Pacira BioSciences, Inc. (PCRX) Earnings Call Transcript & Summary

Good morning, everybody. I'm Chris Schott at JPMorgan, and very pleased to be introducing Pacira today to kick off day 3 of the JPMorgan Healthcare Conference. From the company, we have Dave Stack, the company's Chairman and CEO; as well as Charlie Reinhart, the company's CFO. As a reminder, we're going to have a -- Dave is going to make a presentation. From there, we're going to turn it over to a Q&A session. [Operator Instructions] So with that, let me turn the presentation over to Dave, and we'll go to the Q&A after that.

Thank you, Chris, and good morning, everyone, and the typical disclosures as well as our thank you to JPMorgan for making it possible for us to spend a few minutes with you this morning. We are in an exciting time at Pacira. We continue to grow the company around our 3 growth pillars. What I'd like to highlight to start out the program is that our mission is consistent, to provide an opioid alternative to as many patients as possible using multimodal enhanced recovery after surgery protocols that move opioids to the rescue scenario. And really, what this is doing, and we'll talk about this over the next few minutes, is really changing the way Medicine is practiced and changing the standard of care for postsurgical pain control. We're in a very strong position from a financial point of view. We recorded $429.6 million in revenue for full year 2020. I think on a month-to-month basis, folks have been following the story. And we've actually enjoyed having the opportunity to disclose our revenues on a monthly basis. It's led to a lot of very productive discussions with the financial community. I'd like to put a little bit of color around this. I mean how do we get to the graphs that are represented on this slide. There's several components. First is gross margin, we believe, over the 5-year planning period will improve by 10 points. We also know that our R&D or believe that our R&D will stay roughly flat. And when we look at SG&A, given the termination of the Johnson & Johnson agreement, we have been able to add several layers of enhanced resources and value-creating opportunities around both EXPAREL and iovera°. And we are guiding forward or we're talking internally in our 5-year planning period about a low single-digit OpEx increase on an annual basis. And so when you roll all that together, you get a very exciting long-term EBITDA story. And I think folks are starting to appreciate that as they've seen the numbers for the last several quarters. And I would also say that we were EBITDA positive in Q2. In the very depth of the COVID pandemic, Pacira was still EBITDA positive. So we've had a big year. We've achieved a lot in a fairly challenging environment. We're going to talk about most of the things on the top as we go through the rest of the presentation. So I'm not going to spend a lot of time there. I would focus on the bottom, where we had a $400-plus million debt issuance at less than 1%. We've -- we're preparing to launch both EXPAREL and iovera° in Europe, and we've accomplished a lot of that in 2020. And as I mentioned already, we terminated the DPS agreement, which was really predicated by the COVID environment and our need to be moving these patients out of the hospital and into the ambulatory environment. And in fact, a lot of the EBITDA story that you see is that we've been able to move from being an inpatient surgery-based company to an outpatient anesthesia-based company, and that's led to a lot of the efficiencies that we talk about when we talk about our financials. So first -- the first global pillar, expanding product utilization. And there's really 2 separate things going on here. One is our product assets and building out both EXPAREL and iovera°. It's also making sure that the investors understand that the COVID pandemic has also caused a very significant increase in opioid-related side effects, like suicides, et cetera. So the use of the -- the decreased use of opioids really has an impact not only on postsurgical pain control and on chronic pain with iovera° but also allows patients to avoid all of the COVID-related issues of the strange environment we find ourselves in. And so not starting patients on opioid is the long-term opportunity here with both of our products and with the assets that we plan to bring in through our BD activities as well. So having had a chance to look at a potential competitor's package insert from Europe, I can say with great confidence that we will -- if we have this presentation next year and the year after that and the year after that, I will be able to say to you that this is the only non-opioid long-acting product that's available for infiltration field block and brachial plexus nerve blocks. These ERAS protocols and multimodal protocols are very important because we've standardized the opportunity to reduce opioids. And as I'll talk about in a couple of minutes, that's increasingly important when we move to the ambulatory surgery center, where surgeons and anesthesiologists don't have the same tools, like high doses of opioids and pain pumps and thoracic epidurals that they might have in a hospital setting. There's 20 million Americans who are in recovery. And so the fact that EXPAREL is the only product with level 1 clinical evidence that we can do painful surgeries like total knee arthroplasties, rotator cuffs and C-sections with no opioids. And the patient treatments are accelerating. As we have this presentation today, we've treated over 8 million patients in the United States since launch. So where do we go from here on the right-hand of this slide, and I'm on Slide 7 for those on the web. Regional anesthesia is the most important long-term driver that we have. Only 20% of the anesthesia procedures that were performed in 2020 were done using regional technologies. And so enhancing the anesthesia ability to use non-opioid treatment algorithms is really the key to the future, and we're speaking to you today from our new innovation and training center in Tampa, and that is the reason we built this center. So what we're doing here is we're increasing the use of newer regional blocks. So if you think back into the old days, 10 years ago, anesthesiologists knew about a lot of these blocks, but because they only work for 6 or 7 hours, there really was no return on