Good day. Thank you for standing by. Welcome to the Quarter Four 2022 Pacira BioSciences, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To answer a question during the session, you will need to press star 11 on your telephone. You will hear an automated message advising that your hand is raised. To withdraw your question, press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Susan Mesco. Please go ahead. Thank you, Chris. Good morning, everyone. Welcome to today's conference call to discuss our Fourth Quarter 2022 Financial Results. Joining me on the call are Dave Stack, Chairman and Chief Executive Officer, Roy Winston, Chief Medical Officer, and Charlie Reinhart, Chief Financial Officer. Additional members of our executive team are here for today's question-and-answer session. Before we begin, let me remind you that this call will include forward-looking statements based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties. For information concerning risk factors that could affect the company, please refer to the company's filings with the SEC, which are available from the SEC or our website. With that, I will now turn the call over to Dave Stack. Thank you, Susan. Good morning, everyone, and thank you for joining us. We'll start today's call with prepared remarks covering recent business highlights before turning to your questions. 2022 was another strong year for Pacira as we continued to outperform the elective surgery market, operating from a position of financial strength. We posted record revenues of $667 million in 2022, a 23% increase over 2021. Our growing top line, combined with ongoing operating discipline, drove significantly positive Adjusted EBITDA of $213 million for the year and $59 million for the quarter, and adjusted diluted earnings per share of $2.59 for the year and $0.80 for the quarter. Our performance allows us to fund internal and external growth initiatives while also optimizing our balance sheet with a planned prepayment of our Term Loan B. This marks our ninth consecutive year of positive adjusted earnings and impressive records that we are proud of. Turning now to some specifics for our EXPAREL franchise, where I am pleased to report we have now treated more than 12 million patients in the U.S. Regional analgesia techniques performed by surgeons and anesthesiologists continue to be a substantial growth driver. EXPAREL is fostering a significant paradigm shift in patient care by enabling same-day surgeries and accelerating recovery times. Surgical market procedures continue to migrate from inpatient to outpatient settings at increasing rates. The most recent rolling 12-month IQVIA procedural data from July 2022 further illustrates this shift. For hospital inpatient procedures, the market experienced a year-over-year decline of 7%. EXPAREL was flat year-over-year. With growing interest in women's health, the use of EXPAREL for C-sections grew by 26% in the hospital inpatient setting. The outpatient procedure market demonstrated a year-over-year increase of 5%. EXPAREL continues to enable this growth and significantly outpace the market with 13% year-over-year increase. Across key outpatient procedures, we continue to see strong EXPAREL growth, including total joints with a 22% increase, spine with a 17% increase, breast and gynecologic oncology each with greater than 10% increases, while both shoulder and general surgery experienced a near 10% increase. For your reference, these IQVIA data points are summarized in our investor deck, which is available on our website. In 2023, we will continue to support the market's ongoing migration through several patient-centric initiatives. On the manufacturing front, we have optimized our capacity to supply more than $1.4 billion worth of EXPAREL annually at the current price. Improving gross margins is a top organizational priority. We have addressed different supply chain and manufacturing issues that negatively impacted our margins for the last three quarters of 2022. We expect to see full year margins improve in 2023 with an aim of reaching the mid-80% range over time. Some product-specific updates including the following. For EXPAREL, we expect to secure FDA approval in the coming weeks for an enhanced product release assay that will improve our batch value rate, benefit margins, and support additional intellectual property protection. EXPAREL test batches from our 200-liter manufacturing facility in San Diego are underway, and we remain on track for a supplemental new drug application in 2023. Our new ZILRETTA fill line is in the qualification phase. We expect this line to improve future quality and yield to support anticipated ZILRETTA growth. For iovera, with our new contract manufacturer fully online, we are now seeing lower unit costs and volume expansion, which benefit margins. With expanding manufacturing capacity and improving margins, we are advancing new programs to drive EXPAREL volume growth and expand use in outpatient settings. Starting with patient access. In October, we rolled out 340B pricing for EXPAREL. Participation in 340B provides the opportunity to expand access to uninsured or low-income patients. These two populations are particularly vulnerable to the surgical gateway of opioid addiction and can benefit greatly from EXPAREL-based opioid-sparing regimens. After 17 weeks, we are exactly where we thought we would be, with an increase in both 340B and non-340B purchasers and an aggregate 5% discount to our overall net selling price. We believe this program will drive significant volume expansion within existing and naive 340B business representing nearly 10 million EXPAREL-relevant market procedures. We expect the 340B pricing program to be neutral to slightly accretive to the net revenues by the end of 2023 as we access a significantly larger pool of patients and their surgeon providers who want to perform more outpatient procedures. Importantly, 340B will pave the way for us to leverage on the new NOPAIN Act. This important legislation will mandate CMS reimbursement for non-opioid post-surgical pain treatments in outpatient settings beginning in 2025. NOPAIN was signed into law in December and will provide a reimbursement pathway for nearly 20 million EXPAREL relevant market procedures, with commercial and self-insured payers expected to follow CMS. We are actively monitoring efforts to accelerate implementation prior to 2025, either through a technical amendment or regulation. We believe policymakers in Washington, D.C., will appreciate the urgency for improving access to non-opioid options, given the more than 107,000 Americans who died of a drug overdose in the 12-month period ended March 2022, with more than two-thirds of these deaths involving opioids. NOPAIN and 340B are especially meaningful to hospitals as they continue to migrate lower margin soft tissue procedures to hospital outpatient settings. Both programs will assist eligible healthcare systems in affording the opportunity to offer non-opioid pain control for these procedures while advancing our mission