On November 7, 2019 Pacira BioSciences, Inc. (Nasdaq: PCRX), a leading provider of innovative non-opioid pain management options, reported financial results for the third quarter of 2019 (Press release, Pacira Pharmaceuticals, NOV 7, 2019, View Source;991.htm [SID1234550599]).

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"This continues to be an outstanding year for Pacira marked by significant growth in our EXPAREL business and by an important and promising asset addition in iovera," said Dave Stack, chairman and chief executive officer of Pacira BioSciences. "Anesthesia remains a key driver of our business through the increasing use of nerve and field blocks, as well as the accelerating volume of ambulatory procedures. Our Phase 3 EXPAREL label expansion studies are on track with topline results from the pediatric study expected later this year and patient enrollment in the lower extremity nerve block study set to begin soon. We are also advancing Phase 4 studies to expand utilization in high potential procedures, such as cesarean section, spine, and hip fracture. Our significant orthopedic partnership with Johnson & Johnson is solidifying the role of EXPAREL in opioid-sparing protocols that are enabling the shift of painful procedures to the ambulatory setting. On the regulatory front, the team is advancing our strategy to introduce EXPAREL into target markets outside of the U.S. As for iovera°, commercial initiatives are well underway and we are very encouraged by the loyalty of our existing customers and the interest we are generating for new business within large health systems."

Third Quarter 2019 Financial Results

Total revenues were $104.7 million in the third quarter of 2019, a 25 percent increase over the $83.4 million reported for the third quarter of 2018.

Total net product sales were $104.4 million in the third quarter of 2019, a 26 percent increase over the $82.7 million reported for the third quarter of 2018.

Net product sales of EXPAREL/bupivacaine liposome injectable suspension were $101.7 million in the third quarter of 2019, a 23 percent increase over the $82.7 million reported for the third quarter of 2018.

EXPAREL net product sales were $101.5 million in the third quarter of 2019, compared to $82.2 million in the third quarter of 2018. Sales of bupivacaine liposome injectable suspension to a third-party licensee for use in animals were $0.3 million in the third quarter of 2019, compared to $0.5 million in the third quarter of 2018.

iovera° net product sales during the third quarter of 2019 were $2.6 million. Pacira began recognizing sales of iovera° in April 2019 after completing its acquisition of MyoScience, Inc., a privately held medical technology company.

Total operating expenses were $102.3 million in the third quarter of 2019, compared to $79.4 million in the third quarter of 2018.

GAAP net loss was $6.1 million, or $0.15 per diluted share, in the third quarter of 2019, compared to $0.6 million, or $0.02 per diluted share, in the third quarter of 2018.

Non-GAAP net income was $20.2 million, or $0.48 per diluted share, in the third quarter of 2019, compared to $12.8 million, or $0.31 per diluted share, in the third quarter of 2018.

Pacira ended the third quarter of 2019 with cash, cash equivalents, short-term and long-term investments ("cash") of $336.2 million. Cash provided by operations was $44.6 million in the nine months ended September 30, 2019, compared to $27.7 million in the nine months ended September 30, 2018.

See "Non-GAAP Financial Information" below.

Recent Business Highlights

Appointment of Chris Christie to board of directors. In September, Pacira announced the appointment of Christopher J. Christie to its board of directors. Mr. Christie served as the 55th Governor of the State of New Jersey from January 2010 to January 2018. During these two successful terms, Christie significantly raised public consciousness around the acceleration of opioid and other drug-related deaths. His administration mandated new approaches to address the stigma around drug addiction and focused on making treatments more broadly available.

Enrollment completion in multicenter registration study of EXPAREL in pediatric patients In September, Pacira announced completion of enrollment in its Phase 3 study of EXPAREL administered as a single-dose infiltration in pediatric patients aged six to less than 17 years undergoing spinal or cardiac surgeries. Pacira expects these study results to provide the foundation for a supplemental New Drug Application submission to the U.S. Food and Drug Administration (FDA) seeking expansion of the EXPAREL label to include children aged six and over.

2019 Financial Guidance
Pacira reiterated its full year 2019 financial guidance as follows:

EXPAREL net product sales in the range of $400 million to $410 million.

iovera° net product sales in the range of $8 million to $10 million.

Non-GAAP gross margins in the range of 75% to 76%.

Non-GAAP research and development (R&D) expense in the range of $60 million to $70 million.

Non-GAAP SG&A expense in the range of $180 million to $190 million.

Stock-based compensation in the range of $30 million to $35 million.

See "Reconciliation of GAAP to Non-GAAP 2019 Financial Guidance" below.

Today’s Conference Call and Webcast Reminder

The Pacira management team will host a conference call to discuss the company’s financial results and recent developments today, Thursday, November 7, 2019, at 8:30 a.m. ET. To participate in the conference call, dial 1-877-845-0779 and provide the passcode 8077145. International callers may dial 1-720-545-0035 and use the same passcode. In addition, a live audio of the conference call will be available as a webcast. Interested parties can access the event through the "Events" page on the Pacira website at investor.pacira.com.

For those unable to participate in the live call, a replay will be available at 1-855-859-2056 (domestic) or 1-404-537-3406 (international) using the passcode 8077145. The replay of the call will be available for one week from the date of the live call. The webcast will be available on the Pacira website for approximately two weeks following the call.

Non-GAAP Financial Information

This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP net income, non-GAAP net income per share, non-GAAP cost of goods sold, non-GAAP gross margins, non-GAAP research and development (R&D) expense and non-GAAP selling, general and administrative (SG&A) expense, because such measures exclude milestone revenue; acquisition-related charges and product discontinuation costs; stock-based compensation; amortization of debt discount; amortization of acquired intangible assets; an income tax benefit and step-up in basis of inventory in connection with the acquisition of MyoScience, Inc.; and loss on investment and other non-operating income.

These measures supplement Pacira’s financial results prepared in accordance with GAAP. Pacira management uses these measures to better analyze its financial results, estimate its future cost of goods sold, gross margins, R&D expense and SG&A expense outlook for 2019 and to help make managerial decisions. In management’s opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance at Pacira and its future outlook. Such measures should not be deemed to be an alternative to GAAP requirements or a measure of liquidity for Pacira. Non-GAAP measures are also unlikely to be comparable with non-GAAP disclosures released by other companies. See the tables below for a reconciliation of GAAP to non-GAAP measures, and a reconciliation of our GAAP to non-GAAP 2019 financial guidance for gross margins, R&D expense and SG&A expense.