HRTX - NASDAQ
Heron Therapeutics, Inc.
HRTX·NASDAQ
$0.49
+8.9%HealthcareBiotechnology
Heron Therapeutics, Inc., a biotechnology company, engages in developing treatments to address unmet patient needs. The company's product candidates utilize its proprietary Biochronomer, a drug delivery technology, which delivers therapeutic levels of a range of short-acting pharmacological agents over a period from days to weeks with a single administration. It offers SUSTOL (granisetron), an extended-release injection for the prevention of acute and delayed nausea and vomiting associated with moderately emetogenic chemotherapy, or anthracycline and cyclophosphamide combination chemotherapy regimens; and CINVANTI, an intravenous formulation of aprepitant, a substance P/neurokinin-1 receptor antagonist for the prevention of acute and delayed nausea and vomiting associated with highly emetogenic cancer chemotherapy, as well as nausea and vomiting associated with moderately emetogenic cancer chemotherapy. The company is also developing ZYNRELEF, a dual-acting local anesthetic that delivers a fixed-dose combination of the local anesthetic bupivacaine and a low dose of the nonsteroidal anti-inflammatory drug meloxicam; HTX-019, an investigational agent for the prevention of postoperative nausea and vomiting; and HTX-034 for postoperative pain management, as well as is in Phase Ib/II clinical study in patients undergoing bunionectomy. The company was formerly known as A.P. Pharma, Inc. and changed its name to Heron Therapeutics, Inc. in January 2014. Heron Therapeutics, Inc. was founded in 1983 and is headquartered in San Diego, California.
At a Glance
Live SnapshotMarket Cap$77.82M
EPS-0.1200
P/E Ratio-4.11
Earnings Date08/11/2026
Earnings Call Transcript
HRTX • 2022 • Q1
Operator
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Heron Therapeutics First Quarter 2022 Earnings Conference. As a reminder, this conference is being recorded. Now, I would like to turn the call over to David Szekeres, Executive Vice President, Chief Operating Officer. Please proceed.
David Szekeres
Thank you, Jason. Good afternoon, everyone, and thank you for joining us. With me today from Heron are Barry Quart, Chief Executive Officer and Chairman; John Poyhonen, President and Chief Commercial Officer; and Kimberly Manhard, Executive Vice President of Drug Development and Board Director. For those of you participating via conference call, the slides are made available via webcast and can also be accessed by going to the Investor Relations page of our website, following conclusion of today’s call. Before we begin, I would like to remind you that this call will contain forward-looking statements concerning Heron’s future expectations, plans, prospects, corporate strategy and performance, which constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors, including those discussed in our filings with the SEC. In addition, any forward-looking statements represent our views only as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. Now, I’ll turn the call over to Barry.
Barry Quart
Thank you, David. Welcome, everyone, and thank you for joining us. First quarter was a major turning point for the commercialization of
John Poyhonen
Thank you, Barry. I'm excited to share our first quarter commercial results. We continue to make significant progress with the
Barry Quart
Thanks John. Throughout the call today, you've heard the commercial numbers from both of our product franchises. But to wrap up, on our financial slide, of keen interest to everyone as of March 31, 2022, we had cash, cash equivalents and short-term investments of $111.9 million and accounts receivable of approximately $41 million. We expect net cash used for operating activities of between $37 million to $39 million in the second quarter of 2022. As noted on the next slide, completing an ex-U.S. partnership to improve the balance sheet is one of our highest priorities. Slide 20 contains important catalysts for the Company. The most important of which are completing an ex-U.S. partnership for
Operator
[Operator Instructions] Our first question comes from Brandon Folkes from Cantor Fitzgerald. Please go ahead.
Brandon Folkes
Maybe just, can you talk about why you aren't gaining formulary approval? What is the reasoning behind those decisions? Is it just label? Will it just take time, just any color there? And then, you mentioned the priority to execute and ex-U.S. partnership. Can you just talk about the environment you're seeing there, where you may bring in a substantial upfront? Are we in an environment where partners are looking to pay a substantial upfront? Thank you.
