Pacira Biosciences Inc (PCRX) 2025 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Pacira Biosciences Q2 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Susan Mesco, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone. Welcome to today's conference call to discuss our second quarter 2025 financial results. Joining me are Frank Lee, Chief Executive Officer; Brendan Teehan, Chief Commercial Officer; and Shawn Cross, Chief Financial Officer. Tony Malloy, Chief Legal and Compliance Officer, is also here for today's question and answer session.

Before we begin, let me remind you that this call will include forward-looking statements subject to the safe harbor provisions of federal securities laws. Such statements represent our judgment as of today and may involve risks and uncertainties. This may cause our actual results, performance, or achievements to differ materially. For information concerning risk factors that could affect the company, please refer to our filings with the SEC. These are available from the SEC or the Pacira website.

Lastly, as a reminder, we will be discussing non-GAAP financial measures on today's call. A description of these metrics, along with our reconciliation to GAAP can be found in the news release issued earlier this afternoon.

With that, I will now turn the call over to Frank Lee.

Thank you, Susan, and good afternoon, everyone. I'm pleased to report that the first half of 2025 was marked by solid execution across our corporate, clinical, and commercial initiatives. The stage is set for accelerating top line growth in the second half of the year and importantly, we delivered several key milestones to advance our 5x30 path to growth and value creation.

To remind you that this plan supports two broad strategic imperatives. First, growing our strong commercial-based business, and second, advancing an innovative pipeline of potentially transformative assets such as PCRX-201.

Notable second quarter accomplishments include the following, improving EXPAREL performance with 6% year to year volume growth, the highest in eight quarters. Strong commercial progress, allowing us to reiterate and narrow our range for revenue guidance. Favorable gross margins supporting an increase in guidance. Enhanced capital structure and liquidity with a new $300 million revolver and significant reduction of debt.

And finally disciplined and strategic capital allocation with the repurchase of $50 million of common stock. Bren and Shawn will share more specifics on the quarter shortly. I'll begin with a high level overview of our commercial portfolio where our free best in class products continue to generate significant cash flow. Our flagship product EXPAREL, the first half of 2025 was marked by solid execution across three priorities: market access, awareness, and utilization. We now have a strong base to build on, and we're seeing encouraging momentum across key leading indicators for EXPAREL.

On the market access front, we continue to advocate for expanded patient access to opioid sparing pain therapies. To that end, we're pleased to see a new policy outlined by CMS and its preliminary rule for 2026. CMS is proposing to completely phase out its inpatient only list over the next three years, starting with the removal of hundreds of procedures in 2026.

In parallel, many of these procedures will be added to its list of procedures covered in ambulatory surgical centers. We believe this will enhance the EXPAREL market opportunity in the outpatient settings. On the IP front, our legal team secured a favorable re-examination of our '495 patent from the US Patent and Trademark Office.

Importantly, during this process, we amended the patent's claims to add volume limitations and to address other issues noted in the New Jersey court's opinion last year. The '495 patent will be reissued shortly, and we believe it will be the strongest in our erucic acid family of patents.

In parallel, the team continues to innovate and expand our erucic acid and IVRA patent families with two new patents. Both claimed EXPAREL composition are listed in the FDA's Orange Book with exclusivity into the 2040s.

Shifting gears to strategic partnerships, a key component of 5x30 with an objective of 5 partnerships by 2030. We recently executed a potentially transformative collaboration with Johnson & Johnson MedTech or ZILRETTA. We believe this will significantly expand our reach and patient access for ZILRETTA.

The proven long-lasting benefits of ZILRETTA and its distinct mechanism of action make it an ideal addition to the J&J MedTech existing portfolio of OA pain solutions. Because there's no one size fits all for treating patients suffering from OA pain, a personalized approach is essential. With a highly complementary non-opioid option.

The J&J MedTech team would better support multiple treatment paths and improve the patient journey.

