Pacira BioSciences Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
July 30, 2024

There are 13 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Q2 2024 Pacira Biosciences Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Mesko, Head of Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, and good afternoon, everyone. Welcome to today's conference call to discuss our Q2 2024 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 forward looking statements based on current expectations.

Speaker 1

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 Pacira website. With that, I will now turn the call over to Frank Lee.

Speaker 2

Thank you, Susan, and good afternoon, everyone. As you know, our top priority for 2024 is to ensure we're ready to accelerate growth next year and beyond. Toward that end, the first half of the year was marked by strong execution and meaningful progress towards our commercial, clinical and business objectives. We maintained solid sales across all three of our products, strengthened our balance sheet and bolstered our leadership team. We reshaped our corporate culture and enhanced our organization with new talent and capabilities.

Speaker 2

The foundation for a modernized commercial medical market access organization is now in place. Looking ahead to the remainder of the year, we continue to invest in the organization and set the stage for strong sustainable top line growth in 2025 and beyond. We believe that growth will largely be driven by EXPAREL, which is the product I'll focus on today. Let's start by walking through the 3 key 2024 priorities. 1st, expanding the utilization of EXPAREL as a lower extremity nerve block.

Speaker 2

2nd, preparing the market for separate Medicare reimbursement at average selling price or ASP plus 6% with implementation of the No Pain Act in 2025. And third, broadening patient access to EXPAREL through new GPO partnerships. I'll start with lower extremity nerve block where we continue to see positive market receptivity across all sites of care. To remind you, the rollout of EXPAREL lower extremity nerve block is supported by compelling clinical data from 2 Phase 3 studies that demonstrated 4 days of superiority versus bupivacaine. These data are also a valuable tool we're leveraging to promote the opioid sparing benefits of EXPAREL to our customers in advance of no pain.

Speaker 2

We were pleased to see this new reimbursement policy outlined by CMS in its recently published preliminary rule for 2025. We believe this important reimbursement milestone will drive expanding EXPAREL utilization within the outpatient settings where there's ample room for growth given the market steady migration away from inpatient care. In preparation for no pain, we're advancing multiple initiatives to drive EXPAREL education and awareness across key stakeholders. To highlight the value proposition, we're generating real world efforts demonstrating the opioid sparing and economic benefits of EXPAREL. We believe these data will be a powerful tool in our communications with healthcare systems, physicians and payers.

Speaker 2

Recent progress includes a publication of 3 robust retrospective real world studies in colorectal, spine and breast reconstruction surgeries. Each study compared patients who received EXPAREL with patients who did not. EXPAREL was associated with reduced opioid use as well as lower emergency department visits, length of stay and hospital readmission rates. To drive education awareness among our primary stakeholders, we recently launched our national campaign, Make the No Pain Pact. The campaign is targeting hospital pharmacists, administrators, clinicians and revenue management teams.

Speaker 2

It is solely focused on ensuring these critical groups are up to speed and ready when new outpatient Medicare reimbursement takes effect in January of 2025. Based on our market research, preliminary insights indicate a growing level of awareness and understanding among key stakeholders around no pain and its potential impact on patient care. As the year progresses, we'll continue to roll out new resources to help our customers seamlessly integrate this expanded reimbursement change into their systems. Shifting gears to market access, as you know, we're also paving the way for no paying through our participation in 340B pricing and new GPO partnerships. Through these preferential pricing programs, healthcare systems can afford the opportunity to be at the forefront of opioid sparing pain management.

Speaker 2

Our customers will have a favorable acquisition cost and when no pain takes effect in 2025, they'll be reimbursed at ASP +6%. We're now 6 months post launch of our Premier partnership, which continues to perform as expected with EXPAREL volumes at Premier accounts up over the prior year with only a very modest impact on net sales dollars. We're also leveraging our Premier partnership for additional opportunities. For example, last week I had the opportunity to participate in a Hot Topic interview with a member of the Premier leadership team to discuss PERSERRA at their annual membership meeting. The discussion focused our commitment to partnering with health systems and No Pain.

Speaker 2

We also utilized opportunities to drive awareness around No Pain within the premier membership base. Importantly, we have 2 additional GPO partnerships expected to go live this year with both offering similar opportunities to expand patient access to EXPAREL. Turning to ZILRETTA and ioverao. I'm pleased to report that both products are performing according to plan with solid sales in the first half of the year. Patient dosing is also underway in our Phase 3 registrational study for ZILRETTA in shoulder OA.

