Pacira Biosciences Inc (PCRX) 2011 Q2 法說會逐字稿

Thank you for joining us for the Pacira Pharmaceuticals Second Quarter 2011 Financial Results Conference Call.

At this time, all participants are in a listen-only mode. Following the formal remarks, Pacira's management team will open the lines for a question-and-answer period. Please be advised that this call is being recorded at the Company's request and will be archived on the Company's website for two weeks from today's date.

At this time, I'd like to introduce Jennifer Beugelmans of Pure Communications. Please proceed, ma'am.

Thank you, Jeff, and good morning, everyone. Welcome to Pacira's Second Quarter 2011 Financial Results Conference Call. With me on the call today are Dave Stack, President and Chief Executive Officer, and Jim Scibetta, Chief Financial Officer at Pacira.

Before I turn the call over to the management team for their prepared remarks, I would like to remind you that certain of the remarks made by management during this call about the Company's future expectations, plans, and prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements about the Company's future expectations, plans, and prospects include statements regarding the estimate of 2011 financial performance, anticipated development and approval timelines for EXPAREL, and the efficacy and utility of EXPAREL. Any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks and uncertainties.

Actual results may differ materially from those expressed or implied by such forward-looking statements. Any of these risks and uncertainties are described in the Risk Factors section and elsewhere in Pacira Pharmaceuticals' annual report on form 10-K, filed with the SEC on March 31, 2011, and in its other filings with the SEC and are available online at www.sec.gov.

All of the information in this conference call is as of August 11, 2011 and should not be relied upon as representing the Company's views as of any subsequent date. While the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so; therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

Please be advised that today's call is being recorded and webcast. To access the webcast replay, please visit the Investor Relations section of Pacira's website at www.pacira.com.

I would now like to turn the call over to Dave. Dave?

Thanks, Jennifer. Good morning and thanks, everyone, for joining us today.

During the second quarter, we continued to aggressively execute on our pre-commercial strategy, focused on the successful launch of EXPAREL. As most of you know, our PDUFA date was extended from July 28 to October 28 following our submission of data to the FDA within 90 days of our PDUFA date. While this was a disappointing development, we believe we are using this delay to our advantage in working towards a stronger, even more aggressive launch that originally planned.

Based upon the new timeline for potential approval, we expect to launch EXPAREL early in 2012. With this as our goal, our plan is to train our sales force at the end of the year so that they are fully prepared to bring the product to market.

By the time of our launch, we will have finalized the analysis for our retrospective health outcomes research studies focused on identifying patient populations who are considered to be most problematic from a quality-of-care and total-cost perspective when opioid-based pain management is utilized.

We have completed several of these retrospective studies with our integrated health system customers, and the data consistently demonstrates that opioid-based post-surgical pain management is a primary driver of increased total hospital resource consumption and length of stay.

We have submitted these data sets to key meetings planned for later in 2011. The data clearly demonstrates the total cost associated with the use of opioids as the platform for post-surgical pain management. The data has been developed by our customers in their institutions and with their patients for individual programs of specific use in these institutions. As a result, these data have great meaning to our customers and should be powerful tools for our sales team.

Also by the time of our January launch, we will have completed patient enrollment for the prospective health outcome clinical study programs being run in partnership with these same integrated health system customers. These programs are focused on demonstrating the benefits of incorporated EXPAREL in the post-surgical pain management protocols and regimens at our partners' own hospitals and with their patients and surgeons.

Based on the success of the retrospective programs, we are now working with these customers to demonstrate prospectively how the use of EXPAREL will improve patient care and hospital economics by improving post-surgical pain management, reducing the amount of opioid required, and reducing the opioid-related adverse events.

We have several protocols based on abdominal surgical procedures and we are currently working through the IRB approval process. We expect to initiate these prospective trials in the next several weeks. We will provide further details on the clinical design as appropriate and we expect the top-line data from these prospective studies to be available prior to launch and have planned to publish the data following the launch.

We also believe that these studies, coupled with a variety of planned publications and educational programs, will provide the platform for an enhanced formulary approval process in these integrated health network hospitals.

As planned, and as part of our defined launch strategy, we intend to hire a sales management team comprised of six regional management leaders in October. This team will focus on accelerating the formulary process among our top 200 hospitals and driving adoption within our plastic surgery customers. They will also be tasked with hiring and training our sales force in advance of the launch in early January.