investment for learning how to use them and the technology that was required to perfect the art. Now moving from several hours to several days with EXPAREL makes it possible for us to look at a whole range of regional blocks for both field blocks and nerve blocks, things like erector spinae block for spine surgery and for scoliosis, pectoralis for breast, PENG for hip arthroscopy. And these are all driven by physician requests to enhance their ability to treat pain without opioids or moving opioids to a rescue opportunity. We're also expanding the label to include pediatrics. Our PDUFA date is March 22. And we're in the middle of enrollment for the STRIDE study, doing a lower extremity nerve block trial for foot and ankle. And we expect to have top line data at the end of the first quarter or maybe leaking into April of 2021 of this year. As we've said many times, we will launch in Europe for both EXPAREL and iovera° around midyear this year. And we expect that, that will eventuate slowly and -- but over the 5-year planning period, we do expect that we would have revenues of roughly $100 million from this European opportunity. And long-term market exclusivity and competitive advantage, we don't see any commercially viable competition in the 5-year planning horizon. And from our perspective, and I'll get into this in a slide later in this presentation, there is no generic threat that is in any -- of any reasonable concern. So building out a little bit on that in terms of shifting using EXPAREL and iovera° to shift surgical procedures to the ambulatory surgery setting. As I mentioned, it's really extending what physicians have wanted to do for many years by being able to provide several days of reliable pain control. Remember that the anesthesiologists are experts and know where the nerves are and in the best place -- or the best practice of how to use ultrasound guidance to ensure that we have a reliable block, really important when we're only going to have the patient in for a few hours in the ambulatory surgery center, and we know that there will be several days of pain control required. We've talked to you guys for several years now about a TAP block where EXPAREL is injected as a field block in between the transverse and abdominis muscles into that plane. There's over 7 million procedures being performed there on an annual basis. And we see continued growth there, spurred on most recently by the C-section data where we've shown that we can do a opioid-free C-section. A newer block that is being driven by CMS reimbursing for total hip arthroplasty and the ASC as of January 1 of this year, a couple of weeks ago, is something called a PENG block, a pericapsular nerve group. And this has been sought after by the physicians who -- many of which have been here and came to this facility because they didn't feel like their hip pain program had kept up with their knee program, and they wanted to see what the state of the art was in terms of doing these PENG blocks. And then across a broad spectrum of regional anesthesia approaches, our partnerships with many of the large anesthesia groups to train their anesthesiologists and their CRNAs on how to do these regional approaches to improve patient care but also to improve the value of the anesthesia group and working and moving patients to the ASC, which is of great interest to the payers. So if I go to the last bullet point on Slide 8, again, referring to the fact that the COVID pandemic and the need for EXPAREL, not only to move patients to an ambulatory surgery center for their elective procedures to avoid going into a COVID environment for what could be a very simple procedure and -- but also to move patients to a less costly environment. By moving to an ASC, commercial payers, self-employed payers as well as the government and CMS now understand that they can save several thousand dollars on large painful procedures, like total hip arthroplasty and spine, by simply moving to an environment, which is the ambulatory environment. I'm on Slide 9. This is an IQVIA slide. There's been a lot of discussions with us about what happened in November, where we reported 3% increase year-over-year. First, I would remind everybody that it was an increase year-over-year in a very difficult environment, but also this slide gives a very real explanation of what happened. And then a week characterized here by 11/27 along the bottom, you see that elective surgeries decreased by 45% in that week versus the week of -- the same week previous year, and EXPAREL was down 10%. And you'll also see a consistent movement where EXPAREL is outperforming the elective surgery market, and to give a little bit of color to that. And this is anecdotal. But as we talk to folks about what was going on in individual practices, not only did we have contact tracing that was impacting the surgical opportunity to have patients available for surgery, but there is a lot of exhaustion in the marketplace. And doctors, especially orthopedic surgeons, had trouble filling out their operating room schedules around the availability of support staff, the nurses. And all the folks that are required to fill out a surgical program just were not willing to work 10- and 12-hour days, especially the Wednesday, Thursday, Friday and the Monday of Thanksgiving. So moving to Slide 10 and focusing on the EXPAREL market opportunity. To share with you that this graph would give a very real representation that, today, we have a massive opportunity in front of us. In fact, we have a market share of less than 6 million. And so we are doing a number of things in each of these product categories, each of these procedure categories, to be able to enhance the use of EXPAREL and iovera° and non-opioid treatment programs. As I mentioned, for large profitable procedures, moving orthopedics to the ambulatory surgery environment. This all started actually with the brachial plexus block in April of 2018, and you've seen the financial results since then. And we are now in the middle of the STRIDE study where we are examining foot and ankle and knee surgeries. And the intention here is to get a package insert indication for a lower extremity nerve block. We'll file that application later in 2021 with the hope of gaining approval in the first or second quarter of 2022. The bread and butter has been abdominal surgery for us from day 1, and