You're welcome, everyone, to the Piper Sandler Healthcare Conference. My name is Biren Amin . I'd like to welcome our next company. We have Pacira BioSciences and their Chief Financial Officer, Shawn. Welcome, Shawn, to our conference, and thanks for attending. Maybe, you know, start off, provide a brief overview. You know, Pacira's been around for a long time, you know, has had several evolutions. So, you know, tell us a little bit about, you know, the product portfolio as well as the pipeline.
Yeah. Sounds great. And thanks for having us. And for the tough questions, I'll ask Susan to chime in here in the front row. But yeah, there is a podcast from our chief commercial officer recently, who I think mentioned that we're sort of standing on the shoulders of giants. And I think that's the case, based upon, you look at, our portfolio of products. So the, you know, the big picture is we're a commercial-stage biopharmaceutical company. We have three products that are on the market, generating revenue. We have a pipeline that, comprised of, I would say, both sort of indication-expanding opportunities for existing products in addition to, a couple of novel programs, one of which we're particularly excited about called PCRX-201.
The company is focused on, and the history of the company has been focused on non-opioid pain therapeutics that can transform the lives of patients. And our largest product is called EXPAREL, and it's a product that provides roughly 72 hours of pain relief, post-surgically. So you think about when the pain is spiked, during the first couple of hours couple of days after surgery. For all of us in the room who've experienced that, EXPAREL is designed to mute, if not completely block, that spike in pain. And the original thesis was not only to provide more modern pain relief, but also to provide an opportunity for patients to have an opioid-sparing opportunity. And I'll give sort of a personal example of that. I have three children, and my youngest had her wisdom teeth extracted this past summer.
The first two came home with multiple days of narcotics for the post-extraction pain relief. My youngest benefited from maybe having the CFO of EXPAREL on board, where she was able to have EXPAREL during her procedure, and the recovery was remarkably different, where it didn't come home with Percocet or oxyContin or whatever you're prescribed. EXPAREL is the largest product in our portfolio. The second product is also particularly compelling. It provides a long-acting corticosteroid for OA knee pain called ZILRETTA . We acquired that when the company acquired Flexion a handful of years ago. Then we have a very interesting novel handheld device that provides immediate long-term pain relief using advanced cold or cryo technology.
From a top-line perspective, where if you look at our guidance, we'll generate north of $700 million of revenue this year, a couple hundred million of adjusted EBITDA. We have a, I think, a pretty thorough capital allocation strategy where we're focused on growing the top line, but also investing in the pipeline thoughtfully. And then also we've repurchased a couple hundred million or $100 million worth of stock over the last couple of quarters.
And so you've got a five by 30 Plan. Can you talk a little bit about that?
Sure. Yeah. So earlier this year, new CEO Frank Lee, who came on board nearly two years ago, we rolled out a framework to provide a little bit of a big-picture guidance in terms of where we're looking to take the business over the next five years called the five by 30 Plan. And it's focused on five key metrics. The first are focused on patients, where we're looking to have three million patients benefit from Pacira therapies by 2030. This year, we're in the 2.4-2.5 million zip code, which is pretty remarkable. The second is the top-line growth. We're looking to grow the top line by 10% CAGR over the next five years. Focus on profitability, where we're looking at improving our gross margin by 5% over the next five years compared to 2024 levels. And the team's made remarkable progress on that front already.
Then, partnerships and the pipeline. On the partnership side, you might recall that we only sell our products domestically, and we do have approval for EXPAREL in Europe. And there's a relatively straightforward path forward to approval in other ex-U.S. jurisdictions. So we're looking to commercialize our products through a partner or partnerships ex-U.S. And then also looking to bring in five novel programs to the pipeline to perpetuate the business, you know, beyond 2030. So that's sort of the high level of the five by 30 Plan.
I guess, with EXPAREL, you clearly have exclusivity for some time now. Can you talk a little bit about, you know, any updates with the No Pain reimbursement and what that could potentially mean from a sales standpoint with EXPAREL?
Absolutely. So earlier this year, something called the No Pain Act was implemented, which is, it was a bipartisan act of Congress that provides separate reimbursement for 11 non-opioid pain therapeutics in the outpatient setting for CMS for patients who are covered under CMS. And maybe a quick step back that, you know, EXPAREL historically or typically is reimbursed if it's not by, you know, cash pay, it's reimbursed in the bundle. So you have making it up a hernia surgery, the hospital or the care provider will get one bundled payment for the procedure, including sutures, pain relief, etc., etc. And EXPAREL was included in that bundle.