to provide a non-opioid pain management solution to as many patients as possible while positioning opioids for rescue use only. We're also supporting the significant need for opioid-sparing pain management at our Pacira Innovation and Training Centers, as well as our in-field educational events. In 2022 alone, our educational programs provided ultrasound-based training to more than 6,000 physicians for select regional blocks with erector spinae, transverse abdominis plane, and pectoralis, the most highly requested EXPAREL workshops. Our iovera workshops are also accommodating the market's growing interest in long-acting drug-free nerve blocks. These educational programs for EXPAREL and iovera also provide increased visibility to expand ZILRETTA awareness among our customer base of surgeons seeking an alternative for non-opioid office-based osteoarthritis pain management solutions. With last month's opening of our second Innovation and Training Center in Houston, we now have more than doubled our capacity to host meaningful education programming. This state-of-the-art facility features a 125-seat adaptive lecture hall, broadcast studio, and both wet and dry lab space for cadaver labs and other interactive workshops, as well as advanced ultrasound with artificial intelligence training software. In fact, it is the only facility in the United States featuring simulation-based block training with computerized phantoms for user training and scoring. Our EXPAREL growth initiatives are supported by a strong and growing patent estate. As a reminder, we currently have eight Orange Book-listed patents, and any potential generic would have to successfully overcome each claim within every one of our patents to get to the point of establishing bioequivalence at commercial scale. With no commercially viable alternative for long-acting non-opioid post-surgical pain management, we are highly confident that EXPAREL will maintain its well-entrenched position as the branded market leader for many years to come. Outside the United States, we continue to make steady progress. We recently appointed a new international general manager, and our team has been further developing the business by securing approval for EXPAREL access from hospital pharmacy departments. Long wait lists for elective surgeries are overwhelming healthcare systems across the United Kingdom and Europe, and we believe EXPAREL can help improve this dynamic by enabling more rapid recoveries. In Latin and South America, our partner, Eurofarma, submitted for regulatory approval for EXPAREL in Brazil in December, and we are now focused on submitting the approval in other countries. On the regulatory front, last month, we submitted our supplemental new drug application to the FDA seeking expansion of the EXPAREL label to include lower extremity nerve block procedures. This timeline places us on track for approval in the fourth quarter of this year. Complementing EXPAREL, ZILRETTA and iovera are serving attractive pre-surgical segments of the market. Last month, we held our annual national sales meeting, during which we formally aligned and trained our full 240-person field force-based team as a single unit, with all account managers now selling all three products in our portfolio. With this realignment, sales territories are smaller in size, and we are significantly increasing our reach and frequency with a threefold anticipated increase in ZILRETTA and iovera sales calls. We also have several value-creating milestones on track for the next 12 to 24 months for ZILRETTA and iovera. For ZILRETTA, we are now promoting safety data showing its advantages for diabetic patients with osteoarthritic knee pain. The data show clinically meaningful reductions in glycemic spikes and will be presented at the Osteoarthritis Research Society World Congress taking place in Denver next month. Roy will share more on these data momentarily. For iovera this quarter, we are launching new commercial initiatives for the cash pay market following the concept of platelet-rich plasma, or PRP, and stem cell injections. This is a large and important lifestyle market for drug-free nerve blocks, which provide immediate pain control and can last for several months for patients who simply want to play golf, walk on the beach with their grandchildren, or dance at their child's weddings. We also recently signed a multiyear deal for iovera to become the official non-opioid pain management partner of the Ladies Professional Golf Association, or LPGA. Through this direct-to-consumer initiative, we will be driving awareness of the benefits of iovera and how to access the product using commercial broadcasts, digital advertising, and in-person presence at tournaments in key markets nationwide. Our customers are also using iovera for treating pain related to spasticity, which is an on-label use. We are on track to begin a registration study for the treatment of spasticity around the middle of this year. In spasticity, iovera has the potential to be a game changer. There are approximately 10.2 million patients in the U.S. currently diagnosed with spasticity. 2.6 million of these patients have moderate to severe spasticity. 42% of these patients have received at least one treatment modality, only 150,000 are currently receiving treatment with a toxin. This underscores the highly dissatisfied market with current treatment options that are inadequate. Beyond the advancing label expansion programs for our commercial portfolio, we have an exciting earlier stage portfolio of new product development opportunities that include PCRX-201, a novel intracellular gene therapy product candidate that produces IL-1Ra for knee osteoarthritis. Our preliminary phase I data safety and efficacy data findings were compelling. Importantly, the greatest level of efficacy was observed with the lowest dose. These data will be presented at orthopedic and gene therapy meetings in the coming months. We continue to advance our internal multivesicular liposome pipeline. Our phase I study of EXPAREL for intrathecal administration continues and is on track for completion this quarter. We will also initiate phase I studies later this year for our multivesicular liposome dexamethasone formulation in low back pain and a 20-milligram multivesicular liposome bupivacaine formulation as a nerve block or field block for longer-lasting or chronic pain. In addition to our internal programs, we have a portfolio of externally sourced innovation that offers us the opportunity to participate in the development of several exciting product candidates addressing pain along the neural pathway while targeting our current customer base. These opportunities include strategic investments in Spine BioPharma, Geneos Therapeutics, GQ Bio Therapeutics, and CartiHeal. With that, I'd like to turn the call over to Roy Winston, our Chief Medical Officer, to summarize some more detail on some of the upcoming near-term value drivers from our clinical programs. Roy? Thanks, Dave. This is an exciting time, not only for us at Pacira, but for