Pacira BioSciences Inc

Previous wording

This Quarterly Report on Form 10-Q and certain other communications made by us contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, including, without limitation, statements related to: our growth and future operating results and trends, our strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, including our plans with respect to the repayment of our indebtedness, anticipated product portfolio, development programs, patent terms, development of products, strategic alliances and intellectual property, plans with respect to the Non-Opioids Prevent Addiction in the Nation (“NOPAIN”) Act and any other statements that are not historical facts. For this purpose, any statement that is not a statement of historical fact should be considered a forward-looking statement. We often use the words “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “will,” “would” and similar expressions to help identify forward-looking statements. We cannot assure you that our estimates, assumptions and expectations will prove to have been correct. Actual results may differ materially from these indicated by such forward-looking statements as a result of various important factors, including risks relating to, among others: the integration of our new chief executive officer; risks associated with acquisitions, such as the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur; our manufacturing and supply chain, global and United States, or U.S., economic conditions (including inflation and rising interest rates), and our business, including our revenues, financial condition, cash flows and results of operations; the success of our sales and manufacturing efforts in support of the commercialization of EXPAREL® (bupivacaine liposome injectable suspension), ZILRETTA® (triamcinolone acetonide extended-release injectable suspension) and iovera°®; the rate and degree of market acceptance of EXPAREL, ZILRETTA and iovera°; the size and growth of the potential markets for EXPAREL, ZILRETTA and iovera° and our ability to serve those markets; our plans to expand the use of EXPAREL, ZILRETTA and iovera° to additional indications and opportunities, and the timing and success of any related clinical trials for EXPAREL, ZILRETTA and iovera°; the commercial success of EXPAREL, ZILRETTA and iovera°; the related timing and success of United States Food and Drug Administration, or FDA, supplemental New Drug Applications, or sNDAs, and premarket notification 510(k)s; the related timing and success of European Medicines Agency, or EMA, Marketing Authorization Applicatio…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q and certain other communications made by us contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, including, without limitation, statements related to: our future outlook, our intellectual property and patent terms, our growth and future operating results and trends, our strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, including our plans with respect to the repayment of our indebtedness, anticipated product portfolio, development programs, development of products, strategic alliances, plans with respect to the Non-Opioids Prevent Addiction in the Nation (“NOPAIN”) Act and any other statements that are not historical facts. For this purpose, any statement that is not a statement of historical fact should be considered a forward-looking statement. We often use the words “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “will,” “would” and similar expressions to help identify forward-looking statements. We cannot assure you that our estimates, assumptions and expectations will prove to have been correct. Actual results may differ materially from these indicated by such forward-looking statements as a result of various important factors, including risks relating to, among others: the integration of our new chief executive officer; risks associated with acquisitions, such as the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur; our manufacturing and supply chain, global and United States, or U.S., economic conditions (including inflation and rising interest rates), and our business, including our revenues, financial condition, cash flows and results of operations; the success of our sales and manufacturing efforts in support of the commercialization of EXPAREL® (bupivacaine liposome injectable suspension), ZILRETTA® (triamcinolone acetonide extended-release injectable suspension) and iovera°®; the rate and degree of market acceptance of EXPAREL, ZILRETTA and iovera°; the size and growth of the potential markets for EXPAREL, ZILRETTA and iovera° and our ability to serve those markets; our plans to expand the use of EXPAREL, ZILRETTA and iovera° to additional indications and opportunities, and the timing and success of any related clinical trials for EXPAREL, ZILRETTA and iovera°; the commercial success of EXPAREL, ZILRETTA and iovera°; the related timing and success of United States Food and Drug Administration, or FDA, supplemental New Drug Applications, or sNDAs, and premarket notification 510(k)s; the related timing and success of European Medicines Agency, or EMA, Marketing …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Pacira is the therapeutic area leader in non-opioid pain management with a stated corporate mission of providing non-opioid pain management options to as many patients as possible and redefining the role of opioids for rescue therapy only. Our long-acting, local analgesic EXPAREL® (bupivacaine liposome injectable suspension) utilizes our unique pMVL drug delivery technology that encapsulates drugs without altering their molecular structure and releases them over a desired period of time. In the U.S., EXPAREL is a long-acting, non-opioid option proven to manage postsurgical pain. EXPAREL is the only product indicated for local analgesia via infiltration in patients aged six years and older and regional analgesia via interscalene brachial plexus nerve block, sciatic nerve block in the popliteal fossa and adductor canal block in adults. In Europe, EXPAREL is approved as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults and children aged six years and older. Since its initial approval in 2011, more than 14 million patients have been treated with EXPAREL. We drop-ship EXPAREL directly to end-users based on orders placed to wholesalers or directly to us, and there is no product held by wholesalers. With the acquisition of Flexion Therapeutics, Inc., or Flexion, in November 2021 (the “Flexion Acquisition”), we acquired ZILRETTA® (triamcinolone acetonide extended-release injectable suspension), the first and only extended-release, intra-articular, or IA, therapy that can provide major relief for osteoarthritis, or OA, knee pain for three months and has the potential to become an alternative to hyaluronic acid, platelet rich plasma injections or other early intervention treatments. With the acquisition of MyoScience, Inc., or MyoScience, in April 2019 (the “MyoScience Acquisition”), we acquired iovera°®, a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature to targeted nerves, which we sell directly to end users. EXPAREL, ZILRETTA and iovera° are highly complementary products as long-acting, non-opioid therapies that alleviate pain.

