Q4 2023 Pacira BioSciences Inc Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the Q4 2023 Pacira Biosciences Earnings Conference Call. At this time, all participants are in a listen-only mode.
Good day and thank you for standing by welcome to the queue for 2023 per Sierra Biosciences Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session you'll need to press star one one on your telephone.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Susan Mesco, Head of Investor Relations. Please go ahead.
You will then hear an automated message advising your hand is raised to draw. Your question. Please press star one one again please be advised the today's conference is being recorded I would not like to hand, the conference over to your first speaker today, Susan Mesko head of Investor Relations. Please go ahead.
Susan Mesco: Thank you and good morning everyone. Welcome to today's conference call to discuss our fourth quarter and full year 2023 financial results. Joining me are Frank Lee, Chief Executive Officer; Tony Malloy, Chief Legal Counsel; and Charlie Reinhart, Chief Financial Officer. Jonathan Slonin, Chief Medical Officer, is also here for today's question and answer session. Before we begin, let me remind you that this call will include forward-looking statements. Such statements represent our judgment as of today and may involve risks and uncertainties. For information concerning risk factors that could affect the company, please refer to our filings with the SEC, which are available from the SEC or the Pacira website. Before turning the call over to Frank, I'd like to mention that going forward in 2024, we will be shifting the timing of our quarterly calls to after-market with an expected start time of 4.30 p.m. Eastern time. With that, it is my pleasure to welcome Frank Lee. Well, thank you, Susan, and good morning, everyone.
Susan Mesko: Thank you and good morning, everyone welcome to today's conference call to discuss our fourth quarter and full year.
Susan Mesko: 2023 financial results.
Susan Mesko: Me are frankly, chief Executive Officer.
Susan Mesko: Malloy, Chief legal counsel, and Charlie Rinehart, Chief Financial Officer, Jonathan phone and Chief Medical Officer is also here for today's question and answer session.
Susan Mesko: Four we begin let me remind you that this call will include forward looking statements based on current expectations Dutch.
Susan Mesko: Such statements represent our judgment as of today and May involve risks and uncertainties for information concerning risk factors that could affect the company. Please refer to our filings with the SEC, which are available from the S. P C or the pits here a website.
Speaker Change: Before turning the call over to Frank I'd like to mention that going forward in 2024, we will be shifting the timing of our quarterly cause to post market with an expected start time of 430 P. M. Eastern time with that it is my pleasure to welcome frankly.
Frank: Well, thank you Susan and.
Frank: Good morning, everyone.
Frank D. Lee: I'm excited to speak to you today as the new CEO of Pacira Bioscience. I was drawn to this organization because Pacira is the leader in non-opioid pain management. Pacira has market-leading products, a clear sense of purpose, a talented team, and an unwavering commitment to transforming the lives of patients by expanding access to opioid-sparing pain management. I was especially inspired by the team's steadfast commitment to working with leading medical societies and patient organizations to get no paint over the finish line. And this legislation is a real testament to Becerra's leadership. It's been a busy and productive time since I joined the company last month. I've met with colleagues here in New Jersey and at our Science Center campus in San Diego.
Frank: I'm excited to speak to you today as a new CEO Sarah Biosciences.
Frank: I was drawn to this organization because pressure is the leader.
Speaker Change: Opioid pain management.
Speaker Change: Sarah market, leading products are clear sense of purpose.
Speaker Change: The team and unwavering commitment to transforming lives of patients by expanding access to opioid spearing pain management.
I was especially inspired by the team steadfast commitment to working with leading medical societies and patient organizations.
Speaker Change: To get no pain.
Speaker Change: Finish line.
Speaker Change: And this legislation is a real testament to preserve leadership.
Speaker Change: It's been a busy and productive time since I joined the company last month.
Speaker Change: Met with colleagues here in New Jersey, and at our Science Center campus.
Speaker Change: And Diego.
Frank D. Lee: I've also received valuable feedback on our culture and met with key stakeholders. Now that I've spent several weeks listening and learning, there's no doubt this team is highly committed to our corporate mission and the impact that our three trusted products are making in patients' lives. Consequently, I'm even more enthusiastic about Pacira and the patients we serve. This is a special company that I'm both humbled and honored to lead through this next phase of growth. While much has been accomplished, it's still early days in my tenure here at Pacira. I'm excited to continue to work with the team and our stakeholders to define a thoughtful path for long-term growth, and I look forward to sharing more details as the year progresses.
Speaker Change: Also received valuable feedback on our culture and met with key stakeholders.
Speaker Change: Now that I've spent several weeks listening and learning there's no doubt. This team is highly committed to our corporate mission.
Speaker Change: Fact that are three trusted products or making impatient lives.
Speaker Change: Consequently, I'm, even more enthusiastic for Sarah and the patients we serve.
Speaker Change: There's a special company that I'm, both humbled and honored to lead to this next phase of growth.
Speaker Change: While much has been accomplished is still early days in my tenure Europe is Sarah.
I'm excited to continue to work with the team and our stakeholders to define a thoughtful path for long term growth.
Speaker Change: And I look forward to sharing more details as the year progresses.
Frank D. Lee: That said, we're taking several steps to ensure we are fit for growth going forward and best positioned for sustainable success. We've initiated an organizational restructuring that includes the following key changes, reshaping our executive team, and launching searches for a new position, Chief Commercial Officer, and Chief Business Officer, reallocating our efforts and resources from non-US markets and certain early stage development programs to the U.S. market, reprioritizing investments And finally, doing a thorough strategic review of our pipeline and therapeutic area strategy. Going forward, we'll foster a culture we call One Pacira, grounded in key values and behaviors that enable the whole organization to work as a united team.
Speaker Change: That said, we're taking several steps to ensure we are fit for growth going forward and best position for sustainable success.
Speaker Change: We've initiated an organizational restructuring that includes the following key changes.
Speaker Change: [noise] reshaping our executive team and.
Speaker Change: And launching searches for a new position G commercial officer.
Speaker Change: And Chief business Officer.
Speaker Change: Reallocating, our efforts and resources from X U S markets.
Speaker Change: And certain early stage development programs.
Speaker Change: To the U S market.
Speaker Change: Re prioritizing investments to focus on no pain readiness and enhancing key commercial capabilities, such as strategic national accounts marketing.
Speaker Change: Market access and reimbursement.
Speaker Change: And finally doing a thorough strategic review of our pipeline and therapeutic curious strategy.
Speaker Change: Going forward will foster a culture.
Speaker Change: We call once Sarah grounded on key values and behaviours that enabled the whole organization to work as a United team.
Frank D. Lee: For the remainder of today's call, I'd like to focus on Xpiril, the product that will drive substantial growth in 2025 and beyond. Xpiril recently passed the 14 million patient mark, and we're confident in its potential to grow to blockbuster status. This year, we're advancing three key drivers. First, we are launching Expiril in two new lower extremity nerve block indications.
Speaker Change: For the remainder of today's call I would like to focus on EXPAREL the product that will drive substantial growth in 2025 and beyond.
Speaker Change: Next Bill recently passed the 14 million patient Mark and we're confident and its potential to grow to blockbuster status.
Speaker Change: This year, we are advancing three key drivers first <unk>.
Speaker Change: Largely EXPAREL into new lower extremity nerve block indications second preparing for launch and rollout of no pain in 2025 and.
Frank D. Lee: Second, preparing for the launch and rollout of NoPain in 2025. And third, expanding access through 340B pricing and new GPO partnerships. I'll start with lower extremity nerve blocks.
Speaker Change: And third expanding access through 340 be pricing and new G. P O partnerships.
Speaker Change: I'll start with lower extremity nerve blocks.
Frank D. Lee: Our sales force is ready, and the launch is officially underway. Importantly, we're going to market with an overwhelmingly positive body of data, from two head-to-head phase three studies demonstrating four days of superiority over BP. The first study evaluated Xpiril as a sciatic nerve block in Puffett Field Fascia for bunionectomy.
Our sales forces ready and launches officially underway importantly, we're going to market with an overwhelmingly positive body of data.
Speaker Change: From two head to head phase III studies, demonstrating for days of superiority over BP.
Speaker Change: The first study evaluated EXPAREL as a sciatic nerve block and pop until Pasha for Bunionectomy.
Frank D. Lee: Expiril achieved a 44% reduction in pain scores while reducing opioid consumption by 61% versus buprenorphine. In addition, patients who received Expirel were five times more likely to be opioid free. The second study evaluated Expiril as an adductor canal block with total knee arthroplasty.
Speaker Change: EXPAREL achieved a 44% reduction in pain scores, while reducing opioid consumption by 61% versus BB.
Speaker Change: In addition patients who received EXPAREL were five times more likely to be opioid free.
Speaker Change: The second study evaluate EXPAREL as an AD after canal block, where total knee Arthur spots arthroplasty. In this study EXPAREL achieved statistically significant reductions in pain scores and a 23% reduction in opioid consumption versus beauty.
Frank D. Lee: In this study, Expiril achieved statistically significant reductions in pain scores and a 23% reduction in opioid consumption versus pupil. These results are highly significant with p-values of less than 0.01. With respect to safety, Xpiril was well tolerated with a safety profile consistent with the, These positive outcomes were achieved with a 10 mL dose, making a single-dose Expiril nerve block a very attractive value proposition to the anesthesia and surgical community for knee and foot and ankle surgeries across all sites of care.