Speaker 2

If successful, this study could make ZILRETTA the first and only long acting steroid approved for use in shoulders. Shoulder OA represents a sizable market opportunity with approximately 1,000,000 intra articular injections administered each year. Our registration study for ioverao for the treatment of spasticity is also underway. Given the significant lack of innovation in the spasticity space, we believe ioverao may offer a novel approach for patients afflicted by this debilitating condition. On the research and development front, I'd like to provide a brief update on PCRX201.

Speaker 2

This novel gene therapy product candidate codes for interleukin-one receptor antagonist or IL-1Ra for the treatment of osteoarthritis or OA of the knee. There is significant unmet need in the OA space. This is primarily due to lack of drugs with durable and clinically meaningful improvements in pain and function and the lack of disease modification therapies. Current single dose injectable therapies relieve pain and function for only 3 to 6 months and do not offer disease modification to the 14,000,000 patients suffering from knee OA. Earlier this year, we reported encouraging interim results from a 72 patient Phase 1 study of PCRX201 for moderate to severe knee OA.

Speaker 2

In this large Phase 1 study, a single intra articular injection of PCRX201 demonstrated a sustained and clinically meaningful effect. This was observed at all doses across all levels of severity for at least 1 year post injection. Importantly, PCRX201 was well tolerated with a favorable safety profile. We continue to follow these patients and now have data for 2 years that were submitted for presentation at a medical meeting in the fall. Based on our market research and feedback from our scientific advisory board, improving pain and function while potentially modifying the disease for a year or more with a single dose will be considered transformative by both physicians and patients.

Speaker 2

Furthermore, more than a year of durability would be clinically and economically meaningful for patients and healthcare systems. Unlike traditional gene therapies that focus on rare diseases, PCRX201 leverages the properties of a novel high capacity adenovirus or HCAD platform to address unmet needs in prevalent diseases like knee OA. Importantly, our strategy will unlock the potential of gene therapy to provide meaningful and durable and economically viable treatment through local delivery of the affected joint, very low dosing enabled by adenovirus and large scale manufacturing to support favorable cost of goods. As you may recall, PCRX-two zero one received the FDA's first ever regenerative medicine advanced therapy or RMAT designation for a gene therapy product in osteoarthritis. We're scheduled to have our 1st RMAT meeting with the FDA next month to discuss our plans for clinical development.

Speaker 2

We look forward to sharing more details on the advancement of PCRX-two zero one on future calls. With that, I'll turn the call over to Tony for a brief discussion of the EXPAREL patent litigation.

Speaker 3

Thanks, Frank, and good afternoon, everyone. I'll briefly touch on the FDA's recent approval of a generic version of liposomal bupivacaine and next steps in our paragraph 4 litigation. To remind you, the FDA's decision is a separate track and has no impact on our multiple patent infringement lawsuits against A Venus, which are all still pending. The first case involving our 4 95 patent concluded in May. We believe we made a strong case that EVNUS is infringing on our patent.

Speaker 3

That said, to provide clarity, I wanted to walk through the 3 scenarios that could play out with respect to this first lawsuit. Outcome 1, Pacira wins the lawsuit against E Venus Pharmaceutical. Under this scenario, we expect the court would enjoin E Venus from launching a generic until the expiration of the 4.95 patent in January 2041. So even with an FDA approval, there is no ability for Evinus to commercialize their drug unless they successfully appeal and overturn the lower court's decision. Outcome 2, the court upholds the validity of the 4.95 patent, but concludes that e Venus is not infringing on that particular patent.

Speaker 3

We also view this as a positive for Pacira given that this is only the first patent being litigated. 3 additional infringement lawsuits are underway for our 348, 574, 575 and 706 patents. And these patents are broader than the 495 patent. Also have other patents that are forthcoming, many of which will be listed in the orange book with expiration dates through January 2041. In order to be commercially successful, Evinus would have to overcome all of our patents.

Speaker 3

Outcome 3, the court concludes that the $495,000,000 patent is not valid and that e Venus does not infringe. This is the least ideal scenario. If this happens, we have a comprehensive strategy in place depending on the findings of the court. We firmly believe the EXPAREL franchises will protect it from multiple directions. We are committed to taking the necessary steps to protect the interests of our business, shareholders, patients and other stakeholders.

