Q2 2024 Pacira BioSciences Inc Earnings Call
Good day and thank you for standing by.
Operator: Sciences 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 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 speaker today, Susan Mesco, Head of Investor Relations. Please go ahead.
Speaker Change: Welcome to the Q2 2024 Pacira Biosciences Earnings Conference Call. At this time, all participants are in a listen-only mode.
Speaker Change: 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.
Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Mesco, Head of Investor Relations. Please go ahead.
Susan Mesco: Thank you and good afternoon, everyone. Welcome to today's conference call to discuss our second quarter 2024 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 based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties.
Susan Mesco: Thank you and good afternoon everyone. Welcome to today's conference call to discuss our second quarter 2024 financial results.
Speaker Change: Joining me are Frank Lee, Chief Executive Officer, Tony Malloy, Chief Legal Counsel, and Charlie Reinhart, Chief Financial Officer.
Speaker Change: 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 based on current expectations.
Susan Mesco: 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.
Speaker Change: Such statements represent our judgment as of today and may involve risks and uncertainties.
Speaker Change: 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. With that, I will now turn the call over to Frank Lee.
Frank D. Lee: Thank you, Susan, and good afternoon, everyone. As you know, our top priority for 2024 is to ensure that we're ready to accelerate growth next year and beyond. Toward that end, the first half of the year was marked by strong execution and meaningful progress towards our commercial, clinical, and business objectives. We maintained solid sales across all three of our products, strengthened our balance sheet, and bolstered our leadership team. We reshaped our corporate culture and enhanced our organization with new talent and capabilities.
Frank D. Lee: Thank you, Susan, and good afternoon, everyone.
Frank D. Lee: As you know, our top priority for 2024 is to ensure we're ready to accelerate growth next year and beyond.
Frank D. Lee: Toward that end, the first half of the year was marked by strong execution and meaningful progress towards our commercial, clinical, and business objectives.
Frank D. Lee: We maintain solid sales across all three of our products.
Frank D. Lee: strengthened our balance sheet and bolstered our leadership team.
Frank D. Lee: We reshaped our corporate culture and enhanced our organization with new talent and capabilities.
Frank D. Lee: The foundation for a modernized commercial medical market access organization is now in place. Looking ahead to the remainder of the year, we continue to invest in the organization and set the stage for strong, sustainable top-line growth in 2025. We believe that growth will largely be driven by Xpiril, which is the product I'll focus on today. Let me start by walking through the three key 2024 priorities.
Frank D. Lee: The Foundation for a Modernized Commercial Medical Market Access Organization is now in place.
Frank D. Lee: Looking ahead to the remainder of the year, we continue to invest in the organization and set the stage for strong sustainable top-line growth in 2025 and beyond.
Frank D. Lee: We believe that growth will largely be driven by Expirail, which is the product I'll focus on today.
Frank D. Lee: First, expanding the utilization of Expiril as a lower extremity nerve block. Second, preparing the market for separate Medicare reimbursement at average selling price, or ASP, plus 6%, with the implementation of the No Pain Act in 2025, and third, broadening patient access to Exporail through new GPO partners. I'll start with lower extremity nerve block, where we continue to see positive market receptivity across all sites of care. To remind you, the rollout of Expirail and lower extremity nerve block is supported by compelling clinical data from two Phase III studies that demonstrated four days of superiority versus bupivacaine.
Frank D. Lee: Let's start by walking through the three key 2024 priorities.
Frank D. Lee: First, expanding the utilization of Expiril as a lower extremity nerve block.
Frank D. Lee: Second, preparing the market for separate Medicare reimbursement at average selling price or ASP plus 6% with implementation of the No Pain Act in 2025.
Frank D. Lee: And third, broadening patient access to Expiril through new GPO partnerships.
Frank D. Lee: I'll start with lower extremity nerve block where we continue to see positive marker receptivity across all sites of care.
Frank D. Lee: To remind you, the rollout of x-Borrel and lower extremity nerve block is supported by compelling clinical data.
Frank D. Lee: from two phase three studies.
Frank D. Lee: These data are also a valuable tool we're leveraging to promote the opioid sparing benefits of Expirail to our customers in advance of no pain. We were pleased to see this new reimbursement policy outlined by CMS in its recently published Preliminary Rule for 2025.
Frank D. Lee: that demonstrated four days.
Frank D. Lee: of Superiority versus Bupivacaine.
Frank D. Lee: These data are also a valuable tool we're leveraging to promote the opioid sparing benefits of Expirail to our customers in advance of no pain.
Frank D. Lee: We were pleased to see this new reimbursement policy outlined by CMS in its recently published Preliminary Rule for 2025.
Frank D. Lee: We believe this important reimbursement milestone will drive expanding expiry utilization within outpatient settings, where there's ample room for growth given the market's steady migration away from inpatient care. In preparation for No Pain, we're advancing multiple initiatives to drive expiry education and awareness across key stakeholders. To highlight the value proposition, we're generating real-world events demonstrating the opioid sparing and economic benefits of expertise. We believe these data will be a powerful tool in our communications with healthcare systems, physicians, and payers. Recent progress includes the publication of three robust retrospective real-world studies in colorectal, spine, and breast reconstruction surgery.
Frank D. Lee: We believe this important reimbursement milestone will drive expanding expiry utilization within the outpatient settings where there's ample room for growth given the market's steady migration away from inpatient care.
Frank D. Lee: In preparation for No Pain, we're advancing multiple initiatives to drive experial education and awareness across key stakeholders.
Frank D. Lee: To highlight the value proposition, we're generating real-world evidence demonstrating the opioid sparing and economic benefits of Expiro.
Frank D. Lee: We believe these data will be a powerful tool in our communications with health care systems.
Frank D. Lee: physicians, and payers.
Frank D. Lee: Recent progress includes the publication of three robust retrospective real-world studies in colorectal, spine, and breast reconstruction surgeries.
Frank D. Lee: Each study compared patients who received Expiril with patients who did not. Expiril was associated with reduced opioid use, as well as lower emergency department visits, length of stay, and hospital readmission. To drive education awareness among our primary stakeholders, we recently launched our national campaign, Make the No Pain Path. The campaign is targeting hospital pharmacists, administrators, clinicians, and revenue management teams.
Frank D. Lee: Each study compared patients who received Expiril with patients who did not.
Frank D. Lee: Expirel was associated with reduced opioid use as well as lower emergency department visits, length of stay, and hospital readmission rates.
Frank D. Lee: To drive education awareness among our primary stakeholders, we recently launched our national campaign, Make the No Pain, Pact.
Frank D. Lee: The campaign is targeting hospital pharmacists, administrators, clinicians, and revenue management teams.
Frank D. Lee: It is solely focused on ensuring these critical groups are up to speed and ready when new outpatient Medicare reimbursement takes effect in January of 2025. Based on our market research, preliminary insights indicate a growing level of awareness and understanding among key stakeholders around no pain and its potential impact on patient care. As the year progresses, we'll continue to roll out new resources to help our customers seamlessly integrate this expanded reimbursement change into their. Shifting gears to market access, as you know, we're also paving the way for no payment through our participation in 340B pricing and new GPO partners.
Frank D. Lee: It is solely focused on ensuring these critical groups are up to speed and ready when new outpatient Medicare reimbursement takes effect in January of 2025.
Frank D. Lee: Based on our market research, preliminary insights indicate a growing level of awareness and understanding among key stakeholders around no pain and its potential impact on patient care.
Frank D. Lee: As the year progresses we'll continue to roll out new resources to help our customers seamlessly integrate this expanded reimbursement change into their systems.
Frank D. Lee: Shifting gears to market access, as you know, we're also paving the way for no-paying through our participation in 340B pricing and new GPO partnerships.
Frank D. Lee: Through these preferential pricing programs, healthcare systems can afford the opportunity to be at the forefront of opioid-sparing pain management. Our customers will have a favorable acquisition cost, and when no payment takes effect in 2025, they'll be reimbursed at ASP plus six.
Frank D. Lee: Through these preferential pricing programs, healthcare systems can afford the opportunity to be at the forefront of opioid sparing pain management.
