Pacira BioSciences, Inc.

Good morning and welcome to the fourth quarter 2021 Becero Biosciences Inc. Earnings Conference call. My name is Brandon and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session during which you may dial star 1 if you have a question. I will now turn the call over to Susan Mesko, Head of Investor Relations. And Susan, you may begin.

Thank you, Brandon, and good morning, everyone. Welcome to today's conference call to discuss our fourth quarter and full year 2021 financial results. Joining me on today's call are Dave Stack, Chairman and Chief Executive Officer, and Charlie Reinhart, Chief Financial Officer. Before we begin, let me remind you that today's call will include forward-looking statements based on current expectations. 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 the company's filings with the SEC, which are available from the SEC, or our website. One last piece of housekeeping. Local internet went down this morning, so the Pacira team is participating via cellular device. We ask for your patience if sound quality is limited at any point. With that, I will now turn the call over to Dave Stack.

Thank you, Susan. Good morning, everyone, and thank you for joining us. We'd like to devote most of the time today to your questions, so I'll begin today's discussion with a brief prepared remarks that cover recent business highlights. We remain proud of our team as they continue to perform and deliver both for our patients and our investors. The progress we made throughout 2021 positions us for even greater success in 2022. We have a series of value-driving milestones in the year ahead, and we couldn't be more excited for the future of Pacira. We ended the year in a strong position with a diversified portfolio of unique, safe, best-in-class products, that support healthcare providers' ability to provide low or no opioid therapies to improve patient experiences along the neural pain pathway. Our achievements in 2021 highlighted by growing XBRL sales, the acquisition of Flexion, and an exciting pipeline of innovation that have placed Pacira in the forefront of opioid sparing pain management. Zoretta provides us with a highly complementary commercial asset for the treatment of osteoarthritis knee pain while also increasing our presence in chronic pain. With more than $100 million in sales in 2021 and a significant potential for an even greater contribution moving forward, Zoretta gives us great confidence in its long-term prospects as a high-potential, durable product for Pacira. Importantly, this acquisition diversifies our revenue stream, enhances our top line, and we believe it will provide meaningful synergies as we expect to drive substantial near and long-term accretion to our cash flows and earnings. Turning now to progress we made with Expirel. I'll start with a recent achievement of a very exciting milestone. Over 10 million patients have been treated with Expirel since launch in the United States alone. Our team achieved record XPREL sales of $507 million with adjusted EBITDA margins of 37% in 2021, marking our eighth consecutive year of positive adjusted EBITDA. These are important accomplishments. As we have been reiterating, XPREL-based blocks are enabling the regional anesthesia revolution, which is our number one growth driver. Regional anesthesiologists are developing new blocks, perfecting old blocks, and using imaging to ensure successful patient outcomes. Our state-of-the-art PIT training and innovation facility is supporting this market transition with real-time best practice knowledge transfer and is helping accelerate the surgical migration to all patient sites of care. In addition, throughout 2021, we significantly fortified our XPRO IP estate with two new Orange Book composition patents that are now listed in the FDA Orange Book. Recently, we received four new notices of allowance from the US Patent Trademark Office. These are all composition patents that we will submit for Orange Book listing, after which there will be a total of six XBRL patents listed in the Orange Book with expiration dates of January 22, 2041. Last year, we were excited to launch XBRL in the pediatrics market, where we are making an even bigger impact than anticipated. We are seeing erector spinae, or ESP blocks, becoming the standard of care and displacing costly and cumbersome pumps and catheters. Interestingly, pediatric spine is triggering a halo effect in adult procedures. Spine surgeons are a tight-knit group of like-minded surgeons, and the technique for an erector spinae block is the same for children and adults. This provides us with an opportunity to establish expiral ESP regional blocks as the cornerstone of best practice enhanced recovery pathways for both adult and pediatric spine surgeries. Looking to our international expansion for Expirel, we are delighted to report that our targeted European launch is now underway. Importantly, as you may recall, Expirel enjoys a broad label in Europe, which includes both upper and lower extremity nerve blocks, as well as field blocks, such as transverse abdominus plane field blocks, or TAP. This is key and will factor into our ability to gain traction in this important market without having to expand our call points and should help simplify market access. Our women's health franchise has seen 30% improvement in Expirel procedures over the prior year. Expirel tap blocks for C-section are driving the success, which is not surprising given the incredible value proposition that faster recovery and opioid sparing pain control means to new mothers. With 1.3 million C-sections per year in the U.S. and rapidly expanding Expirel penetration, we see significant opportunity for continued growth. Further, positive experience and outcomes in C-section procedures are driving demand in gynecologic