Thank you for joining the Pacira Pharmaceuticals Third Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks of Pacira's management team we will open the lines for a question-and-answer period. Please be advised that this call is being recorded at the Company's request and will be archived on the Company's website for two weeks from today's date. At this time, I'd like to introduce Jessica Cho of Pacira Pharmaceuticals. Jessica Cho - Investor Relations Thank you and good morning, everyone. Joining me on the call today from Pacira are Dave Stack, President and Chief Executive Officer and Chairman; and Jim Scibetta, Senior Vice President and Chief Financial Officer. Before I turn the call over to the management team for their prepared remarks, I would like to remind you that certain remarks made by management during this call about the Company's future expectations, plans and prospects including those regarding EXPAREL, Pacira’s plan to expand the indications of EXPAREL, our ability to adequately resolve the issues raised in the FDA warning letter, Pacira’s plan to evaluate, develop and pursue additional DepoFoam based product candidates, production in Suite A and Suite C, a manufacturing relationship with Patheon, anticipated cost, gross margins, operating leverage and other statements containing the words "believes," "anticipates," "plans," "expects," and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are based on assumptions that the Company believes are reasonable that are subject to a wide range of risks and uncertainties. Actual results may differ materially from those expressed or implied by such forward-looking statements. Many of these and other risks and uncertainties are described in the Risk Factors section of Pacira’s most recent Annual Reports on…

Thanks Dave and good morning, everyone. We saw strong evidence in the Q3 results of the Pacira operating leverage which we believe will be more and more pronounced as EXPAREL revenue continues to grow not only with increased market share infiltration and with the anticipated nerve block launch in March 2015 but also further down the road with the potential oral surgery, pediatric and chronic pain opportunities. With EXPAREL revenue of $50.2 million in Q3 has emphasized a slow quarter in terms of surgical procedures, we are obviously in an annual sales run rate of over $200 million. This has been achieved in our 10th quarter post launch remaining ahead of the timeline reached by the largest comparable branded hospital products which ultimately achieve revenue well over $500 million. Let me point out here as we have noted on every quarterly call since launch that we continue to caution against relying on the EXPAREL sales estimates released by the third party data tracking services which have consistently shown distorted and misleading trends and this was particularly acute this quarter. As expected, we continue to see gross margin improvement up to 61% in Q3. Recall, we have guided EXPAREL gross margins for product made in Suite A and Suite C to be 75% to 80% at peak and greater than 60% in Q4 of this year which we’ve already surpassed. We expect to see further improvement over the Q3 results in Q4 and going forward as we work our way up toward full production capacity. Turning to measures of profitability, our GAAP net loss narrowed to $3 million or $0.08 per share. You will recall that we expected to achieve profitability on a non-GAAP basis no later than the second half of 2014 and we achieved that milestone last quarter with…

Thank you. (Operator Instructions) Our first question comes from Douglas Tsao of Barclays. Your line is open.

Hi good morning.

Good morning, Doug.

Just when you think about sort of the trajectory that we have seen in recent months or recent quarters, sort of then varies with sort of little bit more modest growth followed by sort of boluses of activity, some of that seems to be seasonal. What is your sort of take on what we saw this last quarter, say in comparison to the inevitably tough comp that we saw in 2Q, where we saw really strong sequential growth on a quarter-to-quarter basis?

Yes, pretty much what we were—pretty much what we had forecasted, Doug. If you go back and look at Q1, we had growth of 13%. In Q3, we had growth of 12% that’s pretty much the way we think the years are going to rollout based on everything we’ve talked about earlier, we see Q1 and Q3 being soft quarter for different reasons by the way and Q2 and Q4 being the big procedure driven quarters and that’s really what is the driver is really the number of procedures being done that any kind of a different use of EXPAREL. I would make one additional comment there Doug is as we do more orthopedic procedures which by their very nature are elective then we become more and more seasonal, right. So what we have is the baseline of emergent things as they are related to tumor remover and things like that and then patient’s actually have a choice of when they would have a knee or hip done and they would favor the second quarter and the fourth quarter.

