PCRX - Earnings call transcript Q3 2019 | Pacira BioSciences, Inc.

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Operator

Good morning, ladies and gentlemen. And welcome to the Q3 2019 Pacira Biosciences Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and answer session, and instructions will follow at that time. [Operator Instructions]

conference being this reminder, a call recorded. is As turn over of to would Relations. now host, conference to like Head I your the Susan Investor Mesco,

Susan Mesco

Thank today’s Welcome our you, morning, quarter call third results. to discuss Whitney, to financial XXXX good and conference everyone.

are call Medical Executive Chief Stack, Chairman and Charlie Reinhardt, today’s Officer; on and Richard Dr. me Dave Joining Officer. Scranton, Officer; Chief Chief Financial

the as statements start, of based risks Please that available include SEC, our today’s risk we information or company. call represent involve you our and website which SEC let statements today concerning remind the judgment current that may and on refer factors affect forward-looking filings me expectations. to are Such Before with for the will uncertainties. from our the could

will over call I that, to the turn now Stack. Dave With

Dave Stack

terrific Susan. joining. and important Good be highlights. by few key business along everyone, continues with to out ioveraº. our will a EXPAREL asset year in morning, by you, core thanks led an XXXX I Thank for acquisition significant calling in growth start a

EXPAREL annual the least five next -- of to growth, five average plus year-over-year clear rates growth and consecutive our at on path with adoption trajectory is XX% validating plan placing achieve quarters high-teens us Broad for in topline accelerating a years. the

partnership the of this to conclusion continue relationship XXXX. with solidifying the great orthopedic expect we through role in Johnson the significant Johnson Our is painful to & and of EXPAREL procedures in agreement value deliver

after with patients a multimodal pain We during management opioid-sparing EXPAREL ioveraº and TKA a providers solution are plus surgery. in terrific and to position for offer before,

extremity broad block add are on label. procedures pediatrics expansion to label and and track X already studies decide Phase our to nerve lower Our

will which opioid is January free read XXXX. C-section CHOICE Our Phase topline results X in out as known study

the this non-opioid management a of Governor and momentum join strong Board. Christie All-in-all, leads health us him crisis unwavering his Directors, and long-time achieve have Board is long-term commitment our delighted well-suited pain valuable in regenerative are our member leadership of well-positioned opioid to to to makes We Chris a forward market solutions.

remain goal, we this global achieve growth To on focused pillars. three

growth the and key and management opioid-free patient ioveraº preferred EXPAREL First, as procedural surgical throughout continued through expansion for solution journey. a top of rollout the pain driving line the osteoarthritis settings of

Second, DepoFoam leveraging -- our new our clinical to platform deep advance rapidly candidates.

and And out align directly partnerships third, and pipeline our audiences. innovative with mission, acquisitions building through product our physician infrastructure that

third with deliver Let’s begin increased EXPAREL. year-over-year start growth quarter. topline, the to significant with the I sales with will continues XX% for EXPAREL of

and used approval. its are X report of a has more across excellent efficacy we EXPAREL now established am expansion safety in seeing I As profile, result patients million than to its strong procedures. been all that pleased since

momentum out utilization women’s cardiothoracic The realize in-patient HOPDs departments surgery payers continues commercial and for or to ambulatory important and the surgical orthopedics, abdominal, health. In-patient support segments direct to centers cost and setting present of to significant in CMS or as ASCs savings. grow opportunity such across to out-patient surgery hospital

are reward ASC providers policies surgery delivering effective new significantly and the for in benefits changes migration supporting rule insurance that growing. CMS cost incentivize setting and care and

EXPAREL surgery these For implemented outpatient example, in growth and of authorization the opportunity cases procedures musculoskeletal represent in the requiring setting UnitedHealthcare on that a necessity for setting. types medical commonly the November a ASCs. present ASC site-of-service and Xst, policy procedures These XX prior hospital directing to use

surgeries orthopedic we and ASC from ongoing abdominal see in continued result, to migration of driven hours and our procedures a stay environments. As XX the by uptick the business robust HOPD

setting In growth we and the from fact, place roughly of of segment. ongoing XX% this EXPAREL are outside taking inpatient procedures expect hospital

more than ASC in on final with valued program XX% setting. published just to Medicare of a Based XX% procedures in the historical $XXX to at arthroplasty there for patients procedures knee to $XXX TKA Medicare shift The approved opportunity the the to include the is per Xst, setting hospital and savings for XXX,XXX rules are million to year. were the million performed total Medicare. November On list ASC Medicare adding trends,

in to accounts. of continue see We our increase year-over-year a base and strong with steady customer in the growth size XX% ordering active

We are ASCs. customers customers averaging XX two every primarily month these over with of coming from new new thirds

million market As EXPAREL a deliver result sale of our ability within we XX%. of in million, to our represents remain more range than year-over-year which net growth these $XXX dynamics, highly to favorable $XXX guided of confident