Overall, we are targeting roughly 60 reps who, along with the regional managers, will cover more than 80% of our target market for soft tissue surgical procedures, plastic surgery procedures, and elastomeric pump replacement. This target market cover 1,296 target hospitals. Our plan is to use Innovex Quintiles to hire this sales force as a variable cost resource. We expect to roll the sales organization into Pacira headcount based on a successful launch and revenue ramp.

As many of you know, I was the President and General Manager of Innovex for several years, and we have an excellent relationship with Innovex Quintiles and their management team. Access to all of the Innovex Quintiles systems and sales force operational processes provides the basis for a successful launch program and will allow our commercial team to focus on our customers, the ongoing management of the formulary approval process, and the various additional components of our launch strategy.

We have three specific areas of focus for our training and educational programs. The first two, plastic surgery and elastomeric pump replacement, should allow us to drive early revenue wins while we work with formulary committees to gain access to our third launch target base, key hospital surgical customers with a focus on abdominal soft tissue procedures.

We are very excited about the opportunity in plastic surgery, where we believe the benefits of EXPAREL will be immediately recognized by patients and surgeons alike. We believe that EXPAREL can become a practice-building tool used by the surgeons to differentiate their practices by offering an improved patient experience.

Based upon our market research, including advisory board panels and other outreach programs, we believe that plastic surgeons will have significant interest in the use of EXPAREL for breast augmentation and abdominoplasty, or tummy tuck, procedures. This market represents about a million uses for EXPAREL annually. And since it is a cash market, there is little or no formulary approval required.

Within the elastomeric pump market, there will be about a million of these units sold in 2011 and the market is growing. These pumps provide the only available option for non-opioid, long-term, post-surgical pain control with greater than 95% of these units utilizing bupivacaine. With a price point of $300.00 to $500.00 per pump, we believe that EXPAREL is ideally positioned to provide long-lasting, non-opioid pain control in a cost-effective, easy-to-use delivery technology to replace elastomeric pumps.

As we have previously discussed, these pumps continue to grow in use in the United States, even though there are well known issues, including premature emptying, issues with the catheters falling out, patient non-compliance in wearing the pump, several safety reports of deaths, etc. We believe this supports our base level these, that healthcare providers are highly interested in delivering effective post-surgical pain management while managing opioid use.

This is an ideal target market for EXPAREL, and our customer -- and our commercial team is working with several pharmacy KOLs on programs to replace elastomeric pumps with EXPAREL based on improved safety, ease of use, and lower cost. We expect that our customers, where these elastomeric pumps are routinely used, will assist us in the formulary approval process to make EXPAREL available as an appropriate alternative.

For our broad hospital launch initiative, our focus will be on abdominal soft tissue surgeries typically performed by colorectal surgeons, general surgeons, and OB/GYNs. Within our hospital launch campaign, we will focus on procedures such as cholecystectomy, appendectomy, prostatectomy, abdominal hysterectomy, and heriorrhaphy as well as colorectal and anorectal procedures including hemorrhoidectomy, colectomy, and ileostomy reversal.

This is our launch focus for several reasons. The majority of local infiltrations in the United States are for these types of soft tissue surgeries and include 11 million current uses of a caine -- meaning bupivacaine, lidocaine, or ropivacaine -- for local analgesia by infiltration.

These procedures also provide an opportunity for preceptorship programs, for center of excellence programs where our surgical customers can easily transfer their knowledge and surgical techniques from one procedure to another. 50% of these surgical procedures are performance in 616 hospitals, thus providing a highly focused opportunity for our 60-rep sales force.

As I mentioned earlier, we will have analyses from our retrospective studies in hand at the time of our launch. We believe that this data will help drive commercial adoption by validating the health economic benefit of incorporating EXPAREL into post-surgical pain management regimens.

To further validate the conclusion gleaned from our retrospective trials, we have strategically built a publication plan that we expect to yield published studies post PDUFA and around the time of launch. In addition, we have submitted posters to several national meetings for the fourth quarter based on the success of our health outcomes program discussed earlier in this call.

We believe it's critical that our health economic data is specifically tied to individual hospital consortium customer groups because it makes this data even more relevant, creates strong opportunities to recruit champions for EXPAREL, and positions EXPAREL for formulary success.

The publication plan for the retrospective studies target a number of influential outlets. We believe these opportunities, coupled with planned presentations at several medical meetings throughout the remainder of 2011, will positively position EXPAREL in the minds of target clinician audiences and other key opinion leaders.

