Financial Performance - Generated Q3 2025 Net Revenue of $38.2 million, a 16.5% increase from Q3 2024, and year-to-date revenue of $114.3 million[7] - Reaffirmed 2025 Net Revenue Guidance of $153 million to $163 million and adjusted EBITDA guidance of $9.0 million to $13.0 million[5] - ZYNRELEF® Net Revenue grew 49% in Q3 2025 compared to Q3 2024, driven by the launch of the Vial Access Needle and enhanced distributor incentives[7] - APONVIE® Net Revenue increased 173% in Q3 2025 compared to Q3 2024, supported by a dedicated sales team[7] - Acute Care franchise revenue grew 67.2% year-over-year in Q3 2025 and 69.2% year-over-year for the first nine months of 2025[8] - Net product sales for Q3 2025 reached $38.213 million, a 16.3% increase from $32.810 million in Q3 2024[32] - Gross profit for Q3 2025 was $26.299 million, compared to $23.352 million in Q3 2024, reflecting a gross margin improvement[32] - The net loss for Q3 2025 was $17.495 million, significantly higher than the net loss of $4.848 million in Q3 2024[32] - Adjusted EBITDA for Q3 2025 was $1.542 million, a recovery from an adjusted EBITDA loss of $0.355 million in Q3 2024[36] Cash and Investments - Cash, cash equivalents, and short-term investments were $55.5 million as of September 30, 2025[11] - Cash and cash equivalents increased to $43.068 million as of September 30, 2025, up from $25.802 million at the end of 2024[34] Inventory and Assets - Inventory increased to $70.025 million as of September 30, 2025, compared to $53.160 million at the end of 2024, indicating potential growth in product availability[34] - Total assets as of September 30, 2025, were $248.950 million, an increase from $233.147 million at the end of 2024[34] Operating Expenses - Total operating expenses for Q3 2025 were $30.392 million, up from $27.810 million in Q3 2024, primarily driven by increased research and development costs[32] Shareholder Information - The weighted average common shares outstanding increased to 170.348 million in Q3 2025 from 152.830 million in Q3 2024[32] Other Significant Events - The permanent J-code for ZYNRELEF went live on October 1, 2025, improving reimbursement and billing clarity[8] - The company reported a significant loss on debt extinguishment of $11.339 million in Q3 2025[32] - CINVANTI unit demand and Net Revenue increased 6% in Q3 2025 compared to Q3 2024[11]

Core Insights - Heron Therapeutics reported financial results for Q3 and the first nine months of 2025, showing significant revenue growth and reaffirming its financial guidance for the year [1][7][3]. Financial Performance - Q3 2025 net revenue reached $38.2 million, a 16.5% increase from $32.8 million in Q3 2024 [7][9]. - Year-to-date revenue for 2025 is $114.3 million, up 10.4% from $103.5 million in the same period of 2024 [10]. - The company reaffirmed its 2025 net revenue guidance of $153 million to $163 million and adjusted EBITDA guidance of $9 million to $13 million [3][7]. Product Performance - ZYNRELEF net revenue grew 49% in Q3 2025 compared to Q3 2024, driven by the launch of the Vial Access Needle and enhanced distributor incentives [7][8]. - APONVIE net revenue surged 173% in Q3 2025 compared to Q3 2024, supported by increased adoption and a dedicated sales team [7][8]. - The Acute Care franchise reported a revenue growth of 67.2% year-over-year in Q3 2025 [8][9]. Cash Position - As of September 30, 2025, the company had cash, cash equivalents, and short-term investments totaling $55.5 million [8]. Corporate Updates - The company launched several new initiatives in Q3 2025 that are positively impacting commercial execution and product demand [2]. - A permanent product-specific J-code for ZYNRELEF was granted, effective October 1, 2025, which is expected to streamline reimbursement processes [8]. Conference Call - Heron will host a conference call and live webcast on November 4, 2025, to discuss these results and updates [11].

