Q1 2025 Pacira BioSciences Inc Earnings Call
Good day, and thank you for standing by and welcome to the first quarter 'twenty to 'twenty five assume a biosciences earnings conference call at this time, all participants and they sell only mode. After the speaker's presentation, there will be the question and answer session.
Ask a question during this session you will need to press star one one on the telephone keypad, you Wouldnt here and let somebody take message. It bother you had this race to withdraw your question. Please press stop online again, please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your first speaker today.
Speaker Change: And Mexico head of Investor Relations. Please go ahead.
Speaker Change: Thank you and good afternoon, everyone. Welcome to today's conference call to discuss our first quarter of 2025 financial results. Joining me are frankly, Chief Executive Officer, Jonathan <unk>, Chief Medical Officer, and Shaun Cross Chief Financial Officer, Tony Malloy, Chief legal and compliance officer.
Speaker Change: And Brendan he hadn't Chief commercial officer are also here for today's question and answer session.
Speaker Change: Before we begin let me remind you that this call will include forward looking statements are subject to the safe Harbor provisions of federal Securities laws.
Speaker Change: Our statements represent our judgment as of today and May involve risks and uncertainties that may cause our actual results performance or achievements to differ materially for information concerning risk factors that could affect the company. Please refer to our filings with the SEC either available from the D. C C.
Speaker Change: Your own website.
Lastly, as a reminder, we will be discussing non-GAAP financial measures on today's call. A description of these metrics along with our reconciliation to GAAP can be found in the news release issued earlier. This afternoon with that I will now turn the call over to frankly.
Speaker Change: Thank you Susan and good afternoon, everyone.
Speaker Change: I'm pleased to say 2025 is off to a solid start we started the year by introducing our funded by 30 to value creation.
Speaker Change: To advance our transition into an innovative biopharmaceutical company.
Speaker Change: To remind you the plan supports two broad strategic imperatives.
First accelerating growth or strong commercial based business and second advancing our innovative pipeline of potentially transformative.
Speaker Change: Like PCR, it's dual one.
Speaker Change: And just a few short months, we've achieved early in meaningful part by 30 milestones.
Speaker Change: With respect to growing our commercial based business we.
Speaker Change: We successfully settled our patent infringement litigation for EXPAREL.
This agreement recognizes the strength of our IP and establishes an exclusivity runway extending to 2039.
Speaker Change: We expanded our EXPAREL patent estate enlisted our 18th patent in the Fda's Orange book with additional patents what kind of.
Speaker Change: And our legal team recently secured a favorable court ruling.
Speaker Change: Eliminates our RDF royalty obligation for EXPAREL.
Speaker Change: This will benefit EXPAREL gross margins by low single digit percentage.
Speaker Change: As for the pipeline here too we saw strong progress.
Speaker Change: First we added a novel platform our preclinical portfolio.
Speaker Change: Talented research team with the acquisition of Tiki buyout second multiple new P starts to what datasets are reading out this year.
Speaker Change: The new data continue to underscore the promise and disease modifying potential of <unk> 201, and a huge cat platform.
Speaker Change: Finally patient dosing is officially underway in our phase II study of <unk> 201, and osteoarthritis of the knee.
Speaker Change: I'll start by expanding a bit more on the settlement of EXPAREL litigation.
Speaker Change: We believe this positive outcome recognized the strength of our EXPAREL.
Speaker Change: It also provides important short and long term visibility to confidently advance or $5 30 plan.
Speaker Change: Fortify our leadership in musculoskeletal pain.
Speaker Change: Importantly, the agreement as volume limited, but no pricing restrictions.
Speaker Change: Ts or technology transfer.
Speaker Change: Resilience and its partners are solely responsible for the future manufacture and import of the generic product.
Speaker Change: As a reminder, this is a <unk>.
Speaker Change: Sole generic and the filer.
Speaker Change: Any future filer, we'd have to overcome a significant number of legal hurdles given our growing number of Orange book listed patents.
Speaker Change: In short the agreement sets the stage for long term EXPAREL growth and market expansion for the next 14 years.
Speaker Change: And with only one generic and ample room for increased penetration.
Speaker Change: We expect EXPAREL to generate significant cash flow.
Speaker Change: Seeable future.
Speaker Change: This provides a perfect segue to no pain, we have an important opportunity to significantly expand EXPAREL utilization.
Speaker Change: As you know no pain provides a reimbursement pathway for 18 million outpatient surgical procedures.
Speaker Change: Approximately $6 million. These are scams procedures, which are now covered under no pain the.
Speaker Change: The remaining 12 million procedures are covered by commercial plans, but we expect no pain like coverage policies will be implemented over time.