that's the place that EXPAREL still is widely used. An evolving scenario for us is women's health as a category. I mean C-section has really driven this over the recent quarters. But understand that with TAP blocks for the abdomen and pec blocks for breast, we are a standard of care for gyn/oncology, for mastectomy and breast reconstruction procedures. And we see women's health is a very important and growing sector for us. More nascent is cardiothoracic, but you can think again about these procedures. Nobody thinks we're going to move a heart-lung machine procedure to the ambulatory center. But there is a lot of interest around reducing opioids and these major surgeries to enhance patient recovery and to make sure that these patients don't leave the hospital in a scenario where they are relying on opioids maybe well after their pain control is no longer an issue. So an important slide for us relative to a number of questions we've gotten from the financial community around market exclusivity over the long-term for EXPAREL. As most everyone will know, our Orange Book listed patent expires on December 24, 2021, this year. We have filed a number of unpublished and pending patents around method, around product and process, around manufacturing that will go out to 2041. And we have additional process -- provisional patent applications that are in process now that would take us out to 2042. I think I'm not sure that we've done a very good job explaining to everybody that EXPAREL is the only company that has ever manufactured a multivesicular liposome at commercial scale anywhere in the world. And that this is a sterile cold chain manufacturing expertise that has been developed over 20-plus years of experience. And then relative to anything that could look like a generic, first, the FDA draft guidance was really on multivesicular liposomes. And since EXPAREL is the only multivesicular liposome that's on the market anywhere in the world, it had to be drafted around setting out some characteristics that would be required to achieve a generic EXPAREL. Go to the last bullet on Slide 11 -- and the last 2 bullets, actually. We've had outside services suggest to us that it would take 10 to 12 years and up to $150 million in order to determine if you could make a multivesicular liposome with bupivacaine attached. And the important aspect of that is you would need to have commercial scale manufacturing, all the validation and all the operational issues that are required before you could do the bioequivalent study that's required by the FDA. So the generic multivesicular liposome, EXPAREL, would have to be identical to EXPAREL, which is hugely problematic for anybody who was going down that road. But for the purposes of the short-term here, the human PK trial would have to be done after this 10- to 12-year period, and you would still not have any idea. That would only allow you to do an ANDA. And at the end of the day here, we have -- there are hundreds of decision points that are made during a manufacturing batch of EXPAREL. And we've never disclosed to anybody what those specifications are. So you would have to be extraordinarily lucky to guess right across 100 different opportunities. And then even if you were successful in doing that, the release assay that's required to release a batch of EXPAREL is a proprietary assay to EXPAREL, and we've never disclosed to anyone what that is. In fact, there is no IP around that because we didn't even want to disclose the information that would be required to apply for a patent around what that release assay look like. So we have great confidence that there will never be a generic EXPAREL, at least in my lifetime. Switching to iovera° for a second, I want to communicate how perfectly this fits with EXPAREL. So this is another way to do a nerve block. The difference here is that instead of using pharmacology, we're using cold. So these are very much complementary procedures. And just to walk through the value proposition here, the effect of freezing a nerve is temporary and immediate. So patients who go into the treatment room in significant pain in a matter of a few minutes have no pain. And I've had iovera° personally 3 times, and I can tell you that the pain control is immediate. We can do it over and over again for patients that may be too young for an arthroplasty or just afraid of surgery for some reason. And so this technology also allows us, because it's available for repeated use, we can use it before to get a patient out of a wheelchair, going up and down stairs, back to the gym so that they're a better surgical candidate. And we can do it during the procedure to make -- to allow for an improvement around the pain of the surgery itself. And most importantly, and one of the things that we're looking at with the PREPARE trial, is does iovera° allow these patients to have a more rapid recovery. One of the primary endpoints in PREPARE is functional recovery, which is increasingly important to the self-insured payers. When I pay through my self-insured program to have a patient have a hip arthroplasty or a spine procedure or a knee procedure, when I get them back, actually, are they better prepared for their job function than they were before they went to surgery. The health care providers love it. It's a very simple elegant solution. There are several tips that are available and in development. There will be procedure specific. And we -- by removing the pain, we do allow the patients to have a completely different outlook on life in the short-term time after their surgical procedure. And importantly, unlike any other cold therapy that's on the market, you're not tethered to a piece of capital equipment. This is a handheld that you can walk around your office with. In fact, we've done this in my office. And you can do it in an ASC. You can do it in an HOPD. You can do it in the physician's office. So we have a great advantage in terms of how this technology will be implemented over time. And then the potential to reduce length of stay, the potential to think again about how we do physical therapy if the patient doesn't have the same pain limitations that they might have had before they had this and as we'll talk about in the next slide the opportunity in a nonsurgical environment to address peripheral chronic OA pain. So I'm on Slide 13 now. So we continue to believe that