Q2 2024 Heron Therapeutics Inc Earnings Call

Hermione: Thank you for standing by. My name is Hermione, and I will be your conference operator today. At this time, I would like to welcome everyone to Heron Therapeutics' Q2 2024 conference call. All lines have been placed on mute to prevent any background noise.

Unknown Executive: Thank you for standing by.

Thank you for standing by my name is your Miami and always be a conference operator today at this time I would like to welcome everyone to hear them say predicting Q2 of 'twenty 'twenty four conference call. All lines have been placed on mute to prevent any background nice I'll say the speaker's your mark.

Hermione: My name is Hermione, and I will be your conference operator today.

Unknown Executive: At this time, I would like to welcome everyone to Heron Therapeutics Q-2224 conference call. All lines have been placed on YouTube, even any background noise.

Unknown Executive: After this speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press our follow-way number one on your telephone keypad. If you would like to withdraw a question, press our one again.

Hermione: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to reserve a question, press star 1 again. I would now like to turn the call over to Melissa Jarel, Executive Director, Legal. Please go ahead.

Speaker Change: There will be a question and answer session, you'll like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Speaker Change: If you'd like to Mr. A question press Star one again.

Melissa Jarel: I would like to turn the call over to Melissa Jarel, Executive Director, Liko. Please go ahead. Thank you, operator, and good afternoon, everyone. Thank you for joining us on the Heron Therapeutics conference call. This afternoon to discuss the company's financial results for the quarter ended June 30, 2024.

Speaker Change: I would now like to turn the call over to Melisa Giles Executive director of <unk>. Please go ahead.

Melissa Jarel: Thank you, Operator, and good afternoon, everyone. Thank you for joining us on the Heron Therapeutics conference call this afternoon to discuss the company's financial results for the quarter ended June 30, 2024. With me today from Heron are Craig Collard, Chief Executive Officer, Ira Duarte, Executive Vice President, Chief Financial Officer, Bill Forbes, Executive Vice President, Chief Development Officer, and Kevin Warner, Senior Vice President, Medical Affairs, Strategy, and Engagement.

Melisa Giles: Thank you operator, and good afternoon, everyone. Thank you for joining us on the Heron Therapeutics Conference call. This afternoon to discuss the company's financial results for the quarter ended June 32024.

Melissa Jarel: With me, Caitlin Heron, are our Craig Collard, Chief Executive Officer, Ira Duarte, Executive Vice President, Chief Financial Officer, Bill Forbes, Executive Vice President, Chief Adult Minister, and Kevin Morener, Senior Vice President, Medical Affairs, proud of you and engagement.

Speaker Change: With me today from here on our price Holler, Chief Executive Officer, Eric <unk> Executive Vice President Chief Financial Officer, Bill for Executive Vice President Chief Development.

Speaker Change: The officer, and having more junior Vice President Medical Affairs.

Speaker Change: Yeah.

Melissa Jarel: For those of you participating via conference call, slides will be made available via webcast and can also be accessed via the Investor Relations page of our website following the conclusion of today's call. Before we begin, let me remind you that during the course of this conference call, the company will make forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs, and future performance, all of which constitute forward-looking statements for the purposes of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995.

Melissa Jarel: For those of you who participated in the Vietnam conference call, slide your view of a little view of webcast, and can also be accessed via the Investual Relations Team for website following the conclusion of today's call. Before we begin, let me remind you that during the course of this conference call, the company will make forward-looking statements. We talked to you that any statement that is not a statement of a struggle fact is a global statement. This includes remarks about the company's projections, expectations, plans, beliefs, and future performance, all of which constitute global statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995.

Speaker Change: For those of you participating via conference call. So I can read available via webcast.

Speaker Change: Yeah.

Speaker Change: Following the conclusion of today's call.

Speaker Change: Before we begin let me remind you that during the course of this conference call. The company will make forward looking statements.

Speaker Change: We caution you that any statement that is not a statement of historical fact is a forward looking statement.

Speaker Change: This includes remarks about the company's projections expectations plans beliefs and future performance all of which constitute forward looking statements.

Speaker Change: Purposes of the Safe Harbor provision under the private Securities Litigation Reform Act.

Speaker Change: 95.

Melissa Jarel: These statements are being subject in the analysis as of the day in the conference call, and are subject to numerous important risks and concerns to use that to cause actual results to differ materials from those described in the Civil Eust status. The risks and uncertainty that they gave with forward-looking statements made in the conference call, which are described in the state-harber statement in today's casually, and account public, to your audience, by the way, with the APC.

Melissa Jarel: These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call and webcast are described in the State of Harvard statement in today's press release and in Heron's public periodic filings with the FDIC.

D J: D J.

D J: Gentlemen, and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements.

D J: The risks and uncertainties associated with forward looking statements made in this conference call and webcast are described in the Safe Harbor statement in today's press release and inherent public filings with the SEC.

Melissa Jarel: Except as required by law, however, on the news, no apologies to the APC forward-looking statements to reflect future events or actual outcomes, and does not intend to use those.

D J: As required by law Geron assumes no obligation to update these forward looking statements to reflect future events or actual outcome.

Speaker Change: Mum and does not intend to use that.

Craig Collard: And with that, I was now lucky to turn it over to Craig College, Chief Executive Officer, John. Thanks, Melissa.

Melissa Jarel: Except as required by law, Heron assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. And with that, I would now like to turn it over to Craig Collard, Chief Executive Officer of Heron.

D J: With that I would now like to turn it over to Craig <unk>, Chief Executive Officer Karen.

Craig: Thanks Melissa.

Craig Collard: Good morning, everyone, and welcome to the Heron Therapeutics second quarter 2024 earnings call. Today we are pleased to update you on our latest achievements for the second quarter, which include the narrowing of our financial guidance and a view into our financial performance, discussion of our product performance, and the impact of the COVID-19 pandemic, progression of the vial, access needle, or van towards our September 23rd caducanate. The publishing of the long-awaited Bill Payne Act, which includes NLS, and last, an update on the building and training of our partners across the nation. Movies and Financial Performance

Craig Collard: Good morning, everyone, and welcome to the hearing of their few days, second quarter, 2000s when we've heard earnings call. Today, we are pleased to update you on our latest achievements for the Steady Quarter, which includes an error in our financial guidance, and a view into our financial performance, the discussion of our private performance, the aggression of the valve, access needle, or land, toward our substitute 23rd to do the day, the publishing of the long-awaited bill-paying act, which includes an error in last and update on the building, in training, or apart as a problem. Now, moving to the financial performance.

Craig: Good morning, everyone and welcome to Cara Therapeutics second quarter 2024 earnings call.

Speaker Change: Today, we're pleased to update you on our latest achievements for the second quarter, which includes an early.

Speaker Change: Financial guidance and a view into our financial performance discuss some of our product performance.

Speaker Change: Russian on the Val accessing the ore then towards our September 2013.

Craig: The publishing of a long way to go pay which includes <unk>.

Craig: And last an update on the building industry requirements.

Craig: Okay.

Craig: Now moving to the financial performance.

Craig Collard: I believe this slide is straight. The impact, our new management team has handled this business as you can clear first half of 2024, with the first half of 2023. Keep in mind, the management team was not fully in place until August of 2023. Just arriving, we have been able to establish the proper financial management that has allowed us to reduce spends dramatically while still growing top line revenue. When comparing the first six months of 2024, the same period in 2023. Now moving to product performance, the apology franchise continues to outpace our expectations, with invading their revenues of $24.9 million for the quarter and fulstowing their revenues of $4.3 million for the quarter.

