DOMA Perpetual Sends Letter to Board of Directors of Pacira Biosciences to Immediately Accelerate and Increase its Share Buyback Program to Enhance Return to Shareholders

Core Viewpoint - DOMA Perpetual Capital Management believes that Pacira Biosciences' cash balance of $400 million, which constitutes approximately 59% of its market capitalization, is being inefficiently utilized and urges the Board to accelerate stock repurchases to enhance shareholder returns [1][6]. Capital Allocation and M&A Strategy - The current Board is criticized for ineffective capital allocation, poor M&A track record, and lack of strategic oversight, prompting DOMA to publicly address these issues [2][11]. - The recommendation is to pause all future M&A activities until proper shareholder returns are achieved, emphasizing the need for a focus on enhancing shareholder value through buybacks [3][11]. Stock Buyback Proposal - The company is urged to complete the currently approved $150 million buyback before Q3 earnings and to initiate a new $300 million buyback in Q4, allowing for the repurchase of approximately 12 million shares [4][6]. - The goal is to reduce the share count from 46 million to 30 million shares, representing a 35% reduction, which could significantly enhance earnings per share (EPS) [8][9]. Financial Projections and Market Opportunity - Pacira is expected to experience substantial growth in sales and net income due to the NOPAIN Act, which could increase annual procedures from 2.3 million to about 6 million, with private insurance coverage potentially following Medicare coverage [10]. - By 2027, revenues could more than double or triple, leading to a projected net income exceeding $330 million, resulting in an EPS of at least $11 if share buybacks are executed as proposed [10][11]. Legal Situation and Market Perception - The current legal challenges are viewed with optimism, as DOMA believes the probabilities of winning patent cases or reaching settlements are favorable, presenting a significant opportunity for stock buybacks at depressed prices [5][7]. - The market's negative assumptions regarding Pacira's legal battles and potential competition from generic drug developers are seen as miscalculations that undervalue the company's prospects [7][9].