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

Good morning. For the folks that are here with us live, thanks for taking the time to join. For folks that are online, we're excited to share what we believe is a unique position of Pacira. Very few companies can provide opportunities to address both the COVID pandemic and the opioid epidemic, providing low or no opioid options to migrate procedures to the 23-hour sites of care, while hospital beds are being sequestered for COVID patients. We have the standard -- not working? I'll do it -- so just standard disclosures and forward-looking statements. So we have a packed day, and so I'm going to jump right in. For those of you joining us on the web, if you exit full-screen mode, you'll find a Q&A portal on the right-hand side of the screen for you to enter your questions. We'll have a 20-minute question-and-answer period at the end of the presentations. So I'm going to start out with a couple of slides that talk about the TAM for our currently marketed products and where we see the growth opportunities. So first, EXPAREL, the firstborn son. We have a number of large and, we think, very addressable product opportunities going forward. I'll remind everyone that the Pacira mission is to provide an opioid alternative to as many patients as possible. So hopefully, as we go through the day, you'll see how that we are operationalizing that. So overall, there's 32 million procedures. And I just want to note that, that does not include our maxillofacial surgery and plastic surgery. Of those, 20 -- well, and so the growth rate for EXPAREL in the last non-COVID year was over 23%. And the growth rate this year through Q3 was over 27%. Overall, we've treated 9.3 million patients to date, and we forecast for 2022 that we will treat over 2.3 million patients in the United States alone. So if we go to the annual data that we get, but this is 6 months delayed, and you guys hear me talk about this all the time on the delay, the best we have now is April data. So to give you a sense of where we are, with April data, we had a market share of 5.5% in this TAM, and it's growing by roughly 0.1% per month. So we're growing at over 1% on an annual basis. And to give you a time stamp, 1 market share in this market is worth a little over $100 million. And so you can see the growth trajectory of the brand EXPAREL alone. So what are the drivers of this growth? How do we expect to meet our objectives that we've talked with you guys about repeatedly? The first is field blocks and nerve blocks. In 2018, only 20% of the anesthesia procedures for pain control were done with regional techniques. We think that, with places like the PITT and with new blocks, that we can make that number more than 80% by 2025. There is advances in imaging; the fellowship programs now all train in ultrasound; and the development of new blocks like ESP blocks, pec blocks, PENG blocks, all things that we'll share with you guys as we go through the day today. The second big mover is the migration to the 23-hour stay environment, the ambulatory surgery centers and hospital outpatient compartments. And we believe that, that is largely driven by the enablement of EXPAREL to provide low or no opioid care that allows these folks to be in a 23-hour stay environment for only a few hours after surgery. In fact, today, over 70% of our procedures and the procedures in our TAM are done in a 23-hour stay environment. EXPAREL-based multimodal enhanced recovery after surgery protocols are the standard of care to enable this migration. Interestingly, this market is being driven primarily now by commercial payers and self-insured payers who understand that they can save roughly 35% of the cost of care by moving these patients to the ambulatory environment. Patients and providers are great supporters of the move to an ambulatory environment or to a 23-hour stay environment. And I can tell you that when you do these surveys, the patients will never go back to a hospital if they have the choice of being treated in a place where they go home a few hours after their surgery. From a procedure basis, again, I'll refer to the April data, that's where we get procedure and site of care. And as of April this year, 52% of our procedures were done in orthopedics, and 48% were done using soft tissue techniques. In orthopedics, the drivers are really joint arthroplasty, primarily hips and knees, shoulders, including rotator cuff repair, and spine. And really what we see driving that is the move to the 23-hour stay environment. In fact, in April of this year, 74% of the EXPAREL cases that were done in the ASC were, in fact, orthopedic cases. For soft tissue, abdominal and colorectal are the mainstay. It's really where this product started in the marketplace. It's where bupivacaine was used before EXPAREL. And so we still have a market share of roughly 28% with just abdominal and colorectal. But we see a great growth opportunity with women's health: C-section, mastectomy, breast recon, ovarian and cervical cancer. And in fact, we have protocols -- ERAS protocols for virtually every procedure that's performed at MD Anderson using low or no opioid treatment strategies. Pediatrics is a recent launch, but you're going to hear a lot in just a few minutes about pediatrics and how we're changing the way medicine is practiced for pediatric care, really meaningful to us because that's our most vulnerable patient population and the folks that we need to pay the most attention to given the opportunities that we have. And also just for you to know, we continue to have discussions with the FDA about treating patients 2 to 6 as well as getting a peripheral nerve block indication for pediatrics. And then rest of world, you won't hear anything about today, so just a quick mention upfront. For EXPAREL, we are in the process of launching in the European Union right now. And we also have a partner in Latin America. And so over the next couple of years, you'll see us roll out in the Latin America market with, of course, the big target there being Brazil. And then for iovera°, a generation 2 device that will roll out early next year, in addition to the United States, we will launch that ourselves in Europe, and we have a partner that will launch in Canada. So for iovera°, much quicker. So this is really -- it shows you the breadth of opportunities and procedures that we see with iovera°. And what we purchased in 2019 was just a small segment of this opportunity, as you can see not very clearly in that very small blue sliver there. And so what we see here is that we're replacing these clunky, large tanks of gas, et cetera, with a very small handheld device. And for those of you in the room, you can see them to the right of me, there's a whole bunch of them around, and we'll be able to show you more about this later. Really, the big benefit here is immediate pain control, no opioids, no drugs, no surgery. And the tagline here is stop pain cold. The current commercial activity and the dedicated sales force are selling for total knee arthroplasty and osteoarthritis. We think that, that gives us a foothold. We also think that we can expand this with their recent acquisition of ZILRETTA after the deal closes. That will give us a second opportunity to talk to these physicians about chronic pain. And we'll also show you later on that there are 2 current tips in development, but there are a number -- or 2 current tips, I'm sorry, on the market. There are a number of tips in development that allow us to go after medial branch block and specific spine procedures and spasticity in a number of future directed procedures. And you'll get the idea that we are really excited about the future opportunity with iovera°. Just almost housekeeping but to clean up a couple of things and give you guys our stated position on where we are with the ANDA filer, just 3 clean points. One, we have 4 currently issued patents, 3 which we expect to be Orange Book filed. These are product by process and chemical composition patents. We expect that there will be several more over the next coming months. And the Chinese company will have to navigate every one of these patents or there is no Paragraph IV to worry about. And they have till 2041 to figure this out. Point two, if they do get around the patents, and we think that, that is highly, highly unlikely, then the FDA guidance on multivesicular liposomes would have to be navigated, and those guidelines say that they would have to produce an exact duplicate. And you see listed on the slide some of the things that they would have to tackle. We don't believe that there's anybody that's got multivesicular liposome technology anywhere in the world. Just to give you guys a time point or a dollar stamp, we just opened our 200-liter facility in the U.K. The same people that built these facilities in the United States were over there, and it took them 7 years and cost us $100 million to replicate our own technology. There is no way that these folks have multivesicular liposome technology. And in addition to that, we've never released what our specifications are or what our proprietary release assay is that actually releases against those specifications. So you see the hurdles are very high. And then very quickly on Monday's news brief here, obviously, this deal hasn't closed yet, but we thought that we would at least put one slide in. We're very happy that we made this acquisition, an innovative non-opioid product to address a large and growing medical need for osteoarthritic pain management. It's complementary to iovera°, our cryotherapy product that we just talked about and gets us into chronic pain where, interestingly, Ron will talk about a number of our M&A activities are directed towards chronic pain. So this makes perfect sense. We're providing a toolkit to address the 15 million patients who have osteoarthritis in the United States. And this gives us an opportunity to have an immediate revenue opportunity. We expect to be accretive in 2022 and significantly accretive after that. And there's really synergy on all -- not only the call points but really all of the functional units and operating units. And this product has a J code, which we think gives us a significant opportunity to continue development in the United States. So with that, I'd like to introduce you our first speaker. Dr. Jeff Gadsden is a regional anesthesiologist and associate professor of anesthesiology, the Chief of the Division of Orthopedic and Plastic and Regional anesthesia at Duke University. This is a perfect way to start off our program, with Jeff in regional anesthesia and transforming the standard of care with EXPAREL. Dr. Gadsden?

Perfect. Thank you. Good morning. Well, my name is Jeff Gadsden. I am a regional anesthesiologists, which means that I stick needles in people for a living and get a kick out of that. And I want to start off this morning by telling you a story, one that goes back a few years. When we think of disruptive technology, we think about new tech that has attributes that are both superior to existing products and immediately obvious to the consumer which, of course, helps to propel the rapid adoption. And when it comes to the relief of pain and suffering as humans, we went through a phase where the best we could do was to chew on some willow bark or smoke some opium. And those things got the job done, but they also have side effects. And it's easy not to think about your pain once you're stoned, but it's hard to get much done in your day. Now all pain impulses in your body are carried by nerves. And in the 1880s, we learned you could put cocaine next to nerves, and your arm or your leg or your finger or your face got numb. And so you could target exactly where you wanted the patient not to feel anything and leave the rest of them whole without any side effects. And the idea of regional anesthesia is born. Now flash forward 100 years, we've put the cocaine down, and we've invented other local anesthetic caines. Things like Novocain or bupivacaine are prominent examples. But not much has actually evolved in the actual practice of regional anesthesia. And the limiter was knowledge of anatomy. So if you're going to slide a sharp needle into a very delicate part of the body and avoid causing damage to other organs or blood vessels, you better have wizard-like skills. And that's what us regional anesthesiologists were. We were wizards because that serves us a set of skills and knowledge that were painstakingly developed and passed down to the next generation. Because these skills were hard to come by, not many patients got the regional anesthesia. Now those that did, did amazing. They were awake, alert in the recovery room after surgery without the nausea, the vomiting, the morphine pills, et cetera. But it took an enormous investment to learn it. And so it remains like the backup kicker on the football team. Yes, he could save the game for you, but you're really not planning to use him all that much unless you have to. Now the first big disruption arrived when someone thought to use ultrasound in the nerves and surrounding structures. Then overnight, regional anesthesia became doable for virtually anybody because now it's a video game. So you see the target, you drive the needle to the target while watching it in real time and smart bomb the nerve with local anesthetic. Ultrasound was cheap. It was safe. It was easy to learn. And now the growth of regional anesthesia was only limited by an individual's hand-eye coordination. And as it happened, the very people that were graduating from residency training programs in the year 2000 were the same people that grew up with Atari and Super Mario. So as you might guess, regional anesthesia exploded. Because we could image the body anywhere we wanted to, we could target those nerves in new places with better results. And so in 1990, we had 6 nerve blocks that we, as anesthesiologists, could offer patients. And today, there are over 60. Training programs have sprouted up across the country and across the world, in fact. And so now it wasn't just a select group of patients that were getting the benefit. It was a really sizable chunk. Knee surgery, check. Spine surgery, got it. Colorectal, we're all over it. Cesarean delivery, there's a block for that. And that's all well and good, but there was a caveat. When we reported all the good things regional anesthesia did for patients, it was in the first 24 hours. And so we'd say things like, "Yes, the TAP block allows patients to have minimal pain after colectomy, but don't ask how they're doing the next day." And so we were limited by the duration of whatever local anesthetic we were using. Bupivacaine, our heaviest hitter, lasted 24 hours max. And we saw what we call rebound pain, pain that comes roaring back after the block wears off. And that happened at home, unfortunately, for a lot of patients and meant that they had to come back into the ED or the hospital with uncontrolled pain. It wasn't good, but what could we do? We educated them and said, "Here's a bottle of oxycodone. And when the block starts wearing off tonight around bed time, take 2 and hope for a couple of hours of good sleep." Now around this time, insurers and CMS began to say to us as physicians, "Hey, we'll give you a chunk of money for that operation. And if you do it under budget, you keep the change. If it costs you more, that's on your dime." And so if the patient reported satisfaction scores that were low, you'd literally pay for it. And so there is instant pressure for us to look at factors that we can control to make sure patients got through surgery safely without complications, got home quickly and remained happy for at least 90 days. Now at the same time, this is happening, America began to enter into a catastrophic public health crisis related to opioids. People were dying because of the oxycodone they received after their operation, and we needed alternatives fast. So enter EXPAREL, the biggest disruption in regional anesthesia practice since ultrasound. Now I remember where I was when I first heard about this drug. Joyce Davis had come to our hospital in New York to talk to somebody else. Nobody came to see me in those days. And I thought to myself, wait, a slow-release local anesthetic that lasts for 2 to 3 days. This is exactly what we need. It fills that gap. Those first 72 hours are when people hurt the most after surgery, and we were failing at addressing the pain on day 2 and day 3. It was an instant game changer. So now we have a tool that allows us to smart bomb a set of nerves and get several days of complete pain relief. The mastectomy patient who gets nauseous with any bit of oxycodone, we now have a 3-day solution for her. The knee surgeon who wants to send patients home on the same day but can't because he has to admit them for pain control over those first 2 days, we have a 3-day solution for him. The spine patient whose husband died of an opioid overdose and who desperately wants to avoid opioids, we have a solution for that. The mother who wants to spend time bonding with her new baby after her C-section without feeling groggy, nauseous or miserable, you get the idea. If you've ever had a rotator cuff procedure without a block, you know how excruciating that recovery is. Now imagine you can't feel your shoulder for 3 entire days. You're going to hear a lot from other physicians today about some of the successes that they've effected in their practices using these technologies. This has actually changed the way that we provide care and, more importantly, the standard of care for many surgical procedures. It's an incredible low-cost investment into patient well-being and health system efficiency. If I can do a block that leaves your chest numb for 80 hours after thoracic surgery with zero side effects, how can I justify not doing that, especially when the alternatives are, one, an old-fashioned 12-hour block; or two, no block, some opioids and a handshake? So it's a good time to be a regional anesthesiologist, and it's an amazing time to be a surgical patient. Innovations, as we all know, come along regularly and sort of chip away at the status quo. But EXPAREL is an example of a technology that's pushed the practice of medicine forward by leaps. The fact that over 9 million doses have been used speaks volumes to its perceived value by those of us that have access to it. So I hope you enjoy hearing about how the other physicians are changing the standard of care in their settings, and I look forward to chatting with all of you in the question period. Thank you.

Thank you, Dr. Gadsden. Long-acting regional blocks moving forward postsurgical pain management. My pleasure to welcome Dr. Sundeep Tumber. Dr. Tumber is a pediatric anesthesiologist and the Chair of the Department of Anesthesiology at Shriners Hospital for Children in Northern California. He'll discuss his experience with EXPAREL and how this fits into his practice and where he sees the future of low or no dose opioid pain management. Dr. Tumber?