Current wording

Pacira’s mission is to deliver innovative, non-opioid pain therapies to transform the lives of patients. Our long-acting, local analgesic EXPAREL® (bupivacaine liposome injectable suspension) utilizes our unique pMVL drug delivery technology that encapsulates drugs without altering their molecular structure and releases them over a desired period of time. In the U.S., EXPAREL is a long-acting, non-opioid option proven to manage postsurgical pain. EXPAREL is the only product indicated for local analgesia via infiltration in patients aged six years and older and regional analgesia via interscalene brachial plexus nerve block, sciatic nerve block in the popliteal fossa and adductor canal block in adults. In Europe, EXPAREL is approved as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults and children aged six years and older. Since its initial approval in 2011, more than 15 million patients have been treated with EXPAREL. We drop-ship EXPAREL directly to end-users based on orders placed to wholesalers or directly to us, and there is no product held by wholesalers. With the acquisition of Flexion Therapeutics, Inc., or Flexion, in November 2021 (the “Flexion Acquisition”), we acquired ZILRETTA® (triamcinolone acetonide extended-release injectable suspension), the first and only extended-release, intra-articular, or IA, injectable therapy that can provide major relief for osteoarthritis, or OA, knee pain for three months and has the potential to become an alternative to hyaluronic acid, platelet rich plasma injections or other early intervention treatments. With the acquisition of MyoScience, Inc., or MyoScience, in April 2019 (the “MyoScience Acquisition”), we acquired iovera°®, a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature to targeted nerves, which we sell directly to end users. EXPAREL, ZILRETTA and iovera° are highly complementary products as long-acting, non-opioid therapies that alleviate pain. We are also advancing the development of PCRX-201 (enekinragene inzadenovec), a novel, locally administered gene therapy with the potential to treat large prevalent diseases like OA.

Previous wording

•In May 2024, we completed a private placement of $287.5 million in aggregate principal amount of 2.125% convertible senior notes due 2029, or 2029 Notes. We used part of the net proceeds from the issuance of the 2029 Notes to repurchase $200.0 million in aggregate principal amount of our 0.750% convertible senior notes due 2025, or 2025 Notes, in privately-negotiated transactions at a discount for $191.4 million in cash (including accrued interest). The partial repurchase of the 2025 Notes resulted in a $1.5 million proportional reduction of deferred financing costs and a $7.5 million gain on early extinguishment of debt. For more information, see Note 8, Debt, to our condensed consolidated financial statements included herein and “Liquidity and Capital Resources” below.

Current wording

For more information, see Note 15, Commitments and Contingencies, to our condensed consolidated financial statements included herein.

Previous wording

•Pediatrics. We have launched a Phase 1 pharmacokinetic study of EXPAREL as a single-dose post-surgical infiltration administration in patients under six years of age. If successful, we expect this study, followed by a Phase 3 registration study, will support expansion of the EXPAREL labels in the U.S., European Union, or E.U., and United Kingdom, or U.K. We are also discussing with the FDA, EMA and Medicines and Healthcare Products Regulatory Agency (MHRA) our regulatory strategy for EXPAREL administered as a nerve block in the pediatric setting. We received notification from the FDA in October 2023 that our pediatric studies requirement had been waived for the indication of brachial plexus interscalene nerve block to produce postsurgical regional analgesia in pediatric patients.

Current wording

•Pediatrics. We have launched a Phase 1 pharmacokinetic study of EXPAREL as a single-dose post-surgical infiltration administration in patients under six years of age. If successful, we expect this study, followed by a Phase 3 registration study, will support expansion of the EXPAREL labels in the U.S., European Union, or E.U., and United Kingdom, or U.K. We are also discussing with the FDA, EMA and the Medicines and Healthcare Products Regulatory Agency (MHRA) our regulatory strategy for EXPAREL administered as a nerve block in the pediatric setting. We received notification from the FDA that our pediatric studies requirement had been waived for the indications of brachial plexus interscalene and lower extremity nerve block to produce postsurgical regional analgesia in pediatric patients.

Previous wording

PCRX-201 is a novel, helper-dependent adenoviral vector expressing interleukin-1 receptor antagonist (IL-1Ra). After injection, the vector enters joint cells and turns them into factories to produce sustained therapeutic levels of IL-1Ra and inhibit the IL-1 pathway to manage pain and mitigate OA-related joint damage while remaining localized to the joint space. In a Phase 1 proof-of-concept study of patients with moderate to severe OA of the knee, PCRX-201 was well tolerated with improvements in knee pain observed across all doses. The study enrolled 72 patients in two three-dose cohorts: a co-administered IA steroid cohort and a cohort that did not receive a steroid. PCRX-201 was well tolerated, with efficacy observed through at least 52 weeks at all doses and cohorts. The highest level of efficacy was achieved in the co-administered steroid group, which showed a greater percentage of patients with at least a 50% improvement in Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) pain and stiffness scores, as well as a meaningful improvement in (Knee Injury and Osteoarthritis Outcomes Score) KOOS functional assessment. The one-year data were presented at the Osteoarthritis Research Society International (OARSI) 2024 World Congress in April 2024. We now have two-year efficacy and safety data that we have submitted for presentation at a medical meeting later this year. Given the highly encouraging Phase 1 data, we are preparing to launch a second clinical study in knee OA.