Frank D. Lee: Our customers will have a favorable acquisition cost, and when no paying takes effect in 2025, they'll be reimbursed at ASP plus 6%.
Frank D. Lee: We're now six months post-launch of our premier partnership, which continues to perform as expected with expiral volumes at premier accounts up over the prior year with only a very modest impact on net sales dollars. We're also leveraging our Premier Partnership for additional opportunities. For example, last week, I had the opportunity to participate in a Hot Topic interview with a member of the Premier Leadership Team to discuss Pacira at their annual membership meeting.
Frank D. Lee: We're now six months post-launch of our Premier partnership, which continues to perform as expected with experial volumes at Premier accounts up over the prior year with only a very modest impact on net sales dollars.
Frank D. Lee: We're also leveraging our Premier Partnership for additional opportunities. For example, last week I had the opportunity to participate in a Hot Topic interview with a member of the Premier Leadership Team to discuss Pacira at their annual membership meeting.
Frank D. Lee: The discussion focused on our commitment to partnering with health systems and no pain. We also utilize opportunities to drive awareness around no pain within the PREMIER membership. Importantly, we have two additional GPO partnerships expected to go live this year, with both offering similar opportunities to expand patient access to expertise. Turning to Zoretta and Iovera, I'm pleased to report that both products are performing according to plan with solid sales in the first half of the year.
Frank D. Lee: The discussion focus are a commitment to partnering with health systems and no pain.
Frank D. Lee: We also utilize opportunities to drive awareness around no pain within the Premier membership base.
Frank D. Lee: Importantly, we have two additional GPO partnerships expected to go live this year, with both offering similar opportunities to expand patient access to experil.
Frank D. Lee: Patient dosing is also underway in our phase three registrational study for Xylreta in shoulder OA. If successful, this study could make Zoretta the first and only long-acting steroid approved for use in children. Shoulder OA represents a sizable market opportunity with approximately 1 million intra-articular injections administered each year. Our registration study for Iovera for the treatment of spasticity is also underway. Given the significant lack of innovation in the spasticity space, we believe Iovera may offer a novel approach for patients afflicted by this debilitating disease.
Frank D. Lee: According to Zoretta and Iovera, I'm pleased to report that both products are performing according to plan with solid sales in the first half of the year.
Frank D. Lee: Patient dosing is also underway in our Phase III Registrational Study for Zolreta in shoulder OA.
Frank D. Lee: If successful, this study could make Zoretta the first and only long-acting steroid approved for use in shoulders.
Frank D. Lee: Shoulder OA represents a sizable market opportunity with approximately 1 million intra-articular injections administered each year.
Frank D. Lee: Our registration study for Iovera for the treatment of spasticity is also underway.
Frank D. Lee: Given the significant lack of innovation in the spasticity space, we believe Iovera may offer a novel approach for patients afflicted by this debilitating condition.
Frank D. Lee: On the research and development front, I'd like to provide a brief update on PCRX201. This novel gene therapy product candidate codes for an interleukin-1 receptor antagonist, or IL-1RA, for the treatment of osteoarthritis, or OA, of the knee. There is a significant unmet need in the OA space.
Frank D. Lee: On the research and development front, I'd like to provide a brief update on PCRX201.
Frank D. Lee: This novel gene therapy product candidate codes for interleukin-1 receptor antagonist or IL-1RA for the treatment of osteoarthritis or OA of the knee.
Frank D. Lee: This is primarily due to the lack of drugs with durable and clinically meaningful improvements in pain and function and the Lack of Disease Modification Therapy. Current single-dose injectable therapies relieve pain and function for only three to six months and Do Not Offer Disease Modification to the 14 million patients suffering from the O.S. Earlier this year, we reported encouraging interim results from a 72-patient Phase I study of PCRX201 for moderate to severe OA.
Frank D. Lee: There is significant unmet need in the OA space. This is primarily due to lack of drugs with durable and clinically meaningful improvements in pain and function and the lack of disease modification therapies.
Frank D. Lee: Current single-dose injectable therapies relieve pain and function for only three to six months.
Frank D. Lee: and do not offer disease modification to the 14 million patients suffering from the OA.
Frank D. Lee: Earlier this year we reported encouraging interim results from a 72 patient phase 1 study of PCRx201 for moderate to severe in the EOA.
Frank D. Lee: In this large Phase I study, a single inter-articular injection of PCRX201 demonstrated a sustained and clinically meaningful effect. This was observed at all doses, across all levels of severity, for at least one year post-injection. Importantly, PSARX 201 was well tolerated with a favorable safety profile. We will continue
Frank D. Lee: In this large Phase I study, a single inter-articular injection of PCRX201 demonstrated a sustained and clinically meaningful effect.
Frank D. Lee: This was observed at all doses.
Frank D. Lee: across all levels of severity for at least one year post-injection.
Frank D. Lee: Importantly, PCRx201 was well tolerated with a favorable safety profile.
Frank D. Lee: You can follow these patients and now have data for two years that were submitted for presentation at a medical meeting in the fall. Based on our market research and feedback from our scientific advisory board, improving pain and function while potentially modifying the disease for a year or more with a single dose will be considered transformative by both physicians and patients. Furthermore, more than a year of durability would be clinically and economically meaningful for patients and healthcare.
Frank D. Lee: We continue to follow these patients and now have data for two years that were submitted for presentation at a medical meeting in the fall.
Frank D. Lee: Based on our market research and feedback from our scientific advisory board, improving pain and function while potentially modifying the disease for a year or more with a single dose will be considered transformative by both physicians and patients.
Frank D. Lee: Furthermore, more than a year of durability would be clinically and economically meaningful for patients and healthcare systems.
Frank D. Lee: Unlike traditional gene therapies that focus on rare diseases, PCRX201 leverages the properties of a novel high-capacity adenovirus, or HCaD, platform to address unmet needs in prevalent diseases like Neo-AIDS. Importantly, our strategy will unlock the potential of gene therapy to provide meaningful and durable and economically viable treatment through local delivery of the affected joint, very low dosing enabled by the high-capacity adeno As you may recall, PCRx201 received the FDA's first-ever Regenerative Medicine Advanced Therapy, or RMAT, designation for a gene therapy product in osteoarthritis.
Frank D. Lee: Unlike traditional gene therapies that focus on rare diseases, PCRx201 leverages the properties of a novel high-capacity adenovirus, or HCaD, platform.
Frank D. Lee: to address unmet needs in prevalent diseases like Neo-Aid.
Frank D. Lee: Importantly, our strategy will unlock the potential of gene therapy to provide meaningful and durable and economically viable treatment.
Frank D. Lee: through local delivery of the affected joint.
Frank D. Lee: Very low dosing enabled by high-capacity adenovirus and large-scale manufacturing to support favorable cost of goods.
Frank D. Lee: As you may recall, PCRx201 received the FDA's first-ever Regenerative Medicine Advanced Therapy, or RMAP, designation.
Frank D. Lee: We're scheduled to have our first RMAP meeting with the FDA next month to discuss our plans for clinical development. We look forward to sharing more details on the advancement of PCRx201 on future calls. With that, I'll turn the call over to Tony for a brief discussion of the external patent litigation.
Frank D. Lee: for a gene therapy product in osteoarthritis.
Frank D. Lee: We're scheduled to have our first RMAP meeting with the FDA next month to discuss our plans for clinical development.
Frank D. Lee: We look forward to sharing more details on the advancement of PCRx201 on future calls.
Frank D. Lee: With that, I'll turn the call over to Tony for a brief discussion of the experial patent litigation.
Anthony Malloy: Thanks, Frank. Good afternoon, everyone.
Anthony Malloy: Thanks Frank and good afternoon everyone. I'll briefly touch on the FDA's recent approval of a generic version of liposomal bupivacaine and next steps in our paragraph 4 litigation.
Anthony Malloy: I'll briefly touch on the FDA's recent approval of a generic version of liposomal bupivacaine and next steps in our Paragraph 4 litigation. To remind you, the FDA's decision is on a separate track and has no impact on our multiple patent infringement lawsuits against Adenis, which are all still pending. The first case involving our 495 patent concluded in May. We believe we made a strong case that eVenus is infringing on our patent. That said, to provide clarity, I want to walk through the three scenarios that could play out with respect to this first lawsuit. Outcome 1.