patients, providers, and payers seeking safe and effective opioid-free options for pain management. I'll start with our lower extremity nerve block. As Dave mentioned, our supplemental new drug application has been submitted to the FDA, and we are awaiting official acceptance, which is expected to come via the standard 74-day letter, which will include our PDUFA date. To remind you, the basis of this submission are two phase III studies. The first study was a single-dose femoral nerve block in the adductor canal for total knee arthroplasty, and the second was a single-dose sciatic nerve block in the popliteal fossa for bunionectomy. Both utilized the 10 ml dose, which is 133 milligrams. Both studies achieved the primary and key secondary endpoints of statistical significant reductions in post-surgical pain and opioid consumption from 0 through 96 hours when compared to the active comparator, bupivacaine. These data provide strong evidence for label expansion to include these two new indications and should support a superiority claim for EXPAREL over bupivacaine in the new label. We believe adding these two additional nerve block indications will significantly extend our reach into surgeries of the knee, medial lower leg, foot, and ankle, representing more than 3 million annual procedures. Working with key opinion leaders, we've begun to publish these data to deliver strong evidence in the literature and incorporate them into society practice guidelines to use EXPAREL as a nerve block in lower extremity procedures. We are also on track to begin a pediatric study later this year that is designed to support the expansion of our U.S. and EU. label to include patients from 0 to six years of age. We look forward to minimizing exposure to opioids in this very vulnerable population. Turning to ZILRETTA. In March, investigators will present the results of a phase II study of patients with knee OA and type 2 diabetes. Participants were randomized to receive ZILRETTA or immediate-release triamcinolone and compared glycemic spikes for the two groups. ZILRETTA was associated with a clinically meaningful reduction in hyperglycemia versus triamcinolone, suggesting that ZILRETTA treatment leads to fewer short-term hypoglycemic related adverse events. The ZILRETTA group had significantly longer duration in the target glucose range, which helps improve glucose management, improve patients' well-being, and reduce complications and healthcare utilization. Remember that approximately 50% of patients being treated for OA knee pain also have type 2 diabetes or are pre-diabetic, which is especially important for those needing repeat corticosteroid dosing or those that have bilateral knee disease. We also expect to initiate a new ZILRETTA label expansion study around the middle of this year. This includes a phase IV diabetes safety study in knee OA and phase III shoulder OA study. Our shoulder study would position ZILRETTA as the first and only approved corticosteroid for shoulder osteoarthritis. Both studies will evaluate ZILRETTA versus triamcinolone with the goal of adding a superiority claim to the ZILRETTA label and, equally as important, to place ZILRETTA into orthopedic and pain management society guidelines as the new standard of care. Turning to iovera, we are excited about what we are seeing in using iovera for the treatment of spasticity itself. As Dave mentioned, treating the pain associated with spasticity is already on label, and we are now educating physician specialists around the value of iovera in this setting. In parallel, we are launching a registration study to evaluate iovera as a revolutionary new treatment for spasticity itself. This is based on strong data from the research of Dr. Paul Winston, President of the Canadian Association of Physical Medicine & Rehabilitation. Dr. Winston and his team recently presented data from his ongoing work in spasticity at the annual meeting of the Association of Academic Physiatrists, which was held in Anaheim last week. Presentations included data from 59 patients participating in an ongoing study evaluating cryoneurolysis as a treatment for upper extremity spasticity, demonstrating progressive functional improvement over a 180-day follow-up period. Data from three ongoing observational studies evaluating cryoneurolysis for managing upper and lower extremity spasticity were presented to characterize the safety profile of cryoneurolysis. Data from 113 patients demonstrated low and easily manageable side effect profile. A case study reported a 42-year-old male with spastic hemiplegia following a middle cerebral artery stroke. The patient had a 10-year history of physical therapy and botulinum toxin injection therapy. After receiving iovera treatment, one in three-month follow-up showed a highly clinically significant improvement in shoulder movements, elbow and wrist extension, and ankle dorsiflexion. The patient also reported immediate pain relief. We have met with the FDA and expect to kick off our spasticity label expansion study in the second quarter of this year, 2023. The study will evaluate iovera versus sham in adult patients. Enrollment is expected to conclude before the end of the year. Because iovera is a 510(k) device, we anticipate a review timeline of three to six months, which would place us on the market for the treatment of spasticity as early as the second or third quarter of 2024. We are also planning a second active comparator study in spasticity designed to demonstrate the superiority of iovera versus toxin. It is our belief that iovera can completely disrupt the current spasticity treatment paradigm, bringing tremendous relief to patients and value creation for Pacira shareholders. Lastly, for iovera, we have completed a study evaluating iovera versus radiofrequency ablation as a medial branch block to treat low back pain. We expect to present these data at a scientific conference before the end of 2023. With that, I'll turn the call over to Charlie for his financial review. Charlie? Thank you, Roy. Good morning, everyone. I'll start with some commentary on our 2022 results and then walk through our outlook for 2023. To remind you, I will be discussing non-GAAP financial measures this morning. A description of these metrics, along with our reconciliation to GAAP, can be found in the news release we issued this morning. Let's begin with an update on sales and margin trends. Starting with EXPAREL, where we continue to outperform a flat surgical market with net EXPAREL sales coming in at $536.9 million for the year and $138 million for the quarter. Fourth quarter average daily volume growth of 6% was partially offset by a lower net selling price due to our implementation of 340B drug pricing in October 2022. ZILRETTA continues to be a highly meaningful and accretive addition to the Pacira portfolio, adding $105.5 million post-acquisition sales to our top line in 2022. We saw improving sales trends for ZILRETTA as we exited the year, which we expect to accelerate as we broaden education and awareness around its value in treating