For Pacira, this collaboration essentially doubles our sales calls for ZILRETTA, which is the most responsive product. It gives us access to a well-established team and an extensive customer base. These relationships span a variety of physician specialists beyond orthopedics, such as sports medicine, osteopathy, pain management, and rheumatology. We believe this will meaningfully accelerate the ZILRETTA growth trajectory in an efficient manner.

As for growth margins, enhanced manufacturing efficiencies have allowed us to increase our full year guidance. This is the result of a multi-year investment in our 200 liter facilities in Swindon and San Diego. These suits provide ample capacity to meet demand with more favorable cost structure and manufacturing yields.

Turning now to our pipeline where we're focused on becoming the therapeutic area leader in musculoskeletal pain and adjacencies. These are large markets with high unmet patient needs. Our two registrational studies for ZILRETTA in the shoulder OA and iovera and spasticity are progressing according to plans.

To further solidify our leadership and opioid sparing innovation, we're advancing innovations in genicular outcomes registry or iGOR. Pacira designed this comprehensive prospective, observational real world study in the interest of science, not as a health authority obligation. OA is a unique condition that patients live with for decades and receive a myriad of pain treatments as the disease progresses.

IGOR's position to provide in-depth insights into the patient journey, and we're capturing clinical and economic data as well as patient reported outcomes. Its potential for meaningful insights is better than any known OA registry of its kind. With over 2,500 patients enrolled to date and growing, iGOR is now bearing fruit. Recent and upcoming publications are further reinforcing the value of our products.

In addition, we believe that insights gained from iGOR will support much needed innovation and new product development for treating the OA pain.

PCRX-201 is a great example of innovation that we believe has the potential to revolutionize the treatment landscape. Clinical data continue to underscore the promise and disease modifying potential of PCRX-201 and the HCAd platform.

In June, we presented three year follow-up data at the European Alliance of Associations for Rheumatology. Very few OA studies reached such a milestone for study duration. Results showed that a single intra-articular injection of PCRX-201 was well tolerated, with sustained efficacy for three years.

In addition, we're making great progress in enrolling our Phase 2 ASCEND study with enrollment in Part A on track to conclude by year end. Beyond PCRX-201, we have a promising portfolio of other HCAd platform-based assets that may have disease modifying potential in other musculoskeletal diseases and adjacencies. We look forward to sharing more as the year progresses.

In summary, this quarters marked by solid execution and across corporate, political, and commercial initiatives as well as delivery of key milestones that advance our 5x30 strategy.

With that, I'd like to turn the call over to Brend to share more details on a commercial performance on the second quarter. Bran?

Thank you, Frank. And good afternoon to all joining us today. I'm excited to share a few highlights of the strong progress we've been making on the commercial front. Significant second quarter revenues were driven by improving ex volume growth of 6%. This is a two-fold increase over the 3% year-over-year growth in the first quarter of 2025 and the second quarter of 2024.

As Frank mentioned during the first half of the year, we were sharply focused on establishing a foundation to support sustainable top line growth. We made great strides expanding position and payer awareness around NOPAIN. As you know, this is an important shift in reimbursement policy and represents a significant opportunity to broaden the EXPAREL utilization in outpatient procedures.

As expected, we are seeing robust momentum from leading indicators as we head further into the year. These data reinforce our confidence that EXPAREL is well positioned for steadily improving year over year growth as the year progresses. I'll start with market access where we've made terrific progress that is driving change.

In addition to clinical value, accounts consider market access for their specific patient population when making decisions. Here we're focusing on highlighting EXPAREL's clinical and economic value to national, regional and local commercial plans with real world evidence.

We're excited to report we are tracking ahead of plan and are maintaining a strong pace, expanding our commercial coverage map. We currently estimate more than 40 million commercial lives now have access to EXPAREL by a separate reimbursement outside the bundle.

We'll continue our efforts to expand access, and we're on track to reach 60 million covered commercial lives by the end of this year. This positions us to exit the year with a total covered population of nearly 100 million lives across both commercial and government payers.

As we gain critical mass of coverage, we're creating increased leverage amongst our practices for broader EXPAREL utilization. Importantly, our payer progress has been strategic, focusing on key markets with high procedural volumes. We've prioritized our top five states, which collectively account for roughly 40% of EXPAREL volumes.