Current wording

After injection, the HCAD vector enters joint cells and turns them into factories to boost cellular IL-1Ra production, which blocks IL-1 pathway activation to reduce inflammation and pain in the knee. PCRX-201 uses an inflammation-responsive promoter to only produce IL-1Ra when needed, mimicking how the body naturally responds to inflammation. In a Phase 1 proof-of-concept study of patients with moderate to severe OA of the knee, PCRX-201 was well tolerated with improvements in knee pain observed across all doses. The study enrolled 72 patients in two three-dose cohorts: a co-administered IA steroid cohort and a cohort that did not receive a steroid. PCRX-201 was well tolerated, with efficacy observed through at least 52 weeks at all doses and cohorts. The highest level of efficacy was achieved in the co-administered steroid group, which showed a greater percentage of patients with at least a 50% improvement in Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) pain and stiffness scores, as well as a meaningful improvement in (Knee Injury and Osteoarthritis Outcomes Score) KOOS functional assessment. The one-year data were presented at the Osteoarthritis Research Society International (OARSI) 2024 World Congress in April 2024. We now have two-year efficacy and safety data that we have submitted for presentation at the American College of Rheumatology’s annual ACR Convergence meeting in November 2024. While other therapies typically provide relief for three to six months, PCRX-201 has already set a new standard with a year or more of sustained pain relief from a single injection. Given these highly encouraging Phase 1 data, we are preparing to launch a Phase 2 clinical study in knee OA in 2025.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

EXPAREL revenue increased 1% in both the three and six months ended June 30, 2024 versus 2023. Components of the increase included a 3% increase in gross vial volume in both the three and six months ended June 30, 2024 versus 2023, which was offset by a shift in vial mix. EXPAREL revenue was also impacted by a 1% increase in selling price per unit in both the three and six months ended June 30, 2024 versus 2023, related to a January 2024 price increase, net of increases in sales related allowances as a result of group purchasing organization contracting.

Current wording

EXPAREL revenue increased 3% and 2% in the three and nine months ended September 30, 2024 versus 2023, respectively. Components of the increases included a 3% increase in gross vial volume in both the three and nine months ended September 30, 2024 versus 2023, which was offset by a shift in vial mix. EXPAREL revenue was also impacted by a 1% increase in selling price per unit in both periods related to a January 2024 price increase, net of increases in sales related allowances as a result of group purchasing organization contracting.

Previous wording

Net product sales of iovera° increased 29% and 28% in the three and six months ended June 30, 2024 versus 2023, respectively, primarily due to increases of 29% and 32% in Smart Tip volume, partially offset by increased sales related allowances and accruals.

Current wording

Net product sales of iovera° increased 8% and 20% in the three and nine months ended September 30, 2024 versus 2023, respectively, primarily due to respective increases of 9% and 23% in Smart Tip volume, partially offset by increased sales related allowances and accruals.

Previous wording

Bupivacaine liposome injectable suspension revenue increased more than 100% in both the three and six months ended June 30, 2024 versus 2023. Its related royalties also substantially increased in both the three and six months ended June 30, 2024 versus 2023 primarily due to the sales mix of vial sizes and the timing of orders placed for veterinary use.

Current wording

Bupivacaine liposome injectable suspension revenue increased 91% and by more than 100% in the three and nine months ended September 30, 2024 versus 2023, respectively. Its related royalties increased more than 100% in both the three and nine months ended September 30, 2024 versus 2023 primarily due to the sales mix of vial sizes and the timing of orders placed for veterinary use.

Previous wording

The following tables provide a summary of activity with respect to our sales related allowances and accruals related to EXPAREL and ZILRETTA for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following tables provide a summary of activity with respect to our sales related allowances and accruals related to EXPAREL and ZILRETTA for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

Total reductions of gross product sales from sales-related allowances and accruals were $73.1 million and $63.9 million, or 17.6% and 16.3% of gross product sales, for the six months ended June 30, 2024 and 2023, respectively. The overall 1.3% increase in sales-related allowances and accruals as a percentage of gross product sales was primarily related to accruals as a result of higher chargeback-related allowances from expanded contracting efforts.

Current wording

Total reductions of gross product sales from sales-related allowances and accruals were $108.8 million and $95.5 million, or 17.6% and 16.3% of gross product sales, for the nine months ended September 30, 2024 and 2023, respectively. The overall 1.3% increase in sales-related allowances and accruals as a percentage of gross product sales was primarily related to accruals as a result of higher chargeback-related allowances from expanded contracting efforts.