Core Insights - Heron Therapeutics, Inc. has appointed Thomas Cusack to its Board of Directors, enhancing its governance and strategic direction [1][2] - Mr. Cusack brings over 20 years of experience in investment management and corporate finance, previously serving as Managing Director at Starboard Value LP [2] - The appointment is part of a Cooperation Agreement with Rubric Capital Management LP, indicating a strategic partnership aimed at improving company performance [1][2] Company Overview - Heron Therapeutics is a commercial-stage biotechnology company focused on developing therapeutic innovations to enhance patient care [3] - The company utilizes advanced science and patented technologies to create a portfolio of products aimed at improving standards of care for acute care and oncology patients [3]

Core Viewpoint - Heron Therapeutics, Inc. will host a conference call on November 4, 2025, to report its third quarter 2025 financial results and discuss recent business highlights [1]. Group 1: Conference Call Details - The conference call will take place at 8:30 a.m. ET and can be accessed via a registration link for dial-in details [2]. - Participants are encouraged to join the call fifteen minutes early to avoid delays [2]. - The call will also be available as a webcast on Heron's website, with an archive accessible for 60 days post-call [2]. Group 2: Company Overview - Heron Therapeutics is a commercial-stage biotechnology company focused on developing therapeutic innovations to improve patient care [3]. - The company utilizes advanced science, patented technologies, and an innovative approach to drug discovery and development [3]. - Heron aims to advance the standard-of-care for acute care and oncology patients through its portfolio of products [3].

Core Viewpoint - Heron Therapeutics has adopted a Section 382 rights plan to protect its net operating loss carryforwards (NOLs) and other tax attributes, which are crucial for offsetting future taxable income [1][2][3] Group 1: Rights Plan Details - The Board of Directors unanimously approved the Rights Plan, which is effective from August 14, 2025, and will expire one year later unless terminated or extended [1][2] - The Rights Plan aims to deter any single investor or group from acquiring 4.99% or more of Heron's outstanding common stock, thereby reducing the risk of an "ownership change" that could limit the use of NOLs [2][3] Group 2: Financial Context - As of December 31, 2024, Heron had approximately $1.37 billion in U.S. federal NOLs available to offset future taxable income, which can enhance cash flow as the company pursues its growth strategy [2] - The adoption of the Rights Plan is intended to protect the potential value of these NOLs as the company executes its growth plans [3] Group 3: Company Overview - Heron Therapeutics is a commercial-stage biotechnology company focused on developing and commercializing therapeutic innovations to improve patient care, particularly in acute care and oncology [4]

Company Performance - Heron Therapeutics reported a quarterly loss of $0.02 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.01, but an improvement from a loss of $0.06 per share a year ago, indicating a surprise of -100.00% [1] - The company posted revenues of $37.2 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.89%, but showing an increase from $36.02 million in the same quarter last year [2] - Over the last four quarters, Heron Therapeutics has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Heron Therapeutics shares have increased approximately 20.3% since the beginning of the year, outperforming the S&P 500's gain of 7.8% [3] - The current consensus EPS estimate for the upcoming quarter is breakeven on revenues of $39.28 million, while for the current fiscal year, it is -$0.02 on revenues of $158.1 million [7] Industry Outlook - The Medical - Drugs industry, to which Heron Therapeutics belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Heron Therapeutics' stock performance [5]

