Pacira BioSciences, Inc.

Ladies and gentlemen, thank you for standing by. Your conference call should begin momentarily. Again, thank you for standing by. Your conference call should begin momentarily. Thank you. Thank you for standing by, and welcome to the Q1 2022 Pacera Biosciences Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question at that time, please press star then 1 on your touch-tone telephone. As a reminder, this call is being recorded. I would like to turn the conference over to your host, Ms. Susan Mesko. Head of Investor Relations, please go ahead.

Thank you, Valerie, and good morning, everyone. Welcome to today's conference call to discuss our first quarter 2022 financial results. Joining me on today's call are Dave Stack, Chairman and Chief Executive Officer, and Charlie Reinhart, Chief Financial Officer. Additional members of our executive team are joining for today's question and answer session. Before we begin, let me remind you that this call will include forward-looking statements 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 our filings with the SEC, which are available from the SEC or our website. 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'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. Pacira continues to drive innovation in non-opioid pain management with notable progress taking place across our entire portfolio in the first quarter of 2022. We are pleased to cap off the first quarter with record high expo sales that exceeded $51M for the month of March. This is particularly impressive given the recent and ongoing pockets of persisting COVID related operational disruptions in the elective surgery market, along with labor shortages, which continue across all surgical settings in the first quarter and especially around the Easter and Passover holidays in April. Strong top-line sales, coupled with our operational efficiency objectives, continue to drive attractive adjusted EBITDA margins of over 34% for the first quarter, marking our 20th consecutive quarter of positive adjusted EBITDA. XPREL utilization continues to expand and support the market transition to outpatient sites of care. This is demonstrated within our latest available weekly data, which shows XBRL significantly and consistently outperforming the elective surgery market by a very healthy margin, period over period, as well as sequentially when compared to pre-COVID baseline levels. Our most recent IQVIA data are available in the investor relations section of our website. Expro-based nerve blocks and field blocks are fueling a revolution in regional anesthesia, so it is not surprising that this segment is our number one growth driver. Anesthesiologists are developing new blocks while perfecting existing block techniques. In addition, anesthesiologists utilize imaging to ensure successful blocks and pain control to expedite recovery times and ensure best practice patient outcomes, a critically important element in ambulatory surgery cases as the aim is to discharge patients shortly after surgery. In-person society meetings are back and enabling us to engage directly with clinicians who remain eager for education and training around regional approaches for Expirel, as well as drug-free nerve blocks with Iovera and intraarticular injections with Zoretta for osteoarthritic knee pain. We are leveraging our state-of-the-art PIT training and innovation center in Tampa to facilitate real-time best practice knowledge transfer and accelerate surgical migration to outpatient sites of care. In the first quarter alone, we had 84 inbound requests for institutions requesting training for their anesthesia teams on select blocks, with erector spinae block, or ESP, being the most requested, underscoring its growing popularity given its simplicity, safety, and broad coverage. Our medical and innovation team also continues to host monthly workshops where interest and attendance remain high. We have launched development plans for our second innovation and training facility in Houston, which we will look forward to opening later this year. We expect Houston will have an equally positive impact on expanding ExPRO and IOVERA expertise among clinicians, especially for field and nerve block procedures, which are driving the majority of our growth. This cutting-edge facility will feature an adaptive lecture hall, broadcast studio, state-of-the-art advanced imaging, and dedicated space for cadaver labs and other interactive workshops. These training centers are core to developing both our physician champions and community-based clinicians who want to stay on the forefront of opioid sparing pain management. Importantly, we continue to advance our robust patent strategy around expirale and have fortified our intellectual property with new patents which extend protection to January 22, 2041. We now have five patents listed in the FDA's Orange Book and expect a sixth patent to issue in the coming weeks. Drilling down into a few key expirale markets, Orthopedic procedures are growing significantly with our most recent IQVIA data from October 2021 showing year-over-year XPREL utilization of 26% for this orthopedic market segment. XPREL-based regional protocols are safely and reliably enabling a shift of orthopedic procedures with XPREL utilization of 34% over the same period in the 23-hour sites of care. In pediatrics, XPREL is performing very well and quickly replacing pumps and catheters as a standard of care. We are continuing to drive medical education around the latest techniques. In addition to spine and cardiovascular surgeries, we are seeing emerging regional blocks in pediatric deformity, trauma, and injury-related procedures. Later this month, we are launching a new monthly production from our Tampa Innovation and Training Center, the Pediatric Exchange, which will feature pediatric surgeons, anesthesiologists, and nurses from nationally recognized institutions who will share their clinical experience and outcomes with Expirel. These remain early days in the pediatric market, where opioid-sparing pain management in these vulnerable pediatric patients is tantamount. In women's health, we continue to see significant growth and are experiencing a powerful halo effect, with success in C-section driving expanded utilization in breast augmentation and gynecologic oncology procedures, where we are also seeing a lift to the 23-hour setting. The growing level of interest around XPREL regional blocks and women's health was recently evidenced by a high level of engagement at our educational events focused on neuroanatomy, regional techniques, and same-day surgeries at recent congresses, including the Society of Gynecologic Surgeons, the Society of Gynecologic Oncology, and the American Society of Breast Surgeons. Regarding our European launch, we continue to make slow but steady progress and now have a full team in place. We've been encouraged by