Speaker 3

We expect the trial opinion on the first case very soon. As I'm sure you can appreciate, it would not be in our best interest to publicly share details around our legal strategy other than to say we believe that we have a strong legal position and that E Venus is infringing upon our patents. We are advancing a robust multifaceted legal strategy and we stand ready to engage with the court and vigorously defend our EXPAREL franchise in the event of any decision. That being said, we will keep our investors informed as this process unfolds. I want to emphasize that we have a responsibility to patients, their clinicians and other stakeholders to vigorously defend our intellectual property and the proven safety and integrity of EXPAREL.

Speaker 3

I'll now turn the call over to Charlie for his financial report. Charlie?

Speaker 4

Thank you, Tony, and good afternoon, everyone. To remind you, I will be discussing non GAAP financial measures this afternoon. A description of these metrics along with our reconciliation to GAAP can be found in the news release we issued this afternoon. I'll start with an update on sales and margin trends. 2nd quarter EXPAREL sales increased to $136,900,000 versus $135,100,000 in 2023.

Speaker 4

Volume growth in the January 2024 price increase were largely offset by a shift in vial mix and discounting associated with the launch of our premier partnership. 2nd quarter ZILRETTA sales increased to $30,700,000 versus $29,300,000 in 2023 and ioverao sales improved to $5,700,000 compared to $4,400,000 in the Q2 of 2023. Turning to gross margin. On a consolidated basis, our 2nd quarter non GAAP gross margin percent was 76%, at the high end of our full year guided range of 74% to 76%, driven by strong margins for all three products. For non GAAP R and D expense, the 2nd quarter increased to $18,400,000 from $17,100,000 reported last year.

Speaker 4

This increase primarily relates to the startup activities for our registration studies of ZILRETTA for shoulder OA and ioverao for spasticity. Of note, 2nd quarter R and D expense included $7,300,000 of product development and manufacturing capacity expansion costs, which are down from $9,300,000 in the prior year. Our pre commercial scale up activities are now complete and the 200 liter EXPAREL manufacturing suite in San Diego began commercial production earlier this month. Non GAAP SG and A expense came in at $59,000,000 for the 2nd quarter, which is up from $57,100,000 last year. This increase is largely due to investments we are making in our commercial, medical and market access organizations, including programs that will drive education and awareness ahead of separate Medicare reimbursement and 3rd party strategic consulting services.

Speaker 4

All of this resulted in another quarter significant adjusted EBITDA of $62,100,000 With respect to the balance sheet, in the 2nd quarter, we completed a very successful $287,500,000 convertible debt financing, which allowed us to retire about half of our August 2025 notes. With more than $400,000,000 of cash and investments and a business that is producing significant cash flow, we have the flexibility to continue investing in growth and long term value creation, while opportunistically returning capital to shareholders by repurchasing our stock. Turning to guidance. Today, we are reiterating our full year 2024 guidance as follows. Total revenue of $680,000,000 to $705,000,000 non GAAP gross margin of 74% to 76%, non GAAP R and D expense of $70,000,000 to $80,000,000 non GAAP SG and A expense of $245,000,000 to $265,000,000 and stock based compensation of $50,000,000 to $55,000,000 With that, I'll turn the call back to Frank.

Speaker 2

Thank you, Charlie. In closing, I'm proud of the progress we've made in the first half of twenty twenty four, which will help cement our leadership position in advancing innovation in non opioid pain management. We're confident that the investments we're making will support and expand this leadership position. As discussed earlier throughout the balance of the year, we'll continue our efforts to ensure we're ready for long term growth. The foundation work that we have undertaken leaves us well positioned for sustainable success.

Speaker 2

With that operator, we're ready to open the call for questions.

Speaker 5

Thank

Operator

And our first question comes from Gregory Renza of RBC Capital Markets. Your line is open.

Speaker 6

Great. Hey, good afternoon, Frank and team. Thanks for the time and thanks for taking my question. Frank, just to kick off on the generic liposymbotifacam approval early July, July 2nd, just wondering if you could just comment on your evolving confidence in your ability to sort of defend EXPAREL at this key point in time. To what degree was that development surprising to you?

Speaker 6

And then I have certainly a follow-up. Thanks.

Speaker 2

Thanks for the question, Greg. With regard to the I think you're referencing the ANDA approval. And as Tony mentioned, that has nothing to do with our case. So that's a separate matter. And that's our focus.

Speaker 2

Our confidence hasn't changed with regard to our case. And so as Tony outlined, we have multiple levels of legal action and defense that we have at our disposal. So that's unchanged.