Financial Data and Key Metrics Changes - The company reported total net revenues of $37.2 million for Q2 2025 and $76.1 million year-to-date, with adjusted EBITDA of $7.9 million for the first half of the year, indicating a focus on operational efficiency [8][22] - Product gross profit for Q2 2025 was $27.3 million or 73.5%, an increase from 70.8% in Q2 2024, while year-to-date gross profit was $57.8 million or 75.9%, up from 73.2% in the same period last year [19][20] - The company incurred a net loss of $2.4 million for Q2 2025, compared to a net loss of $9.2 million in Q2 2024, and reported a net income of $300,000 for the first half of 2025, a significant improvement from a net loss of $12.4 million in the same period last year [21][22] Business Line Data and Key Metrics Changes - Combined net revenues from OPONVI and ZINRALF totaled $10.7 million for Q2 2025, reflecting a year-over-year growth of 55.5% for the quarter and 70.5% year-to-date compared to the same periods in 2024 [10][11] - Zenerlef adoption showed a 6.3% increase in demand units over Q1 2025, with total ordering accounts exceeding 700 by June [11][12] - Oponvi demand units grew by 19% in June, while net revenue grew by 9% over Q1, indicating strong market performance despite inventory adjustments [14][36] Market Data and Key Metrics Changes - The oncology franchise generated combined net revenues of $26.5 million for Q2 2025, maintaining market share in a competitive environment [16] - The transition from a C code to a permanent J code for Zenerlef, effective October 1, is expected to streamline reimbursement processes and improve access across payers [9][29] Company Strategy and Development Direction - The company successfully completed a new financing round, enhancing its financial flexibility and positioning for strategic initiatives [7] - A restructuring of the sales force was implemented to better align teams with product focus, aiming to drive growth in the second half of the year [18][43] - The company is exploring creative strategies to drive continued growth in the oncology supportive care market [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive innovation and expand commercial initiatives, supported by strong product demand growth [8][10] - The management noted that while immediate impacts from the J code for Zenerlef may not be seen, it is expected to facilitate reimbursement and adoption in the long term [29][48] - The company maintained its net revenue guidance of $153 million to $163 million for 2025 and revised adjusted EBITDA guidance to a range of $9 million to $13 million [22] Other Important Information - The company entered into a refinancing agreement that includes a new credit facility and the issuance of senior convertible notes, which will strengthen its balance sheet [22][23] - Cash and short-term investments as of June 30, 2025, were reported at $40.6 million [21] Q&A Session Summary Question: Details on the Zenerlef 400 mg transition and Q2 revenue impact - The transition began at the end of Q4 2024, with inventory normalization expected to complete by July 1, 2025 [26][27] Question: Impact of the J code on reimbursement and adoption - The J code is expected to simplify reimbursement processes and improve adoption over time as commercial payers align with Medicare practices [28][29] Question: Zenerlef sales force reorganization and its impact - The sales force was restructured to focus on specific products, enhancing engagement with targeted accounts [33][34] Question: Aponvi demand and revenue growth - The growth in demand was primarily due to wholesaler inventory adjustments, with expectations for normalization in the second half of the year [36][37] Question: Overall share count after recent transactions - The pro forma common share count is approximately 183 million shares [50] Question: Rate on the senior credit facility and cash addition to the balance sheet - The overall rate on the senior credit facility is slightly above 10%, with an expected addition of $11 to $12 million to the balance sheet after expenses [52][53]

Financial Performance - The company generated Q2 2025 net revenue of $37.2 million and year-to-date 2025 net revenue of $76.1 million[9] - Acute Care franchise revenue grew by 55.5% for the three months ended June 30, 2025, compared to the same period last year[9] - The company achieved a record year-to-date 2025 adjusted EBITDA of $7.9 million[9] - Net product sales for Q2 2025 were $37.2 million, compared to $36.024 million in Q2 2024[32] - Adjusted EBITDA for Q2 2025 was $1.771 million, compared to $(1.234) million in Q2 2024[34] Product Performance - ZYNRELEF unit demand grew by 6.3% in Q2 2025 compared to Q1 2025[9] - APONVIE unit demand grew by 19% in Q2 2025 compared to Q1 2025[9] - Acute Care franchise net sales were $10.7 million for the three months ended June 30, 2025[14] - Oncology Care franchise net sales were $26.5 million for the three months ended June 30, 2025[26] Refinancing and Capital Structure - The company completed a comprehensive refinancing of prior debt facilities, reducing total debt from $175 million to $145 million and extending the bullet maturity to 2030+[9] - $110 million was funded at closing from Hercules Capital as a senior secured term loan[38] - $35 million of 50% Senior Convertible Notes were issued to Rubric Capital Management due in 2031[38]

