Pacira BioSciences, Inc.

Good day and thank you for standing by. Welcome to the Q3 2021 PACEBRA Bioscience Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and the number 1 on your telephone. Please be advised that today's conference call is being recorded. If you require assistance during the conference, please press star and then the number 0. I would now like to hand the comments over to Susan Mesko, Head of Investor Relations. Please go ahead.

Thank you, Amanda, and good morning, everyone. Welcome to today's conference call to discuss our third quarter progress. Joining me as speakers on today's call are Dave Stack, Chairman and Chief Executive Officer, and Charlie Reinhart, Chief Financial Officer. Additional members of the PACIRA Executive Leadership Team are here for our question and answer session. Before we begin, let me remind you that today's call will include forward-looking statements based on current expectations, including those related to the potential transaction between PACIRA and Flexion Therapeutics. Such statements represent our judgment as of today and may involve risks and uncertainties. For information concerning risk factors that could affect the company, please refer to our filings with the SEC which are available for free on the SEC website or our website. In addition, we'd like to remind you that the required tender offer documentation for both the CIRA inflection has been filed with the SEC. Please also refer to the information in such documents which are available for free on the SEC website. With that, I will now turn the call over to Dave Beck.

Thank you, Susan. Good morning, everyone, and thank you for joining us. We'll begin today's discussion with a few prepared remarks to cover recent business highlights before turning to your questions where we'd like to devote most of our time today. Last month, we were thrilled to deliver a major milestone in our growth strategy with our proposed acquisition of Flexion Therapeutics. This transaction directly aligns with our goal of building out a robust offering of novel non-opioid treatments that will allow us to broaden our differentiated portfolio of end-to-end solutions across the neuropain pathway. With Zoretta, we have a highly complementary commercial asset for the treatment of osteoarthritis knee pain, which will diversify our revenue stream, grow our top line, and provide meaningful synergies that we expect to drive substantial near- and long-term benefits accretion to our cash flow and earnings. We are developing an integrated Zaretta operating plan for 2022. We expect significant operational synergies, accretion, and growth potential for Zaretta, which will be fueled by our complementary call points and commercial activities. To put some quantitative context around this, the three complementary commercial assets are each on a strong growth trajectory with year-over-year to date net product sales growth of 27% for XPRO, 76% for Iovera, and an estimated 25% for Xelretta as reported by Flexion Therapeutics last month. And based on our estimates, Pacira only needs to capture 30% of the operational synergies to make this deal accretive in 2022. Future growth opportunities for Expirel and Iovera were highlighted at our Investor Day last month, which we hosted from the Pacira Innovation and Training Center in Tampa. We were joined by eight key opinion leaders who shared their experiences across multiple procedures. Dr. Jeff Gadsden, head of regional anesthesia at Duke University, provided an excellent summary of the revolution taking place in the field of regional anesthesia, where ex-pro-based blocks are transforming the standard of care by institutionalizing enhanced recovery after surgery, or ERAS, protocols that are yielding improved outcomes, faster recovery, better pain control, and enabling the shifting of complex procedures to outpatient settings. Regional techniques are redefining the standard of care for post-surgical pain management with field and nerve blocks expected to grow from 20% of anesthesia procedures in 2019 to 75% by 2025. Expirel is the only FDA-approved product that allows field and nerve blocks for single-dose long-acting pain control. Dr. Sonny Toomber, a pediatric anesthesiologist from Shriners Children's Hospital, discussed how Expirel is changing the standard of care for his institution where they are using Expirel-based regional techniques such as erector spinae or ESP blocks to achieve excellent pain control using low or no opioid regimens in highly painful procedures such as scoliosis, noose bar placement, and colorectal surgeries. XPREL is redefining pediatric post-surgical pain management by displacing opioids and cumbersome catheter systems, which can have a 50% value rate, especially important for this vulnerable patient population. With approximately 1 million pediatric procedures per year, we envision pediatrics to be at least a $100 million market opportunity by 2026. Dr. Maggie Holtz, a regional anesthesiologist and medical director at WellStar Health Systems, performed live demonstrations of ultrasound-guided Exprel-based ESP and tap blocks, showcasing the ease of administration and superiority to general anesthesia in terms of earlier recovery and fewer side effects. For example, as discussed by Dr. Tumbler, Expro-based ESP blocks are becoming the marquee procedure for pediatric spine surgeries at influential children's hospitals across the country. Dr. Michael Wang, Chief of Neurosurgery at the University of Miami Hospital, highlighted how Expirel-based ERAS protocols have paved the way for him to perform awake spinal fusion surgery and cited cost savings of more than $5,000 per case, as well as a reduction in