UNITED STATES DISTRICT COURT Civil Action No. CLASS …shareholdersfoundation.com/system/files/complaints/... · 2020-06-16 · and regarding Pacira Pharmaceuticals, Inc. (“Pacira”

Case 2:14-cv-06172-WHW-CLW Document 1 Filed 10/03/14 Page 1 of 37 PageID: 1

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

Individually and on Behalf of All Others Similarly Situated,

Plaintiff(s),

v.

Civil Action No.

CLASS ACTION

COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS

DEMAND FOR JURY TRIAL

PACIRA PHARMACEUTICALS, INC., DAVID STACK, JAMES SCIBETTA, and LAUREN RIKER

Defendants.

Plaintiff “Plaintiff”), individually and on behalf of all

other persons similarly situated, by his undersigned attorneys, for his complaint

against defendants, alleges the following based upon personal knowledge as to

himself and his own acts, and information and belief as to all other matters, based

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upon, inter alia, the investigation conducted by and through his attorneys, which

included, among other things, a review of the defendants’ public documents,

conference calls and announcements made by defendants, United States Securities

and Exchange Commission (“SEC”) filings, wire and press releases published by

and regarding Pacira Pharmaceuticals, Inc. (“Pacira” or the “Company”), analysts’

reports and advisories about the Company, and information readily obtainable on

the Internet. Plaintiff believes that substantial evidentiary support will exist for the

allegations set forth herein after a reasonable opportunity for discovery.

NATURE OF THE ACTION

1. This is a federal securities class action brought on behalf of a class

consisting of all persons and entities, other than Defendants (defined below) and

their affiliates, who purchased the securities of Pacira from April 9, 2012 to

September 24, 2014, inclusive (the “Class Period”). Plaintiff seeks to pursue

remedies against Pacira and certain of its officers and directors for violations of the

federal securities laws under the Securities Exchange Act of 1934 (the “Exchange

Act”)

2. Defendant Pacira is a specialty pharmaceutical company that

develops, commercializes, and manufactures pharmaceutical products primarily for

use in hospitals and ambulatory surgery centers worldwide. Its product pipeline

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includes EXPAREL, which has completed Phase III clinical trials for postsurgical

analgesia-nerve block administration.

3. The Company was founded in 2006, is headquartered in Parsippany,

New Jersey, and its shares trade on the NASDAQ stock exchange under the ticker

symbol “PCRX.”

4. Throughout the Class Period, Defendants made false and/or

misleading statements, and failed to disclose material adverse facts about the

Company’s business, operations, prospects and performance. Specifically, during

the Class Period, Defendants made false and/or misleading statements and/or failed

to disclose that: (i) the Company was overstating the efficacy of its Exparel drug;

(ii) the Company was improperly promoting its Exparel drug by touting its ability

to be effective for up to 72 hours, when in fact, it is approved only for 24 hours of

pain relief; (iii) the Company improperly claimed that Exparel is safe for use in

cholecystectomy and colectomy procedures, when in fact, its approved labeling

does not provide instructions for, or indicate that Exparel will be safe and effective

for, postsurgical pain, if used in surgical procedures other than hemorrhoidectomy

or bunionectomy; (iv) a substantial portion of the Company’s revenues were

derived from off label marketing; and (v) and as a result of the above, the

Company’s financial statements were materially false and misleading at all

relevant times.

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5. On September 25, 2014, the Company announced that it received a

Warning Letter from the U.S. Food and Drug Administration’s (“FDA”) Office of

Prescription Drug Promotion (“OPDP”) referencing certain promotional materials

relating to Exparel (the “Warning Letter”). In the Warning Letter, the FDA’s

OPDP stated that it has evidence that Exparel has been promoted for new uses for

which it does not have approval, and for which its labeling does not provide

adequate directions for use, thus rendering Exparel “misbranded.” The FDA noted

that Pacira’s advertising materials suggested that Exparel is safe and effective for

use in cholecystectomy and colectomy procedures. However, the FDA said that

the approved labeling for Exparel does not provide instructions for, or indicate that

Exparel will be safe and effective for postsurgical pain, if used in surgical

procedures other than a hemorrhoidectomy or bunionectomy. Further, the

Warning Letter noted that a journal advertisement by Pacira claimed Exparel was

able to provide pain-relief for up to 72 hours, while the drug is approved for pain-

relief only up to 24 hours. The agency said these claims overstate Exparel’s

efficacy and are misleading.

6. On the news, Pacira stock fell $11.66, or almost 11%, on unusually

heavy volume, to close at $94.62 on September 25, 2014.

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7. As a result of Defendants’ wrongful acts and omissions, and the

precipitous decline in the market value of the Company’s securities, Plaintiff and

other Class members have suffered significant losses and damages.

JURISDICTION AND VENUE

8. The claims asserted herein arise under and pursuant to §§10(b) and

20(a) of the Exchange Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5

promulgated thereunder by the SEC (17 C.F.R. §240.10b-5).

9. This Court has jurisdiction over the subject matter of this action under

28 U.S.C. §1331 and §27 of the Exchange Act.

10. Venue is proper in this District pursuant to §27 of the Exchange Act

(15 U.S.C. §78aa) and 28 U.S.C. §1391(b) as a significant portion of the

defendants’ actions, and the subsequent damages, took place within this District.