Good morning. I'm Sundeep Tumber. I'm a pediatric anesthesiologist. And today, I'll be talking about pediatric pain management and some of the issues and challenges that we face when taking care of this vulnerable population. I'll be discussing the role and future potential that EXPAREL has in helping us manage pediatric pain. So any pediatric lecture would not be complete without the use of emojis. So this is called the Faces Pain Scale. We use this scale to evaluate and treat pain in children. If the pain is moderate or severe, then they will typically receive an opioid after surgery. 40% of children experience moderate to severe pain after surgery. We continue to struggle with pain management despite advances in surgical technique, including minimally invasive surgery, despite the use of multimodal analgesia and despite the use of advanced management techniques such as regional anesthesia. Opioids, they traditionally been considered the gold standard for moderate to severe pain. But opioids are far from the gold standard in the conventional sense of the term. But until recently, we just simply have not had better tools. Opioids have many side effects, including nausea, itching, constipation, respiratory depression and the risk of addiction. The use of opioids leads to increased length of hospital stay and decreased satisfaction from patients, parents and surgeons. The greatest risk factor for the development of chronic pain is poorly treated acute pain. So persistent opioid use between 3 to 6 months was found in 5% of adolescents after some of the most common surgeries that we perform in children, surgeries like surgery for gallstones, hernia surgery, fractures and ACL repair. So opioids are not the answer for effective pain management, especially in children. Tolerance to opioids can quickly develop, and escalating doses are frequently needed to achieve pain control. However, tolerance does not develop due to side effects of opioids, including the risk of overdose and death. And we put these children at risk of developing an opioid use disorder. We know that as little as 5 days of opioid therapy will increase the chance of tolerance independence, which leads to many problems, including addiction. One of the main issues with opioids is diversion. Children who legitimately use prescription opioids before the 12th grade have a 33% higher risk of misuse as an adult. We know that approximately 2% of children abused opioids in 2019. That's 125,000 children. 75% of patients with opioid use disorder were first exposed to opioids from a medical prescription. We know that in 2016, almost 700 children died from an overdose. That's more than the children that have died from COVID since the start of this pandemic. We all know the immense amount of media attention and resources that have been devoted to COVID. Preventing opioid use disorder needs to be a priority. And to do this, we need effective pain control and decrease the amount of opioids that are prescribed. So why are children so vulnerable to be predisposed to addiction? It all has to do with the fact that the adolescent brain is developing. Addiction is a developmental disease and starts in adolescents and childhood. During brain development, neuronal pathways are constantly being developed and disposed of. It's called synaptic pruning. Anything that disrupts or interferes with these processes can have long-lasting effects. This process can be disrupted by emotional trauma, pain, abuse, neglect, social media, that positive reinforcement from the like button, and especially drugs. Additionally, the prefrontal cortex in the frontal load is not mature until the mid-20s. That's this area in red here. This area of the brain regulates judgment, emotions, impulse control and decision-making, short-term reward with long-term consequences. This area of the brain is the last to fully develop. However, the nucleus accumbens, it's this area in yellow here, that part of a teenager's brain is fairly well developed early on. It seeks pleasure and reward. This results in preferences for activities that require low effort yet produce high amounts of excitement. This may explain the vulnerability of the teenage brain to drug use. So as a pediatric anesthesiologists, one of the most important tools that I have in my toolbox is the use of regional anesthesia to block pain and minimize opioid use. If you don't take care of postoperative pain early, sensitization can occur and the risk of escalating opioid use and chronic pain increases. Moderate to severe pain after major surgery lasts typically between 1 and 3 days. However, local anesthetics that we traditionally use last about a day or less with a single injection technique, and this is suboptimal. So what should the ideal regional technique consist of? It should be safe and effective for long duration to match surgical pain. It should be easy and efficient to place. It should minimize opioid use, and it should be palatable to patients, parents and surgeons. So in an attempt to increase the duration of analgesia, the use of nerve block catheters that continuously infused local anesthetics have gained in popularity. But those 2 are suboptimal. The problem with these catheters that they're costly. They're resource intensive. They're difficult to accept for some children. Children are usually even distressed by an IV after surgery, let alone a whole catheter contraption hanging out of their body. Additionally, not all surgery warrants the use of continuous nerve block catheters. The biggest problem is that studies show that catheters can have up to a 50% failure rate depending on where they're placed. They can become infected, dislodged and malfunction. It's always difficult to deal with the patient and the parent after nerve block catheter has failed. To replace, we often have to heavily sedate the child, which often involves giving more opioids. Okay. So in March of this year, the FDA approved EXPAREL in children that are 6 years or older for single-dose infiltration. EXPAREL is the first and only approved long-acting local anesthetic in children. This medication has been a game changer for pediatric pain management and regional anesthesia. By performing a single injection during surgery, we now can have effective pain control that lasts throughout the first 3 days when pain is typically at its greatest. We're able to minimize or even eliminate opioids in many types of surgery. The use of EXPAREL takes that pain from moderate to severe, that sad face emoji, to mild and easily controlled with non-opioid medications such as ibuprofen and Tylenol. In the next 3 slides, I'm going to talk about how we've incorporated EXPAREL into our ERAS, enhanced recovery after surgery, multimodal protocols after major surgery. These surgeries are some of the most painful surgeries that we perform in children. For spine surgery, we're performing 4-quadrant erector spinae plane blocks before a surgical incision. This block will provide anesthesia to the nerves that will result in pain after back surgery. We've been able to minimize opioids and opioid-related side effects and get the patients to mobilize sooner. This, in turn, has decreased length of stay and resulted in a better patient experience and a cost savings for our hospital. This particular patient was a teenage girl that I took care of that had a history of anxiety and depression. So she was already predisposed to pain. She had a smooth post-op course and was discharged on post-op day 3 with great pain control. With EXPAREL and regional anesthesia, she only required minimal amounts of opioids the first 3 days. And her mother on the post-op call said that she was off of all medications by the end of the week. She could have not been happier about her recovery. Her mom said, "She felt a little stiff by the end of the week after that major back surgery." So we also had great success in using EXPAREL for rector spinae blocks for the Nuss procedure as part of our ERAS multimodal protocol. This condition is called pectus excavatum. It's a sunken-in chest wall. It's the most common chest wall deformity in children. About 1 in 1,000 children have this condition. The Nuss procedure involves thoracoscopically placing a metal U-shaped bar and then they clip it in the chest. As you can imagine, it can be very painful every time they breathe or move. Using EXPAREL, along with other multimodal techniques, our patients typically go home the next day after this major surgery. They require a minimal amount of pain medications. In the past, we were placing invasive thoracic epidurals, and they would stay in the hospital, a lot of times in the ICU, for the first couple of days. By decreasing length of stay, our ERAS protocol results in a tremendous cost savings for the hospital. It greatly benefits patients and families in many ways, especially with reduced dependence on the opioids to help with pain control. Chronic pain has been an issue with this type of surgery, and we've had great success. So this case report was published by my group about 2 weeks ago. This child had a history of Hirschsprung's disease. With this disease, the colon is missing nerve cells in the muscles of the colon wall. This causes severe constipation. This child underwent a major redo colorectal procedure lasting over 6 hours. We performed bilateral low thoracic and a sacral ESP block with EXPAREL for his procedure. ESP blocks can help control both visceral, that's a deep gut type of pain, and somatic pain. That's a skin incision pain after abdominal surgery. This child required zero postoperative opioids and had excellent pain control. Because we were able to eliminate opioids, he had a quick return of his bowel function, which is paramount in this type of surgery. We had an uneventful postoperative course. So we're planning to create the ERAS protocol for colorectal surgery as part of our multimodal pain plan. So in conclusion, the widespread adoption of pediatric regional anesthesia makes it the fastest-growing and exciting aspects of pediatric anesthesia. QI registries, such as the Pediatric Regional Anesthesia Network, support the use and safety of pediatric nerve blocks. The bottom line is that regional techniques provide excellent pain relief and decrease the use of opioids, but traditional local anesthetics only offer pain relief for hours to 1 day. EXPAREL offers unique advantages in pediatric regional anesthesia, and the growth potential is significant. As further indications for EXPAREL are expanded through research, I anticipate the widespread use in the pediatric and adult regional anesthesia and pain management. Thank you for your time.

Thank you, Dr. Tumber. You can understand how proud we are at Pacira to be able to work with folks like Dr. Tumber but also to address really significant issues as we treat these pediatric patients. I'd now like to introduce Dr. Maggie Holtz, regional anesthesiologist and Medical Director at WellStar Health Systems in Atlanta, Georgia. Maggie is going to provide a live demonstration of regional anesthesia approach and patient care advantages from our sim lab.

Thanks. Welcome to the sim lab. Regional anesthesia is, in my humble opinion, the most fascinating and rapidly evolving subspecialty in medicine today. [indiscernible] are literally being described every day [ and is the most critical part ] of our multimodal and rapid recovery pathway. Nothing else has the potential to so dramatically impact a patient's post-operative pain, reliance in opioid medication and [indiscernible] disposition after surgery. But [ surgery infiltrate ] the operative field of local anesthetic we've been doing [indiscernible]. But if we take a look at [ anesthetics, you put them in the hands of ] the skilled regional anesthesiologist, that truly is the next level. With our knowledge of anatomy and the use of our ultrasound machines, we were able to precisely target [ the section in ] which to block. Regional anesthesia is safe, it's effective, it's reproducible and it allows us to significantly reduce [indiscernible] requirement or, in some cases, avoid [indiscernible] entirely. The limitation of blocks [indiscernible] has historically been related to the duration of our local anesthetic, [ in which to do ] an effective block, it simply didn't outlast the patient's pain. Now with liposomal bupivacaine, it became less of an issue. We are truly able to provide several days' worth of analgesia better matching their worst postoperative acute pain. So today, I'm going to walk you through a couple of different regional anesthetic techniques that we do every day. So the first one is an erector spinae block, or ESP, block. And a little later, I'll demonstrate the transverse abdominis plane, or TAP. So I'd like to invite our model over. So the erector spinae plane block has generated a lot of buzz in the regional anesthesia community, probably because of its potential for use in a wide variety of different cases. It's been described in the cervical region for shoulder surgery, in the thoracic region for big abdominal surgical cases, chest wall cases, breast cases, in the lumbar or low-back region for spine surgery and even in the sacral region. We use this block a lot for rib fractures, for big abdominal surgeries and for CT surgery in the spine. It's also relatively easy to learn and likely safer than some of the more invasive blocks we use to cover the same area of the body. So the target nerves, which I'll show you in a moment, for the ESP block lie between the erector spinae muscle and the transverse process. So in all of our fascial plane blocks, these nerves are tiny. We cannot see them on ultrasound. It doesn't matter. We know exactly where they live, and we can see the muscles and the boning structures that allow us to precisely target these nerves. So when I do this block in a patient, I have them sitting. And I'm placing my probe a little bit off the midline. What I see immediately is you can see those sort of curved bright white structures. Those are the ribs. And in between those lines, you can -- that's a bit of the lung. There's some muscles on top. As I move my probe towards the midline, the morphology of that bone changes. And you can appreciate that the bone is now more squared off and a little bit more superficial. So the muscle overlying that transverse process is the erector spinae muscle. And so my goal is to bring a needle in, either from top to bottom or bottom to top, and land right in that erector spinae plane. And now we're going to take you to a video which will show this live. All right. So you see the transverse process, and you see the erector spinae muscle line on top of it. Here's our needle coming in, aiming for the corner of the transverse process. And the goal is to lift that muscle off of the transverse process and inject local anesthetic in that plane. So it just lifts that muscle up. You can see the local anesthetic spreading over top the transverse process. You also see what we call the breathing sign. So as we inject medication, that plane opens. And as we stop injecting medication, or we aspirate, that plane closes. That's called the breathing sign. So if I see that plus that nice ribbon-like spread of local anesthetics over top the transverse processes, I know I'm going to get a good block. [indiscernible] erector spinae block in the thoracic region, as we've demonstrated, I can expect a spread of about 8 levels up and down with a single injection. So that's pretty significant. Now more research does need to be done to identify exactly how this block works and if it's indeed superior to the other fascial plane blocks we already do. But what we do know is that, based on clinical experience, it does seem to work quite well. And I hope you can see how easy it is to actually perform. Back to you, Dave.

Thanks, Dr. Holtz. I appreciate your providing specific visualization of regional anesthesia and how you're redefining field blocks and nerve blocks for dependable pain management. Dr. Holtz will be back, as she mentioned, in a few, in a little bit, to show a tap block, which is really standard care for regional anesthesia today. My pleasure to introduce Dr. Mike Wang. Dr. Wang is a spine and neurosurgeon, the Chief of Neurosurgery at the University of Miami Hospital, Professor Department of Neurological Surgery and Rehabilitation Medicine, University of Miami, Miller School of Medicine. Dr. Wang?

Thank you, Dave. Good morning. Thanks, Dave, for having me here. What a pleasure to be here with all of you live and virtually, online. I have to say that when Dave asked me to do this, I was a little nervous. I have given over 1,000 lecture presentations to the medical community but never to folks like you. So when Dennis McLoughlin asked me to talk to you guys about Pacira and my experience with Pacira and your products, I really struggled to find the right message. So what I'm going to do today is extend on the lectures that were given already and give you a message of change and positivity. Now many of you know about spine surgery. Maybe you've had friends or family who've had a spine surgery. And I'm a spine surgeon. And I'll tell you that spine problems are the #2 reason for a visit unexpected to a physician. So it's a common problem. But also, almost everybody who's had a spine surgery is going to have one who has heard don't have that surgery because spine surgery perception in the public is that it's painful, potentially dangerous and highly unpredictable. So I've been on a 20-year journey with this, and this is where I came together with EXPAREL. So I'm going to take you through a little bit of a journey of mine over the last 20 years and how that dovetailed with this company, Pacira, because it was very impactful to me as a spine surgeon because I believe that spine surgery works. So I'm going to take you through a journey over the last 7 years, and we're going to start with the Awake Spinal Fusion. This is a project we worked on in Miami for multiple years. But the final culmination, you'll see the year is 2014, occurred when EXPAREL came on the market. Here's an example of an Awake Spinal Fusion. You can see the patient here giving me the thumbs up. And we're going to do one of the most painful surgeries in man, or woman in this case, which is we're going to put in screws and rods and cages. And this is the process. What you can see is that we've combined multiple technologies. But the key was the arrival of EXPAREL, the arrival of that product to allow us to do these operations, which are nontrivial in Awake patients. So this video shows the first case in man. This was actually the former dean of FAU Business School. So this is not a rat lab, if you know what I mean, we're not just experimenting on people. And we're talking to him. We're going to do a surgery where we're going to put screws and rods and cages into his back to fix his structural spinal condition. And we're going to combine all these different features of what we do with minimally invasive surgery but, if you will, icing on the cake, the critical piece, is the use of a long-acting agent, as we've heard previous speakers talk about, which gives you 4 days of analgesia. So here we are removing the disk, and then we're going to put the cages and screws in. So I can see the looks on people's faces right now like that looks kind of like something that might be scary. And if you had to go through something like this, maybe you'd say, "Wow, I want to find every possible way to get through this better. So let me show you my experience with this. This is a patient of mine, here we go. [Presentation]

