Heron Therapeutics, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Heron Therapeutics Fourth Quarter 2022 Earnings Conference. As a reminder, this conference is being recorded, and now I would like to turn the call over to David Siqueiras, Executive Vice President, Chief Operating Officer.

Please proceed.

Thank you, Lisa. Good afternoon, everyone, and thank you for joining us.

With me today from Heron are Barry Court, Chief Executive Officer and Chairman, John Poynan, President and Chief Commercial Officer in Kimberly Manhart, Executive Vice President of Drug Development. For those of you participating via conference call, the slides are made available via webcast and can also be accessed by going to the investor relations page of our website following conclusion of today's call. Before we begin, I would like to remind you that this call will contain forward-looking statements concerning Heron's future expectations, plans, prospects, corporate strategy and performance, which constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our filings with the FCC. In addition, any forward-looking statements represent our views only, as of the date of this webcast. and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update such statements. Now, I'll turn the call over to Barry.

Thank you, David. Welcome, everyone. Thank you for joining us this afternoon. For those who are wondering why this call is later in the month than usual, we are currently not an accelerated filer. and we wanted to give our newly reconstituted board of directors the opportunity to get to know the company before closing the quarter. We had an excellent fourth quarter and are obviously delighted with the strong increase in sales of ZinRelief last quarter, along with the growth of our CINV business. This month's launch of a Ponvi, our fourth commercial product, rounds out our portfolio. First quarter has started off more slowly for ZenRelief due to the normal seasonal decline in surgeries in the first quarter of each year. Even with the expected decline in surgeries, we continue to see growth of ZenRelief, albeit at a slower pace than fourth quarter. The board has been working hard with the management team to develop a strategy to accelerate growth of ZenRelief and our other products. The real-world experience with Zinrelief continues to show strong efficacy, consistent with our clinical trials. But feedback from customers is that there are two opportunities to improve growth. Expanding the label and improving withdrawal of the drug product from the vial. Correcting the limited label is already in progress with our December submission of SNDA number two, requesting a label covering soft tissue and orthopedic procedures. This requested indications, if approved, would cover essentially all our 14 million target procedures. We currently provide a vented vial spike in the XenRelief kit designed to withdraw the product as simply as possible. The high turnover of nurses post-COVID has added an unexpected complexity. Because XenRelief is viscous, it can still take several minutes to withdraw all the product, and even if the nurse doesn't follow instructions, it can take even longer. This can be annoying and diminish use of the product. With the broader label expected later this year, we want to make sure the product is as easy to use as possible. Optimization will be in two steps. Step one is to complete the development and gain approval of a greatly improved custom device designed to speed the withdrawal of the product. with step two being the continued development of a prefilled syringe. Because customers have indicated that they would use more Xenrolift if it was easier to remove from the vial, and the prefilled syringe will take a few years, we have developed an innovative vial access needle, or VAN, which not only reduces the withdrawal time from minutes to around 30 seconds, It also covers the vial to eliminate the need for a non-sterile nurse to be involved with withdrawing the drug product. This seamless single-person withdrawal tested very well by both customers and non-customers. We are pushing hard to get this device approved by the middle of next year. As noted, the pre-filled syringe is the optimal presentation for Zinnerleif and we have been working on it for several years. We are very familiar with this technology as Sustol is provided in a pre-filled syringe. However, Zinnerleif has proved to be much more complicated and has significantly lengthened the time to development. The great news is that we have recently overcome several of the most difficult obstacles. and are now ready to push this development project forward. An added benefit is that pre-filled syringes of Xenrolip should also help reduce the cost of goods. I will now turn the call over to John.