Craig Collard: I believe this slide demonstrates the impact our new management team has had on this business as we compare the first half of 2024 with the first half of 2023. However, keep in mind, the management team was not fully in place until August of 2023. Since arriving, we have been able to establish proper financial management that has allowed us to reduce spins dramatically while still growing top-line revenue. As you can see from the slide, revenues are up 15%, and gross margin has improved from 40% to 73%. And operating expenses were reduced by over $36 million when comparing the first six months of 2024 to the same period in 2023.

Speaker Change: I believe this slide demonstrates the impact our new management team that's out of this business as we compare first half of 2024 with the first half of 2023.

Craig: Keep in mind the management team was not fully in place until August of 2023.

Craig: We have been able to establish the proper financial management that has allowed us to reduce dramatically while still growing topline revenue.

Craig: As you can see from the slide revenues were up 15% gross margin has improved from 40% to 73%.

Craig: Operating expenses have been reduced by over $36 million when comparing the first six months of 2024.

Craig: Period.

Craig: Right.

Craig Collard: Now moving to product performance, the Oncology franchise continues to outpace our expectations with Subanti Net Revenues of $24.9 million for the quarter and Sustol Net Revenues of $4.3 million for the quarter. We continue to maintain our existing market share in a very competitive environment with the Oncology franchise, and we believe these products will continue to show similar consistency throughout 2024. Total acute care net revenues for the quarter were $6.8 million, which is record revenue for our acute system. Then we'll even have revenue for the quarter of $5.8 million.

Speaker Change: Now moving to product performance. The oncology franchise continues to outpace our expectations with <unk> net revenues of $24 9 million for the quarter and so saw net revenues of $4 $3 million for the quarter.

Craig Collard: We continue to maintain our existing market share in a very competitive environment, with the apology franchise, and we believe these products will continue to show similar consistency throughout 2024. Till the cute care net revenues for the quarter were $6.8 million, which is record revenue for our cute business. Then we leave net revenues for the quarter were $5.8 million. Upon the net revenues for the quarter were $1 million, which is double versus Q1 of this year. While we were pleased with the direction we were headed, we realized we were still transitioning with our new expanded dental label, bringing on the cross-linked team, the advanced submission and loss later this year, which will all have a dramatic impact to not only dental out, as we move later in the year and into 2025, but also poverty.

Craig: We continue to maintain our existing market share in a very competitive environment.

Craig: With the oncology franchise and we believe these products will continue to show similar consistency throughout 2024.

Craig: Total of acute care net revenues for the quarter were $6 8 million.

Craig: Which is record revenues for our acute business.

Speaker Change: Net revenues for the quarter Robotically.

Craig: Yeah.

Craig Collard: Upon the net revenues for the quarter were $1 million, which is double versus Q1 of this year. While we are pleased with the direction we are headed, we realize we are still transitioning with our new expanded General Ed Label. Bringing on the Crosslink team, and the VAMS submission and launch later this year, which will all have a dramatic impact on not only ZenderLift as we move later in the year and into 2025, but also Eponvi, as these actions will free up more selling time for our sales team and allow us to create better pull-through with our account wins. As we think about Eponme performance, it's important to know that Eponme is the type of product where systematic wins are possible.

Speaker Change: <unk> net revenues for the quarter were $1 billion, which is double versus Q1 of this year.

Speaker Change: While we are pleased with the direction. We are headed we realize we are still transitioning with our new strategy.

Speaker Change: Bringing on the cross linking the vast submission and launch later this year, which will all have a dramatic impact not only in general as we move later in the year and into 2025, but also Harvey as these actions will free up more selling time for our sales team and will allow us to create better pull through.

Craig Collard: As these actions will free up more scaling time for our sales team, and allow us to create better pull-through with our account wins. As we think about the apology performance, it's important to note that apology is a type of product where systematic wins are possible. What I mean specifically is when we win at the P&P and formula level, protocols can be put in place where apology is used throughout the hospital system for a specific patient or surgery type. As you can see on this slide, we continue to gain T&P wins and new customer orders. The goal of any new account win is to establish a protocol, get products already set up in our hospital system, and then move to expand usage within the hospital.

Speaker Change: With our account wins.

Speaker Change: As we think about our holiday performance. It's important to know the economy is the type of product. We're systematic wins are possible.

Craig Collard: What I mean specifically is when we went to the P&T and formulary level, protocols can be put in place where a quantity is used throughout a hospital system for a specific patient or surgery type. As you can see on this slide, we continue to gain P&P wins, and New Customers Ordering. The goal of any new account win is to establish a protocol, get product ordering set up in the hospital system, and then move to expand usage within the hospital. Slide 10 provides a dashboard of how we forecast our economic business.

Speaker Change: What that means specifically is when we win.

Speaker Change: E. A formulary level protocols can be put in place where <unk> is used for a hospital system or <unk>.

Speaker Change: Specific patient or surgery.

Speaker Change: As you can see on this slide we continue to gain P&C wins and.

Speaker Change: Net new customers ordered.

Speaker Change: The goal of any new account with us to establish a protocol.

Speaker Change: <unk> already set up in a hospital system, and then move to expand usage within the hospital.

Craig Collard: Slide 10 provides a dashboard of how we forecast our economy business. We must have this chairing by account size based on the number of surgical seizures within each account. Commercially, this allows us to better focus our sales team and evaluate account performance within each year. We believe the greatest opportunity resides in certain patients that present to the operating room with moderate and high risk of having post-operative nausea and vomiting. This risk evaluation already happens preoperably across the country and uses a validated series of questions to reliably classify these patients. The medical literature informs us that approximately 1 in 2 patients, or 50%, present as moderate to high risk.

Speaker Change: Slide 10 provides a dashboard of how we forecast our coffee business.

Craig Collard: We've established commissions by account size based on the number of surgical procedures within each account. Commercially, this allows us to better focus our sales team and evaluate account performance within each tier. We believe the greatest opportunity resides in a surgical patient that presents to the operating room with a moderate and high risk of having postoperative nausea and vomiting. This risk evaluation already happens preoperatively across the country and uses a validated series of questions to reliably classify these patients.

Speaker Change: We've established sharing by accounts.

Speaker Change: Just on the number of surgical procedures within each account.

Speaker Change: Commercially this allows us to better focus our sales team and evaluate account performance within each year.

Speaker Change: We believe the greatest opportunity resides in a certain patients that present to the operating room with moderate and high risk of having post operative nausea and vomiting.

Speaker Change: This risk evaluation already happened pre operatively across the country and even the validated serious questions through reliably classify these patients.

Craig Collard: The medical literature informs us that approximately 1 in 2 patients, or 50%, present as moderate to high risk. Our internal sales target is to achieve market penetration of 40% of that 50% of hired patients, or, if you will, 20% of the overall searchable opportunity with our converted business. The opportunity we have today reflects a $30 million potential for the 320 accounts currently under contract.

Speaker Change: The medical literature informs us that approximately one two patients or 50%.

Speaker Change: As moderate to high risk.

Craig Collard: Our internal sales target is to achieve market penetration of 40% of that 50% of high risk patients or, if you will, 0% of the overall searchable opportunity with our converted business. Our confidence in Upon View is based on the ease of use, the superior onset of action via an intravenous administration, the absence of infusion reactions, as well as the absence of certain simple nervous system and cardiovascular side effects, being with other agents. We believe there's an opportunity to convert business to the use of Upon View when other approaches to preventing PLNV still report an approximate 30% failure rate in this higher risk population.