Core Insights - Heron Therapeutics reported a 55.5% increase in Acute Care segment revenue, but faced a GAAP revenue shortfall compared to analyst expectations and continued declines in the Oncology segment [1][5][7] - Net revenue (GAAP) for Q2 2025 was $37.2 million, slightly below the consensus estimate of $38.075 million, with a year-over-year growth of 3.3% [1][2] - The company achieved a positive adjusted EBITDA of $1.8 million, indicating improved operational leverage [2][8] Financial Performance - GAAP loss per share was $(0.02), missing the expectation of $(0.01), while operating losses narrowed [1][2] - Acute Care revenue reached $10.7 million, up from $6.9 million in Q2 2024, reflecting a 55.5% year-over-year increase [2][5] - Oncology segment revenue declined by 9.0%, with SUSTOL experiencing a significant drop of 43.4% [2][7] Business Overview - Heron Therapeutics focuses on developing and commercializing therapeutics for acute care and oncology, including pain management and anti-nausea drugs [3] - The company is emphasizing growth in the Acute Care business, particularly through products like ZYNRELEF and APONVIE [4][10] Product Performance - ZYNRELEF saw a 40.4% year-over-year growth in GAAP net revenue, with unit demand increasing by 6.3% compared to Q1 2025 [5] - APONVIE's revenue grew by 141.6% year-over-year, with a 19% sequential increase in unit demand [6] - The Oncology segment's decline was attributed to ongoing weakness in SUSTOL and CINVANTI, with no new product drivers announced [7] Operational Developments - Gross margin was reported at 73.5%, with operating expenses decreasing by $3.0 million year-over-year to $29.0 million [8] - Total debt was reduced to $145 million, with maturities extended to at least 2030, providing greater flexibility for growth [8] - Cash and short-term investments decreased to $40.6 million, with a notable inventory increase of almost $20 million over six months [9] Future Outlook - The company reaffirmed its full-year 2025 net revenue target of $153.0 million to $163.0 million, requiring at least $77 million in the second half of 2025 [11] - Adjusted EBITDA guidance was raised to $9.0 million to $13.0 million for full-year 2025, reflecting improved operating performance [11] - Future growth in Acute Care revenue is expected to be driven by commercial team expansion and the rollout of permanent reimbursement codes for ZYNRELEF [11]