Thank you, Barry. We made solid progress across our acute care and oncology care franchises during the fourth quarter. During my presentation, I'll start with a number of updates on key performance metrics related to XenRelief. Then I'll provide an update on our upon the launch and finish with an update on another strong commercial quarter with our oncology care business. I'll start by summarizing XenRelief's quarterly performance of our leading performance indicators. The fourth quarter has historically been the strongest quarter Of our currently indicated surgical procedures, we were able to take advantage of the seasonality as in relief net sales grew to 3.9 million for the quarter, representing a 44% increase over the prior quarter and a 362% increase over the same quarter in the prior year. Fourth quarter demand units grew to 20,765 units representing a 38% increase over the prior quarter and a 301% increase over the same quarter in the prior year. Total ZIN relief unique ordering accounts grew to 793 through the end of the fourth quarter compared to 704 through the end of the third quarter. Total formulary approvals for ZinRelief grew to 522 through the end of February 2023, compared to 416 approvals through the end of October 2022. Importantly, we're also seeing growth with integrated delivery networks, or IDNs, with an updated total of 74 IDNs that have added ZinRelief to formulary. Gaining IDN support is a critical component to drive therapeutic interchanges with our key account substituting XenRelief for X4L for indicated procedures in the future. Overall, we made solid progress in Q4 and are implementing key initiatives to accelerate XenRelief sales in our existing user accounts in 2023. As mentioned on the prior slide, there has been consistent quarterly seasonality in elective procedures. The fourth quarter has always been the highest volume quarter, based on patients having met their annual deductibles during the year, along with holiday time off to recover and rehab. The line graph on this slide demonstrates the quarterly seasonality when looking at Expirel historical sales from 2018 through 2022, which have been adjusted by removing 2020 results to eliminate the direct impact of COVID. Historically, the fourth quarter has shown significant growth versus the third quarter, only to be followed with a significant reduction in the first quarter results. As previously mentioned, ZIN relief demand units grew by 38% in the fourth quarter over the third quarter. This translates into an average of 1,597 units per week during the quarter. With two weeks remaining in the first quarter of 2023, the ZIN relief weekly average is about 1,760 units per week, representing a 10% increase over the Q4 weekly average. Next, I wanted to provide an update on a key top-down strategy of targeting integrated delivery networks, or IDNs, to create new system-wide opportunities for therapeutic interchange from XBRL to ZIN relief for indicated procedures. Thus far, 74 IDNs have added ZIN relief to their formularies compared to 66 in our last uptake report. These 74 IDNs account for over 1.1 million annual ZIN relief indicated procedures. Finally, our IFDN formulary expansion now covers 149 million annual XBRL sales, and we've expanded to 17 IDNs at various stages of evaluating, switching, from XBRL to ZinRelief. Previously, we introduced a new metric to help evaluate the impact we're making with IBMs. As a reminder, the metric to measure performance is branded market share, which is simply ZinRelief units divided by the total number of XBRL units plus ZinRelief units. In order to benchmark the IBM progress against the entire market basket, we've included a total market branded share in addition to the IDN subcategories. The IDN subcategory branded results have not been updated to include the full 74 IDNs with formulary approval and the 17 IDNs evaluating therapeutic interchange, since many of these decisions came late in the fourth quarter or in this quarter. We'll update those numbers to reflect all our IDN wins in our next quarterly earnings report. Overall, in the 66 IDNs with formulary approval, we're demonstrating solid branded market share growth at 9.1%, which is about twice the level of the total market. Advancing IDNs to evaluation of a therapeutic interchange is an important step in accelerating ZIN relief growth. As the table shows, the 15 IDN evaluating TI have combined for a 12.5% branded share in Q4 which is significantly higher than the average for the 66 IDNs which have ZinRelief on formulary. Finally, we've also provided ZinRelief's branded market share for the top five IDN accounts out of the 15 IDNs evaluating therapeutic interchange from XBRL to ZinRelief. And this table demonstrates our branded market share can grow very quickly to a high approaching 50% for the fourth quarter based on our current indicated procedures, 50% is approaching the upper limit of what we expect to receive until an additional label expansion, which is expected in October of this year. We shared different versions of this slide in the past. Today's version upstates the pricing based on WAC price increases effective January 1st, 2023. Switching to XenRelief provides a cost