UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-33221 HERON THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdicti ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 San Diego, CA 92121 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (858) 251-4400 For the transition period from _______ to _______ Commissio ...

| --- | --- | --- | |----------------------------------|-------|-------| | | | | | | | | | | | | | | | | | Heron Therapeutics | | | | Leerink Update February 24, 2020 | | | | | | | | | | | Forward-Looking Statements This presentation contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. We caution investors that forward-looking statements are based on management's expectations and assumptions as of the date of this presentation, and involve substantial ris ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-33221 HERON THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) DELAWARE 94-2875566 4242 CAMPUS POINT COURT, S ...

| --- | --- | --- | |--------------------|-------|-------| | | | | | | | | | | | | | Heron Therapeutics | | | | Update | | | | | | | | | | | | DEC 3, 2019 | | | | | | | | | | | Forward-Looking Statements This presentation contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. We caution investors that forward-looking statements are based on management's expectations and assumptions as of the date of this presentation, and involve substantial risks and uncer ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements detail the company's financial position, operational results, equity changes, and cash flows as of September 30, 2019 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show total assets decreased to $393.0 million, liabilities increased, and stockholders' equity declined as of September 30, 2019 Condensed Consolidated Balance Sheets (in thousands) | | September 30, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Total current assets** | $364,147 | $447,248 | | **Total assets** | **$392,962** | **$462,179** | | **Total current liabilities** | $96,737 | $92,019 | | **Total liabilities** | **$107,520** | **$92,019** | | **Total stockholders' equity** | $285,442 | $370,160 | | **Total liabilities and stockholders' equity** | **$392,962** | **$462,179** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The statements of operations show significant net product sales growth for the nine months ended September 30, 2019, but also an increased net loss due to higher operating expenses Statements of Operations Highlights (in thousands) | | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Net product sales** | $42,624 | $19,786 | $110,885 | $48,630 | | **Total operating expenses** | $77,477 | $61,566 | $262,217 | $181,253 | | **Loss from operations** | ($34,853) | ($41,780) | ($151,332) | ($132,623) | | **Net loss** | **($33,595)** | **($38,346)** | **($146,829)** | **($129,281)** | | **Basic and diluted net loss per share** | **($0.42)** | **($0.49)** | **($1.85)** | **($1.81)** | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity significantly decreased from December 31, 2018, to September 30, 2019, primarily due to the net loss incurred - Total stockholders' equity decreased from **$370.2 million** at the end of 2018 to **$285.4 million** as of September 30, 2019[15](index=15&type=chunk) - The primary driver of the decrease in equity was the net loss of **$146.8 million** for the nine months ended September 30, 2019[12](index=12&type=chunk)[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement shows net cash used in operations, cash provided by investing and financing activities, resulting in a net increase in cash and equivalents Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | **Net cash used for operating activities** | ($97,603) | ($158,318) | | **Net cash provided by (used for) investing activities** | $104,576 | ($286,878) | | **Net cash provided by financing activities** | $21,299 | $354,547 | | **Net increase (decrease) in cash and cash equivalents** | $28,272 | ($90,649) | | **Cash and cash equivalents at end of period** | $60,108 | $53,934 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's business, accounting policies, product pipeline, customer concentration, and significant subsequent events - The company's commercial products are SUSTOL and CINVANTI; its investigational product HTX-011 received a CRL from the FDA in April 2019 but was resubmitted and accepted in October 2019 with a PDUFA goal date of March 26, 2020[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - Three major customers accounted for **97.8%** of net product sales and **99.0%** of accounts receivable for the nine months ended September 30, 2019, indicating **significant customer concentration**[33](index=33&type=chunk) - In October 2019, the company completed a public offering of **9.9 million shares** of common stock, receiving net proceeds of **$162.2 million**[83](index=83&type=chunk) - A federal securities class action complaint was filed against the company in June 2019 following the announcement of the CRL for HTX-011[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, product portfolio, and