I'll tell you Mike Wang's experience. I've done over 7,000 spinal operations. When I come to recovery room 15 minutes after surgery, either the patient wants to take a swing at me or they're zonked out, right? So this is an example of how that changes things. This is an 86-year-old patient having surgery, ejection fraction of 11%. That means that patient can't have an operation, right? But they can have an operation with me because of this technology. Think about what that means for our public health. Think about what that means for a medical community, right? So let's go fast forward to 2018. So why does that even matter, right? So that's cool. I can do some surgeries. But let's talk about ERAS. We heard the last speaker talk about ERAS a bit, enhanced recovery after surgery. But there's an economic proposition as well. Dave Stack introduced that nicely, what is the market proposition? Now I love this slide because this is actually going to be the first time that the audience might actually know what I'm talking about because the doctors don't know anything about this. This is a slide about something called Baumol's cost disease, right? So if you look at this, what you'll see is that almost every industry there is on the planet has gotten more efficient and cheaper decade after decade after decade except for 2 areas: college education and health care, right? And so this is why we are always in the crosshairs when they're talking about economics. So let's talk about this for a second. So I told you that I'm doing my Awake Fusion project. And here is a publication of mine. And it's very hard, by the way to get cost data. No hospital wants to release it. Every insurance company wants it, right? So I had to wait until the CFO retired from our hospital to get this data. And what you can see here, on the bottom line, published is that when we compare our Awake Fusion with EXPAREL compared to our standard minimally invasive fusion, we're getting a 15% cost savings right off the bat. Now why does that matter? And how does that happen? People are like, "Well, we're using more product, right? That's more expensive." All of the pharmacies are saying, "You're using this stuff. Why is it more expensive?" Let me show you. Let me show an example of Mike Wang versus Mike Wang, right? Maybe I'm a good surgeon. Maybe I'm not a good surgeon. Who knows, right? On the left, you'll see a standard surgery. On the right, you see with EXPAREL the Awake Fusion. So here I am, I'm going to start of surgery on -- maybe it's going to be a loved one of yours, right? So on this day, I'm doing a standard surgery starting at 7:25. Patient's in the room. And the other day, also 7:25. That's pretty good, consistent, right? Then because I'm doing the surgery awake, with the standard surgery, the patient has to go to sleep, all this stuff has to be done, and it's 7:49 by the time I start versus 7:32 for the EXPAREL surgery. That's already saved me 17 minutes before I even started the day. Now you may not care about that, right? But let's go further. Now the procedure starts. Now 8:00 for the standard minimally invasive surgery versus 7:38. Now I'm ahead of myself by 22 minutes. Now the surgery is a lot faster because I can do this without all that trauma. At the standard surgery, it's 10:56 on finish. On the Awake Fusion, it's 8:30 a.m., and this doesn't even count room turnover. And then when the patient gets out of the room, they have to [ excavate ] the patient, right? They have to wake the patient back up in a standard surgery. But the other one, they just flip back over and go to recovery room. That's a saving of 151 minutes on the first procedure of the day. That's a lot of time. Now let me just play that out for you because surgeons are inherently narcissistic and selfish, right? So if it were just about me, I'd say I'm saving 151 minutes per case. If I do that 100 times a year, that's 15,100 minutes a year. That's 251 hours. That's 10.5 days -- not work days, but that's 10.5 24-hour days per year that I'm saving as a surgeon. I can do more surgery. I can take my kids to baseball. I can do other things. I can be a hospital administrator. I can do a lot. But that's just my personal experience. What about across an institution? So we took this, and we said maybe this product is so good, it doesn't even matter what your surgical technique is. So we took it to our other surgeons, and we said, "Okay, look, you guys start to use EXPAREL and let's see what happens, okay?" We instituted a true ERAS program, where we instituted this product in all kinds of [ service ]. We just did these 3 simple things. We used EXPAREL. We gave a dose of IV Tylenol, and then we had a medical student -- medical student can't write orders, right? See the patient after surgery. And this is what happened. Within the first 6 months, the average length of stay dropped by almost 1 full day, and that led to all of this, which is improved pain control, reduced consumption of medications with all the attendant problems like nausea and vomiting, constipation, urinary retention, all that and then increased ambulation. I mean people are moving more in the first 3 days after surgery. They're walking further with a therapist, et cetera, et cetera, and getting discharged out faster. That resulted in over $0.25 million of savings in the first 6 months with just those surgeries with 2 surgeons and $5,000 saved per patient in that time course. Now it's not a completely controlled study, but understand that when you get people out of the hospital faster with fewer problems, guess what? People do better, hospital wins, patient wins, society wins. So let's go further because I think it's important to realize that we've become very comfortable in America with a situation that's so robust and luxurious, right? Let's just be honest. We're in Tampa. It's a beautiful weather. Everybody's had breakfast and coffee, right? But things happen. Environments change, right? And you got to be prepared. So 2020 hits. COVID-19 hits. Okay, so this is an interesting scenario, right? Now I've told you about all the cool stuff I can do, but does it really matter? Will it really matter? So this is what waiting rooms look like. This is my waiting room. Usually, I see 70 people a day in clinic. This is what Mike Wang's operating -- waiting room in the clinic looks like at University of Miami in the spring of 2020, just like every other hospital. You guys are familiar with this problem now, right? So basically, hospitals shut down elective surgery. This is what was going on. You guys have read the papers. You've lived through this. It's a lived experience. It was horrific. But I'll tell you, we've never been busier than now at the University of Miami, and I'll show you why. So this is the phased approach that was released by the U.S. White House, whatever you thought of it last year, and this is the approach, and this is Phase I. And Phase I stipulated to the country that elective surgeries can resume as clinically appropriate on an outpatient basis. That's the key. Now I will never live to hear another leader of any country talk about elective surgery on the dais in front of the entire nation, right? This was real. I mean I was watching this. I'm like, oh my God, they're talking about elective surgery? And so this is very interesting to me because at the time, all of my colleagues around the country, Mayo Clinic, UC San Francisco, Harvard, NYU were like, hey, what are you doing with all your free time because they're talking about cutting our salaries, and we're not able to see patients and everything is turned into COVID ward? Well, I'll tell you what, it was interesting. People were afraid to come to the hospital. We're still wondering about the economic effects of this COVID. There's a push to single payer because everybody said, why have -- the insured patients? Well, guess what? That patient is not employed anymore. They don't have insurance anymore. How about that, right? Insurance companies have CARP launch now, right? COVID gives them the whip and tremendous economic pressure because the hospitals are all like, when are you guys going to get back to work with your elective surgery so we can like be black on the bottom line. And what of these effects are going to outlast COVID? Well, clearly, some of them will, right? So let me tell you a little brief story about what happened to my hospital. So in February of 2020, this patient arrived in my clinic and has a real spine problem. You can see the dislocation of the spine at, an L2, 3, even if you're not a doctor. And what's happening is she's saying to me, "I'm okay. I'm getting shots and kind of managing and I'll be okay for now, okay?" So then in April, I get a message through our electronic medical record that, "I'm going to kill myself". And this is not uncommon in spine surgery that you see stuff like this. And I'm like, oh, well, I actually have some free time because we were at home more. And I called her up. I said, "Ma'am, what's going on? I just saw you in February." She goes, "I was okay then, but like I'm not okay anymore and you need to fix this and I'm literally going to kill myself." And she's a young lady like some of the beautiful women sitting here. She's got kids. She goes, "I can't even walk to the bathroom anymore because this is so bad like it was before. Please fix me." So I go to the hospital CEO, I said, "Well, I mean, come on, let me do elective surgery." He goes, "Come on. Mike, you see it, it's COVID everywhere." I'm like, well, we don't have to intubate the patient. You don't need any nursing resources. This patient is not going to go to ICU, and they're going to go home right after surgery. And he says, "All right, we'll let you do it." So sure enough, we do the surgery. This is what the surgeries look like. I'll put the x-rays up of that case, screws, rods, cages, all that, right? All that jazz, right? Patient has a surgery, leaves the hospital 4 hours later. I get a call from the CEO. CEO says, "Dr. Wang, amazing. Can you do more of that?" And now you know the story of why I've become probably the busiest spine surgeon in the country during COVID. This is when these differences matter. When the economic or environmental catastrophes occur. Those are the challenges to the nativist environment of saying, "Well, we're just doing fine anyways, everybody is the same." And what you're hearing about today is a message of change, a message of positivity, a message about the future of how we're going to deal with all these problems like the opioid pandemic and the rising cost of health care and the fear of patients and the aging population, all of these things that are striking our health care system now. So just in summary, I think spine surgery service lines are incredibly profitable, right? Growth is anticipated, right? We, as surgeons, are searching for the tools we need in our toolkit to make surgery better, safer, more reliable, more effective and cost-effective and Pacira provides those tools for us. So thank you, again, Dave, [ Dennis ], for welcoming me here and to get in front of this audience.

Thanks, Mike. Thank you, Dr. Wang, awake spine surgery. You certainly are resetting expectations and leading the way forward. I'd now like to welcome Dr. Paul Sethi, Orthopedic Surgeon, Sports Medicine Specialist with special interest in opioid-sparing sports medicine. Dr. Sethi?

Hi, I'm Paul Sethi. I'm an Orthopedic Sports Medicine and Shoulder Surgeon in Greenwich, Connecticut. It's a tongue twister if you try and say it a couple of times, so be careful on the podium. What I'm going to talk about is my experience with shoulder surgery. And if I circle back to early in practice, 2005. In circa 2005, I'm a surgeon in practice that just come from the West Coast where I looked after elite professional teams. And now I'm doing that in Greenwich, Connecticut. And what I find is that in an effort to provide the highest quality care, understanding pain after surgery is not well understood. In the same way that a rotator cuff or an ACL or a labral repair is going to have specific steps that we pay careful attention to, that sort of methodical attention was not paid to the pain after surgery. And there is indeed a lack of education on how to control pain after surgery. In fact, there are no -- in 2005, no evidence-based guidelines at all. We were fearful of using nonsteroidals because they may inhibit soft tissue healing and delay the return to sports, which for our patients is essential. And then you heard about this rebound pain. We had the advent of nerve blocks, but somewhere around 11:00 or 12:00 after their shoulder surgery, the patient would experience a rebound and the most god-awful pain. And that rebound pain resulted in a lot of phone calls, a lot of frustrated patients and return visits to the emergency room. Suddenly, the surgery that I spent so many years learning to perfect was really not turning out to be a good experience. Patients would come in and suggest that, gosh, this may be the worst experience that I'm leading into. And I would nod my head and say, look, we're going to get you through this. In fact, I would tell them that acute pain does not lead to addiction. We were led to believe that pain was a vital sign and we needed to treat it. We were giving patients as many as 70 oxycodone pills, and even refilling it because we did not want that patient to call on Saturday night and have a lot of pain and have no access to a doctor and have to return to the emergency room. That would have been a failure. We created a prescription -- we created a culture of overprescription because we didn't want calls. We wanted happy patients. We created a culture of medication diversion and subsequently, we're responsible for dependence and addiction. In a study done in Chicago, 20% of patients undergoing rotator cuff surgery were still on opioid medications 6 months after surgery. If I had a 20% complication rate of any of my surgical procedures, be sure I would not be up here talking to you about this. And then we have a battle, an inherent battle. As it turns out, we are now rated. Our patients go online, just like Yelp and Google and whatever restaurant you went to last night, we're going to be evaluated on a regular basis. And these ratings are going to impact how other patients see us, come to us, how insurers reimburse us. We're battling the satisfaction of the patients, the minimization of opioids and then somehow, can we transition -- in a value-based medical system, can we transition some of these surgeries from the inpatient hospital to the outpatient ASC, which is in the interest of everybody, at least economically and perhaps for the patient, too. So the goal, the goal that I sort of walked into is can I come up with some idea, can I reduce pain? Can I minimize the requirement for opiates after shoulder surgery? And could I actually do an outpatient replacement? Because when I started in practice, you would stay in the hospital at least 3 days. And why is that? That was just the routine. And my predecessors would admit my patients, admit their patients before the surgery and stay up to a week. So how can we transition this to an opiate-free outpatient concept? And if you asked me in 2005, I would have said, that's great, no chance. But we set out with a goal. So the first thing I looked at is really to understand, well, what's out there? What guidelines do I have to follow? And here, I'm going to show you guidelines from 2018 and 2019. And while that may seem 2 years ago, in medicine, data that comes out in 2018 and 2019 is very relevant because it takes a year or 2 from a study's inception to get data and then another year to publish it. So a study that you see can reflect 4 years of previous work. And what we have from the state of Washington in 2019 and 2018, which is a well-recognized opioid crisis is recommending 42 opioid pills after surgery. In a study from Stepan in the prestigious orthopedic journal, this is in a New York City well-recognized hospital, they're recommending 60 pills for shoulder rotator cuff repair and 40 for arthroscopy. So I thought to myself this can't be right. This does not seem to be consistent with what I'm doing in my practice. And certainly, in terms of longevity and treating patients properly, we're just drowning them in opiates. So I set forth and I said, look, can we design a study and can I actually develop a protocol that makes sense? And is that protocol going to stand up? So we published this study in the Journal of Shoulder and Elbow Study. And in medicine, the level of journal that you publish in the higher level means it undergoes more medical scrutiny. So this is not just a white paper. This is a paper, and the papers that I'll present today are specifically those represented by the most scrutinized surgeons. And what we looked at in the era, before nerve block existed, is could we augment a standard nerve block with EXPAREL? And would that indeed make a difference? So we designed the study. We designed the protocol. We prospectively looked at this, and we randomized it. And here is the salient slide from that study, and I'll just spend a couple of minutes on it. The dash line is a standard nerve block. The solid purple line is going to be an EXPAREL field block in addition to a nerve block. And there are some important findings. The first is that the pain scores between day 1 and day 2 after surgery, and those patients who got EXPAREL was substantially and statistically different. Even more important than a statistical analysis, because we can somehow manipulate numbers, was what we call the MCID, minimal clinically important difference. So that is, does this number translate at into something that a patient values? So yes, indeed, we showed at day 1 and day 2 after surgery that there were relevant differences in pain. And by day 3, 2 interesting things happen. One, the lines start to converge. Well, as it turns out, this medication followed its pharmacological rules. So the data that I present is not fragile. It's actually consistent with pharmacology, which makes you feel a lot better about what I'm presenting. The second, as we heard earlier, by about day 3, a lot of the acute soft tissue trauma from pain actually starts to subside. So now we've created a bridge. We've created a very relevant bridge that these patients are substantially happier from. [Presentation]

So I think it's important to present data, but at the same time, it's important to recognize that these are real people that we're talking about. And this is a woman who came from out of town. She actually flew from Florida and was not tough. And she told me she wasn't tough, and she was able to get through that. Well, we spent a lot of time looking at how we could do the local infiltration. And then, fortunately, FDA allowed us to look at interscalene nerve block. And interscalene nerve block is a way of actually getting right at the source, numbing the nerves before we can even get into the field. So the question that we asked ourselves is, look, we have a really good technique here for augmenting the soft tissue with the standard nerve block. Does it make a difference? Does an EXPAREL nerve block make a difference? Or can we stay with our standard ideas? So once again, we went back. We looked at the research team and said, "Can we ask this question and can we figure out what matters here?" So this is another study again from Journal of Shoulder and Elbow, this is 2021 data. And we've got 3 lines here. And this is really an assessment of real life. And it's a real-life assessment because we looked at 3 different techniques, and we looked at it across 2 different centers, one on the West Coast, one on the East Coast. So what I'm presenting is not something that I can just produce in my clinic, but something that's reliable or generalizable to the population at large. So the top gray line is going to be a field block, a field block where we just inject EXPAREL into the wound. The middle line, the orange line is going to be a standard interscalene nerve block, so just bupivacaine. And the blue line at the bottom is the EXPAREL nerve block. So what you see, once again, is 3 lines. The people who had a field block immediately after surgery had the most pain, right? Not a tremendous amount of pain. There's still only about a 3.5 on the pain scale, not a 7 or an 8, but they had the most pain. And that makes sense because you know what? You haven't numbed the nerves entirely. You've just gotten to the field. When you look at the standard block, they were pretty comfortable and the EXPAREL block was the most comfortable. But then let's look at day 1 and day 2 afterwards. The EXPAREL block is substantially lower. These are patients who had shoulder replacement surgery, and throughout the course of their entire surgery are not reporting a pain score of greater than 2 out of 10. I mean it's unheard of. And on top of it, these are patients who went home after surgery. It's almost hard to believe. But what makes it more sort of more robust is once again, looking at when the pain scores converge. And at day 3, in the same way that the pain scores converge for our arthroscopy trial, the pain scores converged for the open-surgery trial. And that once again lines up with pharmacology. So lets you sort of speak to the fact that you know what? The data that we're seeing in humans lines up with the data that we see on the pharmacologic behavior and it makes it very robust data. And that's why it really gets through the most scrutinized peers. So once again, I'd like to believe the data, but let's look at what some of our patients say about this. Well, our patients look at this and say, wait a minute, you've changed the protocol. You've changed the world on how things are going to be prescribed to us. University of Washington, give me 60 pills. New York City, give me 42 pills. Well, in our study, we looked at this and we said, look, you can have 25 pills, and that's all you need. So we've gone to less than half. And as it turns out, we really are now down to 15. And in our 15, as we continue to follow these patients prospectively, 30% of the patients are not going to use any opiates at all. We are not refilling pain medications. As you know, when you refill pain medications, that's one of the substantial risk factors for recurrent dependence as it is a prescription of more than 5 days. We are well below the danger planes. And honestly, the medication is a rescue medication. So as we transition into the outpatient world, can we do this? In 2005, if you question me and say, can I do a shoulder replacement? Can it not hurt? And can I send you home the same day? And I would have said, "Listen, we've got a lot of other fish to fry that's not relevant." In today's world, I think that is essential. I think that it's a value-based thesis. I think that it's a patient-based thesis and it's a patient-first thesis. That's probably the most important part. Believe my data. Believe these patients. [Presentation]

So look, here we are in 2021, and we have a paradigm shift. We have a shift of many things. We have a shift of nondependence on opiate medications to recover from surgery. We have a shift to the outpatient sector as a value-based thesis in medicine, and we have this all underneath the guise of patient-first, patient-centric care. And I believe that our medication here, EXPAREL, has really been a pivot point in allowing us to make this change. Thank you.

[indiscernible] changing the world for patients. Rotator cuff repair, 30% opioid-free, pretty interesting stuff. And thank you, Dr. Sethi, for that presentation. I'd like to take the opportunity to welcome back Dr. Maggie Holtz to provide a demonstration of one of the foundation blocks for regional anesthesia, transversus abdominis pain block. Maggie?

All right. Welcome back for round 2. So let's talk about TAP block. So we know that the nerves that feed the abdominal wall and are, therefore, involved in incisional pain anytime a cut is made in the abdomen emerge from the spinal cord and wrap around the body, they course to the front. So just like the erector spinae block and all of our fascial plane block, we cannot see these nerves in ultrasound. They're simply too tiny. But again, we don't need to because we know exactly where they live, and we can see those structures. So for lower abdominal incisions for example, the nerves course between the internal oblique muscle and the transversus abdominis muscle. We can readily see those muscles and that plane on ultrasound and can very easily and reproducibly inject local anesthetic in that plane, bathing those nerves and halting transmission and pain signals back to the spinal cord. If we do this preoperatively, which is my preference, we can preemptively block pain and significantly reduce the need for opioids, both during and after the surgery. So we've got our model back here. When I do this block, I have the patient lying on their back. And my target, where to put my probe, is kind of in a soft spot in between the top of the hip and the bottom of the rib cage. So when I place my probe right in there, and what you'll see on ultrasound are 3 layers, 3 like stripes. So those are the layers -- muscle layers of the abdominal wall. So from top to bottom, you have the external oblique muscle, you have the internal oblique muscle and then you have the transversus abdominis muscle. So the TAP plane is between the second and the third. It's between the internal oblique muscle and the transversus abdominis muscle. So this is my target. I'm going to insert my needle from front to back and land right in that TAP plane and inject my local anesthetic. So now we're going to take you to a video where this will be demonstrated. Okay. So once again, you see your 3 layers. The needle is coming in from the left side of the screen, piercing through the external oblique muscle, then the internal oblique muscle. And once it gets the TAP plane, you will feel a little bit of a pop as it gets into that plane. We do a test injection of some saline to confirm that we are indeed in the right location. And you can see that plane just splitting open and opening up. We switch to our local anesthetic mixture. And as we inject, we continue to advance the needle and just bathe all of those nerves that lie in that plane in local anesthetic. Now we do this on both sides, and that gives me a very reliable dense block from about the belly button below. If I do need to cover incisions in the upper abdomen, there are other types of TAP blocks available, such as a subcostal TAP block or rectus sheath block which covers the midline. So I can easily supplement with those blocks in addition to my classic TAP block. And so as you can see, we can really tailor our blocks specifically to cover the incisions. I hope that you can appreciate how with the solid knowledge of ultrasound anatomy, regional anesthesiologists can precisely target the nerves that line these fascial planes, allowing us to provide consistent and reproducible analgesia of the back, chest and abdomen. And by using liposomal bupivacaine as our local anesthetic, we can really better match the expected duration of severe pain after these surgeries, which really is our ultimate goal. Dave?