savings of 23 to 34% based on wholesale acquisition costs. Even with Pacera finally offering 340B pricing in the fourth quarter of 2022, XenRelief's 340B pricing still provides 340B accounts with a 23 to 32% savings compared to Expro. Many 340B customers that we've spoken with have indicated But Sarah's response with the ZenRelief pricing strategy just doesn't allow them to effectively compete based on our clinical and value proposition. Finally, from a reimbursement standpoint, using ZenRelief remains much more profitable with Medicare patients. In these challenging financial times, only ZenRelief provides separately reimbursed outside the surgical bundle payment and the hospital outpatient setting of care which represents about 60% of the market opportunity. Based on these economic values, it's not surprising that large IDNs continue to evaluate Cinrelink for therapeutic interchange and indicator procedures and are anxious to limit XPRO's usage. With FDA approval of our expanded indications anticipated later this year, we would expect many more IDNs to move towards switching. Our top priority is to build consistent usage in existing ordering accounts. Our sales force is working to increase pull-through and build average order size. This can be accomplished by increasing the number of surgeons using ZimRelief at each count and the number of surgical procedures where it's used. During the fourth quarter, we began deploying new flexible resources to ensure that we have additional personnel for inservicing surgeons and their staff. We have piloted two types of flexible resources. The hospital implementation team utilizes operating room educators to start new accounts with focus in services across all indicated surgical lines to establish a strong base for the future. In addition, we have utilized medical device representatives in certain territories to build our orthopedic business with TKA, THA, and foot and ankle surgeries It's important to note these reps are only paid for incremental growth they're generating. We're also focused on increasing communications on a number of outstanding real-world evidence studies using XenRelief. For example, Dr. Kevin Warner of Covenant Healthcare presented a poster at Orthopedics Today with preliminary results comparing the use of XenRelief versus a generic joint cocktail. Their results indicated that XenRelief as part of a multimodal protocol in TKA significantly reduced pain and morphine usage per 24 hours compared to the joint cocktail. Importantly, their patient length of stay was over 24 hours shorter with XenRelief. We believe this type of real-world data will change practice and we're working with other healthcare providers to share their data. Our efforts with IVNs have produced meaningful results in growing ZynRelief branded market share, and we'll continue to look for opportunities to expand our pipeline and pursue therapeutic interchanges with new customers. And finally, as Barry already indicated in his comments, we know that ZynRelief works exceptionally well with patients, but some customers would like to see the product easier to withdraw from the vial, and we are committed to enhancing that process going forward. Now I'd like to shift the presentation to Aponvi, our new product for the prevention of postoperative nausea and vomiting, or PONV. We truly believe that Aponvi and the PONV market is a big opportunity for Heron. Let's start with the name. Aponvi conveys a prepotence for PONV. The market research on the brand name was extremely positive from healthcare providers And importantly, differentiates this lower dosage offering of a prepotent emulsion from Cymbati, our highly effective and successful product for CINV. We'll be targeting 36 million annual procedures in patients and moderate to high risk of PONV. In this segment, an estimated 12 million moderate to high risk patients are not receiving any prophylaxis at all. One of our goals will be to use the 2020 consensus guidelines to change this practice, growing the market, addressing one of the most concerning side effects for patients undergoing surgery. Market research identified a significant unmet need in the current market, including a more convenient product with faster onset, which upon be meets with a rapid IV push and 97% receptor occupancy within five minutes. A more effective product is desired, and a prepotent is the most effective product for PONV prevention alone or in combination. And finally, longer-lasting treatment with a PONV providing PONV prevention for up to 48 hours. This last unmet need is especially important with the growth in outpatient surgeries and patients being discharged after surgery. In short, a PONV is clearly differentiated in this market and positioned for success. Aponte is also the perfect strategic fit for Heron based on the synergies with our commercial organization. It starts with tremendous overlaps of accounts we're already targeting for ZIN relief. We have existing trusted relationships with anesthesia and pharmacy, which is critical for formulary access and usage. In addition, about 65% of our Symbonti business comes from the hospital market. The existing positive experiences and major hospitals and IDN