liquidity, highlighting significant sales growth, HTX-011 regulatory progress, and increased operating expenses [Overview and Product Portfolio](index=20&type=section&id=Overview%20and%20Product%20Portfolio) This section provides an overview of the company's commercial products, SUSTOL and CINVANTI, and the regulatory status of its investigational product HTX-011 - CINVANTI's administration was expanded to include a **2-minute IV injection** (approved Feb 2019) and a **130 mg single-dose regimen** for MEC (approved Oct 2019)[91](index=91&type=chunk)[104](index=104&type=chunk) - The FDA accepted the NDA resubmission for HTX-011 in October 2019 and set a PDUFA goal date of **March 26, 2020**; the initial CRL was due to CMC and non-clinical information needs[92](index=92&type=chunk)[106](index=106&type=chunk) - A Marketing Authorisation Application (MAA) for HTX-011 was validated by the EMA in March 2019, with an opinion anticipated in the **first half of 2020**[92](index=92&type=chunk)[107](index=107&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section details the company's operational results, including significant growth in net product sales, increased cost of sales, and higher research and development and sales and marketing expenses Net Product Sales (in millions) | Product | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | CINVANTI | $97.6 | $32.8 | | SUSTOL | $13.3 | $15.8 | | **Total** | **$110.9** | **$48.6** | - The company decided on October 1, 2019, to discontinue all discounting of SUSTOL, expecting **significantly lower net product sales** for SUSTOL in future periods[131](index=131&type=chunk) Research and Development Expense by Project (in thousands) | Project | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | HTX-011-related costs | $66,665 | $59,264 | | CINVANTI-related costs | $3,900 | $6,094 | | HTX-034-related costs | $3,912 | $— | | SUSTOL-related costs | $1,826 | $2,800 | | Personnel and other | $28,679 | $22,620 | | Stock-based compensation | $14,123 | $9,363 | | **Total R&D Expense** | **$119,105** | **$100,141** | - Sales and marketing expenses for the nine months ended Sep 30, 2019, increased to **$69.3 million** from **$44.6 million** in 2018, driven by HTX-011 launch preparation and **$8.4 million** in stock-based compensation for a retiring executive[138](index=138&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position improved with existing cash and proceeds from a subsequent stock offering, which management believes are sufficient to fund operations for at least one year - As of September 30, 2019, cash, cash equivalents, and short-term investments totaled **$256.3 million**[141](index=141&type=chunk) - In October 2019, the company raised an additional **$162.2 million** in net proceeds from a public stock offering, bringing pro-forma cash to **$418.5 million**[141](index=141&type=chunk) - Net cash used for operating activities decreased to **$97.6 million** for the nine months ended Sep 30, 2019, from **$158.3 million** in the same period of 2018, primarily due to changes in working capital[143](index=143&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate exposure on its investment portfolio, which is mitigated by investing in short-term, investment-grade securities - The company's primary market risk is **interest rate risk** on its investment portfolio of cash, cash equivalents, and short-term investments[150](index=150&type=chunk) - Risk is mitigated by investing in short-term, investment-grade securities; a **50-basis point movement** in interest rates would **not have a material impact** on the portfolio's fair value[150](index=150&type=chunk) [Controls and Procedures](index=30&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management evaluated the company's disclosure controls and procedures, concluding they were effective as of September 30, 2019, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** at a reasonable assurance level as of the end of the period[152](index=152&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[153](index=153&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is facing a purported federal securities class action lawsuit filed in June 2019, alleging violations related to a stock price decline following an FDA Complete Response Letter - A **federal securities class action complaint** was filed against the Company, its CEO, and CFO on June 3, 2019, following the announcement of the CRL for HTX-011[82](index=82&type=chunk)[155](index=155&type=chunk) [Risk Factors](index=31&type=section&id=ITEM%201A.