Speaker Change: As a reminder, it will take time for the market to broadly adopt a new reimbursement.
Speaker Change: We're seeing encouraging leading indicators in this early phase of the launch.
Speaker Change: First quarter average daily EXPAREL sales and volumes were up approximately 7% over 2024 after adjusting for two fewer selling days in 2025.
Speaker Change: This is more than double the low single digit year over year growth rate reported in the last two years.
Speaker Change: Beyond EXPAREL sales other positive early indicators include.
Speaker Change: An increase of more than 30% in both new and reactivated EXPAREL accounts.
Speaker Change: Customer expansion across all sites of care.
Speaker Change: Malkin utilization of our new <unk>, J code, indicating a rising level of awareness around enhanced reimbursement policies.
Speaker Change: Growth within community hospitals, and ambulatory surgical centers. These accounts, which typically have fewer decision makers are embracing the no paying value proposition.
Speaker Change: We're incorporating best practices from these early wins into our discussions with larger health systems.
Speaker Change: And formulary wins are starting to come in for integrated delivery networks. We expect these wins to grow as the year progresses, while we navigate the numerous stakeholders within these large scale networks.
Speaker Change: But we're encouraged by the early positive trends its important to keep in mind that we are driving change for more than a decade of established processes within complex delivery systems.
Speaker Change: As you know claims that it can take four more months to process and we look forward to sharing quarterly updates as more reliable market data become available for second half of the year.
On the payer front, we continue to highlight <unk> value proposition to commercial plans with real world evidence. We're pleased to see an increasing percentage of claims coming in from those plans that have adopted no pain like policies.
Speaker Change: There's two indicates a rising level of awareness among healthcare providers and organizations about the enhanced reimbursement that's now available.
Speaker Change: Since our last call additional commercial plans have adopted no pain like coverage and we anticipate more to follow suit in the months ahead.
Speaker Change: Now turning to our other products, so rather than iron ore.
Speaker Change: As a reminder, late last year, we restructured our field base teams to prioritize EXPAREL and maximize the opportunity of no pain.
Speaker Change: As part of our plan to establish a commercial medical and market access powerhouse, we pivoted our existing sales force to focus on EXPAREL.
Speaker Change: In parallel we on boarded new sales teams to focus specific be answer rata Niobrara given specific capabilities required to service these customers.
Speaker Change: As a result first quarter sales were impacted by the transition given that both products are promotion sensitive.
Speaker Change: This should naturally subside with some time as a team strengthens relationships and begins to hit its stride in the second quarter.
Speaker Change: In addition, our three salesforce structure now has the capability and capacity to carry additional products.
Brazil Brito: Brazil Brito, we're rolling out several new programs at spring. Among these are establishing value based contracts with large accounts that have demonstrated interest and are capable of driving volume growth.
Brazil Brito: Living us with their Medicare population, but we have a very good access and coverage there.
Brazil Brito: There is no prior authorization requirement for CMS patients in contrast to most commercial plans.
Brazil Brito: This allows a regular treatment to be administered during the same office visit that a provider decides to treat.
Brazil Brito: Driving awareness surrounds a rather unique delivery mechanism and strong safety and pharmacokinetic profile. This allows for fewer systemic effects such as blood glucose spikes, a key advantage for diabetic patients and their healthcare providers.
Brazil Brito: In assessing strategic partnerships to expand our breadth and depth of customer coverage.
Brazil Brito: In parallel with our commercial activities, our phase III Registrational study is advancing in shoulder OA and on track for topline results next year.
Brazil Brito: If approved so rather than it would be the first and only long acting steroid approved for use in shoulders.
Brazil Brito: With a sizable market with approximately 1 million intra articular injections administered each year.
Brazil Brito: Switching gears to <unk> as you might recall this year launching an innovative smart tip, specifically designed for use as a medial branch block to relief low back pain.
Brazil Brito: Millions of Americans suffer from chronic low back pain, and often lead to poor quality of life disability loss wages and persistent prescription opioid use.
Brazil Brito: We're pleased with what we're seeing from the first phase of launch initially were focused around a small group of spine key opinion leaders to gather insights and feedback before expanding to a broader targeted audience.
Brazil Brito: The medial branch smart chip stands to grow the number of <unk> procedures in the second half of the year beyond.
Brazil Brito: Lastly, our Registrational study of <unk> for the treatment of specificity is advancing with topline results expected next year.
Brazil Brito: There is significant lack of innovation and patient satisfaction. This debilitating condition.
Brazil Brito: We believe <unk> represents a novel approach for patients with moderate to severe specificity seeking better treatment options.