Anthony Malloy: To remind you, the FDA's decision is a separate track and has no impact on our multiple patent infringement lawsuits against Adenis, which are all still pending.
Anthony Malloy: The first case involving our 495 patent concluded in May.
Anthony Malloy: Pacira wins the lawsuit against eVenus Pharmaceuticals. Under this scenario, we expect the court would enjoin Evinas from launching a generic until the expiration of the 495 patent in January 2041. So even with an FDA approval, there is no ability for E-Venus to commercialize their drug unless they successfully appeal and overturn the lower court's decision. Outcome 2.
Speaker Change: We believe we made a strong case that eVenus is infringing on our patent. That said, to provide clarity, I want to walk through the three scenarios that could play out with respect to this first lawsuit.
Speaker Change: Outcome 1. Pacira wins the lawsuit against eVenus Pharmaceuticals.
Speaker Change: Under this scenario, we expect the court would enjoin Uvinas from launching a generic until the expiration of the 495 patent in January 2041.
Speaker Change: So even with an FDA approval, there is no ability for eVenus to commercialize their drug unless they successfully appeal and overturn the lower court's decision.
Anthony Malloy: The court upholds the validity of the 495 patent but concludes that eVenus is not infringing on that particular patent. We also view this as a positive for Pacira, given that this is only the first patent being litigated. Three additional infringement lawsuits are underway for our 348, 574, 575, and 706 patents, which are broader than the 495 patent. We also have other patents that are forthcoming, many of which will be listed in the Orange Book with expiration dates through January 2041.
Speaker Change: Outcome 2. The court upholds the validity of the 495 patent, but concludes that eVenus is not infringing on that particular patent.
Speaker Change: We also view this as a positive for Pacira given that this is only the first patent being litigated. Three additional infringement lawsuits are underway for our 348, 574, 575, and 706 patents. And these patents are broader than the 495 patent.
Speaker Change: We also have other patents that are forthcoming, many of which will be listed in the Orange Book with expiration dates through January 2041.
Anthony Malloy: In order to be commercially successful, you would have to overcome all of our problems. Ultimately, outcome three, the court concludes that the 495 patent is not valid and that E-Venus does not infringe. This is the least ideal scenario.
Speaker Change: In order to be commercially successful, EVBIS would have to overcome all of our patents.
Speaker Change: Outcome 3. The court concludes that the 495 patent is not valid and that e-Venus does not infringe. This is the least ideal scenario. If this happens, we have a comprehensive strategy in place depending on the findings of the court.
Anthony Malloy: If this happens, we have a comprehensive strategy in place depending on the findings of the court. We firmly believe the XBRL franchise is well-protected from multiple directions. We are committed to taking the necessary steps to protect the interests of our business, shareholders, patients, and other stakeholders. We expect the trial opinion on the first case will be very. As I'm sure you can appreciate, it would not be in our best interest to publicly share details around our legal strategy other than to say we believe that we have a strong legal position and that eVenus is infringing upon our path.
Speaker Change: We firmly believe the XBRL franchise is well protected from multiple directions. We are committed to taking the necessary steps to protect the interests of our business, shareholders, patients, and other stakeholders.
Speaker Change: We expect a trial opinion on the first case very soon.
Speaker Change: As I'm sure you can appreciate, it would not be in our best interest to publicly share details around our legal strategy, other than to say we believe that we have a strong legal position and that eVenus is infringing upon our patents.
Anthony Malloy: We are advancing a robust, multifaceted legal strategy, and we stand ready to engage with the court and vigorously defend our expro franchise in the event of any decision. That being said, we will keep our investors informed as this process unfolds. I want to emphasize that we have a responsibility to patients, their clinicians, and other stakeholders to vigorously defend our intellectual property and improve the safety and integrity of experts. I'll now turn the call over to Charlie for his financial report. Charlie.
Speaker Change: We are advancing a robust, multifaceted legal strategy, and we stand ready to engage with the court and vigorously defend our expro franchise in the event of any decision.
Speaker Change: That being said, we will keep our investors informed as this process unfolds.
Speaker Change: I want to emphasize that we have a responsibility to patients, their clinicians, and other stakeholders to vigorously defend our intellectual property and improve the safety and integrity of ExporO.
Speaker Change: I'll now turn the call over to Charlie for his financial report.
Charles A. Reinhart: Thank you, Tony, and good afternoon, everyone. To remind you, I will be discussing non-GAAP financial measures. A description of these metrics, along with our reconciliation to GAP, can be found in the news release we issued this afternoon. I'll start with an update on sales and margins. Second quarter XBOREL sales increased to $136.9 million versus $135.1 million in 2023. Volume growth and the January 24 price increase were largely offset by a shift in violonics and discounting associated with the launch of our premier partnership.
Speaker Change: Charlie.
Charles A. Reinhart: Thank you, Tony, and good afternoon, everyone.
Charles A. Reinhart: To remind you, I will be discussing non-GAAP financial measures this afternoon.
Charles A. Reinhart: A description of these metrics, along with our reconciliation to GAP, can be found in the news release we issued this afternoon.
Charles A. Reinhart: Second quarter's Loretta sales increased to $30.7 million versus $29.3 million in the second quarter, and Iovera sales improved to $5.7 million compared to $4.4 million in the second quarter. Turning to gross margin, on a consolidated basis, our second quarter non-GAAP gross margin percent was 76%. At the high end of our full-year guided range of 74 to 76%, driven by strong margins for all three products. For non-GAAP R&D expense, the second quarter increased to $18.4 million from $17.1 million reported last year. This increase primarily relates to the startup activities for our registration studies of Zoretta for Shoulder OA and Iovera for Spasticity.
Speaker Change: I'll start with an update on sales and margin trends.
Speaker Change: Second quarter XBOREL sales increased to $136.9 million versus $135.1 million in 2023.
Speaker Change: The volume growth and the January 24 price increase were largely offset by a shift in vial mix and discounting associated with the launch of our premier partnership.
Speaker Change: Second quarter's Zoleta sales increased to $30.7 million versus $29.3 million in 2023. And Iovera sales improved to $5.7 million compared to $4.4 million in the second quarter.
Speaker Change: 2023.
Speaker Change: Turning to gross margin, on a consolidated basis, our second quarter non-gap gross margin percent was 76 percent. At the high end of our full year guided range of 74 to 76 percent.
Speaker Change: driven by strong margins for all three products.
Speaker Change: For non-GAAP R&D expense, the second quarter increased to $18.4 million dollars from $17.1 million dollars reported last year.
Speaker Change: This increase primarily relates to the startup activities for our registration studies of Zoretta for Shoulder OA and Iovera for spasticity.
Charles A. Reinhart: Of note, second quarter R&D expense included $7.3 million for product development and manufacturing capacity expansion, which is down from $9.3 million in the prior year. Our pre-commercial scale-up activities are now complete, and the 200-liter X-Borrel Manufacturing Suite in San Diego began commercial production earlier this month. Non-GAAP SG&A expense came in at $59 million for the second quarter, which is up from $57.1 million last year.
Speaker Change: Of note, second quarter R&D expense included $7.3 million of product development and manufacturing capacity expansion costs.
Speaker Change: which are down from 9.3 million dollars in the prior year.
Speaker Change: Our pre-commercial scale-up activities are now complete, and the 200-liter X-Borrel Manufacturing Suite in San Diego began commercial production earlier this month.
Speaker Change: non-GAAP SG&A expense came in at $59 million for the state.
Charles A. Reinhart: This increase is largely due to investments we are making in our commercial, medical, and market access organizations, including programs that will drive education and awareness ahead of separate Medicare reimbursements, and third-party strategic consulting. All of this resulted in another quarter of significant adjusted EBITDA of $62.1 million. With respect to the balance sheet, in the second quarter, we completed a very successful $287.5 million convertible debt financing, which allowed us to retire about half of it over August 2025, with more than $400 million of cash and investments and a business that is producing significant cash.