And then you mentioned ongoing discussions with the FDA, in terms of the warning letter. I guess the first question that comes to mind is at what point do you think that you could come, there could be a resolution with that, and not necessarily a closeout letter, because I know those can take years and years and years to come, if they ever do come. But at what point do you think you will sort of come to some interim agreement, if you will, with the Agency in terms of the market, you know sort of your marketing material?

I appreciate the question, Doug and I think you will appreciate the fact that we are having ongoing discussions with the FDA and it’s just not appropriate for me to comment at this time.

Okay. And then have you seen any impact in terms of accounts, how they've been looking at the indication of use for the product since the warning letter came out?

That's a much more difficult question to answer. So here's what we see, and I will give you two directional question – or two directional answers to the question and I appreciate you asking the question by the way, I mean it’s the obvious question. One is that we have a strong and a significant number of advocates across a wide range of procedures and healthcare providers who have used the product and have enjoyed the benefits or their patients have enjoyed the benefits of a reduced opioid strategy. With that being said, there have been a number of negative reports almost entirely from pharmacy that have caused some market disruptions as a result of the warning letter and I will give you a couple of examples. We’ve had reports that EXPAREL have a black box. We have report that EXPAREL has been taken off the market. You know EXPAREL must have significant safety issues which have prompted the FDA warning letter after more than two years on the market of course of all those things are not accurate and we are certainly going to have to handle these pharmacy-driven misrepresentations until we come to some resolution with the FDA and certainly it’s not a positive, Doug. I mean, I guess, I should probably start off by saying that.

Okay, great. Thank you very much.

Yes, thank you.

Thank you. Our next question comes from Gary Nachman of Goldman Sachs. Your line is open.

Hi good morning, Dave.

Good morning.

Just to followup on that last point. Have you actually been having any conversations proactively with the hospitals to explain your position to them and make them more comfortable about the while situation and then in 3Q, could you run through where else you're seeing most of the increased use for EXPAREL outside of orthopedics?

Sure, so there is daily discussions with all kinds of customers, individual physicians and pharmacist and even patient advocacy groups and physician advocacy groups. There is a number of quality initiatives and enhanced recovery pathways Gary that we are rolling out at some major institutions so those discussions, those activities continue. Remember that the FDA warning letter was quite specific in the topics that it raised and so as you might imagine we are being very careful in how we work with the FDA and addressing the issues that they raised in the warning letter but we continue to have daily interactions with all of our customers. So that’s number one. Number two, I don’t know if I see anything specifically in Q3, Gary that would be a lot different. I mean what we see is that everything is growing and ortho is growing faster and I would also say tough that these CQI initiatives, the continuous quality improvement initiatives and the care pathways that are being rolled out are primarily in soft tissue indications, primarily in tumor removal and in the OB/GYN area and so we expect that as time goes and it’s largely by the way because those folks who had access to the technology for a longer period of time so their ability to develop protocol driven care is actually stronger than the ortho guys who are more recent advocates for EXPAREL. So you know what we’ve seen in Q3 is a little bit less ortho because of the elective nature of those procedures but on a percentage basis still growing faster than soft tissue and generally a damping of the procedures relative to what we think we will see in Q4. I don’t know if that’s a—if that’s not a specific answer to your question, ask again.

No that's very helpful. And then just last one for Jim. I mean it was noticeable that the R&D expense is pretty low in the third quarter. Just how should we think about that run rate as you head into next year, as you try and move forward with chronic pain, and then potentially also some of those other Depo products in the pipeline?

Yes, you know, I think we’ve had a lot of discussion internally and we feel very fortunate that we can move forward multiple products in a pipeline without having a great impact on the P&L in the process, so the R&D, there is no doubt the R&D number is low this quarter because we are coming off of pivotal studies in the past and then nothing like that is active now. So you can expect a higher run rate as we go forward. But at the same time, when we look out without getting ahead of ourselves the type of things that we are looking at like EXPAREL development are actually not that expensive for us to develop. So we can have a bit of a win-win there.