this is a $200 million market opportunity for us by year 5. Admittedly, COVID made 2020 a very difficult year. We've done a number of enhancements here. We've moved some of our most senior sales management over to iovera°. We've built out a team of roughly 30 that will be dedicated to iovera° as we move into 2021, and they will focus on 2 specific opportunities. One is the procedural solution of iovera° plus EXPAREL to improve total knee arthroplasty before, during and after surgery; and then to look at iovera° for opioid-free, surgery-free, drug-free opportunity to control osteoarthritis pain. Very simply put, if somebody is not ready for surgery or is not a surgical candidate for some reason, we can turn the pain signal off for several months and allow them to play golf, to go for a walk on the beach, all the things that folks might not be able to do with significant OA pain. And so we -- I've mentioned PREPARE several times. We expect to have that data with a 6-month follow-up period, sometime -- excuse me, in the middle of next year. And then we are also launching a registry with real-world evidence from leading academic and orthopedic centers. This will allow folks to look at the protocols and the procedures that are being used to enhance patient care in TPA (sic) [ TKA ] procedures. And then probably the most interesting and exciting for me at least on this slide is we have KOLs bringing opportunities to replace heat with cold to us. So specific procedures in low back pain, in spine and spasticity, where we are developing additional smart tips that we expect will allow us to really change -- dramatically change the standard of care in how we treat some of these different procedures with cold. I referenced rib fracture there just to give you a very specific example of how our portfolio is developing. If you need several days of pain control because you've done some type of a surgical procedure in the intercostal space, which would be the ribs, you might want to use EXPAREL. If you've got rib fracture, for example, you're looking for much more than several days of pain control, so we can provide several months of pain control in the same patient population by simply doing a 20- or 30-minute iovera° treatment. And so a lot of excitement around the portfolio in the marketplace. We're looking forward to COVID cleaning up so that our field force has access to these folks, especially in the orthopedic offices and then the sports medicine offices, around the treatment of peripheral osteoarthritis pain. So we've included Slide 14 just for completeness, so you guys had all of this in one place. I've talked about all of this already generally, so we're not going to spend any time on Slide 14. Slide 15, we've talked about the fact we're going to launch in Europe around the middle of the year. That will be both for iovera° and EXPAREL. We have a very good label in Europe, and we're in labeling -- we're in pricing discussions now with a number of authorities across the continent. We're also in discussions for EXPAREL in Canada on labeling. iovera° is also approved in Canada. In China, we are very thoughtfully approaching China. We will be absolutely certain that we do not provide any manufacturing information that would allow a generic to somehow have an enhanced opportunity in China. At the same time, it's a massive opportunity. And if we can find ways to navigate that with our partner, Nuance, that's what we're exploring right now with the Chinese FDA as well as with Nuance. And we expect over the next couple of months to be able to disclose to you additional partnership opportunities around the world. So I've mentioned the PITT a couple of times. That's where Charlie and I are speaking to you from right now. This is a state-of-the-art training center, and it is really changing the way we train surgeons and anesthesiologists virtually going forward. Just to give you a sense of what's going on in this facility. There was a training program for iovera° on Saturday. There was an EXPAREL training program here on Sunday. And just last night, there was a program with anesthesia fellows allowing them an opportunity to talk to KOLs about the state of anesthesiology, where they should go for their regional approach practices. And so we're really working on how to extend the use of field blocks and nerve blocks and how to extend the best practice, not only to the United States, but from this facility we can broadcast anywhere in the world and have KOLs talk to the regular anesthesiologists and do cadaver labs. We have a virtual cadaver lab here in this facility. So a very exciting opportunity for us to change the way physicians treat patients for postsurgical pain control. I'm on Slide 17, acquisition targets. We have a number of these targets. They go across the spectrum from inflammation to osteoarthritis, focusing mostly on chronic and peripheral nerve pain. And hopefully, you'll hear more about this over the next couple of quarters. We actually have a few of these that have been delayed by the COVID experience, both for due diligence and for sign off on the final M&A opportunities. But be assured that we are using our cash wisely, and we'll create value with our BD opportunities as we go forward here, moving procedures to the ASC space. And then in our own pipeline, we're using DepoFoam to fill in the blanks, if you will. We're currently doing a Phase I study with Duke, looking at a subarachnoid delivery of EXPAREL. The final product would likely not be EXPAREL. We would use the levo-isomer of bupivacaine. And the concern here is motor blockade, and so we're being, again, very thoughtful about how we develop this product in partnership with the FDA. And we're also looking at a number of different DepoFoam opportunities in chronic pain using our own technology. So with all of that, you see 2021 is going to be a big year for us. Clinical data, launches in different markets, approvals for pediatrics and a number of different ways to do business that not only enhance training for these people but also greatly -- for our customers, but also greatly reduce the cost involved in doing those programs. We expect to announce several complementary assets via business development and partnerships and a number of things as we advance through our own DepoFoam pipeline. And so with that, I turn it back over to Chris and have Q&A.