patients, especially those with unique care needs, such as diabetic patients. For iovera, full year sales of $15.3 million. We expect demand and sales growth to gain momentum in 2023 and beyond with the launch of new commercial initiatives in the cash pay and spasticity pain markets, as well as education and awareness collaborations with professional sports organizations like the NFL Alumni Association, the PGA TOUR Champions, and the LPGA. We also remain optimistic in iovera within new indications, such as the treatment of spasticity and medial branch blocks, where we are making new clinical investments. Turning to gross margins. On a consolidated basis, our total non-GAAP gross margin percent was 74% for the full year and 72% for the fourth quarter. Fourth quarter gross margins by product were 71% for EXPAREL, 82% for ZILRETTA, and 58% for iovera. EXPAREL gross margins in the fourth quarter were negatively impacted by new operational challenges, including slightly higher than anticipated batch failures and the scarcity of one disposable part used in our manufacturing equipment. The supply of this part have now been replenished, and we have not experienced elevated batch failures since early in the first quarter of 2023. Fourth quarter non-GAAP R&D expense was $15.7 million, reflecting ongoing investments in label expansion studies as well as our clinical stage pipeline. For full year, non-GAAP R&D was $78.2 million and in line with our guided range of $75 million-$85 million. Our fourth quarter non-GAAP SG&A expense was $54.7 million. For the full year, non-GAAP SG&A expense was $219 million, slightly below our guided range of $220 million-$230 million. Interest expense was $11 million for the fourth quarter of 2022. To remind you, most of the interest expense relates to our Term Loan B finance, which has a floating interest rate of SOFR plus 700 basis points. The remainder of interest expense primarily related to our convertible notes. In December, we made a $50 million prepayment of outstanding principal under our Term Loan B, and we expect to use strong cash position to make another significant prepayment around the middle of 2023. We are also actively evaluating options to refinance the remainder of the Term Loan B by the end of the year. For modeling purposes, based on current interest rates and the current outstanding balance, with only the required minimum payments of principal of $9 million per quarter, full year interest expense will be approximately $37 million. As discussed in today's press release, we are returning to our pre-pandemic standard practice of providing annual financial guidance, and we are discontinuing monthly sales updates. For sales, full year product guidance is as follows. For EXPAREL, we are currently guiding to 2023 global sales of $570 million-$580 million, which is in line with the year-over-year growth rate in 2022. Given ongoing macro uncertainties outside of our control, we believe this is very achievable given several growth initiatives that we expect to kick in as 2023 progresses, such as volume expansion for existing and new 340B customers, as well as new initiatives with OMFS, plastics, outpatient, sports management, and pain management and rehabilitation healthcare providers, and our ongoing expansion in European markets. With respect to cadence, we anticipate 2023 EXPAREL sales to be more heavily weighted to the second half of the year because of historical trends of roughly 20% in the first quarter, 25% for both the second and third quarters, and nearly 30% in the fourth quarter. Importantly, we remain very bullish on our long-term EXPAREL growth prospects and fully expect that once we are on the other side of the current macroeconomic challenges and the elective procedure market normalizes, EXPAREL will return to steady double-digit year-over-year growth. For ZILRETTA, we are guiding to 2023 sales of $115 million-$125 million. For iovera, we are guiding to full year sales of $17 million-$20 million. On the expense side, full year guidance for 2023 is as follows. Non-GAAP gross margins of 76%-78%. We expect margins to strengthen modestly during the year as sales volumes grow and acknowledge that first quarter margins may be slightly lower than our full year gross margin guidance range due to the late 2022 manufacturing challenges that spilled over into early first quarter operations. Non-GAAP R&D of $70 million-$80 million, which is consistent with 2022. Non-GAAP SG&A expense of $220 million-$230 million, which is also consistent with 2022. Finally, stock-based compensation, which is expected to be in the range of $51 million-$54 million. In summary, despite ongoing macro headwinds, Pacira delivered impressive financial results in 2022, with Adjusted EBITDA of $212.7 million for the year and $58.8 million for the fourth quarter, and adjusted diluted earnings per share of $2.59 for the year and $0.80 for the fourth quarter. We remain bullish in our five-year plan with year-over-year top-line growth returning to teens once elective surgery market normalizes. Gross margins improving, modest year-over-year increases in operating expenses and Adjusted EBITDA margins that exceed 50%. That concludes our prepared remarks. I'd like to turn the call over to the operator to begin our Q&A session. Operator? Thank you. At this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question any time, press star one one again. Please stand by while we compile a Q&A roster. Our first question comes from David Amsellem of Piper Sandler. Your line is open. You may go ahead with your question. Hey, thanks. Just had a few. Regarding the guidance, can you talk about what that implies? I apologize if I missed this earlier. Talk about what that implies in terms of the direction of net pricing and just the overall impact of the 340B pricing program and the discounts you're providing. Secondly, can you talk about what the guide implies regarding new customer adds? You're saying that you're expecting, you know, volume growth to drive top line accretion in 23 and beyond. I'm trying to get a better sense of, you know, what you're baking in in terms of new customer adds. The last question is on the surgical environment with soft tissue in particular. What's your general view on, you know, when you think that's going to recover? Because you look at the charts, I mean, obviously it's markedly different. You know, do you think there will be some normalization on the soft tissue side in 2023? Or are you thinking about it as a normalization as a longer term event? Thank you. Thanks, David. First with guidance and the implications of guidance. What we have right now, David, well, our forecast was that we would have a 5% discount in gross to net, and I think, you know, you understand that perfectly. What we see is that as we gain new customers from 340B, that there is a mix of 340B purchases and non-340B purchases. We're actually modestly surprised by the fact that many of these hospitals split their purchases between the 340B program and regular, you know, ASP plus sales. You