Speaker 6

Got it. Thanks. And you certainly mentioned just the ability to prepare for no pain with the resources medical affairs. If you can just give us an update on how that infrastructure is looking, to what degree will you be quantifying that and just applying some extra granularity as we think about receiving that tailwind into through 2025 and beyond? Thank you very much.

Speaker 2

Yes. It's a good question, Greg. Let me go back and say that we're very pleased to see the proposed rule come through this past month and it's exactly as we expected. There are some comments there that we'll comment on, but we expect that everything is on track now for January 1, 2025. And our internal preparations are right on track.

Speaker 2

As I mentioned, our foundation is set in terms of all the things that we've done to expand our capabilities on the commercialization side, on the medical affairs side, as well as our market access side of things. And so as I mentioned on the call, I've had a chance to engage our various customers, including our premier customers at their annual meeting. And we can see that there's growing awareness of not only no pain, but of the ASP plus 6 separate reimbursement. So we've got some additional work to do, but we're off to a good start.

Speaker 6

Got it. Thanks, Frank. Thanks for taking my questions.

Speaker 5

Thanks,

Operator

Greg. Our next question comes from David Amsellem of Piper Sandler. Your line is open.

Speaker 7

Hey, thanks. So just a couple of questions. So first, Frank, as you were diligencing the company ahead of accepting the CEO position, What was your view regarding the approvability of a generic and did that approval surprise you and that's in the context of your predecessor talking quite openly that he didn't believe that this filing was approvable. So I wanted to get your thoughts on the level of surprise that you had that ultimately that this did happen. Secondly, I guess a hypothetical to the extent that e Venus does come into the market, can you talk to how you think market dynamics will play out in terms of your share and even what your market intel might be telling you on their own capacity and how you're preparing that for that in the event that that does happen, not saying that it's going to happen, but in the event that that does happen.

Speaker 7

Maybe I'll stop there and get your thoughts. Thanks.

Speaker 2

Well, thanks for the questions, David. So let me just come back. I remember when I first started, there were a lot of questions about Franklin, what made you think about joining Pacira? And I'm going to come back to number 1, VACERA is the leader in the non opioid pain management space. It's a leader because we have a great portfolio of products not only in line, but also as I mentioned some interesting products in the pipeline that we'll continue to add to over time.

Speaker 2

And broadly speaking, when you think about leadership, you see companies that not only take an interest in products, but also interested in the broadly the pain therapeutic area, which we've done by our leadership here of all the things that we've talked about before in terms of supporting no pain and the passage of that act over the past 7 years. So that's what impressed me. With regard to any sorts of approvals, I come back to it's hard to say during diligence. What I will say is that when you take when you give people enough resources and time, it's not surprising what they can do. So I'll leave it at that, but I'm going to come back to that doesn't change anything with regard to the legal actions that are in play now and will be in play going forward.

Speaker 2

And as Tony mentioned, this is the first piece of the

Speaker 5

business that we're seeing in the

Speaker 2

past, there will be others down the road, right? So that's that. With regard to speculating about what could happen if down the road, one generic, remember now there's one generic would launch at risk. It's hard to say. I'm sure you've looked at various models, but I don't really want to speculate on that.

Speaker 2

I come back to I really believe in our position and the strength of our IP and we're going to defend our IP very rigorously going forward.

Speaker 8

Thank you.

Operator

Thank you. Our next question comes from Glenn San Angelo of Jefferies. Your line is open.

Speaker 8

Yes. Thanks for taking my question. Frank, I'm not sure if this is for you or Tony, but appreciating the way you guys laid out the 3 different scenarios and the potential outcomes here. And while the 2 bookends, the positive scenario of the full invalidity and I'm sorry, the positive scenario of valid and infringed and the opposite invalid and non infringed. Those outcomes seem somewhat obvious.

Speaker 8

I'm kind of curious about the middle scenario where we have a scenario where the patent is valid, but not infringed. And Tony, you seem to paint that scenario as a positive outcome where one might think that that would put the company in a somewhat vulnerable position in the near term. And so I'm kind of wanted to explore that a little bit more and how you think things sort of play out in that scenario and why you think it's positive? Thanks.

Speaker 3

Sure. Thank you, Glenn, and nice to meet you. Keep in mind that the 495 case is just the first case. And there were 4 other patents that are behind the 3 subsequent cases. Each one of those is different.