Speaker Change: These results are highly significant with P values of less than 0.01 with.
Speaker Change: With respect to safety EXPAREL was well tolerated with the safety profile consistent with Bebe.
Speaker Change: These positive outcomes were achieved with 10 ml dose, making a single dose EXPAREL nerve block, a very attractive value proposition to the anesthesia and surgical community for knee and foot and ankle surgeries across all sites of care.
Frank D. Lee: The sciatic nerve block study in the Papatio Foster recently published online in the Journal of Clinical Anesthesia, and we're working to secure publication of the TKA study. We believe this is going to be a $100 million opportunity over time. We have a strong presence in TKA, where anesthesiologists are already doing adductor canal blocks with BP. So we expect faster uptake in this segment, which involves over a million procedures. Conversely, we have a very limited presence in other lower extremity procedures like ACL repair or foot and ankle procedures, so we expect uptake in these segments to be slower.
Speaker Change: The sciatic nerve blocks study popliteal phosphate recently published online in the journal of clinical anesthesia.
Speaker Change: And we're working to secure publication of the TK study.
Speaker Change: We believe this is going to be 100 million dollar opportunity over time.
Speaker Change: We have strong presence in T. K a were anaesthesiologists are already doing add after canal blocks with BB. So we expect faster uptake in this segment, which is over a million procedures.
Speaker Change: Conversely, we have very limited presence and other lower extremity procedures like ACL repair or foot and ankle procedures. So we expect uptake in these segments to be slower.
Frank D. Lee: Switching gears to no pain, we believe will be an important event for both patients and Pacira. As you know, products used to manage post-surgical pain are largely reimbursed as part of the bundled procedure payment. Bundle reimbursement incentivizes the use of cheaper generic approaches to managing pro-surgical pain that often incorporate opioids. Financial pressures facing healthcare systems further incentivize cost-driven approaches. No Pain mandates separate CMS reimbursement of non-opioid therapies for post-surgical pain relief across all outpatient settings. It will eliminate the cost barrier by fully reimbursed at average selling price or ASP plus 6% beginning January 2025. There are roughly six million annual CMS procedures in outpatient settings, with a split of roughly 3.5 million procedures in the hospital outpatient setting and 2.5 million procedures performed at ambulatory surgical centers.
Speaker Change: Switching gears no pain, we believe will be an important.
Speaker Change: Event for both patients and for Sarah.
Speaker Change: As you know products used to manage post surgical pain are largely reimbursed as part of the bundled procedure payment.
Speaker Change: Bundle reimbursement incentivize or the use of cheaper generic approaches to managing pro surgical paying that often incorporate opioids.
Financial pressures facing healthcare systems further incentivise cost driven approaches.
Speaker Change: No pain mandate separate CMS reimbursement of Nonopioid therapies for postage pain relief across all outpatient settings.
Speaker Change: It will eliminate the cost barrier by fully reimbursing.
Speaker Change: At average selling price or ASP, plus 6% beginning January 2025.
Speaker Change: There are roughly 6 million annual CMS procedures, and outpatient settings with a split of roughly 3.5 million procedures and the hospital outpatient settings and $2.5 million procedures performed at ambulatory surgical centers.
Frank D. Lee: As a first step, we'll be allocating resources to drive education and to help healthcare systems implement XperEL as a best practice standard of care for CMS patients. The value proposition is clear, as a recent review of five-year real-world Medicare claims data for hospital outpatient procedures demonstrated a significant correlation between expirail utilization and improved patient outcomes, including opioid prescription fills, emergency room visits, and hospital admissions. These data were published in the Journal of Medical Economics.
Speaker Change: As a first step will be allocating resources to drive education and to help health care systems implement EXPAREL as a best practice standard of care for CMS patients.
Speaker Change: The value proposition as clear as a recent review of five year real World Medicare claims data for hospital outpatient procedure stamp demonstrated a significant correlation between EXPAREL utilization and improve patient outcomes, including opioid prescription pills.
Speaker Change: Emergency room visits and hospital admissions.
Speaker Change: These data were published in the journal of medical Economics.
Frank D. Lee: Over time, as we underscore the value of Expiril as provided to CMS patients, we're hopeful commercial payers will be compelled to follow suit and provide separate coverage to another 12 million outpatient procedures. We have been paving the way for no pain through our investments in 340B pricing and the New QPO Partnership, such as a recently announced deal with Premier, whose significant network of hospitals and health care systems covers nearly 20 percent of XPREL relevant market procedures. These programs assist health care systems in affording the opportunity to improve patient care through best practice pain management.
Speaker Change: Over time as we underscore the value of X Brill is providing to CMS patients were hopeful commercial payers will be compelled to follow suit and provide separate coverage to another 12 million outpatient procedures.
Speaker Change: Live in paving the way for no pain through our investments and 340 be pricing.
Speaker Change: And new <unk> partnerships.
Speaker Change: Such as of recently announced deal with Premier CRU significant network of hospitals and healthcare healthcare systems covers nearly 20%.
Speaker Change: Of EXPAREL relevant market procedures.
Speaker Change: These programs assist healthcare systems, and affording the opportunity to improve patient care through best practice pain management.
Frank D. Lee: Our customers will have a favorable acquisition cost, and once no pain takes effect next year, they'll be reimbursed at ASP Plus Fix. In 2024, we're preparing for no pain as we would a new product launch, because it's that important. To ensure readiness, we'll be enhancing our commercial organization with new talent and expertise to ensure operational excellence within critical functions, such as marketing, strategic accounts, market access, and reimbursement. We'll also be investing in programs to drive awareness, education, and action across key decision makers and sites. We'll track and update you on our progress during the course of the year. We believe no pain will result in accelerated and sustainable growth beginning in 2025 that will drive Xpirel to blockbuster status.
Speaker Change: Our customers will have a favorable acquisition cost.
Speaker Change: And once no pain takes effect next year there'll be reimbursed at Aspie plus six.
Speaker Change: In 2024 were prepare for no pain, as we would a new product launch because that important.
Speaker Change: To ensure readiness will be enhancing our commercial organization with new talent and expertise to ensure operational excellence within critical functions, such as marketing and strategic accounts market access and reimbursement.
Speaker Change: We'll also be investing in programs to drive awareness and education and action across key decision makers and sites.
Speaker Change: We'll track and update you on our progress during the course of the year.
Speaker Change: We believe no pain will result in accelerated and sustainable growth beginning in 2025 that will drive EXPAREL to blockbuster status.
Frank D. Lee: As we do this, we'll hold the bar high with respect to resource allocation and strong execution. Before turning the call over to Tony, I'd like to highlight the FDA's recent approval of our SMDA for our 200 liter manufacturing suite in San Diego. This enhanced 200 liter manufacturing process is just another example of how the Pacira team continues to innovate and augment our broad IP estate with new expert help patents. Our strong and growing patent estate leaves us confident that our Xperil franchise is well protected and positioned to drive significant and durable long-term sales growth, as a potential generic would have to successfully litigate and overcome all of our external patents. With that, I'll turn the call over to Tony Malloy, our Chief Legal Counsel, for his review of our recent Paragraph 4 litigation and next steps.
Speaker Change: As we do this will hold the bar high with respect to resource allocation and strong execution.
Speaker Change: Before turning the call over Tony I'd like to highlight the Fda's recent approval of our <unk>.
Speaker Change: For our 200 leader manufacturing Sweet in San Diego.
Speaker Change: This enhanced 200 leader manufacturing process is just another example of how the basara team continues to innovate and augment our broad IPSA with new EXPAREL patents.
Tony: Are strong and growing patent estate leaves us confident that our EXPAREL franchise, as well protected and positioned to drive significant and durable longterm sales growth.
Tony: As a potential generic would have to successfully litigate and overcome all of our expert patents.
Tony: With that I'll turn the call over to Tony Malloy, our chief legal counsel for his review of our recent paragraph four litigation and next steps.
Frank D. Lee: Thanks, Frank, and good morning to all on the call. I'd like to take a few minutes to update you on the status of our patent infringement lawsuit against Uvena. As background, Pacira initiated this litigation in the U.S. District Court of New Jersey after receiving notice from eVenus that it submitted an Abbreviated New Drug Application, or ANDA, to the FDA with a Paragraph 4 certification seeking authorization for a generic version of Expirel. This first lawsuit alleges patent infringement of X4L U.S. patent number 11-033-495 or the 495 patent. The 495 patent claims composition of X-Borrel made using an enhanced manufacturing process, which was the result of several years of innovation by the Pacira scientific team, with an investment exceeding $100 million. The five-day bench trial concluded on February 14, and we are currently engaged in post-trial briefings with closing arguments set for May 2. We expect the judge to rule on the 495 case before the expiration of the 30-month stay on July 1st.
Thanks, Frank and good morning to all on the call I.
Tony Malloy: I would like to take a few minutes to update you on the status of our patent infringement lawsuit against Venus.
Tony Malloy: His background sincere initiated this litigation in the U S District Court of New Jersey, after receiving notice from Venus submitted an abbreviated new drug application or in.