Brazil Brito: In addition to our label extension studies for Silverado Niobrara revalued other opportunities with near and mid term path to revenue accretion.
Brazil Brito: So a valued commercial partnerships in certain key markets outside of the U S, where we believe our products can deliver value.
Brazil Brito: Turning now to our clinical pipeline, we're focusing on becoming a therapeutic area leader and muscular skeletal pain and adjacencies.
Brazil Brito: These are large markets significantly lacking innovation.
Brazil Brito: Nearly one in four Americans are living with chronic pain and are actively seeking new interventions that address its underlying costs.
Brazil Brito: As we look at new product development, we're prioritizing mid to late stage de risked opportunities.
Brazil Brito: Specifically product candidates with validate mechanisms and established reimbursement pathways.
Speaker Change: <unk> is a great example, that we believe has the potential to revolutionize the treatment of osteoarthritis.
Speaker Change: Before I turn the call over to Jonathan for a review of our PCR 201 program I'd like to highlight our recently announced stock repurchase program.
Speaker Change: Continued focus on disciplined capital allocation.
Speaker Change: This $300 million authorization doubles, the amount authorized under the previous stock repurchase program.
Speaker Change: This decision underscores our commitment to delivering shareholder value and the confidence we have in our growth outlook.
Speaker Change: We believe the sale of shares offer an attractive opportunity at the current valuation, particularly in light of the settlement of EXPAREL patent litigation.
Speaker Change: This settlement agreement solidifies, a strong cash flow generating profile of our business, but the certainty of an exclusivity runway to 2039.
Speaker Change: We believe this will drive significant growth and value as we advance followed by 30.
Speaker Change: With that I'd like to turn the call over to Jonathan to provide additional details on PCR still one and our recently acquired <unk> platform Jonathon.
Jonathan: Thank you Frank and good afternoon to all joining us today.
Jonathan: Excited to share a few highlights on the progress made with <unk> 201, which we believe has the potential to be an important disease modifying therapy for osteoarthritis.
Jonathan: <unk> 201 targets, the IL, <unk> pathway, which triggers inflammation in response to pathogens and to cellular stress.
Jonathan: Importantly, this is a well validated derisked target.
Jonathan: There are two FDA approved drugs targeting the IL <unk> pathway.
Jonathan: <unk> used to treat other inflammatory conditions.
Jonathan: These drugs are not practical for osteoarthritis as they would require very high doses of daily injections directly into the choice.
Jonathan: <unk>.
Jonathan: As a core regulator of this pathway and helps to keep inflammation in balanced by turning it off when it's not needed.
Jonathan: As we get older our bodies have a more challenging time maintaining that balance.
Jonathan: As a result, we develop chronic <unk> driven inflammation and eventually causes joint damage and pain.
Jonathan: The <unk> hundred one we are rebalancing the inflammatory scales by mimicking the body's natural response to inflammation at the cellular level.
Jonathan: This targets the root cause of osteoarthritis.
Jonathan: Other than just alleviating symptoms.
Jonathan: We remain highly encouraged by the data from our large 72 patient study in OA of the knee.
Jonathan: We continue to follow these patients and have multiple new datasets reading out this year.
Jonathan: Last month, we presented encouraging data at the Osteoarthritis Research Society International meeting in this subgroup analysis, a single injection demonstrated two years of improvement in pain stiffness and function.
Jonathan: Fortunately clinically meaningful efficacy was observed across all structural severity suburbs.
Jonathan: Included in the most severe with a Carol.
Jonathan: Sure.
Speaker Change: Most osteoarthritis studies do not include the KL grade four patients as advanced stage is particularly challenging to treat.
Speaker Change: Next week the team will be presenting at the annual meeting of the American Society of gene and cell therapy.
Speaker Change: Our presence will include a podium presentation, where we will be sharing immunogenicity data.
Speaker Change: These data will provide important insights into the potential for re dosing.
Speaker Change: Now this would be a key feature given that many of our patients have multiple points impacted.
Speaker Change: We will also be hosting a clinical symposium to highlight the advantages of our high capacity adenovirus in our <unk> platform.
Speaker Change: In June we will be at the annual meeting of the European Alliance associations for Rheumatology here.
Speaker Change: Here, we wouldn't be protecting the three year follow up data from our phase one study.
Speaker Change: As you know we are advancing our phase III study in knee OA and patient dosing is underway.
Speaker Change: Expect to report topline data from part a of the study late next year.
Speaker Change: This study is generating a high level of interest from investigators, which underscores the significant unmet need and lack of innovation in osteoarthritis.