Speaker Change: This increase is largely due to investments we are making in our commercial, medical, and market access organizations, including programs that will drive education and awareness ahead of separate Medicare reimbursement.
Speaker Change: and third-party strategic consulting services.
Speaker Change: All of this resulted in another quarter of significant adjusted EBITDA of $62.1 million.
Speaker Change: With respect to the balance sheet, in the second quarter we completed a very successful $287.5 million dollar convertible debt financing, which allowed us to retire about half of our August 2025 notes.
Speaker Change: With more than $400 million of cash and investments and a business that is producing significant cash flow, we have the flexibility to continue investing in growth and long-term value creation while opportunistically returning capital to shareholders by repurchasing our stock.
Charles A. Reinhart: We have the flexibility to continue investing in growth and long-term value creation while opportunistically returning capital to shareholders by repurchasing our stock. Turning to guidance, today, we are reiterating our full year 2024 guidance as follows. Total revenue of $680 to $705 million, non-GAAP gross margin of 74 to 76 percent, non-GAAP R&D expense of $70 to $80 million, non-GAAP SG&A expense of $245 to $265 million, and stock-based compensation of $50 to $55 million.
Speaker Change: Turning to guidance, today we are reiterating our full year 2024 guidance as follows.
Speaker Change: Total revenue of $680 to $705 million.
Speaker Change: non-GAAP gross margin of 74 to 76 percent.
Speaker Change: non-GAAP R&D expense of $70 to $80 million dollars, non-GAAP SG&A expense of $245 to $265 million dollars, and stock-based compensation of $50 to $55 million dollars.
Charles A. Reinhart: With that, I'll turn the call back to you, Charlie. In closing, I'm proud of the progress we've made in the first half of 2024, which will help cement our leadership position in Advancing Innovation in Non-Opioid Pain Management. We are confident that the investments we're making will support and expand this leadership position. As discussed earlier, throughout the balance of the year, we'll continue our efforts to ensure we're ready for long-term growth. The foundation work that we have undertaken leaves us well-positioned for sustainable success. With that, Operator, we're ready to open the call for questions. Thank you. As a reminder, to ask a question
Speaker Change: With that, I'll turn the call back to Frank.
Frank D. Lee: Thank you, Charlie.
Frank D. Lee: In closing, I'm proud of the progress we've made in the first half of 2024, which will help cement our leadership position in advancing innovation in non-opioid pain management.
Frank D. Lee: We're confident that the investments we're making will support and expand this leadership position. As discussed earlier throughout the balance of the year, we'll continue our efforts to ensure we're ready for long-term growth.
Frank D. Lee: The foundation work that we have undertaken leaves us well-positioned for sustainable success.
Operator: As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Gregory Renza of RBC Capital Markets. Your line is open.
Speaker Change: With that operator, we're ready to open the call for questions.
Speaker Change: Thank you.
Speaker Change: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: And our first question comes from Gregory Renza of RBC Capital Markets. Your line is open.
Gregory James Renza: Great. Hey, Frank and team. Thanks for the time and thanks for taking my question. Frank, just to kick off on the generic liposynthetic approval of early July, July 2nd, I'm just wondering if you could just comment on your evolving confidence in your ability to sort of defend Experile at this key point in time. To what degree was that development surprising to you? And then I certainly have a follow-up.
Gregory James Renza: Great. Hey, good afternoon, Frank and team. Thanks for the time and thanks for taking my question.
Gregory James Renza: Frank, just to kick off on the generic liposympathetician approval of early July , July 2nd, just wonder if you could just comment on your evolving confidence in the
Speaker Change: your ability to sort of defend Xperia at this key point in time. To what degree was that development surprising to you? And then I have certainly a follow-up. Thanks.
Frank D. Lee: Well, thanks for the question, Greg. With regard to the latter, I think you're referencing the ANDA approval.
Speaker Change: Well, thanks for the question, Greg. With regard to the, I think you're referencing the ANDA approval, and as Tony mentioned, that has nothing to do with our case.
Frank D. Lee: And as Tony mentioned, that has nothing to do with our case. So that's a separate matter. And that's our focus. Our confidence hasn't changed with regard to our case. And, as Tony outlined, we have multiple levels of legal action and defense that we have at our disposal. So that's unchanged.
Speaker Change: So, that's a separate matter, and that's our focus. Our confidence hasn't changed with regard to our case.
Speaker Change: And so, as Tony outlined, we have multiple levels of legal action and defense that we have at our disposal, so that's unchanged.
Frank D. Lee: Got it. Thanks. And you certainly mentioned just the ability to prepare for no pain with the resources and medical affairs. If you can just give us an update on how that infrastructure is looking, to what degree will you be quantifying that, and just applying some extra granularity as we think about receiving that tailwind through 2025 and beyond. Thank you very much.
Speaker Change: And you certainly mentioned just the ability to prepare for no pain.
Speaker Change: with the resources medical affairs. If you can just give us an update on how that infrastructure is looking, to what degree will you be quantifying that and just applying some extra granularity as we think about receiving that tailwind through 2025 and beyond. Thank you very much.
Frank D. Lee: Yeah, that's a good question, Greg. Let me go back and say that we were very pleased to see the proposed rule come through this past month, and it's exactly as we expected. There are some comments there that we'll comment on, but we expect that everything's on track now for January 1, 2025, and our internal preparations are right on track. As I mentioned, our foundation is set in terms of all the things that we've done to expand our capabilities on the commercialization side, on the medical affairs side, as well as on the market access side of things.
Speaker Change: Yeah, that's a good question, Greg.
Speaker Change: Let me go back and say that we're very pleased to see the proposed rule come through this past month.
Speaker Change: It's exactly as we expected. There are some comments there that we'll comment on, but we expect that everything's on track now for January 1, 2025, and our internal preparations are right on track. As I mentioned, our foundation is set in terms of all the things that we've done to expand our capabilities.
Speaker Change: On the commercialization side, on the medical affairs side, as well as our market access side of things. And so, as I mentioned on the call, I've had a chance to engage our various customers, including our
Frank D. Lee: And so, as I mentioned on the call, I've had a chance to engage our various customers, including our premier customers at their annual meeting, and we can see that there is growing awareness of not only no pain but of the ASP plus six separate reimbursements. So we've got some additional work to do, but we're off to a good start.
Speaker Change: premier customers at their annual meeting and we can see that there's growing awareness of not only no pain but of the ASP plus six separate reimbursement. So we've got some additional work to do but we're off to a good start.
Gregory James Renza: Got it. Thanks, Frank. Thanks for taking my question.
Speaker Change: Got it. Thanks, Frank. Thanks for taking my questions.
David A. Amsellem: Our next question comes from David Amsellem of Piper Sandler. Your line is open.
Greg: Thanks, Greg.
Speaker Change: Our next question comes from David Amsellem of Piper Sandler. Your line is open.
David A. Amsellem: Hey, thanks. So just a couple of questions. So first, Frank, as you were diligenceing the company ahead of accepting the CEO position, what was your view regarding the approvability of a generic, and did that approval surprise you? And that's in the context of your predecessor talking quite openly that he didn't believe that this filing was approvable. So I wanted to get your thoughts on the level of surprise that you had that, ultimately, this did happen.
David A. Amsellem: Hey, thanks. So, just a couple of questions. So, first,
David A. Amsellem: Frank, as you were diligencing...
Frank D. Lee: the company ahead of accepting the CEO position.
David A. Amsellem: What was your view regarding the approvability of a generic and did that approval...
David A. Amsellem: surprise you, and that's in the context...
Speaker Change: your predecessor talking quite openly that he didn't believe that this
David A. Amsellem: Secondly, I guess a hypothetical question, to the extent that eVenus does come into the market, can you talk about how you think market dynamics will play out in terms of your share? And even what your market intelligence might be telling you about their own capacity and how you're preparing for that in the event that that does happen? Not saying that it's going to happen, but in the event that that does happen. Maybe I'll stop there and get your thoughts. Thanks. Well, thanks for the questions, David. So, let me just come back.
Speaker Change: filing. Thank you. Thank you.
Speaker Change: So, I wanted to get your thoughts on the level of surprise that you had that ultimately that this...