Speaker Change: Our internal sales target is to achieve market penetration of 40% above that 50% of high risk patients or if you will 20% of the overall surgical opportunity with our converting business.

Speaker Change: The opportunity we have today reflects a $30 million potential from the 320 accounts currently under contract.

Craig Collard: Our confidence in Apogee is based on the ease of use, the superior onset of action via intravenous administration, and the absence of infusion reactions, as well as the absence of certain simple nervous system and cardiovascular side effects seen with other agents. We believe there is an opportunity to convert business to the use of a POND when other approaches to preventing PONV still report an approximate 30% failure rate in this higher-risk population. Of course, slide 10 only takes into account the business Heron has today.

Speaker Change: Our confidence is based on the ease of use the superior onset of action via intravenous administration the app.

Speaker Change: Absent that infusion reactions as well as the absence of certain central nervous system.

Speaker Change: Cardiovascular side effects seen with other agents.

Speaker Change: We believe there is an opportunity to convert business through the use of upon the when other approaches to preventing OMB still report and approximately 30% failure rate in this high risk population.

Craig Collard: Of course, life's in only taking the account that business Heron has today. There aren't an estimated 75 million searchable seizures in the US every year. While penetrating 20% of the entire market may not be achievable, Heron does believe that as we convert more accounts that upon me is already at the gym.

Speaker Change: Of course last year it only takes into account the business Harron has today.

Craig Collard: There are an estimated 75 million surgical seizures in the U.S. every year. While penetrating 20% of the entire market may not be achievable, Heron does believe that as we convert more accounts, that upon me is our hidden gem. Movie Designer Letter, It's important to note the progress and the number of improvements to the product that we have coming in 2024. In January, it started off with a much-anticipated label expansion, which now allows Enelab to be used much more broadly throughout the number of surgeries within a given hospital or ASC. Second, the introduction of the VAN, which was approved in September and will go live in Q4.

Speaker Change: We're in an estimated 75 million surgical procedures in the U S every year.

Speaker Change: While penetrating 20% of the entire market.

Speaker Change: It may not be achievable Perez I believe that as we convert more accounts that of Hanmi is already in June.

Craig Collard: Moving to Zendolev, it's important to note the progress and the number of improvements to the product that we have coming in 2024. In January, it started off with a much anticipated label expansion, which now allows Zendolev to be used much more broadly throughout the number of surgeries within a given hospital or ASC. Second is the introduction of the van, which, if approved in September, will be allowed in Q4. Next will be the inclusion of Zendolev and the budget dissipated NOPANI, which will continue to allow Zendolev to be reimbursed outside of the surgical bubble, and last the costly partnership was continued to progress.

Speaker Change: Moving to Zenola it's.

Speaker Change: It's important to note the progress in a number of improvements to the product that we have coming in 2024.

Speaker Change: In January has started off with the much anticipated label expansion, which now allows them to.

Speaker Change: To be used much more broadly throughout the number of surgeries within a given hospital or ASC.

Speaker Change: Second is the introduction of the van which if approved in September Google out of Q4.

Craig Collard: Next was the inclusion of Xenoleph in the much-anticipated No Pain Act, which will continue to allow Xenoleph to be reimbursed outside of the surgical bundle. And last, the CrossLink partnership, which continues to progress. Now, I'm saying the impact of the van is a bit easier when you see both devices depicted together.

Speaker Change: Next was the inclusion of <unk> and the much anticipated no payback, which will continue to allow them to be reimbursed outside of the surgical bundle and last across a partnership which continues to progress.

Craig Collard: Now understanding the impact of the van is a bit easier when you see both devices depicted together. Our correct and thick configuration with an EDS or VITA valve spike on the left-hand side of the slide is a much more difficult to use as compared to the van or valve access needle on the right-hand side of the slide. The two main advantages that the van offers are virility and speed of product withdrawal from the vial. The preparation of Zendolev has been at the Kelly's Hill since launch. We believe the launch of the van later this year, combined with a expanded label and having a cross-linked presence within the OR study, is going to provide tremendous boost to Zendolev for years to come.

Speaker Change: Notwithstanding the impact of the demand is a bit easier when you see both devices together.

Craig Collard: Our current configuration with a VDS, or Vented Vial Spike, on the left-hand side of the slide is much more difficult to use as compared to the VAN, or Vial Access Needle, on the right-hand side of the slide. The two main advantages that the ban offer are sterility and speed of product withdrawal from the vial. The preparation of Xenolith has been a peculiar field since launch.

Speaker Change: Our current perfect configuration with the ABS or amended valves side on the left hand side of this slide is a much more difficult to use as compared to the demand or vol. Access needle on the right hand side of the slide.

Speaker Change: The two main advantages that the van offers is sterility and speed of product withdrawal from the volume.

Speaker Change: The preparation of similar advanced Achilles' heel since launch.

Craig Collard: We believe the launch of the van later this year, combined with the expanded label and having a cross-linked presence within the O.R. study, is going to provide a tremendous boost to Zimbabwe for years to come. Now, movies, no canine.

Speaker Change: We believe the loss of the van later this year combined with expanded label and having the cross linked presence within the oar study is going to provide a tremendous boost to zenola for years to come.

Craig Collard: Now moving to NOPANI. TMS recently released its outpatient prospective payment system, OPPS, and ambulatory surgical center ASD proposed rule for calendar year 2025. The rule included the NOPOIC policy for pain relief, which was supported by the NOPANI. As expected, Zendolev was a name product in the rule. This will then be here in our patients on multiple levels. The Inclusions of N-O-LF in the rule of Increase Awareness, Remove Financial Barriers, Encouraged in Dobson, and Adoruses Issues. The acronym, No Payne, stands for Non-Opilates Present Addiction in the Nation, which, in itself, is a strong endorsement. The goal of the act was to assure patients that access to non-opioid alternatives and providers are not financially incentivized to utilize opioids instead.

Speaker Change: Now moving to mill payback.

Craig Collard: TMS recently released its Outpatient Prospective Payment System, OPPS, and Ambulatory Surgical Center ASC Proposed Rule for calendar year 2025. The rule included a non-opioid policy for pain relief, which was supported by the No Pain Act. As expected, Xenolab was a named product in the rule. This will benefit Heron and our patients on multiple levels. The inclusion of Xenolab in the rule will increase awareness and remove financial barriers.

Speaker Change: CMS recently released its outpatient prospective payment system or PPS.

Speaker Change: Inventory surgical center ASD proposed rule for calendar year 2025.

Speaker Change: The rule included the non opioid policy for pain relief, which was supported of the no hate us.

Speaker Change: As expected Nonetheless, with our main products in the world.

Speaker Change: This will benefit here and our patients on multiple levels.

Speaker Change: Including those that are left in the rule will increase awareness.

Speaker Change: Remove financial barriers.

Craig Collard: encourages this use. The acronym NOPAIN stands for Non-Opioids Prevent Addiction in the Nation, which in itself is a strong endorsement. The goal of the act was to ensure patients have access to non-opioid alternatives, and providers are not financially incentivized to utilize opioids instead.

Speaker Change: Encourage adoption.

Speaker Change: And endorses this use.

Speaker Change: The acronym no pain dashboard non opioids prevent addiction in the nation.

Speaker Change: Which itself is a strong endorsement.

Speaker Change: The goal was to ensure patients have access to non opioid alternatives and providers are financially incentivized to utilize opioids instead.

