HRTX - NASDAQ

Good day, and thank you for standing by. Welcome to the Heron Therapeutics Q4 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Melissa Jarel, Executive Director of Legal. Please go ahead.

Thank you, operator, and hello, everyone. Thank you for joining us on the Heron Therapeutics conference call today to discuss the company's financial results for the fourth quarter and year ended December 31, 2025. With me today from Heron are Craig Collard, Chief Executive Officer; Ira Duarte, Executive Vice President and Chief Financial Officer; Bill Forbes, Executive Vice President and Chief Development Officer; Mark Hensley, Chief Operating Officer; and Kevin Warner, Senior Vice President, Medical Affairs, Strategy and Engagement. For those of you participating via conference call, slides are made available via webcast and can also be accessed via the Investor Relations page of our website following the conclusion of today's call. Before we begin, let me quickly remind you that during the course of this conference call, the company will make forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs and future performance, all of which constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call and webcast are described in the safe harbor statement in today's press release and in Heron's public periodic filings with the SEC. Except as required by law, Heron assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. And with that, I would now like to turn the call over to Craig Collard, Chief Executive Officer of Heron.

Thanks, Melissa. Hello, everyone, and welcome to the Heron Therapeutics Fourth Quarter and Full Year 2025 Earnings Call. Today, we're thrilled to share our financial results and provide commercial updates on our business. I'd like to begin by highlighting several key accomplishments from the quarter and the full year 2025. One of the most important was the successful completion of our financing. This issue had been an overhang on the company for some time and eliminating it represents a meaningful derisking event. With a solid capital structure now in place, management can concentrate fully on commercial execution, product expansion and delivering sustained growth. Beyond the successful financing, team Heron delivered strong operational and financial performance in the fourth quarter and for the full year 2025. For the full year, we generated approximately $155 million in total net revenues and delivered adjusted EBITDA of $14.7 million, exceeding our previously communicated guidance range of $9 million to $13 million. Gross margin for this year was approximately 73%, reflecting continued improvements in cost discipline and product mix. Turning to our Acute Care portfolio. We executed several strategic initiatives in 2025 that strengthened our commercial foundation and drove meaningful acceleration heading into year-end. These included the launch of the CrossLink IGNITE program, an incentive-based initiative designed to enhance distributor engagement, the introduction of the vial access needle or VAN, and the implementation of a new J-Code for

Thanks, Craig. I'll start with Acute Care, where we finished the year with clear momentum, and then I'll close with Oncology Supportive Care. Moving now to Slide 6. Acute Care net sales were $16.3 million in the fourth quarter, up from $12.3 million in the third quarter, an increase of about 33%. That quarter-over-quarter increase was driven primarily by

Thank you, Mark. Our financial performance in 2025 underscores the meaningful progress Heron continues to make in transforming its commercial trajectory while maintaining strong financial discipline. Total net product sales for 2025 reached $154.9 million, an increase over 2024, driven primarily by the exceptional performance of our lead product,

[Operator Instructions] Our first question comes from the line of Serge Belanger from Needham.

Regarding the new guidance for 2026, can you just maybe highlight your expectations for the CINV franchise, which I guess now is mostly almost 95% or so CINVANTI? And then regarding the NOPAIN Act, should we still expect that as a tailwind for

Thanks, Serge. Regarding the CINV franchise, yes, we continue to think that we're going to -- we'll grow in unit volume. Again, with the IBM team now out promoting that as well, we should get some volume growth on the hospital side. But at the same time, we're going to get some price erosion. So -- but sales should stay relatively flat throughout the year. Regarding the NOPAIN Act, I'll turn it over to Mark Hensley.

Yes. So certainly, I think it's a great question. And we believe the NOPAIN Act will continue to be certainly very beneficial to us. I think most of 2025 was spent educating providers on the NOPAIN Act. So certainly, we believe that to be a strong tailwind as we go forward. That, combined with the permanent J-Code for

Our next question comes from the line of Brandon Folkes from H.C. Wainwright.

Congrats on all the progress. Maybe just on the VAN to start, can you just tell us where you are in terms of sort of P&T committees in terms of the rollout in the VAN? Is that where you'd like it to be for 2026 and it's really just a sort of sales detail that's driving growth this year? Or should we think about sort of a sales detail as well as access within the hospital or institution as a tailwind there? And then maybe staying on that topic, any learnings from the VAN rollout that may change or sort of may tweak the prefilled syringe potential launch? Or should we think of the prefilled syringe rollout is very similar to the VAN commercial rollout?

Thank you for the question. Our growth strategy for this year is 2 parts really. The first part is where our Heron employees are overlapping with CrossLink, where we have the proper resources in our primary targets. And that's going deeper into hospitals, right? So many of our accounts, we only have a few providers that are using

Our next question comes from the line of Carl Byrnes by Northland Capital Markets.