Thank you, Dr. Holtz. Great demonstration of a TAP block. Very interesting because this is one of the blocks that we referenced often with our investors. And so your ability to clearly demonstrate exactly what that entails is really, really helpful for our group. Now next up, we have a video to introduce our next presenter, and there's no way I can compete with this. [Presentation]

Hello, I'm the drummer in that band, and we play that song at every venue and sometimes twice an evening. And the reason is because it engages the crowd. It makes them feel good. It works, and it works every time. And that's the same reason I use EXPAREL because it does the same thing. It works and it engages the crowd and it makes them feel good.

Can I interrupt you for 1 second?

Yes.

I screwed up folks. This is Dr. Stephen Garber, Obstetrics Anesthesiologist, Medical Director of OB Anesthesiology at Saddleback Medical Center in California, and I was destined to make a mistake some time within this program. I'm sorry, it was with you.

That's okay. So back to this crowd. Who is the crowd that we're talking about? Let's start with mom, and we're going to call mom, Ashley. Ashley just had a cesarean section and without adequate pain control, the first 3 days following the cesarean section can be quite uncomfortable to say the least. I am a passionate advocate for my patients, actually being one of them. I'm constantly looking for ways to improve the safety and quality of my anesthetics. With EXPAREL, I am able to provide the best post-anesthetic C-section care that is available anywhere in the world. So the most important person in the crowd to please first is Ashley. And she will be pleased using little to no opioids for the entire 3-day postoperative course after major abdominal surgery. In addition, since she is feeling little to no pain, Ashley is actively engaging with the baby, having less problems with constipation, nausea, vomiting. This makes Ashley very happy. Who's in the rest of the crowd? Nurses. Because Ashley is in less pain and she's feeling better, she needs less attention. She needs less narcotics, which means not having to watch for all of the adverse effects of narcotics. The nurses are having to give less medication to treat nausea, vomiting, constipation and itching. All of this means the nurses can devote their attention to the patient in other ways, like helping actually with the new baby. The obstetricians themselves are pleased because they're not getting calls from nurses regarding Ashley. They're not getting the call Ashley is vomiting, Ashley has abdominal pain and is constipated, Ashley is too drowsy. With EXPAREL and a TAP block, these do not occur. Ashley feels so good. Ashley, because she's feeling, so well goes home a day earlier. Yes, we do see decreased length of stay with the use of EXPAREL, which turns into cost savings on many levels. During the height of COVID, moms did not want to be in the hospital. They wanted to go home, and we provided a vehicle for them to get home earlier. The obstetricians are huge drivers of the use of EXPAREL by anesthesiologists. Because they see how well their patients do, they ask and actually demand that we use it on their C-section patients. How about the pharmacy itself? With our patients using less narcotics, they're using less of the other medications that have to treat the side effects of the narcotics. In addition, the narcotics are controlled substances that have to be handled differently than all other types of medication which is labor-intensive. So we have a group here, patients, nurses, doctors, pharmacists that are all saying in unison, so good, so good. The time after delivery of the baby is referred to as the fourth trimester, the time Ashley is healing and dealing, such an important time for Ashley, bonding with her baby, figuring out logistics of care, dealing with the impact of bringing a newborn back home. Now with the use of EXPAREL and no pain, Ashley can focus entirely on the matters at hand. Let's recap all the advantages of EXPAREL that I am seeing. Extremely low incidence of nausea and vomiting, extremely low incidence of pruritus, no post-opioids is typical, increased early activity, reduced length of stay, increased patient satisfaction, decreased nursing acuity and decreased use of antiemetics. Next, we're going to talk about the potential for the expanded use of EXPAREL in treating patients like Ashley after a C-section. 1.2 million cesarean sections are performed every year. C-section is the most common major surgery performed in the United States. The number of patients getting access to EXPAREL with a TAP block is way too small, as far as I'm concerned. That's one of the reasons I am traveling across the country, speaking to anesthesiologists and obstetricians about EXPAREL. And it's working. Groups I speak to are very excited about trying to get this going at their institutions. The potential is huge, possibly adding 1 million patients per year. That's right. I'm talking about adding 1 million patients per year. Let's look at some of these steps. 9 in 10 mothers have concerns about taking opioids during an after childbirth. 74% of C-section mothers think a non-opioid option is appealing. 50% of C-section mothers are prescribed an opioid to take home with them. 44% of C-section mothers were not satisfied with pain management following childbirth. That's a huge number. Almost 50% of mothers were not satisfied with pain management after childbirth. With EXPAREL, we can address all of these concerns and move into much higher levels of satisfaction and much lower levels of narcotics use. Let's talk about the opioid crisis. Where I'm from, Orange County, California, we have an opioid crisis. One of the reasons I was very interested in looking at EXPAREL was to see if there was a way to reduce the exposure to opioids. 1% to 2% of C-section mothers who receive opioids progress to persistent opioid use. Every year, 13,000-plus C-section mothers in the U.S. at risk of persistent opioid use after surgery. Saddleback Hospital has reduced the number of opioids prescribed at discharge by 70% using an EXPAREL-based multimodal protocol for pain management. EXPAREL-based opioid sparing protocol can eliminate discharge prescriptions that can lead to abuse of leftover pills. We have no way of knowing who's going to go on to be a persistent user or abuser. Imagine a mom who does not have access to advanced pain management, is following her doctor's recommendations in treating her pain and ends up abusing narcotics. It's the pebble in the water. The ripple effect is felt in every aspect of her life, taking care of her newborn, relationships with her significant other, relationships with other family members, and then mom becomes focused on seeking narcotics. Opioids have the potential of ruining her life and those that mean the most to her as well. Imagine if we can rewind this narrative. And by using EXPAREL, preventing her exposure to opioids. Well, I'd like to believe that's one of the things that I'm doing, potentially eliminating a new mom becoming a substance abuser, and that is very rewarding. Okay. So let's look at women that make the health care decisions, over 80%. Women make over 80% of the health care decision for the family. They decide where the kids are going to go to the doctor. They decide where dad is going to go. So clearly, providing a positive pain-free postoperative course for mom. Mom is going to turn around and find providers at your or my institution for the rest of the family to be treated. In addition, I've had moms that have heard about our treatment protocol on Facebook. I want to be part of it, they tell me. I start talking about the use of EXPAREL in our TAP block. And before I'm finished, they say, "I want it. I heard about it on Facebook." I mean, how cool is that? Positive social media feedback. I'm going to tell you a little bit about how we got this started at my institution. This is a safe, proven and straightforward protocol that can be easily rolled out at any institution. What we did is to evaluate it. We started with 10 C-section patients. These patients had -- were repeat C-section patients, okay? So they've had a previous C-section at our institution without EXPAREL. And then we decided to get these 10 patients to have their next C-section with EXPAREL. Some of them with the same obstetrician, and some of them even with the same anesthesiologists. So what we did is we took those 10 patients. And we said, okay, we're going to do a trial. We're going to look at these 10 patients, go back and see how they did and let's see if we want to continue this. We never stopped. After those 10 patients, we never stopped and looked back. The results were so dramatic. They were just incredible, transformational. Patients that were using no opioids, patients that were getting out of bed really quickly, patients that were eating. I had nurses come at me go Dr. Garber, my patient just ate a double cheeseburger. It's only been 6 hours after surgery. I said, well, what happened? She says, Well, nothing. I said, "Okay, great." So anyway, we started this. We've never stopped. It's been almost 2 years now, and the patients love it. The docs love it. My colleagues love it. It's something that we'll never go back to another way. And as we continue, I'm refining the technique to use less and less in narcotics, which is getting even better results. What happened then next is we're going to another service line with EXPAREL, using it for breast surgery because we've got the results there. So now we're starting to use it in breast surgery. So once you get a really satisfactory service line, you can move to another one, and that's what we've been doing. Ashley is a real patient and was the first patient that we did a TAP block on with EXPAREL for C-section. Ashley had, had a horrible postoperative course after her first C-section. She developed such severe constipation and almost became a bowel obstruction. Because of nausea and vomiting, her wound started to come apart. Ashley thought about never getting pregnant again because of the fear of having the same thing happen. By using EXPAREL, I transformed Ashley's postoperative experience. She used no narcotics during her stay and was essentially pain-free. I called Ashley about 10 days after she left the hospital. I asked her how she was doing. She said, "Great." But she said, "Dr. Garber, when am I going to feel pain?" And I said, what do you mean when are you going to feel pain? She goes, "Well, my sister-in-law is here. She had a C-section and she's like, when are you going to be in pain? I see what you're doing. I couldn't do any of those things." I told, Ashley, you're done, you're not going to have any pain. She started crying. She started trying to thank me for what I had done. I'd like you to now hear from Ashley herself. [Presentation]

It's hard to put into words how rewarding both professionally and personally this has been for me. With my team and our use of EXPAREL in a multimodal pain protocol, we have completely transformed the postoperative course for C-section moms in our hospital. Thank you.

Thank you, Dr. Garber. I hope for all the investors, you can understand that why we have made women's health such a important strategic initiative for our company, not only to help all the moms, but the statement that Dr. Garber made about mom being the CEO of the family and representing 80% of the medical choices is really an important strategic consideration for us. So we'd like to take a break. Why don't we come back at 20-of? And if I can ask everybody in the room to be in their seats at 20-of so that we don't have any disruptions around all the technical aspects of what we're doing here. And the restrooms are back at the elevators where you got off the elevator to come in, okay? Thanks, everybody. [Break]

Good morning, and thanks, everybody. We're back. We now turn our attention to iovera° and all the things that our clinicians are doing with the product today and things that we see could be of great value to patient care into the future. It's my pleasure to introduce Dr. Josh Urban, an orthopedic surgeon specializing in hip and knee procedures. Josh is part of OrthoNebraska in Omaha. And Dr. Urban has the distinction of having treated over 1,000 patients with iovera°. So Dr. Urban will share his experience with iovera° with you.

Thanks, Dave.

Thank you, man.

All right. Good morning, everybody. I am going to file a complaint. I am bookended by a rock star apparently. And Dr. Paul Winston, who is going to blow your mind with what he's doing with iovera°, you don't know that yet, but trust me, that's coming. So my job is to introduce you to this technology, to show you how we're using it and to show you what good we're doing. So here we go. So as a surgeon, how we deal with pain is this multimodal approach. And you've heard a little bit about it today. And you can see on the slide there the agents that we use. What we're doing is from the area of surgery, the trauma to the consciousness perception of that pain, we're trying to block that pathway and using several different drugs with different mechanisms of action. The pros of that are just that, multiple drugs, multiple mechanisms of action. It diminishes your reliance on one drug like opioids, and it also gives you alternatives in case of allergies and intolerance. The cons or the disadvantages are that most are systemically given. So you're giving these PO and IV. And as a result, only a fraction of the administered dose gets to the desired location, and you increase your chance of side effects. So as we've established all morning, the best thing we have in that multimodal approach is a nerve blockade. If you talk in apples-to-apples, what is going to shut the pain off? Is it an opioid, one that diminishes it and has some baggage to it, as we've talked, a lot of baggage. But the best thing is just shutting the nerve down. And we can do that with the agents that we talked about, bupivacaine, historically, and now EXPAREL. All other modalities mitigate the pain. They don't block it or eliminate it. The disadvantages, and again, we've established this too, is that this is an hour's time line. It -- historically, the bupivacaine and other agents, the caines, as Dr. Gadsden said, are -- provide hours of relief. And that's great 4 hours. And then what happens the day after you get home from the hospital, if it's a same-day surgery, you can run into problems. So EXPAREL takes you from hours to days, and that's very, very valuable. I'm going to tell you that iovera° takes you from days to weeks and even months. So this is not something we're injecting into the body, a chemical that is. We are sticking needles in places with the help of ultrasound like our anesthesiology colleagues, but we're not injecting a chemical. We're using the body's response to cold. If you put that tip next to a nerve and freeze it, that nerve will shut down. It will shut down a lot longer than a few hours to days. And here's what it looks like, and I'll hold it in my hand here to show you. This is a size of a remote control, right, very portable, very small, very lightweight. That's what it looks like on the screen there, the expanded diagram. I want to point your attention to the nitrous oxide canister. That's the agent that is being used. And at the other end of the handpiece is a smart tip. And that smart tip comes in a couple of different varieties. Here you go. So there's a trio of short needles and a long single needle. It really depends on what you're targeting, which one you use. But you can see the relative ice stones there. If you put a nerve within those ice stones, that nerve is going to shut down. Why do we use nitrous oxide? So we use nitrous oxide because at the temperature, which it works, which is minus 88 degrees Celsius, and that's pretty cold, it is consistent with a second degree nerve injury. This is the Sunderland classification of nerve injuries, if you don't know it. I had to look it up too, and I went to med school. So don't commit it to memory, but just know this, that nitrous oxide will lead to a reversible injury. You can go colder, we can go liquid nitrogen. That is going to lead to a third and/or fourth degree nerve injury, which is consistent with a nonreversible insult to the nerve. Looking at the temperature spectrum, we have liquid nitrogen. iovera° there and COOLIEF on the other far end on the warming side. That's 80 degrees -- positive 80 degrees Celsius. And people ask me, so you can burn it, you can freeze it, what would you do? And I would tell you this. And I stole this from somebody's talk and I loved it. Two pieces of raw chicken on your counter. Take one, put it in the freezer, one, put it in the microwave. Take them both out, let the frozen one thaw. What are you looking at? You're looking at chicken, again, same thing. What are you looking at from the microwave chicken? That thing is cooked. It's denatured. The proteins are different. Cool is definitely the way to go. And you look at the side effects on that slide. You can see with iovera°, we're talking the same stuff as you would get with a vaccine or an injection, tenderness, bruising. That stuff is all short-lived and very minor. With COOLIEF or burning nerves, those side effects can be quite considerable. So what happens at the nerves? When we put iovera°, those treatment tips, at a nerve, these are the steps that happen, schematically shown here. So you treat it. The next step is degeneration. And if you use the analogy of an electric wire with a copper surrounded by a conduit, same thing with the nerve. The nerve as an axon surrounded in some cases with the conduit. And what happens when you apply this level of cold to that nerve is that axon or that copper degenerates, and it will die basically. But the conduit is left intact, and this is the beauty about this. So after acute inflammation happens within days, maybe a week or 2, then the body starts growing back down that conduit. Regeneration starts, and eventually, reinnervation. And the duration of effect, so when you shut down that nerve, is directly related to how far that has to go. So you can basically do the math. And it's been established that it's about a 1- to 2-millimeter a day reinnervation.

[indiscernible]

Hey, guys, we're getting somebody else on the overhead speaker. Hello? Hey, [ Mario? ]

No, no. I'm asking [ Jane ] if I talked to them at [ Germany ] or [indiscernible]

Oh, hey, Paul. Hey, Paul, you got -- you're live on my talk. How are you doing? Paul?