Okay, thanks.

Thanks Gary.

Thank you, our next question comes from Liana Moussatos of Wedbush Securities. Your line is open.

Thank you for taking my question. In Q3 was there any inventory destocking? Can you comment on inventory from Q2 to Q3?

Liana, we are still making more than we are selling now with we see approved. So we're building inventory. I don’t know if that’s the answer to those…

Is that your question, Liana?

I am just wondering, I don't mean at Pacira, I mean more at…

Okay, sorry. I mean, I think we’ve sort of consistently said that based on the order patterns that we see, it doesn’t appear that there is any material stocking in any of our customers meaning that they order so frequently that it appears that they are using the product so, I don’t think that that’s anything that effects the quarter-on-quarter results.

Yes, I would give you a slightly different frame of reference on that Liana. You know we—it’s interesting to us that we will se the same hospital order one box three times in a day and your normal response to that would be we could improve slightly our margins if we can get them to order all three and throw them in one box. But in fact what’s happening in the marketplace is they don’t want those three boxes to go into a central pharmacy somewhere, they want them to go directly into a Pyxis machine or some point of entry system inside the hospital and so that goes back to Jim’s point that we think we have several days of inventory in the field and we don’t see that changing much.

Thank you.

Thank you. Our next question comes from David Steinberg of Jefferies, your line is open.

Yes. Thanks very much and good morning. I was interested in your comments about pursuing an ex-US deal going forward. I haven't heard you discuss that too much in the past. So a couple of questions. First, what are some of the territories that you think are most attractive ex-US, and in which territories do you think you may get more favorable pricing? Secondly, are you looking to do some sort of global transaction, or more sort of a country-by-country situation, and thirdly, what types of companies, I know it's early, would you be look to talk with more, more device companies, more pharmaceutical companies, and finally again it's early, but what sort of structure do you think you might pursue sort of a royalty based deal, or a gross profit split? Thanks very much.

Yes, thanks for the question, David. Let me just a made a broad comment first that the opportunity has been created by over performance in the manufacturing group as Jim outlined. So we’ve moved the schedule for this forward, so your comment that we haven’t talked about it really is appropriate. I think, we’ve had a number of folks who have asked about the drug some every months for the last couple of years frankly and a lot of that is driven by folks who come to the U.S. and work with some of our leading-edge KOLs and see them using EXPAREL and then want to know from us when they might be able to use that in their home territory. Specifically David, we have two quite different global opportunities. There are territories, the U.S., I am sorry Latin and South America, Canada some of the countries like Australia et cetera and to some extent China where the approval in the U.S. provides a shortened regulatory opportunity in those territories and those would be the most obvious for us to look at first. Other territories where you know the regulators have had a different idea about how the clinical trials would have to be done and where you might have to go through a more rigorous pricing discussion are going to take a longer time and I a m talking specifically now about the EU and Japan. So we view this as two very different opportunities. We have been in discussion with some of the KOLs in the European Union about how we might be able to create an opportunity for them to have access to EXPAREL and so those discussions are on going. For the rest of your questions about what kind of deal we are looking for and all of that, it’s just way too early for me to be able to give you any significant comments. We haven’t even really started the process yet, David. We are just getting to the point where we can open the opportunity to start to talk about this stuff.

Okay, thanks. And just one more question sort of a 20,000-foot view. So given your robust trajectory soon you're going to be building up serious cash position, and I don't know how much you talked about at the Board level, but any thoughts on what you might do with that? I would assume you're not going to be paying a dividend, share repurchases, are you potentially looking at acquisitions, obviously it would be hard to find something that's growing as fast as EXPAREL, but what sort of acquisitions might you looking for, or any other possible uses of cash going forward?