should help us jumpstart Aponvi access and usage. Next, I wanted to share some early plans and highlights on the Aponvi launch.

Our most critical success factor will be accelerating formulary access to Aponvi. It all starts with a strong value proposition. We'll be offering 340 pricing, GPO contracts, and full-line wholesaler Prime Vendor discounts. Importantly, a PONV will be the only product for PONV prevention that will have separate reimbursement outside the surgical bundle payment for PONV prevention for three years based on the pass-through for Medicare patients. Utilizing effective targeting will be key in building early access, and we'll start with Oral Apprepitant, Symbonti, and ZinRelief user accounts. Finally, we believe that we can leverage the 2020 consensus PONV guidelines with a focus on high to moderate risk PONV patients. We've had prior success promoting the NCCN guidelines, where we were able to grow the NK market by 35% during the first year of the Symbionte launch. I also want to share some very early commercial progress on Symbionte. On March 6th, 2023, we completed initial stocking of the distribution channel and full line and specialty distributors. And several have already placed reorders for a Ponvi. As announced last week, CMS has approved pass-through status for a Ponvi for three years beginning April 1st, 2023 under C code C9145. We're excited about the early customer feedback. On March 7th at the investor conference, we reported the first formulary approval and first end user sale for Aponvi. Now I can report that we've achieved our first IDN formulary approval with a nine hospital system. And the medical executive committee approved the formulary addition today with you starting in April. Obviously, this is very early days. but we look forward to reporting additional details as we progress through the year. Now I'd like to shift gears and review the fourth quarter results for our oncology care franchise. During the fourth quarter, our oncology care team did a tremendous job of growing our CINP business by net sales by 32% over the same quarter in the prior year. We're very proud of restoring growth to our CI&V franchise following generic arbitrages with both products and believe this will remain a valuable and highly profitable franchise for years to come. For the full year, our CI&V franchise net sales were 97.5 million, an increase of 17% over the prior year. The outlook for our CI&V franchise products remains positive based on continuing reimbursement tailwinds over the past year. As shown on the table, both Symbonti and Sustol are in a very favorable reimbursement position versus the competition. In addition, the elimination of separate reimbursement for generic Fosaprepidin in the hospital outpatient segment effective January 1st of 2022 continues to make the Symbonti value proposition much more attractive. The new CMS guidelines implemented effective January 1st, 2023 that reimbursed for 340 accounts that at a rate of ASP plus 6% compared to the prior rate of ASP minus 22% creates a windfall for those customers. We believe With a significant portion of our Symbonti demand sales already in 340B accounts, this new opportunity will help us increase unit sales to an even greater extent this year. Finally, large-scale Symbonti manufacturing is now online, with product in the distribution channel resulting in a gross margin increasing from about 50% moving towards 75%. For the full year 2023, we expect CIMV franchise net sales in the range of $99 million to $103 million. That completes my prepared remarks, and I'll now turn the call back over to Barry.

Thank you, John.

We will conclude the formal presentation with our financial overview slide. Heron had cash, cash equivalents, and short-term investments of $84.9 million as of December 31, 2022. Net cash used for operating activities for the three months ended December 31, 2022 was $37.5 million, including a payment of approximately $10 million for polymer. Without the polymer payment, our underlying burn was about $27 million, and the full impact of reducing headcount by approximately 34% last year will continue to be realized through this year and next. R&D expense declined to $11.1 million in fourth quarter 2022 compared to $28.9 million in fourth quarter of 21 and $20.5 million last quarter. We are also working with all our manufacturers to reduce external spending over the next few years as sales continue to ramp. We would expect cash burn in the teens in the second and third quarter. Having spent the last several days with our newly reconstituted board, I can safely say that they are completely dedicated to extending our cash runway and improving our valuation. After delving into the data and spending time with our sales force, the new board members continue to be excited about our products. Slides 21 through 24 contain important safety information for Zen Relief and Eponzi. The slides are available on our website. With that, we are ready for your questions. Operator?