We are steadily expanding coverage and estimate that we will soon have the majority of lives covered in these top states. Coupled with this progress, we continue to see strong and growing utilization of the EXPAREL J-code with an increasingly favorable payer mix.

We're also utilizing our strategic pricing programs as important tools to expand patient access. Through these preferential pricing programs, healthcare systems can afford the opportunity to be at the forefront of opioids bearing pain management.

On the GPO front, we're excited to have signed our third partnership in the second quarter and it's off to an excellent start. With this agreement, we now have more than 80% of our EXPAREL business under contracted pricing, which is predicated on driving volume growth.

Our pricing strategy is performing according to plan with our contracted business delivering high single digit volume growth thus far. We expect this to accelerate over time and with only a modest impact on net sales dollars.

Switching gears to awareness, our market research is showing increasing awareness among formulary decision makers, namely surgeons and anesthesiologists. As a reminder, it will take time for broader market adoption. Of those who indicated their facility would adopt CMS reimbursement guidelines, approximately 75% reported implementation could take sex months to a year.

Approximately 60% expressed a willingness to place EXPAREL on formulary in light of separate reimbursement, with the highest level coming from surgeons and anesthesiologists. Importantly, these key physician stakeholders are critical voices in driving institutional change, with a growing number already taking first steps, such as TNT committee meetings and re-evaluating formulary status.

This research aligns with the real-time EXPAREL utilization data we're seeing in the market. Faster adoption is taking place within community hospitals and ambulatory surgery centers where we're seeing high single to low double digit volume growth. Decision making in these settings is more streamlined, enabling faster adoption to take advantage of the NOPAIN value proposition.

Beyond the early adopters, year over year growth in the hospital setting has improved from a low single digit percentage to a mid single digit percentage with the academic segment returning to growth. We've also secured multiple formulary wins at large integrated delivery networks and major national healthcare systems. These accounts are delivering an early lift in volumes after more fully understanding the value of EXPAREL unlocked by NOPAIN. We expect these trends to accelerate as expanding commercial coverage further enhances the value proposition and drives policy change.

Turning to our other products, as you may recall, we started the year with a new sales team supporting ZILRETTA and iovera. The team has begun to hit its stride, and we are confident these products are back on track for improving growth as the year progresses. We look forward to the second half of the year and reporting additional commercial progress on future calls.

With that, I will turn the call over to, Shawn for his review of the financials.

Thank you, Brand. I'll start with an update on sales and margin trends. Second quarter EXPAREL sales increased to $142.9 million versus $136.9 million in 2024. Sales growth of 4% was driven by improving volume growth of 6%, which was partially offset by a shift in vile mix and discounting. Second quarters ZILRETTA sales were $31.3 million versus the $30.7 million reported in 2024.

Looking ahead with our new partnership with J&J MedTech, and other programs, we believe the foundation is set for improving growth. For iovera second quarter sales were $5.6 million compared to $5.7 million in the second quarter of 2024.

Turning to gross margins, on a consolidated basis, our second quarter non-GAAP gross margin improved to 82% versus 76% last year. Gross margins continue to benefit from the improved cost and efficiencies of our two large scale manufacturing suites. But these suites now consistently producing commercial supply. We have ample capacity to meet the growing demand for EXPAREL .

As a result, we have decommissioned our first generation 45 liter suite located in San Diego and optimized our workforce accordingly. We expect these changes will benefit our income statements through a $13 million annual reduction in operating expenses that will begin in the third quarter.

For non-GAAP R&D expense, the second quarter increased to $24.7 million from $18.4 million reported last year. This increase relates to the strong enrollment in Part A of our Phase 2 study of PCRX-201, as well as expenses associated with the ZILRETTA, iovera registrational studies.

Non-GAAP SG&A expense came in at $77.2 million for the second quarter, which is up from $59 million last year. This increase is largely due to investments in our commercial, medical, and market access organization, targeted marketing initiatives, and field force expansion. All of this resulted in another quarter of significant adjusted EBITDA of $54.3 million for the second quarter.