To give you a sense of the breadth and depth of our plan, our upcoming activities include, for our plastic surgery strategy, a Pacira market research booth at Surgery and Body Contouring in Santa Fe in August, a variety of presentations at the American Society for Plastic Surgeons in Denver in September, and we are initiating follow-up activities to leverage the multiple plastic surgery ad boards we convene in the first half of 2011. We expect that these activities will yield additional valuable insights that we will use as we execute our launch strategy.

For our hospital post-surgical pain customers, we expect to present data at the American Society of Anesthesiologists in October in Chicago. At the American College of Surgeons in October in San Francisco, we will have a Pacira market research booth and various EXPAREL data presentations.

In addition, we expect to present clinical information at the American College of Clinical Pharmacy in October, at the American Society of Hospital Systems Pharmacists in December, at the New York State School of Regional Anesthesia, also in December, and at the Post-Graduate Assembly in New York City in December. Overall, we expect to have 15 publications, not including our retrospective studies, between now and the end of the year, targeted to our launch customers.

We expect to have all of these articles published prior to launch. Some examples include the primary manuscripts of the pivotal data from the hemorrhoidectomy and [vaginectomy] data, important data comparing EXPAREL and bupivacaine in a multi-model design from the Phase II hemorrhoid data, a manuscript on the breast augmentation trial, again comparing EXPAREL with bupivacaine, as well as several papers on long-term safety and specific issues of interest to our surgical customers such as cardiac safety.

Throughout the execution of our pre-commercial strategy, we have continued to build relationships with clinicians and KOLs in a variety of specialties and have hosted five ad board meetings during the second quarter alone. Feedback from these key constituents remains positive and we will continue to engage these audiences are part of our pre-commercial launch strategy.

We are very excited about the near-term activities and continue to believe that our long-term opportunities, beginning with EXPAREL by infiltration, but with the potential to expand into a number of other exciting areas such as EXPAREL in nerve block as well as additional pipeline opportunities.

We look forward to our PDUFA data and updating you on our march towards success. With that, I'd like to turn the call over to Jim for a high level review of our Q2 financial results. Jim?

Thanks, Dave. As we issued a press release this morning with our results, I'll limit my comments to our financial highlights and a few clarifying points.

As reported, during the second quarter of 2011 our net loss was $8.8 million, or $0.51 per share, based on 17.2 million weighted average shares outstanding during the quarter. There was no material equity activity during the quarter, so that 17.2 million number is our outstanding share count at June 30, 2011. And on a fully diluted basis, we had approximately 20 million shares outstanding.

Our total revenues for the quarter were $3.6 million compared with $3.1 million for Q2 of 2010. The $500,000 increase was primarily attributable to a $0.5 million increase in collaborative license and developing revenue, which totaled $1.3 million in the second quarter of 2011, primarily driven by activities performed under our license agreement with Novo Nordisk that we entered into in the first quarter of 2011. As a reminder, this agreement could ultimately generate up to $44 million in development and sales-based milestones as well as a single-digit royalty on product revenues.

Royalty revenue also increased $100,000 to $900,000 in the second quarter of 2011 as a result of higher end-user sales for the DepoCyt(e) and DepoDur products by our commercial partners. As we've mentioned in previous calls, royalty revenue is a decent proxy for product activity trends. Supply revenue was $1.5 million in both the second quarter of 2011 and 2010.

Turning to cash, as of June 30, 2011, we reported unrestricted cash and equivalents in short-term investments of $47.2 million. Pro forma cash as of December 31, 2010, which included our net IPO proceeds, was approximately $64 million. Our cash burn in the six-month period ended June 30, 2011 was $17 million, comprised of a cash burn of approximately $5 million in Q1 and $12 million in Q2.

But in monitoring historical cash burn to identify relevant trends going forward, I think it's helpful to call attention to activities that impacted the cash burn of our daily operations. You may recall that we reported in Q1 that the $5 million cash burn benefited from a $1.5 million upfront milestone payment from Novo Nordisk and a $900,000 transfer from a lock box account related to our [fall] capital royalty interest obligation. And so absent those activities, the Q1 cash burn would have been approximately $7.5 million in Q1.

In Q2, our cash burn of approximately $12 million was unfavorably impacted by the mechanics of our royalty interest obligation, which resulted in $2.1 million of supply revenue and royalties falling into the lock box and recorded as restricted cash on our June 30, 2011 balance sheet. So, absent the royalty interest obligation and lock box dynamics, our Q2 cash burn would have been approximately $10 million.

Turning to the balance of 2011, we're reiterating our revenue guidance provided for 2011 and continue to expect to achieve revenue in the range of $14 million to $16 million for the full year ending December 31, 2011.