11. In connection with the acts, conduct and other wrongs alleged in this

Complaint, defendants, directly or indirectly, used the means and instrumentalities

of interstate commerce, including but not limited to, the United States mail,

interstate telephone communications and the facilities of the national securities

exchange.

PARTIES

12. Plaintiff, as set forth in the accompanying Certification, which is

incorporated by reference herein, purchased the common stock of Pacira at

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artificially inflated prices during the Class Period and was damaged upon the

revelation of the alleged corrective disclosures.

13. Defendant Pacira is a Delaware corporation with its principal

executive offices located at 5 Sylvan Way, Suite 100, Parsippany, NJ 07054.

Pacira’s common stock trades on the NASDAQ under the ticker symbol “PCRX.”

14. Defendant David M. Stack (“Stack”) has served at all relevant times

as the Company’s Chief Executive Officer.

15. Defendant James S. Scibetta (“Scibetta”) has served at all relevant

times as the Company’s Chief Financial Officer.

16. Defendant Lauren Bullaro Riker (“Riker”) has served at all relevant

times as the Company’s Principal Accounting Officer and Executive Director of

Finance.

17. Defendants referenced above in ¶¶ 14 – 16 are sometimes referred to

herein, collectively, as the “Individual Defendants.”

18. Defendant Pacira and the Individual Defendants are referred to herein,

collectively, as the “Defendants.”

SUBSTANTIVE ALLEGATIONS

Background

19. Pacira is a biopharmaceutical company that focuses on the discovery

and development of antithrombotic drug systems for acute and sub-acute

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cardiovascular and other indications. The Company’s lead product candidate

includes REG1, an anticoagulant that is in a Phase 3 clinical trial for use in patients

with various cardiovascular conditions undergoing percutaneous coronary

intervention. Its other product candidates under development include REG2,

which is in a Phase 1 clinical trial for the treatment of venous thrombosis

indication; and REG3, a preclinical stage antiplatelet therapy consisting of

glycoprotein VI inhibitor for diabetic vasculopathy and other inflammatory

diseases.

Materially False and Misleading Statements Issued During the Period

20. On April 9, 2012, the Company published a press release announcing

the commercial launch of EXPAREL. In the press release, the Company stated, in

part:

Pacira Pharmaceuticals, Inc. (Nasdaq: PCRX) today announced the commercial launch of EXPAREL ® (bupivacaine liposome injectable suspension) in the United States. Starting today, EXPAREL will begin shipping to hospital and ambulatory care customers through their normal wholesaler and distributor channels. EXPAREL was approved by the U.S. Food and Drug Administration (FDA) in October 2011 for administration into the surgical site to produce postsurgical analgesia.

Strong pre-launch commercialization efforts including more than 40 data publications and more than 1,700 interactions with potential customers have laid the groundwork for what Pacira believes will be the successful introduction of EXPAREL into the hospital marketplace.

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"For Pacira, today is the culmination of several important organizational milestones that span the last several years, with the most significant being the FDA approval of EXPAREL," said Dave Stack, president and CEO of Pacira Pharmaceuticals. "For the millions of patients undergoing surgical procedures in the U.S. each year, the introduction of EXPAREL-a single-dose, non-opioid local analgesic given at the close of surgery-represents a significant addition to the armamentarium of currently available options to manage postsurgical pain."

The Pacira sales force, which consists of 63 hospital specialists who cover more than 81 percent of the market Pacira is targeting for EXPAREL, was launched in January 2012. Since that time, this team has been executing a formulary access strategy, working closely with key hospital and surgical customers to initiate the formulary review process to obtain access for EXPAREL.

"Through the work of our field force and the commercialization activities executed to date, awareness and anticipated demand for EXPAREL has continued to grow among our target markets," said Taunia Markvicka, PharmD, vice president, commercial. "We intend to build off that momentum through a targeted strategy in 2012 that encompasses Phase 4 clinical research, partnerships with key hospital customers and robust publication and medical education plans."

21. On May 9, 2012, the Company published a press release and filed a

Form 8-K with the SEC, announcing financial and operating results for the first

quarter ended March 31, 2012. Net loss for the quarter ended March 31, 2012 was

$11.9 million, or $0.47 per share, on revenue of $7.8 million, compared with a net

loss of $9.8 million, or $0.98 per share, on revenue of $3.9 million for the quarter

ended March 31, 2011. In the press release, the Company stated, in part:

About EXPAREL®

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EXPAREL® (bupivacaine liposome injectable suspension) is indicated for administration into the surgical site to produce postsurgical analgesia. The product combines bupivacaine with DepoFoam®, a proven product delivery technology that delivers medication over a desired time period. EXPAREL represents the first and only multivesicular liposome local anesthetic that can be utilized in the peri- or postsurgical setting in the same fashion as current local anesthetics. By utilizing the DepoFoam platform, a single dose of EXPAREL delivers bupivacaine over time, providing analgesia with reduced opioid requirements for up to 72 hours. Pivotal studies have demonstrated the safety and efficacy of EXPAREL in patients undergoing bunionectomy or hemorrhoidectomy procedures and additional studies are underway to further demonstrate the safety and efficacy in other procedures. Additional information is available at www.EXPAREL.com .

