Pacira picks Patheon to hit the gas on pain drug production

DPx CEO Jim Mullen

Pacira Pharmaceuticals ($PCRX) is counting on an expanded indication and swell in demand for its surgical pain treatment, and the biotech has inked a deal with contract manufacturer Patheon to collaborate on production in a multiyear agreement.

Patheon, which operates under DPx since merging with DSM last month, has agreed to set up a sterile manufacturing facility that will crank out supplies of Exparel, Pacira's extended-release postsurgical pain medication. The biotech already has about $400 million worth of manufacturing capacity devoted to the drug, which debuted in the U.S. in 2012, and Patheon has agreed to add about $300 million to that total over the next two to three years, anticipating a favorable FDA opinion on Pacira's application to treat nerve block.

Under the deal, Patheon will set up its Exparel-producing operation at its Swindon, U.K., facility, making for something of a happy ending for the CMO's long-troubled operation there. The company tried and failed to sell its Swindon facility for years before deciding in 2012 to ramp down production at the site. Now, thanks to the Pacira deal, Patheon has found a new use for an old asset, DPx CEO Jim Mullen said.

"Exparel is an ideal product for our Swindon facility, which we have recently upgraded to focus strategically on manufacturing specialty products in dedicated suites," Mullen said in a statement. "We are excited about the commercial prospects of Exparel and look forward to building our partnership with Pacira based upon Patheon's comprehensive customer service model."

The deal is Patheon's first major partnership since joining forces with DSM in a $2.6 billion deal. Private equity outfit JLL Partners controls 51% of the resulting DPx, with Royal DSM holding on to the rest, and the new company expects to bank $2 billion in revenue this year.

As for Pacira, the biotech remains confident it will win a nerve-block indication despite Exparel's failure to meet its primary endpoint in a Phase III study using the drug in chest surgery. A second late-stage study, testing Exparel in femoral nerve block for knee replacement surgery, has so far succeeded, and Pacira believes that will be enough to sway the agency.

Last week, Pacira hauled in $96 million from a stock offering.

- read the announcement

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