Pacira BioSciences, Inc.

Good day, and thank you for standing by. Welcome to the Q4 2023 PACERA Biosciences Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To draw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Susan Mesko, Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to today's conference call to discuss our fourth quarter and full year 2023 financial results. Joining me are Frank Lee, Chief Executive Officer, Tony Malloy, Chief Legal Counsel, and Charlie Reinhart, Chief Financial Officer. Jonathan Slonin, Chief Medical Officer, is also here 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 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 the PACERO website. Before turning the call over to Frank, I'd like to mention that going forward in 2024, we will be shifting the timing of our quarterly calls to post-market with an expected start time of 4.30 p.m. Eastern time. With that, it is my pleasure to welcome Frank Lee.

Well, thank you, Susan, and good morning, everyone. I'm excited to speak to you today as the new CEO of Pacera Biosciences. I was drawn to this organization because Pacera is the leader. in non-opioid pain management. Pacera has market-leading products, a clear sense of purpose, a talented team, and unwavering commitment to transforming the lives of patients by expanding access to opioid-sparing pain management. I was especially inspired by the team's steadfast commitment to working with leading medical societies and patient organizations to get no pain over the finish line. And this legislation is a real testament to Becerra's leadership. It's been a busy and productive time since I joined the company last month. I've met with colleagues here in New Jersey and at our Science Center campus in San Diego. I've also received valuable feedback on our culture and met with key stakeholders. Now that I've spent several weeks listening and learning, there's no doubt this team is highly committed to our corporate mission and the impact that our three trusted products are making in patients' lives. Consequently, I'm even more enthusiastic for Pacera and the patients we serve. This is a special company that I'm both humbled and honored to lead through this next phase of growth. While much has been accomplished, it's still early days in my tenure here at Pacera. I'm excited to continue to work with the team and our stakeholders to define a thoughtful path for long-term growth. and I look forward to sharing more details as the year progresses. That said, we're taking several steps to ensure we are fit for growth going forward and best positioned for sustainable success. We've initiated an organizational restructuring that includes the following key changes. Reshaping our executive team and launching searches for a new position, chief commercial officer and a chief business officer. Reallocating our efforts and resources from ex-U.S. markets and certain early-stage development programs to the U.S. market. Reprioritizing investments to focus on no-pain readiness and enhancing key commercial capabilities, such as strategic and national accounts, marketing, market access, and reimbursement. And finally, doing a thorough strategic review of our pipeline and therapeutic area strategy. Going forward, we'll foster a culture we call One Pacera, grounded on key values and behaviors that enable the whole organization to work as a united team. For the remainder of today's call, I'd like to focus on Expirel, the product that will drive substantial growth in 2025 and beyond. Expirel recently passed the 14 million patient mark, and we're confident in its potential to grow to blockbuster status. This year, we're advancing three key drivers. First, launching Expirel in two new lower extremity nerve block indications. Second, preparing for the launch and rollout of No Pain in 2025. And third, expanding access through 340B pricing and new GPO partnerships. I'll start with lower extremity nerve blocks. Our sales force is ready and the launch is officially underway. Importantly, we're going to market with an overwhelmingly positive body of data from two head-to-head phase three studies demonstrating four days of superiority over a BP. The first study evaluated Expirel as a sciatic nerve block in popliteal fascia for bunionectomy. Expirel achieved a 44% reduction in pain scores while reducing opioid consumption by 61% versus Bupi. In addition, patients who received Expirel were five times more likely to be opioid-free. The second study evaluated Expirel as an adductor canal block with total knee arthroplasty. In this study, Expirel achieved statistically significant reductions in pain scores and a 23% reduction in opioid consumption versus BUP. These results are highly significant, with p-values of less than 0.01. With respect to safety, Expirel was well tolerated, with a safety profile consistent with BUP. These positive outcomes were achieved with 10 mL dose, making a single dose Expirel nerve block a very attractive value proposition to the anesthesia and surgical community for knee and foot and ankle surgeries across all sites of care. The sciatic nerve block study in the papatial fascia recently published online in the Journal of Clinical Anesthesia, and we're working to secure publication of the TKA study. We believe this is going to be a $100 million opportunity over time. We have strong presence in TKA. where anesthesiologists are already doing adductor canal blocks with BP, so we expect faster uptake in this segment, which is over a million procedures. Conversely, we have very limited presence in other lower extremity procedures like ACL repair or foot and ankle procedures, so we expect uptake in these segments to be slower. Switching gears to no pain, we believe will be an important event for both patients and Becerra. As you know, products used to manage post-surgical pain are largely reimbursed as part of the bundled procedure payment. Bundled reimbursement incentivizes the use of cheaper generic approaches to managing post-surgical pain that often incorporate opioids. Financial pressures facing healthcare systems further incentivize cost-driven approaches. No pain mandates separate CMS reimbursement of non-opioid therapies for post-surgical pain relief across all outpatient settings. It will eliminate the cost period by fully reimbursing at average selling price or ASP plus 6% beginning January of 2025. There are roughly 6 million annual CMS procedures in the outpatient settings with a split of roughly 3.5 million procedures in the hospital outpatient settings and 2.5 million procedures performed at ambulatory surgical centers. As a first step, we'll be allocating resources to drive education and to help healthcare systems implement ExPIREL as a best practice standard of care for CMS patients. The value proposition is clear. as a recent review of five-year real-world Medicare claims data for hospital outpatient procedures demonstrated a significant correlation between expert utilization and improved patient outcomes, including opioid prescription fills, emergency room visits, and hospital admissions. These data were published in the Journal of Medical Economics. Over time, as we underscore the value of Expiril as providing to CMS patients, we're hopeful commercial payers will be compelled to follow suit and provide separate coverage to another 12 million outpatient procedures. We have been paving the way for no pain through our investments in 340B pricing and new QPO partnerships, such as a recently announced deal with Premier, whose significant network of hospitals and healthcare systems covers nearly 20% of XPREL relevant market procedures. These programs assist healthcare systems in affording the opportunity to improve patient care through best practice pain management. Our customers will have a favorable acquisition cost, and once no pain takes effect next year, they'll be reimbursed at ASP Plus 6. In 2024, we're preparing for no pain as we would a new product launch because it's that important. To ensure readiness, we'll be enhancing our commercial organization with new talent and expertise to ensure operational excellence within critical functions such as marketing, strategic accounts, market access, and reimbursement. We'll also be investing in programs to drive awareness and education and action across key decision makers and sites. We'll track and update you on our progress during the course of the year. We believe no pain will result in accelerated and sustainable growth beginning in 2025 that will drive XBRL to blockbuster status. As we do this, we'll hold the bar high with respect to resource allocation and strong execution. Before turning the call over to Tony, I'd like to highlight the FDA's recent approval of our SNDA for our 200-liter manufacturing suite in San Diego. This enhanced 200-liter manufacturing process is just another example of how the Becerra team continues to innovate and augment our broad IP estate with new Xperil patents. Our strong and growing patent estate leaves us confident that our Xperil franchise is well-protected and positioned to drive significant and durable long-term sales growth as a potential generic would have to successfully litigate and overcome all of our experimental patents. With that, I'll turn the call over to Tony Malloy, our Chief Legal Counsel, for his review of our recent paragraph four litigation and next steps.