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.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!