Speaker 3

And just during the course of the litigation, we have reason to believe that, there's infringement on the other patents. So even if the $495,000,000 isn't infringed, we believe that the other patents are infringed.

Speaker 8

And so but it's my understanding that there's no court case, no court dates currently on the docket for those other patents. And so I'm not sure how long it will take till those cases could ultimately be heard. And I guess in the interim, given the vulnerability of a potential even this launch, I'm not sure what the pathway looks like to get a preliminary injunction. And so I'm kind of curious if you could just explore that pathway a little bit and how you might react in that scenario? Thanks.

Speaker 8

And I'll stop there.

Speaker 3

Sure. Well, I mean the standards well defined, you have to show irreparable and imminent harm and a likelihood of success on the merits. And again, we believe in each of the patents that are being litigated, the 348, 574, 575 and 706. So we have 3 cases and we would we'd look for injunctive relief, if appropriate, depending on the opinion. Again, this could play out like most IP cases, it could take years for these cases to be resolved in the court system.

Speaker 3

We've always said this is going to be a marathon and not a sprint. But again, we do believe in even though we haven't gotten a trial date yet on the other cases,

Speaker 9

We do believe in them

Speaker 3

and in the event that it's a mixed outcome that outcome too, we do believe in the strength of the patents that are behind the 495.

Speaker 8

And you believe those patents are enough to get a PI, if that's the case?

Speaker 3

It's again, it's hard to say without seeing the opinion. But again, we believe in the strength of the patents and we believe that eVenus is infringing these 4 patents. So even if there's a finding that the $495,000,000 is not being infringed, we've got these other patents.

Speaker 8

Okay, great. Thank you very much for the details.

Operator

Thank you. Our next question comes from Gary Nachman of Raymond James. Your line is open.

Speaker 10

Hi, good afternoon. So, yes, just on those 3 additional patent cases, what is the estimated time for how long it would take for those to progress to trial? Do you think it would be the same judge as the 495 case? And describe a bit how much broader or stronger those patents might be than 495? And then how many more additional patents down the road do you expect to file?

Speaker 10

And what would those be on, if you could give us some more color on that? And then I have a follow-up.

Speaker 3

Okay. But I'll take each of these questions in order. So at the most recent status conference, the magistrate didn't give a trial schedule for these other cases. And that was because we're expecting the first case to come out sometime this week. All of these cases are going to be in front of the same judge, Judge Arleo at the District of New Jersey.

Speaker 3

Each of these patents is different. Obviously, you can't get a patent for the same claims. You can't get 2 patents for the same claims. So when I say broader there and stronger, they're different and they claim different properties of EXPAREL is made from the 200 liter process. So just they're different and we just from the from what we've learned of the eVenus product, we're confident that they're infringing each of these other patents.

Speaker 3

How many additional patents? We're prosecuting quite a few right now. And it's just hard to predict because a lot happens from application to patent granting. And there are times that there's consolidation of applications and such. So it's hard to say how many additional patents we have, but we do anticipate several additional patents to be coming from this family, including later this year.

Speaker 2

Gary, I just want to come back to, as Tony mentioned earlier, we really believe this is going to be a marathon and this could take years. This is the first case. There are many other patents, as Tony mentioned, and many that are in process. So certainly a lot of things can happen, but we expect this to be a marathon, could take years and we believe in the strength and validity of these patents.

Speaker 10

Okay. That's helpful. And then Frank, just how much more do you have to do to get the full commercial organization in place and ready for no pain? And just talk about what you think that ramp might look like starting next year? Obviously, you're not giving guidance right now, but just what our expectations should be on the implementation of no pain?

Speaker 10

And then, Charlie, how do you see gross margins trending for the rest of the year, because you were at the higher end of the guidance range in the second quarter? Thanks.

Speaker 2

Thanks for that, Gary. First of all, let me say I'm really pleased with the way that the team's delivered on guidance to date. And so if we take a look at now the balance of the year, to your question, Gary, about when will we perhaps provide some indication of what to expect in 2025 as it relates to the no pain ramp. I would say that we're looking at some time towards the end of the year, early next year. By that time, our teams who have now been deployed will have, I think, a very clear idea of the key segments of customers and to what extent certain customers will adopt earlier as opposed to a little bit later in the year.