This revenue expectation includes DepoCyt(e) and DepoDur supply revenue and royalties and collaborating licensing and development revenues resulting from DepoFoam-based partnerships, and it continues to exclude the impact of potential sales of EXPAREL should it receive approval from the FDA in Q4 of '11. We're also reiterating our expectation that cash burn will be $30 million cumulatively through the third quarter of 2011.

Based upon our new PDUFA goal date of October 28, 2011, we're updating and revising our expectation for cash burn during the fourth quarter of 2011. As stated previously, we're committed to maximizing our cash resources available at the time EXPAREL is approved in order to preserve operating flexibility going into the launch.

And so until EXPAREL is approved, we're not triggering expenditures that materially contribute to our 2011 cash burn for the purposes of funding the commercial sales force, subsequent EXPAREL nerve block trials, the next stage of EXPAREL commercial manufacturing, and pipeline activities.

So, based upon this strategy and the new PDUFA date, our Q4 cash burn expectation is now $15 million, in contrast to our previous guidance for cash burn of $25 million. This Q4 cash burn expectation is based on the assumption that EXPAREL is approved by the FDA on or around October 28, and we begin the broad national launch that Dave provided color on during the first quarter of 2012. And therefore, the Q4 burn does not include a $10 million milestone to Skye Pharmaceuticals that we have noted is due upon the first commercial sale of EXPAREL.

So in summary, no surprises in Q2 as revenue and cash burn are on target. I'll now turn the call back to Dave.

Thanks, Jim. As you have heard, we remained busy, excited, and focused on a successful launch for EXPAREL. We are utilizing the time between now and PDUFA to execute a well-thought-out pre-commercial strategy that we believe will dynamically position EXPAREL for success across a broad spectrum of procedures, clinicians, and hospital institutions.

We remain encouraged by the growing interest in EXPAREL and its potential to dramatically evolve post-surgical pain management and health economics, and we continue to believe that EXPAREL is a large product opportunity that will be of great interest to the marketplace.

We look forward to updating you on our progress. And with that, I'd like to open the call for questions. Jeff?

Thank you. (Operator Instructions). Our first question comes from the line of David Amsellem with Piper Jaffray. Please proceed.

Thanks. Just a couple. So, on the PDUFA delay into October, can you just remind us what was the main trigger for the delay? I think you had characterized it as a non-critical issue. But can you clarify whether there was any additional safety or efficacy questions that came up in that delay and how we should think about that? Thanks.

We've -- out of respect to the entire process of the ongoing discussions with the FDA, David, we have not provided any specific color as to the nature of the information that was transmitted. What we have said is that there was a request for some additional information that was provided, and it was simply that provision of the information that allowed them to declare that a major amendment and delayed the PDUFA date.

In the letter that was received, there is no notation of any issue or any specific notation of any concerns that were provided on either side.

Okay. Second question is around the formulary review or formulary acceptance process at the hospitals. And I guess the question here is can you frame for us how to think about the timeline for the formulary review process at major hospitals? And as you think about 2012 and the launch, what's sort of your sense of how quickly you can get major hospitals and community hospitals on board in terms of how the timeline should play out? Thanks.

Thanks, David. A couple of things. The formulary approval process, as I'm sure all of you guys understand well, is a fairly dynamic process. And part of the reason to bring a field force into the marketplace in early January is an acceptance of the fact that as a general rule P&T committees and formulary committees do not meet during December, and so we are electing not to put a sales force out into the organization in and a face over Thanksgiving holidays and the Christmas holidays and the end-of-the-year holidays, so we are accommodating that.

With that said, David, and I think we've gone over this at least peripherally a couple of times, we have a list of 54 high-end hospitals here. I'll remind everybody on the call that less than 50 hospitals do 10% of all of our referenced surgical procedures in the United States, and so we have a fairly concentrated audience at the top 10 for these decile 10 hospitals.

All of the work that the commercial team is currently doing with the references to abstracts and papers and medical meetings and our centers of excellence programs and preceptorship programs and cadaver labs, all of the retrospective studies that have been done and all of the prospective studies that are gearing up, all of the speaker programs, etc. are all being done in a list of 54 hospitals that exist here with the strategy, at least, that in order to be able to provide those services for us around a launch, the drug would have to be put on formulary very early in the launch process.