%20Risk%20Factors) The company outlines numerous risks, including dependence on product success, market acceptance, competition, manufacturing reliance, clinical development uncertainties, financial losses, and intellectual property challenges [Risks Related to Our Business](index=31&type=section&id=Risks%20Related%20to%20Our%20Business) The company's business success is highly dependent on its key products, facing commercialization challenges, intense competition, reliance on third-party manufacturers, and clinical development uncertainties - The company's success is **substantially dependent** on its ability to commercialize SUSTOL, CINVANTI, and HTX-011 (if approved), facing risks from market acceptance, pricing, and competition[157](index=157&type=chunk) - The company relies on third parties for manufacturing, posing risks related to supply continuity, quality, and cost-effectiveness, with some critical components being **single-sourced**[177](index=177&type=chunk)[179](index=179&type=chunk)[183](index=183&type=chunk) - The company faces **intense competition** for its CINV franchise from products like AKYNZEO® and generics, and HTX-011 will compete with products like EXPAREL® if approved[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) [Risks Related to Our Financial Condition](index=41&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition) The company has a history of significant operating losses and an accumulated deficit, potentially requiring future capital, and faces risks from product liability claims and investment volatility - The company has a history of losses, with an accumulated deficit of **$1.1 billion** as of September 30, 2019, and expects to continue generating **substantial losses**[202](index=202&type=chunk) - **Additional capital may be needed** in the future, but the ability to raise it may be constrained by market conditions or restrictive covenants in existing debt instruments[204](index=204&type=chunk)[208](index=208&type=chunk) [Risks Related to Our Industry](index=43&type=section&id=Risks%20Related%20to%20Our%20Industry) The pharmaceutical industry involves lengthy, uncertain drug development and regulatory processes, ongoing scrutiny, pricing pressures, and complex compliance with healthcare fraud and abuse laws - Drug development is a **lengthy, expensive process with an uncertain outcome**, and positive early trial results do not guarantee success in later-stage trials[214](index=214&type=chunk) - Obtaining regulatory approval is a **major hurdle**, and even if granted, it may be **limited, delayed, or revoked**; the company must also comply with varying international regulatory requirements[222](index=222&type=chunk)[226](index=226&type=chunk) - The company is subject to **significant regulation and oversight** under anti-kickback laws, false claims statutes, and other healthcare fraud and abuse laws, where violations can lead to **substantial penalties**[233](index=233&type=chunk)[234](index=234&type=chunk) [Risks Related to Our Intellectual Property](index=51&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's success depends on protecting its intellectual property, but faces risks from uncertain patent landscapes, potential challenges to patents, and costly litigation over infringement claims - The company's success depends on protecting its intellectual property, but patents may not be issued, may be challenged, or may **not provide meaningful protection**[248](index=248&type=chunk)[249](index=249&type=chunk) - The company may face **costly patent-infringement lawsuits** from third parties, potentially leading to product sales cessation, **significant damages**, or licenses on **unfavorable terms**[253](index=253&type=chunk)[255](index=255&type=chunk) [Risks Related to Our Common Stock](index=53&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The company's common stock price is volatile, and stockholders face risks from anti-takeover provisions, potential dilution from convertible notes, concentrated ownership, and limitations on NOL carry-forwards - The company's stock price is subject to **extreme volatility**, and it is currently a defendant in a **class action lawsuit** following a stock price decline[257](index=257&type=chunk)[258](index=258&type=chunk) - Conversion of the outstanding Convertible Notes would result in **substantial dilution** to existing stockholders, potentially issuing over **8.8 million new shares**[261](index=261&type=chunk) - Utilization of net operating loss carry-forwards may be subject to **substantial annual limitations** due to ownership change rules under Section 382 of the Internal Revenue Code[264](index=264&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[271](index=271&type=chunk) [Defaults upon Senior Securities](index=56&type=section&id=ITEM%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities during the period - None[272](index=272&type=chunk) [Mine Safety Disclosures](index=56&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[273](index=273&type=chunk) [Other Information](index=56&type=section&id=ITEM%205.%20Other%20Information) There was no other information to report for the period - None[274](index=274&type=chunk) [Exhibits](index=57&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files

| --- | --- | --- | --- | |--------------------------------------------------|-------|-------|-------| | | | | | | Heron Therapeutics Corporate Update OCT 2, 2019 | | | | | | | | | Forward-Looking Statements This presentation contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. We caution investors that forward-looking statements are based on management's expectations and assumptions as of the date of this presentation, and involve substantial risks and u ...