This demand with the fracture, of continues spine partnership One multiple contributors reconstruction strong & joint to including our Johnson. relationship orthopedic significant hip and procedures surgeries. Johnson and to key establish is EXPAREL utilization shoulder,

experiences. EXPAREL-based As ambulation is ensuring in that as regional enabling and pain recovery procedures shift approaches to advances ambulatory we key early before, setting. of are protocols have to protocol-driven pain The in through clinical painful such opioid-sparing well the orthopedic achieving controlled medicine is the said post-surgical

colleagues EXPAREL. at we the ASC and support Johnson the procedures by & we our of cost as -- reduction effectively driven strategies to Johnson, CMS commercial are as and moving significant marketing at successfully setting, our total colleagues well enhance Johnson our care, allocation to adopting and & with Together, key reimbursement are in resource of Johnson, a

term contributor alliance remaining We strategic to remain expect this the through the of an agreement. important

of This painful multimodal J&J’s educational patient -- ASC satisfaction, from outcomes, proto setting. will growing the resources improved procedures enable lifestyle. patient in around the that profitable meet performed performance and be and level financial protocols physician motivation to standardized more We will support physician world-class to benefit complex,

commercial and we nerve and generate new and settings, lower and sports hip orthopedic procedures value extremity like in as prepare also in Phase pediatric important X data We J&J’s spine block significant expertise the commercial for expansion in fracture. spine medicine

and report are topline For study end pediatrics, year. registration this results enrollment of to X our in Phase has concluded before track on the we

submit a application soon thereafter. We new drug will supplementary

vulnerable for non-opioid an options important population. need to this Strategically, for be urgent as pediatrics post-surgical severe will addition to a label there managing EXPAREL moderate very pain in the is

only children will use formulary in analgesic local imperative for approved the thus If approved, be be will and an listing. EXPAREL

EXPAREL We the define FDA a are study block with pediatric registration as nerve of setting. X also in working to Phase

preparing In EXPAREL parallel, as surgeries. patients is bupivacaine evaluating nerve extremity versus X to in we Phase undergoing a a lower This our launch adult study. STRIDE block registration are trial

market We extremity for opportunity least procedures annually United to than block expect nerve the where more X are in blocks the the plexus States. lower as performed brachial be meaningful million shoulder at there as

anesthesiologists typically indication and cumbersome single a opioid improve This while implementing satisfaction, among who regional exposure EXPAREL-based and and ultrasound control with guidance. eliminate approaches great reducing catheters drive pumps patient to are to continues interest using EXPAREL injection pain

number details team a studies and will also the of is of support Phase key through advancing these expansion to in X regulatory ex-US walk shortly. Rich clinical EXPAREL markets. activities Our our

iovera°, commercial patient to in represents. more opportunity the April, it the care Turning technology behind are and we about since even system and excited this significant transaction the innovative

genicular sales iovera° approach physician for annual enhance We of within the expect nearly reimbursement for materially improve XXX next Medicare will approximately week targeting and the procedures we knee. growth believe iovera° XXXX Last HOPD Consequently, this Medicare to iovera° $X iovera° million around change setting. increasing reimbursement the five nerves the total for years. significantly to in $X,XXX $XXX with the CMS hospital

and over price of that price we the are we we a our quarter, $XXX increasing on to last outlined over front. as great we treatment per are -- list progress base for $XXX best As making with customers

use companies, We procedures. this many prospects a have continue are EXPAREL the robust Consistent TKE and medical large been with business to offering maximize pipeline we sticky plus other quality ability by business new reduce opioids discounts to for encouraged with customers nature within the or painful to of eliminate device ioveraº of to to volume-based build strategy systems. for a health

two patient initial categories. last focus is As quarter, broad we on discussed our

surgery during is would first arthroplasty. provide with to for opioid-free this a as combination a total opportunity solution pain of procedure several plus multimodal administered for EXPAREL be pre-rehabilitation and EXPAREL for patients months The ioveraº control. of surgery In the setting, ioveraº knee before

Orlando, of great concluded demonstrations ioveraº anesthesia recently the have from live generated the community. Anesthesia American meeting patient in on interest cryoanalgesia we and At Society

three initiatives seasoned networks, users. integrated all begun which training also of have We delivery EXPAREL at are

We use workflow. to standardized networks are and to define planning protocols these

program As XXXX. early this of we will in generate we training proof principle replicate data, nationally

Our Surgeons team, a College Infiltration, in symposium hosting multimodal solution a of will to meeting Knee Max pain. and President the later annual American Hip at TKE and manage be today Reinhardt led Dallas Periarticular by titled, Cryoanalgesia

The event world presentations on of protocols multimodal recent published feature of management pain will ioveraº optimized overview and and data. clinical and evidence discussion real an

experience these reduce helped their have pans protocols out integrating multimodal will recovery, presentations and improve outcomes, that post-surgical highlight clinical them costs. Surgeon and

second patients. market Our is target osteoarthritis

we management to opioid free, for an free, months. procedure ioveraº drug Here cryoanalgesia provide surgery pain free offer several

grandchildren, the delay family golf, active vacations an seeking choosing patients or hiking those walking those targeting lifestyle like well are or surgery tennis, simply with as such to as for events weddings. We as

able to XXX,XXX have manufacturing front, the On be for Tips to expect made supply progress we over ioveraº in considerable XXXX. sale Smart and

addition, position developing data for multimodal sparing opioid pain to and as maximize and after this we before, and In management solution ioveraº opportunity surgery. clinical are the leading EXPAREL during

focus TKA two highlight with repair of on be in products. ioveraº initial will these to effects complimentary Our ACL the combination and EXPAREL with

growth, sub-acute our pain Turning customize leveraging our platform acute, safety DepoFoam applications. ability pillar flexibility of to of the chronic second now proven and and for

followed DepoFoam offers delivery system delivery. release know dose by you a is that As immediate flexible an sustained

broad product area. this development see we So for potential in the

programs DepoFoam we selected On clinical our we last two for that discussed call, development.