Craig Collard: To be included, the medications must have an indication for post-operative pain, not act on the body's opioid receptors, and have proven efficacy in the abilities to replace, reduce, or avoid interoperative and post-operative opioid use. The MS degree is N-O-LF's clinical attributes, satisfied these requirements. The MS proposed includes N-O-LF in the policy for talent of the year, 2025, effective April 1st, 2025, which will ensure N-O-LF is eligible for separate payment outside of the surgical bundle. We believe, based on the CMS action, and the endorsement of non-opioid therapies, that many more commercial payers could also follow suit.

Craig Collard: To be included, the medications must have an indication for postoperative pain, not act on the body's opioid receptors, and have proven efficacy in the ability to replace, reduce, or avoid intraoperative and postoperative opioid use. PMS agreed that generalist clinical attributes satisfy these requirements. CMS proposed to include Xenoleph in the policy for calendar year 2025, effective April 1st, 2025, which will ensure that Xenoleph is eligible for separate payment outside of the surgical hundred.

Speaker Change: So we included the medications must have an indication for post operative pain.

Speaker Change: Knock on the bodies opioid receptors and have proven efficacy and the ability to replace reduce for avoid inter operative and post operative opioid use.

Speaker Change: CMS agree in general less clinical attributes satisfy these requirements.

CMS: CMS proposed to includes envelope in the policy for calendar year 2020.

Speaker Change: Effective April one 2020, which will ensure the Nols is eligible for separate payment outside the surgical bundle.

Craig Collard: We believe, based on the CMS action and the endorsement of non-opioid therapies, that many more commercial payers could also follow suit. Overall, we were extremely pleased with the proposed rule, and this will ultimately support increased adoption of Fenterox. Training for the CrossFit team kicked off with the executive team in late February and with the refs at the beginning of March. As of today, we have 561 cross-linked breasts, consisting of joint, trauma, and spine, that have been fully trained and are in the field, solid Xenolab, in 28 states.

Speaker Change: We believe based on the CMS action and the endorsement of non opioid therapies that may more commercial payers could also follow suit.

Craig Collard: Overall, we were extremely pleased with the proposed rule, and this will ultimately support increased adoption, etc. Training for the CrossFit team kicked off with the Executive Team in late February, with the reps at the beginning of March. As of today, we have 551 cross-linked breasts consisting of joint trauma spine that have been fully trained and are in the field, so in Zemola in 28 states. Now, obviously, all these new cells folks were not in the field in Q2, and while we were pleased with our progress, there is a learning curve as part of this process.

Speaker Change: Overall, we were extremely pleased with the proposed rule and this will ultimately support increased adoption of NOL.

Speaker Change: Turning to the <unk> team kicked off with executive team in late February and the reps at the beginning of March.

Speaker Change: As of today, we have 561 cross link for us consisting of joint trauma and spine.

Speaker Change: And fully trained and are in the field selling general in 28 states.

Craig Collard: Now obviously, all these new civil folks were not in the field in Q2, and while we are pleased with our progress, there is a learning curve as part of this process. As an example, once a new cross-linked group comes out of training, the process begins for our sales teams to interact to determine position and account targets. Arianne von Roessler, Product messaging to a given account and ultimately a planned attack within a territory.

Speaker Change: Now obviously all of these new sales folks were not in the field in Q2, and while we are pleased with our progress there is a learning curve as part of this process.

Craig Collard: As an example, once a new cross-linked group comes out of training, the process begins where cells seems to interact, determine physician, and account targeting, IDN formula strategy, product messaging to a given account, and ultimately a planned attack within a territory. Our plan is still to continue to expand our reach across the country with over 650 reps being fully trained and integrated for the boss of the van in Q4 this year. We continue to be impressed by the cross-linked team and relationships they have with the orthopedic surgical community, and we realize that time this is going to have a substantial impact on Zemola revenues.

Speaker Change: As an example, once the new Cross link group comes out of training. The process begins for our sales teams interact to determine a physician and account targeting.

Speaker Change: Audi and formulary strategy product messaging to a given account and ultimately a plan of attack within our territory.

Craig Collard: Our plan is to continue to expand our reach across the country, with over 650 reps being fully trained and integrated before the launch of the van in Q4 of this year. We continue to be impressed by the Crosslink team and the relationships they have with the orthopedic surgical community. And we rely on time.

Speaker Change: Our plan is still to continue to expand our reach across the country with over 650 reps being fully trained and integrated with the loss of the ban in Q4 of this year.

Speaker Change: We continue to be impressed by the cross let team and relationships they have with the orthopedic surgical community and we realize that this is going to have a substantial impact on revenues.

Craig Collard: This is going to have a substantial impact on ZENWeb revenue. In Q2 alone, we had over 350 new surgeon introductions, generating 98 new prescribing positions that translates to 33 new ordering accounts. It's obvious that this has not had a major impact on revenues yet, but we believe the impact will be substantial over time. Many of these new introductions are with top prescribing physicians with deep relationships with cross-linked, As with any new drug, it takes some time for physicians to get comfortable with something new or different, especially due to the unique delivery and application of Zemrolab.

Craig Collard: In Q2 alone, we have over 350 new surgeon introductions generating 98 new prescribed physicians that translate to 33 new ordering accounts. It's obvious this has not had a major impact on revenues yet, but we believe the impact will be substantial over time. Many of these new introductions are with top prescribed physicians with deep relationships with cross-linked. As with any new drug, it takes some time for physicians to get comfortable with something new or different, especially due to the unique delivery and application of Zemola. We are extremely pleased with the progress we have made in getting a cross-linked team trained and in the field.

Speaker Change: In Q2 alone we have over 350, new surgeon introductions generated 98, youll prescribing physicians that translates to 33, new ordering accounts.

Speaker Change: It's obvious this has not had a major impact on revenues, yet, but we believe the impact will be substantial over time.

Speaker Change: Many of these new introductions are with high prescribing physicians with deep relationships with cross selling.

Speaker Change: As with any new drug it takes some time for physicians to get comfortable with something new or different, especially due to the unique delivery and application of <unk>.

Craig Collard: We are extremely pleased with the progress we have made in getting a cross-linked team trained and in the field. We believe this partnership is going to completely change the direction of CENOA as we move into 2025 and beyond. I will now turn the call over to Ira Duarte, our CFO, to discuss our financials and update our financial guidance.

Speaker Change: We are extremely pleased the progress you've made and gained across late teen trade and in the field.

Craig Collard: You believe this partnership is going to completely change the direction of several of us as we move to the 2025 and beyond.

Speaker Change: We believe this partnership is going to completely change the direction of zero as we move into 2025.

Speaker Change: MBR.

Ira Duarte: I will now turn the call over to Ira Duarte, our CFO, if there were financials and updates or financial guidance. Go ahead, Ira. The federal's process for the three months in this June 30, 2024, was $25.5 million or 71%, which increased from 37% for the same period in 2023. This was primarily due to the fact that the current order did not see the significant inventory vitals we experienced in the comparable quarter of 2023. Here today, our product close process was $51.7 million or 73%, and increased from 40% for the same period in 2023. SGNAT expenses was $3.6 in the June 30, 2024, with $27.5 million and $53.9 million, respectively, compared to $40.8 million and $77.8 million, respectively, in the same period in 2023.

Speaker Change: I will now turn the call over to <unk>, our CFO to cover our financials and update our financial guidance here.

Speaker Change: Thanks, Craig.