know, we think that we've weathered the worst of what we'll see in terms of, you know, the 340B purchasers started buying immediately at the end of October. We are just seeing increased action with more 340B, non-340B, previously non-340B hospitals purchasing. As I just said, many of those sales are actually not at the 340B pricing level. Things are unrolling pretty much as we thought, obviously, we've got work to do in terms of continuing that conversion. We think that 5% is probably the worst that it'll be, if that's an appropriate way to present it'll improve as we widen the base of purchasers. You know, also, David, you know, just to make the case again from the script, we also see 340B as a way for us to get more customers with hands-on experience, both for their surgeons, anesthesiologists, and the patient experience, so that when we get NOPAIN Act, we shorten the timeline of these same folks having access to EXPAREL and going through the formulary process, et cetera. I hope that answers your question. If not, come back at me. Pretty much, you know, what I just talked about, talks about, you know, the new customer adds. We do see we have a group of customers that are almost 100% 340B. That's as anticipated. We do have the new customers that are coming in. We also see that there are hospitals that have been purchasers of EXPAREL who have either been less aggressive in restricting EXPAREL because of our 340B involvement. In some cases, we've had people tell us that actually they are now encouraging the use of EXPAREL more relatively as a short-term expense to them with 340B in certain, you know, situations, but also getting ready for NOPAIN when they will be able to treat all of their CMS patients in the outpatient environments and be fully reimbursed for those. Overall, David, very much what we thought was gonna happen in the early stages and very positive for us in terms of opening up new markets. In terms of soft tissue, pretty interesting, David. It's again, you know, the issue here is the ASCs have been almost totally consumed with the higher margin joints, spine and, you know, some of the higher cost and higher margin procedures. Bariatrics would be a good example. So the opportunity for us to have reimbursement in the ASC has been muted by the fact that the insurance carriers are saving thousands of dollars by moving their cases to the ASC. The opportunity to save, you know, $300 to be reimbursed for EXPAREL really mutes the opportunity for soft tissue in that environment. As we've seen for the previous quarters, you know, well over 75% of the use of EXPAREL in the ASC is for orthopedic procedures. Who gets left out in that analysis is the soft tissue procedures that are low margin, that the hospitals are struggling to perform in the hospital environment because of the reimbursement structure just doesn't even cover their costs. In the outpatient environment, again, because these are low margin, and in many cases, these surgeries and these hospitals are in low income and indigent environments, these patients are getting bupivacaine and opioids. Bupivacaine because it's cheap and opioids because they consider them free because they write a prescription, and they're filled in an outpatient department or in a pharmacy that is part of Part D. When we talk to those folks and say, "In an era where there's reimbursement, what will you do?" Universally, the answer is, "You know, I would love to be able to use EXPAREL if I could afford to use it, given the financial structure of my hospital and these procedures that I'm doing, given the margin." The interesting observation there, though, is when a patient needs soft tissue procedures, if they're not done in a period of time, and we're thinking something in the neighborhood of six months to a year, the only logical explanation we can come up with is that they learn to live with these soft tissue, low acuity pain procedures. The numbers would suggest that there's millions of patients walking around out there from these three years of COVID that require soft tissue surgery, and we just don't see that demand in the marketplace, David. I think the pent-up demand in ortho is real because the pain profile is such that patients need to be treated in order to keep their job and, you know, get to work and be able to walk, you know, even to church and things like that. In soft tissue, the only explanation we have is that there's a very high propensity for pain control in these soft tissue procedures, and patients learn to live with it. The pent-up demand is real, but it is nowhere near apples to apples relative to the number of procedures that have not been done over the last three years, if that makes sense. Okay. That's helpful, color. Thank you, Dave. Thanks, David. Thank you. One moment for our next question. This question comes from Glen Santangelo of Jefferies. Your line is open. Yeah, good morning, thanks for taking my question. Hey, Dave, I also want to follow up on some of the questions that David just asked with respect to EXPAREL and sort of your outlook. If I kind of go back to fourth quarter, you said in your prepared remarks, right, that you're continuing to outperform the elective surgery market. I think later in the remarks, you seem to suggest that volume grew 6% in the quarter in a flat surgical market. Did I hear that correctly with the offset in 4 Q maybe being some of the pricing differences on the 340B program in particular that you talked about? Is that a fair assessment of what happened in 4 Q? It is, Glen. Yes. Okay, perfect. If we go to your guidance for 2023, you're sort of forecasting 7% growth at the midpoint, which would that imply sort of low double-digit sort of volume growth with, you know, say, a similar type of pricing impact and, you know, I'm not sure embedded within those assumptions, what you're expecting for the overall surgical market based on that assumption? Close, Glen. The difference between what you just outlined and our guidance is the price increase. Remember in early January, we raised the price of the 10 ml by 8% and the 20 ml by 3%. What you said is absolutely correct. If you understand that there is a roughly 3% net benefit to us as the price increase, then that comes back down into the, you know, 7%, 8% range, which is, you know, what we were trying to do is guide to what actually happened in 2022, thinking that the only thing then, you know, it would be conservative guidance, of course, based on the 2022 data. If our assumption is that the primary reason that the market is the macro environment is negatively impacted by inflation, and if that changes, then this would be, you know, a conservative guide, which is what we were trying to accomplish. Perfect. Okay, maybe just my last question, you know, regards or relates to the competitive landscape. You sort of touched on bupivacaine and maybe some of the fact that some of the opioids are free to some of these surgery centers. You know, could you sort of comment on the pricing difference, you know, between EXPAREL and if you think that's