And so with this, the No Pain Act coming into effect, that in outpatient settings for CMS patients, there's the opportunity for the provider to continue with the bundled payment for the procedure, but EXPAREL is reimbursed separately at ASP + six. And so that was sort of the beginning of a little bit of a spark in terms of the reinvigoration of growth of EXPAREL. But also over time, when Frank came on board as CEO, there was a huge lift in terms of modernizing the medical market access and commercial infrastructure. And as part of that, we have a medical access and a payer team that's also focused on commercial payers to provide no-pain-like reimbursement for the commercial population as well.
That's something we've made good progress on this year and will continue to focus on next year so that, you know, more patients in the United States are, you know, have the opportunity to have post-operative pain relief with non-opioid options.
And then, you know, your second product, ZILRETTA , that launched in OA. How's the adoption look there? And what's the growth opportunity with that program?
Yeah. So ZILRETTA is the only FDA-approved long-acting corticosteroid for OA knee pain. And you might recall that, or if you have any family members with osteoarthritis of the knee in particular, there's the HAs that, you know, Genzyme developed 20 or 30 years ago, however long it was. There's immediate release steroids. There's lots of, you know, sort of other largely ineffective therapies that patients will try just to alleviate the OA knee pain. And so we acquired Flexion a number of years ago that had developed this long-acting corticosteroid for OA knee pain called ZILRETTA , as Vera mentioned. So previously, before Frank came on board, we had one sales force that was dedicated to all three of our products.
Even though they're largely different call points, so EXPAREL being in the hospital and the ASC setting, ZILRETTA focused on orthopods and maybe some rheumatologists, and others. And then ZILRETTA is a medical device. So as part of the modernization of the medical and market access organization, we separated the sales force into three so that they are wholly focused on the appropriate channels, incentivized properly, and dedicated to that one particular brand. So it's a long-winded way of answering your question that this sort of modernization and separation occurred about a year ago, and then it's been implemented throughout this year. And we're, you know, focused on the teams in place and our optimistic feeling pretty good about where we are and anticipate the brand will sort of regain its growth in 2026.
And, as far as label expansion opportunities, I think you're also investigating OA shoulder, where.
Precisely. Yep.
Where is that trial in terms of when we expect it to complete and what's kind of like, you know, the bar for success and a positive endpoint?
Yeah. So as mentioned earlier, we have a pipeline of programs, clinical trials that are ongoing for our existing brands that I would call label expanding opportunities, and then a couple of more novel programs, PCRX-201 in particular, that I'm sure we'll talk about a little bit later. But with regard to ZILRETTA , it is currently approved for OA knee pain. And as you mentioned, there we are running a registrational trial in OA of the shoulder. And it's a meaningful opportunity, you know, not as large as OA of the knee, but still a meaningful opportunity for us. And that data should read out sometime mid this year, roughly.
And then we also, for iovera, our medical device, we have an important trial ongoing for spasticity, which is a very interesting indication where you might have a cerebral palsy patient or somebody who is post-stroke where the muscles are sort of pulling against one another. And they're, you know, commonly the common therapy are toxins, and you can only have so many toxins over time. And so that trial will we anticipate will also have an interim readout in the roughly the first half of next year.
And that's interim. And then the final analysis at some point, I guess.
Yeah. We'll see what the data look like and then comment from there.
I guess what's the market opportunity there in terms of patient numbers, peak potential for spasticity?
Yeah. For spasticity, we, you know, we haven't publicly sort of disclosed where we think that will go, but it could be a, I mean, these patients if you look at maybe just the corollary is what is the, you know, the toxin annual therapy for those types of patients, which is, it's a premium. I mean, they have nothing else to help these people. And so there could be a premium opportunity there, but we're still working on that, and we'll disclose more later.
Got it. And then for 201, this is a, you know, a gene therapy vector that's delivered into the knee. Can you talk a little bit about, you know, the approach here? It's pretty novel.
It's, yeah. It is novel. And we recently announced that we fully enrolled, you know, the first part of the phase II trial. It's a two-part phase II trial. And over the past, gosh, 12 to 18 months have put out data from the 72-patient phase I. So it was a sort of larger than typical phase I trial in patients, which have shown encouraging data. So yeah, too, and I would encourage everybody to go to our website. There's a webinar and some additional information. And being the non-scientist in the room, so take all of this with a grain of salt.