Great. Thanks so much for those comments, Dave. Maybe just to kick off with the Q&A. Can you elaborate a little bit more on EXPAREL dynamics in 4Q and what you've seen with the second COVID wave? When I look at that chart, it seems like the company is performing much better than elective procedure volumes, et cetera. And I'm just trying to get a sense of as the world starts to normalize a bit more in 2021, do you expect we'll see that similar kind of gap between elective surgery trends and EXPAREL? Or is this something that's, I guess, accelerated a bit because of the avoidance of hospital stays, et cetera? So I'm just trying to get a sense of -- obviously, very encouraging signs we're seeing now, but just as the world normalizes, how you see that evolving?

Yes. Actually, we're encouraged as well, Chris, and we actually think it accelerates once we get into a more normalized environment. We see EXPAREL as the enabler of this move to reduce opioids and be able to provide pain control with a single administration of something that provides several days of reduced or non-opioid pain control. In fact, as we've gone through the year, we think that there's roughly 4 million elective surgery procedures that have been warehoused. We see hospitals as well as physician groups and private equity firms building additional facilities for ambulatory surgery. Right here in Bradenton and Tampa, we have a new facility for spine surgery and orthopedic surgery. A big hospital group in Cincinnati announced that they were building an orthopedic hospital. Down to the fact that we have several calls now from OB/GYN groups and from private equity guys who want to build birthing centers, and they're looking for a same-day C-section opportunities. So -- and this will all be driven into the future by the payers. It's very clear that the payers have now understood that there are significant economic savings by moving a patient to enable for a surgery environment. And so we're very confident that the ship has sailed on anybody ever going back to the hospital environment as a preferred mechanism. That's patients, physicians and the payers.