Speaker Change: To fully describe the assent study design, we have made an educational webinar available in the investors section of our website.
Speaker Change: We invite you to watch and learn more about our development program for this exciting asset.
Speaker Change: As you know <unk> hundred one is our lead program for our recently acquired <unk> gene therapy vector platform.
Speaker Change: This platform solves many of the challenges that have made gene therapy inaccessible for common diseases.
Speaker Change: The <unk> vector, it's much more efficient at delivering genes into cells compared to many other gene therapies that provide an adenovirus associated virus.
Speaker Change: Our AAV vectors as a result, the desired effects can be achieved but much smaller doses.
Speaker Change: The doctor using the <unk> platform can carry up to 30000 base pairs of DNA <unk>.
Speaker Change: This enabled gene therapy with multiple or a larger teams compared to AAV vectors.
Speaker Change: And as locally delivered and sustained this differs from systemic approaches requiring much higher dosing to achieve the desired effect.
Speaker Change: Lower doses covered with efficient manufacturing support a favorable and commercially viable cost of goods profile.
Speaker Change: Another key advantage over other gene therapies.
Speaker Change: In addition to this novel local delivery platform. This transaction brings us key research talent and a promising preclinical portfolio.
Speaker Change: The team is carefully looking at these opportunities, which may have disease modifying potential in other prevalent musculoskeletal diseases.
Speaker Change: We also have identified numerous well validated cytokines that would be strong candidates for the <unk> platform.
Speaker Change: So those areas outside of our strategic focus we see potential for partnering.
Speaker Change: This could extend the <unk> platform into other conditions of high unmet need for localized treatment with a therapeutic protein is warranted.
Speaker Change: Bottom line.
Speaker Change: Which card platform directly aligns with our five by 30 objectives of having five novel development programs and five partnerships by 2030.
Speaker Change: It offers great potential to position us as a leading developer of novel treatments for the underlying cost chronic pain.
It also presents the opportunity for <unk> to be a strategic partner of choice and drive value through future royalty revenue.
Speaker Change: We look forward to sharing more detail on the advancement of <unk> 201, and other <unk> based product development opportunities on future calls.
Speaker Change: With that I will turn the call over to Shaun for a review of the financials.
Shaun: Thank you Jonathan I'll start with an update on sales and margin trends.
Shaun: First quarter EXPAREL sales increased to $136 5 million versus $132 4 million in 2024, driven by volume growth.
Shaun: On an average daily basis EXPAREL.
Shaun: Sales and volumes were both up by approximately 7% after adjusting for two fewer selling days in 2025 versus 2024.
Shaun: First quarter is a rate of sales declined to $23 3 million versus $25 8 billion reported in 2020, Florida.
Shaun: As Frank mentioned this was largely attributable to transition to our new sales forces for <unk> Niobrara.
Speaker Change: Looking ahead, we believe the foundation is set for a return to growth the remainder of the year.
Speaker Change: <unk> sales were slightly up at $5 1 million compared to 5.0 million the first quarter of 2024.
Speaker Change: Turning to gross margins.
Speaker Change: On a consolidated basis, our first quarter.
Speaker Change: non-GAAP gross margin improved to 81% versus 72% last year.
Speaker Change: Gross margins continue to benefit from the improved costs and efficiencies of our enhanced larger scale manufacturing process at <unk>.
Speaker Change: Went live last year in San Diego.
Frank: As Frank noted we had a <unk>.
Speaker Change: Recent win in the Nevada Court.
Frank: Will benefit future EXPAREL growth gross margins.
Frank: By a low single digit percentage by eliminating RDF royalties.
Frank: For non-GAAP R&D expense in the first quarter increased $23 1 million from $16 4 million reported last year.
Frank: This increase relates to startup activities for the phase II study of <unk> 201.
Frank: Fences associated with Silverado shoulder study.
Frank: Development.
Frank: non-GAAP SG&A expense came in at $76 2 million for the first quarter.
Frank: This was up from $63 8 million last year.
Frank: This increase was largely due to investments in our commercial medical and market access organization targeted.
Frank: Targeted marketing initiatives initiatives and the expansion of our field force.
Frank: All of this resulted in another quarter of significant adjusted EBITDA of $44 1 million for the first quarter.
As for the balance sheet, we continue to be in a position of strength with $494 million in cash and investments.
Frank: Business that is producing significant operating cash flow. We believe we are well equipped to answer a fiber <unk> growth strategy to create shareholder value.
Frank: We're taking a.
Frank: Disciplined approach to capital allocation and we're focusing on three areas.
Frank: First accelerating growth and our best in class based business.