Ira Duarte: Craig has covered our product performance and operating results in his comments, and I will add some additional points for our Q2 2024 results. Our product gross profit for the three months ended June 30, 2024 was $25.5 million, or 71%, which increased from 37% for the same period in 2023. This was primarily due to the fact that the current quarter did not see the significant inventory of vitals we experienced in the comparable quarter of 2023, year to date our product close profit was $51.7 million or 73% an increase from 40% for the same period in 2023, SGNet expenses for the three and six months ended June 30, 2024, were $27.5 million and $53.9 million, respectively, compared to $40.8 million and $77.8 million, respectively, in the same period in 2023.

Speaker Change: And this current or past performance and operating results at this time.

Speaker Change: Some additional points of our Q2.

Speaker Change: Results.

Craig: Our product gross profit for three months ended June 32024 was $25 5 million.

Speaker Change: With 71%, which increased from 37% for the same period in 2023.

Speaker Change: This was primarily due to the fact that the current quarter did not see the significant inventory of items, we experienced in the comparable quarter of 2023.

Ira Duarte: The decreased was primarily related to decreases in personnel and related costs due to the reductions in poor in the prior years, as well as improved cost efficiencies along all departments. Recession development expenses were $4.4 million and $9 million for the three and six months in the June 30, 2024, compared to $13.2 million and $22 million for the comparable periods in 2023. The decrease was primarily related to decreases in personnel and related costs due to the reductions in poor implemented in previous years, as well as decreases in development activity. During the quarter, we incurred inventory vitals of $1.6 million, but on my last year's vitals, these were not related to inventory management.

Ira Duarte: The decrease was primarily related to decreases in personnel and related costs due to the reductions in force in prior years, as well as improved cost efficiencies across all departments. Research and development expenses were $4.4 million and $9 million for the three and six months ended June 30, 2024, compared to $13.2 million and $22 million in the comparable period in 2023. The decrease was primarily related to decreases in personnel and related costs due to the reductions in force implemented in previous years, as well as decreases in development activities.

Speaker Change: Terry.

Ira Duarte: During the quarter, we incurred inventory ridles of $1.6 million, but unlike last year's ridles, these were not related to inventory management. In addition, we also reported an asset impairment write-off of $1.3 million related to projects no longer part of the company's forward-looking strategy. As you will see on the slide, if we had excluded depreciation and amortization, stock-based compensation, the inventory write-up, and the asset impairment write-up, our adjusted operating result would have been a positive $1.7 million operating income, which represents a substantial turnaround in the financial management of all businesses.

Speaker Change: During the quarter, we incurred inventory write off of <unk> $6 million, but unlike last year's write offs. These were not related to inventory management.

Ira Duarte: In addition, we also reported asset payment vitals of $1.3 million, related to projects no longer part of the company's portal in strategy. As you will see on the slide, if we had exclusive depreciation and emigrations, stock-based compensation, the inventory vitals and the asset and payment vitals, our adjusted operating results would have been of $1.7 million operating income, which represents a substantial turnaround in the financial management of our business. As notes in the TNQ, the condensed consolidated statement of operations and comprehensive loss, as of June 30, 2023, reflects reconvocation of certain expenses from recession development to general administrative expenses to align with functional expenses and curves.

Speaker Change: In addition, we also reported an asset impairment write off of $4 $3 million related to project no longer part of the company's forward looking strategy.

Speaker Change: As you will see on the slide if we had exclusive depreciation and amortization stock based compensation the inventory write off and the asset impairment write off our adjusted operating result would have been up all of this $1 $7 million operating income.

Speaker Change: Which represents a substantial turnaround from the financial management of our business.

Ira Duarte: As noted in the 10-Q, the decondensed consolidated statement of operations and comprehensive laws as of June 30, 2023 reflect reconfiguration of certain expenses from research and development to general and administrative expenses to align with the function of expenses incurred. This resulted in no change to total operating expenses. The net loss was $9.2 million for the three months ended June 30, 2024, and $12.4 million for the six months ended June 30, 2024, compared to $42.1 million and $74.8 million, respectively, for the comparable period in 2023.

Speaker Change: As noted in the 10-Q, you condensed consolidated statement of operations and comprehensive loss as of June 32023.

Speaker Change: Select reclassification of certain expenses from research and development to general and administrative expenses to align with function of expenses incurred.

Ira Duarte: This resulted in no change to total operating expenses. The net loss was $9.2 million for the three months and the June 30, 2024, and $12.4 million dollars for the six months and the June 30, 2024. Compared to $42.1 million and $74.8 million, respect to... for the comparable periods in 2023. Half in short-term investments at June 30, 2024, was $6,000,000. As you can see from these results, we have made tremendous progress in cutting expenses and creating efficiencies within the company over the last 12 months.

Speaker Change: This resulted in no change to total operating expenses.

Speaker Change: The net loss was $9 2 million for the three months ended June 32024, and $12 $4 million for the six months ended June 32024, compared to $42 $1 million and $74 8 million respectively for the comparable periods in 2023.

Ira Duarte: Cash and short-term investments at June 30, 2024, was $63.7 million. As you can see from these results, we have made tremendous progress in cutting expenses and creating efficiencies within the company over the last 12 months. We are therefore nearing our previously given guidance range of $108 million to $160 million for justice-operating expenses, which excludes stock-based compensation, depreciation, and amortization. And going forward, we will also exclude impairment of long-lived assets and inventory write-offs.

Speaker Change: Cash and short term investments at June 32024 was $62 $7 million.

Ira Duarte: We are therefore narrowing our previously given guidance range of $108 million to $160 million for justice-operative expenses to a range of $107 million to $111 million. Adjusted operating expenses, exclusive stock-based compensation, depreciation and amortization and gold boards. We will also exclude and payment of long-lived assets and inventory vital.

Ira Duarte: We are also narrowing our previously given guidance range for justice-evada of $22 million, $3 million to a range of $10 million to $3 million income. Adjusted-evada, exclusive stock-based compensation, depreciation and amortization and gold boards. We will also exclude and payment of long-lived assets and inventory vital.

Ira Duarte: We are also narrowing our previously given guidance range for adjusted EBITDA of $22 million, $3 million income, to a range of $10 million to $3 million. Adjusted EBITDA excludes stock-based compensation, depreciation, and amortization, and going forward, we will also exclude impairment of long-lived assets and inventory write-offs.

Operator: And now we would like to open the call for any questions. Thank you.

Unknown Executive: Thank you; the floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to with your question, simply press star 1 again.

Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue, and your first question comes from the line of Brandon Folkes with Rodman and Renshaw. Please go ahead.

Unknown Executive: If you are called upon to ask your question and are listening via a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Brandon Folkes: Again, press star 1 to join the queue, and your first question comes from the line of Brandon, folks with Rodman and Renchelle. Please go ahead. Congratulations on a lot of good progress in the quarter. Maybe just firstly for me, on generally any color and where you see the most uptake across joint trauma and spine with the cross-link partnership.

Speaker Change: Yeah.

Brandon Folkes: and congratulations on a lot of good progress in the quarter. Maybe just firstly for me on Xen Relief. Any color and where you've seen the most uptake across joint, trauma, and spine with a cross-linked partnership?

Speaker Change: Chins and congratulations on a lot of good progress in the quarter.

Speaker Change: Maybe just firstly for me on Zen relief any color on where you're seeing the most uptake across joined trauma and spine with a cross link partnership.

Craig Collard: I'm sorry, Greg, did you say it one more time? Any color and where you see the most uptake across joint trauma and spine with the cross-link partnership? Anything new there that you've given and have expected? At this point again, we've been, as I said in my comments, we've been getting the cross-linked team up to speed, and in queue two we had roughly a couple hundred folks, sort of, if you will, had gone through training. And so we haven't been up to really dying to the data enough to tell where we're having the largest impact. I mean, obviously, with orthopedic surgeons is where we're spending a majority of time.