Tony Malloy: To the FDA with the paragraph for certification seeking authorization for generic version of EXPAREL.
Tony Malloy: This first lawsuit alleges patent infringement of EXPAREL U S. Number 11, 33, 495 or the 495 pattern.
Tony Malloy: The 495 patent claims composition of EXPAREL made using an enhanced manufacturing process.
Tony Malloy: Was the result of several years of innovation by the <unk> scientific team with an investment exceeding $100 million.
Tony Malloy: The five day bench trial concluded on February 14th and we are currently engaged in post trial briefings with closing arguments set for may 2nd.
Tony Malloy: We expect to judge to rule on the 495 case before the expiration of the 30 months day on July 1st.
Anthony Malloy: We are confident in our position, our 495 patent, and the related 2041 expiry. And we stand ready to engage the court in the event of any decision. The second patent infringement suit is also underway in the U.S. District Court of New Jersey, alleging infringement of U.S. Patent Number 11-426-348 or the 348 Patent, which claims composition of matter for Expro. A trial date has not been set for the 348 patent litigation
Tony Malloy: We are confident in our position or 495 Pan and the related 2041 expiry and.
Tony Malloy: We stand ready to engage the court with it in the event of any decision.
Tony Malloy: A second patent infringement suit is also under way in the U S District Court of New Jersey.
Tony Malloy: <unk> infringement of U S patent number 11, 426, 348 or the 348 Patton.
Tony Malloy: Which claims composition of matter for EXPAREL.
Tony Malloy: Trial date has not been set for the 348 patent litigation.
Anthony Malloy: 495 and 348 patents are just two deliverables from our comprehensive and growing patent portfolio. Our efforts continue to bear fruit by listing additional patents in the FDA Orange Book. We also have additional notices of allowance from the U.S. Patent and Trademark Office, and further applications are being prosecuted. These include chemical composition, product by process, method of use, and process path.
Tony Malloy: 495, and 348 patents or just two deliverables from our comprehensive and growing patent portfolio.
Tony Malloy: Our efforts continue to bear fruit by listing additional patents and the FDA Orange book.
Tony Malloy: We also have additional notices of allowance from the U S patent and trademark office.
Tony Malloy: And further applications are being prosecuted.
Tony Malloy: These include chemical composition product by process method of views and process patents <unk>.
Anthony Malloy: Many of these patents will qualify for listing in the FDA Orange Book. However, it is important to note that the FDA has established extremely rigorous hurdles for proving bioequivalence to a multivascular lepidomal bupivacillus, and this would have to be accomplished without infringing on the broad Pacira patent scheme.
Tony Malloy: Many of these plans will qualify for the list for listing in the FDA Orange book.
Tony Malloy: It is important to note that the FDA is established extremely rigorous hurdles for proving bioequivalence to a multi particularly Olympic normal bupivacaine and this would have to be accomplished without infringing on the broad <unk> Patton state.
Anthony Malloy: We know consistently manufacturing expro would be extremely challenging for a potential generic since Pacira is the only company to manufacture multivecicular liposomal products at commercial scale with more than 20 years of expertise in doing so. Brevin is to be successful in the 495 case. In the 348 case, as well as any future patent litigation, they will have to overcome every one of our patents. This is in addition to establishing bioequivalence and securing approval from the FDA, which they've not done yet. Bottom line, we firmly believe we have built an extensive portfolio of intellectual property around our XBRL franchise, and it is well protected from multiple directions. Generic attempts are commonplace for successful products like Xpro.
Tony Malloy: We knew consistently manufacturing EXPAREL would be extremely challenging for potential generic since <unk> is the only company to manufacture multi the circular loop is almost products at commercial scale with more than 20 years of expertise in doing so.
<unk> has to be successful in the 495 case to.
Tony Malloy: 348 case as well as any future patent litigation they will have to overcome every one of our parents.
Tony Malloy: This is in addition to establishing valuable equivalents and securing approval from the FDA, which they have not done yet.
Tony Malloy: Bottom line, we firmly believe we have built an extensive portfolio of intellectual property around our EXPAREL franchise and it is well protected from multiple directions.
Tony Malloy: Generic attempts are commonplace for successful products like Expro we.
Tony Malloy: We continue to have a thriving export franchise that is supported by strong and growing time estate that we will continue to vigorously defend.
Anthony Malloy: We continue to have a thriving expro franchise that is supported by a strong and growing patent estate that we will continue to vigorously defend. With that, I will turn the call over to Charlie for his financial report. Thank you, Tony, and good morning, everyone.
Tony Malloy: With that I will turn the call over to Charlie first financial report.
Charles A. Reinhart: Thank you Tony and good morning, everyone to remind you I will be discussing non-GAAP financial measures. This morning, a description of these metrics along with our reconciliation to gap can be found in the news release, we issued this morning.
I'll start with an update on sales and margin trends <unk>.
Charles A. Reinhart: To remind you, I will be discussing non-GAAP financial measures. A description of these metrics, along with our reconciliation to GAAP, can be found in the news release we issued this morning. I'll start with an update on sales and margins. Starting with XBOREL, fourth-quarter XBOREL sales of $143.9 million. 4% higher than 2020. Fourth quarter Zoretta sales increased to $28.7 million versus $28 million, and Iovera Sales improved to $6 million. Comparing the $4.6 million reported in 2022, turning to gross margins, on a consolidated basis, our fourth quarter non-GAAP gross margin percentage was 74%.
Charles A. Reinhart: Starting with EXPAREL fourth quarter, EXPAREL sales of $143 $9 million or 4% higher than 2022.
Charles A. Reinhart: Fourth quarter, Zilretta sales increased to $28 $7 million versus $28 million for 2022, and iron Rivera sales improved to $6 million compared to $4 $6 million reported in 2022.
Charles A. Reinhart: Turning to gross margins on a consolidated basis, our fourth quarter non-GAAP gross margin percentage with 74%.
Charles A. Reinhart: Fourth quarter, EXPAREL margins, where in the high 70% range as expected, but were partially offset by lower margins for Zoe letter in Iowa.
Charles A. Reinhart: For non-GAAP R&D expense, the fourth quarter increased to $16 $6 million from the $15 $7 million reported in 2022.
Charles A. Reinhart: This year over year increase primarily relates to startup activities for those Loretta phase III study and shoulder away.
Charles A. Reinhart: non-GAAP SG&A expense came in it.
Charles A. Reinhart: Fourth-quarter XBRL margins were in the high 70% range, as expected, but were partially offset by lower margins for Zoleda and Iovera. For non-GAAP R&D expense, the fourth quarter increased to $16.6 million from the $15.7 million reported in 2022. This year-over-year increase primarily relates to startup activities for the Zoretta Phase III study in Shoulder OS. Non-GAF SG&A expense came in at $57.4 million for the fourth quarter, which is up from $54.7 million in 2022. This increase is largely due to legal fees associated with Paragraph 4 and other litigation. Fourth quarter interest expense improved to $3.4 million versus $11 million reported last year.
57, $4 million for the fourth quarter, which is up from $54.7 million in 2022.
Charles A. Reinhart: This increase is largely due to legal fees associated with the paragraph four in other litigation.
Charles A. Reinhart: Fourth quarter interest expense improved to $3 4 million.
Charles A. Reinhart: Versus the $11 million reported last year.
Charles A. Reinhart: This was driven by the interest expense savings associated with the retirement of our term loan be on March 31 using.
Charles A. Reinhart: Using a new term loan a in cash on hand.
Charles A. Reinhart: And lastly, we delivered or another quarter of significantly positive adjusted EBITDA of 65 $4 million.
Charles A. Reinhart: Turning to our outlook for 2000 2004 today, we're guiding to full year total revenues of $680 million to $705 million. This range assumes mid single digit volume growth for EXPAREL, Enzo ratter, and a low teens growth rate for iron ore.
Charles A. Reinhart: This was driven by the interest expense savings associated with the retirement of our Term Loan B on March 31, using a new Term Loan A and cash on hand. And lastly, we delivered another quarter of significantly positive adjusted EBITDA of $65.4 million. Turning to our outlook for 2024, today we are guiding the full year total revenues of $680 million to $705 million. This range assumes mid-single-digit volume growth for Exporel and Zoretta and a low teens growth rate for Iovera.
Charles A. Reinhart: To remind you EXPAREL volume growth will be largely offset by a lower net selling price due to our investment and expanding market access through our new GPO partnerships, which are expected to have a mid single digit impact on our selling price while growing volumes over time.
Charles A. Reinhart: As Frank mentioned, we believe these GPO partnerships, our core investments to ensure no pain readiness in January 2025.
Charles A. Reinhart: Where expenses 2000 2000 for guidance is as follows.
Charles A. Reinhart: To remind you, X4L volume growth will be largely offset by a lower net selling price due to our investment in expanding market access through our new GPO partners, which are expected to have a mid-single-digit impact on our selling price while growing volumes over time. As Frank mentioned, we believe these GPO partnerships are a core investment to ensure no pain readiness in January. For expenses, 2024 guidance is as follows: non-GAAP Consolidated Gross Margins of 74% to 76%, non-GAAP research and development expense of 70 to 80 million dollars, and non-GAAP SG&A expense of $245 to $265 million.
Charles A. Reinhart: non-GAAP consolidated gross margins of 70, 476% non.