Frank: Second advancing an innovative pipeline coming into winter and musculoskeletal pain and Adjacencies.
Frank: And third Opportunistically, returning capital to shareholders.
Speaker Change: Frank highlighted earlier the board recently authorized a new share repurchase program <unk> 300 billion.
Speaker Change: Given what we believe to be a significant disconnect in our current market valuation was buyback authorization will run through the end of 2026.
Speaker Change: Going forward, we will continue to be highly strategic balancing favorable operating margins, while executing our fiber <unk> growth strategy.
Speaker Change: We expect to prioritize.
Speaker Change: Opportunities that benefit operating margins to further enhance value for shareholders.
Speaker Change: This includes carefully investing in our best practice commercial medical and market access powerhouse and targeted marketing initiatives.
Speaker Change: In parallel we will work to advance our pipeline of potentially transformative assets.
Speaker Change: <unk> Q1, as we transition into an innovative biopharmaceutical organization.
That brings us to our full year P&L guidance for 2025, which severity we are reiterating as follows.
Speaker Change: Total revenue of $725 million to $765 million.
Speaker Change: As Frank mentioned, we are pleased with the positive early signs and growing level of awareness around okay.
Speaker Change: That said it will take time for broad adoption and we expect a more meaningful uptick to begin in the second half of the year.
Speaker Change: non-GAAP gross margins of 76% to 78% non-GAAP R&D expense of $90 million to $105 million.
Speaker Change: non-GAAP SG&A expense of $290 million to $320 million stock.
Speaker Change: Stock based compensation of $56 million to $61 million.
Speaker Change: Lastly for those modeling adjusted EBITDA, we expect our full year 2025 depreciation expense.
Speaker Change: Approximately $30 billion.
Speaker Change: Lastly, and not surprisingly we have recently been asked several questions about the impact potential tariffs.
Speaker Change: As a reminder, all of our intellectual property is domiciled in the U S. The.
Speaker Change: The majority of our manufacturing takes place in the U S.
Speaker Change: We have the capacity to allocate more EXPAREL manufacturing could be U S.
Speaker Change: Based upon everything proposed today, you do not expect a material impact on our operations.
Speaker Change: Recognizing this is an evolving situation.
Frank: We're closely monitoring developments and committed to minimizing the potential impact on the business and with that I'll turn the call back to Frank.
Frank: Thanks, Sean in closing I would emphasize the transformative journey our company has been undergoing.
Frank: With our <unk> strategy, we have a clear path for future growth and value creation.
Frank: Well on our way to becoming a pioneering biopharmaceutical company and a leader in the musculoskeletal pain and Adjacencies.
Frank: Our best in class commercial based businesses generate significant cash flow and is poised for accelerated top line growth <unk>.
Frank: This is anchored by EXPAREL, which developed positioned to continue to set new standards in patient care in the near and long term.
Frank: <unk> our novel locally administered gene therapy product candidate for common diseases like osteoarthritis.
Frank: This exciting asset continues to demonstrate its potential to revolutionize the treatment of osteoarthritis.
Frank: Our phase III development program is enrolling and on track for the first data readout next year.
Frank: And our proprietary first of its kind <unk> platform has the potential to unlock gene therapies for common diseases affecting millions of patients.
Frank: Thank you again for joining us today and for your continued support and trust in our mission to deliver innovative non opioid therapies to transform the lives of patients with.
Frank: With that operator, we're ready to open the call for questions.
Speaker Change: Thank you Jim participants as a reminder, if you wish to ask a question. Please press star one on your telephone keypad and Lakeville and name to be announced to withdraw your question. Please press star one again.
Speaker Change: Nathan Boyle will compile the Q&A roster this will take a few moments.
Speaker Change: And that will go and take our first question.
Speaker Change: And this comes from the line of Gregory <unk> from RBC capital markets. Your line is open. Please ask your question.
Speaker Change: All right Frank and team, it's a niche on for Gregg. Thanks for the update this quarter and for taking our questions. Just a couple from US first if you could just provide some color on what proportion of patients on average are covered with Medicare and with no pain be applicable for within each surgical segment are there any coverage trends within that you are taking notice of and second on <unk> hundred one.
Speaker Change: Are you hearing from docs and patients with respect to what needs to be shown to encourage wide adoption should a therapy such as it entered the market. Thanks so much.
Speaker Change: Thanks, Thanks, Sean It's frankly here. Thanks for the question. So your question was about the proportion of patients covered by Medicare.
Brandt: And now let me turn it over here to Brandt, our chief commercial officer, and he can speak to that sure. Thanks for the question.