Operator: I'm sorry, Brad, could you say that one more time?

Speaker Change: Oh, I'm sorry, Brad.

Speaker Change: Todd.

Brandon Folkes: Any color and where you've seen the most uptake across joint, trauma, and spine with the cross-linked partnership? Anything new there that you wouldn't have expected?

Todd: Any color on where you're seeing the most uptake across joint trauma and spine with the Kosslick link partnership any anything new that you've you would have expected.

Craig Collard: Yeah, no, at this point, as I said in my comments, we've been getting the CrossFit team up to speed, and in Q2, we had, you know, roughly a couple hundred folks that had gone through training, and so we haven't been able to really dive into the data enough to tell where we're having the largest impact. I mean, obviously, orthopedic surgeons are where we're spending the majority of our time, but at this point, I just can't really dice the data into that sort of level to determine, you know, specifically whether you're having an impact in one place more than another.

Speaker Change: No at this point again, we've been as I said in my comments, we've been getting the the crossing team up to speed and in Q2, we had.

Speaker Change: Roughly a couple of hundred folks sort of if you will have you gone through training and so we haven't been able to really dive into the data enough to tell where we're having the largest impact I mean, obviously with orthopedic surgeons, where we spend the majority of time, but at this point I just can't really dissect the data into that sort of level determined specifically or have an impact on one place more.

Craig Collard: But at this point, I just can't really dice the data into that sort of level in order to determine specifically or have an impact in one place more than another.

Speaker Change: Another.

Brandon Folkes: Okay, and then maybe just, you know, obviously did a tremendous job during the quarter on the rep training with Crosslink. Can you just elaborate on when you expect to see that revenue trajectory change within Relief, and do you have to retrain the Crosslink team when the van comes out to market, or how thorough does that training need to be?

Craig Collard: Okay, and then maybe just obviously did a tremendous job during the quarter on the rip training with cross-link. Can I just elaborate when you expect to see that revenue trajectory change within relief? Do you have to retrain the cross-linked team when the van comes out to market, or how thorough does that... Training need to be yeah, so we have been along the way, you know, talking about the van and they know that certainly is coming and I think it's obviously anticipated. We do anticipate being fully trained by the time the van launches. And again, so we think that's, you know, certainly going to have an impact, but there will be certainly a briefing post the approval of exactly what we get approved and then, you know, sort of the timing to launch all that.

Speaker Change: Okay, and then maybe just you obviously did a tremendous job during the quarter on the Rip training with cross link.

Speaker Change: Can you just elaborate when you expect to see that revenue trajectory change was in relief and do you have to retrain. The cross linked team when the van comes out to market or how thorough.

Speaker Change: Does that training need to be.

Craig Collard: Yeah, so we have been, along the way, talking about the van, and they know that certainly is coming, and I think it's obviously anticipated. We do anticipate being fully trained by the time the van launches. And again, we think that's, you know, certainly going to have an impact, but there will certainly be a briefing post, the approval of exactly what we get approved, and then you know, sort of the timing to launch and all that. So we'll go through that process again with them. But they are being briefed on, you know, sort of what's going on and what's coming.

Craig Collard: So we'll go through that again with them. But, uh, but they are being briefed on, you know, sort of what's going on with coming.

Unknown Executive: Great. Thanks so much.

Craig Collard: Um, grandson of that progress. Maybe just lastly one for me on the gross margin line. Um, you know, obviously tremendous progress year over year. Yeah. How should we look at this call to compare to the go for it? And that's it from you. Thank you. You know, at this point, again, we've settled along. We think we'll be somewhere in the, you know, kind of low the mid-70s. We anticipate that continuing. Again, the product makes us so forward to make very a little bit, but we should be in our range.

Craig Collard: On the gross margin line, you know, obviously tremendous progress year over year. But how should we look at this quarter compared to the go? You know, at this point, we've settled.

Craig Collard: You know, at this point, again, we've said all along that we think we'll be somewhere in the, you know, kind of low to mid 70s. We anticipate that continuing. Again, with product mix and so forth, it may vary a little bit, but we should be at that rate.

Unknown Executive: Great. Thank you very much. Thanks for it.

Serge Belanger: The next question comes from the line of Serge Belanger with ETAM. Please go ahead.

Carl Byrnes: Next question comes from the line of shared relauncher with ETHAM. See, go ahead. Good afternoon. Thanks for taking my question.

Serge Belanger: Good afternoon. Thanks for taking my question. The first one, Craig, on Zinrulef, can you just give us a picture of the current reimbursement and coverage across the Medicare and commercial segments and how you think that will change once you switch over to no pain next year? And then secondly, on Syngenty, I think a bench trial was held, and things like that.

Carl Byrnes: Um, the first one, Craig, uh, on the general off, can you just give us a picture of what the current reimbursement and coverages across the Medicare and commercial segment and how you think I will change once you switch over to no pain next year. And then secondly, I think a bench trial was held last month or June, late June, um, in the patent infringement lawsuits. Can you just give us an update on when you expect a decision, what potential outcomes could be. Yeah. Sure. Um, actually, sir, Kevin word is what we call as well. I'll let him get the first part of this, and then I'll address this and body fees.

Speaker Change: I think a bench trial was held last month or June.

Speaker Change: In late June.

Speaker Change: And the patent infringement lawsuit can you just give us an update on when do you expect.

Speaker Change: And what the potential outcomes could be.

Speaker Change: And things like that.

Craig Collard: Yes, sure. Actually, sir, Kevin Warder is on the call as well. I'll let him get the first part of this, and then I'll address this in person.

Speaker Change: Yes sure.

Speaker Change: I actually started Kevin words, let me call it well I'll, let him get the first part of this and then I'll address this in body piece.

Speaker Change: Yeah.

Kevin Warner: Yeah. Thanks, Lerge. You know, in regards to the reimbursement picture and how it looks, there's the difference between no pain and a pass through status product. So currently right now, generally to reimburse you the pass through status and select all our hospital patient procedure department patients and all of our AFC patients under Medicare are reimbursed. As far as the commercial payers, that somewhere between 30 and 50% of the commercial payers that varies by state by state region by region. But with no pain, that paradigm kind of switches because of how no pain is phrased and historically that commercial players don't come on to always follow these pass through drug.

Kevin Warner: Yeah, thanks, Serge. You know, in regards to the reimbursement picture and how it looks, there's a difference between no pain and a pass-through status product. So, currently, right now, it's been released to reimburse via the pass-through status. And so, all of our Hospital Outpatient Procedure Department patients and all of our ASC patients under Medicare are reimbursed. As far as commercial payers are concerned, it's somewhere between 30 and 50% of the commercial payers. It varies by state by state, region by region.

Speaker Change: Yeah. Thanks, Serge you know in regards to the reimbursement picture and how it looks there is a difference between no pain and a pass through status products. So currently right now generally reimbursed via the pass through status.

Speaker Change: And so that's all or hospital outpatient procedure department patience and all of our a S C patients under Medicare reimbursed as far as the commercial payers.

Speaker Change: We're between 30 and 50% of the commercial payers. It varies by state by State region by region that said with no pain that paradigm kind of switches because the whole no pain is phrased and historically a lot of commercial payers don't come on and I always follow these pass through drug stipulations, but with no pain and the fact that it has clinical attributes and reasoning for it.