[indiscernible]

All right. Well, Paul is -- that's the guy I referenced. He's in Victoria, getting ready for the talk. Anyway -- so we'll move on. So it's a distance phenomenon. So if you know the distance between the terminal receptors and where you're treating it, you could tell the patients how long this lasts. And so if you -- 1 to 2 millimeters is roughly an inch a month. So if you're in an English system, you can know that well, that's about 3 months of relief. So where are we using this? We're using this in really the low-hanging fruit of orthopedics: knee arthritis and total knee replacement. Why? Well, first of all, the knee is right here. It's not in the hip, which is deeper. The knee is easy to get super common conditions, highly, highly painful, very painful conditions. And both of these conditions, in the arthritis and the eventual treatment, knee replacement, have a considerable association with chronic opioid use and misuse, and we need to stop that. So just a couple of statistics here. By 2040, 78 million people are projected to have knee arthritis in this country alone. The societal impact, the economic burden, that number, $14 billion, is knee arthritis alone and the opioids that are taking to treat it. That was 3 or 4 years ago. Compound that by the doubling of the knee arthritis that we're seeing, this is going to be a big, big problem if we don't get ahead of it. It's been researched before. So 4 years ago, Radnovich did this study. And basically, he took knee arthritis patients in one group and knee arthritis patients in another group and added iovera°. And that's it. And the data you can see there for up to 3 months, statistically significant improvement in pain scores and still a trend, but not significant at 4 months. And that just has to do with where he was treating it. And he could certainly go longer if they treated more upstream when possible. Moving on to knee replacement. Guys, I think -- can you advance my slide? Hey, [ Mario, ] gentlemen, my clicker is not working. Advance the slide by one, please. My apologies, everybody. To stay on time, I'll just keep talking. So total knee replacement, whether you know it or not, and you probably know someone who's had it. I do. And it is -- go one before that. Thank you. Thanks, guys. So it is extremely painful. You talked -- we talked to our spine surgeons and our shoulder surgeons today. Those are also very painful surgeries. Total knee is right up there with it. It is common, painful. The recovery is extensive. It's not just 6 weeks. I tell my patients, 6 to 9 months of evolution, maybe even a year. And it does still have a high dissatisfaction rate, and a lot of that is related to the pain associated with it. So here are some more statistics for you dealing with now knee replacement, not knee arthritis but knee replacement. The chronic opioid use in patients undergoing surgery is what the left graphic is showing you. Second to colectomy, which is ripping somebody's colon out, it's -- I mean, that's painful. 16.7% of all persistent opioid users after surgery are total knee patients. This is a low-hanging fruit. This is a population we need to address. Far right, you can see that in 2040, we're going to have 6 million of these patients per year that we have to deal with and that we have to make better. So the challenges in total knee replacement, just ask somebody who has it, is we make this incision of variable length in the front of your knee. When everything wears off that day that they give in surgery, i.e., motor blocks, we ask you to get up and walk. And not only that, we ask you to bend and straighten in perpetuity. I mean go, go, go. Otherwise, you're going to be stiff and have a high dissatisfaction rate. It's akin to cutting your abdomen open and having you do crunches that day for months. And it is extremely painful, and it's hard to get over. This has been studied, iovera° that is, in the total knee population. There are 3 studies, including mine at the end there, but these are all very consistent. If you look at the data, they show the same thing, statistically significant improvements in pain scores, opioid use, length of stay and recovery time. This makes people better faster. So here's a patient of mine. And I want you to know that we have a lot of patients. We've been doing iovera° for almost 4 years. And we have a lot of patients who had a total knee the old way, basically without iovera°, and then a total knee with iovera° in that period in the last few years. This guy had the opposite. He had a total knee with iovera°. And let me be clear, what I mean with iovera is we perform the iovera° procedure about 2 or 3 weeks before the knee replacement. And what that allows them to do is it allows the tiny little injection wounds to heal up before surgery. And again, since it's lasting for months, heck, you can do it 9 weeks before, 2 months, 3 months before, if you want. But this gentleman had it in reverse. He had a total knee in 2019, like it says up there, on the left side, iovera° before. Liked it so much, he wanted his right knee done. What happened in early 2020? Everywhere around the world, no surgeries. So his surgery got delayed a while, and eventually, he came back to it basically a year later for his other knee. In that interval, the insurance company dropped it. Not many have. This one has been -- this one did in that interval, and we're working extensively to reverse that. But here's his experience, and this insurance company needs to hear this guy. This is John. And look at face, his passion. [Presentation]

Okay. So the future direction of iovera in the knee. We're just at the tip of the iceberg. We're going to be looking more into OA patients, how to stratify them. We're going to also look into total knee patients after surgery, those with the dissatisfaction rate of 20%. We've treated some of those with modest success, long as they don't have surgical indications. And then post total knee enrollments as well, we've had a handful of those sent to us that we've had good success with. Because you can see the nerves, and you can go -- as long as you can triangulate, you can find these things and treat them. So here's the areas of research that are happening in a lot of places. I want to highlight restless legs at the end there and tell you a little bit about it. First of all, worst name ever. This thing is, yes, it can be mild, but there are severe cases that are debilitating. I know of a gentleman who is my age who has to get new pairs of shoes frequently because, among other things, in his car, he digs his heel through the car mat, through the carpet and into the frame pretty routinely. And he's done that all his life. And he has to take opioids from time to time and other awful medication that really is not very patient-friendly, has a lot of side effects. The cause of this disease is unknown all across the board. You go Google it, and it's -- and good Lord, I mean they have no idea what's going on. Some compelling theories but really nothing solid. So we have this discovery, this aha epiphany moment 2 years ago in 20 -- early in 2019, almost 3 years ago. A research student who is premed at the time, now she's a med student, was working with me on a cadaver study, and she came to me and said, "Listen, I have RLS." And by the way, RLS is not in the space of orthopedics. Yes, we have patients with it, but they're coming to us for other issues. We don't treat RLS. She came to me and said, "I would like you to do iovera for me on my 1 leg -- 1 of 2 legs that has this problem." I said, "Hey, I don't know anything about this." And she talked me into it because this is a benign thing. You're going to get numbness in the distribution of the cutaneous nerve that you take out. And it's going to come back. And aside from the little -- the stick and stuff like that, this is a benign procedure. We're not burning anything. So I said, "Well, the risk is pretty low. Sure, why not." Again -- sorry, go back, guys. Go back. I hit that a little early. Thank you. My apologies. So I want to tell you her symptoms before because it's relevant to the video. So the symptoms she had are intolerance, basically, of tight pants, long car rides, alcohol, people reaching over and touching her legs and also difficulty sleeping, which is classic. This is 2 years later, guys. [Presentation]

Oh, hey, hey, rewind. We're -- go back, go back, go back. There you go. Now start again. [Presentation]

Okay. Here's the relevance of that. That video was taken 2 and almost 2.5 years after we treated the nerves. Those nerves had grown back by then. Those -- we know that because she was numb in the distribution we expected after the treatment. 6, 7 months later, those nerves grew back. We know that because she's no longer numb. 2-plus years later, that relief in 1 of her 2 legs. Difficulty sleeping, the other leg should have caused her some insomnia. Something is going on here that we need to learn more about. And I'm very excited about this. We're going to start a study imminently 30, 40 patients. We enrolled a -- or we talked to a neurologist, a local neurologist, who is an RLS expert into joining us, and she's brilliant. So I think we're going to get to the bottom of this, and we're going to find out what's going on. The impact of that could be significant. First of all, 10% of people on the planet have some sort of RLS symptoms. When we find out what's going on, add to the literature, we can apply this and extrapolate this to other neurologic conditions theoretically, right? And that is a perfect segue to lead me to spasticity. I watched these videos yesterday in the warm-up, and I am extremely grateful not to follow this talk because this is going to be impactful. Coming up is Dr. Winston from Canada. He is going to blow your mind. No pressure, Paul. And here we go. With that, I'm going to walk off.

Wonderful. I just want to make sure everyone can hear me and can pull up my slides. Thanks so much. So my name is Dr. Paul Winston. I'm in Victoria, British Columbia. I'm a physiatrist for physical medicine and rehab specialist. We are the specialty that is involved with maximizing potential and restoring function. We are an old specialty. People ask if it's new, and we started in the '40s after the World War. It's where people survived and needed to live good quality of life. But then the polio pandemic happened, and people had catastrophic injury but went on to have really nice quality of living. So that's my specialty. We give you back your life. One of the conditions that we would treat is pain. So using the iovera° for pain like Dr. Urban, who just did the most extraordinary talk. Thank you so much, Dr. Urban. I've learned so much from you. We are the perfect-positioned doctors. We're ultrasound experts. We're pain experts. I will use that device all over the body for pain. However, I'm a neurologic specialist. I'm a world expert in treating people with neurologic disorders. And one of the disorders that I most treat is spasticity. And I'm going to explain a little bit about that. But stroke is the most common cause. In the United States, every 40 seconds, someone has a stroke and every few minutes, someone will die. This is a huge problem. The burden of disability is about $46 billion a year: loss of work, caregiver burden, medications, hospitalizations. It is a huge impact, and you can see on the distribution of the map where it is. What is spasticity? So if you'll just indulge me for a moment. When you have a lesion to the brain or the spinal cord, your body starts tensing. You can't relax your muscles. So if you could just indulge me and grab your fist as hard as you can. And if you could even dig your fingernails into your palm, as uncomfortable it is, I want you to imagine being there for 5 minutes. And while you're there, I want you to slowly try to reach out in slow motion and pick something off, maybe your water glass. It is incredibly painful. It uses up all of your energy, and you're effectively trapped in your own body. Now in a stroke, you can have paralysis, but 38% of people will also have this spasticity. It gets rid of any function that they may have. It robs them of walking, the ability to use their hands. It is extremely painful. Cerebral palsy is a childhood disorder, you develop this at birth. And the muscles are so stiff that they can't elongate. So surgeons have to go in from infancy and start cutting all the muscles and tendons to allow them to grow because the nerve won't stop stimulating and making [ the muscles ] relaxed. In multiple sclerosis, it helps rob them from the ability to walk. And then spinal cord injury, whatever residual function they have can be completely lost. Now there's many treatments. I am an expert in botulinum toxin, you might know Botox. And in fact, where I live in British Columbia, it was actually invented for cosmetic purposes, a husband and wife team. She was the eye doctor. He was the cosmetic doctor, and they discovered. So I work with that family actually. So I'm very comfortable with botulinum toxin. I use a lot of it. It's very expensive. So in your country, it's up to $3,000 per treatment. That's just for the medication, 4 times a year, and many insurers won't cover it. I inject it all over the body, and it's great for relaxing muscles. But there were so many patients that failed therapy because their spasticity was too great. Their deformity was too great. It doesn't make you more function, it doesn't give it back. It just relaxes the muscles. In the United States, because it's so expensive, you use phenol. Phenol is an alcohol, which is toxic to the nerves. And it's used in pain as well, but it causes fibrosis. And in fact, my German colleagues can't use it because it was a Nazi study and torture tool. So we don't use it here very much because of that. You can put implantable pumps in, but they're very difficult. Very few people have them. And I've become a big fan of surgery. And this -- my story today, you wouldn't believe the series of coincidences and luck. Kind of like Dr. Urban that led to the story, I wanted to create a surgical program to operate on the nerves after seeing European doctors do nerve blocks, just like Dr. Urban and the anesthesiologist described. We -- in Europe, they actually do a nerve block to the motor branch, not the sensory. They paralyze the nerve to make the muscle relax, and then they put in a lot more toxin or they do some microsurgery. There's only a handful of surgeons in the United States who will do this because reimbursement in it is technically challenging. So I wanted to recreate that when I discovered that we could do nerve blocks. Physical therapy is extremely important and we utilize it, but it does not restore movement and it does not make you have greater range of motion. The biggest problem is when they look around the world, 25% of doctors say, I can't even get enough toxin. In the United States, it's 400 units on label. I often have to use 6 and higher. It's free in Canada for my patients. So cost is not an issue, but it's just not good enough. And I have all of these patients that were just not doing enough and giving up. So when I saw what was happening in Europe, I said, wait a minute, I'm an ultrasound expert. In Europe, they take a nerve stimulator, they poke all around the skin and -- with an electrical stimulator, stimulating the nerves until they can find where the nerve is. It's a blind procedure. They don't know where the nerve is. They're guessing, and then they get the muscle to twitch, and then they block it just the way Dr. Urban said. Now with ultrasound, I thought this should be way easier. The anesthesiologists are brilliant. So I asked my colleague back here in Canada, Dr. Daniel Vincent, could you teach us to do ultrasound-guided nerve blocks? It was so fast. In fact, my entire team learned to do nerve blocks in a day. We were shocked. And within the last 4 years, we've had multiple publications, and I'm about to publish an international atlas with 30 leading contributors around the world on exactly how we will use the iovera° on ultrasound of nerves. It's quite exciting. And we've had multiple publications on using the iovera° in spasticity, and we've been well received, and we've had a lot of research awards for it. So when I started, we were using a console. The problem with the console, it had to be done in a special room, in an HVAC-cleared, in a provincially or state-approved facility. It was very challenging to get those. The iovera° is handheld. So if you had told me 4 years ago, I could take a device in my hand, I can go to a nursing home, a patient's bedside, my clinic or their home and free them from their disability, I never would have believed it. So when I started with the console as well, you can see it creates an ice ball. And now on the left side is the original one that we used. It's a reusable probe. So it's a very small ice ball. And it worked quite well, but it was really hard to see under ultrasound to make sure we were in the right place, and we stimulate while we're doing it to make the muscle to twitch. I could not believe early this summer when I bought the iovera°. It's just that ice ball is huge and beautiful, and it shows up so well in ultrasound. So here's what we do. We inject through the skin after doing a diagnostic nerve block with lidocaine to make sure the muscle relaxes for a couple of hours. We inject the probe, and then it expands. So I can see my target nerve. This is the one that causes people to have a deformed in toe in foot. And I create the ice ball. And in just a minute, you can see it's very large. You can see the circle. You can see it on the screen. In fact, the patient is watching their treatment in real time. It's like a TV show, and they're the star. And as part of our book, I have mapped out the nerves everywhere. So this is a nerve that causes the most common spastic pattern, which is this in the arm. And it means you can't use your arm, you can't pick up your grandkids, you can't do things. It's really disabling. So I find that nerve, the brachialis, we put in the iovera°, and the nerve freezes in a minute, and it's immediate relaxation. So this is a classic case of a woman who had toxin for years. That arm is so stiff and painful, she's actually begging me not to pull it out. With 2 muscles in the arm, it lasts. And what Dr. Urban pointed out, that when we freeze the nerve, we get a blockage, but then that nerve unravels. So at 1 month, they're better. At 3 months, they're really good, and that nerve continues to unravel, unravel, unravel. But then it has to grow back. So what's happening, in my mind, is that they're getting up to 7 months, 1 year or 2 years with no electric conduction, while all the other muscles are working. So my very first patient is 3 years out. He had a nonfunctioning arm. He mows the lawn, he lives with his grandkids. He went on a holiday in Mexico, and nobody knew he had a disability because he puts a newspaper in his hand and his arm swings. And every patient is telling us about results like that. Now this was one of our first leg patients. This woman was pregnant. She had 3 children. And with weight gain, she couldn't wear her leg brace. She has multiple sclerosis and fatigue. And she went to her -- my colleague and hears her saying, "I can't walk anymore. I can't do this. I don't know what to do." So we did a nerve block, lidocaine, perfectly safe. We're -- this is a no drug treatment. So we immediately freeze the nerves that cause the foot to point down, and she can walk as soon as she is off the table. There is no recovery time. And as I said, it gets better. So 4 weeks later, she's 8.5 months pregnant. Just a little bit of weakness to clear the foot. But we could do a tendon surgery, but she doesn't want that. She's got 4 kids to worry about soon. So we bring her back 10 months later. In fact, she's walking so well. Her brace is keeping her back. So she can now walk all over the house. And I am getting this from patient after patient who couldn't walk without a brace, who needed poles and a brace to walk, and they can now walk for kilometers, and particularly when they put on their brace, they've all said, "You have completely restored my ability to walk." Now some of them, it's just enough to stand and transfer, but it's really life-changing. This has become my favorite block. So the hemiplegic shoulder is one of the most common causes of pain and disability, high opioid use, high medication use. This patient had a quadriplegic injury, a spinal cord injury. So he actually has to use a straw in his mouth to control his wheelchair, all his environment and his iPhone. He was stuck like this. He couldn't move. His caregivers to dress him was a really long ordeal. So we found the nerves to the pectoralis muscles here. And my colleague, Dr. Vincent and I, we found the nerve, it's actually the easiest and most -- nerve to find. It takes me a second to find it. And we froze it with lidocaine, and the arms went overhead. It was literally miraculous. So we do a cryoneurolysis, and the arms go overhead. Now his caregiver is overjoyed. It's so much easier to dress him. He doesn't have that pain. He was on 600 units. So over the maximum American dose of the botulin toxin and a maximum oral medication. So he was very sedated and sleepy. Now when we free up his shoulders, he's now able to start using that residual muscles he has. He's not paralyzed, but the arms were stuck. So now he's learning to reuse them. And he's starting to regain and he's going to physiotherapy and he's getting gains, and he's feeling better and better. And then he recently came in, this is 2 years post, and he wanted to come in just to show me a surprise. And the surprise is we freed up his shoulders so much that he can now drive his wheelchair with his hand. He's not using it with his mouth anymore, and it's a big celebration. We are doing patient after patient in shoulder. And in fact, I do a super scapular sensory block to get rid of the pain before I relax it. Now one of the most common deformities after stroke is fist in palm. It's ubiquitous everywhere in nursing homes. The fingernails dig into the palm, it stinks. The skin gets broken down, infection, sepsis, admission to hospital, antibiotics, ICU. It's actually a terrible problem. I was always way too afraid to do the median nerve. That's the carpal tunnel nerve here. Because if you or I have this procedure, if I froze your sensory nerve, a big one like that, your hand would fall asleep. But we discovered after doing nerve block after nerve block, stroke, spinal cord patients, they don't feel the sensation. The arm is kind of woody and dead. So we can actually freeze that nerve to the muscles and nerves for the pain and the lack of movements. So this is a patient. In fact, you see his thumbnail, it's overgrown. He won't let anybody trim his nail. If I try to lift his fingers, I'm just using one finger to open his fingers because he thinks, please stop, please stop, this really hurts. And his wrist will not go straight. So I do the whole median nerve here, and this is 5 minutes later. His wrist is relaxed, the muscles go completely up. We were going to send him to surgery to cut all the tendons at the wrist and fingers to get it to open. Now the fingers just pop open. He has no pain. I'm being quite aggressive, 5 minutes. We haven't even had degeneration of the nerve. So he comes back a month later, he hasn't had physical therapy yet. We're going to start that. The fingers are now supple, they're relaxed, they don't hurt. And if he has some residual motor function in the other muscles, he can start to use them. So I'm showing them how to stretch it, embrace it. He will be better in 3 months, at 6 months and 1 year, [ I'm certain. ] Now this is my classic nursing home patient. He has an underlying disease that he cannot have Botox. It could be deadly to him. And his shoulder is very painful. He can't straight out his arm, but the fingernails are so dug in his palm, it stinks. The skin is broken down, and nobody can touch to trim his nails. He begged me not to touch his fingers. We did the pec muscle, 2 muscles in the forearm and that whole median nerve. One month later, he comes back and he actually doesn't have a contracture, which that would have been a surgical release. His arm is going full. The fingers now rest open. They have been like this for 8 years. You can actually see that the skin is still red 1 month after, the air is trying to clean it. But his sons and the caregiver and his physiotherapist has never seen an improvement like this in their nursing home. And he doesn't have pain because I blocked the source of his pain with the iovera°. Now what's amazing is because we got rid of one muscle group that does this, he still now can have the ability to extend. But the other nerve that controls the hand, the ulnar nerve, is opening the hand. So we have actually -- someone said, I think you unparalyzed his hand. What we did is we released latent function. So we're going to train him to use it. He's still so scared. He's so Pavlovian scared, he won't let anyone touch his fingernails. So they're not digging in, the skin is healing. But he's like, "Please don't touch my nails." And then I touched his nails, and he had no pain. So he came back 1 month later, his nails are trimmed. The palm is completely clean, and he's now learning to use his hand to feed himself and do other things. In cerebral palsy, one of the hardest things is that their legs slam together. And many kids have massive surgery by orthopedic surgeons like Dr. Urban to release those tendons. And in France, they cut out the nerves. It's a very dangerous procedure because you're going under major blood vessels. I can do this with cryoneurolysis with iovera°. And patients are telling us, one of our first patients, she did therapeutic horseback riding. While she was in so much pain in her leg, she couldn't ride her horse and her limited of walking was just around the house. After iovera°, she's riding 4 hours a day and she's walking kilometers without poles. Now this is a classic teenager whose family is our physician's, and they never wanted to have surgery, but he's got that scissoring gait. The legs are tripping over. He falls. It's really uncomfortable, and it's a very noticeable deformity. So we decided to go after the nerves. Now he has had no physical therapy. So you can see he's taking bigger steps. It's much more stable, but he actually hasn't retrained. He's walked this way his entire life. So this is where physical therapy comes in. So I said to him, he came back after 5 months because of COVID and he lives far away, "You can now open your legs from here to here. Why are you walking that way?" So I laid out some cones, and lo and behold, he can start walking with his legs apart. So we're going to retrain his brain on how to do this. And that's the next thing. We're going to study what happens in the brain. Now we have 2 trials, which are graciously supported by iovera° and Pacira, one on leg in -- that causes the foot to point down. And we're actually doing a nerve stimulation. So we measure the electrical conductivity of the response of the muscle twitch when it was stimulated, like a frog leg in the calf muscles. And then we stop that so that the size of the wave goes much down more. And then we're going to track how long that nerve block lasts that the stimulation can't go through and when it recovers. Because my hope is that it's long enough that the patient stretches enough, gets motor recovery that we only have to do this one time in many patients. And if it gets worse, we just keep adding muscles. So many of my patients have had 3 or 4 treatments, but each time on a new muscle because they say, "Hey, you fixed my leg. What about my arm." Now patients tell us all the time about unexpected things that they can suddenly do that they couldn't do before. This woman is walking so much better because of her leg. She had a stroke in her 30s. Her chest wall, we released as well and her arm, but she wanted to get her hand done. Don't know if this -- that slide is not advancing. Maybe if you refresh it. I'll give it a moment to play it back, but if not, I'll go explain the story. So the story is her hand has been stiff like this for a long, long time. You can force it open. So we know that she doesn't need a tendon release. But it's like this. And we brought her in the clinic, and we did the nerve block and the cryoneurolysis here. And the hand began to open as we expected. And she was standing there with her hand like this. And then the hand started to open, and it went more and more and opened. And by the end, she was standing here. And then her husband, now they have 2 young children, walked over and he slipped his hand in her hand, and he started to lead her around the room walking. And the entire room was in tears because he said, "Now I can walk around the room and nobody knows she has a disability. We just look like a normal couple." And for her and for him, that was such a validation that she could have a meaningful life. She struggles with her speech, her movements. And that we are restoring for function and maximizing potential. So I really thank you for the opportunity here. We have been doing this for 3 years. And every month, we find a new nerve and a new approach to get rid of disability. Thank you.