Previous wording

Research and development expenses primarily consist of costs related to clinical trials and related outside services, product development and other research and development costs, including trials that we are conducting to generate new data for EXPAREL, ZILRETTA and iovera° and stock-based compensation expense. Clinical and preclinical development expenses include costs for clinical personnel, clinical trials performed by third-parties, toxicology studies, materials and supplies, database management and other third-party fees. Product development and manufacturing capacity expansion expenses include development costs for our products, which include personnel, research equipment, materials and contractor costs for process development and product candidates, development costs related to significant scale-ups of our manufacturing capacity and facility costs for our research space. Regulatory and other expenses include regulatory activities related to unapproved products and indications, medical information expenses, expenses related to our iGOR registry study and related personnel. Stock-based compensation expense relates to the costs of stock option grants, awards of restricted stock units, or RSUs, and our employee stock purchase plan, or ESPP.

Current wording

Research and development expenses primarily consist of costs related to clinical trials and related outside services, product development and other research and development costs, including trials that we are conducting to generate new data for EXPAREL, ZILRETTA and iovera°, clinical trials for PCRX-201 and stock-based compensation expense. Clinical and preclinical development expenses include costs for clinical personnel, clinical trials performed by third-parties, toxicology studies, materials and supplies, database management and other third-party fees. Product development and manufacturing capacity expansion expenses include development costs for our products and PCRX-201, which include personnel, research equipment, materials and contractor costs for process development and product candidates, development costs related to significant scale-ups of our manufacturing capacity and facility costs for our research space. Regulatory and other expenses include regulatory activities related to unapproved products and indications, medical information and scientific communication expenses, expenses related to our iGOR registry study and related personnel. Stock-based compensation expense relates to the costs of stock option grants, awards of restricted stock units, or RSUs, and our employee stock purchase plan, or ESPP.

Previous wording

Total research and development expense increased 8% and 7% in the three and six months ended June 30, 2024 versus 2023, respectively.

Current wording

Total research and development expense decreased 8% in three months ended September 30, 2024 versus 2023 and increased 2% in the nine months ended September 30, 2024 versus 2023.

Previous wording

Clinical and preclinical development expense increased 57% and 39% in the three and six months ended June 30, 2024 versus 2023, respectively, due to the start-up of and enrollment in a ZILRETTA shoulder trial, an EXPAREL intrathecal trial and an EXPAREL pediatric trial, and start-up activities in an iovera° spasticity trial. These increases were partially offset by the winding down of a PCRX-201 Phase 1 trial for knee OA as two-year follow-up visits of subjects were completed in November 2023. This Phase 1 trial remains on track for completion by November 2026, the last year of the follow-up period for the last patient dosed. In addition, toxicology studies for product candidates were completed in 2023.

Current wording

Clinical and preclinical development expense increased 21% and 32% in the three and nine months ended September 30, 2024 versus 2023, respectively, due to site start-up of and ongoing enrollment in a ZILRETTA shoulder trial, an EXPAREL pediatric trial and an iovera° spasticity trial. For the three months ended September 30, 2024 versus 2023, these increases were partially offset by the completion of the EXPAREL intrathecal trial cohort 2 enrollment. For the nine months ended September 30, 2024 versus 2023, these increases were partially offset by the winding down of a PCRX-201 Phase 1 trial for knee OA as two-year follow-up visits of subjects were completed in November 2023. This Phase 1 trial remains on track for completion by November 2026, the last year of the follow-up period for the last patient dosed. In addition, toxicology studies for product candidates were completed in 2023.

Previous wording

Product development and manufacturing capacity expansion expense decreased 21% and 13% in the three and six months ended June 30, 2024 versus 2023, respectively, primarily attributable to the near-completion of pre-commercial scale-up activities of our EXPAREL manufacturing capacity at our Science Center Campus in San Diego, California, subsequently placed into service in July 2024. The FDA approved an sNDA for our 200-liter EXPAREL manufacturing suite in February 2024. This decrease is partially offset by ongoing product development costs related to PCRX-201 and an iovera° medial branch Smart Tip.

Current wording

Product development and manufacturing capacity expansion expense decreased 23% and 17% in the three and nine months ended September 30, 2024 versus 2023, respectively, primarily attributable to the completion of pre-commercial scale-up activities of our EXPAREL manufacturing capacity at our Science Center Campus in San Diego, California, which the FDA approved an sNDA for our 200-liter EXPAREL manufacturing suite in February 2024. This new suite was subsequently placed into service in July 2024. The decrease was partially offset by ongoing product development costs related to PCRX-201 and an iovera° medial branch Smart Tip.

Previous wording

Regulatory and other expense increased 12% and 14% in the three and six months ended June 30, 2024 versus 2023, respectively, due to increased enrollment and additional sites related to an observational registry study which tracks patients’ symptoms and experience with pain management related to OA of the knee.

Current wording

Regulatory and other expense decreased 22% in the three months ended September 30, 2024 versus 2023, due to the reduction of international regulatory activities and headcount vacancies, partially offset by increased enrollment and additional sites related to an observational registry study which track patients’ symptoms and experience with pain management related to OA of the knee. Regulatory and other expense increased 2% in the nine months ended September 30, 2024 versus 2023, due to increased enrollment and additional sites related to an observational registry study, partially offset by the reduction of international regulatory activities and headcount vacancies.

