Pacira BioSciences, Inc.

Everyone, welcome to today's conference call to discuss our third quarter 2022 financial results. Joining me on today's call are Dave Stack, Chairman and Chief Executive Officer, Roy Winston, Chief Medical Officer, and Charlie Reinhart, Chief Financial Officer. Additional members of our executive team will join for today's question and answer session. Before we begin, let me remind you that this call will include forward-looking statements based on current expectations. Such statements represent our judgment as of today and may involve risks For information concerning risk factors that could affect the company, please refer to our SEC filings, 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 prepared remarks that cover recent business highlights before turning to your questions. We are pleased to report our third quarter results, which were a success across all measures, including revenue growth, increased adjusted EBITDA, and value creation. On the clinical and regulatory front, beyond the recently reported positive results of our two Phase III lower extremity nerve block studies, we are poised to deliver several additional near-term milestones across our durable opioid sparing portfolio. XPREL sales were $132.6 million with expanding utilization across all target markets and sites of care and year-over-year growth of 9% despite a challenging macro environment. The third quarter also marked the 11 millionth patient treated with XPREL in the United States. We began to see improvement in year-over-year XPREL growth trends beginning in mid-August, culminating with September average daily sales exceeding 2021 by 13%. Strong sales combined with operating discipline allowed us to deliver significantly positive adjusted EBITDA of $55 million, marking our 22nd consecutive quarter of positive adjusted EBITDA. We are pleased with this impressive record and the execution of our team in a challenging operating environment. We can unequivocally say that despite these unpredictable market conditions, Pacira has consistently delivered. Throughout the quarter, we continue to invest in key initiatives to further improve gross margins across our safe and unique opioid sparing portfolio. For XPRO, we are now running test batches for our 200-liter manufacturing suite in San Diego and remain on track for a supplemental new drug application submission in 2023, seeking approval of this new facility, which will be a significant step in improving XPRO gross margins. Our new Loretta fill line is in the qualification phase, we expect this line to improve future quality and yield to support anticipated growth for Zoretto. Finally, our new iAlvera contract manufacturer is now fully online with lower unit costs, benefiting margins to support future demand. Turning now to some more specifics for our XPREL franchise, Regional analgesia remains our number one top-line growth driver and continues to drive paradigm shifts in patient care with long-acting expiral-based nerve and field blocks, accelerated recovery times, and enabling save-day surgeries. Importantly, we expect additional expansion in the regional analgesia market following the recently announced positive trials for lower extremity nerve blocks. On the reimbursement front, we are supporting legislation such as the No Pain Act to provide Medicare reimbursement for non-opioid post-surgical pain treatments in outpatient settings. In September, advocates from 11 states and Washington, D.C. met with policymakers on Capitol Hill to voice the importance of this bipartisan legislation. Congressional passage of No Pain would provide CMS reimbursement for 70% of our total addressable market for Expirel, with commercial and self-insured payers expected to follow. We are also supporting initiatives to provide greater access to non-opioids for our military and government employees and retirees through a similar language to No Pain that would provide coverage to roughly 10 million lives enrolled in TRICARE. While it's impossible to predict government action on any level of certainty, approval for any of these activities would be pure upside to the XPREL business. The strong level of interest in training programs at our Innovation and Training Center in Tampa underscores the market's eagerness for education and training around ex-pro-based regional approaches. Year-to-date, we have had 191 inbound requests from institutions for training of their anesthesia and surgery teams for selected blocks with erector spinae, transverse abdominis plane, and pectoralis, the most frequently requested workshops. There is also significant growing interest in drug-free nerve blocks with Iovera. These educational programs for Expirella and Iovera also provide increased visibility to expand our Zolretta customer base for surgeons seeking an alternative for non-opioid office-based osteoarthritis treatment options. Our second innovation and training facility in Houston remains on track to open in December. And we expect this facility to have an equally positive impact on expanding XPREL and IOVERA expertise among clinicians with a focus on Texas, which is nearly 20% of our XPREL business. Importantly, we continue to advance our robust patent strategy around XPREL by fortifying our intellectual property with new patents and extended protection to January 22nd of 2041. We now have eight patents listed in the FDA Orange Book and recently received a notice of allowance for a ninth patent, which we expect we'll issue very soon. With no commercially viable alternative for long-lasting non-opioids post-surgical pain management, XPRO provides improved patient care as well as a durable revenue stream for continued expansion of our commercial products and robust pipeline. As a reminder, any generic filer would have to demonstrate that they do not infringe on every claim within these nine patents, as well as any future patents. From a new customer acquisition standpoint, last quarter we discussed the rollout of an agreement with one of the largest faith-based private healthcare systems in the United States. This national health system operates in 19 states with more than 140 hospitals and approximately 30 ambulatory surgery centers. I'm pleased to report that Expirel is now on formulary at 100% of the hospitals in this system as a field or nerve block in both adult and pediatric patients. Since launching this partnership, Expirel has seen a significant increase in ordering accounts within this system, and we expect these positive trends to continue. Switching gears to pricing, with increased manufacturing capacity and improving gross margins, we