As for the balance sheet, we continue to operate from a position of strength. In July, we bolstered our liquidity and financial flexibility with the new $300 million five year revolving credit facility. We used an initial draw of approximately $100 million to fully repay our term loan A. This new revolver will also benefit interest expense., with an annualized savings of 60 basis points beginning in 2026 with no amortization requirements.

In addition, we recently repaid our August 2025 convertible notes with cash on hand. Taking this into account along with RDS repayment of the EXPAREL royalties, we ended the quarter with pro forma cash and investments of approximately $270 million.

With a business that is producing significant operating cash flow, we are well equipped to advance our 5x30 strategy and create shareholder value. We are also taking a disciplined approach to capital allocation, where we are focusing on three areas.

First, accelerating growth in our best in class based business. Second, advancing in an innovative pipeline and becoming the leader in musculoskeletal pain and adjacencies. And third, opportunistically returning capital to shareholders during the second quarter we executed $50 million share repurchases, retired approximately 2 million shares of common stock. This is in addition to the $25 million repurchase executed last year.

To remind you, we have approximately $250 million remaining under our current buyback authorization, which runs through the end of 2026. We will continue to be opportunistic with stock repurchases given what we believe is a significant disconnect in our market valuation. As we execute 5x30, we expect to prioritize the creative opportunities that benefit operating margins to enhance shareholder value. That brings us to our full year P&L guidance for 2025.

Today, we are narrowing our range for full year revenue guidance to $730 million to $750 million. In addition, we are increasing our guidance for non-GAAP gross margins to 78% to 80%. Our previous range of 76% to 78%. 2025 margins benefited from increased manufacturing efficiencies, favorable production volumes and the elimination or EXPAREL royalty obligation.

We remain well positioned to achieve our five year goal of steadily expanding margins with the 5 percentage point improvement over 2024. We are reiterating all of our other financial guidance ranges as follows. Non-GAAP R&D expense of $90 million to $105 million. Non-GAAP SG&A expense of $290 million to $320 million, stock-based compensation of $56 million to $61 million. Lastly, for those modeling EBITDA, we expect our full year 2025 depreciation expense to be approximately $35 million.

Looking ahead with the commercial investments we've made, we expect to achieve sustainable earnings growth driven by improving sales, enhanced gross margins, and stabilizing operating expenses. In addition, opportunistic stock repurchases and reductions in share count will further enhance EPS.

And with that, I'll turn the call back to Frank.

Thank you, Shawn. In closing, I want to thank our entire team for their strong execution and dedication throughout the first half of the year. We've already achieved meaningful milestones that advanced our 5x30 strategy and positioned us for sustainable success.

Put this foundation in place, for entering the second half of the year with strong momentum and a clear focus on further accelerating growth.

Thank you again for joining us today and for your continued support and confidence in our mission. With that operator, we're ready open the call for questions.

(Operator Instructions)

Leszek Sulewski, Truist securities.

Good evening. Thank you for taking our questions. I have a couple. First, maybe could you provide some commentary around the new partnership with J&J MedTech on ZILRETTA. And how does that compare to the previous co promote with J&J and EXPAREL ? And then as a follow up, what are the economics on this partnership and what assumptions can we derive from the strategy? Any figurative commentary would be helpful.

My second question is around the third GPO. What are the expectations for impact to gross to net? And then a couple more just progress on the sales for expansion and maybe one for Shawn. I appreciate the commentary around the expected savings on the consolidation of plans. But how do we kind of view the gross margin outlook in the second half and then into next year? Thank you.

Thanks, Les for the question. it's Frank Lee, here. Hey, first of all, let me just say before we jump into this, and I'll turn to Shwan and Brend for some commentary here that. I have to say I'm really proud of the team on executing on all fronts here across the entirety of the business, whether it's growth and revenue, it's margins, pipeline, IP, et cetera. There's a lot of activity that happened this year, and net-net, it's a strong foundation for growth going forward.

