Heron Therapeutics(US:HRTX)2025-08-08 11:45PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements 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 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 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 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 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 capital293097 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 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 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)109110116 - 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 2027111113 Results of Operations 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-offs133134 - Operating expenses for the six months ended June 30, 2025, decreased significantly due to lower personnel costs and reduced property and equipment write-offs137139141 Liquidity and Capital Resources 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, 2025144 - Management asserts that following the August 2025 Refinancing Transactions, cash and equivalents are sufficient to fund operations for at least one year145 Quantitative and Qualitative Disclosures about Market Risk 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, 2025152 Controls and Procedures 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 report153 - No changes occurred in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls155 PART II. OTHER INFORMATION Legal Proceedings 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, 2032158159 - Patent infringement litigation is ongoing against Slayback/Azurity regarding a generic version of CINVANTI, with a bench trial scheduled for November 17, 2025160161 - 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, 2026163164165 Risk Factors 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 disruptions167168 - 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 costs169172 - 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 profitability174181183 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None190 Other Information 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, 2025193 Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including amendments and officer certifications