Speaker 2

As I mentioned, we see growing awareness and education about not only no pain, but also about the fact that ASP plus 6 separate reimbursement will be in place for Medicare patients. And that along with our GPO contract and the 2 that are pending, we think is going to be a very strong value proposition that marries with the clinical proposition. So in short, what I'd say is that the foundation is set in my mind as it relates to commercial medical market access. Now we're going to engage our customers and really start to execute in a way that gives us clear insight about what to expect as we go into next year.

Speaker 4

Charlie? Gary, as far as margins go, looking forward for the second half of this year, I would anticipate that actual non GAAP margins look closer to the Q2 than they do the Q1. 1st quarter had challenges in it and we didn't see those challenges this quarter.

Speaker 2

Okay, all right. Thank you.

Speaker 5

Thank you. Thank you,

Operator

Jerry. Our next question comes from Hardik Parikh of JPMorgan. Your line is open.

Speaker 5

Hey, everybody. Thank you very much for taking my question. Just wanted to ask I appreciate you guys can't share your legal strategy. I was just wondering this question is just more around kind of what options you actually do have. So specifically in regard to the injunctive release, just wanted to know, let's say, there's a you guys file an appeal on the 4.95 patent, you can ask for injunctive release.

Speaker 5

Could you do that for each kind of subsequent case? So like could you in theory get like 5 subsequent injunctive release or is there some sort of a cap after 1 or 2 or whatever?

Speaker 3

You can file for injunctive relief in all the cases. In practice though, I mean, this is all before the same judge. You really you need one injunction, but you can file as many of these as you want.

Speaker 5

Okay. Thank you. And then just on the GPO contracts, you said you had 2 more going live this year. Any comments on what kind of impact that could have on Asperol kind of net pricing in 3Q and just broadly for the rest of the year?

Speaker 2

Thanks for the question Hardik. With regard to GPO, we'll reiterate that we expect 2 more to be signed by the end of the year. And Charlie can comment on this, but I think we reiterate guidance as we talked about before and we expect that this will be a positive for us and that positive as we go into 2025 and beyond. So Charlie?

Speaker 4

Our original guidance included the GPO contracts being signed roughly 1 a quarter. The second 2 are a little delayed. So that gives us a little positive impact to the extent revenues haven't suffered from not signing them. So all in all, right now, EXPAREL's gross to net is in the 83% range. That's projected to come down a couple of points by the time the third is signed on a going forward basis.

Speaker 3

All of that's built into our models.

Speaker 5

Great. Thank you. Thank

Speaker 2

you.

Operator

Our next question comes from Les Zlucske of Truist Securities. Your line is open.

Speaker 11

Good evening, guys. Thank you for taking my questions. Charlie, perhaps just to build up on the guidance comments. Given the strong 2Q results, is there a level of conservatism built into the guidance perhaps we expect maybe would have been tightened? And then second, on the capital allocation strategies and given kind of the current market conditions around the shares, Is there an accelerated component to your share repurchases or anything we kind of could expect for the remainder of the year?

Speaker 11

And then my last question, has Evinis provided you a commercial sample of their generic product? Thank you.

Speaker 4

I'll just take them in order and I'll let Tony talk about the eViness sample question. So listen, we're pleased with where the business has been in the Q2. We think we did what we needed to do and anticipated we do in the top line on margins and OpEx. So all of those put us favorably within the original guidance ranges. Was guidance conservative?

Speaker 4

Well, it might have been, we'll see. Remember that last year, we thought we were conservative and it didn't work out all that well. So there's a little bit of that hanging around too as well. Share repurchase, we have as you know, we started the repurchase by buying back $25,000,000 worth of stock in conjunction with the convert we already did. We're positive cash flow and we will evaluate when we think it makes opportunistic sense and to what extent and use the cash accordingly.

Speaker 4

Tommy, there's a question about Sure.

Speaker 3

Yes. So we've not received a sample of the Endo product yet and the issue is currently before the magistrate judge to work out the logistics to get those samples.

Operator

Our next question comes from Serge Belanger of Needham. Your line is open.

Speaker 9

Hi, good afternoon. Thanks for taking my questions. I guess the first one for Tony. Do you still expect a decision by Judge Arleo on the 495 case on or prior to August 1? And then secondly, I guess for Frank and Charlie on EXPAREL, You mentioned 3% volume growth in the Q2.

Speaker 9

I believe it was the same as the what we saw in the Q1. Just curious how that compares to the overall market growth and whether it's coming from ortho procedures or soft tissue? And then lastly, on the GPO front, I think that in the past you've described Premier as consisting of 20% of ex ferro relevant procedures. Just curious if the other 2 are similar or would have a larger impact? Thanks.