Charles A. Reinhart: non-GAAP research and development expense of $70 million to $80 million <unk>.
Charles A. Reinhart: non-GAAP SG&A expense of $245 million to $265 million, and finally non-cash compensation expense of $50 million to $55 million.
Charles A. Reinhart: As Frank highlighted underpinning are sharp focused on growth will be a commitment to solid execution and delivering on the expectations that we set by providing guidance, we can confidently stand behind.
With respect to our capital allocation strategy for 2024.
Charles A. Reinhart: In the near term, we are investing to insure commercial readiness for the roll out of no pain in 2025, and the support long term growth. We are also planning for the retirement of debt, including the face value of our convertible notes in August 2025, and the subsequent repayment of our term loan a we.
Charles A. Reinhart: Finally, non-cash compensation expense of $50 to $55. As Frank highlighted, underpinning our sharp focus on growth will be an commitment to solid execution and delivering on the expectations that we set by providing guidance we can confidently stand by with respect to our capital allocation strategy for 2020. In the near term, we are investing to ensure commercial readiness for the rollout of no pain in 2025 and to support long-term growth. We're also planning for the retirement of debt, including the face value of our convertible notes in August, 2025, and the subsequent repayment of our term loan. We will continue to regularly assess our capital allocation strategy.
Charles A. Reinhart: We will continue to regularly assess our capital allocation strategy.
As detailed plans for no pain or implemented this year, we look forward to sharing more specifics.
Charles A. Reinhart: With that I'll turn the call back over to Frank.
Frank: Thanks, Charlie.
Frank: As you may have seen today, we reported that Charlie will be stepping down as our chief financial officer at the end of the year.
Frank: I'd like to personally recognize him for his eight years of financial leadership Sarah.
Frank: Are on solid financial and operational footing, and we wish Charlie all the best.
He prepares for his well deserved next chapter.
Frank: In closing, let me summarize.
Frank: We are sharply focused on driving long term growth.
Frank: We have three great products and there is no question about that.
Frank: We currently have the lower extremity launch, which will be solid tailwind for EXPAREL.
Frank D. Lee: As detailed plans for No Pain are implemented this year, we look forward to sharing more specifics. With that, I'll turn the call back over to Frank. Thanks, Charlie. As you may have seen, today we reported that Charlie will be stepping down as our Chief Financial Officer at the end of the year.
Frank: We have a significant catalyst ahead and no pain.
Frank: And in 2024 will be a key setup year to ensure we are fit for driving growth in 2025 and beyond.
Frank: To that end, we are reshaping our executive team.
Frank D. Lee: I'd like to personally recognize him for his eight years of financial leadership at Pacira. We are on solid financial and operational footing, and we wish Charlie all the best as he prepares for his well-deserved next chapter. In closing, let me summarize. We are sharply focused on driving long-term growth. We have three great products, and there's no question about that. We currently have the lower extremity launch, which will be a solid tailwind for Xperil.
Frank: Reallocating X U S and early stage development resources to the U S market.
Frank: And reprioritising investments to focus on no pain readiness and enhancing key commercial capabilities.
Frank: Lastly, we're confident in our strong and growing intellectual property estate and will continue to vigorously defend our EXPAREL franchise.
Frank: As we progress through the course of this year I look forward to sharing updates on the lower extremity nerve block launch no pain readiness.
Frank D. Lee: We have a significant catalyst ahead and no pain. And 2024 will be a key setup year to ensure we are fit for driving growth in 2025 and beyond. To that end, we're reshaping our executive team, reallocating ex-U.S. and early-stage development resources to the U.S. market, and reprioritizing investments to focus on no pain readiness and enhancing key commercial capability. Lastly, we're confident in our strong and growing intellectual property estate and will continue to vigorously defend our XBRL franchise. As we progress through the course of this year, I look forward to sharing updates on the lower extremity nerve block launch, no pain readiness, our progress in reshaping our culture and capabilities, and crystallizing our long-term vision and growth strategy. I want to take a moment to applaud the dedicated and talented Pacira team who have built the successful and sustainable business that we're now scaling to drive Exporail to blockbuster status.
Frank: Our progress in reshaping, our culture and capabilities and crystallizing, our long term vision and growth growth strategies.
Frank: I want to take a moment to applaud the dedicated and talented Sarah team built.
Frank: Built a successful and sustainable business that we are now scaling to drive EXPAREL to blockbuster status.
Frank: I also want to thank you are shareholders in partners in this journey for the warm welcome and encouraged when I've received since taking the helm Sarah.
Frank: Together, we're changing the course of pain management, and hopefully saving patients from the deadly effects of opioid addiction.
Speaker Change: Would that operator, we're ready to open the call for questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Speaker Change: Draw. Your question. Please press star one one again.
We stand by while we compile the Q&A roster.
Speaker Change: Our first question.
David: Comes from the line of David.
David: David <unk> from Piper Salmon and line is now you won.
David: Hey, Thanks, So just.
Frank D. Lee: I also want to thank you, our shareholders and partners in this journey, for the warm welcome and encouragement I've received since taking the helm at Pacira. Together, we're changing the course of pain management and, hopefully, saving patients from the Deadly Effects of Opioid Addiction. With that, operator, we're ready to open the call for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
David: Few questions here.
Speaker Change: I guess there's.
Speaker Change: There's a lot of things are kind of works in progress but.
Speaker Change: Probably about.
Speaker Change: You want to take the cost structure, particularly.
Speaker Change: The R&D.
Speaker Change: Infrastructure.
Speaker Change: Thinking about margin.
Speaker Change: Margin expansion.
Over time.
Speaker Change: From.
Speaker Change: Benefiting from now.
Speaker Change: Looking at at the cost structure for January the expenses and gain operating leverage.
Speaker Change: Four months.
Speaker Change: Number two regarding no pain can you talk more broadly about what.
Speaker Change: And I know, it's early but what do you think.
The volume trajectory.
Operator: Please stand by while we compile the Q&A roster. Our first question comes from the line of David. David Amsellem from Piper Sandler, the line is now yours.
Speaker Change: Like.
Speaker Change: Next year, and maybe just help us better understand your general thinking.
David A. Amsellem: Oh, hey, thanks. So I just got a few questions here. Frank, I guess there are a lot of things that are kind of works in progress, but can you just talk broadly about where you want to take the cost structure and, particularly, the R&D? infrastructure, how are you thinking about Margin Expansion, Overtime, Number 2, regarding no pain, talk more broadly about it. What do you think? And I know it's early, but what do you think?
Speaker Change: And what the impact.
Speaker Change: The volume is going to be.
Speaker Change: And I'll stop there.
Speaker Change: Hi, Good morning, David frankly here thanks for the question.
David: You're kind of breaking up a little bit on me there, but I think what I heard you ask about is.
David: Cost going forward.
David: Taking in R&D and also may be providing a little bit more color on no pain and 25 and beyond.
David: As it relates to cost and R&D may.
David: May have mentioned in my script that we.
Frank D. Lee: The Volume Trajectory could look like next year and maybe just help us better understand your general thinking on what the impact on and volumes could be, and others. For more information, visit www.fema.gov. Good morning, David. Frank Lee here.
David: We've taken a look at some early development programs and based on our efforts now to reallocate our resources towards growing growth.
David: Driving growth of EXPAREL, we've stopped certain programs that are in early development and reallocated those expenses towards those things that will drive EXPAREL growth.
Frank D. Lee: Thanks for the question. You were kind of breaking up a little bit with me there, but I think what I heard you ask about is, you know, cost, going forward, in R&D, and also maybe providing a little bit more color on no pain in 25 and beyond. So, as it relates to cost and R&D, I may have mentioned in my script that we've taken a look at some early development programs. And based on our efforts now to reallocate our resources towards growing growth, driving growth of Exporel, we've stopped certain programs that are in early development and reallocated those expenses towards those things that will drive Exporel growth. For example, like our efforts towards no pain.
David: For example, like our efforts towards no pain I can tell you we have reallocated substantial resources towards no pain going forward.
David: With regard to the opportunity on no pain, Charlie maybe you can speak a little bit towards the volumes and the procedures that are impacted by no pain.
Charles A. Reinhart: So so David I think you're aware that no pain is focused actually on the outpatient setting from the age O. PD CMS has roughly 6 million procedures in the combination of <unk> and the <unk>.
Speaker Change: These settings with about three and a half and H O P. D in two and a half in ASC. So.
Speaker Change: Obviously.
Speaker Change: No pain relates to CMS.
Speaker Change: There are additional 12 million patients ONR Tam in combination of <unk> that are commercial fact commercial payers as well. So no pain is going to focus initially on CMS and then it's X burrelles.
Frank D. Lee: I can tell you we've reallocated substantial resources towards no pain going forward. With regard to the opportunity for no pain, Charlie, maybe you can speak a little bit about the volume. So David, I think you're aware that No Pain is focused actually on the outpatient setting from the HOPD. CMS has roughly 6 million procedures in the combination of HOPD and the ASC settings with about three and a half in HOPD and two and a half. ASC.
Speaker Change: Alright, excuse me pursuers focus too too.
Speaker Change: The commercial payers on board as well so we're really excited about it I don't think thats all going to happen in 2025.