So, I will ask Jim to pick me up if I stumble here at all relative to the Board discussions but I am the first thing David is we’ve got a number of pipeline opportunities that are DepoFoam based that we’re flushing out now and really more around, we are really more around we are pretty solid with the market opportunity but we want to understand the clinical development requirements and how we are going to manufacture et cetera and that was the reference to hopefully some early discussions in 2015. So that’s the first thing that we are focused on. We are looking at some additional products for in-licensing. Jim would remind me if I don’t say it. We are not going to do $1.4 billion acquisition or anything like that but if we found some thing that, we had a low cost of sales because it was interesting to the same customer base that we are currently dealing with, we’ve also talked to the Board about that opportunity as well. After that, we will just have to see, I guess I look to Jim to make some comments here but we’ve got the bonds that are out there and how you resolve those relative to your use of cash and share buybacks and all the rest of that stuff will requite a much more sophisticated strategy that I can talk about on this call.

Yes I mean the only thing I would add to that is we are aware that we are in an industry where people that have had great success always – haven’t always been the greatest stewards of capital for their shareholders. In front of us what’s visible is a lot of opportunity with tour internal pipeline and then potential in-licensing like Dave said. But if we are in that fortuitous situation of having a lot of cash and it’s not clear what to do with excess cash, we are not going to viscerally impose upon ourselves the need to buy something just because we have the cash. And then you do get into a discussion down the road of you know, you eventually find ways to return cash to shareholders but again between now and then we have a lot of development opportunities in front of us that we intend to pursue.

Great thanks very much.

Thanks David.

Thank you. Our next question comes from David Amsellem of Piper Jaffray. Your line is open.

Thanks. Just a couple. So just back to the warning letter. Maybe I will ask the question a little bit differently, in terms of the sales rep interactions with the surgeons, are you noticing anything in terms of surgeon, physician perceptions of EXPAREL changing in the wake of this letter? So that's my first question. And then secondly switching gears to pricing, I'm sure it's not lost on you on Mallinckrodt did on their price reset on OFIRMEV, and there was a near-term impact on volume. So I guess with that in mind, is it safe to say that you're going to take a conservative approach on price as it relates to EXPAREL, and focus just on continuing to drive volume growth? How are you thinking about that? Thank you.

Yes, thanks for the questions, David. The first question related to surgeons and if can broaden that I would say all healthcare providers other than pharmacy and anybody else who might be in the purchase camp, we don’t see anything where their perceptions of EXPAREL have changed expect where they have been provided misinformation by some other party that is inaccurate and so no, we don’t have—I don’t have any experience or any notion that any surgeons have had any misperceptions. I mean the drug is the drug right and the surgeon know that it works and so that is what it is as far as we are concerned. Your intuition on the conservative approach is probably the best way for me to say it actually. We continue to believe that pain is something that is ubiquitous and especially a opioids bearing strategy is a great value to the healthcare system and we will take modest price increases as the cost of our business increase but we think that it’s much more appropriate for us to make the provide available to as many patients as possible and have access to as many places as possible especially given David the fact that we’ve got nerve block and chronic pain and oral surgery and pediatrics and everything else coming down the pike here. So we are going to take very much a conservative approach and so I would agree with what you said, I won’t make any negative comments.

And just a quick follow-up if I may, David, just so these expansion opportunity that you alluded to, and I might have missed this earlier. Is there any significant headcount expansion that's in the cards or it’s really just expansion at the margins if necessary?

Yes very much at the margins if necessary and if we decide to double up on some the clinical development, you know we might add three, four heads in clinical research, clinical development but this is not anything that would be material in any way David. I mean our, you might increase our clinical group from a whopping seven or eight to nine or ten but from a sales force perspective, we are covering the institutions where the action is if you will.

Okay, thanks.

Thanks.

Thank you, our next question comes from Steve Byrne of Bank of America. Your line is open.