So let me just comment a little bit, about the J&J partnership, and then I'll turn to Shawn for gross to nets and, some commentary about gross margin and then maybe a little bit about the sales force. So just at a high level just to remind everybody that the J&J partnership previously was for export and that was prior to the COVID, and during COVID, as we all know, the dynamics changed.

So prior to that was very successful partnership and so the events of COVID led to the discontinuation of that particular partnership, but we've always appreciated J&J's capabilities and partnership there. So this particular partnership is now with ZILRETTA, which is in a very different setting under different circumstances. So that's says a high level overview.

Shawn, maybe you could speak to gross nets and gross margins as that lasts asks.

Sure, happy to. So the gross to net's pretty simple. It's a little single digit. Impact plus or minus 1% is a reasonable modeling, but that's pretty straightforward. And then with regard to gross margin outlook for the second half and in the next year, as we discussed the team's doing a great job and we benefited from the increased production efficiencies, favorable production volumes and again very proud of the team so that we could raise the full year margin guidance to a range of 78% to 80%.

And we'll provide another update in Q3 as things progress and just as a reminder, there can be pretty significant quarter over quarter variations, you have one bad batch in a quarter, you take a charge for that quarter, but based upon how the team is doing, we're confident that we'll -- in terms of raising the range to 78% to 80%.

And then going into next year, there's a plan for just relentless continuous improvement, at manufacturing sites and so that's something again we'll provide an update later. But the goal is to 5% improvement and as for our 5x30 plan and that continuous improvement will continue into next year.

Thanks, Shawn. So, Brend, maybe you want us to talk about salesforce expansion.

Yeah. Sure. Thanks for the question. We are excited about the focus we're able to provide to all three of our assets. We have a team in ZILRETTA and iovera that have now gotten more and more experience with their target audience. I think they're hitting their stride and beginning to improve in our overall performance there.

Equally excited about what we're seeing with EXPAREL, not only in terms of what we've seen for NOPAIN execution, but also significant formulary wins both at IDNs and large healthcare systems, and I think we're also bolstered by improving commercial coverage as you heard from my prepared comments.

Thanks, Brend. So the last part of it last you had asked about the economics of changing MedTech. We're not going to go into the details here, but what we can say is, number one, it's reflected in the guidance, and we expect this to be beneficial in 2026.

Very helpful. Thank you.

Serge Belanger, Needham & Company.

Hi, this is John on for Serge, today. Thanks for taking my question. Just a quick one regarding surgery volumes. Can you just give us a little bit of color on what you saw in the second quarter and then what you're seeing, I guess, to the first month, the third quarter, and in which section -- in which settings, you think you're seeing the most traction at this time? Thanks.

Hey. Thanks, John. We can't go into specifics about how this quarter started and so they'll have to wait till the next quarter about that. But I'm going to turn to Brend here to talk a little bit about kind of what we're seeing in volumes, over the course of the first half here.

Sure. And actually I'm encouraged by what we've seen for EXPAREL volumes in light of what the broader market has looked like. For us, at least the most recent data points we've seen would suggest that surgery outpatient case volumes are slightly down in the second quarter versus same time last year, and I see more inpatient surgery, kind of flat comparatively speaking. That said to have seen the progress that we have in the HOPD or the outpatient setting for community hospitals as well as in ambulatory surgery centers is very encouraging.

Great. And if I could just have a quick follow up, you mentioned having $40 million commercial lives, under having EXPAREL access and looking to get to $60 million by the end of the year, and then $100 million of total lives covered across commercial and government providers. Just curious where the focus might be in terms of making gains through the remainder of this year and then into next year.

Sure, thanks for the question, John. And I would say that we've been as strategic as we can be with especially regional plans. We're trying to align as best we possibly can our surgical volumes and opportunity with those large regional payer plans.

Of course we will be opportunistic, and I think we're also seeing a number of national plans start to really embrace NOPAINs, start to see reimbursement outside of the bundle. So we're encouraged with what we've seen through the first half of the year and a couple of very recent wins as well. So we'll continue to pursue that. We know that there's kind of a tipping point for our customers when they see not only reimbursement from CMS but a preponderance of their commercial life being covered as well.