Charles A. Reinhart: So obviously, you know, no pain relates to CMS. But there are an additional 12 million patients all in our TAM in combination of HOPD and ASC that are commercial-backed, commercial payers as well. So, No Pain is going to focus initially on CMS, and then it's Xpirel's, excuse me, Pacira's focus to get the commercial payers on board. So we're really excited about it. I don't think that's all gonna happen in 2025, but obviously, it is the beginning of that process.
Speaker Change: But obviously the beginning of that process will.
Speaker Change: And let me just add things. So let me just add that as we grow margin will improve accordingly.
Speaker Change: In addition, as we think about the.
Speaker Change: Customers that are impacted by no pain. These.
Speaker Change: These large strategic customers, we are making investments there to better serve those customers going forward.
Speaker Change: Maybe just a quick follow up are you going to devote significant resources.
There are going forward.
Speaker Change: So let me just start by saying, we've got three great products.
Charles A. Reinhart: Let me just add, thank you Charlie, let me just add that as we grow, margin will improve accordingly. In addition, as we think about the customers that are impacted by no pain, these large strategic customers, we are making investments there to better serve those customers going forward. Maybe just a quick follow-up, are you going to devote significant resources to Zobreta and Ayodhya going forward? But let me just start by saying we've got three great products. And I like all of them a lot.
Speaker Change: And I like all of them a lot.
Speaker Change: That said, we are hyper focused on driving EXPAREL growth.
Speaker Change: So we will focus on that first.
Speaker Change: And then of course as needed will pay some attention to Zilretta Nio there to make sure those businesses go forward.
Speaker Change: But if you think about where where reallocating our resources and where we expect to drive growth. It's EXPAREL.
Speaker Change: Thank you.
Speaker Change: Thank you for your question one moment please.
Frank D. Lee: That said, we are hyper focused on driving expiral growth, so we'll focus on that first. And then, of course, as needed, we'll pay some attention to Zylreta and Iovera to make sure those businesses go forward. But if you think about where we're reallocating our resources and where we expect to drive growth, it's expiry. Thank you. Thank you for your question. One moment, please. Our next question comes from the line of Gregory Renza from RBC Capital Markets. The floor is yours.
Speaker Change: Our next question comes from the line of Gregory Retina Arby's.
Speaker Change: B C capital markets and from what was yours.
Speaker Change: Hey, good morning Franken team.
Speaker Change: Thanks for the time today and thanks for taking our questions.
Speaker Change: Frank maybe just looking at at.
Speaker Change: At 2024, and apparently it's helpful that we heard some color on the revenue guidance I'm. Just curious if you could provide that maybe a little more detail some of those pushes impulse certainly as you've offered that the total portfolio.
Speaker Change: Outlook for 2024, I just wanted to see if you had any additional detail on and number number one just just the character of that and how it sort of translates over the trajectory of 2024, if anything we should be thinking about and then secondly, maybe just longer term Frank as your reiterating your confidence.
Gregory James Renza: Hey, good morning. Frank, maybe just looking at 2024 and, materially, it's helpful, the portfolio on www.pacira.com.au. The Bulletproof Executive 2013, And secondly, maybe. Thanks for the questions, Greg. First, with regard to revenue for 2024, maybe some initial comments here and then I'll turn it over to Charlie.
Speaker Change: On the tailwind with with no pain.
Speaker Change: Just wanted your color on.
Speaker Change: King about no longer term.
Speaker Change: Commentaries in the color on EXPAREL driving 1 billion in sales longer term just wanted to hear your latest thoughts on really where the feeling is for EXPAREL.
Speaker Change: In the out years, thanks, so much.
Speaker Change: Yeah.
Speaker Change: Thanks for the questions Greg.
Speaker Change: With regard to revenue for 2024, maybe some initial comments here and then I'll turn it over to Charlie.
Frank D. Lee: What we're trying to do this year is to be conservative in terms of the way we provide guidance and provide you with guidance that we can stand behind. So as the year goes forward, we expect to tighten the guidance as we have additional information, but that's what we expect, number one, and it's a setting year for 2025. And Charlie, maybe you can provide a little bit more color to your comments on... For more information, visit www.fema.gov. So we mentioned in our comments that we expected both Xporel and Zoretta to have kind of mid single-digit volume growth.
Speaker Change: What we're trying to do this year is to be conservative in terms of the way, we provide guidance and provide your guidance that we can stand behind.
Charles A. Reinhart: So as a year ago stalwart, we expect to tighten the guidance.
As we have additional information.
Charles A. Reinhart: But that's what we expect number one.
Charles A. Reinhart: And it's a setup year for 2025.
Charles A. Reinhart: And Charlie maybe you can provide a little bit more color to your comments on 2020 for.
Charles A. Reinhart: Sure so.
Charles A. Reinhart: We mentioned.
Charles A. Reinhart: In our in our comments that we expected.
Charles A. Reinhart: Both EXPAREL and Zilretta to have kind of mid single digit volume growth.
Charles A. Reinhart: Zoretta doesn't have any other changes to its growth to net, but with the implementation of the GPO contract, the impact on gross to net will pretty much offset the base business volume growth for X4L, and therefore, the upside in revenue in 2024 was probably going to be mostly, So, you know, overall, when we look at the P&L for 2024, I say this, Gregory, we will have modestly higher revenues, will have And we've increased our investment in SG&A to drive growth for no pain, kind of all resulting in a bottom line that should look pretty close to what we saw this year. And so that's the way we think about it. 24 is a bridge to 25.
Charles A. Reinhart: <unk> doesn't have any other changes to its gross to net but with the implementation of the GPO contracts.
Charles A. Reinhart: That impact.
Charles A. Reinhart: Impact on growth to net we're pretty much offset the base business volume growth for EXPAREL and therefore, the upside and the revenue in 2024 was probably going to be mostly no pain.
Charles A. Reinhart: So.
Overall, when we look at the the P&L for 2024.
Charles A. Reinhart: Save disk Gregory.
Charles A. Reinhart: We will have modestly.
Charles A. Reinhart: Higher revenues.
Charles A. Reinhart: You'll have modestly expanded gross margins will have an R&D line that is.
Charles A. Reinhart: Is the same guidance as last year and.
Charles A. Reinhart: And we have increased our investment in SG&A to drive growth for no pain next year kind of all resulting in a bottom line. It looks should look pretty close to what we saw this year.
Speaker Change: So that's the way we think about it we.
Speaker Change: 24, as a bridge to twenty-five we're making really important investments in order to capitalize on new paint and twenty-five and overall the year will look better.
Charles A. Reinhart: We're making really important investments in order to capitalize on no pain in 25. And overall, the year will look better than 23, so we thought that was pretty good.
Speaker Change: 10, 23, so we thought that was a pretty.
Frank D. Lee: Pretty good situation. Thanks, Charlie, just about the long term. First, let me just say that it's still early days in my tenure. With that said, just some color about the long term. In particular, I think you had mentioned NoPain. So first off, about 75% of Expiril-relevant procedures are in the outpatient setting.
Speaker Change: Pretty good situation to be in.
Speaker Change: Thanks, Charlie.
Speaker Change: Just about the long term.
Speaker Change: First let me just say that it's still early days.
Speaker Change: And my tenure that said just some color about long term.
Speaker Change: In particular, I think you had mentioned no pain. So first off about 75% of EXPAREL relevant procedures are in the outpatient setting and as you know no pain is really impacting outpatient reimbursement specifically for CMS patients.
Frank D. Lee: And as you know, NoPain is really impacting outpatient reimbursement specifically for CMS patients. So that's important to note. Secondly, commercial payers will be important in terms of a lever to accelerate that growth. And so we're taking steps now to make sure that we're serving commercial payer customers in the way they need to be served. And third, as I mentioned earlier, we're enhancing and bolstering our commercial capabilities. We have great products, and we need to get them to more patients and serve our customers at a higher level, and so we will do that. So those factors, I think, are going to be important as we think about driving growth with Exporail, let's say, in the medium term.
Speaker Change: So that's important to note secondly is that.
Speaker Change: Commercial payers will be important in terms of a lever to accelerate that growth and so we're taking steps now to make sure that we are we are serving the commercial payer customers and the way they need to be <unk>.
Speaker Change: And third is as you may have mentioned as I mentioned earlier, we are enhancing and bolstering our commercial capabilities, we have great products.
Speaker Change: And we need to get them to more patients and serve our customers at a higher level. So.
Speaker Change: So we will do that so those factors I think are going to be important as we think about driving growth with EXPAREL, let's say in the mid term.
Frank D. Lee: Over the long term, what we're doing now is taking a very thoughtful look at our pipeline, and we're taking a very thoughtful look at our strategic outlook as it relates to our therapeutic area strategy. And so as the year goes on, we'll be able to communicate that more clearly to you. And so that'll help drive some of our future growth over the long term as well. Great, Frank. Thanks, Charlie. Thank you for your question. One moment, please. Our next question comes from the line of Gary Nachman from Ramey James. The floor is yours.
Over the long term what we're doing now is we're taking a very thoughtful look at our pipeline.
Speaker Change: And we're taking a very.
Speaker Change: Very thoughtful look at our strategic outlaw.