Thank you. If you would like to ask a question on the phone lines today, please press star one on your telephone keypad. And if you would like to remove yourself from the queue, that is star one again. We'll take our first question from Josh Schwimmer with Evercore.

Hey, thanks for taking the questions. First, a quick one on the accounts receivable line. It looks like that bumped up quarter over quarter. What is that attributable to?

It's attributable to just some Minor timing in payments, which, as you know, 100% of that gets paid, and also an increase in sales over the course of the year.

Okay. I guess I'm trying to reconcile the comments about the headwinds from the label and the suboptimal delivery device. In light of the obviously challenging launch thus far, it would seem a little bit juxtaposed to John's supremely optimistic adoption metrics in the IDNs, and so trying to figure out is there any meaningful near-term growth prospects this year? Why continue to push on commercialization until you've checked the box on the broader label and the simpler device product profile?

Well, I'll let John answer, but I think to start off, we continue to see growth of the product. We're making significant inroads. What we've identified, obviously, is two areas that will have impact on accelerating growth over what we're seeing today, but we want to obviously continue to get the message out, grow the product. As John talked about, there's an opportunity for dissemination of real-world data that's now being generated as the product has become available. And as we've talked about over the last year, one of the time-consuming aspects of the launch were virtually every large site conducting their own trials. before they would start using the product just because of prior experience with other products in this category. And so there's now an abundance of data going to be coming out that will continue to support adoption of the product between now and later this year when we get the expanded label and hopefully shortly after that. adding to the product by making it easier to to use the product so you know this is obviously a continuum but we we continue to see adoption and and obviously we want to continue to push that as hard as we can John you want to add to that yeah certainly so

I think if we look at the IDNs, as Barry mentioned, the fact that they are all doing internal evaluations, then that takes some time. That's an important aspect and shown in some of the growth that we've seen. But the results that they are generating within relief have actually been terrific. And that's why we continue to add new IDNs. We've added some very large ones just at the end of last year. And those accounts are very interested and excited about switching out their XBRL business for XenRelief because of the clinical profile as well as what we have from a value proposition. Now, as Barry's pointed out, there are some hurdles from a preparation standpoint. One of the ways that we're looking to solve that is by utilization of medical device representatives. They're in the operating room, especially for orthopedics, every single day. So they can help and make sure that the product is on the tray when the surgeon needs it. So it's a short-term solution that can really help us be very effective. The other thing that we think is important is we expect a label expansion in October, which isn't that far away. And as accounts and IDNs, have been getting great results with Zen Relief, they'll look at adding additional service lines once we get that label expansion. So I think we can continue to grow. I think the second quarter, you know, just based on seasonality, has always been stronger than first quarter, and we would certainly expect that as we go forward.

And then, John, you provided some encouraging uptake metrics early on for UponVee. On the other hand, you provided encouraging uptake metrics for ZinRelief, and that's been, I think most investors would agree, to date, a fairly significant disappointment. So why should we have confidence in your upon-V commentary in light of the fact that the commentary around ZinRelief really didn't portend a launch that investors had been looking for?

Yeah, it's a very fair question, and I would tell you that I think a PONV is entirely different. First of all, we have a broad indication for PONV prevention, so we're not limited in the surgical procedures that we can be used. The other thing from an ease of use, Josh, we don't have the same training hurdles. It's really just a 30-second IV push. It's something that hospitals are used to using every single day. So the representatives don't have to remain in the account and make sure that the training takes place with withdrawing the product from the vial. So I think while certainly there are some very encouraging initial results that we're seeing, we believe this is a very different product and ease of use and we'll have a a very rapid uptake as we get going and get formulary access.

Got it. Thanks very much.

Sure.