having any sort of impact on overall utilization? Do you feel like it's a pricing issue or you think it's just sort of a macroeconomic issue and just overall surgical volume issue? Thanks. Thank you, Glen. That's a three-credit course. In the hospital, you know, we're in the DRG environment and that's not gonna change. I mean, when I raised that issue in our Washington D.C. discussions, that is the third rail of the Democrats as it relates to healthcare, and they won't even discuss providing anything for one-off reimbursement inside the surgical bundles. That's for inpatients. For outpatients, where we have the ASC, as I commented with David, you know, the benefit of that is largely muted by the fact that the insurance carriers saving 30%-35% on the cost of a procedure are utilizing the vast majority of the ASC capacity with these high margin procedures like joints and spine and things like that. The in the middle there is the soft tissue procedures that are difficult to do given the reimbursement in the inpatient market and are more appropriately done in the outpatient market, given the improved cost structure of a hospital outpatient department. There are many, many hospitals across the United States, especially in indigent areas and low economic areas, where they can't afford to use anything but the cheapest things that they can buy, and there is no reimbursement. I talk to many of these folks myself. The importance of 340B, Glen, is to start those folks down the, you know, to have an opportunity at a reduced price to be able to use EXPAREL in that environment to achieve our mission of providing an opioid alternative to as many patients as possible. There are still places, many of them here in rural Florida, where they still can't afford EXPAREL even at the 340 price. It is absolutely driven by price in this environment, and that's why the NOPAIN Act is so important. The NOPAIN Act will force CMS, and there is a convergence there of these poor patients being largely under some form of social services. You know, this is the right patient population. When CMS is forced to reimburse for non-opioid pain medicines in these, for these patients in these rural settings, we expect that you will see a very important inflection for EXPAREL because in that soft tissue rural market, it is absolutely cost that is a feeling basically on surgeons' use of the product. Thanks for all the details. Appreciate it. Thank you. One moment for our next question. This question comes from Gregory Renza of RBC Capital Markets. Gregory, your line is open. Great. Thanks, Dave and team. Congrats on the progress. Thanks for taking my questions. Maybe just a few from me, maybe building on the prior theme as well. Dave, and I know you touched on this a little, but could you just comment about your approach to the organic price increases with respect to EXPAREL? You know, how are you strategizing about that, especially with maybe more patients coming online? Do we kind of think about it as in line with historicals or are there other considerations that you and the team are considering? Thanks, Greg. You know, well, I think, you know, we can go back just to January, and I'll use that as the basis of an answer to your question. You know, 20 ml is the effective dose for many of the procedures that we've historically treated. The trials that Roy outlined for lower extremity nerve block, where we expect to be launching that, you know, in late this year and early next year. The 96 hour reduction in pain and opioid consumption for both of those trials was achieved at the 10 ml dose. One of our fastest growing areas, frankly, in our current business is in oral maxillofacial surgery, and largely that is 5 mls per tooth, and you end up with a lot of these extractions also being a 10 ml dose. In many of the pediatric procedures that are being done, you know, not these very large abdominal and orthopedic procedures, but many of the more soft tissue kinds of procedures, we also see a 10 ml dose. We see, you know, a basket of surgical procedures where 10 ml is the procedural dose. We are getting several days of pain control and reduced opioids with 10 mls. The first line of strategy here was to close the gap between the 20 ml and the 10 ml because in different surgical procedures you can achieve the same results with half the dose, right? That was the broad strategy, if you will. You know, your question is a very interesting one as we go forward from here. As we achieve TRICARE and as we achieve no pain, you know, our outlook is that something like 75% of our total addressable market will be reimbursed by 2025. You know, we've made the statement that we expect to be consistent with CPI targeted kinds of price increases. We don't intend to, you know, raise the price by 40%. There's some other models in this space that suggest that things don't go well when you take that approach. We expect that we would have a CPI type of increase as we go forward. That's for EXPAREL. For iovera, Greg, even more importantly, I think is, you know, we are working hard to improve gross margins, which gives us more strategic runway as we try to help more patients. Our ability to lower the price on or lower the COGS on iovera as we go into stellate ganglion blockade and spasticity and some of these things, you know, the competitive opportunities are priced in the $thousands. Our intention is to continue to price iovera around $500 so that we can help all of these patients who are in really desperate straits, given the poor choices that they have for any kind of pain control and any kind of treatment of their afflictions. I hope that answers your question, but I don't expect that we're gonna go crazy when we have reimbursement. I think we'll use CPI directed and try to be fair to our shareholders by offsetting any increases in our, you know, our annual, you know, merit increases to our employees. I don't think you're gonna see us take advantage of this in any inappropriate way. I think we'd rather sell more and lower the COGS and improve the gross margin by selling every vial we can make when we have 200 liter facilities online. When we believe that we can make. As we go into 2024, our forecast suggests that we can make over $2 billion worth of EXPAREL. If we can get margins into the mid-80s, I would much rather sell every vial we can make than raise the price in any kind of a way that might be inappropriate given our mission. Great. That's really helpful. Maybe just one last quick one and helpful to have you and Roy lay out the lower extremity and sNDA. I'm just curious how you're thinking about prospects for an AdCom. Are you preparing for one? What is the likelihood there? Thank you very much. No, I'll comment and see if Roy has any different idea. The P-value here, Greg, I mean, the data is I shouldn't say astonishingly positive, but in my mind, the data is astonishingly positive. You know, given it's a 10 ml dose and the comparator was bupivacaine. Point 0.07 for both pain control and opioids with a 10 ml dose for the adductor canal and 0.0001 