Conference Transcript - PCRX 2026-06-03

Anthea Lee, Analyst — Jefferies

Hey everyone, my name is Anthea Lee, part of the Spec Pharma team at Jefferies. Welcome to our health care conference in New York. Really great to have Frank Lee with Pacira Biosciences CEO of Pacira Sciences here with us. Thank you for being here with us. Well thanks for the kind invitation. Yeah, absolutely. For those who are unfamiliar with Pacira, perhaps we could start with a quick introduction of the company? What are the key goals for this year? And the outlook. Great. Well, thanks for the

Frank Lee, CEO

invitation. And just as a way of background, Pacera is a leader in non-opioid pain management therapies. And so we have three in-line products, Expiril, Zoretta, and Ayovera, and we're building a pipeline as well. So that's an overview of the company. The company's been around for 15 plus years and you know we're doing some exciting things under our new five by

Anthea Lee, Analyst — Jefferies

30 strategy for growth great I think first off starting with expel you've guided to revenue of 600 620 for expel this year can you talk a little bit about that guidance the growth that you've been seeing and kind of the pushes and pulls between the high and low end of guidance for this year sure

Frank Lee, CEO

Well, you know, Expiril, as we look back at 2025, what we saw was that second half of the year, volume started to accelerate. And we talked about that at the beginning of last year, that with no pain as a catalyst for growth. And it's not just no pain, but the expansion into commercial payers and all that we're doing in our commercial medical market access teams, that we would see volume grow. And it did. So we saw volume grow to 8% in the second half of 2025 with a baseline before of around 3.5%. And that continued in the first quarter. So we saw 7% volume growth in the first quarter. And we believe that starting in the middle of the year when we anniversary our last group purchasing organization, that we'll start to see volume growth and dollar growth start to converge. And then, as you might imagine, then you put on top of that any price increases that we take, and then you can pretty easily get to an idea that double-digit growth is certainly possible.

Anthea Lee, Analyst — Jefferies

Right. And you've talked about NoPain being a catalyst for XPRL, but also that there's been a little bit more of an administrative lag for larger hospitals to come on board. So how are you seeing that progress in terms of implementing NoPain across the board? And should that be more of a second-half-weighted event, or are you already seeing kind of early signs of that earlier in the year?

Frank Lee, CEO

You know, our investments in commercial medical market access are paying off. So at the highest level, growth starts with access. So we were pleased to share that at the end of last quarter, we're up to 110 million lives covered outside of the bundle, right? So we've got some more lives to go, but that's a lot of lives that we've got covered outside of the surgical bundle, meaning that X-Barrell, it gets reimbursed at ASP plus six or better. What we're seeing in commercial plans is it can range up to ASP plus 29%. So we've done a good job of expanding payer access and payment outside of the bundle. And what we've seen is that the early uptake has been very, very strong in ASCs, in the outpatient setting. In the larger institutions, it takes a little more time because of some of the reviews and a number of stakeholders involved. But I really think that as we progress forward, we're going to get to that, you know, at the highest level, a tipping point. when the majority of patients are covered in outside the bundle reimbursement and secondly when we're going to start to see the momentum build in larger hospitals and so I think we'll start to see that as we move forward in the not too distant future. Got it that's interesting the

Anthea Lee, Analyst — Jefferies

ASP plus 29 percent what are the factors kind of that influence how much payers reimburse on top

Frank Lee, CEO

of the ASP? Yeah, you know, payers, like they do in many other therapeutic areas, will look at the overall value. What's the value of this particular molecule product? And as you might have seen from some of our press releases and presentations at medical meetings, I'm really pleased to say that the investments that we made in health economics and outcomes research are bearing fruit. And what does it say? It says that by utilizing Expiril, you minimize overall costs to the health care institution you improve patient satisfaction so it's good for not only the healthcare system but also the patient and those data are are really encouraging and in fact we've just done some additional analysis and we can talk about sort of the future of no pain and working with one of the leading hospital networks it's the largest hospital network in the US to analyze some early claims data and as you might know we had done some market research to suggest that 750 survey respondents said hey no pain is having an impact on opioid prescribing in the hospital okay number of stakeholders 750 respondents and now we've validated that with some claims analysis with the largest hospital network in the u.s and so you'll see those data being published and presented the meetings so when you step back that those are the kind of data analyses that payers look at and clearly by the way that they're reimbursing they see the value and so what i would expect is that as we go into second half of the year you'll see more and more payer wins to expand that you know payer coverage outside of the bundle and then we're going to get to that tipping point when most of the patients are covered by outside the bundle reimbursement got it is there an

Anthea Lee, Analyst — Jefferies

opportunity to go back to the pairs that already are covering XREL but maybe at ASP plus six or on the lower percentage with this reward data and kind of boost that as more of a financial incentive for XREL uptake in addition to kind of

Frank Lee, CEO

growing broad coverage as well? Sure there are a lot of ways to engage payers through contracting and you know they determine reimbursement so they'll see value and reimburse accordingly our main focus is access you know patients physicians institutions need access and when access is available for the vast majority of patients that they see that's when you're gonna see behavior

Anthea Lee, Analyst — Jefferies

change pretty significantly you talked about growing access to what extent is Expril growth now more weighted towards these new accounts versus kind of increasing the depth of prescribing within the existing accounts?

Frank Lee, CEO

Yes, certainly. So Expril has been in the marketplace a very long time. And so what we see is really growth, the majority of it coming from those existing accounts. But what we're doing now is further penetrating those lines of service. So maybe we were only in certain procedures, and now we're in additional procedures, or we're only penetrated a little bit in a certain line of service, and we're going much deeper. So that's the kind of growth that we see, in addition to what I mentioned earlier, that outpatient ASC growth is pretty significant.

Anthea Lee, Analyst — Jefferies

Are there particular segments in terms of surgeries that you're watching out for? And then also on top of that, should we be seeing more or should we expect some sort of seasonality to trend with procedural trends over the year as well?

Frank Lee, CEO

Yes, certainly. There is seasonality historically with X-Barrell. You know, the mainstay of our business is orthopedics. So that's core to us. Now, the next is some soft tissue procedures. Then we start to think about plastics and dental kinds of spaces. And so I would think about it sort of in that priority.

Anthea Lee, Analyst — Jefferies

Got it. You've also talked about the future of no pain. I think the current legislation is slated to expire by the end of 27. So what are you seeing in the future of no pain? Are there legislative actions right now to extend that? And what are the stakeholders or potential lobbyists saying as well?

Frank Lee, CEO

You know, I'm really proud of our efforts over the last, I would say, eight to nine years now in advocating for no pain with leading advocacy organizations and health care professional societies. And as you know, that led to the approval of no pain last year, right, in January. And so, as you mentioned, it is a three-year term initially. And so what are we doing to not only ensure that no pain gets re-upped or renewed, but in fact expanded? Because it's clear based on the early data that no pain as a catalyst is doing exactly what it was intended to do. It's providing opportunities for commercial payers to come online to cover outside the bundle for those non-Medicare patients, which is fantastic. And we're starting to see the early data to say that not only through research and market research but also through claims analysis that we're in fact decreasing opioid utilization just if we look in the hospital, never mind what we do outside of the hospital. So I think these are data that are important and we're sharing those data with not only advocacy but CMS as well and they've been very interested. And so it's our plan that we will continue to analyze and share these data and move towards a goal of not only re-upping no pain, but really thinking about expanding it to places like, for example, the inpatient setting. So it's not just limited to the outpatient Medicare. And also to think about what we can do separately for veterans, because as you know, they're covered by a different plan.

Anthea Lee, Analyst — Jefferies

Got it. Okay. I want to also switch on to the other two products in the portfolio. Given your total guidance of total revenue of $745 to $775 this year, how are you seeing that growth trajectory for those two other products?

Frank Lee, CEO

Yeah, that's a good question. So last year, as I mentioned, we invested in commercial medical market access capabilities, and one piece of that was saying, gosh, instead of having one sales force, sell all three products, which are very different products. Why don't we think about having three separate sales forces sell those products? So now, Expiril has its own sales force, Zolretta, along with the J&J MedTech partnership that we can talk about, and of course, Iovera, with its own sales force of people who really understand medical device as opposed to pharmaceuticals, because as you know, that's a very different world right from a regulatory compliance just go to market capabilities and so what i'm pleased about is that we're starting to see the fruit of those kinds of investments and so as you've seen in the first quarter results zoretta grew 15 year over year and the partnership with johnson johnson medtech is really starting to get traction because as you know that expands our reach and it's a nice complement to HAs. So patients will use various products over the course of their treatment cycle, and so it's a nice complement. And for iOvera, we saw a 21% year-over-year increase in quarter one. Again, focused execution by medical device people is really starting to bear fruit.

Anthea Lee, Analyst — Jefferies

Got it. Can you remind me when the full sales force, in terms of the three individual sales forces were fully on board and in the field, and what are you seeing in terms of their

Frank Lee, CEO

productivity? Yeah, you know, we had a reset year in 2024. Then it takes time, obviously, to recruit people, train people, get them on the ground, get them to customers, and be productive. So what I would say is we started to see the traction start to show up in the second half of last year through all those efforts, and now we're clearly seeing it in first quarter results.

Anthea Lee, Analyst — Jefferies

Great. In terms of the J&J MedTech collaboration, what kind of metrics are you tracking on that launch? Any kind of leading indicators that you're pointing to to see kind of the fruits of that

Frank Lee, CEO

expanded reach? Sure. There are lots of different things that we can look at, but the ultimate test is how many scripts are we driving, okay, in accounts where maybe previously we didn't get scripts, or in new accounts where we didn't have a presence, where J&J has a presence and there was no overlap. So we're looking at that, and I think the results show, you know, 15% year over year. You can't argue with that.

Anthea Lee, Analyst — Jefferies

Is there opportunity to look at a similar type of partnership commercially for Alvera Is that something that you are evaluating? And also, what kind of successes do you want to see from the J&J MedTech collaboration to inform how you proceed with that?

Frank Lee, CEO

Good question. So as a part of our 5x30 strategy, the fifth pillar speaks to partnerships. And so this Johnson & Johnson MedTech partnership is for Zolretta in the U.S. only. And, of course, we have the LG Chem partnership, which is for Expiril and Zaretta, starting in Korea and Thailand, but they have rights to it in Asia-Pacific, broadly speaking. And, of course, they're one of the leaders in that space. So we're really pleased with that partnership. iovera we're very open to partnerships both in the u.s and outside the u.s because again i think it efficiently extends our reach for a product like that so we remain open to that and so expect that we're going to stay on track with respect to the five by 30 goals we've got two partnerships already we want five by year 2030 and my sense is that you know we're very well very much on track

Anthea Lee, Analyst — Jefferies

for that. Got it. And are there considerations for Xparel as well, or do you feel like you are executing well on that on your own as well? So with Xparel, we've always had some

Frank Lee, CEO

partnerships here and there with distributors. So for example, in the dental space and plastic spaces, we've always had some degree of partnerships. So we are looking very carefully at where those kind of partnerships might be helpful broadly speaking and so yes we remain open to that and you know that's all a part of the consideration around

Anthea Lee, Analyst — Jefferies

five by 30 partnership goal great and I think before we move on to pipeline and readouts that are upcoming on I think there's been a little bit of noise around Xpro and paragraph four filers there so remind us the runway in terms of exclusivity for Expirel with the Fresenius settlement, and then also how the patent estate is different now than when that settlement was reached.

Frank Lee, CEO

Sure. Maybe a couple of points. Number one, what an ANDA means, and number two, sort of the then and now, which is very So what does an ANDA mean? ANDA means that someone has met the minimum threshold to actually send something to the FDA and the FDA has received it. Doesn't mean that the file is actually a file that's going to be approved, nor does it mean that they can manufacture. it doesn't mean a lot of things right that's number one and number two that that markman hearing that won't go to won't start until the first quarter next year and really won't go to trial until end of the year and that whole process will likely take all the way through april of 2030 roughly speaking so that's a quick primer on what ananda means and what the what to expect from the legal system from ip perspective if you go back in time a little bit when we settled with fasinius we had one orange book listed patent now we have 21 and we continue to innovate and I really want to underscore that so expect additional listings and going forward and these are strong patents so remember the 495 patent that was originally litigated has now been reexamined strengthened and reissued by the US Patent Office okay for the key thing that the judge noted which is the volume limitation so the first patent is re-examined strengthened and reissued and we have 20 other patents and more coming across two different families and the second family has not yet been litigated so what I would say is that we're in a very strong patent position and this is really about composition of matter and product by process patents these are not weak manufacturing patents So, we feel very good about that, and we will continue to grow Expiril and build on the IP estate through research and development, because fundamentally, this is a better product that we're producing. And as you know, Expiril is not a small molecule, per se, it's not a biologic, but it's a little bit more like a biologic than a small molecule in the sense that if you might imagine, I'm sure you all have seen this, is, you know, soap bubbles. So if you can imagine soap bubbles, each one containing a little bit of bupivacaine, and you've got a cluster of a million of those soap bubbles. And think about how you have to turn that into a live-loss powder, be able to reconstitute it, inject it into someone's body, and have a PK profile that releases drug on the path that, you know, on a trend that is consistent with the way it was approved. Because if it releases too much too soon, then it's toxic to the body, right? So this is why it's a very, very different product than your typical, for example, if you're a manufacturer of an NSAID, right? And as you know, biosimilar is the same kind of idea. No biosimilar is exactly the same. That's why they have different INNs.

Anthea Lee, Analyst — Jefferies

Do you feel that the manufacturing aspect of it could also be a barrier even if, you know, this goes through and their ender gets approved? Because we have seen some drugs that have generics that have their end and approved or, you know, settled their litigation or whatever, but can't get over that manufacturing hurdle.

Frank Lee, CEO

Yeah, it is a difficult manufacturing process, I can tell you, because, you know, I started my life as a chemical engineer building manufacturing plants. So this is one of the more difficult processes. That said, you know, given enough time and money, people will figure it out, you know. So the biggest thing for us is continue to invest in innovation of not only X-Beryl, but also to diversify our product portfolio.

Anthea Lee, Analyst — Jefferies

Speaking of innovation, PCRX 201, we're going to see a readout coming up from that by the end of the year. I think maybe talk a little bit high level about the product, the indication, kind of what standard of care is and how you're positioning 201 there.

Frank Lee, CEO

So at the end of the year, we're going to have three important data readouts, starting with PCRX 201, but also, as you know, we'll have the OA of the shoulder readout for Zolretta, which would, you know, if that's positive, that would be the first product approved for a shoulder OA indication, and spasticity for Iovera. And again, that would be the first medical device approved for spasticity. So coming back to PCRX 201, you know, we think about it as local gene therapy for the masses. And this is very different than systemic gene therapy for ultra-rare diseases. Very different. We're studying this for knee osteoarthritis, which in the U.S. is about 15 million patients. So right now, patients cycle through various treatments, including Zaretta, HAs, et cetera, and they offer a range of anywhere from three to six months of benefit. What we saw in the Phase I data is at least a year of benefit. And in fact, we're about to report on some remarkable data following patients now for years, plural, as opposed to one year. So, when we looked at those data, we said, wow, this is interesting, this is interesting. This platform is interesting because this platform is sort of like, I would say, a Mack truck as opposed to the AAV, which is like a compact car. So you can fit 30,000 base pairs into this thing. So think about big genes, think about multiple genes being fitted into this thing, into this hcad high capacity adenovirus chassis but injected locally so that you need very small amounts of it and by the way from a safety standpoint it's much better as well right because you're not bathing the whole body with the product and so we're excited about this and so based on that we said hey we're going to start our phase two program and what we'll see at the end of the year is part Part A of the ASCEND study, which is, for the first time, three different arms, including a control. So we've got an active control, and we've got two different doses of PCR-X201, and we'll be reporting data at 52 weeks. So when you take a look at various studies, there are not many studies that follow a control arm, an active control arm, out to 52 weeks. So we're going to learn a lot from this study. It is not power for definitive efficacy, but we will be looking for trends in terms of efficacy along the lines of what we saw before, OMAC, et cetera. And also, like I said, we're going to learn a lot about this patient population. Importantly, we're starting Part B of the study with commercially viable product. So for those of you that follow cell and gene therapy, you know oftentimes the manufacturing process can be the rate limiting step. We're really pleased to say we're right on track to start part B with the commercially viable product mid this year on schedule. So as we look at the end of the year, we're excited about the potential to be able to share some exciting results with controlled data, with a local gene therapy for the masses.

Anthea Lee, Analyst — Jefferies

Great. You mentioned kind of some of the long-term follow-up phase one data. When should we expect to see that? And kind of what are the learnings from that ahead of the phase two readout?

Frank Lee, CEO

Yeah, I think we'll learn more and more about the potential durability. And, of course, looking at open-label data, you've got to be careful doing that. But we've followed a substantial number of patients. So, as you know, the Phase I study included 72 patients. And so, with each year that goes by, you have less and less of those patients because you have dropouts. But we have actually a substantial sample size. And so, I would think about sometime again towards the end of the year where we'll be able to share more and more information about that. Just ahead, maybe, of the Part A data.