are now offering 340B pricing which opens the opportunity to 5,200 accounts that are not currently purchasing Expirel under the 340B program. This would provide meaningful upside to the business and the opportunity to extend the reach of Expirel to uninsured or low-income patients, to particularly vulnerable populations where access to opioid sparing regimens is key. Drilling down into a few key XPREL markets, orthopedic procedures continue to be a key growth driver with a continued shift of these highly painful surgeries to the outpatient environment using regional approaches. A great example is the intrascaling brachial plexus nerve block, where we continue to drive awareness and education around the superior clinical efficacy, cost efficiency, and safety of XPREL-based solutions. for upper extremity surgeries like rotator cuff repair and total shoulder arthroplasty. Here we believe an expiral base block will become entrenched as a standard of care for the 3 million shoulder procedures performed annually in the United States. In women's health, we are also seeing increased market penetration. We are continuing to educate obstetric anesthesiologists by engaging with key leaders in societies to discuss regional blocks, including tap blocks, and the value of Expirel, even when a short-acting spinal anesthesia is utilized. Breast and plastic surgeons are seeking ways to optimize their protocols and to incorporate Expirel to manage pain and minimize opioids to shift procedures to the outpatient settings. We are also seeing growth and interest in erector spinae blocks for gynecologic oncology procedures to optimize pain management for this patient population, eliminating the use of opioids, which can also downregulate the patient's immune system, especially important in oncology procedures. Our pediatric initiatives center on our educational programs that highlight the pristine safety and efficacy profile of X4L. These programs include the Pediatric Exchange, which features internationally renowned thought leaders who share their insights on their procedure techniques via monthly interactive webinars. We are also seeing increased demand for Expirel among pediatric spine clinicians. We believe this advocacy is a direct result of several podium presentations on the use of Expirel in scoliosis and spine deformity procedures with three positive data presentations at the Scoliosis Research Society Annual Meeting this past September. Turning to the oral and maxillofacial marketplace where we recently announced our initiative with Severident to provide expanded access to Expirel for patients undergoing procedures ranging from third molar and full mouth extractions to dentures and implants. This agreement will facilitate easier access to long-acting Expirel non-opioid pain control for over 1,800 dental practices within their network. We are working on several similar partnerships across the portfolio and look forward to sharing these with you soon. Outside the United States, we continue to make slow but steady progress. We recently appointed a new general manager for these territories, and our team has been further developing the business and securing approval for XPREL access from hospital pharmacy departments. We have a significant opportunity in these markets for X4L to expand rapid recovery after surgery to positively impact the dynamics related to waiting lists for elective surgery in the UK and Europe. We also received formal approval from the European Medicines Agency for marketing authorization for an expanded indication of X4L to include use in children age 6 and older. On the clinical front, we announced positive top-line data in September for our two Phase III registration studies of Expirel for lower extremity nerve block procedures. The first study was a single-dose femoral nerve block in the adductor canal for total knee arthroplasty, and the second was a single-dose sciatic nerve block in the popliteal posa for bunionectomy. Both studies achieved primary and secondary endpoints of statistically significant reductions in post-surgical pain and opioid consumption through 96 hours. These data provide a strong support for the supplemental new drug application we are planning to submit in the first quarter of 2023. Roy Winston, our chief medical officer, will provide additional color on these studies in a couple of minutes. We also have a number of near-term value creation programs for Iovera with additional smart tips for spine and low back pain, as well as a very exciting program for the treatment of spasticity, as well as the pain of spasticity. For Zilretta, we will launch clinical programs for the treatment of diabetic patients with osteoarthritis knee pain, as well as a shoulder arthroplasty trial. Roy will comment on these programs as well. We continue to advance our proprietary multi-vesicular liposome pipeline. We expect to complete our phase 1 study of our Expirel program for intrathecal administration in the first quarter of 2023. We also expect to initiate trials for multi-vesicular liposome dexamethasone formulation in low back pain in the second quarter of 2023. as well as our 20-milligram multivasicular liposome bupivacaine formulation as a nerve block or field block for longer-lasting pain and chronic pain in the third quarter of 2023. Turning to our earlier stage acquired assets, we recently finished analyzing data from our Phase I studies of PCRx201 and PCRx301, which we acquired as part of the flexion transaction. 201 is a novel intraarticular gene therapy product candidate that provides IL-1RA for osteoarthritis. 301 is a locally administered NAV 1.7 inhibitor product candidate formulated for extended release in a thermosensitive hydrogel. Due to a lack of clinical efficacy, formulation challenges, and commercial viability, we have made the strategic decision to no longer pursue the clinical development of 301. Based upon very compelling initial phase one efficacy and safety data for 201, we are working with the investigators and scheduling an FDA meeting to discuss the regulatory password forward for osteoarthritis of the knee. A very important and exciting addition to our durable non-opioid pain pipeline. In addition to this exciting progress taking place within our earlier stage pipeline, we also have several important near-term low-risk expansion opportunities within our commercial portfolio to improve patient care for pain management and regenerative health. Now I'd like to turn the call over to Roy Winston, our Chief Medical Officer, to summarize some of these key value-creating milestones that we expect to deliver in the next year. Roy?