Thank you, Dr. Winston. And thank you, Dr. Urban. Important work, and we look forward to working with you as we go forward in these very difficult clinical scenarios. Clearly, we have lots to do here. I'd now like to introduce you to Dr. Roy Winston. Roy is an anesthesiologist and our Chief Medical Officer at Pacira, and he's going to talk to you about our internal clinical development program, including the STRIDE studies. It's hard to call you, Dr. Winston. I'm sorry.

It's okay. [indiscernible] Winston now and we have Dr. Paul Winston bringing all the spasticity that has really been exciting and [indiscernible]. So I'm going to talk to you a little bit about maybe what we have going on [indiscernible]. So I'm going to talk to you a little bit about what we have going on internally at Pacira, what we're doing with EXPAREL, with iovera° and in our pipeline. So we started a program now to get us lower extremity nerve block, and we have 2 pieces to this program. And these pieces are going to run simultaneously. We're doing a branch of the sciatic nerve, popliteal. And we're doing the -- a branch of the saphenous nerve, adductor canal. The popliteal, we're doing for bunions and the adductor canal, saphenous, we're doing for total knee arthroplasty. These things are being done together. The studies are getting ready to start up right now. We will have first patients enrolled well before the end of this year. And we're looking at being able to take these as a joint sNDA submission around Q3 of '22. And what makes this exciting is we're doing them together. Some will be admix with bupivacaine. Some will be plain EXPAREL. And the summation of these 2 together really will, in our opinion, answer all the questions going on in the lower extremity. So that's Q3 '22. We're also involved with expanding our pediatric label. As you know, we have pediatric approval for kids 6 and over. We're now working on 0 to 6 as well as nerve block in pediatrics. Pediatric nerve block really consists a lot of congenital repairs of young kids, lower extremity, and that's where we're focusing. And for the infiltration label, we're looking at doing it probably in burn children and the reconstructive part. Now you all heard Dr. Tumber speak earlier from Shriners. And Shriners has multiple burn units throughout its system, and we're working with them now to develop that protocol, and that should be coming along very, very quickly. So another thing with EXPAREL, which really makes it kind of interesting that people are doing now with local anesthetics is stellate ganglion blocks. You do stellate ganglion blocks for a variety of reasons. You do it for reflex sympathetic dystrophy or causalgias. But you also now can do it for what we call cardiac storm. Patients who have had cardiac surgery have ventricular dysrhythmias, go through a very unstable course for a few days. People have been using other short-acting local anesthetics to treat this. And now we are looking at a study to do it with EXPAREL so that we can lengthen that time. But one of the problems with the short-acting local anesthetics is obviously, you get recurrence of it and to be able to switch that over. And really, what it does is it turns off the sympathetic nervous system by blocking that little stellate ganglion in the neck. So really kind of a neat way to do that, and we're in the start-up phase of that now. So we have 2 really interesting, I think, post-marketing studies. We're going to look at Shriners and Cleveland Clinic for erector spinae blocks in idiopathic scoliosis patients. Typically, and when we did our initial study that got us pediatric approval, it was infiltration being done by the surgeons. Once we got that approval, that infiltration has really switched in many places to erector spinae, which Maggie kind of demonstrated to you earlier, Dr. Holtz. And you could see that in a block like that, you're going to have much more consistent, better spread and better results. And that's what people are finding in the community now. Dr. Tumber from Shriners, a group at Rady Children's, Cleveland Clinic, they're already doing this. So now we're going to have the study to get us the hard data on it, which we're looking forward to. The other piece of this, the last one I'll talk about with this is the Henry Ford study in opioid-free C-section. You heard Dr. Garber talk about what he's doing at Saddleback, and it's really amazing. We see this at a lot of hospitals, they're doing it at [indiscernible] in Brooklyn. A lot of hospitals have picked this up. What we're doing now, we feel, which will be the definitive study in opioid-free C-section, and that's getting underway right now at Henry Ford. And we're excited to be able to do that. And we really feel this is one of those things that will change the standard of care in those C-section patients. Let me turn to iovera° for a minute and tell you some of the stuff we got going on there, which I think -- you just saw the spasticity, and I feel like that's a hard act for me to follow. So starting from the bottom up, so spasticity, we have some trials that are going to start very quickly with that here in the U.S. We're also planning our regulatory path approval, 510(k), to get spasticity to be centerpiece with iovera° as well. So that will be just another thing that iovera° is able to address. We have the ankle OA, osteoarthritis, study that has been done. It's a pilot study, and we're -- should have that data out very shortly. We have rib fracture and intercostal block, two of those studies being done currently right now in Dallas Methodist and Penn. And those are patients -- intercostal, really -- I find really interesting because you have these patients that come in with broken ribs. And typically, those patients are -- they put an epidural in them, they admit them for IV opioids. And now, by doing an outpatient treatment with iovera°, you're able to send them home, pain-free virtually and recovering at home with really little or no morbidity. So really changing the course of how we treat rib fractures. Low back pain, spine surgery. You saw what Mike Wang was doing with EXPAREL and awake spine surgery. Well, iovera° offers another tool to treat those same nerves but to treat them in patients just with low back pain. And what that does is turns off that signal and maybe allows us to have less surgery. So that's one of the cool things about that or postpone surgery. And in the patients that are having surgery, iovera° can also help with that -- for that back pain with surgery. We have a registry that just started, the IGOR registry, as we call it, which is the Innovation in Genicular Outcomes Registry. In this year, '22 coming up, we've already started enrolling in it. But in this year, we should have almost 1,000 patients in that study. And there, we're going to be able to produce all kinds of data, which should help us expand again how it's looked at iovera° and how we use it. We have a painful OA study, osteoarthritis, with iovera versus steroids. And that study is in the planning stage right now. We'll start next year. And that will have 6 months of follow-up. So we'll be able to look at the patient's osteoarthritis journey and see what's happening with iovera°. And we know from what we see in the total knee group and doctors like Dr. Josh Urban, who you spoke -- response he's having with this. So now we're going to put out some data around that as well. And lastly, the PREPARE study, which may be one of the more interesting studies. We're currently enrolling in that now. By the end of this year, we'll have our interim analysis, which will help guide us as to the power and how far we have to go with it. But that's a combined EXPAREL and iovera° study, having the iovera° for the pre, the EXPAREL for the intraoperative pain, and then the iovera° also for the post to follow you through so you have less pain as you're recovering. And again, Dr. Urban talked a little bit about how he uses it, but this is kind of taking that through that with EXPAREL and iovera°. What makes this also interesting is we do have a sham control, which is really the gold standard in device therapy, right? So we're doing this in a way that, I think, will produce data of the highest quality. So that's all the stuff we're doing with EXPAREL and iovera° this year. But what's really interesting to me now is what we have in the DepoFoam pipeline. And this, I think, represents just such an exciting thing. And I can't even tell you what we think about where this is going to go. So we've talked a little bit previously about the intrathecal EXPAREL and what that could mean to pain management. Spinal anesthesia is a core part of whatever anesthesiologist can do. So by being able to add a little bit of EXPAREL to that spinal can really revolutionize that patient's postoperative pain course in a very simple manner. Everything from thoracic to abdominal procedures to lower extremity orthopedic procedures, pediatric, adult. It really opens up a whole world. So we've completed the first half of the Phase I study. We did that at Duke with Jeff -- Dr. Jeff Gadsden, who you -- was your first speaker today. And we have a second group of 2 cohorts that we're going to be starting in Q1 of '22. And that's a motor dose-finding study. And from there, we're going to go rapidly to a Phase II and III study in a large group of patients having abdominal surgery to start, probably orthopedic surgery on top of that next. Still got a couple of years left until we have that submitted for approval. But I think as far as being able to offer that to our patients, it's really a fantastic thing. And keep in mind, we have a lot of experience in the intrathecal space from previous products, DepoCyt, DepoDur. We have what we feel is one of the safest compounds out there, period. And so far, very excited. So then we also have a steroid DepoDexamethasone, which is being engineered to use in the epidural space for people with radicular back pain, to treat that pain and you would do it with an epidural injection, also can be used in chronic pain for things like facet joints, myofascial pain syndromes. And that's kind of exciting as well. We are in tox studies starting right now with that in animals, 2 species. And we should be out of those tox studies first part of next year. And again, we're going to move rapidly to a Phase I provided the tox studies are clean, which we have no reason to think they won't be. The other compound, which maybe is the most exciting compound of all is Depo20. So Depo20 is really the same idea as EXPAREL, but instead of being 13.3 milligrams per ml, it's 20 milligrams per ml. And 20 milligrams per ml makes it 50% more potent than EXPAREL. The other thing is instead of having a 72-hour or a 3-day curve, it has a 5- to 6-day flat curve. So you've really taken a drug, EXPAREL, which in itself has completely changed the way regional anesthesia is practiced. And now we have maybe EXPAREL 2.0, which will come out and be able to do even more. I think it could be very useful to us in the intrathecal space, in the epidural space, in the chronic pain space. And it also will overlap and give you another tool to use in the block, nerve block, plane block space as well. So it's one of those things where this is -- I mean I'm as excited about this as anything. And I think we're also in toxicology with Depo20, and that should also be out of that by about first quarter of next year. That's what I'm here to talk to you about today, and I look forward to the Q&A in just a bit.

Thank you, Dr. Roy Winston. I'd now like to introduce Ron Ellis, Dr. Ron Ellis. Ron is the Senior Vice President of Corporate Strategy and Business Development at Pacira. And Dr. Ellis is going to talk to us about our development strategies for pain and regenerative medicine. Ron?

Thanks, Dave. Thank, Dave, and thank you for everyone who is here with us, either in person or virtually. As you've heard today, EXPAREL is our flagship and the anchor of our strategy, and iovera is complementary to that strategy. Taking a step back, the strategy is patient-focused and centers around 2 key areas of chronic pain, knee osteoarthritis or OA and low back pain. Starting with knee OA. Here we go. We've plotted the patient journey along the Kaplan-Meier curve, which is very familiar likely to this audience for oncology, but also is quite illustrative for all purposes as well. So on the y-axis, we have function. And on the x-axis, the years. We start off with our patient as we do with all our initiatives. He's at middle-aged male in his early 40s with left knee OA. And he's been managing his OA with over-the-counter medications and physical therapies. This is for the first half of this journey. That journey in the first half is demarcated by the first injection in the back. In the first half of the journey that we see a 1% to 2% decline annually, and that injection usually marks the point where we see a more progressive decline of about 5% annually. So at the end of the patient journey, about 95% of patients have converted to a knee surgery over 20 years. This patient at this first injection will then rapidly go through a series of treatments, usually starting with intra-articular steroids, followed by hyaluronic acid, but unfortunately, after that, has very few therapeutic options. These do include, though, orthobiologics, which have platelet-rich plasma or PRP, stem cells and opioids and would make the point that about 1 in 8 patients present for their knee surgery on an opioid. So how do we think about an enhanced patient journey? In this case, we will have Zilretta earlier on, along with iovera. So with this, patients would typically receive a [ free-steroid ] or short-acting steroid first. About 75% of them respond. we would then switch them over to Zilretta because you have enhanced your responder base. Patients like that, providers, payers like it as well. Of the 25% of patients who don't respond, you have iovera or they may move to HA. We've made investments in potentially regenerative medicine or regenerative medicine solutions, including IL-1 RA PRG-4 and the combination of the 2. As Dr. Urban and Roy had mentioned, we have iovera for knee OA and then EXPAREL as well. In this case, we have been able to lift the curve, also what we talked about in oncology, lifting the curve from converting the knee surgery in 20 years or 19 to 20 years to 25 years or more. And importantly, to EXPAREL as an enabling technology, moving patients from the inpatient to the outpatient setting. And our patient here walks out the ASC. So how do we think about this with spine? Very similar, very analogous. Kaplan-Meier curve with function on the Y-axis, time on the X. Our patient now is a female with right-sided back pain. She is progressing about 1% to 2% annually, and she's managing with physical therapy, chiropractic therapy and over-the-counter medications. Pain worsens, and she presents for our initial injection. At this point, very similar to the knee, we see a more rapid progression of her condition, which is about 5% annually. She will rapidly cycle through the epidural and facet joint injections. Oftentimes now, with 2 therapeutic alternatives, 40% to 50% of patients will present for their back surgery on an opioid. And why is this important? Similar to the knee, we have over 12% of patients presenting with an opioid for their surgery. In this case, 40% to 50% of patients. The best way to keep a patient off of an opioid after surgery is not to put them on one before surgery. So how do we think about an enhanced process or an enhanced patient journey? As Roy just mentioned, we have DepoDexamethasone, which is being developed as an epidural and facet joint injection, starting them off with a potentially longer-acting solution. We've made our first investment in a regenerative medicine or potentially regenerative medicine therapy, Remedisc. As Roy also just mentioned, we have a strong iovera initiative for the back. And then as Dr. Wang had mentioned earlier, we have EXPAREL converting patients from an inpatient setting to an outpatient setting. Our patient here is able to walk out. I'm not sure where she is. But similar situation as the last slide. A patient walks out -- there she is. She finally joined us. So in both instances, we've lifted the curve. We've been a partner with the patient and the provider throughout the course of therapy or the continuum of care. This course is entirely opioid free. And we believe there's the potential to extend that patient journey by 20%, 25% or greater by starting them off earlier on, continuing them through and offering them that, again, continuum of care. And with that, I will turn it back to Dave. Thanks, Dave.