The procedures as DepoFoam-based this Anesthesiologists administered umbilicus. analgesic for first, a subarachnoid regularly spinal below block. use the technique local the or

delivered of an preparing and the a been initiate of Our strategy in analgesic. which The here with has are program typically local one-time discussed or study pumps and long volunteers. is a a are healthy to to we FDA, use with subarachnoid catheters, the acting injection alternative to non-opioid provide opioids, via

treatment To experience an in setting subarachnoid can where delivery the a and safely XX we with believe in in space as years meningitis. the subarachnoid the for epidural used we remind and lymphomatous where than is substantial experience the be as was this you, effectively have more technology have and only DepoFoam space specific -- in it safely DepoCyte we that of DepoDur

dexmedetomidine currently for we healthy a profile. formulations DepoFoam of in release a mimics and in future a based conduct Next, simulated parallel using optimizing dexmedetomidine pilot we study volunteers will are that

of to the technologies solutions. our is we or management just build one discuss align pursuing strategy and EXPAREL pillar, Finally, pain example innovative growth products of provider let non-opioid third how as to complementary regenerative Ioveraº that me and leading a intend are EXPAREL. health with

-- tuck-in opportunity a with remain our number component delivery acquisitions that strategy. growth of the or significant We have on development focused key journeys align mission team. additional build business non-opioid a our to neural ahead, Looking robust a differentiated to consider from patient opportunities along will remain portfolio see a improving and licensures our pathway of to

returning before call to on The Rich last the the touch item I’d landscape. competitive is like to future

Here, with over been over potentially million in proven exceptionally EXPAREL we EXPAREL considerable position. an record. mover used first has enter six an products track of the in patients strong that are other has advantage safety efficacy excellent profile and any market.

partnerships key in players stay that In experience addition, and our and relationships across the to opioid EXPAREL have network approaches strong collaboration including access essential with ensured predictable strategic an and proven are setting. of its a system XX-hour have advantages sparing academic which healthcare

process addition, In obtaining health and products and reimbursement launching new outcome the long on long-term generating arduous is for undertaking. particularly evidence

very new to about regard any entry. feel stand where good we with we So product

field currently very FDA non-opioid single long acting the market long-term and approved as leadership the only nerve infiltration, is analgesic We local in dose brachial for plexus block. are that block well-positioned

as expand as next to label expect two within lower extremity pediatrics, nerve the to block well include We this years.

provides as flexibility so with bupivacaine that the well as sanely be EXPAREL clinicians to immediate tailored larger was for individual a range relief Additionally, for pain of procedures. patient and large pain across needs important can broad management with small procedures, admix ability to

Dr. turn update activities. to With to our Scranton programs, to Rich? like that, you on as ex-U.S. EXPAREL over Rich our Phase I’d the X as regulatory well call

Dr. Richard Scranton

Dave, our Thanks, start X EXPAREL joining all on a studies. and good with quick Phase will update today’s call. I morning to

following rate regional and anesthesia-driven protocols health more or and women’s significant as oncology seeing alarming these as abdominoplasty for users of institutional shown an opioids C-section, Opioid have addiction XX% reconstruction, growing the procedures surgery. we as With in block newly women hold are persistent and is continue gynecological women approaches field to such to studies mastectomy, take become breast likely surgery. are field, growing at demand

We role would block. important within are expect As for Caesarian be around growth an EXPAREL community benefits awareness the play TAP key anesthesia this our five-year opioid one such, care component we OB transforming field of will standard EXPAREL mounts of in trajectory. of administered an continue to undergoing mothers believe block the top expect drivers to to TAP the growth the in and C-section. our sparing demand as accelerate with sections a we

study designed to free later to in expect report on CHOICE which us We topline track arm. This XXXX. this continue January to study our is in to results enrollment be year, EXPAREL complete the completely opioid next-generation places

We are superiority an to publication block bupivacaine you, of first the C-section. undergoing patients of the our in remind a awaiting C-section of demonstrated block EXPAREL TAP study And study. to results this TAP

EXPAREL use, achieved a XX% while pain XX reduction scores in hours. opioid reducing also through

opioid-related a no significant the spared more through one than opioid of effects statistically EXPAREL experience demonstrated tablet percentages also they study side took patients higher hours. the meaning in XX and opioid no Importantly, group,

XX-hour migration sector painful the regimen study, environment. care active study EXPAREL Enrollment spine of control, in very of the world this surgery. real is patients investing is growth are given now our We FUSION as space multi-center standard also a multimodal driver, with in to a many important stay procedures in underway comparing orthopedic undergoing

Looking Authorization underway. our means which Application the application MAA and is up U.S., Medicines review validated Marketing is our by European at process the was Agency, now or June complete in

an opinion XXXX. the in of sometime expect second half We

on Our Canada. by regulatory also track our of the Health activities the remain in validation key drug new next milestone submission being Canada with

EU data in study. both with missions Our the infiltration, blocks and peripheral block placebo-controlled and field and are nerve Canadians efficacy demonstrating EXPAREL active in comparative of robust,

approval analgesia adults. of We regional will in for seeking and local be EXPAREL

initiating are Hong Nuance in we Biotech. with study As Kong pharmacokinetic for partner a our China,

progress continue to of our will expanding apprised We these you markets. in keep

With of call Charlie turn the now a that the overview, for I will over to Charlie? review financials.