22. On May 9, 2012, the Company filed a quarterly report on Form 10-Q

with the SEC, which was signed by Defendants Stack, Scibetta, and Riker, and

reiterated the Company’s previously announced quarterly financial results and

financial position. In addition, the Form 10-Q contained signed certifications

pursuant to the Sarbanes-Oxley Act of 2002 (“SOX”) by defendants Stack and

Scibetta stating that the financial information contained in the Form 10-Q was

accurate, and disclosed any material changes to the Company’s internal control

over financial reporting.

23. On August 9, 2012, the Company issued a press release and filed a

Form 8-K with the SEC, announcing financial and operating results for the second

quarter ended June 30, 2012. Net losses for the quarter ended June 30, 2012 were

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$8.3 million, or $0.27 per share, compared to $8.8 million for the quarter ended

June 30, 2011. Total revenues for the quarter ended June 30, 2012 were $12.3

million compared with $3.6 million for the quarter ended June 30, 2011. In the

press release, the Company stated, in part:

“With our first quarter of EXPAREL sales behind us, we are extremely pleased with the launch trajectory and where we are today,” said Dave Stack, president and chief executive officer of Pacira. “Based on our sales numbers, initial feedback from the physician community and what we believe to be the market potential for EXPAREL, we feel we have only scratched the surface and look forward to updating you on our commercial success as we expand our market share and explore additional therapeutic indications for EXPAREL.”

EXPAREL Commercialization: In the second quarter ended June 30, 2012, EXPAREL sales totaled $2.3 million. As of August 3, 2012, 428 accounts had ordered EXPAREL compared to 164 accounts as of May 8, 2012. Among the accounts that have placed an initial order of EXPAREL, 49 percent of the total accounts have now reordered and 55 percent of hospital accounts have reordered.

Exploring Additional Indications for EXPAREL: Based on a recent meeting with the U.S. Food and Drug Administration, Pacira currently expects to launch a Phase 2/3 clinical program in the second half of 2012 to study the safety and efficacy of EXPAREL for a nerve block indication. Bupivacaine is a standard of care in many nerve block procedures, creating what Pacira believes to be a potential customer base already familiar with the drug and injection techniques.

24. On August 9, 2012, the Company filed a quarterly report on Form

10-Q with the SEC, which was signed by Defendants Stack, Scibetta, and Riker,

and reiterated the Company’s previously announced quarterly financial results and

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financial position. In addition, the Form 10-Q contained SOX certifications signed

by defendants Stack and Scibetta stating that the financial information contained in

the Form 10-Q was accurate, and disclosed any material changes to the Company’s

internal control over financial reporting.

25. On November 1, 2012, the Company issued a press release and filed a

Form 8-K with the SEC, announcing financial and operating results for the third

quarter ended September 30, 2012. Net losses for the quarter ended September 30,

2012 were $15.7 million, or $0.49 per share, compared to $9.5 million, or $0.55

per share for the quarter ended September 30, 2011. Total revenues for the quarter

ended September 30, 2012 were $8.5 million as compared with $4.0 million for the

quarter ended September 30, 2011. In the press release, the Company stated, in

part:

We launched EXPAREL in April and have successfully doubled our product sales quarter over quarter with these results,” said Dave Stack, president and chief executive officer of Pacira. “In addition, we have completed the build-out of our EXPAREL next generation manufacturing facility ahead of schedule. As such, we are advancing with confidence several important initiatives, including continued exploration of additional therapeutic uses for EXPAREL and strategic marketing programs intended to accelerate growth. We look forward to a strong fourth quarter of 2012.”

EXPAREL Commercialization: In the third quarter ended September 30, 2012, EXPAREL sales totaled $4.6 million, up from $2.3 million in the second quarter of 2012. As of October 26, 2012, 628 accounts have ordered EXPAREL

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compared to 428 accounts as of August 3, 2012. Of these, 58 percent of all accounts have reordered EXPAREL and 63 percent of hospital accounts have reordered. Pacira works with an important mix of customers who are expanding their use with 115 hospitals, which have ordered six times or more and continue to see rapid expansion with an average of 22 new customers ordering each week in the quarter and for the month of October.

Exploring Additional Indications for EXPAREL: During the third quarter, Pacira initiated a Phase 2/3 study investigating the use of EXPAREL as a single-dose injection femoral nerve block for total knee arthroplasty surgery. Additionally, Pacira announced data from its first completed Phase 4 IMPROVE study in open colectomy patients, demonstrating that the EXPAREL-based multimodal regimen achieved a statistically significant reduction in each primary endpoint in the study, including a 60 percent reduction in hospital length of stay.

26. On November 1, 2012, the Company filed a quarterly report on Form

10-Q with the SEC, which was signed by Defendants Stack, Scibetta, and Riker,






27. On March 7, 2013, the Company issued a press release and filed a

Form 8-K with the SEC, announcing financial and operating results for the year

and fourth quarter ended December 31, 2012. Net losses for the quarter were

$16.4 million, or $0.50 per share, compared to $15.3 million, or $0.72 per for the

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quarter ended December 31, 2011. Total revenues for the quarter were $10.45

million as compared with $4.2 million for the quarter ended December 31, 2011.