Congratulations on the progress. Yes, I just want to talk a little bit about the Slayback litigation with respect to CINVANTI. If I'm not mistaken, this is the same U.S. District Court of Delaware and the same judge, William Bryson, that ruled in the Fresenius case. And I also believe that it looks like it's the same statutory framework in terms of 505(b)(2) Hatch-Waxman and Orange Book patents along with formulation range, excipient ratios and pH parameters and whatnot. So what are your thoughts with respect to resolution and time frame resolution with respect to this litigation?

Carl, this is Melissa Jarel. Thanks for the question. So we're really confident with the case that we made at trial. We finished briefing earlier this month, and it is with Judge Bryson. We await a deeper oral argument, but we expect a decision before the 30-month stay.

Excellent. Perfect. Very helpful. And then a follow-up, switching back to the NOPAIN Act. Can you talk a little -- maybe a little bit more about what the company may be doing or what others in the industry are doing in terms of creating awareness given where awareness is relative to the significance of the opioid crisis?

Yes, Carl, thanks for the question. It's interesting. One of the things I think we worked -- we did not anticipate is that as NOPAIN kind of rolled out, we thought that it would be fairly simplistic and everybody to be aware and obviously taking what would be otherwise a cost, right, in a surgical bundle type of scenario to actually something where they actually make money. And so there's incentive there. And so -- but what we've learned is as we've gone through this, some of the coding, just the awareness of that, it's just gone a little bit slower. I think it's now happening much faster, but we were a little bit surprised by that. So we've actually -- we're expanding some of our team that handle that so we can answer questions and help with some of that as well. But that was a bit of a surprise. Mark can kind of chime in on some things specifically we're doing that are creating more awareness and helping us on that side.

Yes. And I think kind of to your kind of second part of your question on the industry, it's not just us focused on the NOPAIN and education. Obviously, you know that. There are several other large companies that have invested interest in making sure that there's awareness and understanding of how the reimbursement works. It isn't complicated. It's relatively simple. It's just -- it's a lot of -- there are a lot of players here that have to kind of understand it and seek that reimbursement. And so it's more just an awareness issue. But certainly, where we're getting business where we're focused on the targeted, they're aware of the NOPAIN Act and understanding that reimbursement. And we're beginning to see more and more commercial plans also follow suit, which I think early on was some of the kind of lag in adoption, whereas as we turn into the new year, we're starting to see a lot more kind of alignment between commercial and CMS on NOPAIN.

Excellent. That's very helpful as well. And then just one real final quick question, and apologies if this is somewhat redundant. But with the inclusion of the Fifth Consensus Guidelines with respect to APONVIE, what's a realistic time frame where you think that takes hold and has a material effect in terms of the APONVIE growth trajectory?

Yes. I mean we were certainly very excited to see what the new guidelines had to say. And certainly, we're confident that they will be a significant tailwind for APONVIE. The guidelines are certainly a good educational tool for us, especially as you think about when APONVIE gets taken to P&T for potential approval. Those guidelines are what pharmacy will likely reference in many cases. And so prior to that, we had good clinical data. There's certainly a lot behind IV aprepitant and its use in the setting. But the guidelines are robust enough that we believe they'll have a significant impact. Time line to that is probably back half of the year. The cycle of kind of P&T approvals and additions is typically a 6-month cycle. And so I wouldn't expect it to be impacting much today. But as we move and progress through the year, we do believe it will have a significant impact.

This is Kevin Warner. I'll just add a little bit of color there from Mark's comments in regards to the consensus guidelines. So guidelines really change the paradigm, if you will, is what is accepted in the institutions and what we take a look at. They bring a lot of credibility and validity to the information and the data. And so it goes a long way in changing clinical decision tools, order sets, the protocols and driving that long-term adoption. So right now, when the guidelines are initially released, obviously, you're going to create awareness, education around the clinical impact of PONV and how we should be supporting these patients in the acute phase and the extended phase. But as people adopt it, it will be slow at first to get what I call soft adoption with individual providers recognizing the information, recognizing best practices, but then you get the full implementation. So with the credibility of a guideline, the consensus statement, the level of evidence, the quality of evidence within the guidelines, it brings it to all these P&T tables as a necessity for the best patient outcomes. And so as they go through that, implementing it into order sets protocols so that all high-risk patients receive appropriate therapy, that really changes the trajectory and you get the sustainable long-term adoption. Specifically for APONVIE within the guidelines, we were very happy with the guidelines and how it laid out the NK1 antagonist class really highlighted their long durable efficacy throughout that entire phase of the post-op recovery for the patients, the rapid onset with the IV push of APONVIE and the clinical efficacy of the NK1 class with a great safety profile. So the guidelines are going to go a long ways as far as bringing credibility when we walk into an institution to educate them on best practices for patients, but it's not just product-driven then. This is a consensus statement from 25 societies endorsing this information. So a great driver to the future. And like Mark said, it's probably 6 to 9 months until we roll it out into these order sets and these protocols that really change the trajectory and sustained growth.

This does now conclude the Q&A portion of our conference. I would like to now hand it back to Craig Collard, CEO, for closing remarks. The floor is yours.

Thank you, operator. Thanks, everyone, for joining us on the call today, and we look forward to speaking to everybody next quarter. Thank you.