Previous wording

Stock-based compensation increased 12% and 4% in the three and six months ended June 30, 2024 versus 2023, respectively, primarily due to greater equity awards granted to personnel.

Current wording

Stock-based compensation decreased 19% and 5% in the three and nine months ended September 30, 2024 versus 2023, respectively, primarily due to fewer equity awards granted to research and development personnel and headcount vacancies.

Previous wording

Total selling, general and administrative expense increased 5% and 3% in the three and six months ended June 30, 2024 versus 2023, respectively.

Current wording

Total selling, general and administrative expense increased 9% and 5% in the three and nine months ended September 30, 2024 versus 2023, respectively.

Previous wording

Sales and marketing expense increased 4% in the three months ended June 30, 2024 versus 2023 and decreased 1% in the six months ended June 30, 2024 versus 2023. The three months increase was driven by investing in programs to drive awareness and education for our customers and enhance our marketing, market access and reimbursement teams and value creation for the implementation of separate Medicare reimbursement for EXPAREL at average sales price plus 6 percent in outpatient settings beginning in January 2025 as part of the NOPAIN Act. We expect investments in these programs to increase in the second half of 2024 as we launch our national campaign—Make the NOPAIN Pact—which targets hospital pharmacists, administrators, clinicians and revenue management teams and is focused on ensuring these audiences are ready for the commencement of the NOPAIN Act. These increases were partially offset by the impact of a February 2024 restructuring program. Thesix months decrease wasattributable to the impact of the February 2024 restructuring program.

Current wording

Sales and marketing expense increased 13% and 4% in the three and nine months ended September 30, 2024 versus 2023. The three and nine months increase was driven by investing in programs to drive awareness and education for our customers and enhance our marketing, market access and reimbursement teams and value creation for the implementation of separate Medicare reimbursement for EXPAREL at average sales price plus 6 percent in HOPD settings and iovera° at up to an additional $255.85 when providers administer iovera° in ASC and HOPD settings beginning in January 2025 as part of the NOPAIN Act. We expect investments in these programs to continue through the end of 2024 as we have launched our national campaign—Make the NOPAIN Pact—which targets hospital pharmacists, administrators, clinicians and revenue management teams and is focused on ensuring these audiences are ready for the commencement of the NOPAIN Act. The three and nine months ended September 30, 2024 versus 2023 also benefited from a grant to the American Society of Anesthesiologists Charitable Foundation that occurred in the prior periods. These increases were partially offset by the impact of a February 2024 restructuring program.

Previous wording

General and administrative expense increased 3% and 11% in the three and six months ended June 30, 2024 versus 2023, respectively. The three and six month increases were primarily driven by third-party management consulting to assess strategic opportunities and market assessments for our products, partially offset by lower legal fees for ongoing litigation. Incrementally, the six months increase also included compensatory costs associated with the transition to our new Chief Executive Officer effective January 2, 2024, which include compensation related to the current Chief Executive Officer and to the former Chief Executive Officer who remains employed by the Company in an advisory role.

Current wording

General and administrative expense increased 7% and 9% in the three and nine months ended September 30, 2024 versus 2023, respectively. The three month increase in legal expenses was mostly driven by ongoing litigation and an increase in personnel related expenses. The nine month increase was primarily driven by third-party management consulting to assess strategic opportunities and market assessments for our products and compensatory costs associated with the transition to our new Chief Executive Officer effective January 2, 2024, which include compensation related to the current Chief Executive Officer and to the former Chief Executive Officer who remains an advisor to the Company in a consulting capacity.

Previous wording

Stock-based compensation increased 13% and 4% for the three and six months ended June 30, 2024 versus 2023, respectively, primarily due to greater equity awards granted to personnel.

Current wording

Stock-based compensation increased 1% and 3% for the three and nine months ended September 30, 2024 versus 2023, respectively, primarily due to greater equity awards granted to personnel.

Previous wording

Total contingent consideration charges (gains), restructuring charges and other for the three and six months ended June 30, 2024 included charges of $2.7 million and $4.6 million, respectively. Total contingent consideration charges (gains), restructuring charges and other for the three and six months ended June 30, 2023 included gains of $16.6 million and $4.5 million, respectively.

Current wording

Total contingent consideration (gains) charges, restructuring charges and other for the three and nine months ended September 30, 2024 included gains of $1.8 million and charges of $2.9 million, respectively. Total contingent consideration (gains) charges, restructuring charges and other for the three and nine months ended September 30, 2023 included charges of $3.4 million and gains of $1.2 million, respectively.

Previous wording

During the three months ended June 30, 2024, we recognized a contingent consideration charge of $1.5 million primarily due to revisions to the latest discount rates. During the six months ended June 30, 2024, we recognized a contingent consideration gain of $2.3 million primarily due to an adjustment reflecting the probability of achieving the remaining Flexion regulatory milestone by the milestone expiration date.

Current wording

During the three and nine months ended September 30, 2024, we recognized a contingent consideration gain of $3.2 million and $5.5 million, respectively, primarily due to adjustments reflecting the probability of achieving the remaining Flexion regulatory milestone by the milestone expiration date, partially offset by revisions to the latest discount rates.