Hi, it's Tazeen here for Steve this morning. Couple of questions. Can you drill in a little bit more into your orthopedic business? I know you've had significant growth in the segment for quite some time, and I guess the question I'm really asking is, how much of your targeted orthopedic market have you penetrated, and which procedures in particular do you think you have a lot of room to grow in?

I don’t think that we are anywhere as near any kind of a top in any of them, Tazeen. What we talk about is the percentage of the EXPAREL business that’s related to orthopedic procedures but if you turn that the other way and you look at the percentage of orthopedic procedures where EXPAREL is used, it’s tiny still. And so I don’t—I mean it’s—so the normal progression maybe this is a more appropriate way to answer your question. Physicians or institutions almost always start with knees and hips especially knees and the opportunity there really is around the opportunity to have patients ambulate more quickly which obviously does great things in knee and hip procedures and discharge more quickly so there is a constellation of reasons why you would want to use a low opioid treatment strategy in a patient who is getting a hip or a knee then once the success of the EXPAREL therapy is demonstrated then you see other people in the institution start to pick up on it and that’s when you move to you know wrist and shoulders and then the spine guys generally would get involved and then the trauma guys get involved and those kinds of things and so I would tell you that knees and hips are the bulk of the orthopedic business but we’ve got a whole bunch of additional opportunities that rather literally are primarily word of mouth in the surgeon suite in the hospital you know where it’s the orthopedic surgeon talking to the spine guy, taking to the trauma guy, talking to the sports medicine guy and I would tell you from my perspective other than maybe knees themselves all of those opportunities are nascent.

Okay. And then with regards to your opportunity in chronic pain, it's obviously a very large market in the U.S. alone, and as you think about the types of trials that you plan on running ahead of when you would think you could launch in 2018, where in the treatment regimen are you trying to place EXPAREL?

So we are—actually we are having a series of ad boards right now. We had a couple and we are having a couple more. We are looking at where bupivacaine is used. We would very much want to look at a specific procedure that isn’t confounded by the concomitant use of corticosteroid if we can find one and so right now I think if I had to handicap where we would go, we would look at something like a facet joint and that would be the primary area that you would look at to do a Phase 3 program to demonstrate efficacy and safety.

And obviously these discussions are still in flux, but would you need to do a large patient study for something like that?

You know honestly, I haven’t looked at any kind of a power calculation for a P-value or anything yet. I don’t think we are there yet Tazeen but you know we’re—we will kick those things off sometime next year.

Okay and the rest…

I mean relative to what, I mean relative to a cardiac trial, we are not talking about thousands, we are talking about hundreds in any case but I don’t have a number I can share with you.

Okay and I guess the last question about your plans to partner the ex-U.S. rights, would there be any situation in which you would choose to keep ex-US?

Probably not. I mean, I guess I will never say never, but you know a number of us who work here have had a significant amount of international experience and I think our efforts are best rewarded here in the United States and we would very much like to partner with somebody who actually lives in these other markets and can address those the way we address this year.

Okay thanks.

Thanks.

Thank you. Our next question comes from Oren Livnat of JMP Securities. Your line is open.

Thank for taking the question. I have actually a few. Obviously March is bringing us this PDUFA for nerve block, I don't expect, I think your contraindicated now, but I'm just curious when you are staring at anesthesiologists in the face every day, right? And I'm just wondering sort of what kind of ground work can be laid ahead of that? Sort of what besides that data you published, what sort of awareness do you sense is out there now, and can be built before you launch, and how would that maybe be reflected in that launch uptake curve, assuming you are approved? And I guess the bigger picture question which is growth. You've obviously shown data, and you can show lots of data about opioids bearing and better AE profiles, I am just curious, is this about the hospitals recognizing the value proposition sort of across the board, and say anybody we use this in will have maybe a better outcome, a shorter length of stay, less opioids, et cetera, or is it really about this targeted stratification of, let's get these algorithms right of which patients this is best for, and let's get 70% of that market, rather than 2% of the whole market? Thanks.