But it's unique from a gene therapy perspective in that you think about sort of the traditional gene therapy, if there is a traditional gene therapy, which is systemic dosing, very high cost of goods, and you're one and done. So what's unique about PCRX-201 is the dose is local, so it's directly in the knee. And so we've seen, again, very encouraging safety with regard to it being local. The second is that these are tiny doses relative to the typical gene therapy where you have to, you know , baby the entire body. And so that provides the opportunity for a favorable cost of goods where you could bring, from an economic perspective, gene therapy to the masses is the way Frank describes it, as opposed to just the, you know, the tiny group of monogenic diseases.
And then the other, from a again pharmacoeconomic perspective, as opposed to we're giving one dose and how do we get reimbursed millions of dollars for that one dose, is we've seen again encouraging data that their neutralizing antibodies don't play into effect of the efficacy, which would mean, again, the non-scientist here, the opportunities for repeat dosing. And so not only in one knee, but the other knee, potentially other joints. So when you take a again a step back, we have this very interesting pipeline product that could be a game changer for patients who have OA of the knee. And if you look at the data that we put out approximately a year ago where there was one dose, one year, two years of WOMAC pain and stiffness data.
Again, granted, it wasn't placebo-controlled, but if you look at the literature from a placebo perspective, that these patients are from Kellgren grades two through four, and Kellgren grade four is, again, the layperson here, bone on bone. And there were roughly a third of the patients were Kellgren grade four, maybe a little bit less. And you see this remarkable pain and stiffness, improvement, and it basically flatlines for a couple of years. And, so we're looking forward to that data readout, approximately this time next year.
And what would you hope to see from a pain reduction? I'm assuming you're gonna measure WOMAC, or is it another score like, SPID?
Yeah. It's WOMAC and KOOS. Yes. Thanks, Susan. But just a reminder, it is. It's a safety study.
Okay.
We're looking for safety, but every patient will get a steroid and then either saline or one of two doses of PCRX-201. And so we will, of course, be looking for an efficacy signal, as well, but the primary endpoint is safety.
And it's a week 48, week 52 endpoint?
Yeah. It's a one-year endpoint.
Okay. And then I think you know, in that trial, there's a cap in terms of Kell four patients. So you know, the cap is like 30% of Kell four patients. What was the rationale behind introducing that cap?
I think we're just looking for, you know, a balanced group of subjects in that particular trial. So I think that's just the very summary of it.
Got it. And these are probably the most severe patients. So is there a potential to sort of looking at that subgroup data and, you know, an accelerated path just in those patients, or would you envision, I guess, talking to the FDA, you know, once this data's available and figuring out next steps?
Yeah. I think that's right. So we have RMAT designation. So there's been good collaboration and dialogue with the FDA. And, you know, we are planning for a well-controlled two phase III trials, but we'll see what the FDA has to say based upon the data. And, again, I would encourage everybody to take a look at the website, our publications because the data are quite compelling, but we still need to see the readout, you know, next year.
Got it. Got it. And then I guess in terms of just CMC, do you manufacture this in-house, use a CDMO? What are the costs of goods associated with, you know, a program like this?
Yeah. So from a company broadly manufacturing perspective, we do manufacture EXPAREL in two locations, one in San Diego and the other in Swindon in the U.K. But for PCRX-201, we have contracted a well-known domestic CDMO that has lots of experience as it relates to gene therapy. And again, we haven't publicly disclosed where we ultimately think the cost of goods will come out. But what we have disclosed is that, again, it's not a typical gene therapy where the cogs are, you know, massive, for lack of a better term. This is the potential for gene therapy for the masses, which means it has to be cost-effective. And if you think about it and we're still working with regard to how much we think it could, you know, be reimbursed, etc.
But if you think about a total knee replacement in the $20,000-$30,000 range, we need to be more cost-effective than that. And that's kind of how I would think about it.
Got it. And then I guess, you know, outside of human use, I'm sure you've tested this in dog models. Any read-throughs and any potential for development in the veterinary setting?
Yeah. The answer is yes. In summary, you know, we're not gonna become a vet company, right? There's four major players in, and but there could be a partnering opportunity for OA for companion animals and in dogs in particular. You know, for those of us who have animals, we probably spend more on them than our children for some reason. But, again, there's been encouraging data in companion animals, and it's something that could be an outlicensing opportunity for us.
I mean, especially given the fact that the NGF antibodies have had, you know, significant safety issues, but also, I think initially, everyone felt like there was a broad adoption opportunity. I mean, it's a pretty sizable opportunity for the company.
Yeah. We'll see how it plays out.
All right. Perfect. Great. I think we've kinda covered, you know, all of the programs. So really appreciate you taking the time to come here, Shawn. Great to see you again.
Great to see you too. Thanks for having us.
Yeah. All right. Thanks.