Brandt: As you would suspect there is a little bit.
Brandt: The difference between inpatient and outpatient we have more commercial coverage in the inpatient segment, a little over 50%, but in the outpatient hospital outpatient setting and ASC it skews.
Brandt: A little bit more towards the Medicare side.
Brandt: On the <unk> side, and then for ASC, it's principally commercial almost two thirds three quarters of our business would be found.
Brandt: Commercially covered assets.
Brandt: The second question was around 201, and what we're hearing from clinicians on what we need to show for wide adoption.
Brandt: At a high level, what I would say here is based on our market research and speaking with the community current standard of care provides roughly three to six months of benefit and to the extent that we can provide a year or more that's considered transformative game changing.
Brandt: And so that's why we're particularly enthusiastic about the two year data, we've been able to share so far.
Speaker Change: As Jonathan mentioned, we will be sharing our three year data later on this year.
Speaker Change: Great. Thank you so much.
Brandt: Thank you.
Speaker Change: Now we will go and take our next question.
Speaker Change: And the question comes from the line of Gary Nachman from Raymond James Your line is open. Please ask your question.
Speaker Change: Alright, Thanks, and good afternoon, so first regarding no pain.
Speaker Change: You've talked about some of the logistical challenges with hospital systems benefiting from no pain. What are you doing to help expedite that from your end.
Speaker Change: The review programs that you have in place and are you working with any third parties to help you get hospitals online faster.
Speaker Change: And then just talk a bit more about how overall education of know pain is going for physicians and hospitals in general.
Speaker Change: Where awareness is now <unk>.
Speaker Change: Let's say the start of the year and then I have a follow up.
Speaker Change: Sure.
Speaker Change: Thanks for the question, Gary and just at a high level before I turn it over to Brian here at a high level.
Speaker Change: Said very very consistently that it's.
Speaker Change: Can it be more the second half the year until we really see traction for all the reasons. We described we are seeing some good early.
Speaker Change: <unk>.
Speaker Change: And certainly the things that we see in the smaller institutions and other.
Speaker Change: Settings, we can apply to these bigger institutions, but let me turn it over to Brent to talk here a little bit more yes. Thanks for the question and I think.
Speaker Change: Trying to really address where we've seen our early progress, which I think we have translated into.
Brent: Our path forward for larger ideas I think things are going largely as we expected. So in the house in the community hospital setting and the ambulatory surgery centers, we're seeing significant growth in adoption and the reason we're seeing that as there are fewer decision makers easier to communicate the note.
Brent: Pain message as well as the separate J code.
Brent: But concurrently we're also seeing formulary wins at IBM, where there <unk>.
Brent: as has been suggested in the latter part of the year as that as it works its way through the system.
Speaker Change: So let me just add to that Gary that, as I mentioned in my comments,
We have prioritized our resources to expral.
Field Force, and other field facing.
resources, as well as in-house.
Speaker Change: Resources, and so this is how we're ensuring that we have focus on this.
Speaker Change: and again as more reliable market data become available as we progress in the course of the year.
Speaker Change: We'll be able to share with you some data that we can trend over time consistently . . . . . . .
Speaker Change: So, the bottom line, as Prince said, is where I think run on track with where we expect it to be, and we expect that we'll continue to see the ramp with respect to no bang [inaudible]
David Amsellem, David Amsellem, David Amsellem, David Amsellem
Speaker Change: Okay, great. And then, just on the recent settlement agreement with Frasenias, now that you have...
Speaker Change: line of sight of no generics for all through the end of the decade. Discuss your priorities a bit more in terms of allocating capital. So how much will you be spending on the commercial efforts?
Speaker Change: to accelerate experelle versus spending on the pipeline and also looking to expand the pipeline through in licensing deals. And, you know, would you consider doing a larger transaction for on-market products and would you only focus on the paint space or potentially look at some adjacencies?
Thank you.
Speaker Change: Yeah, thanks for the question, Gary, and before I turn it over to Shawn here to talk about cap allocation, let me just say it at a high level. We're very pleased with the settlement.
Speaker Change: This is a volume limited settlement, provides visibility out to 239.
Speaker Change: That's number one. And as you know, even in the first year, it's high single digits and it gradually goes up from that. And the last few years, it's steady at high, high 30s.
is what we've stated publicly, right? [inaudible]
Speaker Change: So, that combined with the fact that right now, as we've defined our market, our penetration is still relatively low [inaudible]
Speaker Change: In fact, in the high single digits, if you aggregate it...
Speaker Change: So we have plenty of room to grow and we've got visibility now out to 20-30-9 so that says context and now let me turn it over to Shawn for a couple of allocation priorities
Thank you.