Barry Quart
Sure. I'll take the second question and turn the formulary question over to John. In terms of partnering, we have significant partnering activities underway, which is why we felt confident enough to identify it as a certainly a key catalyst coming up in the near future. And because of the fact that we have several different companies, where we have discussions ongoing, late stage discussions, I think, we can safely say that with significant interest gives us the opportunity to ask for significant upfront payments from companies. So, I can't really say much more than that. But certainly there's a lot of interest in the product. Obviously surgical procedures are ubiquitous around the globe. The ability to significantly reduce pain, get patients out of the hospital are all very attractive endpoints. Not everywhere has an opioid crisis as the U.S. and Canada, but pain is still a significant issue around the world. So, with that, John?
John Poyhonen
Sure. So, first of all, I guess from a P&T committee standpoint, I think we're doing extraordinarily well. We're getting over 90% of those P&T committees that actually review
Brandon Folkes
Thanks very much. And do you mind if I just ask one more, as you talk about surgeon champions. Your account reorder rates obviously look very good. Do you have any commentary in terms of actual surgeons at those accounts? Are they reusing the product or thinking about reordering the product?
John Poyhonen
Yes. Great question. So, what we are seeing is we're getting really excellent reorder rates with 80% of accounts during the first nine months are reordering
Operator
The next question comes from Josh Schimmer from Evercore ISI. Please go ahead.
Josh Schimmer
So
Barry Quart
Josh, I appreciate the question, taking the second one first. Again our primary goal right now, as noted, is to conclude at least one, if not more partnering activities, which we believe will play a very significant role in terms of our financing needs. We want to get those completed before we look at any other types of financing activities. Could we hope that we'll be able to complete our financing activities with the partnering events? We're certainly pretty far down the road. And that's the reason why we haven't done anything else. The partnering activities, as you know, always take a little longer than expected, but we anticipate to conclude one or more of those very soon. And in terms of the performance of
John Poyhonen
Yes. I'll add a bit of color to that, Barry. Thanks. So, I guess, from my perspective, Josh, if you look at a number of indicators, the access and formulary approvals has been doing extremely well. The number of ordering accounts has been doing extremely well or the reimbursement that we've been able to get not only with just getting pass-through status, but with the commercial and Medicaid payers is excellent. And the reorder rate is great. Where we're not meeting our goal right now, I would say, is that we would like to be generating higher volume per account than what we are. And I think that there are a couple of reasons for that. One is that as Barry indicated, we started off with three indicated procedures, and even though the market research indicated that surgeons would use it broadly off label, that's not what happened in practice. And we're seeing -- starting to see that change now. And the other is just the internal assessment. A number of accounts were fooled by a previous competitor that came out and they promised them 72 hours worth of coverage and it only gives them 24. So, they had to see in their own hands what
Operator
The next question comes from Serge Belanger from Needham and Company. Please go ahead.
Serge Belanger
Four questions on
Barry Quart
John, why don't you take those?
John Poyhonen
Okay. So I'm sorry. Could you repeat the first question? I was writing down your second one, Serge.
Barry Quart
Procedures in terms of setting a care and what are the procedures we're seeing and where?
John Poyhonen
Yes. Thank you, Barry. So, if you look at it overall, of our 512 ordering accounts, about 58% of those are hospitals and 42% are ASCs. Those hospitals, those 58% are generating 76% of our business. And obviously, the difference is 24% being generated by the ASCs. If you look at the procedures that are being used at, I think we've had a tremendous head start with the original three indicated procedures of total knee replacement, hernia and bunionectomy. So, not surprising, those are big ones. What we've seen during the first quarter with the expanded label is a real increase in the amount of total hip replacements, and the results have been remarkable with that. We're also seeing a lot of bariatric and foot and ankle surgery. So, those would be the key drivers from a procedure’s standpoint. As far as the process, the process of a formulary approval is only the first step. It also then requires a medical executive approval, which usually takes about 30 days. And then, you have to get computerized into the order entry system. The pharmacy has to order, and it has to get to patient. But I think what we're seeing right now is that many of these accounts, they'll approve the product,
Serge Belanger
One more question for Barry. As we think about ex-U.S. partnerships, can you just remind us where the product is approved, and where it's been filed? And do you expect, this partnership to significantly extend your cash runway, or there's other avenues also being evaluated? Thanks.
