On November 3, 2022 Pacira BioSciences, Inc. (Nasdaq: PCRX), the industry leader in its commitment to non-opioid pain management and regenerative health solutions, reported financial results for the third quarter of 2022 (Press release, Pacira Pharmaceuticals, NOV 3, 2022, View Source;991.htm [SID1234623016]).

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Third Quarter 2022 Financial Highlights

Total revenues of $167.5 million
Net product sales of $132.6 million for EXPAREL, $26.5 million for ZILRETTA, and $4.5 million for iovera°
Net loss of $0.7 million, or $(0.02) per share (basic and diluted)
Adjusted EBITDA of $55.2 million
"In the third quarter, we continued to post increasing revenue and adjusted EBITDA, which underscores the success we are achieving in bringing our innovative non-opioid pain management solutions to patients," said Dave Stack, chairman and chief executive officer of Pacira BioSciences. "Moving forward, with an EXPAREL exclusivity runway extending into 2041 driving significant and durable operating cash flows, we are well-positioned to deliver near- and long-term value creation through a blend of new indications within our current commercial portfolio as well as new product development opportunities to support our growth in 2023 and beyond."

Recent Business Highlights

New EXPAREL Patent and Notice of Allowance. In October, the U.S. Patent and Trademark Office (USPTO) issued Patent Number 11,452,691. This patent is a chemical composition patent, with an expiration date of January 22, 2041. This patent is now listed in the U.S. Food and Drug Administration’s Approved Drug Products with Therapeutic Equivalents Evaluations (Orange Book) and is the 8th listed patent. The company also received a Notice of Allowance from the USPTO for a U.S. Patent Application that is a product by process patent for EXPAREL. After issuance, Pacira will submit this patent for listing in the Orange Book.

Positive Topline Data from Two Phase 3 Registration Studies of EXPAREL as a Lower Extremity Nerve Block. In September, the company announced positive topline results from two Phase 3 registration studies of EXPAREL as a single-dose nerve block for postsurgical regional analgesia in lower extremity surgeries. The first study evaluated EXPAREL as a femoral nerve block in the adductor canal for total knee arthroplasty and the second study evaluated EXPAREL as a sciatic nerve block in the popliteal fossa for bunionectomy. Both studies achieved statistical significance for the primary endpoint demonstrating a statistically significant reduction in cumulative pain scores from 0 to 96 hours (p<0.01) and the key secondary endpoint reduction in postsurgical opioid consumption through 96 hours (p<0.01) compared with bupivacaine HCl. In the bunionectomy study, EXPAREL also achieved statistical significance for the percentage of opioid-free subjects (p<0.001) through 96 hours compared with bupivacaine HCl. EXPAREL was well tolerated with a safety profile consistent with bupivacaine HCl.

Positive CHMP Opinion for EXPAREL for the Treatment of Postsurgical Pain in Children Aged 6 or Older. In September, the company announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending marketing authorization for an expanded indication of EXPAREL to include use in children aged 6 years and older as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds. The CHMP opinion was based on the results of the Phase 3 PLAY study of EXPAREL infiltration in pediatric patients undergoing spinal or cardiac surgeries. Overall findings were consistent with the pharmacokinetic and safety profiles for adult patients with no safety concerns identified at a dose of 4 mg/kg.

Positive Phase 1 Data for PCRX-201. The company recently finished analyzing data from its Phase 1 study of PCRX-201, a novel, intra-articular gene therapy product candidate that produces IL-1Ra for osteoarthritis. Based upon very compelling initial Phase 1 efficacy and safety data for PCRX-201, we are working with investigators and plan to request an FDA meeting to discuss the regulatory pathway forward for osteoarthritis of the knee—a very important and exciting addition to our durable non-opioid pain management pipeline.
Third Quarter 2022 Financial Results