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements reflect a decrease in total assets, an increased net loss due to higher operating expenses, and reduced net cash used in operating activities for the first half of 2019 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $53,038 | $31,836 | | Short-term investments | $222,967 | $300,535 | | Total current assets | $380,835 | $447,248 | | **Total assets** | **$411,666** | **$462,179** | | **Liabilities & Equity** | | | | Total current liabilities | $95,056 | $92,019 | | Total liabilities | $106,307 | $92,019 | | Total stockholders' equity | $305,359 | $370,160 | | **Total liabilities and stockholders' equity** | **$411,666** | **$462,179** | - Total assets decreased from **$462.2 million** at the end of 2018 to **$411.7 million** as of June 30, 2019, mainly due to a decrease in short-term investments[9](index=9&type=chunk) - Total liabilities increased to **$106.3 million**, partly due to the recognition of new lease liabilities[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $36,659 | $17,277 | $68,261 | $28,844 | | Total operating expenses | $88,438 | $56,130 | $184,740 | $119,687 | | Loss from operations | ($51,779) | ($38,853) | ($116,479) | ($90,843) | | Net loss | ($50,222) | ($38,670) | ($113,234) | ($90,935) | | Basic and diluted net loss per share | ($0.63) | ($0.54) | ($1.43) | ($1.33) | - Net product sales more than **doubled** for both the three and six-month periods ended June 30, 2019, compared to the same periods in 2018[12](index=12&type=chunk) - Net loss also widened due to significant increases in operating expenses, particularly in R&D and Sales & Marketing[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used for operating activities | ($72,132) | ($122,442) | | Net cash provided by (used for) investing activities | $75,949 | ($137,623) | | Net cash provided by financing activities | $17,385 | $374,416 | | **Net increase in cash and cash equivalents** | **$21,202** | **$114,351** | - Net cash used for operating activities decreased significantly in the first half of 2019 compared to 2018, primarily due to changes in working capital[19](index=19&type=chunk) - Financing activities provided substantially less cash in 2019, as 2018 included **$363.1 million** from common stock sales[19](index=19&type=chunk)[138](index=138&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company is a commercial-stage biotechnology firm with two approved products, SUSTOL and CINVANTI, for chemotherapy-induced nausea and vomiting (CINV)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The FDA issued a Complete Response Letter (CRL) for the company's investigational postoperative pain product, HTX-011, on April 30, 2019, citing the need for additional Chemistry, Manufacturing, and Controls (CMC) and non-clinical information, with no further clinical studies required[25](index=25&type=chunk) - As of June 30, 2019, the company had **$276.0 million** in cash, cash equivalents, and short-term investments, which management believes is sufficient to fund operations for at least one year[27](index=27&type=chunk) - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, resulting in the recognition of **$13.7 million** in right-of-use lease assets and **$14.5 million** in lease liabilities[41](index=41&type=chunk)[65](index=65&type=chunk) - A securities class action complaint was filed against the company on June 3, 2019, following the announcement of the CRL for HTX-011[84](index=84&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's financial performance, highlighting increased product sales, rising operating expenses, and the regulatory status of key product candidates, alongside liquidity assessment [Product Portfolio Update](index=21&type=section&id=Product%20Portfolio%20Update) - **CINVANTI:** The FDA approved a supplemental New Drug Application (sNDA) on February 26, 2019, expanding its administration to a 2-minute IV injection, in addition to the previous 30-minute infusion[91](index=91&type=chunk)[103](index=103&type=chunk) - **HTX-011:** The company received a Complete Response Letter (CRL) from the FDA on April 30, 2019, requesting additional CMC and non-clinical information but no new clinical safety or efficacy studies, while a Marketing Authorisation Application (MAA) was validated by the European Medicines Agency (EMA) in April 2019, with an opinion expected in the first half of 2020[92](index=92&type=chunk)[104](index=104&type=chunk) - **HTX-034:** The company has initiated formal development of HTX-034, its next-generation product candidate for postoperative pain management, following positive preclinical results showing pain reduction for seven days[26](index=26&type=chunk)[93](index=93&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Net Product Sales (in millions) | Product | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | CINVANTI | $33.2 | $11.2 | $61.2 | $16.4 | | SUSTOL | $3.5 | $6.1 | $7.1 | $12.4 | | **Total** | **$36.7** | **$17.3** | **$68.3** | **$28.8** | Operating Expenses (in millions) | Expense Category | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Cost of Product Sales | $13.6 | $5.2 | $28.6 | $8.4 | | Research and Development | $41.4 | $30.2 | $84.4 | $69.7 | | General and Administrative | $9.8 | $6.2 | $19.4 | $13.2 | | Sales and Marketing | $23.6 | $14.5 | $52.4 | $28.4 | - The increase in Sales and Marketing expense was primarily due to costs to support launch preparation activities for HTX-011 and one-time costs related to the retirement of the company's President[132](index=132&type=chunk) - The increase in Research and Development expense was driven by higher costs for HTX-011 and the new HTX-034 program, along with increased personnel and stock-based compensation costs[129](index=129&type=chunk)[130](index=130&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2019, the company had **$276.0 million** in cash, cash equivalents, and short-term investments, down from **$332.4 million** at the end of 2018[134](index=134&type=chunk) - Management believes that the current cash position is sufficient to fund operations for at least one year from the filing date of this Form 10-Q[134](index=134&type=chunk) - Net cash used for operating activities for the first six months of 2019 was **$72.1 million**, a decrease from **$122.4 million** in the same period of 2018, mainly due to working capital changes related to the CINVANTI launch in 2018[136](index=136&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate exposure on its investment portfolio, mitigated by short-term, investment-grade securities and no material foreign currency risk - The company's primary market risk is interest rate risk on its investment portfolio of cash, cash equivalents, and short-term investments[142](index=142&type=chunk) - Default risk is mitigated by investing in high-quality, short-term securities like U.S. treasury bills, corporate debt, and commercial paper[142](index=142&type=chunk) - The company's convertible debt carries a fixed interest rate, so it is not exposed to interest rate risk on its debt obligations[142](index=142&type=chunk) [Controls and Procedures](index=29&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[144](index=144&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[145](index=145&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=ITEM%201.%20Legal%20Proceedings) The company, CEO, and CFO face a federal securities class action lawsuit alleging violations related to the stock price decline following the HTX-011 CRL announcement - A federal securities class action complaint was filed against the Company, its CEO, and CFO on June 3, 2019[84](index=84&type=chunk) - The lawsuit is linked to the market value decline following the announcement of the FDA's Complete Response Letter for HTX-011[84](index=84&type=chunk) [Risk Factors](index=30&type=section&id=ITEM%201A.%20Risk%20Factors) The company details significant risks including product commercialization dependence, regulatory uncertainties for HTX-011, intense competition, financial condition, and reliance on third-party manufacturing - **Product Dependence:** The company's success is substantially dependent on its ability to commercialize SUSTOL, CINVANTI, and HTX-011, if approved[149](index=149&type=chunk) - **Regulatory Risk:** The FDA issued a Complete Response Letter (CRL) for HTX-011 on April 30, 2019, citing the need for additional CMC and non-clinical information, which could delay or prevent approval[151](index=151&type=chunk)[160](index=160&type=chunk) - **Competition:** The company faces intense competition from existing branded products and expects increased competition from generic versions of ALOXI (competing with SUSTOL) and EMEND IV (competing with CINVANTI)[176](index=176&type=chunk)[177](index=177&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - **Financial Condition:** The company has a history of losses (**$1.1 billion** accumulated deficit as of June 30, 2019) and may need to raise additional capital in the future to fund operations[190](index=190&type=chunk)[194](index=194&type=chunk) - **Manufacturing Reliance:** The company depends on third-party suppliers and contract manufacturers for its products, including single-source suppliers for critical components, which poses a risk of supply interruption[170](index=170&type=chunk)[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None reported for the period - The company reported no unregistered sales of equity securities during the period[260](index=260&type=chunk) [Exhibits](index=55&type=section&id=ITEM%206.%20Exhibits) The report lists exhibits filed, including an executive employment agreement, CEO and CFO certifications pursuant to the Sarbanes-Oxley Act, and XBRL data files - Exhibits filed with the report include an Executive Employment Agreement for John Poyhonen, Sarbanes-Oxley Act certifications, and XBRL data files[265](index=265&type=chunk)

Corporate Update June 5, 2019 Forward-Looking Statements This presentation contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. We caution investors that forward-looking statements are based on management's expectations and assumptions as of the date of this presentation, and involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance or achievements to differ significantly from those express ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-33221 HERON THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 94-2875566 (State or ot ...