the strong interest in XPREL as physicians in Europe work through a surgical backlog with wait lists of one to two years. We are effectively using our virtual capabilities from our Tampa Innovation Center to train European anesthesiologists and surgeons in best practice pain management techniques, utilizing XPREL and iAlvera multimodal therapy and enhanced recovery after surgery protocols. Looking at the XBRL pipeline, our two Phase III studies evaluating lower extremity nerve blocks are advancing with data expected in the third quarter. If successful, these studies will support a supplemental NDA filing by the end of this year. Planning is also underway for a multi-center registration study of Expirel as a stellate ganglion block for treating refractory cardiac dysrhythmia. Dr. Shiv Kumar, director of UCLA Cardiac Arrhythmia Center and world-renowned expert in the mechanisms of cardiac dysrhythmias, is collaborating with the team on study design and will be the principal investigator. Once finalized, we intend to meet with the FDA to align on study design and regulatory strategy for expanding the Expirel label to include stellate ganglion block. A stellate block, which lasts for several days with Expirel, will be a significant improvement in patient care, and Dr. Shubhkumar is leading the way forward. Beyond our success with Expirel, our acquisition of Flexion continues to perform and support the strong rationale for this combination. Out of the gate, our Zoretta franchise has performed well. While still in the early stage of its growth trajectory, we are confident this product will be an important revenue and earnings contributor. To better align Zoretta acquisition and distribution with the needs of our customers, we recently introduced a simplified volume-based tiered discounting program. We expect this will normalize ordering patterns and cash outlays for our customers while embedding Zoretta earlier in the treatment paradigm. Beyond the currently marketed indication for Zilretta, we continue to advance a pipeline of opportunities to drive product growth and new indications in the coming years, including a phase three label expansion study and shoulder that we intend to discuss with the FDA in the third quarter. We are also defining a regulatory pathway to add repeat dosing and safety data in type two diabetic patients to the Zilretta label. Moving to Iovera, our novel handheld cryotherapy device, we are working toward transitioning the market to a new Generation 2 device. The rollout of Generation 2 to our broad customer base has been slower than anticipated as we are implementing a software update to further optimize the user experience based on feedback received during the initial phase of the launch to our top Iovera users. Turning to the PREPARE study of Iovera and TKA, following an interim review, we decided to close the study early, as it was unlikely to support our commercial goals around reimbursement since the design no longer reflects the market's current practice patterns. The market is moving rapidly towards ultrasound-guided Iovera blocks delivered by anesthesiologists, pain management specialists, and nonoperative sports medicine clinicians. These providers use a longer 190 tip with ultrasound visualization to precisely target deeper nerves associated with osteoarthritis of the knee. This newer approach confirms nerve location and ensures accuracy of treatment. The IGAR registry study is now positioned to provide real-world evidence with IOVERA, which will better support our commercial initiatives by reflecting these evolving standards of care in real time. IGOR is capturing both Iovera and Zoretta data in the osteoarthritic knee treatment paradigm with leading centers of excellence. In addition to use in total knee arthroplasty and peripheral nerve block, we remain particularly excited for the opportunity for Iovera cold therapy as a novel approach to treating spasticity. As you may recall, we have been working with Dr. Paul Winston, President of the Canadian Association of Physical Medicine and Rehabilitation, who has been conducting IOVERA observational studies in spasticity. The preliminary findings of Dr. Winston's research continue to be highly encouraging, and he is now collaborating with our clinical and medical teams on a publication strategy for these data. In parallel, we are designing a registration study to evaluate IOVERA and the treatment of spasticity. We expect to meet with the FDA later this year to secure alignment on study design. Patients currently have limited and often costly therapeutic options. For example, patients are receiving three to four Botox treatments a year at $1,800 to $2,400 per treatment. Another example is the off-label 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. And with Iovera Smart Tips costing $450 to $500, Iovera could represent a tremendous value proposition in spasticity. An effective and safe treatment for post-stroke patients and pediatric cerebral palsy patients would be a significant advance in the treatment of spasticity. In parallel to our XPREL stellate ganglia block study, Dr. Shiv Kumar is also initiating a study utilizing Iovera's cryo technology to treat the stellate ganglia as a long-term approach to efficacy effectively, I'm sorry, to effectively address various cardiac dysrhythmias such as those that occur post myocardial infarction. Expirel and Iovera have the potential to address both acute and persistent cardiac disease in a wide range of patients. Moving now to our earlier stage pipeline opportunities where we continue to make progress. We expect to initiate a phase two study of Expirel and some arachnoid analgesia later this year. In addition, we are defining clinical programs for our proprietary multi-vesicular liposome formulations of dexamethasone for inflammation and low back pain, and high-dose bupivacaine for longer-acting pain management of five days or more. Lastly, we remain active in the business development front and recently made a strategic investment in Carthronics to support the final stages of preclinical development of CX011, an intraarticular injection designed to slow joint degeneration by mediating the IL-6 cytokines. In closing, we started 2022 in a position of strength, and we continue to feel great about where we stand today. We have the wind in our sails and across multiple non-OPI franchises and remain highly confident in our outlook for strong revenue and earnings growth. With a significant patient need for opioid sparing options and limited commercial competition, we are more confident than ever that we have the right team, the right products, and the right strategy to cement our leadership position in delivering patients innovative non-opioid solutions along the neural pathway while building significant shareholder value. And with that, I'll turn the call over to Charlie for his first quarter financial highlights.