Net losses for the year ended December 31, 2012 were $52.3 million, or $1.72 per

diluted share, on revenue of $39.08 million, compared to a net loss of $43.3

million, or $2.64 per diluted share, on revenue of $15.7 million in the prior year. In

the press release, the Company stated, in part:

“The launch of EXPAREL continues to go well. Weekly growth in new customers and continued expansion in hospitals that have gained experience with the product support our belief that EXPAREL provides a significant opportunity to improve patient care as well as hospital economics,” said Dave Stack, president and chief executive officer of Pacira. “We are in the fortunate position of hearing daily that clinicians are impressed with the ability of EXPAREL to reduce the requirement for opioids and to control postsurgical pain and that nurses and patients comment on the advantages of EXPAREL.”

EXPAREL Commercialization: In the fourth quarter ended December 31, 2012, EXPAREL sales totaled $7.8 million, up from $4.6 million in the third quarter of 2012. As of December 31, 2012, 819 accounts ordered EXPAREL, compared to 628 accounts as of October 26, 2012. Of these, 191 accounts reordered EXPAREL six times or more and 110 accounts reordered 10 times or more. Pacira continues its steady expansion since launch with access to 75 percent of the top 100 target hospital accounts and 53 percent of the top 500 target hospital accounts.

* * *

Exploring Additional Indications for EXPAREL : During the fourth quarter, Pacira announced new positive data supporting the use of EXPAREL infiltrated into the transversus abdominis plane (iTAP) in robotic prostatectomy patients. These data

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showed that treatment with EXPAREL resulted in reduced need for opioids compared to historical controls and 100 percent patient satisfaction with postsurgical pain control. The findings were presented at the 11th Annual American Society of Regional Anesthesia and Pain Medicine (ASRA) Meeting. Additionally, Pacira has two ongoing pivotal Phase 3 trials, an intercostal block study in posterolateral thoracotomy patients and a femoral nerve block in total knee arthroplasty (TKA) patients.

28. On March 7, 2013, the Company filed an annual report on Form 10-K

with the SEC, which was signed by Defendants Stack, Scibetta, and Riker, and


financial position. In addition, the Form 10-K contained SOX certifications signed

by defendants Stack and Scibetta Courts stating that the financial information

contained in the Form 10-K was accurate, and disclosed any material changes to

the Company’s internal control over financial reporting.



quarter ended March 31, 2013. Net losses for the quarter ended March 31, 2013

were $23.1 million, or $0.71 per share, compared to $11.9 million, or $0.47 per

share for the quarter ended March 31, 2012. Revenues for the quarter ended

March 31, 2013 were $11.6 million compared with $7.8 million for the quarter

ended March 31, 2012. In the press release, the Company stated, in part:

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“We saw a solid quarter in what was the fourth quarter of our EXPAREL launch,” said Dave Stack, president and chief executive officer of Pacira. “We continue to see growth from new customers as well as expansion with existing customers who have had access to the product for some time. Especially important is the recent pattern where we have achieved formulary approval without restrictions for several major centers of influence based on the clinical evidence and the broad base of surgical specialties expressing interest in EXPAREL. At the same time, many early-adopting institutions, where EXPAREL was made available with restrictions, have removed these restrictions based on their success in utilizing reduced opioid pain management strategies.”

EXPAREL Commercialization: In the first quarter ended March 31, 2013, EXPAREL sales totaled $10.4 million, up from $7.8 million in the fourth quarter of 2012. As of March 31, 2013, 1,065 accounts ordered EXPAREL, compared to 819 accounts as of December 31, 2012. Of these, 308 accounts ordered EXPAREL six times or more and 175 accounts ordered 10 times or more. Pacira continues its steady expansion since launch with an average of 22 new customers per week as of March 31, 2013.

EXPAREL as Part of a Multimodal Approach to Postsurgical Pain Management: Recently published national and regional analyses of more than 400,000 patients receiving opioids for postsurgical pain management show that patients who experienced opioid-related adverse events (ORAEs) had longer lengths of hospital stay, higher costs of care, greater rates of 30-day readmission to the hospital and a significantly increased risk of mortality. Although opioids have long been the mainstay of postsurgical pain control, these analyses are part of a growing body of evidence that suggests the need to re-examine the benefit-risk profile of an opioid-centric pain management paradigm and to explore a multimodal approach that uses alternative modalities to decrease the amount of opioids needed.

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Recent Data Supporting the Utility of EXPAREL Among Surgical Audiences : Last month, Pacira announced results from EXCLAIM, its Phase 4 prospective, observational study, to assess the use of EXPAREL for postsurgical analgesia in patients undergoing four common plastic surgery procedures.


with the SEC, which was signed by Defendants Stack and Scibetta, and reiterated

the Company’s previously announced quarterly financial results and financial

position. In addition, the Form 10-Q contained SOX certifications signed by

defendants Stack and Scibetta stating that the financial information contained in



31. On May 29, 2013, the Company issued a press release and filed a

Form 8-K with the SEC announcing positive interim analysis of EXPAREL. In the

press release, the Company stated, in part:

“We are pleased with the interim analysis of the safety and efficacy of EXPAREL in this important orthopedic indication,” said Dave Stack, president and chief executive officer of Pacira. “Based on the independent Data Safety Monitoring Board analysis, we believe that a single-dose injection of EXPAREL as a femoral nerve block can provide several days of analgesia without significant motor blockade. We look forward to initiating the Phase 3 portion of this trial and ultimately to providing orthopedic patients with a new option that could significantly contribute to the management of their postsurgical pain by replacing a perineural catheter, drug reservoir and pump with a single-dose injection of EXPAREL.”