Sean: Yeah, thanks for the question. So, similar to the last time we all got together, we're just to read or read or review the Capitol Allocation Strategy.
Speaker Change: Frank mentioned some theories of focus, investing in the base business to capitalize on no
Speaker Change: with the goal of accelerating top line growth as we've articulated in the 5x30.
Speaker Change: Advancing very thoughtfully, an innovative pipeline focused on musculoskeletal pain into the chasing seas and then as we announced earlier, we're turning capital to Cheryl Holders.
Thank you.
Speaker Change: Board authorized an increase in the share buyback, which is now at 300 million.
and it runs through the end of 2026. David Amsellem, Balaji Prasad, Glen Santangelo,
with regard to that particular decision.
Speaker Change: It was part of our capital allocation, continued evaluation. We performed extensive analyses to that end to get to that 300 number and also believe based upon this positive settlement that
Speaker Change: There is a significant disconnect in the current valuation of the company of the company.
Thank you.
John: Thanks, Shawn. Let me just bring it back to maybe adding additional color on a couple of other elements to your first is
as I mentioned...
John: Overall, we're low in terms of penetration as we define our TAM, and just to be really very specific, I mean, we've got, I think, a lot of room to further penetrate in lower extremity, GI, OB-GYN, OMS, plastics
John: and much of which is outpatient if you take a look at the latter few. So we're optimistic about the potential we have to further penetrate these markets and grow as we get beyond 2030.
O.
John: So, that said, I think that in terms of the kind of capital allocation, you see how we progress in a very disciplined way to focus on our growth and the GQ Bio acquisition that we completed this quarter. I think it's a great sign of how we're bringing very disciplined with the kind of capital that we deploy.
David Amsellem, Balaji Prasad, Glen Santangelo
Speaker Change: Okay, but it sounds like you would consider unmarket products. It sounds like you have some capacity within the sales force to potentially do that.
Yeah, great point, Gary, as I made in my comments.
Speaker Change: You know, this restructuring of sorts that we did prioritize the expral, but it also what it did is provide capacity now for the three sales forces to not only carry our products, but perhaps additional products that we bring into the back, new products.
Speaker Change: So I would say that that's a possibility. We'll be very I think disciplined in the way we look for these kind of opportunities and given the current market environment I think we're in a very strong position financially to look for those kind of opportunities and find a deal in a very disciplined way.
David Amsellem, Balaji Prasad,
Okay, great. Thank you
Thank you
Now we are going to take up the next question.
Speaker Change: And the question comes along of Leszek Sulewski from two securities. Your line is open. Please ask your question.
Speaker Change: Titus is Jeevin, on for less. Thanks for taking our questions.
Speaker Change: Quick one for me, are there any experimental enhancements in your line of sight that could extend its life cycle or perhaps expand its label?
Thanks for the question, Stephen.
Speaker Change: What I'd say at a high level is we continue to innovate .
Experial, and as you can see from the recent.
Speaker Change: Patents, that we've orange book listed, the 18th ones, and we expect to continue that innovation.
and going forward. So that's number one.
Speaker Change: Number two, as it relates to other, I would say, indications. We don't have plans for that. We currently do have some studies ongoing, but we don't have any new plans for additional indications
David Amsellem, Balaji Prasad,
Thank you.
Thank you.
Now we're going to take over next question.
Speaker Change: David Amsellem, Balaji Prasad, Glen Santangelo,
Speaker Change: And the question comes along of Hardik Parikh from JP Morgan. Your line is open, please ask your question.
David Amsellem, Balaji Prasad,
Hardik Parikh: Hey, thank you very much for taking me question. I said a question about the gross margins and I apologize if I missed it in the middle. You mentioned about how the royalty to RDF is going to get eliminated and that was about low single digits. That should help improve the gross margins. It's wondering how that was incorporated into the four year guide in terms of you reiterating it. Thank you. Thank you very much.
Hardik Parikh: Sure. Thanks for the question, Hardik. As you might know, this litigation goes as a long history.
Hardik Parikh: and our legal team did a great job here of getting to a favorable resolution.
Speaker Change: and as you mentioned, this is low single digit impact for expereil, the Zoom for overall for expereil.
and so we're very pleased about this.
Speaker Change: And going forward now, this will help us improve margins for sure, but I want to come back to you. We think that overall margins will improve.
Speaker Change: as we sell more products. So, you know, as we drive volumes, margins will continue to improve. So, that said, Shawn, you can speak to a little bit of the impact that's quarter versus, you know, going forward.