Speaker Change: This did happen. Secondly, I guess a hypothetical to the extent that...
Speaker Change: Evening News does come into the market. Can you talk to...
Speaker Change: how you think market dynamics will play out in terms of your share, and even what your market intel might be telling you on their own capacity and how your...
Speaker Change: preparing for that in the event that that does happen. Not saying that it's going to happen, but in the event that that does happen. Maybe I'll stop there and get your thoughts. Thanks.
Frank D. Lee: Well, thanks for the questions, David. So, let me just come back.
Frank D. Lee: You know, I remember when I first started, there were a lot of questions about Franklin: what made you think about joining Pacira? And I'm going to come back to number one: Pacira is the leader in the non-opioid pain management space. It's a leader because we have a great portfolio of products, not only in line but also, as I mentioned, some interesting products in the pipeline that we'll continue to add to over time.
Franklin: Well, thanks for the questions, David. So, let me just come back. You know, I remember when I first started, there were a lot of questions about Franklin. What made you think about joining Pacira? And I'm going to come back to, number one, Pacira is the leader in the non-opioid pain management space.
Franklin: It's a leader because we have a great portfolio of products, not only in line, but also, as I mentioned, some interesting products in the pipeline that we'll continue to add to over time. And broadly speaking, when you think about leadership, you see companies that not only take an interest in products.
Frank D. Lee: And broadly speaking, when you think about leadership, you see companies that not only take an interest in products but are also interested in the broad pain therapeutic area, which we've done by our leadership here on all the things that we've talked about before in terms of supporting no pain and the passage of that act over the past seven years. So that's what impressed me. With regard to any sorts of approvals, you know, I come back to it's hard to say during due diligence. What I will say is that when you take when you give people enough resources and time, it's not surprising what they can do.
Franklin: but also interested in the pain therapeutic area which we've done by our leadership here of all the things that we've talked about before in terms of supporting
Frank D. Lee: So I'll leave it at that. But I'm going to come back to that doesn't change anything with regard to the legal actions that are in play now and will be in play going forward. And as Tony mentioned, this is the first piece, and there will likely be others down the road. So that's that.
Franklin: No pain in the passage of that act.
Speaker Change: over the past seven years. So that's what impressed me.
Speaker Change: With regard to any sorts of approvals, you know, I come back to, it's hard to say during diligence. What I will say is that when you take, when you give people enough resources and time, it's not surprising what they can do. So, I'll leave it at that, but I'm going to come back to...
Speaker Change: That doesn't change anything with regard to the legal actions that are in play now and will be in play going forward. And as Tony mentioned, this is the first piece.
Frank D. Lee: With regard to speculating about what could happen if, down the road, one generic, remember now there's one generic, would launch at risk. It's hard to say. I'm sure you've looked at various models, but I don't really wanna speculate on that.
Anthony Malloy: There will be others down the road.
Speaker Change: All right, so that's that. With regard to speculating about what could happen if...
Speaker Change: down the road one generic, remember now there's one generic, would launch at risk.
Frank D. Lee: I come back to, I really believe in our position and the strength of our IP, and we're gonna defend our IP very rigorously going forward.
Speaker Change: It's hard to say. I'm sure you've looked at various models.
Speaker Change: But I don't really want to speculate on that. I come back to, I really believe in our position and the strength of our IP, and we're going to defend our IP very rigorously going forward.
Speaker Change: Thank you.
Speaker Change: [inaudible]
Glen Joseph Santangelo: Our next question comes from Glen Santangelo of Jeffries. Your line is open.
Speaker Change: Thank you.
Glen Joseph Santangelo: Oh, yeah. Thanks for taking my question. Hey, Frank, I'm not sure if this is for you or Tony, but I appreciate the way you guys laid out the three different scenarios and the potential outcomes here. And while the two bookends, the positive scenario of full invalidity and – oh, I'm sorry, the positive scenario of valid and infringed and the opposite, invalid and not infringed, those outcomes seem somewhat obvious. I'm kind of curious about the middle scenario where we have a scenario where the patent is valid but not infringed.
Speaker Change: Our next question comes from Glen Santangelo of Jeffries. Your line is open.
Speaker Change: Oh yeah, thanks for taking my question. Hey Frank, I'm not sure if this is for you or Tony, but appreciating the way you guys laid out the three different scenarios.
Speaker Change: and the potential outcomes here. And while the two bookends, the positive scenario,
Speaker Change: of the full invalidity and, oh, I'm sorry, the positive scenario of valid and infringed and the opposite, invalid and not infringed. Those outcomes seem somewhat obvious. I'm kind of curious about the middle scenario where we have a scenario.
Glen Joseph Santangelo: And Tony, you seem to paint that scenario as a positive outcome where one might think that it would put the company in a somewhat vulnerable position in the near term. And so I'm kind of wanting to explore that a little bit more and how you think things sort of play out in that scenario and why you think it's positive. Thanks.
Speaker Change: where the patent is valid but not infringed. And Tony, you seem to paint that scenario as a positive outcome where, you know, one might think that that would put the company in a somewhat vulnerable position in the near term. And so I'm kinda wanting to explore that a little bit more and how you think things sort of play out in that scenario and why you think it's positive. Thanks.
Anthony Malloy: Thank you, Glen, and nice to meet you. Keep in mind that the 495 case is just the first case. And there were four other patents that were behind the three subsequent cases. Each one of those is different. And just during the course of the litigation, we have reason to believe that there's infringement on the other patents. So even if the 495 case isn't infringed, we believe that the other patents are in
Anthony Malloy: Thank you, Glen, and nice to meet you.
Anthony Malloy: Keep in mind that the 495 case is just the first case.
Anthony Malloy: And there are four other patents that are behind the three subsequent cases. Each one of those is different, and just during the course of the litigation, we have reason to believe that there's infringement on the other patents.
Glen Joseph Santangelo: And so, but it's my understanding that there are no court cases, no court dates currently on the docket for those other patents, and so I'm not sure how long it will take until those cases could ultimately be heard, and I guess, in the interim, given the vulnerability of a potential Venus launch, I'm not sure what the pathway looks like to get a preliminary injunction, and so I'm kind of curious if you could Thanks. And I'll stop there.
Anthony Malloy: So, even if the 495 isn't infringed, we believe that the other patents are infringed.
Speaker Change: And so, but it's my understanding that there's no court case, no court dates currently on the docket for those other patents, and so I'm not sure how long it will take till those cases could ultimately be heard, and I guess in the interim, you know, given the vulnerability of a potentially Venus launch, I'm not sure what the pathway looks like to get a preliminary injunction, and so I'm kind of curious if you can just explore that pathway a little bit, and how you might react in that scenario.
Anthony Malloy: Sure. Well, I mean, the standard's well-defined. You have to show irreparable and imminent harm and a likelihood of success on the merits. And again, we believe in each of the patents that are being litigated, the 348, 574, 575, and 706. So we have three cases, and we would look for injunctive relief, if appropriate, depending on the opinion. Again, this could play out, you know, like most IP cases. It could take years for these cases to be resolved in the court system. We've always said this is going to be a marathon and not a sprint.
Speaker Change: Thanks, and I'll stop there.
Speaker Change: Sure. Well, I mean, the standard's well-defined. You have to show...
Speaker Change: Irreparable and imminent harm and a likelihood of success on the merits and again we believe in we believe in each of the patents that are being litigated the 348, 574, 575, and 706.
Speaker Change: So we have three cases and we'd look for injunctive relief, if appropriate, depending on the opinion.
Speaker Change: Again, this could play out, you know, like most IP cases, it could take years for these cases to be resolved in the court system. We've always said this is going to be a marathon and not a sprint.
Speaker Change: But, again, we do believe in, even though we haven't gotten a trial date yet on the other cases, we do believe in them in the event that it's a mixed outcome, that outcome too. We do believe in the strength of the patents that are behind the 495.
Glen Joseph Santangelo: And do you believe those patents are enough to get a PI, if that's the case?
Anthony Malloy: It's. Again, it's hard to say without seeing the opinion. But, again, we believe in the strength of the patents, and we believe that eVenus is infringing these four patents. So even if there's a finding that 495 is not being infringed, we... These are the paths. Okay, great. Thank you very much.