Previous wording

During the three and six months ended June 30, 2023, we recognized contingent consideration gains of $18.3 million and $6.6 million, respectively. These gains were primarily due to adjustments to long-term forecasts which reduced the probability of meeting the sales-based contingent consideration milestones for the Flexion Acquisition by the December 31, 2030 milestone expiration date. The gains recognized during the six months ended June 30, 2023 were partially offset by a decrease in the assumed discount rate that is utilized in calculating the liability’s present value, based on a significant improvement in our incremental borrowing rate.

Current wording

During the three months ended September 30, 2023, we recognized contingent consideration charges of $2.8 million primarily due to market volatility which affects the liability’s present value. During the nine months ended September 30, 2023, we recognized gains of $3.8 million primarily due to adjustments to long-term forecasts which reduced the probability of meeting the Flexion sales-based contingent consideration milestones by December 31, 2030, the expiration date for achieving the milestones. The gains recognized during the nine months ended September 30, 2023 were partially offset by a decrease in the assumed discount rate that is utilized in calculating the liability’s present value, based on a significant improvement in our incremental borrowing rate resulting from the TLA Credit Agreement (as defined below) entered into in March 2023.

Previous wording

During the three and six months ended June 30, 2024, we recognized restructuring charges of $1.0 million and $6.5 million, respectively, related to employee termination benefits, such as the acceleration of share-based compensation, severance, and, to a lesser extent, other employment-related termination costs, as well as contract termination costs. During the three and six months ended June 30, 2023, we implemented a restructuring plan in an effort to improve our operational efficiencies and recognized $0.9 million in one-time employee termination benefits through a reduction of headcount.

Current wording

During the three and nine months ended September 30, 2023, we implemented a restructuring plan in an effort to improve our operational efficiencies and recognized $0.2 million and $1.1 million, respectively, in one-time employee termination benefits through a reduction of headcount.

Previous wording

For more information, see Note 9, Financial Instruments and Note 14, Contingent Consideration Charges (Gains), Restructuring Charges and Other, to our condensed consolidated financial statements included herein.

Current wording

For more information, see Note 9, Financial Instruments and Note 14, Contingent Consideration (Gains) Charges, Restructuring Charges and Other, to our condensed consolidated financial statements included herein.

Previous wording

Total other income, net was $8.3 million and $8.8 million in the three and six months ended June 30, 2024, respectively. Total other expense, net was $2.0 million and $25.4 million in the three and six months ended June 30, 2023, respectively.

Current wording

Total other income, net was $0.7 million and $9.4 million in the three and nine months ended September 30, 2024, respectively. Total other expense, net was $1.1 million and $26.5 million in the three and nine months ended September 30, 2023, respectively.

Previous wording

The substantial increases in interest income in the three and six months ended June 30, 2024 versus 2023 were due to higher interest rates and overall investment balances.

Current wording

The substantial increases in interest income in the three and nine months ended September 30, 2024 versus 2023 were due to higher overall investment balances.

Previous wording

The 46% decrease in interest expense during the six months ended June 30, 2024 versus 2023 was primarily driven by lower principal outstanding associated with the TLA Term Loan (as defined below) that was entered into on March 31, 2023 which replaced our then-outstanding TLB Term Loan (as defined below) that had a higher principal balance and interest rate.

Current wording

The 35% increase in interest expense during the three months ended September 30, 2024 versus 2023 was primarily driven by the issuance of the 2029 Notes (as defined below) in May 2024. The 30% decrease in interest expense during the nine months ended September 30, 2024 versus 2023 was primarily driven by the lower outstanding principal associated with the TLA Term Loan (as defined below) that was entered into on March 31, 2023 which replaced our then-outstanding TLB Term Loan (as defined below) that had a higher principal balance and interest rate, partially offset by issuing the 2029 Notes in May 2024.

Previous wording

In the three and six months ended June 30, 2024, we recognized a $7.5 million gain on early extinguishment of debt in conjunction with the repurchase of $200.0 million principal of our 2025 Notes. The partial repurchase of the 2025 Notes was completed with our net proceeds from the issuance of the 2029 Notes.

Current wording

In the nine months ended September 30, 2024, we recognized a $7.5 million gain on early extinguishment of debt in conjunction with the repurchase of $200.0 million aggregate principal of our 2025 Notes (as defined below). The partial repurchase of the 2025 Notes was completed with our net proceeds from the issuance of the 2029 Notes (as defined below).

Previous wording

In the six months ended June 30, 2023, in conjunction with the entry into the TLA Credit Agreement, we incurred a $16.9 million loss on early extinguishment of debt as a result of the retirement of $287.5 million aggregate principal of our TLB Term Loan (as defined below).

Current wording

In the nine months ended September 30, 2023, in conjunction with the entry into the TLA Credit Agreement, we incurred a $16.9 million loss on early extinguishment of debt as a result of the retirement of $287.5 million aggregate principal of our TLB Term Loan (as defined below).

Previous wording

The effective tax rates were 48% and 45% for the three and six months ended June 30, 2024, respectively. The effective tax rates were 32% and 45% for the three and six months ended June 30, 2023, respectively. Income tax expense represents the estimated annual effective tax rate applied to the year-to-date domestic operating results adjusted for certain discrete tax items.