Charlie Reinhardt

Thank you, Rich, morning, everyone. and good

and this the like quarter I’d financial non-GAAP of through GAAP believe includes walk for you issued press third results, description a we additional these financial morning they business. release our remind we aspects press measures. I the includes we discussing release also to to of insights why The metrics financial measures. will that the The provide these reconciliation Before into be

quarter third flow significantly the and financial million and from cash ended approximately in growing strong in We cash $XXX very position with investments, operations.

we that modest have rapidly ramp we expenses. continuing while side, our only and with topline to leverage supporting P&L operating have the business, the a opportunity in to we growing are simultaneously adjusted This revenues significant increases on tremendous On underscores with capitalize EBITDA.

more revenues product $XXX.X million growth XXXX, in million the third turn Total million million to XX% increased was third predominantly now $XXX.X as the by I of to by from will of net XX% by to quarter specific financial $XX.X versus the quarter in highlights EXPAREL, which quarter. XXXX in sales increased This XXXX. $XX.X in compared of driven to XXXX.

net sales we the product reported quarter. of ioveraº, million $X.X For in third

ongoing the the the and in pediatric improved for margin of or in opioid-free C-section the quarter million study hip to $XX launch Our of of non-GAAP were in XX% study, as Phase spine XX% XXXX X $XX.X Phase driven as in Non-GAAP gross XXXX. R&D our in and research was third versus studies. million versus XXXX. X third fracture expenses development XXXX by well The enrollment X our increase Phase quarter

in XXXX, For the manufacturing development, XX% activities, the of XX% non-GAAP scale clinical third up quarter expense including UK. the attributable our of is facilities remaining attributable R&D product to and of roughly the regulatory our and to with

to and For manufacturing of the XX% XXXX, split XX% to was and the with attributable the remaining roughly third quarter regulatory. development, attributable product clinical

activity the team including XXXX. $XX.X access of to of ambulatory account dental $XX.X the attributable million third for driving and and expenses growth increased markets. promotional a the increase in This sales are quarter who plastic establishment as SG&A EXPAREL, the in versus and of as Non-GAAP field-based million managers quarter setting, XXXX of third were in is well the

co-promotion Another directly with key which top linked growth. driver of this our line increase is is J&J, to

diluted million share or resulted $XX.X income $XX.X third All million in XXXX. of or quarter versus $X.XX diluted of $X.XX in these the net per XXXX per non-GAAP of in share

flexibility Looking pain a flow, a internal significant commitment EXPAREL external our on tremendous in capitalize cash growth evolving leader non-opioid opportunities that to operating financial to we delivering and regenerative management growth on align substantial with and have Pacira into ahead, health. that given trajectory, and is leverage global

guidance, like non-cash GAAP Before two to cover from P&L. quickly to I’d our turning items

recorded impairment First, during on million the TELA’s in TELA range third adjustment prospectus. quarter $X.X our This Bio. based IPO calculated a recently we investment in filed in the evaluation was contained

this commercial and acquisition MyoScience purchase consideration recorded the series our of to contingent earlier regulatory of part we as reflecting of milestones. of forecasted Second, accounting the value year, a related

quarter of We and GAAP value adjust value accordingly. these consideration each of reassess are the milestones required by to the contingent

quarter of contingent resulting by $X.X charge re-evaluation our consideration concluded contingent During and million, and to liabilities P&L. short-term long-term an consideration in increase our XXXX, value third total our of that the a the in increased

Dave $XXX very to our which with Turning follows. price. largest year historically volume with and $XXX we being pleased now the to quarter as million guidance of discussed, similar driven to of the product than guidance as to rather very net comfortable pattern by quarter a EXPAREL is you, sales growth XXXX our being fourth EXPAREL guidance, follow last year. reiterating the million, To expect sales cyclical we financial remind are outlook feel

to report we remain sales long-term As $X $XX in prospects million XXXX. and net to optimistic for ioveraº, its million about continue expect product of to

accelerating synergies, MyoScience the second confident and become Given thereafter. we will acquisition the in beginning the that of half commercial strong XXXX remain accretive

our primarily Swindon this responsible once we and side online roughly you, gross location margins margins continue to remind to second in becomes dedicated expect to XX% for to of eventually expense track non-GAAP to XX%. of EXPAREL. comes achieve supplying we To P&L, the improve XX% the suite On on be

higher $XX million expect to million the to guided of of We Our range the $XXX million. $XX guided end in of our to be million. half non-GAAP $XXX range our R&D SG&A non-GAAP continues track to of now lower

expense for at guidance compensation unchanged million. to stock-based remains $XX our Lastly, $XX million

noted high-teens us As achieve in a his Dave rates over next to puts growth years. in annual now the remarks, average our on path opening five trajectory growth revenue the

now With Q&A to operator over that, I our session. the the turn call Operator? begin to will

Operator

from Randall Your [Operator first question Instructions] is Stanicky.

Ashley Ryu

$XXX those I This pieces of much little moving talk you $X EXPAREL, the about for talk can million to kind you today Hi. of targets five-year versus guidance. expanded Ashley you talk of for of targets? Can course, target targets, Ryu ioveraº, morning. ioveraº, how and while For label to a is just your kind manufacturing growth expansions have, can and expansion reps, and the better you Randall. the EXPAREL not know bit about I there? the more Dave, just Good of is to realize or from it’s billion adding more that geographic you but kind recently reimbursement, get you from for about bridge

Dave Stack

Sure. That’s a Ashley. lot,

Ashley Ryu

Sorry about that.