Total revenues were $167.5 million in the third quarter of 2022, versus the $127.7 million reported for the third quarter of 2021.
EXPAREL net product sales were $132.6 million in the third quarter of 2022, versus the $121.9 million reported for the third quarter of 2021.
ZILRETTA net product sales were $26.5 million in the third quarter of 2022. The company began recognizing ZILRETTA sales upon completing its acquisition of Flexion Therapeutics, Inc. in November 2021.
Third quarter 2022 iovera° net product sales were $4.5 million, versus the $4.2 million reported for the third quarter of 2021.
Sales of bupivacaine liposome injectable suspension to a third-party licensee for use in veterinary practice were $3.0 million in the third quarter of 2022, versus the $0.7 million reported for the third quarter of 2021.
Third quarter royalty and collaborative licensing and milestone revenues were $0.9 million in both 2022 and 2021.
Total operating expenses were $146.2 million in the third quarter of 2022, versus the $96.3 million reported for the third quarter of 2021.
Research and development (R&D) expenses were $19.4 million in the third quarter of 2022, compared to $11.6 million in the third quarter of 2021. R&D expenses included $7.2 million and $4.7 million of product development and manufacturing capacity expansion costs in the third quarters of 2022 and 2021, respectively.
Selling, general and administrative (SG&A) expenses were $61.3 million in the third quarter of 2022, compared to $47.9 million in the third quarter of 2021.
GAAP net loss was $0.7 million, or $(0.02) per share (basic and diluted) in the third quarter of 2022, compared to GAAP net income of $17.7 million, or $0.40 per share (basic) and $0.39 per share (diluted), in the third quarter of 2021.
Non-GAAP net income was $29.9 million, or $0.65 per share (basic) and $0.64 per share (diluted) in the third quarter of 2022, compared to $32.5 million, or $0.73 per share (basic) and $0.72 per share (diluted), in the third quarter of 2021.
Adjusted EBITDA was $55.2 million in the third quarter of 2022, compared to $48.1 million in the third quarter of 2021.
Pacira ended the third quarter of 2022 with cash, cash equivalents and available-for-sale investments ("cash") of $346.1 million. Cash provided by operations was $42.7 million in the third quarter of 2022, compared to $60.3 million in the third quarter of 2021.
Pacira had 45.8 million basic and diluted weighted average shares of common stock outstanding in the third quarter of 2022.
See "Non-GAAP Financial Information" below.

Financial Guidance

Since early 2020, the company’s revenues have been impacted by COVID-19 and pandemic-related challenges that included the significant postponement or suspension in the scheduling of elective surgical procedures due to public health guidance and government directives. While the degree of impact has diminished during the course of the pandemic due to the introduction of vaccines and the lessening of elective surgery restrictions, certain pandemic-related operational challenges persist. It remains unclear how long it will take the elective surgery market to normalize or if restrictions on elective procedures will recur due to future COVID-19 variants or otherwise. Given the continued uncertainty around labor shortages, COVID-19 and the pace of recovery for the elective surgery market, the company is currently not providing revenue or gross margin guidance. To provide greater transparency, Pacira is reporting monthly intra-quarter unaudited net product sales for EXPAREL, ZILRETTA, and iovera° until it has gained enough visibility around the impacts of COVID-19. Pacira is also providing weekly EXPAREL utilization and elective surgery data within its investor presentation, which is accessible at investor.pacira.com

Today the company is reiterating its full-year 2022 operating expense guidance as follows:

Non-GAAP R&D expense of $75 million to $85 million; and
Non-GAAP SG&A expense of $220 million to $230 million.
Stock-based compensation of $47 million to $50 million.
See "Non-GAAP Financial Information" below.

Today’s Conference Call and Webcast Reminder

The Pacira management team will host a conference call to discuss the company’s financial results and recent developments today, Thursday, November 3, 2022, at 8:30 a.m. ET. For listeners who wish to participate in the question and answer session via telephone, please pre-register at investor.pacira.com/upcoming-events. All registrants will receive dial-in information and a PIN allowing them to access the live call. In addition, a live audio of the conference call will be available as a webcast. Interested parties can access the event through the "Events" page on the Pacira website at investor.pacira.com. For those unable to participate in the live call, a replay of the webcast will be available on the Pacira website for approximately two weeks following the call.

Non-GAAP Financial Information

This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP net income, non-GAAP net income per common share, non-GAAP weighted average common shares outstanding-diluted, non-GAAP cost of goods sold, non-GAAP research and development (R&D) expense, non-GAAP selling, general and administrative (SG&A) expense, and adjusted EBITDA (as defined below), because these non-GAAP financial measures exclude the impact of items that management believes affect comparability or underlying business trends.

These measures supplement the company’s financial results prepared in accordance with GAAP. Pacira management uses these measures to better analyze its financial results, estimate its future cost of goods sold, R&D expense and SG&A expense outlook for 2022 and to help make managerial decisions. In management’s opinion, these non-GAAP measures are useful to investors and other users of the Company’s financial statements by providing greater transparency into the operating performance of Pacira and its future outlook. Such measures should not be deemed to be an alternative to GAAP requirements or a measure of liquidity for Pacira. Non-GAAP measures are also unlikely to be comparable with non-GAAP disclosures released by other companies. See the tables below for a reconciliation of GAAP to non-GAAP measures.