Current wording

The effective tax rates were (3)% and (30)% for the three and nine months ended September 30, 2024, respectively. The effective tax rates were 35% and 39% for the three and nine months ended September 30, 2023, respectively. Income tax expense represents the estimated annual effective tax rate applied to the year-to-date domestic operating results adjusted for certain discrete tax items.

Previous wording

The effective tax rates for the three and six months ended June 30, 2024 include costs related to non-deductible stock-based compensation, primarily related to expired stock options, and non-deductible executive compensation, partially offset by tax credits. The effective tax rates for the three and six months ended June 30, 2023 includes costs related to non-deductible stock-based compensation, a valuation allowance recorded against non-U.S. results and non-deductible executive compensation.

Current wording

The effective tax rates for the three and nine months ended September 30, 2023 include costs related to non-deductible stock-based compensation and non-deductible executive compensation, partially offset by credits and a fair-value adjustment for the contingent consideration.

Previous wording

Since our inception in 2006, we have devoted most of our cash resources to manufacturing, research and development and selling, general and administrative activities related to the development and commercialization of EXPAREL. In addition, we acquired ZILRETTA as part of the Flexion Acquisition in November 2021 and iovera° as part of the MyoScience Acquisition in April 2019. We are primarily dependent on the commercial success of EXPAREL and ZILRETTA. We have financed our operations primarily with the proceeds from the sale of convertible senior notes and other debt, common stock, product sales and collaborative licensing and milestone revenue. As of June 30, 2024, we had an accumulated deficit of $78.9 million, cash and cash equivalents and available-for-sale investments of $404.2 million and working capital of $539.5 million.

Current wording

Since our inception in 2006, we have devoted most of our cash resources to manufacturing, research and development and selling, general and administrative activities related to the development and commercialization of EXPAREL. In addition, we acquired ZILRETTA as part of the Flexion Acquisition in November 2021 and iovera° as part of the MyoScience Acquisition in April 2019. We are primarily dependent on the commercial success of EXPAREL and ZILRETTA. We have financed our operations primarily with the proceeds from the sale of convertible senior notes and other debt, common stock, product sales and collaborative licensing and milestone revenue. As of September 30, 2024, we had an accumulated deficit of $222.4 million, cash and cash equivalents and available-for-sale investments of $453.8 million and working capital of $383.6 million.

Previous wording

During the six months ended June 30, 2024, net cash provided by operating activities was $102.3 million, compared to $62.6 million during the six months ended June 30, 2023. The increase of $39.7 million was attributable to increased revenue with favorable gross margins, lower interest paid and a $13.0 million payment made in the prior year for a termination fee relating to a licensing agreement.

Current wording

During the nine months ended September 30, 2024, net cash provided by operating activities was $156.3 million, compared to $107.1 million during the nine months ended September 30, 2023. The increase of $49.2 million was primarily attributable to increased revenue with favorable gross margins, lower interest paid and a $13.0 million payment made in the prior year for a termination fee relating to a licensing agreement.

Previous wording

During the six months ended June 30, 2024, net cash used in investing activities was $30.7 million, which reflected $26.3 million of outflows from available-for-sale investment purchases (net of sales), as well as $4.4 million of capital expenditures for manufacturing product fill lines and for an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California.

Current wording

During the nine months ended September 30, 2024, net cash used in investing activities was $82.9 million, which reflected $74.4 million of outflows from available-for-sale investment purchases (net of sales), as well as $8.5 million of capital expenditures for manufacturing product fill lines and for an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California.

Previous wording

During the six months ended June 30, 2023, net cash provided by investing activities was $73.5 million, which reflected proceeds from $90.2 million of available-for-sale investment sales (net of purchases), partially offset by purchases of fixed assets of $10.0 million for fill lines for our products and equipment for an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and purchases of equity and debt investments of $6.8 million.

Current wording

During the nine months ended September 30, 2023, net cash provided by investing activities was $69.2 million, which reflected proceeds from $89.3 million of available-for-sale investment sales (net of purchases), partially offset by purchases of fixed assets of $13.4 million for fill lines for our products and equipment for an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and purchases of equity and debt investments of $6.8 million.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities was $22.2 million, which primarily consisted of $287.5 million in proceeds from the issuance of the 2029 Notes. We used the majority of the proceeds from the 2029 Notes to make a partial repurchase of the 2025 Notes in the amount of $191.0 million, enter into a capped call transaction for $26.7 million, repurchase $25.0 million of treasury stock, and pay debt issuance and financing costs of $9.4 million. Additionally, we paid the remaining $8.6 million of 3.375% convertible senior notes due 2024 assumed from the Flexion Acquisition (the “Flexion 2024 Notes”) upon their maturity and made $5.6 million of voluntary prepayments associated with the TLA Term Loan. See Note 8, Debt, to our condensed consolidated financial statements included herein for further discussion on the Flexion 2024 Notes, 2025 Notes, 2029 Notes, the capped call transaction and the TLA Term Loan. There was also $1.4 million of proceeds from the issuance of common stock through our ESPP.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities was $19.3 million, which primarily consisted of $287.5 million in proceeds from the issuance of the 2029 Notes. We used the majority of the proceeds from the 2029 Notes to make a partial repurchase of the 2025 Notes in the amount of $191.0 million, enter into a capped call transaction for $26.7 million, repurchase $25.0 million of treasury stock, and pay debt issuance and financing costs of $9.4 million. Additionally, we paid the remaining $8.6 million of 3.375% convertible senior notes due 2024 assumed from the Flexion Acquisition (the “Flexion 2024 Notes”) upon their maturity and made $8.4 million voluntary prepayments associated with the TLA Term Loan. See Note 8, Debt, to our condensed consolidated financial statements included herein for further discussion on the Flexion 2024 Notes, 2025 Notes, 2029 Notes, the capped call transaction and the TLA Term Loan. There was also $1.4 million of proceeds from the issuance of common stock through our ESPP.