Speaker Change: Outlook as it relates to our therapeutic area strategy.
Speaker Change: So as the year goes on will be able to communicate that.
Speaker Change: Clearly to you and so that will help drive so where future growth over the long term as well.
Speaker Change: Great Frank Thanks, Charlie that's very helpful.
Speaker Change: Thank you for your <unk>.
Speaker Change: One moment please.
Speaker Change: Our next question comes from in the line of Gary Nothing from Raymond James F O as yours.
Gary Jay Nachman: Hi guys. Good morning. And welcome, Frank. Maybe you could just talk a little bit more about the additional GPO contracting for XperL you're planning on doing this year. So how many more of these could you potentially do?
Hi, guys. Good morning, and welcome Frank maybe you could just talk a little bit more about the additional GPO contracting for EXPAREL, you're planning on doing this year. So many how many more of these could you potentially do.
Frank D. Lee: And I know Charlie said, you know, that should impact net price in the mid single digits. But just how much visibility do you have on that? Are you very confident that that's only going to be the impact just in terms of net price? And then just, how much are you expecting the lower extremity nerve block to contribute this year? And what are you doing to support that launch? And I know you talked about, you know, shifting some resources and more SG&A spend. And I'm just wondering if there are other pockets of XPAREL just in terms of, you know, different areas, different indications that you're going to be investing more in this year as you've taken a closer look at the overall market.
Gary Nothing: And I know, Charlie said that should impacting that price in the mid single digits, just how much visibility do you have on that.
Frank: A very confident that that's only going to be the impact just in terms of net price.
Speaker Change: And then just how much how much are you expecting the lower extremity nerve block to contribute this year.
Speaker Change: And what are you doing to support that launch and I know you talked about shifting some resources and more SG&A spend and I'm. Just wondering if there are other pockets of EXPAREL.
Speaker Change: Just in terms of different areas different indications that you're going to be investing more behind this year as you've taken a closer look at the overall market. Thanks.
Frank D. Lee: Thanks for the questions, Gary, and let me hit the GPO one and turn it over to Charlie for additional detail. With respect to GPO contracting, just at a high level... Our products, our product, Xpiril, is utilized in both the hospital and HOPD setting, of course, and they brought in the outpatient ASC as well. And so in these kinds of settings, it's very commonplace for products to participate in GPO. So that's number one. And what that does is it makes spending at the hospital, at the institution, compliant spent versus non-compliant spent. And so what that means is it's not a flag, so there's not yet another hurdle for physicians to utilize Experil in these settings.
Speaker Change: Thanks for the questions Gary Let me hit the GPO, one and then turn it over to Charlie for additional detail <unk>.
Charles A. Reinhart: With respect to GPO contracting just at a high level.
Charles A. Reinhart: Our products or product EXPAREL.
Charles A. Reinhart: Is utilized in both the hospital and <unk> setting of course, and they brought the outpatient ASC as well and so in these kinds of settings, it's very commonplace.
Charles A. Reinhart: Four products to participate in Gpo's.
Charles A. Reinhart: So that's number one.
Charles A. Reinhart: What that does is it makes spending.
Charles A. Reinhart: At the hospital at the institution be compliant spent versus Noncompliant spent.
Charles A. Reinhart: So what that means is it's not a flag. So that there is not in yet another hurdle for physicians to Utilise EXPAREL in these settings.
Frank D. Lee: And so we're participating in the premier GPO contract, as we mentioned previously. We expect to sign a couple more in the coming month. And what that does is not only enhance access, but we're also able to tap into the services that GPOs provide in helping to educate their membership. In our case, this is going to be very helpful as we think about no pain education and what that means in terms of making that take hold in institutions and all the steps that it takes. So, Charlie, maybe it's over to you.
Charles A. Reinhart: And so we're participating in the Premier GPO contract as we mentioned previously we expect to sign a couple of more.
Charles A. Reinhart: In the coming months ahead, and what that does is not only enhances access but it also we are able to tap into the services that gpus provide in helping to educate their membership in our case. This can be very helpful. As we think about no pain education, and what that means in terms of.
Charles A. Reinhart: Making that take hold in the institutions and all the steps that it takes so Charlie maybe over to you sure.
Charles A. Reinhart: Um, Gary, Frank mentioned there are a couple other GPO organizations that we are in the midst of having conversations with. We expect to sign a couple more this year. The ones that we're looking at are the most significant ones, particularly with respect to our TAM. When you add all three of those together, it's roughly two-thirds of our TAM.
Charles A. Reinhart: Gary Frank mentioned, there are a couple of other GPO organizations were in the midst of disgust, having conversations with you.
Charles A. Reinhart: Expect to sign in a couple of more of this year.
Charles A. Reinhart: Ones that we're looking at are the most significant.
Charles A. Reinhart: Difficult ones, particularly with respect to <unk> and when you add all three of those together, it's roughly two thirds of our tan from a procedural perspective recovered by these three organizations.
Charles A. Reinhart: As far as our confidence level is on the impact, I'd say we're pretty confident. We know what the terms of the contracts will be. We know basically what proportion of our current business is likely to be impacted. And frankly, if I've underestimated the cost, it's probably a good thing because that means they're driving volume and driving revenue.
Charles A. Reinhart: Now.
Charles A. Reinhart: As far as what are what are confidence level is on the impact I'd say, we're pretty confident we know what the terms of the contracts will be we know basically what proportion of our current business is likely to be impacted and frankly if.
Charles A. Reinhart: If I underestimated the cost is probably a good thing because that means they're driving volume and driving revenue and that is exactly what we want them to do.
Charles A. Reinhart: And that is exactly what we want. So, ultimately, you know, I think that in 24, the volume vial growth of the base business of XBRL will kind of equate to what the cost... And we expect them to help us really prepare for NoPain. I mean, NoPain is like a product launch for us.
Charles A. Reinhart: So ultimately.
Charles A. Reinhart: I think that in 24, the volume vile growth the base of the base businesses EXPAREL will kind of equate to what the cost of the GPO.
Charles A. Reinhart: And we expect them to help us really prepare for no pain.
Charles A. Reinhart: No pain is like a product launch for us and we want to make sure that we've got the broadest access possible when no pain starts and we view this as an important way to get there.
Frank D. Lee: And we want to make sure that we've got the broadest access possible when NoPain starts. [inaudible] I'm really happy to say that we just came off of our national sales meeting, which was at the end of January, and our sales reps are very excited to take this new data. This is the first controlled data versus an active control.
Speaker Change: Thanks, Charlie.
Speaker Change: Question about lower extremity.
Speaker Change: Gary.
Speaker Change: I'm really happy to say that.
Speaker Change: We're just coming off of our national sales meeting.
Speaker Change: That was at the end of January in our sales reps are very excited to take this new data. This is the first control data versus an active control.
Frank D. Lee: It's very positive, as I mentioned earlier in my talk. And so they're very, I would say they're very excited to be in front of their customers. Early feedback has been very positive. That said, it's early days. You know, they've only been out there for about a week or so.
Speaker Change: It's very positive as I mentioned earlier mind, and my talk and so they're very act.
I would say, they're very excited to be in for other customers. Early feedback has been very positive that said, it's early days they have only been out there for about a week or so so we will have will have more news for you as a year goes on.
Frank D. Lee: So we'll have more news for you as the year goes on. But as we talked about before, some use is already taking place in that setting. However, we think there are incremental sales there as well. So, as the year goes on, we'll provide you further updates. Okay. And just, are there any other areas, indications, whether it's obstetrics or, you know, there were some other markets that have been talked about in the past, or PEDS, or just, you know, where you think there could be upside if you focused more of your efforts on it? Thanks, Gary.
Speaker Change: As we've talked about before some some use is already taking place in that setting. However, we think there's incremental sales there as well so as the year goes on will provide you further updates.
Speaker Change: Okay, and just are there any other areas indications.
Speaker Change: Whether it's a obstetrics or.
Speaker Change: There there was some other markets had had been talked about in the past or peace or just.
Speaker Change: Where do you think there could be upside if you focus more of your efforts behind them.
Frank D. Lee: I mean, certainly, there are some other areas that we've talked about. One of the things that we're doing now is taking a very thoughtful review of our entire pipeline, as well as programs that we have ongoing. And so, as we move forward, we'll be able to communicate more about that with you. I do see quite a bit of potential for Xpiril. I also want to make sure that we're doing the kinds of studies that are required to get the right kind of reimbursement, and the right kind of differentiation in the market. Okay, great.
Speaker Change: Thanks, Gary and certainly there are some other areas that we've talked about what are the things that we're doing now is we're taking a very thoughtful review of our entire pipeline as well as Ah programs that we have ongoing and so as we move forward, we will be able to communicate.
Speaker Change: More about that with you I do see quite a bit of potential for EXPAREL.
Speaker Change: Also want to make sure that we're doing the kinds of studies are required to get the right kind of reimbursement right kind of differentiation in the marketplace.
Gary Jay Nachman: Thank you. Thank you for your question. One moment, please. Our next question comes from the line of Les Sulewski from Truist Securities. The floor is yours.
Gary: Okay, great. Thank you.
Speaker Change: Thank you for your question one moment please.
Speaker Change: Our next question comes from the line of <unk>.
