All right. I think we're good to go. Good afternoon, everyone, and thanks for joining us at the Barclays Miami conference. I'm joined on stage by Pacira BioSciences, and representing the company is the Chief Executive Officer, Frank Lee. Thank you for being here with us today. Maybe just to kick off the conversation, if you could give us a quick overview of the current product portfolio and then maybe walk us through 2025, how things trended relative to what you expected and maybe within that, you know, 2025 was an important year because for your biggest product, there was the NOPAIN reimbursement implementation in January. We'll get into some of the more financial-related questions, but with respect to NOPAIN, maybe just talk about what you've learned in the first year of having that in place.
Well, Jenna, thanks for having me here, and good to see you all. I have to say, last year, we rolled out our 5x30 strategy for value creation, and that was at a different healthcare conference. That was January of last year. Five by thirty, what were those things? You know, it's 3 million patients by year 2030, double-digit top line growth, five-point expansion in margin, five pipeline products and five partnerships. If you go from January of last year to now, I tell you what a difference a year makes in terms of the kind of progress we've made and the progress that the team has made.
Just to recap a little bit, last year, some important events, we did have a settlement with Fresenius, a volume-limited settlement, which provided visibility out to 2039, which is very important for us for our lead product, EXPAREL, and subsequently supported the IP estate with many, many more patents that we can get into. We started to see, as we talked about the second half of the year, how NOPAIN, along with some of our investments on the commercial side, has started to accelerate growth. Growth starts with volume, and we started to see a good amount of that. Importantly, we did a lot of work to make sure that our customers could access the product in a good way through GPO contracts as well as from the payer.
You know, if you step back a little bit, EXPAREL is covered, period. What we wanted to do is cover it outside of the bundled payment. NOPAIN Act provided the outside of the bundled payment for Medicare patients in the outpatient setting at ASP + 6%. What we want to do is really expand that to the commercial pay. We ended the year with about 102 million lives covered total outside the bundle. What we've been able to find is that from a remittance standpoint, what we're seeing on the commercial side is up to ASP + 29%, which is great. As you know, from a pipeline perspective, we're advancing PCRX-201, and I'd love to talk about that here shortly, as well as the iovera° product, which could be a nice complement to EXPAREL.
Finally, we signed a couple of very important agreements, one with Johnson & Johnson MedTech to triple our reach for ZILRETTA and importantly, LG Chem, the South Korean company that'll cover EXPAREL and ZILRETTA in the Asia Pacific countries.
Awesome. Thank you. You know, there's a lot of moving pieces, a lot going on in the pipeline, the 5x30 plan, the growth margin outlook, and we're gonna touch on all these things. I guess let's stick with EXPAREL and just so we can better understand how things are trending, so we can frame 2026. We talked about NOPAIN, which provides reimbursement in the hospital outpatient department. You also have signed over the past couple years several GPO contracts.
Mm-hmm.
The latest of which was around mid-year. With EXPAREL through 2025, we saw a nice uptick in volume in the second half.
Yeah.
With NOPAIN and with the GPO contract that you signed, can you just talk about the volume trajectory over the last four quarters and maybe any impact on pricing and that will help set the stage for when we talk about this year and beyond?
Sure. Just to give some additional clarity on NOPAIN, it's certainly for Medicare in the outpatient setting, and that'll cover all outpatient settings.
Yep.
HOPD, ASC, as well as any other setting like in offices. It just doesn't cover inpatient.
Yeah.
that's that remaining piece. broadly now, commercial payers are following suit, and our ambition there is to really expand that to a much larger universe this year. let's talk about volume growth on EXPAREL. you know, last year, broadly speaking, we're north of 6% last year, in aggregate last year, and that's compared to about 3% the year before. I always like to say, you know, growth begins with volume, and we saw volume growth. along the way, as you mentioned, Jenna, we signed some important group purchasing organization contracts, GPOs. we signed three of them that cover the vast majority of our business. the last one we signed was in June of 2025, and we saw a good uptake from that.
We'll lap that GPO contract in June of this year. Also, as you know, we took a price increase across our product line this year. As we think about this year and reflect on last year. Last year, we signed a lot of these agreements at various times in the year. Various payers were coming online at different times of the year, and we were really launching into this new catalyst called the NOPAIN Act that we really had to educate. As we had predicted, the second half is when we really started to see the uptake in volume. My sense is it'll start to steadily increase, you know, over time. We're seeing that. We're seeing that for sure.
Likely the second half of this year is when we're gonna start to see volume, and dollars converge a little more because that's when we lap the last GPO. That's kinda how we think about it. You know, we're seeing good growth and we've set numbers accordingly, to make sure that we can hit those numbers and deliver.
I remember, you know, when NOPAIN was coming into effect. I just am curious how the clinician community maybe whether they underappreciated it a little bit, or there's some education required to get them up to speed because in years past, there was a little bit of a cost-prohibitive nature just given the immediate cheaper generic alternatives, whereas this provides long-acting, reduces opioid consumption? I'm just wondering now, 12 months later, how you feel going into 2026 with just general awareness that this NOPAIN reimbursement structure, moving it out of the bundle is, you know, in place?
You know, what's really great to see is, you know, if you go back in time a little bit, the whole idea was that, because of the bundled payment, because you get one payment per procedure, it almost provided a disincentive to use the most innovative products. What the NOPAIN Act did is say, "Okay, now you're still gonna get paid for the bundle, but now separately, you'll get paid at ASP + 6% or more," in the case of commercial, it's up to 29%, "for 11 products that are included in the NOPAIN Act," of which we have two of them, iovera° and EXPAREL. Right? That was the idea. Because of that, then the idea is that the opioid utilization would decrease over time, and because these products do have a favorable impact on opioid use. Now, here's the good news.
We just ran a survey, you know, a very large market research survey. 740 participants in this, pharmacy directors, anesthesiologists, surgeons. Awareness is high. About half have already taken action in terms of how they manage patients before, during, and after surgery. We're making an impact. We're starting to see it, and we're gonna continue to run the survey over time. We've shared these data with CMS, you know, of course, 'cause CMS is looking at, gosh, you know, how long are we gonna keep NOPAIN? Initially, it was for three years, as we all know, and now we're entering an evaluation period. I think the data look promising in terms of the impact that NOPAIN is having, not only directly through Medicare, but also broadly through commercial payer access and reimbursement.
Speaking of the duration of NOPAIN, I mean, just common sense would suggest. It feels like it would be a negative headline to pull that back. Like, how confident are you that it makes sense to keep this in place, just given the broader effort across the country to keep lowering opioid consumption and in favor of non-opioid alternatives?
Yeah. What I'm really pleased to see is the data starting to point that way. We're already doing some claims analysis to further support the market research. My sense is as we progress along and the data will continue to point to better patient outcomes, lower opioid utilization, and overall healthcare costs that are reduced because of that. This is a good idea, and we'll continue to share information. We should all be happy that, you know, this insight led to our government passing this legislation, and it's already having a good impact.
Awesome. Just shifting gears to your 2026 guidance. You know, total company revenue expected to grow 3%-6%, EXPAREL a bit higher than that at 4%-8%. You know, we appreciate breaking out the EXPAREL specific revenue. I think that's very helpful. Can you talk about, you know, we mentioned with the GPO contracts, there's some pricing impacts and maybe we lap that? Between the volume and price just for modeling purposes, talk us through the cadence of how that might play out over the year?
Yeah. You know, we feel comfortable breaking out EXPAREL because I think and that, of course, people wanna know exactly what we're thinking about EXPAREL. We feel comfortable with that guidance. We've set guidance in a way where we wanna make sure that we deliver on that this year. You know, last year, there were a lot of different moving parts because it's year one. Year one of not only NOPAIN , but year one of 5x30 and a lot of things that we're doing. What are we doing to ensure that we hit our numbers this year? First is, as you know, last year, we broke apart our selling efforts. We've got one dedicated field force previously selling all three products, but now we have three separate field forces, each selling their individual product because these are very different products.
Last year, we went through a bit of a reorganization, particularly the second half of the year, for ZILRETTA and iovera°, while keeping EXPAREL selling effort where it is. We took that one sales force and said, "Just sell EXPAREL. Stay focused. That's the priority." We'll restructure and add new sales forces for ZILRETTA and iovera°. My sense is that effort will pay off this year, but we've been conservative about guidance on ZILRETTA and iovera° because I want to see that growth before I guide to a bigger number. My sense is that we're positioned well this year for that.
I have a few questions on ZILRETTA and iovera°, and there's also some pipeline developments there as well. Just one last one on the EXPAREL guidance. As you mentioned, 2024 was a nice uptick in volumes. Then when you think about the total revenue guidance versus 2026 versus 2025, you know, the high end, another nice step up. The low end, a slight deceleration. You mentioned a layer of conservatism and wanting to set a bar that you feel very comfortable with. Just can you talk about maybe what would take you to the higher end of that range?
Yeah. We continue to execute on expanding payer coverage, you know, so outside the bundle. That's gonna be important as more and more commercial payers reimburse it up to what we're seeing in, again, ASP + 29%, which is substantial. And certainly pulling through the GPO agreement. We have a number of people on the ground that help to educate people like pharmacy directors, billing and reimbursement folks, and healthcare professionals that now it's available through the GPO. I think it's really more about execution this year, because a lot of the year one moving parts have settled a bit, right? As I mentioned earlier, and you mentioned, we'll lap the GPO, the third one mid this year, and that's when volume and dollars will start to converge a little more. I'm excited about this year.
I'm excited 'cause a lot of the things that we put in place, and like I said, if I step back, what a difference a year makes, you know. Last year in January, we were just rolling out NOPAIN.
Yeah.
There was some uncertainty about EXPAREL's IP runway. Now we have a lot more visibility about not only the IP runway, but also the impact of NOPAIN. People in place in the field now that are really executing, in a way that we start to see growth. Just to remind you, EXPAREL has been around a long time.
Yeah.
To get a much more of a late life cycle product to grow again like we have, let me tell you something, you don't see that very often in this industry where it was relatively flat before, then we went to 3%-6%.
Yeah.
Right? That's, I wanna just recognize the team for that. Yeah.
Before we focus more on the five by thirty and mostly with ZILRETTA because you announced the J&J partnership.
Mm-hmm.
You know, we'll talk about iovera° and maybe within this question for those two products, if you could remind us of the pipeline updates that you expect next? Just thinking about the trends from last year, what you're seeing in those products this year, how the J&J partnership can impact ZILRETTA and also the pipeline updates for those?
What's great is, with ZILRETTA, Johnson & Johnson, DePuy Synthes now, will triple our reach. Last year was a lot about getting that partnership set up, folks in the field trained and working together. This year will be about executing. I didn't wanna bake all that in until we started to really see it, right, and have actual evidence of that. For iovera°, it was really about let's get medical device people to sell a medical device. We saw the impact of that in the second half of last year. I expect to see that continue going forward. Just so, you know, we step back here a little bit.
This year, in addition to the base business and what we're doing, it's the first year where we've actually had data events coming up. We'll have ZILRETTA of the shoulder interim analysis coming up. We'll have iovera° and spasticity both of those registrational trials. PCRX-201 the part A reading out at the end of this year.
Awesome. You know, with the growth margin target as part of the 5x30 plan, can you just help us bridge the five points of expansion? You know, there's a little bit of a step-down this year. With four Q and maybe the OpEx guidance for this year, just you're clearly investing. There's a lot of different things to-
Sure.
-Invest in. Maybe help us unpack that a little bit.
Yeah. There again, I'd say what a difference a year makes 'cause if you go back in time not too long ago, the margin was 76%. The company was in many ways living hand-to-mouth on inventory. We've gone from that to a very robust process, and we almost got to the 5 points just last year.
Yeah.
In the first year, as you know. What that wound up doing is, you know, we didn't, it was a much more efficient process. We didn't throw away as much product, and we built up inventory, and so cost per unit went down. We'll kinda work through that this year, and so that's why it's a little lower in terms of guide this year than last year. We're well on our way to achieving five by thirty. We'll have continuous improvement just on the process, number one. Number two is that as volumes go up, the margins get better.
Awesome. It feels like for 2026, EXPAREL likely another step up in growth. Things are tracking well, ZILRETTA, iovera°. You also have several pipeline readouts, and you also announced a partnership in Asia- Pac.
Yeah.
With LG Chem on EXPAREL. I want to spend a minute there and just you know, talk through maybe some of the due diligence and what gave you confidence and maybe just given in the United States what we saw were some issues with the cost. I'm just curious on how you view the adoption over there and, you know, eventually we're gonna talk about the two zero one and how all of this will build towards
Sure.
That double-digit growth. We'll start with the LG Chem.
You know, I'm really pleased at the quality of partners that we've been able to sign deals with. J&J DePuy, leader in their field, LG Chem, a leader in Asia Pacific. you know, when I think about partnerships outside of the U.S., you know, as we've looked at these partnerships in the various regions and we look to sign something in Europe, Latin America, Japan, to build on the broadly South Korean Asian Pacific partnership with LG Chem, we won't guide to this until next year, but these revenues will be important. They're not insignificant. In fact, if you think about how they ramp, it builds nicely so that they really start to peak around the timeframe that we might have a little bit of erosion.
Mm-hmm.
From Fresenius. Right? Historically, as you know, several years back, the company tried to execute more of an ex-U.S. strategy by itself. We're taking a different tack here with leading partners who have presence in that space. In Asia, we expect a lot of this to come from private pay. As you know, the price of our product isn't thousands or tens of thousands.
Yeah.
It's hundreds of dollars.
Yeah.
It's more accessible, right? That's the difference. We're excited about signing these ex-U.S. agreements, which will often, just like the LG Chem, involve an upfront, a transfer price and royalties, and it won't be insignificant. That's that piece of it. Of course, we can talk about the pipeline as well.
Yeah. On the pipeline, probably the program that's getting the most attention right now is PCRX-201. I just wanted to get your thoughts on what is driving the excitement in that, how you view this opportunity, how much of a potential game changer it is in OA pain, just, and maybe the timing of when you-
Sure.
Would expect that update.
You know, I have to say I'm really excited about this one. This could be truly transformational. I don't use that word lightly. This could be the first gene therapy that's local for the masses as opposed to systemic gene therapy for the few rare disease. You know, we're studying this for osteoarthritis, and there were some impressive results for phase I, 72 patients. We'll report out on phase II, part A at the end of this year. As we go through the course of this year, we're gonna try and set some, I would say, context as to how to think about the data that we'll see.
Yeah.
During the course of this year, and also the path to regulatory approval. If you think about this a little bit, some context, we already know what short-acting steroids and HA deliver. It's a few months of durability, right? When we went out to the marketplace, we said, "Hey, what would be transformational?" What we got back is, "If you have durability out to 12 months, that is transformational." The low bar is about three months, you know, because that's what you typically get with steroids and HA. We've got a wide band there. As we know from our phase I data, the durability was quite impressive, you know, out to many years. That's one lens that we'll look at through. The other lens is we know what the safety profile of PCRX-201 is, and it's very favorable.
You know, 72 patients that we followed for three years. You know, we're looking to see something similar to that we saw earlier. I think we'll have some context. Just as a reminder now, this study isn't powered for efficacy, it's primarily a safety study.
Mm-hmm.
What we'll see are trends toward efficacy, and that'll inform our future development. As you know, we have RMAT designation.
Yep.
For this, we'll be looking at ways to accelerate the development path to approval.
You know, on that front with the path to potentially accelerated approval and the 5x30 double-digit growth. You have the three products on the market, you have a bunch in the pipeline and new indications for ZILRETTA, iovera° . Can you just talk about the double-digit 5x30? Like, which products are going to contribute to that, and what maybe in your pipeline is a little bit beyond 2030 and a growth driver more long term?
Yeah. I suspect that, you know, we'll get there in aggregate. You know, to break it down individually, it's gonna be hard.
Yeah.
We'll get there certainly. You can see the early signs of it. The proof in the pudding will be how we report out first quarter and second quarter this year. I believe we're well on track to that double digit. As we talked about, we're well on track with margin.
Yeah.
Tremendous improvement there. My sense of this is we'll step back this year and say, "Gosh, you know, the numbers look good. We're on track here with delivering 201. We set expectations.
Yeah.
Accordingly." Then we'll have some other interesting data readouts. Now along the way, as you all know, we bought back a fair amount of stock last year because we felt like there's a disconnect between what we think the valuation is versus the market. As we go forward, you know, we'll have to look at that carefully and also consider some BD deals that could be accretive. Now we have a commercial medical market access infrastructure, so you could easily drop a product or two into that.
Yeah. On the capital allocation, you mentioned BD before we close out. I just wanted to give you an opportunity to remind people of your balance sheet situation. You know, the company has low leverage and just your capacity to do deals.
Yeah. We're in very strong financial shape. Not very much leverage. We do have a fair amount of capacity in terms of firepower. We're gonna be very disciplined about this. The first place we're gonna look are gonna be places where it could be accretive right out of the gate, because of course, we shrunk the denominator now in terms of the number of shares outstanding.
Yeah.
It would be nice to continue on this momentum of delivering top line and, perhaps more with something that could be accretive. You know, as I say to people, this is a year of Pacira. What a difference a year makes.
Yeah, that's fantastic. Your core driver right now is picking up growth, different volume tailwinds, big pipeline with updates coming this year. Yeah, thank you for attending the conference, and we appreciate it.
Thanks, Jenna.