Speaker Change: And you believe those patents are enough to get a PI, if that's the case?
Speaker Change: It's...
Speaker Change: Again, it's hard to say without without seeing the opinion.
Speaker Change: But, again, we believe in the strength of the patents, and we believe that eVenus is infringing these four patents. So even if there's a finding that the 495 is not being infringed, we believe that eVenus
Glen Joseph Santangelo: Okay, great. Thank you very much for the details.
Speaker Change: These are the parents.
Speaker Change: Okay, great. Thank you very much for the details.
Speaker Change: Thank you.
Gary Jay Nachman: Our next question comes from Gary Nachman of Freeman James. Your line is open. Hi, good afternoon.
Speaker Change: Our next question comes from Gary Nachman of Freeman James. Your line is open.
Gary Jay Nachman: Hi, good afternoon. So just on those three additional patent cases, what is the estimated time for how long it would take for those to progress to trial? Do you think it would be the same judge as the 495 case? And describe a bit how much broader or stronger those patents might be than 495. And then how many more additional patents down the road do you expect to file? And what would those be on? If you could give us some more color on that, and then we can have a follow-up.
Gary Jay Nachman: Hi, good afternoon. So, yeah, just on those three additional patent cases, you know, what is the estimated time for how long it would take for those to progress to trial? Do you think it would be the same judge as the 495 case? And describe a bit
Speaker Change: How much broader or stronger those patents might be than 495? And then, you know, how many more additional patents down the road do you expect to file? And what would those be on, if you could give us some more color on that and then have a follow-up?
Anthony Malloy: Okay, I'll take each of these questions in order. At the most recent status conference, the magistrate didn't give a trial schedule for these other cases, and that was because we're expecting the first case to come out sometime this week. All of these cases are going to be in front of the same judge, Judge Arleo, in the District of New Jersey.
Speaker Change: and others.
Speaker Change: Okay, but I'll take each of these questions.
Speaker Change: in order. So at the most recent status conference, the magistrate didn't give a trial schedule for these other cases. And that was because we're expecting the first case to come out sometime this week.
Speaker Change: All of these cases are going to be in front of the same judge, Judge Arleo, at the District of New Jersey.
Anthony Malloy: Each of these patents is different. Obviously, you can't get a patent for the same claims. You can't get two patents for the same claims. So when I say broader and stronger, they're different. And they claim different properties of X-Borrel as made from the 200-liter process. So, just like that, they're different.
Speaker Change: Each of these patents is different. Obviously, you can't get a patent for the same claims. You can't get two patents for the same claims.
Speaker Change: So, when I say broader there and stronger, they're different, and they claim different properties of Exporel as made from the 200-liter process.
Anthony Malloy: And we, just from what we've learned of the e-Venus product, we're confident that they're infringing each of these other patents. How many additional patents? We're prosecuting quite a few right now, and it's just hard to predict because a lot happens from application to patent granting, and there are times that there's consolidation of applications and such, so it's hard to say how many additional patents we have, but we do anticipate several additional patents to be coming from this family. Gary, I just want to say
Speaker Change: So, they're different and we, just from what we've learned of the eVenus product, we're confident that they're infringing each of these other patents.
Speaker Change: How many additional patents?
Speaker Change: We're prosecuting quite a few right now.
Speaker Change: And it's just hard to predict because a lot happens from application to patent granting.
Speaker Change: And there are times that there's consolidation of applications and such, so it's hard to say how many additional patents we have, but we do anticipate several additional patents to be coming from this family, including later this year.
Frank D. Lee: Gary, I just want to come back to, as Tony mentioned earlier, we really believe this is going to be a marathon. It could take years. This is the first case. There are many other patents, as Tony mentioned, and many that are in the process. So certainly, a lot of things can happen, but we expect this to be a marathon. It could take years. And we believe in the strength and validity of these patents.
Speaker Change: Gary, I just want to come back to, as Tony mentioned earlier, we really believe this is going to be a marathon. This could take years. This is the first case. There are many other patents, as Tony mentioned, and many that are in process.
Speaker Change: So, certainly a lot of things can happen, but we expect this to be a marathon, could take years, and we believe in the strength and validity of these patents.
Gary Jay Nachman: Okay, that's helpful. And then, Frank, just how much more do you have to do to get the full commercial organization in place and ready with no pain? And just talk about what you think that ramp might look like starting next year. Obviously, you're not giving guidance right now, but just what our expectations should be for the implementation of no pain. And then, Charlie, how do you see gross margins trending for the rest of the year? Because you were at the higher end of the guidance range in the second quarter. Thanks.
Speaker Change: Okay, that's helpful. And then Frank, just how much more do you have to do to get the full commercial organization in place and ready for no pain? And just talk about what you think that ramp might look like starting next year. Obviously, you're not giving guidance right now, but just...
Speaker Change: what our expectations should be on the implementation of NoPain. And then, Charlie, how do you see gross margins trending for the rest of the year? Because you were at the higher end of the guidance range in the second quarter. Thanks.
Frank D. Lee: Thanks for that, Gary. First of all, let me say I'm really pleased with the way that the team has delivered on guidance to date. And so if we take a look at the balance of the year to your question, Gary, about when we might perhaps provide some indication of what to expect in 2025 as it relates to the no pain ramp, I would say that we're looking at some time towards the end of the year or early next year.
Speaker Change: Thanks for that Gary. First of all let me say I'm really pleased with the way that the team's delivered on guidance to date.
Speaker Change: And so, if we take a look at, now, the balance of the year, to your question, Gary, about when will we perhaps provide some indication of what to expect in 2025 as it relates to the no pain ramp.
Frank D. Lee: By that time, our teams who have now been deployed will have, I think, a very clear idea of the key segments of customers and to what extent certain customers will adopt them earlier as opposed to a little bit later in the year. As I mentioned, we see growing awareness and education about not only no pain but also about the fact that ASP plus six separate reimbursements will be in place for Medicare patients, and that, along with our GPO contract and the two that are pending, we think is going to be a very strong value proposition that marries with the clinical proposition.
Speaker Change: You know, I would say that we're looking at some time towards the end of the year, early next year. By that time...
Speaker Change: Our teams who have now been deployed will have, I think, a very clear idea.
Speaker Change: of the key segments of customers.
Speaker Change: and to what extent certain customers will adopt earlier as opposed to a little bit later in the year.
Speaker Change: As I mentioned, we see growing awareness and education about not only no pain, but also about the fact that ASP plus 6.
Speaker Change: reimbursement will be in place for Medicare patients and that along with our
Speaker Change: you know, GPO contract and the two that are pending.
Frank D. Lee: So, in short, what I'd say is that the foundation is set, in my mind, as it relates to commercial medical market access. Now we're going to engage our customers and really start to execute in a way that gives us clear insight about what to expect as we go into next year. I think, Gary, as far as margins go, you know, looking forward to the second half of this year, I would anticipate that actual non-gap margins look closer to the second quarter than they did in the first quarter. The first quarter had challenges in it, and we didn't see those challenges. Okay, all right.
Speaker Change: We think it's going to be a very strong value proposition that marries with the clinical proposition. So, in short, what I'd say is that the foundation is set, in my mind, as it relates to commercial, medical, and market access.
Speaker Change: Now we're going to engage our customers and really start to execute in a way that gives us clear insight about what to expect as we go into next year.
Speaker Change: I think, Gary, as far as margins go, you know, looking forward for the second half of this year, I would anticipate that actual non-gap margins look closer to second quarter than they do the first quarter. First quarter had challenges in it, and we didn't see those challenges this quarter.
Gary Jay Nachman: Okay. All right. Thank you.
Gary Jay Nachman: Okay. All right. Thank you.
Hardik K. Parikh: Our next question comes from Hardik Parikh of J.P. Morgan. Your line is open. Hardik Parikh of J.P. Morgan
Speaker Change: Our next question comes from Hardik Parikh of J.P. Morgan. Your line is open.