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=5&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements) Heron Therapeutics' unaudited condensed consolidated financial statements as of June 30, 2025, reflect total assets of **$232.1 million**, a **$27.3 million** stockholders' deficit, and a **$0.3 million** net income for the six months, a significant improvement from the prior year [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, cash and equivalents decreased to **$40.6 million**, total assets were **$232.1 million**, and the stockholders' deficit improved to **$27.3 million**, with liabilities reclassified due to maturity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $16,516 | $25,802 | | Short-term investments | $24,117 | $33,481 | | Inventory, net | $72,965 | $53,160 | | Total current assets | $210,923 | $209,014 | | Total assets | $232,090 | $233,147 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $258,601 | $91,457 | | Total liabilities | $259,348 | $266,798 | | Total stockholders' deficit | $(27,258) | $(33,651) | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, net product sales increased to **$37.2 million**, with net loss narrowing to **$2.4 million**; for the six months, sales grew to **$76.1 million**, achieving a **$0.3 million** net income from a prior-year loss Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $37,200 | $36,024 | $76,103 | $70,694 | | Gross profit | $27,343 | $25,506 | $57,789 | $51,732 | | Total operating expenses | $28,980 | $31,951 | $56,272 | $62,975 | | (Loss) income from operations | $(1,637) | $(6,445) | $1,517 | $(11,243) | | Net (loss) income | $(2,381) | $(9,235) | $254 | $(12,395) | | Diluted net (loss) income per share | $(0.02) | $(0.06) | $0.00 | $(0.08) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities increased to **$19.7 million**, resulting in a **$9.3 million** net decrease in cash, ending the period with **$16.5 million** Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(19,738) | $(14,120) | | Net cash provided by investing activities | $9,607 | $3,326 | | Net cash provided by financing activities | $845 | $503 | | **Net decrease in cash and cash equivalents** | **$(9,286)** | **$(10,291)** | | Cash and cash equivalents at end of period | $16,516 | $18,386 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail business, liquidity, and accounting policies, highlighting the August 2025 refinancing that addressed debt and provided working capital, and significant customer revenue concentration - In August 2025, the company executed refinancing transactions, including a new credit facility and convertible notes, retiring existing debt and providing additional working capital[29](index=29&type=chunk)[30](index=30&type=chunk)[97](index=97&type=chunk) Customer Concentration for Six Months Ended June 30, 2025 | Customer | % of Net Product Sales | % of Accounts Receivable | | :--- | :--- | :--- | | Customer A | 43.9% | 43.8% | | Customer B | 33.5% | 34.4% | | Customer C | 21.2% | 21.3% | | **Total** | **98.6%** | **99.5%** | Inventory Breakdown (in thousands) | Product | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | CINVANTI | $34,500 | $36,600 | | ZYNRELEF | $31,700 | $11,800 | | SUSTOL | $3,000 | $3,200 | | APONVIE | $3,800 | $1,600 | | **Total** | **$72,965** | **$53,160** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting a **70.5% increase in Acute Care sales** and a turnaround to **$1.5 million income from operations** for the six months, with sufficient liquidity [Overview](index=24&type=section&id=Overview) Heron is a commercial-stage biotechnology company with Acute Care (ZYNRELEF, APONVIE) and Oncology Care (CINVANTI, SUSTOL) portfolios, utilizing proprietary Biochronomer Technology - The company's portfolio is divided into two main categories: Acute Care (ZYNRELEF, APONVIE) and Oncology Care (CINVANTI, SUSTOL)[109](index=109&type=chunk)[110](index=110&type=chunk)[116](index=116&type=chunk) - ZYNRELEF has received expanded FDA indications and benefits from CMS pass-through status and the NOPAIN Act, providing separate Medicare reimbursement in outpatient and ambulatory surgical center settings from 2025 through 2027[111](index=111&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2025, total net product sales increased by **7.6% to $76.1 million**, driven by **70.5% Acute Care growth**, with improved gross profit margin and decreased operating expenses Net Product Sales by Segment (in thousands) | Segment | Six Months 2025 | Six Months 2024 | % Change | | :--- | :--- | :--- | :--- | | Acute Care | $20,954 | $12,290 | +70.5% | | Oncology | $55,149 | $58,404 | -5.6% | | **Total** | **$76,103** | **$70,694** | **+7.6%** | - Gross profit margin for the first six months of 2025 increased to **75.9%** from **73.2%**, driven by higher units sold and lower inventory write-offs[133](index=133&type=chunk)[134](index=134&type=chunk) - Operating expenses for the six months ended June 30, 2025, decreased significantly due to lower personnel costs and reduced property and equipment write-offs[137](index=137&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$40.6 million** in cash and equivalents; management believes post-refinancing, capital is sufficient for the next twelve months - The company had an accumulated deficit of **$1.9 billion** as of June 30, 2025[144](index=144&type=chunk) - Management asserts that following the August 2025 Refinancing Transactions, cash and equivalents are sufficient to fund operations for at least one year[145](index=145&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes to the company's market risk disclosures since its 2024 Annual Report - There are no material changes to the company's market risk disclosures during the three and six months ended June 30, 2025[152](index=152&type=chunk) [Controls and Procedures](index=30&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[153](index=153&type=chunk) - No changes occurred in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[155](index=155&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=ITEM%201.%20Legal%20Proceedings) The company provides an update on patent litigation, settling with Mylan for generic CINVANTI and APONVIE licenses starting June 2032, with ongoing infringement cases against Slayback/Azurity and Qilu - The company settled patent litigation with Mylan on May 6, 2025, granting Mylan a license to market generic versions of CINVANTI and APONVIE in the U.S. beginning June 1, 2032[158](index=158&type=chunk)[159](index=159&type=chunk) - Patent infringement litigation is ongoing against Slayback/Azurity regarding a generic version of CINVANTI, with a bench trial scheduled for November 17, 2025[160](index=160&type=chunk)[161](index=161&type=chunk) - The company has initiated patent infringement lawsuits against Qilu Pharmaceutical for its ANDA filings for generic versions of both APONVIE and CINVANTI; a bench trial for these consolidated cases is scheduled for November 16, 2026[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) [Risk Factors](index=32&type=section&id=ITEM%201A.%20Risk%20Factors) The company highlights key risks, including reliance on single-source suppliers, potential negative impacts from government policy changes, and persistent pressure on product pricing and reimbursement - The company relies on single vendors for some critical materials and components, creating risk of supply chain interruption due to geopolitical instability, natural disasters, or other disruptions[167](index=167&type=chunk)[168](index=168&type=chunk) - Changes in government policies, laws, and regulations, including layoffs at agencies like the FDA, potential government shutdowns, and shifts in trade policy, could negatively impact operations and increase costs[169](index=169&type=chunk)[172](index=172&type=chunk) - The company faces significant risk from healthcare cost-containment efforts, including potential changes to reimbursement levels and drug pricing reforms like the Inflation Reduction Act, which could limit revenue and profitability[174](index=174&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&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[190](index=190&type=chunk) [Other Information](index=37&type=section&id=ITEM%205.%20Other%20Information) No new Rule 10b5-1 trading plans were adopted or terminated by directors or executive officers during Q2 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[193](index=193&type=chunk) [Exhibits](index=38&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including amendments and officer certifications