Heron Therapeutics(HRTX) - 2023 Q4 - Annual Results

Executive Summary & Business Highlights CEO Statement Heron's CEO, Craig Collard, highlighted continued positive momentum and increased sales trajectory in Q4 2023 across acute and oncology care, positioning the Company for long-term success and profitability - Heron experienced continued positive momentum and an increased sales trajectory in both acute care and oncology care franchises in Q4 2023[3] - Strategic decisions made over the past year have positioned the Company for long-term success and profitability[3] Business Highlights Heron Therapeutics achieved significant Q4 and FY2023 milestones, including record ZYNRELEF sales, exceeding oncology revenue guidance, strategic partnerships, and key regulatory approvals 2023 Key Financial & Operational Highlights | Metric | Value | | :-------------------------------- | :------------------- | | 2023 Oncology Care Franchise Revenue | $107.9 million (exceeded full-year guidance) | | ZYNRELEF Q4 Net Product Sales | $5.6 million (quarterly record) | | Cash and Cash Equivalents (End of 2023) | $80.4 million | | Q4 Gross Margin | 71% (up from 58% in Q4 2022) | - Announced partnership with CrossLink Life Sciences, LLC on January 7, 2024, to expand ZYNRELEF promotional efforts with up to 650 additional sales representatives[5][6] - Received FDA approval for expanded indication of ZYNRELEF on January 23, 2024, broadening its label to approximately 13 million procedures annually[5][6] - The ZYNRELEF Vial Access Needle (VAN) program is on track for a Prior Approval Supplement (PAS) submission in Q2 2024 and an anticipated launch in the second half of 2024[6] - The ZYNRELEF Prefilled Syringe (PFS) program continues to progress with an expected submission for approval in 2026[6] Financial Guidance for 2024 2024 Financial Outlook Heron Therapeutics reaffirms its full-year 2024 guidance, projecting Product Revenues, Net between $138.0 to $158.0 million, Adjusted Operating Expenses between $108.0 to $116.0 million, and Adjusted EBITDA ranging from $(22.0) to $3.0 million Full-Year 2024 Financial Guidance | Metric | 2024 Guidance | | :-------------------------- | :----------------------- | | Product Revenues, Net | $138.0 to $158.0 million | | Adjusted Operating Expenses | $108.0 to $116.0 million | | Adjusted EBITDA | $(22.0) to $3.0 million | Product Performance Acute Care Franchise Net Product Sales The Acute Care Franchise demonstrated significant growth in 2023, with Q4 net product sales increasing by 56.4% YoY to $6.1 million and full-year sales growing by 87.3% YoY to $19.1 million, driven primarily by ZYNRELEF and the commercial launch of APONVIE Acute Care Franchise Net Product Sales (YoY) | Period | 2023 Sales ($ million) | 2022 Sales ($ million) | YoY Change | | :---------------- | :---------------- | :---------------- | :---------- | | Q4 2023 | $6.1 | $3.9 | +56.4% | | FY 2023 | $19.1 | $10.2 | +87.3% | ZYNRELEF Net Product Sales ZYNRELEF net product sales showed strong growth in Q4 and full-year 2023, increasing by 43.6% and 73.5% respectively, compared to the same periods in 2022 ZYNRELEF Net Product Sales (YoY) | Period | 2023 Sales ($ million) | 2022 Sales ($ million) | YoY Change | | :---------------- | :---------------- | :---------------- | :---------- | | Q4 2023 | $5.6 | $3.9 | +43.6% | | FY 2023 | $17.7 | $10.2 | +73.5% | APONVIE Net Product Sales APONVIE, commercially launched in March 2023, generated $0.5 million in net product sales in Q4 2023 and $1.4 million for the full year, with no comparable sales in 2022 APONVIE Net Product Sales | Period | 2023 Sales ($ million) | 2022 Sales ($ million) | | :---------------- | :---------------- | :---------------- | | Q4 2023 | $0.5 | $0.0 | | FY 2023 | $1.4 | $0.0 | - APONVIE became commercially available in the U.S. on March 6, 2023[10] Oncology Care Franchise Net Product Sales The Oncology Care Franchise experienced growth in 2023, with Q4 net product sales increasing by 7.7% YoY to $28.1 million and full-year sales growing by 10.7% YoY to $107.9 million, driven by CINVANTI and SUSTOL Oncology Care Franchise Net Product Sales (YoY) | Period | 2023 Sales ($ million) | 2022 Sales ($ million) | YoY Change | | :---------------- | :---------------- | :---------------- | :---------- | | Q4 2023 | $28.1 | $26.1 | +7.7% | | FY 2023 | $107.9 | $97.5 | +10.7% | CINVANTI Net Product Sales CINVANTI net product sales increased by 5.2% in Q4 2023 to $24.3 million and 8.7% for the full year to $94.9 million compared to 2022 CINVANTI Net Product Sales (YoY) | Period | 2023 Sales ($ million) | 2022 Sales ($ million) | YoY Change | | :---------------- | :---------------- | :---------------- | :---------- | | Q4 2023 | $24.3 | $23.1 | +5.2% | | FY 2023 | $94.9 | $87.3 | +8.7% | SUSTOL Net Product Sales SUSTOL net product sales saw a significant increase of 26.7% in Q4 2023 to $3.8 million and 27.5% for the full year to $13.0 million compared to 2022 SUSTOL Net Product Sales (YoY) | Period | 2023 Sales ($ million) | 2022 Sales ($ million) | YoY Change | | :---------------- | :---------------- | :---------------- | :---------- | | Q4 2023 | $3.8 | $3.0 | +26.7% | | FY 2023 | $13.0 | $10.2 | +27.5% | Product Information ZYNRELEF Overview ZYNRELEF is the first and only dual-acting local anesthetic for postoperative pain, combining bupivacaine and meloxicam, approved in the U.S. for various soft tissue and orthopedic surgical procedures, though Heron cancelled its marketing authorizations in the U.K. and EU in 2023 - ZYNRELEF is the first and only dual-acting local anesthetic that delivers a fixed-dose combination of bupivacaine and meloxicam for up to 72 hours of postsurgical analgesia[13] - FDA approved an expansion of ZYNRELEF's indication on January 23, 2024, to include soft tissue and orthopedic surgical procedures where direct exposure to articular cartilage is avoided[13] - Heron cancelled ZYNRELEF's U.K. (August 2023) and EU (October 2023) marketing authorizations, as there are no plans for commercial launch in those regions[13] APONVIE Overview APONVIE is a substance NK1 Receptor Antagonist indicated for the prevention of postoperative nausea and vomiting (PONV) in adults, approved by the FDA in September 2022 and commercially available in the U.S. on March 6, 2023, delivered via a 30-second IV push - APONVIE is a substance NK1 Receptor Antagonist indicated for the prevention of PONV in adults, delivered via a 30-second IV push[15] - It was demonstrated to be bioequivalent to oral aprepitant 40 mg and is the same formulation as Heron's approved drug product CINVANTI[15] - APONVIE was approved by the FDA in September 2022 and became commercially available in the U.S. on March 6, 2023[15] CINVANTI Overview CINVANTI is an IV formulation of aprepitant, an NK1 RA, indicated for the prevention of acute and delayed chemotherapy-induced nausea and vomiting (CINV) associated with highly and moderately emetogenic cancer chemotherapy, and is the first IV formulation to directly deliver aprepitant - CINVANTI is an IV formulation of aprepitant, an NK1 RA, indicated for the prevention of acute and delayed CINV in adults[18] - It is the first IV formulation to directly deliver aprepitant, the active ingredient in EMEND® capsules[18] - Aprepitant (including its prodrug, fosaprepitant) is the only single-agent NK1 RA to significantly reduce nausea and vomiting in both the acute and delayed phases after chemotherapy[18] SUSTOL Overview SUSTOL is an extended-release, injectable 5-hydroxytryptamine type 3 RA, indicated for preventing acute and delayed CINV associated with moderately emetogenic chemotherapy or anthracycline and cyclophosphamide combination chemotherapy regimens, utilizing Heron's Biochronomer® drug delivery technology to maintain therapeutic levels of granisetron for at least 5 days - SUSTOL is an extended-release, injectable 5-hydroxytryptamine type 3 RA for the prevention of acute and delayed CINV[20] - It utilizes Heron's Biochronomer® drug delivery technology to maintain therapeutic levels of granisetron for ≥5 days[20] Company Information About Heron Therapeutics, Inc. Heron Therapeutics, Inc. is a commercial-stage biotechnology company dedicated to improving patient lives by developing and commercializing therapeutic innovations in acute care and oncology, leveraging its advanced science, patented technologies, and innovative approach to drug discovery and development - Heron Therapeutics is a commercial-stage biotechnology company focused on improving patient lives by developing and commercializing therapeutic innovations[22] - The company leverages advanced science, patented technologies, and an innovative approach to drug discovery and development for acute care and oncology patients[22] Non-GAAP Financial Measures Heron Therapeutics uses non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Operating Expenses, to supplement GAAP results, providing insights into operational activities by excluding items like stock-based compensation, depreciation, and amortization, while relying on an 'unreasonable efforts exception' for not reconciling forward-looking non-GAAP guidance to GAAP measures - Non-GAAP financial measures (Adjusted EBITDA, Adjusted Operating Expenses) are used to supplement GAAP results, offering insights into normal operational