So, we're highly aware, David, that getting a drug on formulary is great, but getting a drug on formulary in places where you have a high opportunity to generate significant revenue is really what this game is all about. And so we will follow the more traditional processes of a representative working with a surgeon or an anesthesiologist to get a drug on formulary largely in the Southeast and in some cases in the Southwest.

That will give us a lot of formulary approvals, but doesn't lead to a lot of revenue on a very short-term basis. Our greater focus, frankly, of the commercial team here and0 Pacira's management will be on achieving formulary approval in the Northeast and down the East Coast into places like Orlando Regional Hospital and Florida Hospital, where a formulary approval is worth a lot more than a whole bunch of formularies in smaller hospitals in some of the other parts of the country.

So, our guess is that we will achieve some formulary approvals very early on in the launch based on the success of our commercial pre-launch programs. And then after that, we will be following a more traditional design, in which case it can take anywhere from three to six months to achieve formulary approval.

That's great detail. Thanks. And then one last question, if I may. You mentioned that the unit growth for the elastomeric pumps has actually been fairly strong and you also pointed out the complications associated with them.

So, I wanted to get your perspective on why you think those modalities are growing. What do you think are the big reasons for that? And is it mainly just a function of a dearth of long-acting, non-opioid pain management modalities available? I'd like to get your color there. Thanks.

Yes. I think the simplest answer is yes. The medical community is looking for ways to provide non-opioid pain control. And when you start to see the data that we're generating on the cost and economic -- the quality and economic implications of morphine post-surgical pain control, you'll clearly understand why people are trying to get away from that modality.

And then there's a couple of other things going on. A number of procedures where these [bags] are being used are in procedures that are not routinely done in the hospital. So if you think about the difficulty of post-surgical pain control in a hospitalized patient, you can imagine that that is compounded when you've got a patient where you're only going to have that patient under your direct control for, say, 12 to 24 hours.

And in a lot of these surgical situations they're looking for a non-opioid way to be able to send this patient home but still be able to achieve pain control. So that is one of the places where these bags are enjoying some of their growth.

Okay. Thanks, guys.

Thanks, David.

Our next question comes from the line of Richard Lau of Wedbush. Please proceed.

Hi, guys. Thanks for taking my question. I was wondering, since now that you guys have had a chance to sort of present at more medical conferences and ad boards, what's sort of the broad physician interest in terms of using EXPAREL maybe in surgery types outside of data you've specifically generated in, assuming you guys skipped the broad label you're seeking?

Yes. I'm not sure this is a direct answer to your question, Richard, so if it's not, come right back at me. We have asked many times. We show the totality of the data set and the procedures where we have specific data on EXPAREL, and then we ask the surgical audiences if there are other specific surgical procedures where they would require us to have information in order for them to be able to use the product.

And what we get very specifically is that what we've generated is fine for them initiating and they would just as soon use the product in their own hands and in their patient population and see how it does, largely born by the fact, Richard, that they're using bupivacaine routinely in these same procedures today.

And so the only real question in their mind is is it safe? Which is why we have a fair amount of effort been put into the QT trials and answering all of the answers around cardiac safety, not only for our questions, but for the regulators. And then, if they know that it's safe, then it's just how long does it provide control?

And so when we show them data in TKA and herniorrhaphy and hemorrhoidectomy and breast augmentation and bunionectomy and we show them across a number of bony and soft tissue indications. There are occasions when they ask for some very specific data set in some very specific surgical procedure, but on balance what we've been told is that we don't need any more information, including the plastic surgery audience, where they were very clear that they had enough to be able to initiate use of EXPAREL.

Okay, great. That definitely answer it. Thank you.

Thanks, Richard.

(Operator Instructions). Our next question comes from the line of Matt Duffy with Concept Capital Markets. Please proceed.

Good morning and thanks for taking my question. David, as you've been through the formulary wars a number of times, what do you think the key issues in formulary decisions are likely to be with EXPAREL? Obviously, pricing will be an important one.

And then secondly, sort of a corollary to a general pressing question is do you expect much variation in terms of the amount of EXPAREL used by indication?

Two good questions, Matt. To the first, the reason that we've spent a good deal of our cash resource and that we've got a number of [FTs] here that have been totally focused on the retrospective analysis that we talked about, Matt, is we wanted to be able to demonstrate two our GPO and IHN customers that it was morphine that was responsible for the driving of costs, especially in patients who are known to be problematic in these abdominal surgery [DRGs].

And so the focus of this program starts out with demonstrating what percentage of the patients cannot be treated (technical difficulty), right? So that's issue number one. And generally, that's something over 25%.