Yeah. John, let me just add to that, that I have to say that I'm very pleased with what progress we've made on the commercial payer front probably market access. As we had talked about before, NOPAIN was actually enacted getting commercial players to adopt sooner rather than later was important, and oftentimes it can take years. And so really proud of the market access team for what they've accomplished. This is ahead of our plans and I think to the extent that we get our target into the year of $100 million total, that'll be a really great accomplishment.

Gary Nachman, Raymond James.

Hey guys. This is Denis Reznik on for Gary Nachman. Thanks for taking our questions. So first, you've previously talked about expanding the current suite of products ex-US with a partner. So can you provide an update on how those conversations are going? What are you looking for in a partner? When do you think a deal could materialize? And would you look for a partner for all three parts at once, or would you go one by one? And then I've got a couple follow ups. Thank you.

Thanks, Denis. Really good questions. Indeed, we believe there are markets outside the US with meaningful opportunity for all of our products. Of course, the initial focus certainly our flagship product EXPAREL, but ZILRETTA and iovera potential there as well. So we're making good progress and if you think about our 5x30 goal of having 5 partnerships in this time frame, we think we're well on track.

So I can't give you any specific dates, but what I can tell you is that there's been very good interest and as we think about potential strategic partners, they would of course be leaders in their field. Meaningful penetration in portfolio and values that are aligned with ours.

So those are some of the things that we look for and the good news is, I think that there are meaningful partners out there and so we'll keep you apprised of how things are progressing, but I can tell you now that we're active in the process and that we're pleased with the kind of dialogue we're having.

That's great. And then if I may, ask for some more color on PCRX-201 and the resend through your data, kind of any call you can give about the significance of it and the feedback from the poster presentations, and then on the ongoing Phase 2, it's nice to see the enrollment going so well. Could you just remind us how many total sites you plan on having, and the split between how many are in the US versus ex-US? Thanks.

Yeah, thanks for the question. 201, I have to tell you there's been very good excitement about 201, as we all know, there's been a lack of innovation and broadly the way of the space and, a big reason why we have in essence breakthrough status for gene therapies, the RMAT designation.

So the data that we recently presented were three year data. And as I mentioned in my comments, there are very few studies that follow patients with OA of the knee out to three years, and we're seeing still a very good response, very good safety profile and data that we've observed.

Of course this is an open label study, and we'll know a lot more as we progress and report on our ASEND study. So to answer your question about the response from investigators, thought leaders, et cetera. And to and there's been a lot of great excitement about that one. Number one, number two is that as we think about the ASCEND study we haven't provided all the specifics about the number of sites, et cetera. But what we can tell you is that there are three arms, and one is the control is the steroid control, and then two other arms that are the steroid plus CPRX-201.

And so we're more than halfway through our enrollment that's progressing very, very well. And so we expect to be completed by the end of this year for Part A and then Part B will start next year. So bottom line is we'll have some initial data as we've talked about before, from Part A sometime towards the end of '26 or '27 in that time frame.

Great. Thank you so much, and congrats on all the progress.

Thank you.

Douglas Miehm, RBC Capital Markets.

Excuse me, good afternoon everyone. My question just has to do with the guidance. Saw that you tightened it, $730 million to $750 million now, but what I'm curious about is back in Q1 when you were looking at these numbers and you had a wider range, what is it that's changed that's moved you away from let's say the upper end, the $750 million to $765 million, is it more price or is it NOPAIN and the discussions that you're having with payers little slower than you anticipated. Just curious about that.

Thanks for the question, Douglas. Obviously I have a launch of something like this. There are uncertainties and of course we provided a guidance range where we thought was reasonable. It all comes down to just some of the fundamentals that we talked about and Brend address which is market access, to what extent could we get commercial payers to come on board along with now this new CMS reimbursement, enough so that we have tipping points in certain geographic areas where the majority of patients, let's say, are covered under this new approach to reimburse EXPAREL.