Kevin Warner: That said, with no pain, that paradigm kind of switches because of how no pain is phrased. And historically, a lot of commercial payers don't come on board and always follow these pass-through drug stipulations. But with no pain and the fact that it has clinical attributes and reasoning for using non-opioids and minimizing the impact of opioids in our nation, there's more, I guess, a push for them to go along with this statute and the fact that it could be extended in perpetuity and continue to provide that reimbursement.

Kevin Warner: Depulations but with no pain and the fact that it has clinical attributes and reasoning for using non opioids and minimizing the impact of opioids in our nation. There's more, I guess a push for them to follow along with this statute and the fact that it could be extended and perpetuity and continue to provide that reimbursement. So the commercial payers, if you're whether going to want to be on the right side of the fence on this paradigm to understand the cost efficacies and the clinical efficacies, the overall economic model. So we start to see more commercial pairs to come on board with no pain, and no pain really doesn't change the current reimbursement from the CMS. As you stated, the trial ended in June.

Kevin Warner: So, the commercial payers, if you want to be on the right side of the fence on this paradigm, they understand the cost effectiveness and the clinical efficacy and the overall economic model. So, we expect to see more commercial payers come on board with no pain. And no pain really doesn't change the current reimbursement from the CMS perspective.

Craig Collard: As you stated, the trial ended in June, and again, as we've said all along, we feel very comfortable with what happened in the trial. We feel very strong in our position. And again, this case really comes down to, we have, you know, infringement has sort of been established in the case, and it all really comes down to the obvious. And, again, that's where we feel that the invention that we made here was unique.

Craig Collard: And again, as we've said a long, we feel very comfortable with what happened in the trial. We feel very strong in our positioning. And again, this case really comes down to, we have, you know, infringement has sort of been established in the case. And it all really comes down to, obviously. And again, that's where we feel, you know, the invention that we made here was unique. You know, Merck had this product for years as a prophetess and was unable to get this in this form. And so that really is what this comes down to: is burden of proof there.

Craig Collard: You know, Merck had this product for years as a potent and was unable to get it in this form. And so, that really is what this comes down to, the burden of proof there. And, again, we feel that, you know, Fresenius did not meet that, and we feel very comfortable with our position.

Craig Collard: And again, we feel that, you know, for some of us did not meet that, and we feel very comfortable with our position. And do you expect a court decision? I think it's current. I do so for the 30 months, the 30 months, just actually takes fire in December. Is that when you thank you court decision? Yeah, so there's, there's, yeah, remaining, you know, to be done are closing arguments.

Craig Collard: I think the current for the 31st, the 31st, I should say, expires in December, so when you think you can make a quick decision, yeah, so there's, there's, yeah, remaining, you know, to be done are

Craig Collard: Yeah, so there's, there's, yeah, the only remaining thing to be done are our closing arguments, and then we're expecting a decision to be made in Q4 of this year.

Craig Collard: And then we're expecting a decision to be made through for this year. Thank you.

Clara: Your next question comes from the line of Kalishi with Jeffrey. Please go ahead. Hi, this is Clara on for Kelly. Thanks for taking our question. So, could you remind us how many cross-link wraps are in the, were in the field selling product during second quarter and how that number is going to change in the second half of 2024? And based on the experience they have in the field so far, I was wondering if you've heard any feedback and, you know, if there's anything you think could be added to their training for the remaining wraps or maybe also the existing wraps that will be helpful in selling the product.

Kelly Shi: Your next question comes from the line of Kelly Shi with Jefferies. Please go ahead. Hi, this is Clara. I'm for Kelly. Thanks for taking...

Clara: Hi, this is Clara. I'm for Kelly.

Clara: Thanks for taking our question. So could you remind us how many cross-link reps were in the field selling product during the second quarter and how that number is going to change in the second half of 2024? And based on the experience they've had in the field so far, I was wondering if you'd heard any feedback and, you know, if there's anything you think could be added to their training for the remaining reps or maybe also the existing reps that would be helpful in selling the product. Thank you.

Speaker Change: Do you think or could be added to their training for the remaining routes or maybe also the existing rough that would be helpful and selling that product. Thank you.

Clara: Thank you.

Craig Collard: David Crosslink, which were North Carolina, Stockholm, and Georgia. And then we moved from there. But we ended up getting, I think, by Q2, we had a couple of hundred reps, and we had just migrated to maybe 12 states. And so where we sit now is 561 reps in 28 states. And that continues to grow. And again, we believe we'll be over 650 at the time of launch with the van. And so, if you think about inflection and how this really comes together, we've had a lot of things happen this year, obviously, with the No Pain Act, the expansion of our label, getting the cross-linked folks trained, but there's another piece to this, too, which is really the integration with our sales force and managing that and working together and targeting accounts and all that.

Pedro: Pedro crossing which were North Carolina.

Speaker Change: <unk> in Georgia, and then we move from there, but we end up getting update by Q2, we had a couple of hundred reps and we adjust migrate to maybe 12 states and so where we sit now is 561 reps.

Speaker Change: In 28 states and that continues to grow and again.

Pedro: We believe we will be over 650 at the time of launch with the van so.

Pedro: If you think about sort of inflection in how this really comes together.

Pedro: We've got a lot of things happened this year, obviously with no pain at the expansion of our label daily crossings folks trained and but theres. Another piece of this too which is really the integration with our sales force and in managing that and working together.

Craig Collard: Some of that just takes time. I've said all along that as we launch the van and really move out of Q4 into Q1 of 25 is really when we see a majority of inflection taking place into next year. Again, some of this just takes time in order to get all this fully up to speed and integrated.

Craig Collard: I said all along that we view that as we lost the van and really kind of move out of Q4 into Q1 to 25 is really when we see, you know, the majority of inflation taking place into next year. And again, so this just takes time in order to get, you know, all this sort of full-up speed to integrate.

Unknown Executive: Again, if you'd like to ask a question, press *1 on your telephone keypad.

Carl Byrnes: Again, if you'd like to ask a question, press star 1 on your telephone keypad. Your next question comes from the line of Carl Byrnes with Northland Capital Markets. Please go ahead.

Carl Byrnes: Your next question comes from the line of Carl Byrnes with Martin, Northland Capital Markets. Please go ahead. Thanks for the question, and congratulations on your progress. In the event that we see a generic expral down the road, how do you see that changing the dynamics, if at all, for a similar level? Actually, then I've been followed.

Carl Byrnes: Thanks for the question, and congratulations on your progress. In the event that we see a generic XPREL down the road, how do you see that changing the dynamics, if at all, for Xenrolab? Thanks. And I have a follow-up as well.

Kevin Warner: Hey, Carlos, Kevin Warner. I'll jump in and take that one. Appreciate that. You know, I guess the question is if we see a generic and then, if at all, how would it impact the release? You know, there's multiple barriers here to the access to the market with them, you know, the current brand of manufacturer has multiple patents that they feel confident in. They've yet to receive a sample, or if it's known whether the generic manufacturer would be able to scale, if you will, as they've always cited that as being very challenging. But that said, a generic product, if it did come to market, a second major barrier would be the possible lack of financial benefits.

Kevin Warner: Hey, Carl. It's Kevin Warren. I'll jump in and take that one. I appreciate that.

Kevin Warner: You know, I guess the question is, if we see a generic and then, if at all, how would it impact Xen Relief? You know, there are multiple barriers to access to the market with them. You know, the current brand of manufacturer has multiple patents that they feel confident in. They've yet to receive a sample, or it's unknown whether the generic manufacturer would be able to scale, if you will, as they've always cited that as being very challenging.