Then, we work with them in order to establish a list of well-recognized and accepted morphine AEs and we do a retrospective analysis of these DRGs and say what percentage of the patients have a morphine AE? And just by a quirk of the numbers, that turns out to be 25% or 26%.

Then we have two analysis that we can do with them. One is the odds ratio of a patient being on the list of patients who cannot be treated to wellness who also have a recognized morphine AE, and those odds ratios are very strong in favor of a morphine AE leading to an inappropriate cost outcome.

And then we can compare the 25% of patients who had morphine AE to the 75% of patients who did not have a morphine AE, and those analyses are very strong in favor of limited the amount of morphine and opioids that are used in order to avoid those costs that are clearly being driven by morphine post-surgical pain control.

The reason I drag you through all that, Matt, is the focus of that program is to demonstrate to these folks that we clearly can offset at least the cost of EXPAREL. And we started out by saying that we want to be able to do that in these patients that are most problematic on opioids.

As a result of all the data that we've seen to date -- and I'm intentionally not sharing the data with you guys because it's embargoed, it's in abstracts and papers that have been submitted -- the offset is strong enough that you could use EXPAREL in all patients based on the total resource consumption savings and the length of stay savings that are achieved when you avoid a known morphine AE. Does that answer (inaudible - multiple speakers)?

Okay, great. Yes, that's very helpful. Do you expect --? And I guess one thing before you get over to the usage by indication, do you expect restrictions or will they handle the protocols, do you think? Or do you think, based on your initial discussions with folks, that it will just be put on formulary for general use?

Two-part question, Matt. One is that we're going to sell in the abdominal soft tissue surgery and we are going to sell to colorectal surgeons and general surgeons and OB/GYNs. So a restriction is not always a restriction, right? If they restricted it to all the patients that we want it to be used in, we would be highly likely to accept that even though it would still be a restriction.

But it is safe to say at the same time, Matt, that when we have our pharmacy ad boards that there is some concern about the number of bupivacaine uses in their hospitals. And if you replace all of that bupivacaine with EXPAREL, this would be a whopping big product for that.

And so there is -- we have had discussions with them about how we can work together on appropriate use and make sure that the technology is employed, at least in the early days, where the -- all of the retrospective and, hopefully be launch, the prospective data will demonstrate that we get the biggest bang for our buck.

And then after that, it's very difficult for us to -- we certainly aren't going to counter-detail ourselves, but I think in the early days, especially around a January launch, where a pharmacist hasn't had a strategic opportunity to prepare a budget line for EXPAREL for 2012, we will work with them in a partnership way to make sure that the technology is deployed the way that we think is appropriate and so do they.

Okay. Excellent. Thanks.

And then, on the second one, Matt, it's one of the reasons that we're focusing on abdominal soft tissue. But we have data, as you guys have seen, that was submitted to the FDA.

It's 120 milligrams for a bunionectomy. The reason for that, frankly, is that 8 cc is the total amount of volume that you can get into a bunionectomy wound, so that's, frankly, where the 120 milligrams come from. We do not believe that that has a lot of relevance in terms of a bunionectomy to the commercial launch, but it does provide us the opportunity to say for a small wound you can use a 120 milligram dose.

We expect that the vast majority -- 85% plus -- of our uses will be a 300 milligram dosage form; that is the basis of our pricing studies. The times when we think that the drug would be used in more than a 300 milligram dosage form will be in large surgical procedures.

The only place that we've actually studied the drug at a 600 milligram dosage form is in total knees. That will not be the focus of our launch because we think based on our ad boards that the orthopedic market would be best addressed by a nerve block of EXPAREL used in combination with a infiltration of EXPAREL.

But it is at the same time, Matt, really important that we get 600 milligrams into the clinical pharmacology section of the package insert. And the basis of that is where we have bilateral applications of 300 milligrams. So, in things like breast augmentation you're going to have 300 times two. There are a number of surgical procedures like TAP blocks, or transverse abdominis blocks, where the drugs are generally administered both right and left.

And so we have a QT study that studied up to 750 milligrams to provide safety data on a 600 milligram per patient dose, but something well over 80%, 85% of the doses will actually be 300 milligram doses.

Okay, great. That's very helpful. Thank you.

And, ladies and gentlemen, that will conclude the Q&A portion of today's event. I'd now like to turn the presentation back over to Mr. Dave Stack for closing remarks.

Thank you for your time, everybody. We appreciate it. We appreciate the questions. Thanks a lot for all of your help and we look forward to working with you as we make this a big brand and a big Company.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect.