Dave Stack: I’ll start, and ask Greg or ask Roy to pick up the spasticity issue. So on the gross margin, the — so I mean, we’ve given the answer in a different sort of positioning. So the — well, the 340B has no impact on gross margin at all. It’s on net margin, right? And so, what we see over time is more volume from 340B and more volume from NOPAIN. And the ability to get the 200-liter facility in San Diego approved for commercial scale at — sale at the end of this year, Greg, gives us the opportunity to have two 200 liters. And the gross margin from those two facilities is significantly better than the gross margin opportunity longer term with the 45-liter facilities that we’re currently making the product on. So best in Swindon in the U.K. with a variable cost environment, improved, but not as great an improvement when we go to San Diego where we have a fixed cost environment.
But both 200 liters will allow us to improve gross margins. So that is a piece of it. It’s both the volume and the gross margin enhancement that allows 340B to be a viable opportunity for us. And if you look at the procedures, about 20% of the 340B procedures have flipped 340B from current customers. So the new customers that the 340B helps us with the gross margin and the increased capacity once we can make $2 billion worth of EXPAREL, the price increases on an annual basis allow us to offset these discounts. And so, that’s why as you look towards the end of next year, the new business from these 340B customers and the expansion in volume at the gross margin line allows us to start to address — to come up on neutrality as we come to the end of the year.
It’s a very complex formula that we used in order to assimilate all of these different pieces, but also don’t lose sight of the fact that having all of these additional surgeons using EXPAREL and these previously naive EXPAREL accounts is a really important aspect of our NOPAIN strategy. You could probably assume from this that when we did 340B, we had some pretty good feelings that we were going to be successful with NOPAIN. So, this is one big opportunity for us to increase margins by increasing capacity and then increasing the number of patients who have an opportunity to get these no-opioid treatment strategies.
Operator: Thank you. That concludes our Q&A segment. I’ll now turn the call back over to Dave Stack, Chairman and CEO, for closing remarks.
Dave Stack: Thank you, Chris, and thanks to everyone on the call for your questions and time today. As you can see, we’re making steady progress and expect to deliver on a variety of value-driving milestones over the next 12 to 24 months as we grow product revenue, advance our clinical pipeline to expand product offerings, improve gross margins, increase cash flow and strengthen our balance sheet. The need for non-opioid pain management remains a global imperative. And as Pacira further solidifies its leadership role in this important work, we expect to have significant market opportunities and growth in the years ahead. We look forward to keeping you updated on our progress. Next up for us is the Barclays Conference in Miami. Thanks all, and stay well. Goodbye.
Operator: And thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. The conference will begin shortly.