Speaker Change: Solecki from <unk> Securities, that's what was yours.
Leszek Sulewski: Good morning. Thank you for taking my questions. I have two.
Solecki: Good morning. Thank you for taking my questions have to first can you talk about some optionality that you have regarding a potential unfavorable grueling regarding that 495 patent in July.
Leszek Sulewski: First, can you talk about some optionality that you have regarding a potential unfavorable ruling regarding the 495 patent in July? And then second, you now have data showing expiration duration of up to 96 hours. What has been some of the feedback you've been getting from physicians regarding the need for additional post-operative pain management, and how would expiral treatment coincide with other non-opioid treatments that are undergoing clinical trials, specifically VX548? Thank you. Thanks, Les. Thanks for the question. You asked about optionality regarding the unfavorable rate ruling against us, etc.
Solecki: And then second.
Solecki: Have data showing EXPAREL duration of up to 96 hours.
Solecki: What has been some of the feedback you've been getting from physicians regarding need for additional post operative pain management and how would.
Solecki: I spell of treatment coincide with other nine okay treatments that are undergoing clinical trials, specifically the X 548. Thank you.
Speaker Change: Thanks, Liz Thanks for the question.
Speaker Change: Asked about Optionality regarding the unfavorable right ruling against us et cetera. So let me just say this number one that as Tony mentioned, where we are very confident and where we stand.
Anthony Malloy: So let me just say this, number one, that, as Tony mentioned, we're very confident in where we stand. And so I'll just say that at the beginning, and Tony, let me turn it over to you. Thanks Frank and good morning Russ. First to level set, like most IP cases, this matter is going to take many years to be resolved in the court system, not just for this case, but also for future litigation covering our patents. And as I'm sure you can appreciate, it wouldn't be in our best interest to publicly share details around our legal strategy.
Speaker Change: And so I'll, just say that the beginning and Tony that we turn it over to you. Some additional comments. Thanks Franklin Good morning Russ.
First a level of <unk> like most IP cases.
Russ: This matter is gonna take many years to be resolved through the court system.
Tony Malloy: Not just for this case, but as well as future litigation covering our patents.
Tony Malloy: And as I'm sure you could appreciate it wouldn't be in our best interest to publicly share details around our legal strategy.
Anthony Malloy: Other than to say that we believe that we have a strong legal case and E-Venus is infringing on our patents. Several years ago, we undertook an extensive strategy to protect XPAREL and the XPAREL franchise from many directions. And you're starting to see that now with the number of patents that are being issued and that have already issued. And we'll continue to defend those patents vigorously. You've also asked, Les, about the lower extremity nerve block and how that might play into NAV 1.8. So, let me turn it over to Jonathan here for some comments. Thanks, Fred.
Tony Malloy: Other than to say that we.
We believe that we have a strong legal case.
Tony Malloy: Venus is infringing on patents.
Tony Malloy: Several years ago, we undertook extensive strategy.
Tony Malloy: To to protect EXPAREL in the expert franchise.
Tony Malloy: From many directions, and you're starting to see that now with with the number of patents that are issuing have issued.
Tony Malloy: Uhm will continue to defend those patents vigorously.
Speaker Change: Thanks, Tony.
Tony Malloy:
Speaker Change: You had asked also less about the lower extremity nerve block and.
Speaker Change: How that might play into the Nab one eight so let me turn it over to Jonathan here for some comments.
Jonathan Slonin: So, so far, we've received very positive feedback with our two new lower extremity indications. As you know, Xperil achieved four days of superior pain control and opioid consumption versus Bupivacaine, so an active comparator, very, very high quality trials with a very high P value, a very low p-value for those showing the benefits of employing these two blocks.
Jonathan: Thanks Frank.
Jonathan: So so far we have received very positive feedback.
Jonathan: With our two new lower extremity indications as you know EXPAREL achieved four days are superior pain control.
Jonathan: An opioid consumption verse bouquet.
Jonathan: <unk> so inactive comparator.
Jonathan: Very very high quality trials.
Jonathan: With a very high P value.
Jonathan: Very low key value for those showing.
Jonathan: Benefits employing these two box so anytime we can expand opportunities for our patients and surgeons Ah that's a plus when you talk about lower extremity. These fees nerve block indications target two large markets.
Jonathan Slonin: So anytime we can expand opportunities for our patients and surgeons, that's a plus. When you talk about lower extremity, these nerve block indications target two large markets around the knee, most likely TKA, as well as other sorts of knee repairs, and then foot and ankle as well. As far as other products in the space go, we always welcome innovation for our patients, and we are pleased to see that the non-opioid space is attracting investors, specifically for VX548, as you inquired about. We see this as having a complementary rather than a competitive mechanism of action. So remember, you know, Expiril being used as an herb block or a fascial plain block is providing deep analgesia needed for the prevention of post-operative acute breakthrough pain.
Around the knee.
Jonathan: Most likely TK as well as other sort of knee repairs, and then foot and ankle as well.
Jonathan: As far as.
Jonathan: Other products and the space, we always welcome innovation for our patients.
And we are pleased to see that the non opioid space is attracting investments.
Jonathan: Specifically towards V X 548.
Jonathan: As you inquired about.
Jonathan: We see these as having.
Jonathan: Complementary rather than a competitive mechanism of action so remember.
Jonathan: <unk> being used as.
Jonathan: <unk> black or facial plain block is providing deep analgesia needed for the prevention of post operative acute breakthrough pain, whereas when you saw in that novel one eight studies, they enrolled patients who already had pain. So.
Jonathan Slonin: Whereas when you look at the NAV1H studies, they enrolled patients who already had, so the goal was breakthrough pain reduction rather than breakthrough pain prevention. So this mechanism may offer patients the opportunity to transition to an oral medication post-operatively at discharge as part of their multimodal program. So bottom line, we see these as rather complementary, where Xpirel would prevent pain, these other products seem to help treat.
Jonathan: The goal was breakthrough pain reduction rather than breakthrough pain prevention. So this mechanism may offer patients the opportunity to transition.
Jonathan: To an oral medication.
Jonathan: Operatively and discharge as part of their multi modal program. So bottom line, we see these as rather complimentary where as EXPAREL would prevent pain.
Jonathan: These are products seem to help treat pain.
Jonathan Slonin: Thank you. Thank you for your question. One moment, please. Our next question comes from the line of Balaji Prasad from Barclays. The floor is yours.
Great: Great. Thanks, Jonathan.
Speaker Change: Thank you.
Speaker Change: Thanks for your question one moment please.
Speaker Change: Our next question comes from the lineup <unk> Prasad from Barclays That's for sure.
Balaji V. Prasad: Good morning, and thank you for the question. So, to the extent that you can with regard to the litigation with EVNS, I know you can't comment more on it, but could you help us understand or confirm if the technology that EVNS has is a multilamellar technology versus multivascular? At least that's what our channel checks seem to indicate.
Prasad: Good morning, Thank you for the question.
Prasad: Extend that again with regard to the litigation with Damien as I know you can't comment more on that but could you help us understand confirm if the technology that even as as an as a multi lamellar technology versus multi Ms. Clark leans at one O challenging seemed to indicate.
Balaji V. Prasad: And two, stepping back, Frank, going back to the restructuring and the steps taken, can you discuss the deficiencies or the processes that you noted in the company as it took charge to embark on this measure? And I'm also curious about how your go-to-market is going to change with what a CCO, a commercial officer, and a business officer will bring to the company and to Xperil. Thank you. Thanks for the question. Good morning.
Prasad: One and two stepping back Frank going back to the restructuring understands taken can you <unk> the deficiencies of the process of that in northern and the company is it took charge to embark on this measure.
Prasad: And I'm also in spam curious on how we go to market is going to change with <unk> commercial often than of often will bring to the company and <unk>. Thank you.
Frank: Thanks for the question. Good morning, Let me address the restructuring question first and then I'll turn it over to Tony to comment what we can on the litigation.
Frank D. Lee: Let me address the restructuring question first and then I'll turn it over to Tony to comment on what we can on the litigation. First of all, I'm gonna come back to, we are structuring the organization so that we're fit for growth going forward. There were a lot of great things that helped to bring the company to where it is today, and it's remarkable that we've been able to treat 14 million patients so far.
Tony Malloy: First of all I'm going to come back to we are.
Tony Malloy: Structuring the organization so that were fit for growth going forward there were.
Speaker Change: A lot of great things that helped to bring the company to where it is today and it's remarkable that we've been able to treat 14 million patients so far today.
Frank D. Lee: Now, as we look at the future, we're going to need a different set of skill sets to take us to the next level of performance and growth that is driving Expiril to blockbuster status and growing our other products as well, and further building on our leadership in pain management. So that said, what we've done is we created a new position. It's quite common for companies like ours to have a chief commercial officer who has a lot of expertise in driving not only growth but organizational structuring ourselves so that we have those capabilities to grow in the future.
Speaker Change: We look at the future, we're going to need a different set of skill sets to take us to the next level performance and growth that is driving EXPAREL to blockbuster status and growing out of their products as well.
Speaker Change: In further building on our leadership in pain management.
Speaker Change: So that said what we've done is we create a new position chief commercial officer.