Dave Stack

don’t and come me first start me Let and time the pieces pick here. for up back get that I

is regional call and would in pumps, these So, not is specialties of especially support cetera. getting what anesthesia, the for are strong and classic we and what approaches rid just see a the in et anesthesia very from adoption we in medical their EXPAREL of of using very that these use in blocks in catheters regional think product growing we field early block, we but nerve and

So that’s one piece.

a the out injection of of talked in all we go EXPAREL script. and get setting, we patients of and ability inpatient things and a is into as The control of we to anesthesiologist rid piece the key you as is achieve in to and are about try where single single required a pain the environment. that when treat pain an pumps several pain and the that ambulatory use of an hospital other shot The during HLPD into element those moving days epidurals

think the we So of the which about working have look is million you we that just X were viable that Add that very we base see when a than patients you you with at talking have high-teens there. we get to that, growth the guys. see you if then, been pediatrics, we of talked more about opportunity, as can that procedure kind

at time. base, you So, give about get million you a just to that are over a we you talking XX% market home going thought if were $XXX, share to $XXX

time. million If you as $XXX Rich is a XX, a opportunity at X.X market outlined, look $XXX procedures, C-section, billion over share

than If bigger block, lower procedures extremity look it’s it’s extremity we a block X nerve a have nerve and million predominantly ml XX think we where you again upper dose.

that are growth expect you to coming see the that million adoption the $XXX couple So, got that to from we kinds that we relatively come next for of EXPERAL. moving you of us the ambulatory and care, you at to environment the years add you over from numbers of get if to patients multiple ambulatory start have and to about the talking opportunities

when mentioned With sitting there the script you when at in ASA -- ioveraº, around in this were we like the Orlando are we and well. as

We we a repair interest -- an programs well TKA. there’s ACL are are formal as where develop clinical lot actually, doing as in of

intercostals talk about fractured et are to of wrist, for docs even But a and for the have series folks to are whole at we and so want looking cetera. and EXPERAL pain peripheral that ribs using in projects, shoulders and mastectomy is cryoanalgesia nerve ribs and and where hand ways and got what use people

So another pain turn folks off. signal use opportunity really you can non-opioid iovera° see is how to for of the the

there our overall see in reimbursement the an these in how this ASC that have high for now the and customers cost can think the or grow very fairly CMS could doubling offering. will of immediate are and you two interest is, quickly HOPD in it so is And integral an reason and we intimacy effectively being where these this use we nearly you -- part with HOPD, that the see products you

the big vast are of big of the piece talking products. what the about. for that’s majority That’s two So it we

still global the as our plan. than a talking becomes global about start meaning five of sales EXPAREL more sales number, that are you When way still of of it end but total the is over the meaningful current United than XX% ROW, EXPAREL, at XX% less actually, the States of in of five-year the it plan year

the field, because because nerve We putting of largely extremity peds, more reps of C-section, because of block. because iovera°, are of lower in

really OB group As that C-section, the hospital. is anesthesia of customers distinct an a in distinct example work a of area

in something unless wouldn’t relative call talk that them we our be normal else involved have to to pattern or they So something to might about in. cancers they be female

I additional So all question, your order we need remember That’s all areas. to firepower can to those in of get Ashley.

So if there was something…

Ashley Ryu

I think that was everything.

So so -- was Thank no, that I think, everything. you much.

Dave Stack

All right. Thanks.

Operator

from Your Amsellem. next question is David

David Amsellem

Thanks.

So just couple. a had I

about the two of on partnership, Number I going forward vision First talk is on things more how can partnership So not may and J&J and role just one. is gross what guess, may that’s change? the you where specifically, the that or stand, J&J margins. number for the your

component some expansion, for the margin fixed sustainable there’s I EXPAREL. cost fairly that some You sizable and is makes have and know I seen guess, sense, question how that is

a better those just as get understand want I moving expands the help there? the and from of you you. us EXPAREL Thank to to sense margins directionality So as parts just

Dave Stack

questions. the for Thanks David. Thanks,

benefiting effect We programs. J&J professional are their relationship and is in full all education we their services -- the and professional are from

for For be orthopedic starts things other all would the and OCA recon and example, that today, of oriented.

as very hip peak and regional the a much committed could the we as meetings, ourselves, well to programs training American There OCAs surgery, EXPAREL at programs, academy et way programs huge that are and beyond they their that they call David. at is cetera. anything of as are knee have education And Rayham, them, are which something presence for done

primary that & and in are Johnson going that as the with So benefit the we so field of in becomes on ambulatory with having these call the these move resources of that customers. around we world working oriented of think Johnson we more the be conjunction to see audiences all care, really sponsors

to a we script, indication as trial. that peds said the and is scoliosis during to we add indication you If peds get that fundamental the in expect

to during sports trauma those we as of launching the dedicated spine, to going so they of are So all medicine well agreement. there resources to term folks EXPAREL and as into see this have products and them

think agreement is to residual no them sunset, So and continue we this in agreement the to the with no XXXX. end of XXXX, of is David, end the working benefit it’s our there until aggressively would there end. At

have in back between Ashley’s we then question, and adding practices allows field. comfortable and are get with what’s on to maximum this can the strategic we to the this to have some of to two two be and the big that So, no relationships two-year so But are next orthopedic interlude doubling now Ioveraº own. years out we us start to And people value our I just is from right? on it do then over what the is. prepared it partnership idea that’s going happen years it very now,

pick On I the gross the can you and margin side, will go quick answer. Charlie

get we are we time producing margins. at scale full better any David, So

the aggressively, margin see that are we start continues grow -- you peak times of have we to opportunity. gross as product so And to best

that and is so the we maintenance remind an I we year those you to that basis. close are ongoing all will of of on things, anything could and not promise the facility when cleaning everybody times XX% there for and

your and answer approaching XX% that’s gross once specifically, XX% will the we in and XXXX. on question producing margins Swindon material sustained over To XXX scheduled commercial we have start come liter for have and facility

saw if some you there… Charlie, I if wrong -- So,

Charlie Reinhardt

obviously I nothing. No. Dave, There’s is, manufacturing the fixed would add a is only investment. capacity thing

we and demand, up of the will and in total have capacity, we see combined, so, And we utilization that we to as start reduce start to therefore, those the ramp improvement doubled as well.

that’s all would add. So I

Dave Stack

Yeah.