Thanks Livnat. First with anesthesia, really you are right. I mean we do interact with anesthesia because we are in the pain world everyday and really the only ongoing activity that we have with the anesthesia community because we have an sNDA under review at the FDA is when there is a specific request for information around some educational component of the trial work that was done or every once in a while we will have somebody ask about a physician who they heard is using the product somewhere else as there is some way that you know we can introduce them to that person or something like that. But there is no rep driven interactions for sure on the higher level side where we have anesthesia at boards of course as we start to work with the different anesthesia groups around the country to understand what the opportunity is and how they see the value of opioid reduction and things like that but no formal program that would be rolled out in advance of the FDA approval of the product. The second question is a little—well I don’t mean the first question wasn’t interesting on but we’ve known each other for a long time it’s a little bit more interesting. So, there is no one answer, which you might—and you might understand but let me give you—how we think about it anyway and then come back and ask me another question. So if you are talking about so let’s say a cholecystectomy where we are taking somebody’s gallbladder out typically the economic incentive of the hospital would be and I will just pick a number but let’s say for the purpose of this discussion that it’s a thousand dollars and in that environment the use of a $300 product actually is material and in that environment we provide the algorithms of who is most likely to have problems with opioids and stay too long and cost too much and that’s where we recommend that the hospital or the purchasing group might want to take a look at their own data and investigate a low opioid treatment or a low morphine treatment strategy. That would be quite different than any procedure where you have a significant profit margin for the hospital and especially in a scenario where there is a volume of procedures that overwhelms either the PACU bed size or the number of beds that are dedicated to that certain surgical group and scenarios where throughput becomes very important. So I will give a specific again. If you thought that you were going to make $6,000 on a procedure say the use of a $300 drug that has the promise of reducing length of stay by a day has a completely different discussion then you had with our cholecystomy guy. So it’s both.

And I guess in terms of your uptake using this approach, are you finding that you're able in these lower profit margin procedures, are your algorithms resonating are these care and quality pathways you talked so much about gaining traction, or is this ultimately and the reason we are seeing so much more or maybe ortho uptake, is it just a numbers game, and we're just looking at the math, and they're saying that the low hanging fruit is the rain making stuff, and let's just use it there?

Well there is a little bit of that but it is interesting to me that most of the care pathways and enhanced recovery protocols are actually in soft tissue and it’s for the reasons that we outlined, right and so you know it’s a lot easier for the institution then to define exactly who is going to get EXPAREL and to have those pathways established so it’s not a physician or a group of physicians at a time. It’s an institutional decision that’s made or in some cases a group of institutions that have defined the best way to take care of patients in a certain procedure category.

Thanks. I don't want to hog the time, so I will sort of…

I appreciate the question. Thanks Oren.

Thank you. Our next question comes from Jonathan Aschoff of Brean Capital. Your line is open.

Thank you. A simple one. What's the difference between the $50.2 million in the headline, and the $50.9 million on the P&L for the EXPAREL revenues?

I am not sure what you are referring to Jonathan.

The press release has $50.2 in the headlines and $50.9 down in the P&L?

If you are accurate then that’s inaccurate. The revenue is $50.2 million for the quarter.

Okay thanks a lot.

The EXPAREL revenue. I don’t, okay, I don’t see that.

Thanks Jonathan.

Thank you. Our next question comes from Patti Bank of DISCERN Securities. Your line is open.

Good morning. I just wanted to follow up on the nerve block, and just Dave, if you can explain a little bit kind of the training that needs to be done ahead of nerve block versus infiltration, and whether it's one dose for all nerve blocks, or different doses for different nerves?

So the study was done in femoral nerve blocks Patti and the sNDA that was submitted is 266 in a femoral nerve block and so that will be the reference indication or the reference produce if you will. And the intention here is that once the FDA approves the femoral nerve block that we will do additional work in an upper extremity nerve block and a lower extremity nerve block. So there—what we have right now is a femoral nerve block dataset, with that being said, I am sure you know there are a number of KOLs and academic institutions who are doing their own clinical programs with EXPAREL in nerve block and hopefully we will have the benefit of that information as we gain FDA approval but right now all we are looking at is a femoral nerve block and that will likely be what the indication is.