Speaker Change: Yeah, we were very pleased to see the strong first quarter margins that exceeded our guided range of 76 to 78 percent.
Speaker Change: We're getting good volume output from both our expral sites, San Diego and the UK.
as we just discussed, that Mark's benefited.
Speaker Change: from Faberable, RDF, royalty ruling. But just as a reminder, there's a number of manufacturing variables that can result in a pretty significant core variability.
Speaker Change: But based upon the performance of this quarter and what we're seeing from the teams that will, will of course look at marks again after our second quarter landing and determined if an update is needed for a full guidance, a full year guidance range at that point.
David Amsellem, Balaji Prasad,
Speaker Change: And I guess just to add, this quarter it's a minor impact, this quarter is really more going forward that we'll have a more significant impact and carry over on the other side
David Amsellem, Balaji Prasad,
I think that was your question, wasn't, Hardik? [inaudible]
Speaker Change: Yeah, yeah, correct. Basically, why not raise a guide? And then the second question is just more around. Just one other thing about that, just for the guide. You know, the other thing, obviously, there are a number of headlines about terror of these days.
Speaker Change: And so, of course, we've been diligent at looking at that, analyzing that And so, we're comfortable with the guidance that we provided, so we're not lowering guidance [inaudible]
Speaker Change: We're comfortable with the guidance that's provided and then as we get better visibility on truly how these terrorists might, even how they might manifest and we can sharpen guidance as needed.
Thank you.
David Amsellem, Balaji Prasad,
Speaker Change: Great, thank you. And the second question is just around pricing. So if I understand your comments correctly, I'm interpreting as pricing was mostly flat, maybe slightly down, when you adjust for the lower number of selling days. So one is that correct, and then how do you see pricing progressing for the rest of the year as a GPO contracts? Come online. Thank you very much.
Speaker Change: Yeah, so let me turn this over to Shawn. We pursued price as we normally do and obviously the GPU contracts are slowly coming online, so Shawn.
Sure, yeah, the-
With my address for all the, it was gross vital volume.
Speaker Change: for the period. It was all volumes, effectively. [inaudible]
Speaker Change: And then with regard to the GPUs, we've been talked about this previously, that there will be a mid-single digit impact for the first year, but when we bring on, not going to with the next final GPU.
Speaker Change: Final GPO Agreement. We'll be lapping the second one, this coming fall, and let's have a think about it, a good single digit impact.
Thank you.
Thank you
Thank you.
Now we will take our next question.
Speaker Change: And the question comes learn of Serge Belanger from Needham. Your learn is open, please ask your question.
Serge Bellinger: Good afternoon. Thanks for taking my questions and apologies if you've already covered this earlier in the call. Just regarding surgery volumes, can you just give us a little color on what you're seeing so far? Thank you very much.
Speaker Change: First quarter, and I guess the first month of the second quarter [inaudible]
and if the macro is impacted, those volumes.
and secondly regarding competitions, I think you mentioned that...
You're still at low penetration on your overall tan.
Speaker Change: But just curious, if you're seeing more competition now from other players like Zenre Leff.
That's it. Thank you.
Speaker Change: Well, thanks for the question. Let me take a little bit of the competition question and then turn the surgery volume to brand.
Speaker Change: Right now, we don't see any new competition that's significant. So we have a lot of room to grow. There's largely that.
Brent: Epivocaine, Short Acting Epivocaine, and the various cocktails are out there, pumps, etc. But all that said, we really think the room, we have a lot of room for penetration going forward.
Brent: So that's what I'll say to that. Nothing has changed with respect to the competition and intensity.
So...
Frank.
and many more. Thank you. Thank you.
David Amsellem, Balaji Prasad,
Thanks, Serge. Anything more?
David Amsellem, Balaji Prasad,
No, that was it, thank you [inaudible]
Speaker Change: DSP is running for the questions for today. I would not like to hand a conference over to Susan Mesco for any closing remarks.
Susan Mesco: Susan, welcome back. Welcome back. Thank you for being here. Thank you for the great conversation. I'm Susan. I'm Anthony Molloy. I'm Frank Lee. I'm Charles Reinhart. I'm Frank Lee. I'm Anthony Molloy. I'm Frank Lee. I'm Frank Lee. I'm Charles Reinhart. I'm Frank Lee.
Speaker Change: Thank you, operator, and thanks to all of the call for your questions in time today. We are excited about the opportunities that lie ahead for us. Throughout the remainder of the year, we will continue to ensure we are well-positioned for long-term success by executing our 5-by-30 plan to advance our mission. Thank you, and be well.
David Amsellem, Balaji Prasad,
Speaker Change: [music].