David Amsellem

to your I was relationship, dialogue mean, leaning you is with J&J, and extension where are a comments decencies XXXX, the your after I that there life J&J from don’t the know XXXX? be Can on discussing Dave. you and will regarding back Hey, things come of beyond but I an comments

Dave Stack

be would discussion having we two-plus before. a that expect with David wouldn’t them I

two to we fast I I changing looks mean, and to next anesthesia world rest on. that now. of my will of think world relative and get our XXXX experience want I -- we think the from the years we be these use working The of good time to that wouldn’t, a a all use like we AFCs the of that what are things is in so view wouldn’t

So, would I but be this the of far there’s that timeline I ongoing, relationship. you any there no that would ahead of say, would the that expect take is discussions I can mean,

David Amsellem

Thanks. Okay.

Dave Stack

Thank you, David.

Operator

David from Your next question is Steinberg.

David Steinberg

Thanks and have I good of couple a questions. morning.

first The The company around obviously on. going a lot development. business revolves has

to Europe year. going are next You launch in

new indications. with up ioveraº. ramping are are some There You

what And so to we view see to are following then, know you projected you those And about you contemplating? but activity estimates. -- painted and versus just the is X% by buckets major what think do followed what the in-licensing haven’t you think strokes the years. acquisitions EXPAREL and of you think I you have year major into I what’s low, how your what potential outlook is do long-term of of Thanks. secondly, for given What if consensus that, acquisitions? you if curious you they the year. be sort are I thought capacity about you do, future pretty you And those for next growth -- do estimates do disconnect? robust think XX% near-term what have next five am a of are about broad brush the guidance, some

Dave Stack

you, David. Thank Yeah.

growing would those be the now, XXXX out early we think start iovera° in of plus development into don’t and that be I kickoff are national that’s business anything things. me and meeting will unexpected the and capacity. Let of EXPAREL with all Right

So, right-sized we I today, two opportunities David. think, those for are

we occasion would sales are And Most the at then that are commercial have to not of looking a where we things launching them. have they rare at we what are organization assets, comes looking about with worry that immediately.

any broad see wouldn’t you So kind across organization case. relationship J&J our a or of displacement the any in

have with that API couple DepoFoam other clinical because for technology What -- really of looking that drugs, sight falls mentioned typical things we pump is, could requirement the where delivery a of are viable been a or to technology lead products. where able some like actually them toxicity use into One -- to DepoFoam pharmaceutical we are assets a think a buckets. or of that at their couple candidate. marrying folks of or There not products. We pharmaceutical

block pain perspective, many cases, likely, M&A More pain. -- are not today. an are It’s as that inflammation with at we we focused David, it’s looking things somehow from involved acute non-opioid in are or

about guys We a of only ongoing talking we not number familiar of that have you where a there’s discussions with. chronic are commercial organization all pain, got use number neuropathic peripheral the opportunities pains, pain,

very implicitly. and viable have we understands pain a But team clinical which got here

than come to is and talk to about and that pain it’s KOL our a with the valuable portfolio, us develop people. people us. So of to you with just very and start a care how When more asset relationship assets commercial

side, drug interested inflammatory the more those anesthesiologist orthopedic of on So, things block would an about and all think process, be you assets, kinds directly of can the pain in. surgeon that anti-inflammatories an would that

bone, ACL a growing the repair, of medicine about at. are the cartilage, miniscule things things growing we MSL that repair, lots side, number looking of On regenerative in are around marketplace

of use the patient assets goes. journey of cycle interested those the the of are life the people clinically assets those Again, as along the that who in use because and OA relationship

have even any interest very, an of to well know We what in very folks in are think kind have we cases, very those those a robust we we because helping the folks early product. the and opportunity, before we some in is get stages

are So fall two you the customers for end a both different buckets driven opportunities by the the can that the those fact of the lot see pretty much primariXly of guidelines same along that day. at

second from you will part follow on your Next, if so that. there’s no go David I to

said that a trend our we high-teens see so portfolio. we for five-year of And

the quarters. the five in low-XXs consistently run last for have We

go of would that the world in would them. project be be force good are why worried XX% there to there we would ask year because would that sense worry there’s to low-XXs the if that from to a field the we is in no the have first or general not quarter the disconnect makes fourth of from about all. the absolutely this would next And pressures, at That reason anybody year? in You How there to quarter me. competitive

David Steinberg

to are million market year. Heron, And HTX-XXX head to How protocols. Right. a C-section, there’s I of of a going that quick on ups, procedures head any follow their thinking study versus share speaking then, the they just you run says, X.X couple are And EXPAREL, about of a there? secondly, thoughts competition, think,

Dave Stack

have to be to groups this we country -- anesthesia of because We talk largely would that And higher around would confirms it free David, when normal, them. the in intense is opioid Yeah. anything the the anticipated. beyond than the have interest with these area an really relationships folks that is C-sections interest we way I