Barry Quart
Sure, yes. So, the product is approved in Canada and the European Union and several other countries that accept the European Union approval, Iceland and other countries. The product is available for a submission in many other countries in terms of the package of data that we have is fileable in other countries. We just have not yet moved forward to submit the product in other countries, but we're in discussions with companies about doing that. And so, the fact that the product is not approved in a region has not been an obstacle in terms of finding companies that are interested in moving forward in that region. And as I said, the goal is through one or more partnerships to make significant headway in terms of the financial picture of the Company. We continue to look at ways to reduce burn. That's the additional approach. And then, obviously, once we've completed both of those activities, we'll take a look and see if there's any additional gap that needs to be filled through another route. And we'll certainly evaluate all possible approaches and make sure that we do -- take the best route for shareholders, and certainly at the current share price using equity is certainly very low on our list in terms of something that we'd want to do.
Operator
Our next question comes from Boris Peaker from Cowen. Please go ahead.
Boris Peaker
First. I just want to understand -- my understanding is that there's a financial incentive for using a
Barry Quart
John, do you want to take that?
John Poyhonen
Sure. So, really, a couple of ways to look at that, Boris. You're correct. There is a financial incentive in using
Boris Peaker
Got it. And my second question is on the financial strategy. Are you considering just selling royalties or fully selling your non -- I don't know if they're considered non-core assets or basically the chemotherapy and nausea management franchise, or is that not something that you're considering at this point?
Barry Quart
Well, I think that Boris, it would be appropriate to say that we are certainly evaluating all different avenues with partnering as non-dilutive dollars being the primary target. And we feel very comfortable that we'll be able to generate significant deals there. And then, as I said before, once we complete our cost cutting activities, get the burn down as well as bring in significant upfronts in terms of partnering, we'll take a look and see where the gap is and utilize one of several different approaches to fill the rest of that gap.
Operator
Our next question comes as a follow-up from Kelly Shi of Jefferies. Please go ahead.
Kelly Shi
So, the reorder rate for
David Szekeres
John, you want to take that?
John Poyhonen
Sure. So, Kelly, the first question I would say is that the price per milligram between the 400 and 200 is virtually identical. So, there is no real financial benefit of a hospital using one versus the other. I think what you're seeing as far as usage with 26% of our business coming in the 200-milligram since launch is really reflective of only having one procedure that was indicated by the FDA that used the 200-milligram that was bunionectomy. So, as we expanded the label in mid-December, we started seeing a very significant growth of the 200-milligram. In fact, during the first quarter, it grew by over 106%. So, it's growth is, is accelerating. And a lot of that is small to medium abdominal surgeries, as well as foot and ankle surgeries that are now available that weren't originally available, based on the FDA limitations of indication. So, what we would expect is we've already seen very significant growth where we ended the first quarter at 41% reorder rate for the 200-milligram. Just through May 3rd, we're already up to 67%. And by the time we end this quarter, we would expect that we should have depleted the inventory of the 200-milligram. So, we're making great progress with that. And if you have any follow-up questions, please let me know.
Kelly Shi
Thank you. And also, could you comment on the split of volume and also dollar value for the relative use at hospital and use at hospital and ambulance center settings?
John Poyhonen
Yes. Right now the split from a demand standpoint is 76% in the hospital outpatient setting -- or the hospital overall for the 400-milligram and 24% of the volume is in the ASC. It's pretty similar. I don't think there's a material difference between the ASC and the hospital. It's probably a bit higher, I'm sure, if you look at it that the overall rate of
Operator
There are no more questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to Barry Quart for any closing remarks.
Barry Quart
Thank you. And thanks to everyone for joining us on the call today. We're really pleased with the progress this quarter, and look forward to keeping you updated.
Transcript from May 9, 2022
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