procedure time of more than two hours per case. Enabling the transition of spine procedures to outpatient settings is a game changer and represents at least a $100 million growth opportunity for Expirel. Dr. Paul Sethi, a leading research physician in sports medicine from Greenwich, Connecticut, has established new Expirel-based clinical guidelines for shoulder surgery, where he is seeing 30% of patients go opioid-free after surgery in the ambulatory surgery setting. Shoulder surgery is the fastest-growing orthopedic procedure for Expirel in the ambulatory surgery centers. Dr. Steve Garber, obstetric anesthesiologist at Saddleback Medical Center in California, highlighted his success using Expirel tap blocks to help new moms have opioid-free, pain-free experience after C-section surgery. C-section is the cornerstone of the women's health market with Expirel, with sales also expected to exceed $100 million by 2026. Dr. Josh Urban of Ortho Nebraska, who has used Iovera in more than 1,000 patients for treating pain associated with osteoarthritis or total knee arthroplasty, summarize the advantages of Iovera cold therapy as a long-acting, non-pharmacologic nerve block versus the safety risks associated with heat-based approaches. We are successfully positioning Iovera as a total procedural solution for total knee arthroplasty and expanding to peripheral osteoarthritis as well. As we reported previously, orthopedic procedures make up slightly more than 50% of our Expirel procedures. All of these above are on-label applications and are driving real-time demand in the market. The event also highlighted several exciting future development opportunities, such as the treatment of pain from spasticity, presented by Dr. Paul Winston, who is the medical director of rehabilitation and transitions at the University of British Columbia, Victoria, and also the current president of the Canadian Association of Physical Medicine and Rehabilitation. Dr. Winston presented compelling data outcomes data using ivera cold therapy as a novel approach for treating not only the pain of spasticity, but the spasticity itself. The unmet medical need is significant, and the social impact and costs are extremely high. With an estimated 5 million patients, we believe Iovera could make a meaningful impact for stroke, cerebral palsy, multiple sclerosis, or spinal cord injury patients suffering from spasticity. Pilot studies are almost completed. Treating the pain of spasticity is currently on label, and we are defining the regulatory strategy to add spasticity itself to the indication. Spasticity has the potential to be a blockbuster market for Iovera. From the beginning to the end, the event underscored the vast untapped market opportunity that lies ahead. With a total addressable market of 32 million procedures for Expirel and 31 million procedures for Iovera, and current single digit penetration, we feel great about the outlook for growth, with each 1% incremental market share adding another $100 million to the top line. A replay of our investor day can be found on the investor section of the Pesera website. Turning to Europe, the launch of Expirel and Iovera are now underway in this important market. We are generating interest, taking orders, and expect to be shipping product by mid-November. We are seeing a high level of interest as COVID has caused a tremendous backlog for orthopedic procedures in Europe, with waiting lists as high as two years. Importantly, the average length of stay in Europe is several days, which provides an optimal opportunity for both Expirel and Iovera to improve pain management for patients waiting for surgery, as well as recovery time, surgical efficiency, and throughput for total hip and total knee procedures. On a clinical front, our team continues to make strong progress. For Expirel, two phase three registration studies for Expirel and lower extremity nerve block are now underway. This timeline places us on track for regulatory submission in the third quarter of 2022. Activities to support label expansion to include a pediatric nerve block program and an indication for patients under six years of age continue to progress as expected. A number of academic collaborations are also starting. These include an opioid-free C-section study at Henry Ford Hospital in Detroit and ESP blocks in pediatric spine surgeries at Shriners Hospitals and the Cleveland Clinic. Finally, we're defining regulatory strategies in new areas of interest, such as stelae ganglion block for treatment of post-operative dysrhythmia from open-heart surgery procedures. With Iovera, we remain on track to report interim results from our PREPARE study, which is evaluating Expirel and Iovera in total knee arthroplasty procedures. In addition, we are supporting a wide range of pilot initiatives in exciting markets, such as restless leg syndrome, spasticity, and rib fracture. As for the DepoFoam pipeline, we're moving to the next cohort in our subarachnoid program for spinal administration, a Depo-dexamethasone asset for particulate-free inflammation therapy, and a high-potency Expirel with an extended duration of action. In closing, we feel great about where we stand today and the market dynamics we are seeing for both products. We will continue to build on our momentum to remain highly confident, and we remain highly confident in our growth outlook. Looking ahead, we intend to cement our leadership position by expanding the use of XPREL and Iovera, and look forward to adding Zoretta to our commercial offering to deliver patients end-to-end non-opioid solutions along the pain pathway. And with that, I'll now turn the call over to Charlie for a review of the financial outlook. Charlie?