X.X as I would at if $XXX procedures, XX% opportunity time at be response in be said over had years the patient the a median with we plan, it’s next that’s a to don’t earlier So market But EXPAREL, of obviously, opportunity average all. cost share year. you it think of million as going expectation $XXX that five of million unreasonable the $XXX million not an an

a eight they he years If head EXPAREL there. to and trial, hasn’t we know stop why think it just do Relative I I it. both done it, was trial, going with to why, to Heron, they do had have he if will to to wanted and head do

Operator

next is our Chiang. question Okay, Tim from

Tim Chiang

block indication, the heading is of want XXXX? I brachial and on plexus get indication how the that torso expanding David, doing how sort thoughts to with your see do far on you EXPAREL Hi. usage so into nerve upper

Dave Stack

perfect took nerve then in catalyst marketplace. I EXPAREL trained it that the up off, block mean, code expand. brachial got was the, plexus of had took speed fully the is it of was sort storm it that and the J&J of It’s, corporation CMS The the a ASC for it and all paying -- of when being was we a and sort Tim, to entire and

opportunity reason studied, really to was dose anesthesiologists because brachial ml it XX particularly It the was some had have as an free a with is that use bupivacaine. EXPAREL, plexus block the interesting

to of were ml see painful that they vial the in XX this everything regional so for convinced the procedure a to that very anesthesia, had and anesthesiologists that drug price every really or of doing. ability advantages our real and or bottle pain some safety nearly and nearly else control over efficacy the so And the got efficacy a half dose a them

to What really that any is iliaca blocks and surprised like were we at to fascia that TAP and anticipation to we than the was XX blocks, had that going ml days blocks quickly in do. converting PECS anesthesia it etcetera, field early blocks led way more

no led anesthesiologist why and hospitals they of have didn’t It which the at also number all, So opioids require any didn’t the done plexus interested. putting a opioid. they formulary, a in like of were the physicians procedures led being on to to brachial the was pain and any led asking because all block patients EXPAREL that to so at number with if hospital they

was front an for it a almost really runner these So to ambulatory environment. moving patients

strategic has from even very From way here. way are a revenue than and where from -- perspective, it important more So been led important. been going we revenue, strategic a perspective, a it’s the it’s to the really

company. about say actual over -- a fundamental And so, in marketplace. to I It’s been us is to than to more our that think, it’s change hard for the

high blocks, et like to are think So nerve give extremity, so cetera. canal lower on us do is opportunity that’s the would we and things a very block important adductor which why we

Tim Chiang

I you resources one into of like wondering peak sales put next basically behind the your just with looks David, doubled And CMS reimbursement sort it more year? iovera° potential now I follow up, do am mean, heading it rules. And

Dave Stack

No.

manufacturing still going made than be smart Tim, are the had XX,XXX to more these never we bought a our asset, capabilities. year. tips company the When of bound, in by We

next got I do to can think much than don’t We XXX,XXX have better that. for up add to year. we

that really plus the because we And have things a when stock a fundamental we hospital don’t business. out that’s in like do goes to run way TKA, ioveraº they for change of careful EXPAREL to be

And ourselves care, where go somehow they so position to care. of paradigm an in back never old of we to protocol had put could a an

we think, put we we careful I lot don’t to we out So, very going I don’t field. make of this and tips. that be more a need in But see how with that are to the marketplace run approach to out sure have people

the be afield any long-term. If we like I’d et peripheral number our people and would small spine, a care I in that how with is just get health to and think nerve work what this number product and would opportunities is relatively far used afraid put we we shoulder high-end do a in out be there, going of figure these more cetera. too we of repair and doing really rather self providers favor ACL be out

Tim Chiang

Thanks. Great. Okay.

Dave Stack

Thanks.

Operator

Your next from question Serge Belanger. is

Serge Belanger

Hi. Good morning.

just changes, pediatric this I STRIDE some impacting and you you couple give usage guess label data a decisions? when well recent they me Just will anything covered think, is the questions EXPAREL a I then, do from that But when further of could trial, second discussed study extremity on the generate you Can lower the as as of see if for question timelines apologize and should CMS X, us foresee to from you before. And expansion. related CMS the I impact changes ioveraº. recent we

Dave Stack

Serge. Yeah. Thanks,

require on a top to a would lower to let will peds block, is want me a peds label. year. end extend in make by C-section would approved of lead that to -- expect in that on the just we We sNDAs because peds indication, currently expect sNDA have data we publications. line So nerve we extremity the cases. That that distinction so both Opioid-free here, waiting the are well,

the So, I go through will three.

midyear data year. out will all So, the see couple And sNDA you other for top next and over line next then then will peds, and come that we of the course months talk papers the the things sometime here. about filing of probably the in

indication, go is would year. sometime would expect we we next -- all the a aspects indication -- this. all of ped an planning we into I what If details are so that of of get on But the get we gory before the I won’t expect to think end different

secondary has that different we expect for So be endpoints primary of first or with number C-section, which trial, C-section early X.XXX a will the month in and published December. this p-values

would next that probably the that time lead likely expect Society May sometime have and the will scheduled we the We early publication in that to year. the study for frame JPMorgan SOAP, meeting, a topline around opioid-free is of the which next C-section for year, data

then, normal doing extremity are we a healthy volunteer study. block, a And for nerve lower --

trial to that We lead extremity a a lower nerves. lower in formal extremity and expect that will us

we year Assuming early year, to in third quarter. next that the that up sometime trial early and late like we this finish gets expect expect, in running

You would put have together six-month would an cycle. SNDA review and a you

would the the So national meeting. sometime be plan around XXXX

nerve sorry. extremity the expect and would sometime next I on block Yes? am You in --XXXX. of lower quarter that year train second

Serge Belanger

Thank Yes. you.