Hardik K. Parikh: Hey, everybody. Thank you very much for taking my question. Just wanted to ask, I appreciate you guys can't share your legal strategy, but I was just wondering. This question is just more around kind of what options you actually do have. So specifically in regard to the injunctive release, just wanted to know, let's say there's a, you guys filed an appeal on the 495 patent. You can ask for an injunctive release. Could you do that for each kind of subsequent case? Could you, in theory, get like five subsequent injunctive releases? Or is there some sort of a limit after one or two?
Hardik K. Parikh: Hey everybody, thank you very much for taking my question. Just wanted to ask, I appreciate you guys can't share your legal strategy, I was just wondering, this question is just more around kind of what options you actually do have, so specifically in regard to the injunctive release.
Hardik K. Parikh: Just wanted to know, let's say there's a, you guys file an appeal on the 495 patent you can ask for an injunctive release. Could you do that for each kind of subsequent?
Hardik K. Parikh: I feel like, could you, in theory, get, like, five subsequent injunctive release? Or is there some sort of a cap after one or two or whatever?
Anthony Malloy: You can file for injunctive relief in all the cases. Um, you know, in practice, though, I mean, this is all before the same judge, you really need one injunction. But you can file as many of these as you want.
Speaker Change: You can file for injunctive relief in all the cases. You know, in practice though, I mean, this is all before the same judge. You really, you need one injunction, but you can file as many of these as you want.
Hardik K. Parikh: Okay, thank you. And then just on the GPO contracts, you said you had two more going live this year. Any comments on what kind of impact that could have on expiration kind of net pricing in 3Q and just broadly for the rest of the year?
Speaker Change: Okay, thank you. And then, just on the GPO contracts, as you said, you had two more going live this year. Any comments on what kind of impact that could have on expiral kind of net pricing in 3Q and just broadly for the rest of the year?
Hardik K. Parikh: Thanks for the question, Hardik. With regard to GPO, we'll reiterate that we expect two more to be signed by the end of the year, and Charlie can comment on this, but I think we reiterate guidance, as we talked about before, and we expect that this will be positive for us and that it will be positive as we go into 2025 and beyond.
Speaker Change: Thanks for the question Hardik. With regard to GPO we'll reiterate that we expect two more to be signed by the end of the year and Charlie can comment on this but I think we reiterate guidance as we talked about before and we expect that this will be a positive for us and that positive as we go into 25 and beyond.
Charles A. Reinhart: Our original guidance included the GPO contracts being signed, you know, roughly one a quarter. The second two are a little delayed, so that gives us a little positive impact, to the extent that revenues haven't suffered from not signing them. So, you know, all in all, right now, XBRL's growth to net is in the 83% range, but that's projected to come down a couple of points by the time the third is signed on a going forward basis. All of that's built into our model.
Charles A. Reinhart: to the extent revenues haven't suffered from not signing them. So all in all, right now, XBRL's growth to net is in the 83% range. That's projected to come down a couple of points by the time the third is signed on a going forward basis.
Charles A. Reinhart: All of that's built into our models.
Charles A. Reinhart: Great, thank you.
Speaker Change: Thank you.
Leszek Sulewski: Our next question comes from Les Sulewski of Truist Securities. Your line is open.
Speaker Change: Our next question comes from Les Sulewski of Truist Securities. Your line is open.
Leszek Sulewski: Good evening, guys. Thank you for taking the time to answer my questions. Charlie, perhaps just to build on the guidance comments, you know, given the strong QQ results, is there a level of conservatism built into the guidance perhaps we expect maybe would have been tightened? And then second, on the capital allocation strategies and given kind of the current market conditions around the shares, is there an accelerated component to your share repurchases or anything we kind of could expect for the remaining day of the year? And then, my last question: has Uginis provided you with a commercial sample of their generic product? Thank you.
Leszek Sulewski: Good evening guys. Thank you for taking my questions. Charlie, perhaps just to build up on the guidance comments.
Leszek Sulewski: You know, given the strong 2Q results, is there a level of conservatism built into the guidance perhaps?
Speaker Change: We expect maybe it would have been tightened. And then second, on the capital allocation strategies, and given kind of the current market conditions around shares,
Speaker Change: Is there an accelerated component to your share repurchases or anything we could expect for the remaining day of the year? And then my last question, has Egenis provided you a commercial sample of their generic product? Thank you.
Charles A. Reinhart: So, I'll just take them in order, and I'll let Tony talk about the EV in a sample question.
Speaker Change: So, I'll just take them in order and I'll let Tony talk about the EV in a sample question.
Charles A. Reinhart: So, you know, listen. We're pleased with where the business is.
Charles A. Reinhart: https://www.globalonenessproject.org Was guidance conservative?
Speaker Change: So, you know, listen, we're pleased with where the business has been in the second quarter. We think we did what we needed to do and anticipated we do in the top line on margins and OPEX. So all of those put us, you know, favorably within the original guidance ranges.
Charles A. Reinhart: Well, it might have been. We'll see.
Speaker Change: Was guidance conservative? Well, it might have been. We'll see. Remember that last year, we thought we were conservative, and it didn't work out all that well. So there's a little bit of that, you know, hanging around too as well.
Charles A. Reinhart: We thought we were conservative, and it didn't work out all that well. So there's a little bit of that, you know, hanging around too. Share repurchase, we have, as you know, we started the repurchase by buying back $25 million worth of stock in conjunction with the conversion we already did. We're positive cash flow, and we will evaluate when we think it makes opportunistic sense and to what extent, and use the cash accordingly.
Speaker Change: Share repurchase. We have, as you know, we started the repurchase by buying back $25 million worth of stock in conjunction with the convert we already did.
Speaker Change: We're positive cash flow, and we will evaluate when we think it makes opportunistic sense, and to what extent, and use the cash accordingly.
Anthony Malloy: There's a question. Sure. Yes. So we've now received
Anthony Malloy: I'll use the question, but sure. Yes. So we've not received a sample of the end product yet, and the issue is currently before the magistrate judge to work out the logistics.
Speaker Change: We've not received a sample of the end-of-product yet and the issue is currently before the magistrate judge to work out the logistics to get those samples.
Speaker Change: Thank you.
Leszek Sulewski: Our next question comes from Serge Belanger of Needham. Your line is open.
Speaker Change: Our next question comes from Serge Belanger of Needham. Your line is open.
Serge D. Belanger: Good afternoon. Thanks for taking my question. I guess the first one for Tony, do you still expect a decision by Judge Arleo on the 495 case on or prior to August 1st? And then, secondly, for Frank, and Charlie Onyx-Sperl.
Serge D. Belanger: Hi, good afternoon. Thanks for taking my questions.
Serge D. Belanger: I guess the first one for Tony, do you still expect a decision by Judge Arleo on the 495 case on or prior to August 1st?
Serge D. Belanger: You mentioned 3% volume growth in the second quarter, but I believe it was the same as what we saw in the first quarter. Just curious how that compares to the overall market growth and whether it's coming from ortho procedures or soft tissue. And then lastly, on the GPO front, I think that in the past, you've described Premier as consisting of 20% of relevant experimental procedures. Just curious if the other two are similar or would have a larger impact.
Serge D. Belanger: And then secondly, I guess, for Frank.
Charles A. Reinhart: and Charlie Onyx-Sperl.
Frank D. Lee: Thanks.
Speaker Change: You mentioned 3% volume growth in the second quarter. I believe it was the same as what we saw in the first quarter. Just curious how that compares to the overall market growth and whether it's coming from ortho procedures or soft tissue.
Speaker Change: And then lastly...
Speaker Change: on the GPO front.
Speaker Change: I think that, in the past, you've described Premier as consisting of 20% of experimental relevant procedures. I'm just curious if the other two are similar or would have a larger impact. Thanks.
Charles A. Reinhart: So let me go in reverse order a little bit, and I'll take the Premier and, you know, maybe Charlie can talk a little bit about expirile volume ortho versus soft tissue and then turn it over to Tony after that. So Premier, again, we're pleased with how that agreement is performing, how we're pulling through, and how we now have other opportunities with Premier to leverage other opportunities to educate their membership about not only expiry dates but also no pain.