Great. And I think part of the presentation, you mentioned about 20% of surgeries are using regional anesthesia. Where do you see that moving over time? And can you maybe just elaborate a little bit more on which surgeries you think are particularly interesting from an EXPAREL perspective to play a role in maybe changing the way we think about pain management for some of those procedures?

Yes. Sort of the standard fare, Chris, if you will. I mean if you were thinking about what docs have become pretty comfortable with, it's under ultrasound guidance doing something like a TAP block. And -- so that would give you basically anything below the umbilicus. It's the way we did the CHOICE study. So it's where we're using for C-sections, for example. And so that's 7 million procedures in its own right which was a key product just for that, right? But as we go forward, and docs have now understood that they can get several days of pain control under ultrasound guidance, we start to think about, well, I'm doing different things. So think about doing an infiltration in a morbidly obese person, right? It would be much easier to do a TAP block in that person for bariatric surgery. Think about spine, where we have a very specific idea of which dermatomes we want to hit, but it's very difficult to visualize what that looks like if you have to do multiple injections into the CNS, where, under ultrasound guidance, we can watch the spread of the drug and we can know exactly what's happening. And that's what we're doing here. We're bringing in the best KOLs from around the world. We're looking at the spread and a cadaver model and understanding exactly the impact of free bupivacaine of volume, of where you make the injection on all the different aspects so that we can produce manuscripts that will have visual components -- video components to them that will allow folks to move much more quickly than we've ever been able to do in the past to adopt things like PENG blocks, which are -- 3, 4 years ago, you would have said, what's that? Now since CMS is paying for ambulatory hips, folks are coming here saying, I need to know how to do that. And so you'll have a big anesthesia group send in a training group for a weekend program. We teach them how to do it generally. It would be one person from several different hospitals, and then they go back home to teach their own folks how to do that with the opportunity always to come back here for refresher courses. So that's what we're doing.

It sounds like relative to maybe traditional infiltration, this is a much easier process from a physician education perspective. Is that fair to say?

Well, yes, and surgeons are operating and they're doing surgery. Here we have anesthesiologists who really have a whole different frame of reference on pain control and the neuroanatomy and being 100% certain that we're going to release this patient without having to worry about them having pain. There was a lot of variability when docs were using EXPAREL by infiltration. Remember, it stays where you put it. So you had to be an expert in neuroanatomy to know where to put it and then you had to be willing to take the time and have the staff to be able to put it into those exact places to get your money's worth, so to speak. And now with the anesthesiologist we have somebody that does this for a living, basically. And it's not in all cases. There are cases where the surgeon and the anesthesiologist will do this together, where in a knee, for example, you would do a nerve block and a periarticular injection. But it is a completely different way of thinking about how we achieve pain control, especially when we don't have access to things that docs would have been using for years in a hospital setting.

Perfect. And then just maybe a quick update on EXPAREL usage with all these dynamics playing out. What percent U.S. maybe right now is inpatient versus outpatient in terms of usage? I know it's not target exact numbers, but what's your best guess.