for the foot and ankle. It was a bunionectomy trial, but it's a popliteal block. I'm sorry, it's a sciatic block in the popliteal fossa. That also was a 10 ml dose, and the 0.0001 was both for opioid reduction and pain control. I don't not being Pollyanna-ish here at all, but, you know, we filed this in January. We're, you know, we're moving along in the regulatory process. We'll get our 74-day letter here, you know, relatively soon. I don't see why there would be anybody that would say that they need help from the medical community providing guidance on whether this is a useful agent in the marketplace or not, or if you have any different ideas. Yeah, I'll just add one thing to that, Greg. The other studies that we've always submitted for NDA, sNDA with EXPAREL have always been against a placebo comparator, right? This time we went against bupivacaine, and we demonstrated superiority to bupivacaine in two studies. We're actually asking for a superiority claim in the label, and I think that one of the criticisms we've had. Keep in mind, the FDA originally asked us to go against placebo when we first started. People say, "Well, how come you don't go against an active comparator?" Here, these both of these studies went against an active comparator. Like Dave said, it was only a 10 ml dose instead of the 20, and it demonstrated such meaningful clinically meaningful reductions and statistical significance. I think, we're always prepared for an AdCom, but I do feel like the chance of it are extremely low. That's very helpful. Thanks so much, guys. One moment for the next question. This question comes from the line of Oren Livnat of H.C. Wainwright. Your line is open. Thanks for the questions, and really appreciate you returning to guidance. Couple from me. Firstly, on the EXPAREL guidance, I noticed you said global sales for that. I'm wondering if you can help quantify sort of the significance of ex-U.S. sales in 2023. Then on 340B, I appreciate your commentary about the, I guess, neutral to slight revenue accretion by end 2023. I just wanna understand that, does that reflect sort of steady uptake already that's begun, you know, eventually sort of surpassing that effective price decrease by year-end? Is there a lag that we're still seeing, and as expected, between the initial price increase and even beginning to see uptake in new customers or uptake in existing customers such that maybe in 2024, do you expect a acceleration on that front, with 340B, or do we have to wait for NOPAIN Act to kick in in 2025 ostensibly to see that acceleration? No, thanks, Oren. The EXPAREL sales ex-U.S. are not significant in 2023. We are doing well, and it is increasing quite rapidly on a percentage basis. You know, it is not anything that's gonna be material to the 2023 numbers. Important as we go forward, in 2023, we're still, you know, putting the pieces in place and going through the formulary process and teaching people how to use the products effectively. Interestingly, there is a great deal of interest in iovera in Europe, we're training many of the high-end spasticity folks across Europe. Paul Winston is going over there regularly now and training these folks. Europe will be important but 2023 is not material. You got all of the pieces for 340B, Oren. You know, we have a list of people who are currently purchasing EXPAREL, and we forecasted off of that list how much of that business would convert to 340B pricing, and that's where the 5% comes from. As these new places come on board, you know, we see that the volume, the total volume increases, which will help gross margin, especially as we bring new places online. The ability to address these folks and have folks in these are 340B hospitals that never purchased EXPAREL before, and they are just starting to come online in a material way. We expect that that will grow as we go through 2023. Most of the action moving from 5% to something that approaches neutrality will be back-end loaded as we get into the second half of the year. On gross margin, I guess some of these issues have persisted a little longer than at least I had modeled through year-end, and I guess you mentioned a little bit of spillover. Can you just characterize how conservative your 2023 gross margin guidance is on that front? You know, are you leaving a little room for, you know, continued batch failures that maybe, you know, now that you've, you know, had to be a little more conservative, or are you assuming totally smooth sailing in that guidance and it's entirely sort of sales and volume based? Yeah. No, we are not forecasting totally smooth sailing, for sure. You know, what we see. There's a couple of things here. You know, we mentioned this new in vitro test that we will get approved. We've had some issues where the current test and the soon-to-be removed test or replaced test was actually causing us to reject lots that were good based on some variabilities in the test method. All of the things that were associated with our inability to access supply are not currently. You know, we're in good shape. We've got everything we need to make EXPAREL. Remember, Oren, that we've been in the late 70s before. In our view, you know, without some of these one-off things that were driven largely by the pandemic and the supply issues, we're really talking about going back to something that looks more normal to where we were before the pandemic. You know, we've been in the, you know, 79%-80% range before. We're thinking that we get partway there as we go through this year, and then we pick up the rest of it once we get more volume coming online. All right. Thanks a lot. Thank you. One moment for our next question. This question comes from the line of Andreas Argyrides of Wedbush. Your line is open. All right, guys. Good morning, thanks for taking our question, congrats on all the progress. just on couple on this, on the NOPAIN Act here. What are some of the ways that the implementation of the NOPAIN Act would be pushed up to 2024 from 2025? Just trying to get a sense of the likelihood that this would occur. Then how are you thinking about this EXPAREL being included in the act in into perpetuity, not just for the three years? Then I'll have some follow-up. You know, the original bill as it was going through Congress had a 2024 start date. You know, we've got patient advocacy groups, and we've got, you know, folks that represent us on the lobbyist side of the aisle. We are actively working with a number of, you know, patient advocacy groups who would be the primary beneficiaries of non-opioid treatment therapy for the low socioeconomic ladder and the disadvantaged, and working hard going to Congress. It is possible that the House could have a technical amendment and would push the start date forward to 2024. It's also possible that CMS, in their normal rulemaking process, would take everything that is currently been approved for 2025 and move it forward to 2024. We are actively involved in those discussions. In fact, we will be in Washington next week. You know, the, the starting