That's when meaningful change really happens. And so without having some initial data, we had to provide that kind of a range and now we have better certainty as we've now got a half the year under our belt. And so that's why I think we can provide this more narrow range. So the midpoint hasn't changed and if that's your question, of course, but I think it's really about market access, about tipping point where the majority of patients are covered on this kind of reimbursement. And then of course, after that, we'll be driving awareness and utilization because access is available for the majority of patients.

Okay. And then just as a follow up, the J&J deal does look good on ZILRETTA, and I'm curious as we go into 2026, what in particular, where do you think that they're going to be able to add the greatest value to the product and I'll leave it there. Thank you.

Yeah. Thanks. So I'm going to look over here, Brend. Thanks for that.

Yeah. Just to reiterate, we're thrilled to have this opportunity. I spent the first half of my career at J&J, and it's wonderful to be partners with them again here. As Frank shared in his prepared comments, this essentially doubles our ability to reach our audience with a promotionally sensitive product like ZILRETTA. And beyond that, J&J has a great deal of experience in the space and a broader customer base than we were originally calling on with ZILRETTA.

So coming into play in much more prominence are groups like sports medicine, some of the pain management centers, and in particular, rheumatologists. All of that I think, expands our messaging for ZILRETTA to an audience that needs to know. That they have an option beyond the HA's, many of which you're not able to give more than once or twice in a year. So it's really a nice compliment to their portfolio and a very logical product to have in their bag for the OA treatment journey.

Excellent. Thank you.

Thank you, Douglas.

Hardik Parikh, JPMorgan.

Hey, thanks for the questions today, and thanks for the update, Frank and team. I had a couple questions. First is just wondering, you mentioned that survey you guys had done, and you're talking about the organizations who plan to add EXPAREL to the formula. It could take 6 to 12 months to start adopting. I'm just wondering, did you get any more color from that survey in terms of what are the gating factors that kind of lead to that 6 to 12 month time frame?

And then the second part is when your sales teams are pitching to various stakeholders qualitatively how much of the discussion is on educating on NOPAIN versus explaining the benefits of EXPAREL relative to alternatives. Thank you.

So I'm going to look to Brend here on that one as well. So Brend, thanks Hardy.

Yeah. For sure. If you go back to when NOPAIN went into effect which is January, most of the time -- when you're asking your audience why it might take them a little bit of time to effect that change, a lot of it is to confirm they're going to get the reimbursement that they believe is coming. They also understand that CMS, while that accounts for a significant number of procedures, it's about third of the total.

So they want to see, will commercial follow that plan. So as we've been updating every earnings call, we want to put increasing points on the board for commercial coverage outside of the bundle. As that becomes reality in a variety of geographic areas, we see increasing numbers of payers come on board with EXPAREL reimbursement outside the bundle.

And then, just speaking about how we speak about EXPAREL, let's be clear, we are obviously excited about what NOPAIN means in terms of the value proposition, the enhanced value proposition for EXPAREL. But the majority of our time is spent explaining what differentiates EXPAREL from alternatives and why it leads to the types of outcomes that our patients deserve.

And I think you'll see more of that in the second half of the year as we look to amplify that message and make sure that patients, caregivers, and physicians understand what makes EXPAREL the best choice for procedures for which it's approved.

Thanks, Brendan. Let me just add to that, with regard to the health economic value proposition so important in these settings, increasingly important as we go forward and as we step back, I mentioned that we have 2,500 patients in the iGOR registry that follows patients through their OA of the knee journey, and we think that's going to provide some really great insights into not only the value of our products, but some other products that are used in the setting and give us again, better confidence that we'll be able to provide more patients access to our medicines.

Thank you for the color.

And this concludes the question and answer session. I would now like to turn it back to Susan for closing remarks.

Thank you, Sean, and thanks to all on the call for your questions and time today. We're energized by the opportunities ahead and remain focused on executing our 5x30 growth strategy with discipline and purpose. As we move through the remainder of the year, we are confident in our ability to build on our momentum and position Pacira for long-term success. Thank you again for your continued support and be well.

Thank you for your participation in today's conference. This does conclude the program, you may now disconnect.