Anthea Lee, Analyst — Jefferies

Okay, great. And then you mentioned the study's not powered for STAT-SIG on efficacy, WOMAC pain and stiffness, but what is kind of a clinically meaningful or good data on trends on those endpoints? How do you want to see those curves separate, for example?

Frank Lee, CEO

Well, certainly we'd want to learn more about the control, you know, because typically now a control, you wouldn't expect to see a control work for 52 weeks, okay? If it does, we've got to do some additional thinking, all right? And then the active, the two active arms, you know, in our phase one study, as you know, we had 70 grand 70% of patients have a 50% or greater response versus baseline that's pretty that's pretty significant okay most therapeutic areas if you get a 15 to 30% response you're ringing the bell and saying hey this is this is something really different okay so to have in our phase one study over 70% of patients have a 50% or greater response versus their baseline, that's pretty impressive, Now, whether we'll see that kind of response in a phase two study with a control or not, I don't know, but I think that, you know, when we take a look at the baseline and improvement over baseline and when we take a look at relative to the control group, those are sort of important things to sort of keep in mind. So we haven't set a specific anchor as of yet, but I think that as we get closer ahead of the data, we'll start to share with you what the market is saying is going to be important in terms of what's clinically meaningful and what's important and how this could be potentially a breakthrough therapy for patients. Because as you know, this did receive our MAT designation, which is the equivalent of breakthrough for cell and gene therapies. So stay tuned, and, you know, we look forward to an event ahead of the data event at the end of this year where we can set maybe some of those goalposts better.

Anthea Lee, Analyst — Jefferies

I think digging into the phase one, was there a kind of WOMAC improvement over time curves that you showed there, and what did that shape look like?

Frank Lee, CEO

Susan Mesko, our head of investor relations, will send you as many curves as you want to see. And what we saw in those curves is that over the first, let's say, couple of months, we saw a pretty significant improvement, in this case down as good, and that was sustained over time, which is really remarkable but fits with the idea that what we're doing is we're delivering instructions to the cell to produce IL-1 receptor antagonists. We know that blocking IL-1 works. There are two products already approved to block IL-1. They just have a very very short half-life and That's not a reasonable thing to ask patients to inject themselves every day Or just take a pill every day to help and to hope that that's going to get better. So with one injection and Delivering instructions to the cell to produce more IL-1 RA It makes a lot of sense that we would see this kind of sustained response because We're turning the cell into a little IL-1 RA factory, so to speak. And so if that works, I think that has implications. If that works in a controlled setting, see what we need to see. I think that has also implications on thinking about, well, where else could we take this platform? And what are the other known pathways that we can impact in a localized way? And so that's why we've started to take a look at, what about the eye? What about compartments in the back? What about the lung? So we've got some important clinical programs that we're looking at, or preclinical programs, to further this idea. And of course, we've got a canine program that, you know, canines, if you have dogs, have OA. In fact, that's a pretty substantial market. If you follow Librella, it's over half a billion dollars. And that program, what we're testing is not only IL-1RA, but another gene. So the idea that two genes could be loaded in this platform and could be useful.

Anthea Lee, Analyst — Jefferies

Right. I guess thinking about the control arm for 201, down as improvement, do you expect it to have the kind of same dip in terms of improvement as 201 arms? and then maybe, you know, that's not as durable and then you see the curves widen over time? Or do you feel like that improvement would probably not be as strong as 201? Just kind of conceptually thinking about how those curves would look like.

Frank Lee, CEO

You know, it's really hard to say because there haven't been a lot of really well-controlled trials in this space, believe it or not. So this is going to be one of the first really well-controlled trials with an active comparator, not saline. Okay, so my general sense of what we should see is that, of course, a short-acting steroid should act like a short-acting steroid, and it shouldn't work for a year. It should work for more like months, you know, a small number of months as opposed to a year. Whereas the active should work more like what I talked about. if we turn the body cell in the in the knee into a small IL-1 RA production factory then that effect should continue over time and as you know we have an inducible promoter so the cell is only on producing IL-1 RA when there's inflammation and it's off when there's no inflammation so in many ways we think that helps with the durability of the effect because it's not on all the time And it also helps with safety as well. So those are some of the things we think about.

Anthea Lee, Analyst — Jefferies

Got it. It seems like we are at time. But thank you for being here, Frank. And I hope you have a good rest of your conference.

Frank Lee, CEO

Well, thank you for the invitation. And we look forward to sharing more data about the pipeline with you.

Anthea Lee, Analyst — Jefferies

Thank you.