Speaker Change: So, let me go in reverse order a little bit, and I'll take the premier and, you know, maybe Charlie can talk a little bit about...
Speaker Change: Xpryl volume ortho versus soft tissue and then turn it over to Tony after that.
Speaker Change: So, Premier, again, we're pleased with how that agreement is performing, how we're pulling through, and how we have now other opportunities with Premier to leverage.
Speaker Change: and other opportunities to educate their membership.
Charles A. Reinhart: As we discussed before, as we think about other GPOs, and if you think about the 340B program as well, that would encompass well over 80% of our market, and so we're very happy about where we're gonna wind up by the end of the year in terms of providing our customers with, I would say, better access to our products. So with that, let me turn it over to Charlie.
Speaker Change: about not only Expiril, but about also no pain.
Speaker Change: As we discussed before, as we think about other GPOs and if you think about the 340B program as well,
Speaker Change: That would encompass well over 80% of our...
Speaker Change: broadly of our market.
Speaker Change: And so we're very happy about where we're going to wind up by the end of the year in terms of providing our customers with, I would say, better access to our products. So with that, let me turn it over to Charlie here.
Frank D. Lee: So as far as knowing the actual medical procedures that sales are related to, we don't have that data so quickly. It takes us four or five months to get that data. So with the data we have now, there's no significant change in the trends, but that doesn't really tie to the second quarter.
Charles A. Reinhart: So as far as knowing the actual medical procedures that sales are related to, we don't have that data so quickly.
Charles A. Reinhart: Serge, thank you for the question. Yes, we still expect a decision this week at closing arguments in May. Judge Arleo told us she expected to have the decision by August 1st, and we haven't heard anything from the court that would lead us to believe that that's the case.
Charles A. Reinhart: Serge, thank you for the question. Yes, we still expect a decision this week at closing arguments in May. Judge Arleo told us she expected to have the decision by August 1st, and we haven't heard anything from the court that would lead us to believe that that's not going to happen.
Serge D. Belanger: Charlie, can you tell us what growth and nets on Xperia are worth for this quarter?
Charles A. Reinhart: Okay. Charlie, can you tell us what growths and nets on Xperia were for this quarter?
Charles A. Reinhart: Roughly 83% stuck with it. Got it. All right. Thank you. Thanks, Serge.
Serge D. Belanger: Got it. All right. Thank you.
Charles A. Reinhart: Roughly 83% in the second quarter.
Charles A. Reinhart: Got it. All right. Thank you
Serge D. Belanger: Thanks, Serge.
Speaker Change: Thank you.
Balaji V. Prasad: Our next question comes from Balaji Prasad of Barclays. Your line is open.
Speaker Change: Our next question comes from Balaji Prasad of Barclays. Your line is open.
Balaji V. Prasad: Hi, good evening, and two questions from me. Firstly, on the litigation itself, while I can understand the legal defense against an at-risk launch, and the potential injunctive relief being sought, what would a commercial defense against an at-risk launch look like? And two, is it fair to assume, I imagine, that this is not impacting or influencing your business allocation priorities, your CAPEX thoughts going into next year, and Frank, also on the reorganization of the company structure that you have embarked on since taking over? Thanks.
Balaji V. Prasad: Hi. Good evening and two questions from me. Firstly, on the litigation itself, while I can understand the legal defense against an at-risk launch, a potential injunctive relief being sought, what would a commercial defense against an at-risk launch look like?
Frank D. Lee: And two, is it fair to assume, I imagine, that this is not impacting or influencing your business allocation priorities, your CAPEX thoughts going into next year, and Frank also on the reorganization of the company structure that you embarked on since taking over. Thanks.
Frank D. Lee: So, Balaji, listen. Based on what we know about our IP, we've been, as you know, making sure that we build our capabilities, modernize our approach to commercialization, and medical market access, and we've done that. As I mentioned, we laid the foundation, and we're executing on that in the second half of the year so that we're ready for driving growth, accelerated growth, in 2025 and beyond.
Speaker Change: So, Balaji, listen,
Speaker Change: Based on what we know about our IP, we've been, as you know, making sure that we build our capabilities, modernize our approach to commercialization, medical, market access.
Speaker Change: And we've done that, as I mentioned, we've laid the foundation and we're executing on that in the second half of the year so that we're ready for driving growth, accelerated growth in 25 and beyond.
Frank D. Lee: So that's what I'll say to that. I really can't speculate in terms of all the different things that could happen. Again, I'll reiterate that this is one generic, not nine. So that's an important fact to know. And again, I want to come back to this is the first piece of litigation that's being litigated relative to all the other patents that we still have to go through. So it is going to be a marathon. So I really don't want to speculate about all the different kinds of tactics and strategies. I'm sure folks can look into that. But again, the point here is that it is one generic, not nine.
Speaker Change: So, that's what I'll say to that. I really can't speculate in terms of all the different things that could happen.
Speaker Change: Again, I'll reiterate that this is one generic, not nine.
Speaker Change: So that's an important fact to know, and again I want to come back to this is the first piece of litigation that's being litigated relative to all the other patents that we still have to go. So it is going to be a marathon. So I really don't want to speculate about all the different kinds of tactics and strategies. I'm sure folks can look at that, but again the point here is there's one generic, not nine.
Balaji V. Prasad: Understandable, Frank. Maybe as a quick follow-up, last quarter I asked about the incremental market opportunity within the 18 million procedures coming from Nopain. I think you had said that your team was figuring this out, checking in to see if there's better clarity now on this, on what the exact incremental opportunity is. Yeah, Balaji, I think we...
Frank D. Lee: Understood, Frank. Maybe as a quick follow-up, last quarter I asked about the incremental market opportunity within the 18 million procedures coming from Nopain. I think you had said that your team was figuring this out, checking in to see if there's better clarity now on this, on what is the exact incremental opportunity.
Frank D. Lee: guidance with confidence as we get into the towards the end of this year and early next year as our now enhanced teams engage customers and really get granular in terms of their thinking their plans we're going to be able to provide guidance that we can stick to just like we have today this year and I'm really proud of the team for that so hang tight we're getting there as I mentioned the foundation is set and so I'm really excited actually about the second half and I feel the momentum building and so we'll be able to identify as we move forward again those kinds of customers and accounts are likely to adopt sooner rather than later so the early adopters or the middle adopters and late adopters and based on that we'll be able to provide some guidance in terms of growth
Frank D. Lee: Thanks.
Balaji V. Prasad: Yeah, Balaji, I think we've...
Speaker Change: guidance with confidence as we get into the towards the end of this year and early next year.
Speaker Change: As our now enhanced teams engage customers and really get granular in terms of
Speaker Change: their thinking, their plans.
Speaker Change: We're going to be able to provide guidance that we can stick to just like we have to date this year.
Speaker Change: and I'm really proud of the team for that. So hang tight, we're getting there. As I mentioned, the foundation is set. And so I'm really excited, actually about the second half.
Speaker Change: I feel the momentum building and so we'll be able to identify as we move forward again those kinds of customers and accounts are likely to adopt sooner rather than later so the early adopters or the middle adopters and late adopters and based on that we'll be able to provide some guidance.
Speaker Change: in terms of growth.
Susan Mesco: Thank you. This concludes the question and answer session. I would now like to turn it back to Susan Mesco, Head of Investor Relations, for closing remarks.
Speaker Change: www.pacirapharmaceuticals.com
Speaker Change: Thank you. This concludes the question and answer session. I would now like to turn it back to Susan Mesco, Head of Investor Relations, for closing remarks.
Susan Mesco: Thank you, Dede, 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 the rollout of No Pain in 2025, which we believe will pave the way for our long-term success. The opioid epidemic continues to be a national crisis underscoring the vital importance of our mission. Thank you, and be well.
Susan Mesco: Thank you, Dede, and thanks to all on the call for your questions and time today. We are excited about the opportunities that lie ahead for us.
Speaker Change: Throughout the balance of the year, we will continue to ensure we are well-positioned for the rollout of No Pain in 2025, which we believe will pave the way for our long-term success. The opioid epidemic continues to be a national crisis, underscoring the vital importance of our mission. Thank you, and be well.
Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.