Okay and then I just had a quick question on a J code. If am I correct that we are supposed to here sometime in November on that and just kind of what your thoughts are about possibly getting that for 2015?

Yes, on the first point that is our understanding and on the second point we don’t know but my – honestly Patti, I just don know. I should just stop there. We really don’t know whether we are going to get a J code or not in – I mean, I guess I could give you a little bit of intuition and we are already working on an updated application that we would put in immediately if we don’t get it.

And then just the last question maybe for Jim as point of clarification, on DepoFoam spray I thought you said that you would be having a meeting with the FDA in the first half of 2015, am I correct in that you would go in and suggest some kind of bridging study or that’s the outcome that you would want there and that we are not looking at any additional big studies to get a DepoFoam spray approved.

That’s right. We are trying to, as always have a regulator path that is one that allows us to get to the market the quickest.

Okay thanks.

Just going back to the question that Jonathan asked, I think I thought he was referring to the headline in the press release and he wasn’t, obviously he was referring to the income statement itself and it says net product sales of $50.9 million that include some DepoCyt revenue in there. So it’s the $50.2 million or EXPAREL and $700,000 of DepoCyt revenue.

Thank you, looks like we have a followup from Oren Livnat of JMP Securities. Your line is open.

Thanks. That was fast. First, I want to thank you guys for hosting us out there in San Diego. That’s a really cool trip. So don’t get mad at me if I took something incorrect, away from it, so I am going to ask you maybe a nit picky question but on that Suite C which was sort of educational to me to see that that was this two side-by-side parallel suites there. Did I misunderstand that that second half is not yet running or validated or FDA approved. I am not trying to take a potshot here just help me understand when you talk about $400 million in capacity now. Is that actually up and running or is there still a few steps you have to take before you are fully functional?

You are right, the first skid was approved and we have been using the opportunity to do some development related activities, development is not the right word, efficiency related activities that put us in a position to be able to maximize productivity as we go forward and we are just now in the process of using the second skid from a pre-commercial perspective but the approval process is quite perfunctory there and with Suite A and then one of the skids in Suite C, as I sort of intimated earlier we are well ahead of production that we would have considered to be getting out of those skids.

Alright. So, just so I understand the second skid relatively box checking exercise to get that going and regardless it’s not like you take half of that 300 million and take—chop that off because you are already running significantly more efficiently with the 100 and the half of Suite C as it stands today.

Both of those are accurate.

Yes, thanks so much.

Thanks Oren.

Thank you. It looks like we have a followup from Douglas Tsao of Barclays. Your line is open.

Hi, just a quick clarification. Busy morning, but I wasn't clear. Dave, you indicated in terms of the nerve block indication that you're expecting to get, do you think it will be limited to femoral knee block—nerve blocks, rather than sort of a more general nerve blockade?

I really don’t know Doug but I think what I was trying to point out was that it was—that the data that was submitted to the FDA is in femoral nerve block and so there is a range of possibilities as to how these different products have been approved. We are taking some of our guidance from the ropivacaine package insert, where they talk about large nerves but we really don’t know until we get into discussions with the FDA and that hasn’t happened yet Doug.

Okay, great. Thank you. Dave Stack Thanks.

Thank you and that’s all the time we have for question there. I would like to turn the call back over to Dave Stack for any further remarks. Dave Stack - President and Chief Executive Officer Great thanks, Ashley. We would like to note that next month we will be attending the Barclays Select Series 2014 Small Cap Symposia on November 12 and the Brean Life Sciences Summit on November 24 both of which will take place in New York City. We will also be presenting at the Jefferies Global Healthcare Conference in London on November 20. Thanks for joining us today and we hope to see all of you there. Thanks Ashley, thanks everybody.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.