Thanks, Ron. So a couple of slides in closing. So what we want to show to you, and keep in mind here as we go forward, the purple has significance. All of the projects that we're going to show you in purple are currently existing assets. So this graph comes from our 5-year plan. And basically, what we've done here is provided a representation of what we think OpEx looks like, cash looks like and EBITDA looks like over the planning period. And so the first and most obvious thing here is that we've fractured any thinking about the need for a unit of resource to support a unit of revenue growth and why are we in this position, which we think really makes us look like -- look much different than most specialty pharmaceutical companies. First, we don't believe that there's any commercially viable competition during the planning period. Second, and this one, I think you've heard over and over, but I'll just see if I can crystallize the point, that ERAS and protocol-driven care have institutionalized the use of EXPAREL. So think about when Cleveland Clinic, for example, has an opioid-free C-section, every patient who comes in for that C-section is going to have a computer-driven Pacira-platformed opportunity to have an opioid-free treatment, and we don't need to be there over and over again in order to make that happen. And that's happening all across academic medical centers. Fuel blocks and nerve blocks have revolutionized the practice not just for medicine but for Pacira. I mean if I just stop for a second and tell you guys if you were a rep and you were working with a very significant orthopedic surgeon, you would see 7, 8, 10 vials of EXPAREL being used in a work day in a very good case scenario. If you were to work with Dr. Gadsden or Dr. Holtz and you saw how a regional anesthesiologist uses the product before the patient goes into the surgery in a block room, they're using many times that much EXPAREL because they're with those patients for a short period of time before there's an incision, before the patient ever goes into the operating room. Gross margins will improve to something in the area of 85% over the next 3 years as we open up our new 200-liter facility just outside of London. And as you just heard from Roy, we expect to have a continued flow of new data and manuscripts on a number of different asset fronts to provide value to the community. So this is what that looks like if you roll it out. And again, purple are assets that are currently in our portfolio. Green are assets in the portfolio where we have a lot of work to do. And I think you'd agree after today, we have a lot of work to do. And then blue are the newer projects that Roy just outlined for you that are assets that either Ron has got in the pipeline. And in many cases, for example, we've taken equity positions in these companies but are taking over those assets or those companies related to some specific point along the development pipeline where Pacira will step in. So again, current assets in purple, things to come with current assets in green and then new initiatives in the light blue. And these are all going to be available on our website, I assume. Right, Susan? So this will all be up on our website guys, for you guys to be able to look at again or print any of these if you'd like. If we look at that in a slightly different way, you'd see where the 5-year plan takes us. And again, you've got all the things that you folks have seen today from EXPAREL and iovera°. You've got the newer things like the stellate ganglia block. And I'll just put in the first data set that I saw on stellate ganglia block for the cardiac storm was a female patient from -- on a West Coast academic center. And she had, had 28 events -- 26 events, I'm sorry, from a previous open heart surgery. The physician performed a stellate ganglia block on the left side. And in her next open heart surgery, she had one. So we think that there is great potential here for another use. And if we start down that road and if that's successful, think about what you would do if you were able to turn off the sympathetic nervous system. Plastic surgeons can get better blood flow in their flaps. We have case studies that have been published in PTSD. Personally, I was involved with a case where a gal was in for -- she had multiple amputations of her hand. She was a scleroderma patient, but she would not stop smoking. She was scheduled for another surgery to take her almost up to the knuckles. She would not stop smoking. The physician did a stellate ganglia block. I saw her again 6 weeks later, and her hands were filled -- were healed, and she still wouldn't stop smoking. But remarkable kinds of things. And then -- so my opening comment was that we believe that we have a unique positioning in the marketplace -- I'm sorry, I went too far -- that we have a unique positioning in the marketplace. And just to recap the importance of the initiatives that we have, I said in the open that this is the only company that I know of that's addressing both the opioid epidemic and the COVID pandemic. You'll see the numbers there, specifically the 20 million Americans who are in recovery. One of the things that we ask often is, what do you do when a patient comes in and is in recovery and refuses opioids? How do you do surgery in that patient population? And you see, I think, greatly here that even the government with CMS is understanding the plight that we find ourselves in, and that's why you see CMS pushing patients towards HOPD and ambulatory surgery care. Accelerating that site of care in the 23-hour stay environment, critically important for us. It is where the action was during the COVID pandemic when the sites were being reserved for -- or when the surgical sites were being reserved for COVID patients. And if we go to the right, this is all made possible by the efforts of the folks that have talked to you today. Regional anesthesiologists have been looking for ways to use local anesthetics to provide a longer duration of action for a very long time. But really having the opportunity to do it and Pacira and all of our folks having the opportunity to work with the faculty that you saw today is a real honor and a privilege. So with that, I'm going to ask our faculty to join us again, and we're going to have a question-and-answer period.

Do we have any more? So we have -- I have 3 questions that came from the Internet. So why don't we start off? Does anybody here have a question in the room? Yes, please. Why don't you tell everybody who you are.

Sure. Greg Renza, RBC Capital Markets.

So this is Greg Renza, RBC Capital Markets, for the folks on the...

And Dave and team, thanks for hosting into the panel. Thank you all for participating and for your insights today. My question just comes around COVID and sort of the coping, and Dr. Wang had some nice insights on that in your talk, which resonated with me. I'm just curious as we sort of segue out of that, if you could provide some perspectives on -- in your centers, in your areas, how we should think about the environment coming out and adapting to some of the measures that we have dealt with and how care standards and how procedure-based opportunities are actually being influenced by this in this new world environment.

Anybody?

I'll take a stab. We, from an orthopedic standpoint, have been looking to move the joint replacement specifically, not so much sports medicine, but joint replacement into an outpatient center. And there's hurdles. There's logistic hurdles. There's insurer hurdles. But there's also cultural hurdles that we have to overcome. With COVID, I think the patient really started to drive that as opposed to the physician or the surgeon or the insurance driving us into the ASC for the value-based. The patients are to drive it. It would be -- we got a little bit more adaptation and excitement. So that, in my microcosm, is one of the enduring components of COVID.

I'll add on to that. Where I'm from, we had -- in the winter of 2020, we had a governor-directed health measure that would not allow us to do inpatient total joints at the end of the year. This is the second wave in Nebraska. And so when we signed up patients, we said, "Hey, you've got to go home that day or you've got to wait." 100% of people, medically appropriate, "I'm going to go home that day." The millisecond that rule got reversed, half our patients called in and said, "I changed my mind. I'd like to stay the night." They watch the news. They see what's happening. To Paul's point, the patients were driving that. The patients knew what they were getting into. You have pain and you have money. Quarter 4, deductibles are met. Those are powerful motivators. What can we do in the future to optimize that patient buy-in while still moving toward the outpatient space? And that's, I think, going to be the hurdle with -- if there's not a COVID that forces us to do that, what is it going to push us into that space? And that's kind of the million-dollar question, right?

I'll take it a little further. I'm probably the most disagreeable physician on the group. So it's interesting, for the last 70 years, physicians have been given this ability to drive and determine most of what happens in health care with insurance companies and guidelines sort of nibbling at the edges. But before COVID, there was something that was coming that was very threatening. And we dodged a bullet, I think, as procedureless, which is the bundling of care. And if you looked at what was being happening -- what was going to be happening in the hip bundling space, and I'm a neurosurgeon, it looked like they were going to bundle in at $25,000 for a procedure. That included -- inclusive all events after a surgery, including you get a cold and go to the ER. So what that's going to lead to is a very strict rationing of care because you're not going to deviate on any procedures on anybody that has any chance that they're not going to be able to go home and not even the rehab, forget about day surgery. So if you look carefully at my slides, what it allowed us to do is that we dropped the spinal fusion total cost of care to below $19,000 -- below $20,000, which made us profitable in the setting of bundling, which was the ultimate goal. Now if this bundling happens under Trumpcare, Bidencare, I don't care what it is, at $25,000, you're going to see essentially the death of most spine surgery in America. No surgeon's prepared for this. But they're not looking at it because most doctors don't think that way. They don't think the way you do. They don't think about 20 years from now or 5 years. And so that's what we were actually preparing for. And so actually, I can walk into -- with this capability, I can walk into the largest employer in the country, into Walmart. I go, "You know what, you should pretty much send me all your patients." And they will. They absolutely will. They'll fly them to Miami to have surgery. That's not my goal here. But you can see the power of these economic drivers far beyond COVID. COVID is just one catalyst. Sorry, is that too ideological?

Not at all. Not at all. That's why we're here. I mean this morning has pretty much been ideological in a lot of ways, right? If you look backwards 10 years ago, none of this was possible. So I'll just add one thing quickly, Greg. I find it really interesting that in the old days, 4 or 5 years ago, you would have had to call for a preauthorization to be able to do a total knee arthroplasty in the ASC, and most of the time it would have been denied. Now you have to call for a preauthorization to do it in a hospital and it's generally denied. So we just have to think about we're never satisfied, of course, but it's happening quickly. Anybody else in the room?

Serge Belanger from Needham & Company. My question is for the EXPAREL users that presented. Can you just talk about the level of access to the product you have in your facility? And what kind of data was needed to get that level of access in terms of clinical or economic data? And then my second question. Obviously, you've all had great results with EXPAREL, but maybe talk about what would be the ideal post-op pain management product. We've talked about a 5- or 6-day duration product. Would that be ideal? Or what would that look like?

Somebody want to go after part 1?

I'm going to take part 1. So as far as getting it in your facility, I think that's a struggle, especially in particular facilities. I think that when you're presenting to your P&T committee, you're presenting to your C-suite at your hospital, you have to speak their language. And what we looked at was everybody says, well, this is an expensive drug. It's $300. Can't you just use regular bupivacaine that's pennies? Well, that's not comparing apples to apples, right? The regular bupivacaine is going to give me 12 to 18 hours. The EXPAREL is going to give me days. So when you look at it that way, there's a cost difference. EXPAREL is higher. What we did was we looked at comparing apples to apples. So if you look at EXPAREL as an extended duration pain relief, you have to compare it with another extended duration pain relief. In our case, it was a catheter system. So we actually did a study at our own institution, presented it at a national meeting. That looked at how much does it cost the system, not just pharmacy, the system for me to do a catheter with bupivacaine versus a single shot with EXPAREL. And we did an interscalene block. And we found that the system saved about $500 per block that we did. Additionally, it took about half the time for each anesthesiologist to do the block, meaning that I could potentially do 2 blocks in that amount of time. So that kind of was eye opening for our system, saying, we need to really think outside the box. It isn't just about the drug cost. It's not about the pharmacy budget in a vacuum. It's about the cost to the system and how many more blocks we can do.

Yes, I'd like to say something about getting in the pharmacy. It was difficult for us at first. It took several months. And what happened after those first 10 patients that we did, the pharmacist then came around. And after a few months, we presented 23 patients to the Board of the hospital. They're looking at length of stay, patient satisfaction, and they said, okay, we're going to discontinue this. It's not a problem. We also went to the foundation of the hospital because they were interested in the opioid crisis, right? And we said, well, if you have someone that couldn't pay for it, could you raise -- help us raise money for that? And they said immediately -- they sent out letters within the next week because someone had been affected by the opioid crisis. They were getting funds in for that. So the value of -- when you're looking at the value, and that's what I'd like to talk about, is like the dollars and cents when you look at the value, the overall value to the patient, to the nurses, to this whole team approach, you gradually get people, the pharmacists especially, looking away from just the cost and the value of the medication. Part 2 of your thing, what you were talking about in the future, what you're looking at as far as post-op, one of the things I'm really excited about is the potential for intraspinal EXPAREL. So imagine right now, when we're putting for labor -- okay. Let's say for labor, you're putting a catheter, an epidural catheter. Sometimes they fall out. There's an infusion going. Imagine if you could give one spinal dose of EXPAREL for labor, a single shot, and it lasts for 3 days or 4 days of pain relief. That would be remarkable. So the stuff that's coming down the pike is very, very exciting.

Anybody else thinks these products perfect? If there is such a thing. And remember, we got to get it through the FDA, which is imperfect.

From our point of view, the -- there are categories of patients that I see needing different durations of analgesia. So we try to match the analgesia to the burden of pain afterwards. And so there's some that just actually only need a couple of hours or a day's worth. And we won't use EXPAREL for those. But those -- that's like a small finger fracture or a cosmetic procedure or something like that. A lot of them do fall into the 3-day category because that's where a lot of the main healing takes place. And after that 3 days, they can kind of transition over to oral medications and be opioid-free as you've heard many times this morning. But there are -- there's a significant chunk of our patient population that still needs additional days. So that's where the excitement happens for that, the newer products that last for 5 days or so. And in combination with the cryoneurolysis ahead of time, I think combining those different pathways leads to -- or could lead to a really exciting sort of pain trajectory after surgery. For some of these big procedures at 7 days, they're still hurting if you didn't do anything else.

Great. Thank you, Dr. Gadsden. I do have 3 questions from the Internet. So I'll start with those. And others, just let us know. For Dr. Tumber, in what portion of your pediatric procedures would it make sense to use EXPAREL? And how quickly do you think that, that use will ramp?

Yes. Thank you for the question. So if you take a look at what the indication is for pediatrics, it's for local infiltration, including some of the nerve blocks that Maggie went over, the tap blocks, the ESP blocks. But how about the rest of the nerves? The adult indication is for interscalene. Dr. Sethi presented some compelling evidence. Grandma gets a shoulder replacement. She's raising her hand. But how about my 15-year-old sports kid who got a shoulder injury and now has to have an open shoulder? Because that happens almost every week at our hospital. How about that kid? That kid's at a higher risk of having opioid issues, and that will devastate not only his life but his whole family's life. Grandma's not going to go and seek fentanyl tablets on the street, but that kid will. How about some of the ACL injuries? So I think as we do more and more research with EXPAREL and get nerve block indications, Dr. Gadsden, with his arrow slide, showed all the blocks that we can do. A lot of those were peripheral nerve blocks that he was showing. And for adults, it's only indicated for an interscalene block. So as we get more and more evidence for nerve block indications, this is going to explode. A lot of physicians are obviously rightfully reluctant to use off-label indications. But once we get that data, I do see a huge expansion.

Great. Thanks, Dr. Tumber. You can tell the people on the Internet. We're really listening, guys. It's -- this one is for Dr. Garber. When, in your view, we'll actually have the opportunity to have her C-section and not go to the hospital at all?

Wow, that's a great -- well, yes, I don't know. That's a great question. We have a saying in labor delivery, home deliveries are for pizza. So that one's kind of taken me off guard. So with the hospital, one of the problems is when you have -- you're there where you have access to all of the neonatologists, the anesthesiologist, it's such an area that's full of all of these experts. Look at child birth. Most of the time, everything goes great. You have no problems. But if you have all of those things available right there, you're golden. So the question is about having all of this done outpatient or somewhere.

Well, I -- yes.

Okay. Well, it's good point. You know what, nothing is impossible so...

I'll take you off the hook a little bit because we have had people look, and I'll ask Roy to comment on this in a minute. But I will tell you that the first 2 issues that we came up on, one were religious issues for folks who could not be discharged on Friday or Saturday. And you would think with a C-section, you could schedule them, but it didn't -- it wasn't happening. So that's the first big hurdle. The biggest hurdle, and you'd jump in here in a second, right, because Roy is doing this face-to-face every day, is that it was pretty easy to get the OB and mom to agree that going home the same day was -- could be useful in certain patients. COVID, it was really hard to get a pediatrician to release junior...