We'll take our next question from Brandon Foulkes with Cantor Fitzgerald.

Hi, congratulations on all the progress and thanks for taking my questions. Maybe firstly for me, can you just elaborate on some of the options you have for shoring up your cash runway. I know you did talk about that and sort of working with the board on that. So maybe just if you could elaborate there. And then along the same line, how should we think about R&D going forward in light of the Zin Relief label expansion, SNDA now being filed, but then also the sort of pre-fold syringe and BAN you talked about today? Thank you.

Yeah, thanks, Brandon. So, you know, in terms of the second question first. Looking at R&D expense going forward, we continue to do our best to moderate R&D over the course of this year. Even with our activities in terms of trying to move the pre-filled syringe forward, That's a relatively modest investment compared to, you know, running large-scale clinical trials. We will do it as economically as possible. So, you know, and we've already taken significant measures to reduce our R&D expense as I think indicative of the numbers that we put up for fourth quarter. And we'll continue to look at ways to reduce burn both, you know, in R&D as well as elsewhere. I can't go into, you know, specifics at this point. The board is still, you know, in the kind of data accumulation stage, working together very closely with management. and we'll certainly provide updates when available.

Great, thanks very much. And maybe just one follow-up. In terms of the 10% growth, volume growth, any pushes and pulls around revenue that we should think about in the first quarter there, just sort of why revenue may or may not track that closely?

Yeah, great question. And, you know, there's no doubt that, you know, in the first quarter, as on an annual basis, you have, you know, what we showed in terms of seasonality of the use of Xenrolif and also, you know, ordering patterns and The mix of the two vial sizes, you know, may be different. So, you know, I don't know if there's any specifics that John or David can add in terms of Brandon's question.

Brandon, were you asking about Zin relief specifically?

Correct, yes.

Yeah. So if you look at it, I think Barry's right. So what we have seen is additional general surgery procedures coming on board, which is very encouraging. Our initial launch was really focused much more on orthopedics. So with that, there's a higher mix of the 200 milligram SKU, which would have a lower cost value. And then I think you can see that by some of the numbers historically over time from a demand standpoint. Also, as we gain business in 340B accounts, there will be a bit of a reduction in what the net selling price will be. So, you know, there will be some sensitivity to that that we'll continue to look at. I think the final piece is we took our first price increase in the January 1st. So there was a very minor buy-in that occurred at the end of last quarter, probably in the neighborhood of a week or two. So those would be the factors that would impact the actual results for Q1.

Great. Thank you very much. Sure.

As a reminder, everyone, that is star one to ask a question. We'll take our next question from Sergei Boulanger with Needham and Company.

Hi, good afternoon. A couple questions for us. First one, Barry, can you just talk about the overall surgical volume trends? I know your competitor has been, as previously mentioned, that the lack of Full recovery has been a headwind. So just curious what you've seen so far this year. I know first quarter is usually slow, but usually by the time we get to March starts to normalize. So curious what you see in terms of those strengths.

Yeah, and I think John can comment on a little more color. You know, no question, January is very slow. And we've seen, you know, good movement in February and strong March, which, you know, leads to overall growth over the quarter. John, do you want to give any more color?

Yeah, I think that if you look at the slide that we showed, you know, based on the seasonality of the product, that continues to hold true. overall in our indicated procedures last year they were down 4.1 or 4.6 percent compared to 2021 volume so far in the first quarter of this year they're running very comparable to what they were in 2022 surge so you know but it's It's still early. The claims data tends to run a bit behind when the actual unit volume is available. So it's something that we can look at and report on during our next earnings call.

Okay. And then secondly, you highlighted your plans to improve the presentation of the ZNLF product. Just curious what the regulatory, I guess, implications are here. what is required from an FDA standpoint to get these improvements approved for the product presentation?