Speaker 2

So let me go in reverse order a little bit and I'll take the Premier and maybe Charlie can talk a little bit about EXPAREL volume ortho versus soft tissue and then turn it over to Tony after that. So Premier, again, we're pleased with how that agreement is performing, how we're pulling through and how we have now other opportunities with Premier to leverage, other opportunities to educate their membership about not only EXPAREL, but about also NoPayne. As we discussed before, as we think about other GPOs and if you think about the 340 program as well, that would encompass well over 80% of our broadly of our market. And so we're very happy about where we're going to wind up by the end of the year in terms of providing our customers with, I would say, better access to our products. So with that, let me turn it over to Charlie here.

Speaker 4

So as far as knowing that the actual medical procedures that sales are related to, we don't have that data so quickly. It takes us 4 or 5 months to get that data. So the data we have now, there's no significant change in the trends, but that doesn't really tie to the 2nd quarter actions.

Speaker 3

Serge, thank you for the question. Yes, we still expect a decision this week at closing arguments in May. As Judge Arleo told us, she expected to have the decision by August 1. And we haven't heard anything from the court that would lead us to believe that that's not going to happen.

Speaker 9

Okay. Charlie, can you tell us what gross to nets on EXPAREL were for this quarter?

Speaker 3

Roughly 83% in the

Speaker 2

second quarter.

Speaker 9

Got it. All right. Thank you.

Speaker 2

Thanks,

Speaker 5

Serge.

Operator

Thank you. Our next question comes from Balaji Prasad of Barclays. Your line is open.

Speaker 12

Hi, good evening and two questions from me. Firstly, on the litigation itself. While I can understand the legal defense against an at risk launch of potential injunctive relief being sought, what would a commercial defense against an at risk launch look like? And 2, is it fair to us? You might imagine that this is not impacting or influencing your business allocation priorities, your CapEx thoughts going into next year?

Speaker 12

And Frank, also on the reorganization of the company structure that you embarked on since taking over? Thanks.

Speaker 2

So Balaji, listen, based on what we know about our IP, we've been, as you know, making sure that we build our capabilities, modernize our approach to commercialization, medical market access. And we've done that as I mentioned, we laid the foundation and we're executing on that in the second half of the year, so that we're ready for driving growth, accelerated growth in 2025 and beyond. So that's what I'll say to that. I really can't speculate in terms of all the different things that could happen. Again, I'll reiterate that this is 1 generic, not 9.

Speaker 2

So that's important fact to know. And again, I want to come back to this is the first piece of litigation that's being litigated relative to all the other patents that we still have to go. So it is going to be a marathon. So I really don't want to speculate about all the different kinds of tactics and strategies. I'm sure folks can look at that.

Speaker 2

But again, the point here is, is one generic, not 9.

Speaker 12

Understood, Frank. Maybe a quick follow-up. Last quarter, I asked about the incremental market opportunity within the 18,000,000 procedures coming from no pain. I think you had said that your team was figuring this out, checking in to see if there's better parity now on this or on what is the exact incremental opportunity? Thanks.

Speaker 2

Yes. Balaji, I think we're guiding guidance with confidence as we get into the towards the end of this year and early next year as our now enhanced teams engage customers and really get granular in terms of their thinking, their plans. We're going to be able to provide guidance that we can stick to just like we have to date this year. And I'm really proud of the team for that. So hang tight.

Speaker 2

We're getting there. As I mentioned, the foundation is set. And so I'm really excited actually about the second half. And I feel the momentum building. And so we'll be able to identify as we move forward.

Speaker 2

Again, those kinds of customers and accounts are likely to adopt sooner rather than later. So the early adopters, so the middle adopters and late adopters. And based on that, we'll be able to provide some guidance in terms of growth.

Operator

Thank you. This concludes the question and answer session. I would now like to turn it back to Susan Mesko, Head of Investor Relations for closing remarks.

Speaker 1

Thank you, Didi, and thanks to all on the call for your questions and time today. We are excited about the opportunities that lie ahead for us. Throughout the balance of the year, we will continue to ensure we are well positioned for the rollout of no pain in 2025, which we believe will pave the way for our long term success. The opioid epidemic continues to be a national crisis underscoring the vital importance of our mission. Thank you and be well.

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Earnings Conference Call
Pacira BioSciences Q2 2024
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