Well, that -- yes. And that -- so when you talk about COVID, how COVID affected us, our moms wanted to get out. And the neonatologists were like, wait a minute, we can't discharge the baby yet. And we said, look, this -- we're in war time right now. You've got to figure something out. If you can't discharge that baby, we're going to have a real problem. Mom wants to go home. Let's figure it out. And you know what, under the screen and the rules, we figured out a way to do it. So there is a way to do that, and you're right. They have their protocols. Oh, no, they can't go into this. It's like, hey, you need to do a PK. You need to do some tests, send someone out there to do it. They don't have to wait here for their test before they're discharged. So there's ways around that.

I'll tell you why we know it's going to happen. Because we've had at least half a dozen PE firms, private equity firms call us and ask us if we had a protocol for same-day birthing.

Yes, I think it's going to happen and it's going to happen pretty rapidly now. And you look -- there's a lot of centers, there's a big group in New Jersey, Summit. They've built these really well evolved ASCs where they have 10, 12 operating rooms. And on their campus, they have -- they're attached to a big urgent care center, and one of them even has 100,000 square foot MD Anderson Cancer Center. And that actually is about 5 minutes from our Parsippany office. So there, that would be an ideal setup because they have all the facilities. Because that's one of the worries. I'm sure that's what you were referencing, Dr. Garber, is if you have someone who has a bleed or has problems, you want to be close to a hospital. But when you have the infrastructure and the ASCs are beefed up a little bit, I think we'll be able to see scheduled C-sections happen in an ASC environment rather quickly. And the thing about it, which is so interesting, is the guidelines have changed. It used to be that ACOG even wouldn't let you go home the same day or the next day. Now those guidelines have changed, the American College of OB/GYN and the Pediatric Societies as well has been recommending now that, that can be shortened. Because it always was funny. You could labor for 24 hours, have a baby and leave in 8 hours. But if you came in for a scheduled easy C-section, that baby had to stay for 3 days. It was completely illogical right from the beginning. So those guidelines have now kind of harmonized together. That makes sense, and it's just the hospitals and the group's medical staffs adopting them. So I think we're going to see that happen rapidly.

Great. I have one last question here that has to be the last question. So are there any other questions in the room? Yes.

First of all, thank you, guys for being here. You are the leading docs to get things done at institutions. So what I'm wondering about is a business question. Where are you on the curve of getting the, what I call, the 1,000 nos dealt with? And are you getting mainstream to adopt new techniques like this so it goes along easier for you and you don't have to be on your knees pleading to get things done? I'd like your business sense, please.

Well, I can start. An answer to that is, yes, there are lots and lots of nos, and it is getting easier because what happens with me is that once they see that you're -- if you're behind something and you're passionate for it and it works and it's patient -- we're always talking about patient safety, And that's the one thing, patient safety, a better anesthetic, when you're doing that and you can leave something like EXPAREL first, it's easier for people to listen to you because you believe in what you're doing and what you're working on. So it does pave the way. And the other thing that drives the market, too, for the hospitals is that we're doing something that the hospital down the street is not doing, okay? They're not doing it and we're doing it. So it's like, oh, that innovation that they're doing at Saddleback, let's keep that there. Can we get patients here? Can we bring other surgeons here because we do it? So that's another driver when you have something that works very well. I hope that...

I can add just one thing to that. I know your group is a large anesthesia group that covers multiple hospitals. And some of the OB groups are the same way. And one of the OB groups that works up the street from you, he's in Laguna Beach, this one more in the center of Orange County, they went to their hospital and said, "Hey, if we can't get what they're getting there, we're going to take all our business to that hospital." So sometimes when we -- you get a kind of a breach point in the neighborhood, you get that done. We had the same thing happened with orthopedics at [ Hoag ], places like that, where you can really change care in one place and then it magnifies out to the community once it happens. And I think you've seen that in your community now.

I spent the first half of my career fighting to get blocks done with surgeons and I'd say, "Hey, I got this cool block. Can you let me do this on your patients?" I don't know. It seems kind of fishy. And that has switched now. And so now I have surgeons that I haven't even worked with that come to me and say, "Hey, I heard your block team does a really good job. I've got my competitor across town doing block X, Y, Z for this urologic procedure. We need to be doing this now in our center and using EXPAREL because they're getting great results and that sort of thing." So to me, to answer your question, I feel that is a marker of how we're at this inflection point where we've developed this base of experience and data that has informed not just our own opinion because I have -- we're sold. We're the -- we've drunk the Kool-Aid. But the administrators, the surgeons, so the pressure comes from them back to us to provide the service. So I think we're seeing just the beginning of huge growth. And when I see Dave's slide about that TAM, I mean, that's incredible. I work in a place where we're doing blocks all day long. So I think, hey, we've got 100% of my addressable market. But seeing what we could do out there and not just in this country but in Europe and Latin America, it's incredible. I think that we're just at that takeoff point.

Thank you for that question because as you know, I'm a neurosurgeon, right? Certainly on this end, we're used to getting lots of nos, right? But I'd like to go a little deeper, and I'd like to ask people why are you saying no, right, because that gives insight. And I'll tell you a little story. In 2014, when EXPAREL first launched, I sought them out. There was no rep that came to my office or anything like that. I was waiting for this. And I went to them and I said, "I need this to do the kind of surgeries I want to do." And I went to the CEO of the hospital. And I said, "I'll pay for it because you can't do that." I'm like, okay, well, just let me do 10 cases. And I did the 10 cases, and then it was on the shelf, but they wouldn't release it to anybody else. And I asked them why. I said, "Why -- what is going on in your head that you know this works for me that you won't let the other surgeons use it." And he said to me -- this is 2014. He says, "Everybody will want it." And I said, "But I don't understand your rationale anymore." And then it clicked that there are different motivations for the no. And in this particular case, the fear was that this is something that every surgeon would see would work and they would all demand it. And in fact, in 2021, that is what has happened. So I guess there's lots of reasons why people will hold back technology, and I've wanted all different kinds of technologies for different reasons, but this works, right? And so that's the fear, right?

[indiscernible] is going to. So my no is an insurance company. It's pretty significant, and Blue Cross Blue Shield is no secret. And they insure a substantial number of people in Nebraska. They're starting to come around, I've heard, but we need data to drive their decision to make it idiot-proof that they can't ignore this. And right now, the data is piling up. But that's really, I think, our challenge on this side of the fence, is, yes, there's nos along the way. Patient is an easy no. They say, "Less pain, I'm in." Providers, less pain, or that other guys doing less pain, I got to be in. Hospitals are an issue sometimes. But insurers, that's my problem and -- where I'm at. And we're working on that. But we need to get that data out there, furnish the data, submit it, let's go.

And it's our problem, too. I mean just so you know, there are a number of -- and Josh know some of these well. One, actually, in upstate New York, they took iovera° off of their formulary because it was "investigational" even though it's paid for by CMS and approved by the FDA. So there is a gap there that we have to fill in with data and with results, as Dr. Urban outlined. Yes. I got 2 more after those 2 guys, and then we'll be done. Okay.

Just as a follow-on to [ Neil's ]. I'm Lewis Rubinson. I'm the Chief Medical Officer at Morristown Medical Center and both play an administrative role but also a clinical role as an intensivist. How have you been able to institutionalize? So even though the regional anesthesia person or the surgeon can use EXPAREL, but there are so many people who touch the patient even for extended recovery. We have PAs on the floor. We have hospitalist managing folks. And this only works if everyone drinks the Kool-Aid. We get a great block, but someone still sends someone home with a bunch of oxy because the surgeon may not be discharging the patient. So how have you been able to work it in your facility where really the whole theory, the whole treatise follows the patient through their entire time because that's the only place we're really going to get success. It's not just the 1 or 2 folks who are really allowed and championing it. They're important to get it in the door. But then how do you make it where it becomes just part of practice?

Let me start. We have a very robust best practice solution at our hospital system, a 3-hospital system. And we have an ERAC/ERAS protocol that all of the doctors, all of the OBs must use. So we take care of all of the pain needs for 72 hours. The OBs aren't doing any of the care with the pain meds. Every patient is getting the same pain medication for the whole time. The nursing -- one thing about Pacira that's fabulous is the support for education. We had nursing educators come out to talk to all the nurses, like look at -- you're not going to be running in, giving them norco. They're used to, oh, my patient is going to need a norco. It's like you're not going to do that. Train them what to do. And it's just been fabulous because this is what we've done. We have a standardized, completely standardized approach, order sets. Everything is the same for every anesthesiologist, for every OB. It's very hard to differ from that. We have rescue opioids that are available. But every patient gets the same treatment. The only differential is at the end of the time, the doctors, if they want to prescribe what they're going to -- how many norco or whatever, and that's gone way, way, way down. So that's how we standardize it at our institution, and it works very, very well. The nurses all know -- from the nurse in the operating room to the nurse taking care, they all know what to expect. And they can have all the answers -- the questions answered by the anesthesiologist on call for any pain or other controls.

There's no doubt -- there's no doubt that it's very upheld because it is a cultural shift. And any time there's a chink in the armor, the patient senses that. So if it's the admitting office that says, "Oh, no, you are going to stay overnight," or if it's the traveling nurse who doesn't know your system says, "Oh, no, your pain score is a 4. For that, you get [ that low to 2 ]," So there are many ways in which you can get jammed up. And as you know, as a physician, you can get jammed at every single step of the way. So it is the constant sort of institutionalization of thought processes, and as the patients really -- and driving back to your question about how do we change this, I think that we can publish data. I think we can have compelling answers. But it has to be the patient demanding a certain outcome and a certain algorithm. And if we can teach our patients to come in with that expectation and that demand, then they will drive their behavior because they are the ultimate consumer.

I think there has been, fortunately, sort of a desiloing of medicine. We see this particularly in like our total joint population. It used to be an anesthesiologist [ dosing ] an OR, then surgeons, nursing, and nobody was communicating. And now we realize that it takes a village. And so we have a total joint committee that meets once a month at least. There's a navigator that takes the patient from the clinic all the way through the process. It's the same one. At that meeting, you have input from team anesthesia, team surgery, team pharmacy, team Epic, medical record, nursing, PT. And I think that, that open communication is key. And we didn't always have that. The reason we started that is we had a sort of a bad outcome. We had a -- we had started all these blocks for total joints, and we thought we were really reducing opioids in the perioperative setting, and we kind of forgot to change what we were sending the patients home with. And we had a patient who wrote a letter. It was about a year after her hip surgery. Of course, she was a VIP because it would only happen to a VIP. And she just said, "Hey, I'm not trying to place blame. I'm just trying to raise awareness. It's a year after my hip surgery, and I'm now entering rehab for opioid addiction." And she said, "I really wasn't even hurting. It was just that I got sent home with all these opioids, and they just kept refilling them. And nobody told me how to come off of them. Nobody told me at what point should I not need an opioid and should rely on just non-opioid medication." And she's like, "The funny thing is I just never had any significant pain. But here I am a year later entering rehab." And so I think we realized for as much work as we have done in the perioperative setting, we really dropped the ball when we sent them home. So now that's a standard process. We go through that entire thing from day 1.

I mean a piece of insight that might be useful from us is in some of the value-based things and in some of the different payment schemes that are being developed by different folks, the person that has the most interest in standardizing care is actually the CEO or the person who's going to sign these value-based agreements. And getting an organization around an ERAS protocol that standardizes care, it's far from perfect. But Roy and Jonathan and I work in scenarios where the cost from one physician to another is double. And how do you bid in that? How do you become competitive in that scenario? You have to find a way to move the air bars closer together. ERAS is a patient-centric way to do that. We see some of the big groups doing that or trying to do that. It's hard. I think you're hearing the same thing from everybody. But if it's coming from the CEO, you got a shot. I think the same thing for myself, by the way, that's not true either. But we do see that work or at least the CEO gains that piece of insight that when somebody goes upstairs to complain, they get sent back downstairs because the idea came from the C-suite.

Can I say something that's contradictory?

Yes, go ahead, Mike.

[ I'm going to have to say ] I'm sorry. You're a physician, right? I understand where you're going with this, and I understand it's complicated. We set up the first successful spine U.S. program in the world. The first one to show actual results. And I do understand what everybody is saying here, but the idea that you're going to conform human behavior by protocol, by the WIP, is one way of doing things. And I don't want to do that. I don't do that. We did not do that on our ERAS protocol. We did not say, "Oh, you only get this so you're screwed." What we said is, "Take whatever you need. We trust you." People come for us to relieve their pain. They're in pain. They're already on narcotics before the spine surgery. They wouldn't have a surgery. So we say, okay, look, we got it. But using the tools that Pacira provides for us, they need less. This is a very different strategy than saying, okay, well, it's not really the EXPAREL that's working. It's that we just don't give you medicine anymore, right? No. We say, "Look, we're going to do things differently with new technology, and therefore, you won't require that." And that actually worked. So this isn't a big departure from I see the flood of all these ERAS protocols and all this confirmation of medical records and these -- I mean patients are unique. Every human being I've operated on is different. They have different needs and different problems. And so what Pacira provides for me as a spine surgeon is the tools that let them get through this better. And then they need less narcotics. And then we don't have an addiction problem with my patient population. But anyway, I'm sorry, that's counter to what other people are saying, but I just wanted to give that other perspective because I think it's important to balance that.

Totally agree, Mike, and that's why we're here. This one, Ron, has to be for you, from the Internet. Can you tell us, as iovera° gains traction in OA of the knee, how you're going to position ZILRETTA and iovera° for that same patient population?

Sure. And we tried to address this in the slide and the idea being that the patient presents for their first injection. Typically, that would be with a free steroid, and we would not change that at all. But if they're a responder, which 75% of patients are on average, we would then convert them over to ZILRETTA. That other 25% of patients, they could be a candidate for either HA, the hyaluronic acid, or iovera°. And the iovera° value proposition actually increases over the course of that patient journey, whereas the ZILRETTA value proposition decreases. So they're very complementary to each other.

Great. Thank you. And you'll understand why this is -- has to be the last question. For any physicians, does anyone use other bupivacaine products? In particular, does anyone have any experience using ZYNRELEF? And how would you compare it to EXPAREL?

I have not used it. There's a lot of differences in my mind, having -- I've seen it. And it -- my concern relates to how it's administered, the volumes and the proposed efficacy for what it is, and I think you'll get to play with some later on today.

Yes. For the people that are -- for the people in the room, we have some. So we'll show you, and you can try to put it in a syringe for yourself. I wish the person that asked the question was here with us. We could show you exactly what the issues are. But anybody else? Anybody tried it?

I think that compound, I haven't tried it. But that compound is really for infiltration right now. I don't personally see how I could ever put it in a needle and put it in a fascial plane block or put it in a peripheral nerve block. And so I'm kind of uninterested in surgical infiltration. I've been trying to kill it for the past half decade in my institution because I think that we can do a better job as regional anesthesiologists. So they're going to have to do something to change that to make it amenable to a regional block for it to get my interest.

So far as labor delivery or C-section goes, the pharmacists asked me about it. I said, "Well, what about breast feeding? How does that affect it?" And they're looking at me, and they're like, "Oh, yes, I didn't think about that." So we can't use it at this time in labor and delivery for those reasons until they've done much more robust studies in that level.

Our surgeons also had concerns about wound problems. And on the label, there's been some warnings about wound problems that resulted in the clinical development program. So that's been kind of a negative hit as well in terms of the uptake.

And let me just add one little closing remark about that. So before coming to Pacira, I was an anesthesiologist, practiced over 20 years, clinically taking care of patients, lots of local anesthetics. The one thing as anesthesiologists, and I'm not discounting you surgeons here, but anesthesiologists, we always are concerned with the safety of the patient. Safety, safety, safety. Particularly somebody like Sunny Tumber over there, pediatric anesthesia, there's no bigger thing you worry about than safety when it comes to kids. Think about your own kids and anything we do, safety, right? So we have a product EXPAREL that has really established a record. We've treated almost 10 million patients with it. We have no safety signal. When you compare it to the other things out there, we have a fraction of the issues that they have. And now you have a new product on the market that has a multiple of the commonly used bupivacaine and ropivacaines. They are multiplied. When you look at the skin issues, when you look at toxicity issues, other things, it's just one of those things. Why would you go from something that is super safe to something that isn't? So I think you have to think about it that way. And I think that's, as an anesthesiologist, how we think about things.

Great. So in closing, I'd like to acknowledge our terrific staff here in Tampa. We really had a great time and not only with this program but showing off the capabilities that we have here in the pit. And I think you can understand how this can be used for educational opportunities given all of the clinical opportunities we have going forward. Thanks to our audience, both in person and on the Internet. And special thanks, of course, to our faculty. We're humbled and proud that we get to work with you folks every day. And having an opportunity to actually change the way medicine is practiced in many cases and improve the life of folks is just a real privilege. And as I said, we're humbled and proud to be able to share that with you. And so in closing, we hope that you share our sense of excitement going forward, and we look forward to sharing our progress with you over the next several years. Thanks so much for coming.