Speaker Change: Common for companies like ours to have achieved commercial officer, who has a lot of expertise and driving not only growth, but organizationally structuring ourselves. So that we have those capabilities to grow in the future. So that position is one that we are actively looking to fill.
Frank D. Lee: And so that position is one that we are actively looking to fill. And secondly, as we think about some other capabilities in the organization, I may have mentioned earlier that serving our large strategic customers is going to be very, very important. Now that we are participating in 340B, as well as in future GPO contracting, we're going to have ways to make sure that we reach the C-suite and pharmacy customers in ways that we're not reaching them currently, very important for products like ours in these kinds of settings. So those are some of the two key things that we're acting on now. And as I mentioned, we're, for the mid and long term, embarking on a very thorough strategic review of our pipeline and our therapeutic area strategy.
Speaker Change: And secondly, as we think about some other capabilities in the organization I may have mentioned earlier that serving our large strategic customers is going to be very very important.
Speaker Change: Now that we are participating 340, b as well as in the future GPO contracting.
Speaker Change: We're gonna have ways to make sure that we reached the C suite and the pharmacy customers in ways that were not reaching in currently and this is very important for products like hours in these kinds of settings. So those are some of the two key things that were acting on now and as I mentioned, where for the mid and long.
Speaker Change: Term embarking on a very thorough strategic review of our pipeline and our therapeutic area strategy that will inform our future investments in the pipeline as well as our thinking about what else fits into our portfolio.
Frank D. Lee: That'll inform our future investments in the pipeline as well as our thinking about what else fits into our portfolio. So with that, I'll turn it over to Tony. Thanks and good morning, Balaji. Unfortunately, details of the eVenus product are protected by the court's protective order, so we can't comment on the eVenus product. Tony, Balaji, anything else that we can answer? I'm with Pankow. Thank you for your questions. One moment, please.
Speaker Change: So with that let me turn it over time.
Speaker Change: Thanks, and good morning biology.
Speaker Change: Unfortunately details of the Venus product are protected by the courts protective order. So we can't comment on the evening this product.
Speaker Change: Thanks, Tony <unk> is there anything else that we could answer I'm going to thank you.
Speaker Change: Thanks for all your questions.
Speaker Change: One moment please.
Anthony Malloy: As a reminder, if you'd like to ask a question, please press star 1-1 on your telephone. Our next question comes from the line, Serge Belanger from Needham. The floor is yours.
Speaker Change: As a reminder, if you'd like to ask a question. Please press star one one on your telephone.
Speaker Change: Our next question comes from the line.
<unk> bollinger from need him.
Serge D. Belanger: Hi, good morning, this is Serge. I guess the first question regarding the restructuring of the Commercial Infrastructure. I know the company has changed their sales force makeup. I think over the last year, they kind of streamlined it so the sales force would promote all three products. I'm just curious what changes you're implementing. Is it really just a refocusing of efforts, or could we see an expansion of those current efforts? And then, on the 340B program, what should we expect at least for 2024 and heading into 2025 regarding that program? Thanks for the question, Serge, things regarding our commercial effort broadly, Salesforce in particular. As you noted, currently, our Salesforce promotion promotes all three products, and there are no changes planned in the near term around that.
What was yours.
Bollinger: Hi, Good morning. This research.
Bollinger: First question regarding the the restructuring of.
Bollinger: Of the commercial infrastructure.
Bollinger:
Bollinger: I know the company had.
Bollinger: Change their Salesforce makeup.
Bollinger: I think over the last year.
Bollinger: Kind of streamlined at some salesforce would promote all three products.
Bollinger: Curious what changes you are implementing.
Bollinger: Is it really just refocusing of efforts or we could see an expansion of those current efforts and then secondly on the 340 B program, what should we expect to at least for 2024 and heading into 2025.
Speaker Change: Regarding that program. Thanks.
Speaker Change: Thanks for the question Serge.
Speaker Change: Do things regarding.
Speaker Change: The our commercial effort Salesforce in particular as you noted currently our sales force promotes all three products and there are no changes planned in the near term around that what we are looking at our ways to make sure that we have the necessary Cher voice required for no pain going forward.
Frank D. Lee: What we are looking at are ways to make sure that we have the necessary share of voice required for no pain going forward. And as we mentioned earlier, we're treating no pain like a new product launch. So in a new product launch year, you want to make sure you have the appropriate share of voice. And we're going to make sure that happens. So if we need to bolster it, we will, particularly around Exporail. That's number one.
Speaker Change: As we mentioned earlier were trading no pain like a new product launch so in new product launch here you wanted to make sure you have the appropriate Cher voice and we're going to make sure that happens. So if we need to bolster it we will particularly around EXPAREL. So that's number one.
Frank D. Lee: Number two, broadly, with respect to our marketing efforts and other efforts, we're going to bolster some capabilities around marketing insights, digital pricing, and reimbursement, again, to better serve the kinds of customers that we're interacting with on a regular basis. So that's, that's important. With respect to 340B, we have always looked at our strategy there in terms of taking a look at our return on investment and our strategy going forward. Based on that, we have no plans to change our strategy in 340B at this time, but we'll continue to evaluate that as we move forward. As you might imagine, 340B and GPO now provide a good entry point, a good entry point to accessing our product, and combined with ASP Plus 6 in the outpatient setting for no pain, that should be an attractive value proposition for our customers. I believe I have hit on all three of your questions.
Speaker Change: Number two broadly with respect to our marketing efforts and other efforts, we're going to bolster some capabilities.
Speaker Change: Around marketing insights.
Speaker Change: Digital pricing and reimbursement again to better serve the kinds of customers that were interacting with on a regular basis. So that's that's important.
Speaker Change: With respect to 340 B we.
Speaker Change: We have.
Speaker Change: We've always looked at our strategy there in terms of.
Speaker Change: Taking a look at our retarded.
Speaker Change: Return on investment and our strategy going forward.
Speaker Change: Based on that we have no plans to change our strategy in before to be at this time, but we will continue to evaluate that as we move forward.
Speaker Change: As you might imagine 340, B and G. P O now provides.
A good entry point.
Speaker Change: Entry point into accessing our product and combined with ASP plus six in the outpatient setting.
Speaker Change: Paying that should be an attractive value proposition for our customers. So that's.
Speaker Change: Leave I hit on all three of your questions Yeah anything else search.
Frank D. Lee: Anything else, Serge? I guess just on the DR&D front. There are some efforts around Loretta, I think a shoulder OA study, as well as around Iovera. Any changes to those at this point, or are those all under evaluation? The studies are underway, and so I'll turn it over to Jonathan. He can provide just a little bit of color on each one.
Speaker Change: I guess system that DRM difference I think there are some efforts runs on <unk> I think his shoulder only to study as well as around <unk>.
Speaker Change: Any changes to those at this point are those are all under evaluation.
Speaker Change: The studies are underway and so let me turn it over to Jonathan He can provide they're just a little bit of color on each one so jonathan yeah.
Jonathan Slonin: So, Jonathan. Yeah, so on the Zaretta front, we've kicked off our shoulder study. And so we're actively screening patients now, which will provide expansion beyond the need for Zoretta. As far as Iovera goes, as well, we've kicked off our study in the spasticity space, which will provide us with a significant opportunity to help those patients and meet an unmet need as far as current treatments are concerned. We also have our IGOR registry, which collects real-world data, and we're starting to publish data from that showing how these two products work in the real world.
Jonathan: Yeah, so on the <unk> front, we've kicked off our.
Jonathan: Shoulder study.
Jonathan: And so we're actively screening patients now.
Jonathan: Which will provide.
Speaker Change: Expansion beyond the need for as a writer.
Speaker Change: As far as <unk> as well we've kicked off our study.
Speaker Change: In the past this a space.
Speaker Change: Which will provide us a significant opportunity.
Speaker Change: To help those patients and meeting unmet need as far as current treatments are concerned.
Speaker Change: We also have our Igor registry.
Speaker Change: Which.
Speaker Change: Collects real world data.
Speaker Change: And we're starting to publish data from that showing.
Speaker Change: How these two products work in the railroad.
Jonathan Slonin: Thank you. Thank you for your questions. This now concludes our question and answer session. I would now like to turn it back to Susan Mesco, Head of Investor Relations, for closing remarks. The floor is yours.
Speaker Change: Alright, thanks, Thank you.
Speaker Change: Thank you for your question.
Speaker Change: This now concludes our speaker a question and answer session I would now like to turn it back to you Susan Mezcal head of Investor Relations for closing remarks, that's lowered yours.
Susan Mesco: Thank you, Gerald, and thanks to all on the call for your questions and time today. We are excited about the opportunities that lie ahead for us. Throughout the balance of the year, we will continue to ensure we are well positioned for long-term success. The opioid epidemic continues to be a national crisis, underscoring the vital importance of our mission.
Susan Mesco: Thank you and thanks to honor the cost of your questions and time today. We are excited about the opportunities that lie ahead for us throughout the balance of the year. We will continue to ensure we are well positioned for the long term success.
Susan Mesco: I'd epidemic continues to be a national crisis underscoring the vital importance of my mission. Thank you and stay low.
Speaker Change: Thank you. Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Speaker Change: Mmm.
Operator: Thank you, and stay well. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Speaker Change: [music].
Speaker Change: Mmm.
Speaker Change: [music].