Dave Stack

as let me And Okay. talk will I about well. surge talk -- CMS about

continue work with on EXPAREL. a we So will for reimbursement FDA HOPD to

ASC and the formal what EXPAREL keep we very in a a lot in for ago. were think EXPAREL chances setting And couple as grow next doesn’t good will a reimbursement as year environment, and office the setting as are not actually that our mean think this getting in of like looks years they continues with campaign have trying. that actually ASC I to we year, I ioveraº, that are did of to we not going but

more we with expect -- who why increasingly they marketplace any see opioids, -- and docs as ioveraº on no in in could care possibly immediately, reason be So be. to the able use no pain, in patient having really claim, office in because you a more it’s be is can if in to safe it as discussions us with their no very don’t active but and ambulatory are comes CMS especially it wouldn’t -- acts there there’s cutting, working

milligrams, the news a also a setting would way increase as from EXPAREL, milligram on in but well. a CMS work there’s a well. $X.XX So that, office that’s And in with and that I the as payment with by to of product in CMS $X.XX use XXXX lot use of the have say, so a interest the we good to affirmed the

Serge Belanger

Okay. Thank you.

Dave Stack

Thanks.

Operator

next Your Gary from is question Nachman.

Rob Fay

an COOLIEF over about and the of how XX% morning. opportunity can have that It’s you Hi. to Fay Gary. is is and on shift there competing ASCs comprising the past, products ioveraº, from for In next years? talked regarding three comment all two to do Have at Good like that And year years for differentiated international where from revenues. expect product this be Rob you you on the Avanos ioveraº?

Dave Stack

Yes. what am I Thank was first Fay. [inaudible], one. you, the sorry, Rob

Charlie Reinhardt

ASC.

Rob Fay

ASC.

Dave Stack

Okay. Yeah.

So, ASC. yeah,

bit So information let little there. a me background of give

use done we expectation XXXX, surgery American setting. XXX. to population tell were And an change that in the is the numbers, if folks ambulatory XX% about XXXX So to extend number XX% to procedures of you if that that out us will

a will So, for but three expectation the yes, this this years, next probably not that is huge change years. quickly, next five over the

the do hernia. doing departure very outpatient now into quite is ambulatory as interesting and just that have would and TKAs, a is small, arthroplasty, that’s things CMS knee from hysterectomies see total is hernias knees, with What’s are relatively minor, like up we substantial looking What especially facilities approving that space to do the relatively primary backwards, procedures like surgeries, been ASC a and gearing that. laminectomies, happening surgeries spine discectomies,

not -- a to much patients, higher moved acuity the setting. pain have ambulatory have moved are we we percentage who So, a patients only of but

a that move move ambulatory different sorry, immobile the et you pumps, the use ambulatory patient surgery of so where modalities, the to I use you use lot for epidurals, and patient pain, pain doses use am an a is that opioids. you the cetera. epidural, days, enables opportunities is believe huge all of PCA several thoracic you don’t epidurals, that of these you thoracic we we can’t right pain that other environment, a access have reason balls, And can a When that about to you excited EXPAREL use can’t centers it’s hospital in can’t pump, can’t you in are hospital

the move and like inside we then market the EXPAREL way. being around as see in procedures dramatic care we and ambulatory that a important fundamentally move So, share TKA fairly believe to favors spine our

was fact, last in growing it the see higher Fay, XX% it’s than we So it much very this And year. rapidly. year, Rob than

versus ioveraº device. is very ioveraº a handheld they different. then, COOLIEF, are And

tip And like it cell a and phone no it the oxide a screw old the like nitrous So and phone. other a what the of stand of capital charges piece goes into equipment almost cylinder there looks little family is Jetson and than fixed on. days

fixed space device. or So any that. XXX% capital it or equipment require It like mobile doesn’t is any anything

doesn’t more of cold approach heat. heat, It cold which because is have natural a effect reversible. Fundamentally use we much it important bystander is body. uses it any is the We don’t instead use to

and called the So that a an it this can kill is can’t we over it nerve grows don’t frozen, signal use again. be back it stun at what’s and we the nerve pain nerve, so month, where [ph] used time, wolevian over effect, inch conduct a so back over once a we grows roughly it

referenced that that these smart expensive are significantly are less believe program. to that selling, We tips tips the Cooley’s we than we the

an as number So as marketplace, physician’s in these to of ambulatory and environment there talk system patients a are start set Cooley’s about to and a potentially way least environment the effective office the that’s procedures we we to especially like even we think as where headed. are at migrating advantages the up these is we and

Rob Fay

Thank you.

Dave Stack

Thank you.

Operator

am back showing to the this conference at I no turn like Dave and Chairman time. Stack, further would now CEO I closing remarks. questions to for

Dave Stack

questions in your Whitney. additional for look providing this updates We and an the you, to Thank Thanks future. morning. forward time

Piper us in by Conference New forward IR Jefferies in for the look on followed calendar is Thanks. you London, We York. seeing up the to Next Conference the also.

Operator

participation call. conference day. wonderful for Thank a have this gentlemen, and and concludes Ladies you today’s your

You may all disconnect.

Pacira BioSciences (PCRX) 7 Nov 192019 Q3 Earnings call transcript