Pacira BioSciences: A Proxy War Erupts-Is Shareholder Activism the Catalyst for Value Realization?

The biopharmaceutical sector has long been a battlefield for shareholder activism, but Pacira BioSciences (PCRX) has emerged as a particularly contentious case in 2025. Activist investor DOMA Perpetual Capital Management, which holds a 6.8% stake in the company, has launched a high-stakes campaign to force a full sale process and overhaul the board, accusing management of misallocating capital and failing to deliver adequate returns. Meanwhile, Pacira has doubled down on its 5x30 growth strategy, emphasizing operational efficiency, margin expansion, and innovation in musculoskeletal pain therapies. This proxy war raises a critical question: Is shareholder activism a disruptive force or a necessary catalyst for unlocking Pacira's latent value?

The Activist Case: A Call for Radical Overhaul

DOMA's activism is rooted in a stark critique of Pacira's financial stewardship. The firm argues that the company's $400 million cash balance is squandered on excessive R&D and SG&A expenses, which have surged despite flat revenue growth. In a letter to the board, DOMA demanded immediate stock repurchases, a formal sale process, and the replacement of key executives, citing "severe underperformance" and "unmerited compensation". The activist also highlighted declining sales of ZILRETTA, Pacira's extended-release corticosteroid, as evidence of management's inability to capitalize on market opportunities according to reports.

To amplify its influence, DOMA announced plans to nominate three independent director candidates for Pacira's 2026 annual meeting, framing the move as a step toward restoring "prudent fiduciary oversight". The firm's aggressive tactics-ranging from SEC filings to public criticism-reflect a broader strategy to pressure the board into adopting a more shareholder-centric approach.

Pacira's Counterstrategy: Growth Through Governance and Innovation

Pacira has responded to the activism with a mix of defiance and strategic recalibration. In January 2025, the company appointed Laura Brege, a seasoned pharmaceutical executive, as Chair of the Board, replacing Paul J. Hastings and Andreas Wicki, PhD. This move, part of a broader board refreshment initiative, underscores Pacira's commitment to governance reform while retaining its long-term vision. The new board includes eight independent directors, with five joining since October 2023, signaling a shift toward diversified expertise.

Financially, Pacira has taken steps to bolster shareholder value. A $300 million share repurchase program, announced in response to activist pressure, aligns with the company's focus on operational efficiency. Additionally, Pacira secured a $28.3 million court settlement from RDF and expanded patent protection for EXPAREL, its flagship analgesic, reinforcing its competitive moat. The company also launched a $300 million revolving credit facility and advanced its gene therapy candidate, PCRX-201, into Phase 2 trials, demonstrating a dual emphasis on innovation and liquidity according to financial results.

The Tension Between Short-Term Gains and Long-Term Vision

The clash between DOMA and Pacira encapsulates a broader debate in corporate governance: Should companies prioritize immediate shareholder returns or invest in long-term growth? DOMA's push for a sale process assumes that Pacira's intrinsic value is undervalued, with activist estimates suggesting a potential acquisition price of $66/share. However, Pacira's 5x30 strategy-aiming to become a leader in musculoskeletal pain by 2030-hinges on sustained R&D investment and market expansion. The company's recent co-promotion agreement for ZILRETTA and its clinical pipeline advancements illustrate this forward-looking approach according to Q2 results.

Analysts remain divided. While DOMA's criticisms of Pacira's spending habits are valid, the company's recent operational milestones-such as the Phase 2 enrollment of PCRX-201 and its expanded credit facility-suggest a capacity to navigate financial challenges without sacrificing innovation according to Q2 results. The key question is whether Pacira can balance activist demands for cost-cutting with its ambitious growth agenda.

Conclusion: A Proxy War as a Double-Edged Sword

Pacira's proxy war highlights the duality of shareholder activism as both a disruptive force and a potential catalyst for value creation. DOMA's campaign has forced the company to address governance gaps and inefficient capital allocation, but it also risks derailing long-term strategic initiatives. Conversely, Pacira's board refreshment and financial reforms demonstrate that internal restructuring can align with activist goals without necessitating a hostile takeover.

For investors, the outcome of this conflict will hinge on Pacira's ability to execute its 5x30 strategy while addressing DOMA's concerns. If the company can demonstrate that its growth-oriented approach generates sustainable returns, the proxy war may ultimately serve as a turning point rather than a distraction.