So we have June data. And as we exited '19, 60% of our TAM were being done and the procedures we focus on were being done in an ambulatory environment, hospital outpatient and ambulatory surgery. And as of June, that's moved to 63%. So the end is smaller, of course, because of the pandemic, but I think you see a considerable move. And we believe that by 2025, that will be at least 75%.

Okay. Okay, great. I know you mentioned from a competitive standpoint, feeling pretty comfortable. Can you just talk a little bit about when we eventually see a competitor here how you think about the traditional infiltration business? I know that's -- you're kind of moving away from some of that with the business. But just how do you think about the competitive landscape as we do get competition in the market and acknowledging it's obviously not going to happen anywhere near the breadth of utility that EXPAREL has?

Yes. Well, there's a couple of things. First is the package insert indication. So it will be a difficult scenario to come after a product on the market that has a very broad usage profile, especially if we're successful with peds and lower extremity nerve block. We will be in a very different situation. But I think the bigger issue is safety. And the anesthesiologists community, not the surgeons and everybody else, is not worried about safety. But with every anesthesia program we do, we spend significant time talking about safety and talking about all of the issues associated with bupivacaine and EXPAREL and how it's been developed and all of the different safety mechanisms that are built into the technology here. I think more than the indication, frankly, it's going to be a very difficult sell when there are safety issues that are associated, at least with the label that we've seen so far from Europe. And so there's wound healing. There's warnings on skin reactions. There is a whole bunch of things in that package insert that are very consistent with the citizens petition that we filed several years ago that we've never seen before from bupivacaine. So we're very comfortable with where we are with EXPAREL and the evolving marketplace that we've developed.

Great. Can you talk a little bit about OpEx dynamics? I guess just on a go-forward basis, can you just talk about this kind of low OpEx growth going forward because it seems like on one hand, you've got a lot of new indications, a lot of growth. So how do you manage to maximize that opportunity in an environment where you've got limited kind of expense growth? And so just help me understand the balance that you're achieving there.

Sure, Chris. I'd be happy to do that. So as you are well aware, we had a relationship with DPS, which was ended at the beginning of this year. So that frees up a fair amount of additional money for us to both invest in our business and to leave some on the bottom line. Dave mentioned the fact that we've -- we're expanding the iovera° sales force. He mentioned that we have made some additional investments in the EXPAREL's commercial organization. The peds launch will be supported by a small group of pediatric specialists internally. And we're starting to put together a team, a small, focused group on the spine, obviously. We're also launching in Europe, and that will require some investment over the next couple of years before that spring. But all of those things were covered by the J&J fees that are not going to be incurred going forward and the bottom line will expand.

2 quick things, Chris, just to give a very direct answer. So if a Pacira rep worked with an orthopedic surgeon and a very good orthopedic surgeon, we might cover 6 or 8 cases in a day, right? When you look at a skilled regional anesthesiologist who has access to a block room where the patient is brought into a block room for their postsurgical pain control before they ever have an incision, that transaction will take a couple of minutes. And that anesthesiologist could use EXPAREL 60 times in a day. And so it's the opportunity around having an audience that -- once they learn how to use EXPAREL, there's very little continued enhancements needed other than having them come to the PITT for new blocks or for different ways of doing things. And so we actually are in a very -- a much more dynamic return on investment model. And I'll just enhance what Charlie said just for 1 second. If you look at 2019 and you look at 2021, with all of the enhancements that Charlie just mentioned, our sales and marketing expense has actually gone down from 2019 to 2021. And so we've been able to achieve all of this growth while we're actually reducing the OpEx line. And then going forward, we think we can manage that on a low single-digit annual basis.

Great. So it seems like pretty healthy margin expansion going forward, which is a more -- much more efficient model that's created with this pivot to anesthesiologists. It's fair to say.

Yes.

Excellent. I think we're about out of time. Congrats on all the progress and everything. Look forward to seeing that the trends continue in '21, and thanks for joining us today.

Well, and thanks for the opportunity, Chris. We appreciate it a lot, man. Take care.

Thank you, Chris.

Take care. Talk to you soon. Take it easy.

Bye-bye.