activities, cash generation, budgeting, and forecasting[23] - Adjusted EBITDA excludes interest expense/income, income taxes, depreciation, amortization, stock-based compensation, and other non-ongoing operational adjustments[25] - Adjusted Operating Expenses exclude stock-based compensation expense, depreciation and amortization, and other non-ongoing operational adjustments[26] - The Company has not provided a reconciliation of its full-year 2024 guidance for adjusted EBITDA or adjusted operating expenses to GAAP measures, citing the 'unreasonable efforts exception' due to the unpredictability of certain items[28] Forward-looking Statements This section serves as a cautionary note, stating that the news release contains forward-looking statements based on management's expectations, which are subject to certain risks and uncertainties that could cause actual results to differ materially, and Heron takes no obligation to update or revise them except as required by law - The news release contains 'forward-looking statements' based on management's expectations and assumptions, subject to risks and uncertainties that could cause actual results to differ materially[30] - Examples include potential market opportunities for products, financial guidance, commercial launch results, regulatory approvals, partnerships, litigation, and future cash balances/profitability[30] - Heron takes no obligation to update or revise these statements except as may be required by law[30] Conference Call and Webcast Heron hosted a conference call and webcast on March 12, 2024, at 4:30 pm ET to discuss the financial results and corporate updates, with access details provided for domestic and international callers, and an archive available on Heron's Investor Relations website - Heron hosted a conference call and webcast on March 12, 2024, at 4:30 pm ET[12] - The conference call could be accessed by dialing (646) 307-1963 (domestic) or (800) 715-9871 (international) with passcode 6135354, and a webcast was available via www.herontx.com[12](index=12&type=chunk) Investor Relations Contact Contact information for investor relations and media inquiries is provided, directed to Ira Duarte, Executive Vice President, Chief Financial Officer of Heron Therapeutics, Inc - Investor Relations and Media Contact: Ira Duarte, Executive Vice President, Chief Financial Officer, Heron Therapeutics, Inc. (iduarte@herontx.com, 858-251-4400)[35] Financial Statements Consolidated Statements of Operations The consolidated statements of operations detail Heron Therapeutics' financial performance for the three and twelve months ended December 31, 2023, showing increases in net product sales and gross profit, alongside a reduced net loss compared to the prior year Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Twelve Months Ended Dec 31, 2023 | Twelve Months Ended Dec 31, 2022 | | :-------------------------- | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Net product sales | $34,233 | $30,028 | $127,044 | $107,672 | | Cost of product sales | $9,885 | $12,627 | $65,105 | $54,874 | | Gross profit | $24,348 | $17,401 | $61,939 | $52,798 | | Research and development | $10,950 | $11,057 | $55,897 | $107,506 | | General and administrative | $11,290 | $8,924 | $49,014 | $37,437 | | Sales and marketing | $12,328 | $17,775 | $67,643 | $82,513 | | Total operating expenses | $34,568 | $37,756 | $172,554 | $227,456 | | Loss from operations | $(10,220) | $(20,355) | $(110,615) | $(174,658) | | Net loss | $(10,724) | $(19,869) | $(110,559) | $(182,024) | | Basic and diluted net loss per share | $(0.07) | $(0.17) | $(0.80) | $(1.67) | Consolidated Balance Sheets The consolidated balance sheets present Heron Therapeutics' financial position as of December 31, 2023, and 2022, showing a decrease in total assets and a shift in stockholders' equity from positive to a deficit, while total liabilities increased Consolidated Balance Sheets (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------------ | :------------------ | | ASSETS | | | | Cash and cash equivalents | $28,677 | $15,364 | | Short-term investments | $51,732 | $69,488 | | Accounts receivable, net | $60,137 | $52,049 | | Inventory | $42,110 | $54,573 | | Total current assets | $188,774 | $205,435 | | Total assets | $222,506 | $250,951 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $79,685 | $82,355 | | Non-current notes payable, net | $24,263 | - | | Non-current convertible notes payable, net | $149,490 | $149,284 | | Total liabilities | $256,479 | $237,379 | | Total stockholders' equity | $(33,973) | $13,572 | | Total liabilities and stockholders' equity | $222,506 | $250,951 |