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32. On August 6, 2013, the Company issued a press release and filed a


quarter ended June 30, 2013. Net losses for the quarter ended June 30, 2013 were

$14.0 million, or $0.42 per share, compared to $8.3 million, or $0.27 per share for

the quarter ended June 30, 2012. Total revenues for the quarter ended June 30,

2013 were $17.1 million compared with $12.3 million for the quarter ended June

30, 2012. In the press release, the Company stated, in part:

“The second quarter marks the commencement of the second year of launch, and we are pleased with the strong sales growth and traction of EXPAREL,” said Dave Stack, president, chief executive officer and chairman of Pacira. “Broad market acceptance across a wide range of surgical specialties, bolstered by a series of commercial initiatives and a growing body of clinical evidence, has led to formulary approval and expanded access among both existing and new customers alike.”

33. On August 6, 2013, the Company filed a quarterly report on Form

10-Q with the SEC, which was signed by Defendants Stack and Scibetta, and






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34. On October 31, 2013, the Company issued a press release and filed a

Form 8-K with the SEC, announcing financial and operating results for the third

quarter ended September 30, 2013. Net losses for the third quarter of 2013 were

$14.8 million, or $0 .44 per share, compared to $15.7 million, or $0.49 per share,

for the third quarter of 2012. Total revenues for the third quarter of 2013 were

$23.3 million, compared to $8.5 million for the third quarter of 2012. In the press

release, the Company stated, in part:

“The strong third quarter for EXPAREL sales was accelerated by increased traction in orthopedic surgeries and infiltration into the transversus abdominis plane (or iTAP) procedures,” said Dave Stack, president, chief executive officer and chairman of Pacira. “Driven by strategic partnerships, specialized education and training, as well as new clinical evidence, we are changing the standard of care for postsurgical pain management across different surgical specialties and audiences.”

EXPAREL Commercialization: In the third quarter ended September 30, 2013, EXPAREL sales totaled $20.0 million, up from $15.2 million in the second quarter. Pacira continued its steady expansion of EXPAREL sales, reporting 297 total new accounts in the third quarter, an average of 23 new customers per week. As of September 30, 2013, 1,732 total accounts ordered EXPAREL since launch, with 165 accounts each ordering more than $100,000. The customer base has continued to grow along with acceptance and use of EXPAREL in hospitals that adopted the product early in the launch.

35. On October 31, 2013, the Company filed a quarterly report on Form

10-Q with the SEC, which was signed by Defendants Stack and Scibetta, and


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36. On February 25, 2014, the Company issued a press release and filed a

Form 8-K with the SEC, announcing financial and operating results for the year

and fourth quarter ended December 31, 2013. Net losses for the quarter were

$12.0 million, or $0.36 per share, compared to $16.3 million, or $0.50 per share, in

the fourth quarter of 2012. Total revenues were $33.6 million, compared to $10.5

million in the fourth quarter of 2012. For the year, net losses were $63.9 million,

or $1.93 per share, compared to $52.3 million, or $1.72 per share, in 2012 and total

revenues were $85.6 million, compared to $39.1 million in 2012. In the press

release, the Company stated, in part:

“We are very pleased with the overall performance and trajectory that we have seen in the marketplace for EXPAREL this past year,” said Dave Stack, president, chief executive officer and chairman of Pacira. “Driven by the increase in sales among existing accounts as well as new customers purchasing EXPAREL, we saw a surge across all procedure types, with orthopedic and infiltration into the transversus abdominis plane (iTAP) procedures fueling rapid growth.”

EXPAREL Commercialization: EXPAREL net product sales were $76.2 million in 2013, compared to $14.6 million in 2012, and EXPAREL net sales in the fourth quarter of 2013 were $30.5 million, up from $7.8 million in the fourth quarter of

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2012. Since launch, 2,106 total accounts have ordered EXPAREL as of December 31, 2013, with approximately 250 accounts each ordering more than $100,000. The Company also reported 374 new accounts in the fourth quarter of 2013, averaging approximately 29 new accounts per week.

EXPAREL Commercialization: EXPAREL net product sales were $76.2 million in 2013, compared to $14.6 million in 2012, and EXPAREL net sales in the fourth quarter of 2013 were $30.5 million, up from $7.8 million in the fourth quarter of 2012. Since launch, 2,106 total accounts have ordered EXPAREL as of December 31, 2013, with approximately 250 accounts each ordering more than $100,000. The Company also reported 374 new accounts in the fourth quarter of 2013, averaging approximately 29 new accounts per week.

37. On February 25, 2014, the Company filed an annual report on Form

10-K with the SEC, which was signed by Defendants Stack, Scibetta, and Riker,


financial position. In addition, the Form 10-K contained SOX certifications signed

by defendants Stack and Scibetta Courts stating that the financial information

contained in the Form 10-K was accurate, and disclosed any material changes to

the Company’s internal control over financial reporting.



quarter ended March 31, 2014. Net losses were $11.5 million, or $0.34 per share,

compared to $23.1 million, or $0.71 per share, in the first quarter of 2013. Total

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revenues were $36.7 million, compared to $11.6 million in the first quarter of

2013. In the press release, the Company stated, in part:

“We are excited by the continued success of EXPAREL in the marketplace,” said Dave Stack, president, chief executive officer and chairman of Pacira. “With a sales track record of consistent growth every quarter since launch, we endeavored in the first quarter to meet the regulatory, clinical and commercial milestones that would set the foundation for not only maximizing the market opportunity for EXPAREL, but also meeting expected future demand.”