Thanks, Dave. This is an exciting time, not only for us at Visera, but for the many patients, providers, and payers seeking safe and effective opioid-free options for pain management. I'll start with lower extremity nerve block, as Dave mentioned. Our two registration studies were both successful. In our most recent reported study, sciatic nerve block in the popliteal fossa, patients who received a single dose extra block had significantly lower pain scores and required significantly fewer opioids than patients who received a bupivacaine block for the 96 hours after surgery. These results were highly significant with p-values of less than 0.00001. EXPRIL has demonstrated statistical and clinically meaningful superiority in terms of opioid-free patients versus bupivacaine. In our study as a femoral nerve block in the adductor canal for patients undergoing total knee arthroplasty, The XRL group also achieved significantly lower pain scores while requiring significantly fewer opioids versus bupivacaine for the 96 hours after surgery. These data were also highly significant with a p-value of less than 0.01. As for next steps, we will be submitting an SNDA to the FDA for expansion of our label to include both sciatic and femoral nerve block in the abductor canal. first quarter of next year, we are planning for approval in the fourth quarter of 2023. These studies clearly demonstrate four days of clinically meaningful reductions in both pain and opioids versus the active comparator, bupivacaine. We believe adding these two additional nerve block indications to our label will significantly extend our reach into surgeries of the knee, Medial lower leg and ankle representing in excess of 3Million additional annual procedures. We are now working with key opinion leaders to publish these data. To deliver strong evidence in the literature and implement them into practice guidelines for as a single dose nerve block. In lower extremity procedures. On the pediatric front, we now have alignment with the FDA and EMA regarding next steps for adding patients zero to six years of age to our US and EU labels. The study is expected to begin next year and will involve three age-based cohorts. We look forward to minimizing exposure to opioids for this vulnerable population. Turning to Zolretta, we are preparing to launch two label expansion studies next year. The first will be a study in diabetics with knee osteoarthritis and will compare Xilretta to immediate-release triamcinolone acininide. After analyzing the data from a flexion study previously completed, we believe there is tremendous opportunity in providing the diabetic and prediabetic community an intraarticular steroid that improves efficacy and is significantly safer with reduced glycemic spikes. We are also finalizing our protocol to study Zolretta in shoulder osteoarthritis after receiving positive feedback from key opinion leaders. This study could make Zolretta the first and only approved steroid for use in shoulders. We expect to complete the diabetes trial in 2023 and the shoulder trial in the first half of 2024. These studies will establish Zolretta as the gold standard in patients with diabetes for both knee and shoulder by demonstrating superiority versus immediate-release triamcinolone acetonide. Importantly, these two studies may also provide an incremental opportunity for enhancing Zolretta commercial reimbursement. We also significantly advance our regulatory registration activities for Ayurveda and spasticity. In September, we met with the FDA and now have clarity on study design and pathway to approve for Iovera as a treatment for spasticity. The study will evaluate Iovera versus sham in adult patients and is on track to launch in early 2023 with enrollment to conclude before the end of the year to support a 510K marketing approval. To remind you, pain associated with spasticity is already currently on label, and we started educating physician specialists around the potential value of Iovera in this setting. We believe using Iovera to treat spasticity will completely disrupt the current treatment paradigm, bringing tremendous relief to patients and value creation for Pacera shareholders. Lastly, for Iovera, we recently completed enrollment in a study evaluating Iovera as a medial branch block to treat low back pain and expect to report data, and launch the new smart tip in 2023. With that, I'll turn the call over to Charlie for his financial highlights.