Pacira BioSciences, Inc. Q4 FY2024 earnings call

• 2024 saw record revenues of $701 million, which was at the high end of the guided range. - EXPAREL and iovera secured separate CMS coverage and product-specific reimbursement codes. - PCRX-201 received RMAT designation from the FDA, and compelling 2-year data from its Phase 1 study was released. - Acquired GQ Bio to add a high-capacity local delivery platform for genetic medicines. - Focused on the 5/30 strategy with objectives including benefiting over 3 million patients annually by 2030, achieving double-digit CAGR in product revenues, expanding gross margin by 5 percentage points, having five novel pipeline programs, and establishing at least five partnerships. - For EXPAREL, the NOPAIN Act is in effect with a reimbursement pathway for 18 million outpatient surgical procedures, and DTC pilot programs were launched. - ZILRETTA is focused on increasing share of voice, with its Phase III registrational study in shoulder osteoarthritis (OA) on track for top-line results next year. - Iovera gained separate CMS reimbursement via a product-specific code and launched a new SmartTip, with its Phase III study in spasticity advancing.

In the fourth quarter of 2024, EXPAREL generated sales of $147.7 million, an increase from $143.9 million in the same period of 2023. ZILRETTA's sales for the quarter were $33.1 million, up from $28.7 million in Q4 2023. Iovera reported sales of $6.5 million, compared to $6.0 million in Q4 2023. Consolidated non-GAAP gross margin for the fourth quarter was 79%, driven by improved margins for EXPAREL and ZILRETTA.

For 2025, total revenue is guided to be between $725 million and $765 million. Non-GAAP gross margins are expected to be in the range of 76% to 78%. R&D expense is projected to be $90 million to $105 million. SG&A expense is guided to $290 million to $320 million. Stock-based compensation is estimated at $56 million to $61 million. Depreciation expense in 2025 is expected to be approximately $30 million, driven by new facilities and fill lines.

• Potential delay in the adoption of new reimbursement models for EXPAREL and iovera by customers. - Competition from generic products or other therapeutic options. - Uncertainty in clinical trial outcomes for pipeline programs such as PCRX-201 and ZILRETTA's shoulder OA study. - Challenges in market access affecting product penetration.

Q: Can you talk more about the assumptions for NO PAIN implementation and uptake?

A: It will take time for customers to gain traction with NO PAIN, with the second half expected to see more meaningful uptake. There is a need to raise awareness, get customers comfortable with the J code, and while early signs are encouraging, it's still in the early stages.

Q: What are the relative contributions of the product portfolio for 2025 and sequential trends?

A: EXPAREL is the flagship product, but ZILRETTA and iovera also contribute. Revenue guidance is effectively driven by volume growth, with price increases and GPO-related headwinds offsetting each other.

Q: How comfortable are you with in-house R&D and the GQ Bio acquisition?

A: The company is transitioning to an innovative pharma model, investing in R&D with programs like PCRX-201. The acquisition of GQ Bio brings a valuable platform and preclinical assets, and the company will be opportunistic in expanding the pipeline further.