It would be just like development of any other device similar to the Luer lock applicator that we provide in the kit. You have to go through normal manufacturing activities in terms of demonstration of the sterility, how you're using radiation to sterilize the device and packaging of that device. You put all of that material together. All of that's being done by an external manufacturer. That contract manufacturer has many many of these type of devices that they make their expert at this activity and so they provide all that information for the filing and then it's really a a question of two parallel paths that can be taken filing a 510 K as a device as well as filing a pre-approval supplement in order to package the product in the kit. The 510 goes faster, generally. And so, we're currently evaluating opportunities to see if we can accelerate this process using that approach. There's some technical issues associated with that that we need to work through with the FDA. But in either pathway, it's really the development of the device and showing that you can write instructions on how to use it appropriately. Not a lot of big hurdles. This is a, although the device is quite novel in how we've designed it, the general concept of a vial access needle is extremely common. And the amount of education or instruction in order to use it will be really minimal.

Thank you.

We'll take our next question from Kelly Shee with Jefferies.

Hi, this is Clara. I'm for Kelly. Thanks for taking my question. So my first question is on general love. So I wonder if you can give us more color on your strategy on getting more uptake from those accounts already have consistent ordering. And what do you think will be the inflection point in terms of the sales trajectory for Zinrolab? And also, can you share a little bit more about the progress on the EU launch? Thanks.

Yeah, John, you want to take the first part?

Of course. So our focus right now is, in our existing accounts, making sure that our representatives are able to really maximize the number of surgeons using a product. So oftentimes in these initial evaluations that are coming about, they'll start with maybe two or three orthopedic surgeons, and there may be five to eight in practice. So our goal is to really leverage the positive results that the initial trial period had and expand to those other surgeons. The other thing that we're looking to do is expand within the procedures that we're doing. So we're starting with total... Someone maybe could go on mute. There's an awful lot of background noise there. Thank you so much. So the other thing that we're doing is looking to expand the surgical procedures. So if someone's starting in TKA, we're obviously looking to do hips. We're also then looking to expand within an account to other surgical lines. So if it's going well in orthopedics, what can we do in general surgery and bariatrics? What can we do in C-section? Where are additional places that we can grow the business? And we are beginning to see good traction on taking that approach. Some of the flexible resources that we're adding like the medical device reps are helping a lot too because they have such strong relationship with orthopedic surgeons. There may be some that we don't have strong relationships and are harder to convert and we've already seen growth coming from accounts by using that. So there's a variety of really strategies that we're using there but I think most of it is just making sure that we're leaving no stone unturned

unturned within accounts that already have existing business.

Yeah, and on the EU question, really no update. We have continually seen it a challenging process to find an EU partner, and we have no intention of launching the product ourself. That's an expensive endeavor. We certainly would not want to use our cache for that at this time.

Got it. That's very helpful. And upon the launch, you know, you have talked about the early signals you have seen from the launch two weeks ago. And could you maybe, you know, give us more color on the upon the ramp-up and, like, what are the additional cells force you might need to support upon the ramp up and how should we expect the cost increase associated with that? Thank you.

Yeah, John, do you want to take that?

Of course. So with respect to the sales ramp up, it will really be determined on how quickly we can get formulary approval. So that's a key priority that we have right now. As with any of our products, we don't give guidance during a launch phase, so we're really not providing any additional insights at this time. What we hope to do is continue to provide updates on the progress as we get further in, but we're only two weeks out. With respect to the additional cost, we're using our existing Zen Relief sales force. They call on the exact same audience our team's already calling on, anesthesiologists, on pharmacy, on surgeons. And fortunately, there is a tremendous overlap of the target accounts that we're going after, especially the oral or prepident accounts with the ZIN relief accounts that we have. So it's a very small percentage of the overall budget that's used incrementally to launch a PONV compared to what we're doing as a commercial spend.

Got it. Thank you.

And that does conclude the question and answer session. I would like to turn the call back over to Dr. Court for any additional or closing remarks.

Thank you. And thanks, everyone, for joining us today on the call.

We look forward to keeping you updated in the future.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation, and you may now disconnect. Goodbye.