EXPAREL Commercialization: EXPAREL net product sales were $34.4 million in the first quarter of 2014, compared to $10.4 million in the first quarter of 2013 and up 13 percent from the fourth quarter of 2013. Pacira also reported 346 new accounts in the first quarter of 2014, averaging approximately 27 new accounts per week. Since launch, 2,452 total accounts have ordered EXPAREL through March 31, 2014, with approximately 330 accounts each ordering more than $100,000 worth of product.








40. On July 31, 2014, the Company issued a press release and filed a


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quarter ended June 30, 2014. Net losses were $5.0 million, or $0.14 per share,

compared to $14.0 million, or $0.42 per share, in the second quarter of 2013. Total

revenues were $47.2 million, compared to $17.1 million in the second quarter of

2013. In the press release, the Company stated, in part:

“With nine quarters now under our belt, we are pleased with the continued success of EXPAREL in the marketplace, both in new accounts as well as within existing accounts,” said Dave Stack, president, chief executive officer and chairman of Pacira. “With consistent quarter over quarter growth, an anticipated nerve block indication next year and expanded manufacturing capacity, we believe EXPAREL is well positioned to become a blockbuster drug over the next several years.”

EXPAREL Commercialization: EXPAREL net product sales were $44.9 million in the second quarter of 2014, compared to $15.2 million in the second quarter of 2013. Pacira also reported 363 new accounts ordering EXPAREL in the second quarter of 2014, averaging 28 new accounts per week. Since launch, 2,815 total accounts have ordered EXPAREL through June 30, 2014, with 469 accounts each ordering more than $100,000 worth of product.

* * *

Data Continues to Support Value of EXPAREL-Based Multimodal Regimen for Postsurgical Pain Control: Last month, Pacira announced the published results from the IMPROVE program, a series of open-label, Phase 4 clinical studies comparing postsurgical narcotic use and health economic outcomes between patients receiving EXPAREL as the basis of a multimodal analgesic regimen versus a standard opioid-based pain management regimen across three surgical procedures—open colectomy, lap colectomy and ileostomy reversal. Published in the Journal of Pain Research, the study showed that the EXPAREL group experienced statistically significant reductions in total narcotic consumption, incidence

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of opioid-related adverse events (ORAEs), total hospital costs and length of hospital stay by 1.4 days.

41. On July 31, 2014, the Company filed a quarterly report on Form 10-Q







42. The statements in ¶¶ 20–41 above were materially false and/or

misleading because they misrepresented and/or failed to disclose that: (i) the

Company was overstating the efficacy of its Exparel drug; (ii) the Company was

improperly promoting its Exparel drug by touting its ability to be effective for up

to 72 hours, when in fact, it is approved only for 24 hours of pain relief; (iii) the

Company improperly claimed that Exparel is safe for use in cholecystectomy and

colectomy procedures, when in fact, approved labeling does not provide

instructions for, or indicate that Exparel will be safe and effective for, postsurgical

pain, if used in surgical procedures other than hemorrhoidectomy or

bunionectomy; (iv) a substantial portion of the Company’s revenues were derived

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from off label marketing; and (v) and as a result of the above, the Company’s

financial statements were materially false and misleading at all relevant times.

The Truth Emerges

43. On September 25, 2014, the Company announced that it had received

the Warning Letter from the FDA referencing certain promotional materials on

Exparel. In the Warning Letter, the FDA’s OPDP stated that it has evidence that

Exparel has been marketed for new uses for which it does not have approval, and

for which its labeling does not provide adequate directions for use, thus rendering

Exparel “misbranded.” The FDA noted that Pacira’s promotional materials claim

that Exparel is safe and effective for use in cholecystectomy and colectomy.

However, the agency said that the approved labeling for Exparel does not provide

instructions for, or indicate that Exparel will be safe and effective for postsurgical

pain, if used in surgical procedures other than hemorrhoidectomy or

bunionectomy. Further, the Warning Letter noted that a journal ad by Pacira

touted Exparel as being able to provide pain-relief for up to 72 hours, while the

drug is approved for pain-relief only up to 24 hours. The FDA said these claims

overstate Exparel’s efficacy and are misleading.

44. On the news, Pacira stock fell $11.66, or almost 11%, on unusually

heavy volume, to close at $94.62 on September 25, 2014.

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45. As a result of Defendants’ wrongful acts and omissions, and the

precipitous decline in the market value of the Company’s securities, Plaintiff and

other Class members have suffered significant losses and damages.

PLAINTIFF’S CLASS ACTION ALLEGATIONS

46. Plaintiff brings this action as a class action pursuant to Federal Rule of

Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who

purchased or otherwise acquired Pacira securities during the Class Period (the

“Class”); and were damaged upon the revelation of the alleged corrective

disclosures. Excluded from the Class are Defendants herein, the officers and

directors of the Company, at all relevant times, members of their immediate

families, heir legal representatives, heirs, successors or assigns and any entity in

which Defendants have or had a controlling interest, and any judicial officer

hearing this matter.