Kevin Warner: But that said, a generic product, if it did come to market, a second major barrier would be the possible lack of financial benefit. So historically, most generics come to market, obviously, as a discount to the brand of product to provide a financial advantage to our healthcare system. But in today's current economic climate, specifically with the No Pain Act and broadening commercial reimbursement, those advantages would be muted, if you will.

Kevin Warner: So historically, most generics come to market, obviously, as a discount to the brand of product to provide a financial advantage to our healthcare system. But in today's current economic climate, specifically with the no-paying act, then broadening commercial reimbursement, those advantages would be mute, if you will. So generally, for even expral to that extent, with the reimbursement package from no-paying to follow on commercials, could Trump would utilizing a generic sized product.

Kevin Warner: So Xen Relief or even Xpiril, to that extent, with the reimbursement package from No Pain and the follow-on commercials, could trump utilizing a genericized product. You know, when looking at the possibility of more non-opioid analgesics just in general coming to market, I see synergies rather than antagonism. You know, with the practice of medicine, moving to opioid-sparing therapies, novel mechanisms are needed in order to provide the most effective multimodal therapy.

Kevin Warner: You know, when looking at the possibility of more non-opioid analgesics just in general, I see synergies rather than antagonism. You know, with the practice of medicine moving to opioids-bearing therapies, novel mechanisms, you know, are needed in order to provide the most effective multi-modal therapy. So whether it's generic liposomal bupevicane as a regional block, or an oral navel 1-8 inhibitor, like Vertex, is that true gene. You know, I see opportunities for Zenerleaf as the best-in-class local installation product to be combined with the other modalities as we all seek one common goal, right? And that's to minimize or eliminate the need for opioids.

Kevin Warner: So whether it's generic liposomal bupivacaine as a regional block or an oral NAV1.8 inhibitor like Vertex or Zetragine, you know, I see opportunities for Xen Relief as the best-in-class local installation product to be combined with the other modalities as we all seek one common goal, right? And that's to minimize or eliminate the need for opioids. And then possibly most importantly is who's your prescriber, if you will. So for Xen Relief, it's the surgeon doing the installation process.

Kevin Warner: Looking at a fundamental level, though, just briefly, you know, considering liposomal bupevicane as a competitor or not, you have to look at the key differences of what makes a drug. A drug, right? And if you will, so the active ingredients, the dose, the route, the frequency, the mechanism of action, and in the end, the primary prescriber. So these all differ between Zenerleaf and liposomal bupevicane. They're different drugs. One's a combo, one's a single agent. The dose is different. Up to 400 milligrams bupevicane is Zenerleaf, 266 of liposomal bupevicane. Zenerleaf's extended release, liposomal is not. Route of administration is installation for Zenerleaf injection for liposomal bupevicane, also the site of action, whether it's local or regional.

Speaker Change: Well one of the single agent the doses different up to 400 milligrams bupivacaine as Interleaf 266 of diapers on will be to have again didn't release extended release lysosomal is not route of administered administration is installation freezing relief injection for life is only bupivacaine also the site of action, whether it's low.

Kevin Warner: And largely with liposomal now, it's mainly the anesthesiologist doing regional blockades with it. So huge differences overall when looking at whether it is truly a comparator when you look at those fundamentals. And in the end, the last piece I'd mention is clinical efficacy, right? Xen Relief has it proven through 72 hours over standard of care for pain reduction, severe pain reduction, and opioid reduction across multiple clinical trials, but also real-world trials, even head-to-head against liposomal acid, showing benefit. So it makes those decisions fairly simple for our institution.

Speaker Change: <unk> or regional and possibly most importantly, as who's your prescriber. If you will so presumably if it's the surgeon doing the installation project process and largely what life was almost now it's mainly the anesthesiologist doing regional blockades with it so huge differences overall, we're looking at is it truly the comparator when you look at those.

Kevin Warner: And then possibly, most importantly, is who's your prescriber, if you will. So for Zenerleaf, it's the surgeon doing the installation process. And largely with liposomal now, it's mainly the anesthesiologist doing regional blockades with it. So huge difference is overall when looking at, is it truly a comparator when you look at those fundamentals?

Kevin Warner: And in the end, the last piece I'd mention is the clinical efficacy, right? Zenerleaf has it proven through 72 hours, overstandered a care for pain reduction, severe pain reduction, and opioid reduction, cross multiple clinical trials, but also real world trials, even had to head against liposomal showing benefit. So it makes those decisions fairly simple for our institution. Great, thanks, Brandon. It's very helpful.

Pedro: Rentals.

Speaker Change: And the last piece I'd mention is the clinic clinical efficacy rate generally has it proven through 72 hours over standard of care for pain reduction severe pain reduction and opioid reduction across multiple clinical trials, but also real world trials, even head to head against life of XOMA showing benefit. So it makes those decisions fairly simple for our.

Pedro: <unk>.

Carl Byrnes: Thanks, Brendan. It's very helpful. On a different topic... What are you seeing with respect to opportunities? You know, what sort of timing might we expect in terms of smackdown? Yeah, no, Carl. Thank you. Great question.

Speaker Change: Great. Thanks, that's very helpful.

Craig Collard: On a different topic, what are you seeing with respect to opportunities for potential complimentary token acquisitions? And what sort of timing might we expect in terms of some activity there? Thanks.

Speaker Change: Different topic, what are you seeing with respect to opportunities for potential complementary tuck in acquisitions.

Speaker Change: What sort of timing might we expect in terms of some activity there.

Craig Collard: Yeah, no, Carl, thank you. Great question. I mean, again, as we really tried to put out there, certainly on this call and on prior calls, really getting our hands around the business and managing it. I think we've shown that, you know, we've certainly done that through the reduction of expenses and that type of thing. And now it's about growing the product and, you know, the partnership with Crosslink and some of these things.

Craig Collard: You know, Carl, thanks for the great question. Again, as we really started to put out there something in this call and prior calls, is really getting our hands around the business and managing it. I think we've shown that we've certainly done that through the reduction of expenses, and that type of thing. And now it's about growing product and the partnership of cross-link and some of these things. But really, the next phase is what else can we do from an M&A standpoint?

Craig Collard: Again, as we really tried to put out there, certainly on this call and on prior calls, is really getting our hands around the business and managing it. I think we've shown that, you know, we've certainly done that through the reduction of expenses and that type of thing. And now it's about growing the product and, you know, the partnership across

Craig Collard: But really, the next phase is, what else can we do from an M&A standpoint? And again, this management team has been together before. We've done these things. And we're bringing in, this will be announced in the next few weeks, a business development person to head that up. And again, we're going to get a lot more, I guess, a lot more active, if you will, in that area, looking at things and trying to bring in complementary types of assets or companies that would be accretive to what we're doing.

Craig Collard: And we're going to be fairly active here in a very short timeframe. Excellent. Thanks, Carl. If there are no... further questions? We just want to thank everybody for being on the call today, and we look forward to next quarter's call.

Craig Collard: And again, this management team has been together before; we've done these things, and we're bringing in, this will be announced in the next few weeks, we're bringing in a business development person to head that up. And again, we're going to get a lot more active, if you will, in that area, looking at things and trying to bring in complimentary types of assets and our companies that would be agreeable to what we're doing. And we're going to be fairly active here in a very short time period. Excellent. Thanks. Thanks for all.

Unknown Executive: If there are no further questions, we just want to thank everybody for being able to call today, and we look forward to the next course.

Unknown Executive: That will conclude today's call.

Operator: That will conclude today's call. You may now disconnect.

Unknown Executive: You may now disconnect.