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On Monday, JPMorgan downgraded Pacira Pharmaceuticals (NASDAQ:PCRX) stock from Overweight to Underweight, significantly reducing the price target to $10.00 from the previous $45.00.
This move followed a legal ruling on Friday where Judge Cox Arleo declared that Pacira's '495 patent on Exparel was invalid, which means that eVenus is now able to launch a competing product, gExparel, without infringing on the patent.
The ruling is a significant blow to Pacira, as Exparel accounts for approximately 80% of the company's revenue. With the patent invalidated, it is anticipated that a considerable portion of this revenue could be lost if other patents fail to protect the drug. The company's other assets are considered to be of minor importance, and the research and development pipeline is not highly valued by the market.
The analyst from JPMorgan pointed out that the appeal process and litigation for other Exparel patents could take years. Friday’s ruling also raises concerns about the strength of Pacira's remaining patents. This situation is likely to create a persistent overhang on the company's shares.
Investors are expected to look for more stable investment opportunities within the pharmaceutical sector. The analyst's outlook for Pacira's shares does not see a clear path to recovery in the near term, leading to the decision to downgrade the stock.
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