Previous wording

During the six months ended June 30, 2023, net cash used in financing activities was $153.5 million, which consisted of a $296.9 million repayment of TLB Term Loan principal as well as a $5.8 million prepayment penalty in connection with the retirement of the TLB Term Loan facility, partially offset by the net proceeds from the TLA Term Loan of $149.6 million and the exercise of stock options of $1.9 million and $1.7 million from the issuance of common stock through our ESPP.

Current wording

During the nine months ended September 30, 2023, net cash used in financing activities was $181.3 million, which consisted of a $296.9 million repayment of TLB Term Loan principal as well as a $5.8 million prepayment penalty in connection with the retirement of the TLB Term Loan facility and $30.6 million repayments of TLA Term Loan principal, partially offset by the net proceeds from the TLA Term Loan of $149.6 million, proceeds from the exercise of stock options of $1.9 million and $1.7 million from the issuance of common stock through our ESPP.

Previous wording

On March 31, 2023, we entered into a credit agreement (as amended to date, the “TLA Credit Agreement”) to refinance the indebtedness outstanding under our TLB Credit Agreement (as defined and discussed below). The term loan issued under the TLA Credit Agreement (the “TLA Term Loan”) was issued at a 0.30% discount and provides for a single-advance term loan A facility in the principal amount of $150.0 million, which is secured by substantially all of our and any subsidiary guarantor’s assets and matures on March 31, 2028. We may elect to borrow either (i) alternate base rate borrowings or (ii) term benchmark borrowings or daily simple SOFR (as defined in the TLA Credit Agreement) borrowings. Each term loan borrowing which is an alternate base rate borrowing bears interest at a rate per annum equal to (i) the Alternate Base Rate (as defined in the TLA Credit Agreement), plus (ii) a spread based on our Senior Secured Net Leverage Ratio ranging from 2.00% to 2.75%. Each term loan borrowing which is a term benchmark borrowing or daily simple SOFR borrowing bears interest at a rate per annum equal to (i) the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as each is defined in the TLA Credit Agreement), plus (ii) a spread based on our Senior Secured Net Leverage Ratio ranging from 3.00% to 3.75%. During the six months ended June 30, 2024, we made voluntary principal prepayments of $5.6 million. During the year ended December 31, 2023, the Company made a scheduled principal payment of $2.8 million as well as $30.6 million of voluntary principal prepayments. Due to voluntary principal prepayments made, we are not required to make further principal payments until June 2026, although we retain the option to do so. As of June 30, 2024, borrowings under the TLA Term Loan consisted entirely of term benchmark borrowings at a rate of 8.43%.

Current wording

On March 31, 2023, we entered into a credit agreement (as amended to date, the “TLA Credit Agreement”) to refinance the indebtedness outstanding under our TLB Credit Agreement (as defined and discussed below). The term loan issued under the TLA Credit Agreement (the “TLA Term Loan”) was issued at a 0.30% discount and provides for a single-advance term loan A facility in the principal amount of $150.0 million, which is secured by substantially all of our and any subsidiary guarantor’s assets and matures on March 31, 2028. We may elect to borrow either (i) alternate base rate borrowings or (ii) term benchmark borrowings or daily simple SOFR (as defined in the TLA Credit Agreement) borrowings. Each term loan borrowing which is an alternate base rate borrowing bears interest at a rate per annum equal to (i) the Alternate Base Rate (as defined in the TLA Credit Agreement), plus (ii) a spread based on our Senior Secured Net Leverage Ratio ranging from 2.00% to 2.75%. Each term loan borrowing which is a term benchmark borrowing or daily simple SOFR borrowing bears interest at a rate per annum equal to (i) the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as each is defined in the TLA Credit Agreement), plus (ii) a spread based on our Senior Secured Net Leverage Ratio ranging from 3.00% to 3.75%. During the nine months ended September 30, 2024, we made voluntary principal prepayments of $8.4 million. During the year ended December 31, 2023, we made a scheduled principal payment of $2.8 million as well as $30.6 million of voluntary principal prepayments. Due to voluntary principal prepayments made, we are not required to make further principal payments until September 2026, although we retain the option to do so. As of September 30, 2024, borrowings under the TLA Term Loan consisted entirely of term benchmark borrowings at a rate of 7.95%.