oncology and breast procedures. As we all know, mothers are the CEOs of the household, and a positive birth experience with Expirel will drive a lifetime of opioid sparing decision-making for other procedures. This past year, COVID has escalated the need for many breast, plastic, and oncology surgeons to expedite discharge for their patients. With Expirel, they are now able to meet the needs of women who demand an opioid-free experience and don't want to stay overnight in the hospital, while simultaneously optimizing their care experience through better pain management using Expirel-based multimodal ERAS protocols. In addition to the success of our growing Expirel and Zoretta franchises, we are also making great strides with our Ayurveda franchise. Iovera is the only cryotherapy option available in a handheld design, allowing it to be used in a variety of institutional settings and environments where you could not use the previously available console-based cryoanalgesia systems. In 2021, we launched Iovera with a partner in Canada and with Pacira Resources in the UK and EU. We also used last year as an opportunity to design a more user-friendly, next-generation device and develop additional smart tips new indications we now have a specific tip ready for human pilot studies for medial branch block as a treatment for chronic low back pain we are also preparing to evaluate iolvera as a treatment for spasticity which represents a very significant long-term opportunity looking ahead we expect to build on last year's success and believe 2022 will be a banner year for pasira as we expect to deliver another year of record sales significant ebitda growth and multiple clinical and regulatory updates. Enrollment is progressing in our two phase three lower extremity nerve block studies for Expirel or the STRIDE studies. COVID related delays in the fourth quarter of last year have shifted the expected timing of our SMDA submission to the fourth quarter of 2022. We believe the lower extremity nerve block label is at least as significant as the upper extremity market with around 3 million procedures a year and an addressable market of approximately $100 million. For Zorretta, the first and only FDA-approved treatment for osteoarthritis knee pain, we are focusing on three areas of development in 2022 and will be meeting with the FDA to obtain alignment. The first is to expand the current label to include a safety superiority claim in diabetes, which we expect will establish Zorretta as the first choice corticosteroid for osteoarthritis and pain of the knee. Second, we are preparing to launch a phase three shoulder study, which we plan to begin in year end. And lastly, we are working to expand the current knee indication to include repeat dosing. In short, we believe Zoretta is a perfect fit for the Pacira family of unique products, and we envision longer term our commercial and clinical capabilities will significantly expand its use. At the same time, we are addressing several issues with specialty distributors and pharmacies, as well as previously stocking of short-dated materials. We are moving these systems and processes to our PSEERA operations and expect to have many of these issues behind us by the end of the second quarter. For IOVERA, the launch of our next-generation handheld device is now underway, and we remain on track for an interim review of our PREPARE study, which is evaluating the combination of IOVERA and Expirel as a procedural solution in TKA procedures in the next few weeks. As I mentioned earlier, we are particularly excited for the opportunity in spasticity. You may recall that at our analyst event last year, Dr. Paul Winston shared some compelling proof of concept videos in his spasticity patients. Importantly, pain associated with spasticity is already unlabeled, and we are working to facilitate greater adoption given the efficacy, safety, and ease of use. We plan to work with the FDA to define a regulatory pathway for adding treatment of spasticity to our iogara label. Patients currently have limited and often costly therapeutic options. For example, patients are receiving Botox, which has dose limitations. Here, patients receive three to four treatments a year for $1,800 to $2,400 per treatment. Another example is the use of phenol, a chemical neurolytic, Phenol is painful, requires anesthesia, and has adjacent tissue scarring with outcomes that are highly variable. In contrast, Iovera has shown great promise in this indication. With tips costing $450 to $500, Iovera could represent a tremendous value proposition in spasticity. In addition to Expirel, Zaretta, and Iovera, our portfolio includes promising earlier stage opportunities. We expect to initiate a Phase II study of our multiviscerate vesicular liposome technology for subarachnoid analgesia in late 2022. We are planning pilot studies to evaluate Expirel and Iovera spasticity separately, I'm sorry, as stela ganglia blocks for use in cardiac dysrhythmia following heart surgery. In addition, we are defining next steps for clinical programs and our multi-vesicular liposomal formulations of dexamethasone for inflammation and low back pain and high-dose bupivacaine for longer-acting pain management of five days or more. Moving ahead with patients always at the forefront of our endeavors, Pacera will continue to innovate in all areas of our business, including new indications, line extensions, design improvements, and more. We will leverage our state-of-the-art PIT innovation and training center in Tampa, as well as a second facility that we are building out in Houston, to bring these innovations into the hands of our healthcare provider partners. I'm proud of all we accomplished last year and even more excited for what's to come. With that, I'll turn the call over to Charlie for some financial highlights. Charlie?