47. The members of the Class are so numerous that joinder of all

members is impracticable. Throughout the Class Period, Pacira securities were

actively traded on the NASDAQ. While the exact number of Class members is

unknown to Plaintiff at this time and can be ascertained only through appropriate

discovery, Plaintiff believes that there are hundreds or thousands of members in the

proposed Class. Record owners and other members of the Class may be identified

from records maintained by Pacira or its transfer agent and may be notified of the

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pendency of this action by mail, using the form of notice similar to that

customarily used in securities class actions.

48. Plaintiff’s claims are typical of the claims of the members of the Class

as all members of the Class are similarly affected by Defendants’ wrongful

conduct in violation of federal law that is complained of herein.

49. Plaintiff will fairly and adequately protect the interests of the

members of the Class and has retained counsel competent and experienced in class

and securities litigation. Plaintiff has no interests antagonistic to or in conflict with

those of the Class.

50. Common questions of law and fact exist as to all members of the

Class and predominate over any questions solely affecting individual members of

the Class. Among the questions of law and fact common to the Class are:

• whether the federal securities laws were violated by Defendants’ acts as alleged herein;

• whether statements made by Defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management of Pacira;

• whether the Individual Defendants caused Pacira to issue false and misleading financial statements during the Class Period;

• whether Defendants acted knowingly or recklessly in issuing false and misleading financial statements;

• whether the prices of Pacira securities during the Class Period were artificially inflated because of the Defendants’ conduct

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complained of herein; and,

• whether the members of the Class have sustained damages and, if so, what is the proper measure of damages.

51. A class action is superior to all other available methods for the fair

and efficient adjudication of this controversy since joinder of all members is

impracticable. Furthermore, as the damages suffered by individual Class members

may be relatively small, the expense and burden of individual litigation make it

impossible for members of the Class to individually redress the wrongs done to

them. There will be no difficulty in the management of this action as a class

action.

52. Plaintiff will rely, in part, upon the presumption of reliance

established by the fraud-on-the-market doctrine in that:

• Defendants made public misrepresentations or failed to disclose material facts during the Class Period;

• the omissions and misrepresentations were material;

• Pacira securities are traded in efficient markets;

• the Company’s shares were liquid and traded with moderate to heavy volume during the Class Period;

• the Company traded on the NASDAQ, and was covered by multiple analysts;

• the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company’s securities; and

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• Plaintiff and members of the Class purchased and/or sold Pacira securities between the time the Defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts.

53. Based upon the foregoing, Plaintiff and the members of the Class are

entitled to a presumption of reliance upon the integrity of the market.

54. Alternatively, Plaintiffs and the members of the Class are entitled to

the presumption of reliance established by the Supreme Court in Affiliated Ute

Citizens of the State of Utah v. United States , 406 U.S. 128, 92 S. Ct. 2430 (1972),

as Defendants omitted material information in their Class Period statements in

violation of a duty to disclose such information, as detailed above.

COUNT I

Violation of Section 10(b) of The Exchange Act and Rule 10b-5

Against All Defendants

55. Plaintiff repeats and realleges each and every allegation contained

above as if fully set forth herein.

56. This Count is asserted against Defendants and is based upon Section

10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated

thereunder by the SEC.

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57. During the Class Period, Defendants engaged in a plan, scheme,

conspiracy and course of conduct, pursuant to which they knowingly or recklessly

engaged in acts, transactions, practices and courses of business which operated as a

fraud and deceit upon Plaintiff and the other members of the Class; made various

untrue statements of material facts and omitted to state material facts necessary in

order to make the statements made, in light of the circumstances under which they

were made, not misleading; and employed devices, schemes and artifices to

defraud in connection with the purchase and sale of securities. Such scheme was

intended to, and, throughout the Class Period, did: (i) deceive the investing public,

including Plaintiff and other Class members, as alleged herein; (ii) artificially

inflate and maintain the market price of Pacira securities; and (iii) cause Plaintiff

and other members of the Class to purchase or otherwise acquire Pacira securities

and options at artificially inflated prices. In furtherance of this unlawful scheme,

plan and course of conduct, Defendants, and each of them, took the actions set

forth herein.

58. Pursuant to the above plan, scheme, conspiracy and course of conduct,

each of the Defendants participated directly or indirectly in the preparation and/or

issuance of the quarterly and annual reports, SEC filings, press releases and other

statements and documents described above, including statements made to

securities analysts and the media that were designed to influence the market for

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Pacira securities. Such reports, filings, releases and statements were materially

false and misleading in that they failed to disclose material adverse information

and misrepresented the truth about Pacira’s marketing practices.

59. By virtue of their positions at Pacira, the Individual Defendants had

actual knowledge of the materially false and misleading statements and material

omissions alleged herein and intended thereby to deceive Plaintiff and the other

members of the Class, or, in the alternative, Defendants acted with reckless

disregard for the truth in that they failed or refused to ascertain and disclose such

facts as would reveal the materially false and misleading nature of the statements

made, although such facts were readily available to Defendants. Said acts and

omissions of Defendants were committed willfully or with reckless disregard for

the truth. In addition, each defendant knew or recklessly disregarded the fact that

material facts were being misrepresented or omitted as described above.

