who have seen a stock double while they owned it to sell out of at least a portion of their position, and the fact that Orbimed may be doing this makes it even better advice.

At least in the course of the second quarter, however, some hedge funds were buying in to Pacira Pharmaceuticals Inc. Jacob Gottlieb’s Visium Asset Management and Richard Schimel’s Diamondback Capital both increased their stakes from the first quarter of the year between April and June. See more stock picks from Jacob Gottlieb and former SAC Capital portfolio manager Richard Schimel. Obviously, these transactions are a few months old, and with the stock having risen substantially these funds may have sold shares during the third quarter.

Pacira did double its revenue in the first half of 2012 versus the same period in 2011, on the strength of licensing and development. The company still shows a net loss, and Wall Street analysts expect a loss in 2013 as well despite Pacira’s continued sales of EXPAREL, one of the company’s primary products which was launched in April of this year. Pacira burned $25 million in cash during the first six months of 2012, and closed June with $21 million in cash and cash equivalents and $63 million in short term investments on its balance sheet following a stock offering in April.

We think that other development-stage pharmaceutical companies generally make for good peers for Pacira. Nektar Therapeutics (NASDAQ:NKTR), Alkermes Plc (NASDAQ:ALKS), Hospira, Inc. (NYSE:HSP), and Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL). Rigel, at about $740 million, is the only one of these companies with under a $1 billion market capitalization, so over all this peer group is considerably larger than Pacira. As development-stage companies all four of these peers are unprofitable on a trailing basis; Nektar and Rigel also resemble Pacira in that the sell-side expects negative earnings per share next year as well. Alkermes and Hospira, conversely, are seen as breaking into the black: specialty injectable drug provider Hospira even trades at a forward P/E of 13 and could be a value candidate if it can deliver that level of business performance, while drug developer Alkermes trades at 21 times forward earnings estimates.

We think that it is a good idea for investors in Pacira to sell some of their shares and lock in some profits they have earned from the rise in the stock, as Orbimed seems to be doing, and potentially look at other pharmaceutical companies as investment prospects. Certainly investors should do more work before buying, but if the story checks out Hospira or Alkermes are more attractive than the rest of these companies as they near profitability.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!