point, Andreas Argyrides, is, you know, the 107,000 folks who died of a drug overdose. You know, there's different ways that this can be established. We're talking to folks about, you know, can we think about approving a 2024 start for folks who currently have a C-Code or a J-Code and approving them for 2024. If you need more time for new folks who might be reimbursed, you know, make that a 2025. those are the things that we're working on right now in real time. I don't know how to handicap that other than the chance there's a better than 0 chance that we're going to have a positive outcome here, but that's the best I can tell you as we sit here in February. On the extension, I mean, you guys probably know Chris Christie's on our board, and what Chris said to me when we were talking about the timing here is that the government never takes anything that's working back. You know, what was in the bill was a 5-year horizon. It was trimmed back to a three-year horizon. I would tell you that we're pretty comfortable with that given the fact that, you know, we think that this is gonna be a major change and improvement in healthcare, and it will be very, very difficult for the government to take this back after three years. We'll find out, you know. We're pretty good at working with them too to show them the benefits. You know, we've been able to maintain the ASC reimbursement now since 2018. I think we know how to do all these things with the right people, representing us in Washington. Okay. Great. Then just a follow-up on lower extremity. To what extent would the results from the STRIDE study be factored into the FDA here? The data's included. The question is, you know, yeah, it's a compilation of both, Chris. The STRIDE study, while it missed its 24-hour endpoint, was the first indication that we had that we had a P value at 96 hours. You know, the difference here in demonstrating even a larger data set to the regulators is that if you take care of the front end and you use a standard of care that, you know, that addresses pain in the first 12 to 24 hours, that we can extend the duration here. That's what the whole strategy was around the clinical program. You know, we will include both of these data sets in the package that goes to the FDA. You know, the other thing too is in the STRIDE study, that those patients all had a general anesthetic. When they woke up, and EXPAREL takes a little longer to set up than the bupivacaine comparator they had. And we never positioned EXPAREL ever as something to help you during the surgery, right? It's really for postoperative pain management. That's why we evolved the next two studies to be patients having regional anesthesia for the surgery, which is really the standard of what's practiced out there today. If you're having bunionectomy, ankle or a total knee, most of those patients are being done with regional anesthesia for the anesthetic, little sedation along with it, and not a general anesthetic. I think when you look at the STRIDE study days two, three, four, we demonstrated, again, not the primary endpoint, but we did demonstrate really meaningful pain reduction that was superior to the active comparative bupivacaine for 24-96 hours, if that makes sense. Great. Thanks for taking my questions. Congrats on all the progress. Thanks, Greg. Thank you. One moment for the next question. Our final question of the day comes from Greg Fraser of Truist Securities. Your line is open. Go ahead. Good morning. Thanks for squeezing me in. On spasticity, can you talk a bit more about the design and size of the registration study? Will that study include a Botox arm or will that not come until the later study? Then on the gross margin, can you quantify the impact this year on the guidance from 340B pricing and your discounting program? How much growth do you need to see in volume over time to get to your longer term target of mid-80s%? Thank you. I'll start and ask Greg or ask Roy to pick up the spasticity issue. On the gross margin, you know, I mean, we've given the answer in a different sort of positioning. You know, well, the 340B has no impact on gross margin at all. It's on net margin, right? What we see over time is more volume from 340B and more volume from NOPAIN. The ability to get the 200 liter facility in San Diego approved for commercial scale at sale at the end of this year, Greg, gives us the opportunity to have 2, 200 liters. The gross margin from those two facilities is significantly better than the gross margin opportunity longer term with the 45 liter facilities that we're currently making a product on. Best in Swindon in the UK with a variable cost environment. Improved, but not as great an improvement when we go to San Diego where we have a fixed cost environment. Both 200 liters will allow us to improve gross margins. That is a piece of it. It's both the volume and the gross margin enhancement that allows 340B to be a viable opportunity for us. If you look at the procedures, about 20% of the pre-340B procedures have flipped to 340B from current customers. The new customers, the 340B helps us with the gross margin and the increased capacity once we can make $2 billion worth of EXPAREL. The price increases on an annual basis allow us to offset these discounts. You know, that's why as you look towards the end of next year, the new business from these 340B customers and the expansion in volume at the gross margin line, allows us to start to address, to come up on neutrality as we come to the end of the year. It's a very complex formula that we used in order to, you know, assimilate all of these different pieces, but also don't lose sight of the fact that having all of these additional surgeons using EXPAREL and these previously naive EXPAREL accounts is a really important aspect of our, of our no pain strategy. You could probably assume from this that when we did 340B, we had some pretty good feelings that we were gonna be successful with no pain. This is one big opportunity for us to increase margins by increasing capacity and then increasing the number of patients who have an opportunity to get this no opioid treatment strategies. Thank you. That concludes our Q&A segment. I'll now turn the call back over to David Stack, Chairman and CEO, for closing remarks. Thank you, Chris. Thanks to everyone on the call for your questions and time today. As you can see, we're making steady progress and expect to deliver on a variety of value-driving milestones over the next 12-24 months as we grow product revenue, advance our clinical pipeline to expand product offerings, improve gross margins, increase cash flow, and strengthen our balance sheet. The need for non-opioid pain management remains a global imperative. As Pacira further solidifies its leadership role in this important work, we expect to have significant market opportunities and growth in the years ahead. We look forward to keeping you updated on our progress. Next up for us is the Barclays Conference in Miami. Thanks all. Stay well. Bye-bye. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.