60. Information showing that Defendants acted knowingly or with

reckless disregard for the truth is peculiarly within Defendants’ knowledge and

control. As the senior managers and/or directors of Pacira, the Individual

Defendants had knowledge of the details of Pacira’s internal affairs.

61. The Individual Defendants are liable both directly and indirectly for

the wrongs complained of herein. Because of their positions of control and

authority, the Individual Defendants were able to and did, directly or indirectly,

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control the content of the statements of Pacira. As officers and/or directors of a

publicly-held company, the Individual Defendants had a duty to disseminate

timely, accurate, and truthful information with respect to Pacira’s businesses,

operations, future financial condition and future prospects. As a result of the

dissemination of the aforementioned false and misleading reports, releases and

public statements, the market price of Pacira securities was artificially inflated

throughout the Class Period. In ignorance of the adverse facts concerning Pacira’s

business and financial condition which were concealed by Defendants, Plaintiff

and the other members of the Class purchased or otherwise acquired Pacira

securities at artificially inflated prices and relied upon the price of the securities,

the integrity of the market for the securities and/or upon statements disseminated

by Defendants, and were damaged upon the revelation of the alleged corrective

disclosures.

62. During the Class Period, Pacira securities were traded on an active

and efficient market. Plaintiff and the other members of the Class, relying on the

materially false and misleading statements described herein, which the Defendants

made, issued or caused to be disseminated, or relying upon the integrity of the

market, purchased or otherwise acquired shares of Pacira securities at prices

artificially inflated by Defendants’ wrongful conduct. Had Plaintiff and the other

members of the Class known the truth, they would not have purchased or otherwise

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acquired said securities, or would not have purchased or otherwise acquired them

at the inflated prices that were paid. At the time of the purchases and/or

acquisitions by Plaintiff and the Class, the true value of Pacira securities was

substantially lower than the prices paid by Plaintiff and the other members of the

Class. The market price of Pacira securities declined sharply upon public

disclosure of the facts alleged herein to the injury of Plaintiff and Class members.

63. By reason of the conduct alleged herein, Defendants knowingly or

recklessly, directly or indirectly, have violated Section 10(b) of the Exchange Act

and Rule 10b-5 promulgated thereunder.

64. As a direct and proximate result of Defendants’ wrongful conduct,

Plaintiff and the other members of the Class suffered damages in connection with

their respective purchases, acquisitions and sales of the Company’s securities

during the Class Period, upon the disclosure that the Company had been

disseminating misrepresented financial statements to the investing public.

COUNT II

Violation of Section 20(a) of The Exchange Act Against The Individual Defendants

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65. Plaintiff repeats and realleges each and every allegation contained in

the foregoing paragraphs as if fully set forth herein.

66. During the Class Period, the Individual Defendants participated in the

operation and management of Pacira, and conducted and participated, directly and

indirectly, in the conduct of Pacira’s business affairs. Because of their senior

positions, they knew the adverse non-public information about Pacira’s marketing

practices.

67. As officers and/or directors of a publicly owned company, the

Individual Defendants had a duty to disseminate accurate and truthful information

with respect to Pacira’s financial condition and results of operations, and to

promptly correct any public statements issued by Pacira which had become

materially false or misleading.

68. Because of their positions of control and authority as senior officers,

the Individual Defendants were able to, and did, control the contents of the various

reports, press releases and public filings which Pacira disseminated in the

marketplace during the Class Period concerning Pacira’s marketing practices.

Throughout the Class Period, the Individual Defendants exercised their power and

authority to cause Pacira to engage in the wrongful acts complained of herein. The

Individual Defendants therefore, were “controlling persons” of Pacira within the

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meaning of Section 20(a) of the Exchange Act. In this capacity, they participated

in the unlawful conduct alleged which artificially inflated the market price of

Pacira securities.

69. Each of the Individual Defendants, therefore, acted as a controlling

person of Pacira. By reason of their senior management positions and/or being

directors of Pacira, each of the Individual Defendants had the power to direct the

actions of, and exercised the same to cause, Pacira to engage in the unlawful acts

and conduct complained of herein. Each of the Individual Defendants exercised

control over the general operations of Pacira and possessed the power to control

the specific activities which comprise the primary violations about which Plaintiff

and the other members of the Class complain.

70. By reason of the above conduct, the Individual Defendants are liable

pursuant to Section 20(a) of the Exchange Act for the violations committed by

Pacira.

PRAYER FOR RELIEF

WHEREFORE , Plaintiff demands judgment against Defendants as follows:

A. Determining that the instant action may be maintained as a class

action under Rule 23 of the Federal Rules of Civil Procedure, and certifying

Plaintiff as the Class representative;

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B. Requiring Defendants to pay damages sustained by Plaintiff and the

Class by reason of the acts and transactions alleged herein;

C. Awarding Plaintiff and the other members of the Class prejudgment

and post-judgment interest, as well as their reasonable attorneys’ fees, expert fees

and other costs; and

D. Awarding such other and further relief as this Court may deem just

and proper.

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Documents

UNITED STATES DISTRICT COURT Civil Action No. CLASS …shareholdersfoundation.com/system/files/complaints/... · 2020-06-16 · and regarding Pacira Pharmaceuticals, Inc. (“Pacira”