Pacira BioSciences, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Commercial Portfolio: EXPAREL saw 6% year-over-year volume growth. Progress in market access with CMS policy changes advocating for expanded patient access to opioid-sparing therapies. IP updates included favorable reexamination of the 495 patent and new patents for erucic acids and IVRA families.
• Strategic Partnerships: Collaboration with Johnson & Johnson MedTech for ZILRETTA to expand reach for the product, leveraging J&J's established team and customer base.
• Gross Margins: Enhanced manufacturing efficiencies led to increasing full-year guidance for gross margins, driven by multiyear investments in 200-liter facilities.
• Pipeline: Registrational studies for ZILRETTA in shoulder OA and iovera° in spasticity progressing. iGOR registry enrolling over 2,500 patients. PCRX-201 showed promising 3-year data at the European Alliance of Associations for Rheumatology congress.

Segment Performance

• EXPAREL: Second quarter 2025 sales were $142.9 million, up from $136.9 million in 2024. Volume growth was 6%, contributing significantly to revenue. It is the flagship product with strong commercial progress.
• ZILRETTA: Second quarter sales were $31.3 million, similar to the prior year. The partnership with Johnson & Johnson MedTech is expected to expand its market reach.
• iovera°: Second quarter sales were $5.6 million, slightly down from $5.7 million in 2024.

Guidance

• Revenue: Narrowed full-year revenue guidance to $730 million to $750 million.
• Gross Margins: Increased guidance to 78% to 80% from previous range of 76% to 78% due to manufacturing efficiencies, favorable production volumes, and elimination of EXPAREL royalty obligation.
• Other Guidance: Reiterated non-GAAP R&D expense range of $90 million to $105 million, non-GAAP SG&A expense range of $290 million to $320 million, stock-based compensation range of $56 million to $61 million, and full-year 2025 depreciation expense estimate of approximately $35 million.

Risks

• Market Access Uncertainty: Dependence on CMS policy changes and commercial payer adoption for EXPAREL to expand market access.
• Partnership Execution Risks: Uncertainties in successfully executing strategic partnerships as planned, which could impact growth trajectories.
• Pipeline Execution Risks: Uncertainties in the progress and outcomes of registrational studies and pipeline assets like PCRX-201, which could affect future revenue and market position.

Question and Answer

Q: Provide commentary around the new partnership with J&J MedTech on ZILRETTA, economics, GPO impact, sales force, and gross margin outlook A: Frank and Shawn discussed the J&J partnership, noting it's for ZILRETTA vs previous EXPAREL partnership. Gross to net impact is low single-digit. Raised gross margin guidance due to manufacturing efficiencies, and sales force progress was mentioned.

Q: Commentary on surgery volumes, EXPAREL coverage progress A: Brendan talked about EXPAREL volumes in outpatient settings being up and progress in commercial coverage, including reaching 40 million commercial lives with EXPAREL access and aiming for 60 million by year-end.

Q: Update on international partnerships for products, PCRX-201 data and Phase II enrollment A: Frank discussed international partnership progress, noting good interest in partners with aligned values. PCRX-201 showed promising 3-year data, and Phase II enrollment for ASCEND study is on track to conclude by year-end.

Q: Discussion on guidance tightening, J&J deal value to ZILRETTA in 2026 A: Frank and Brendan discussed guidance tightening due to market access uncertainties, and J&J's value addition to ZILRETTA in 2026, including expanding reach to new physician specialties.

Q: Survey on EXPAREL formulary adoption, NOPAIN vs EXPAREL benefits discussion A: Brendan discussed gating factors for EXPAREL formulary adoption being related to confirming reimbursement and commercial follow-through, and the focus on explaining EXPAREL's benefits relative to alternatives rather than just NOPAIN.