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Heron Therapeutics(HRTX) - 2023 Q4 - Earnings Call Transcript
HRTXHeron Therapeutics(HRTX)2024-03-13 02:35
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Financial Data and Key Metrics - ZYNRELEF achieved a record net revenue of 5.6millioninQ42023,markingthefirsttimeitsurpassed5.6 million in Q4 2023, marking the first time it surpassed 5 million in a quarter [16] - The oncology franchise outperformed expectations with CINVANTI net revenues of 94.9millionandSUSTOLnetrevenuesof94.9 million and SUSTOL net revenues of 13 million for the year [25] - Total acute care net revenues for the year were 19.1million,includingAPONVIEnetrevenuesof19.1 million, including APONVIE net revenues of 1.4 million [55] - Gross margins improved to over 70% due to better inventory management and renegotiations with manufacturers, with future margins expected to reach the mid-70s range [24] - The company closed 2023 with over 80millionincashandcashequivalents,sufficienttoreachprofitabilitybyQ42024[24]BusinessLinePerformance−Theacutecarefranchise,particularlyZYNRELEF,isexpectedtodrivethemajorityofproductgrowth,withsignificantmomentumanticipatedin2025followingthelaunchofVANandfulltrainingofnewsalesrepresentatives[17]−Theoncologyfranchisecontinuestoshowconsistentperformance,withCINVANTIandSUSTOLexpectedtomaintaintheirstrongperformance[25]−APONVIEispositionedtoaddresspostoperativenauseaandvomiting,asignificantunmetneed,withhigh−riskpatientsexperiencingratesashighas8080 million in cash and cash equivalents, sufficient to reach profitability by Q4 2024 [24] Business Line Performance - The acute care franchise, particularly ZYNRELEF, is expected to drive the majority of product growth, with significant momentum anticipated in 2025 following the launch of VAN and full training of new sales representatives [17] - The oncology franchise continues to show consistent performance, with CINVANTI and SUSTOL expected to maintain their strong performance [25] - APONVIE is positioned to address postoperative nausea and vomiting, a significant unmet need, with high-risk patients experiencing rates as high as 80% [20] Market Performance - The CrossLink partnership, signed in January 2024, is expected to significantly impact ZYNRELEF revenues, with over 150 sales representatives trained and ready by the end of 2024, and an additional 650 reps to be fully trained nationwide [26] - The ASC (Ambulatory Surgical Center) segment presents a significant opportunity for cross-selling ZYNRELEF and APONVIE, particularly in the orthopedic space [56] Strategic Direction and Industry Competition - The company has implemented cost reduction strategies, including headcount reductions and streamlining financial processes, leading to a decrease in operational expenses from 182 million in 2022 to 135 million in 2023 [53] - The label expansion for ZYNRELEF, approved by the FDA in January 2024, has doubled the number of indicated procedures, positioning it as a foundational element for postoperative analgesia [32] - The NOPAIN Act, effective from January 2025, will provide reimbursement for non-opioid products in outpatient surgical settings, further supporting the adoption of ZYNRELEF [33] Management Commentary on Operating Environment and Future Outlook - Management anticipates positive EBITDA by Q4 2024 and does not expect to raise additional capital, given the strong balance sheet and operational plan [70] - The company expects ZYNRELEF to see an inflection point in 2025, driven by the launch of VAN and the full impact of the CrossLink partnership [17] - The updated guidelines on postoperative nausea and vomiting prevention in 2024 are expected to enhance awareness and adoption of APONVIE [31] Other Important Information - The VAN (Vial Access Needle) project is progressing well, with expected approval by the end of 2024, and the Prefilled Syringe (PFS) is expected to be approved in 2026 [15] - The company has reduced SG&A expenses from 119.9 million in 2022 to 116.7 million in 2023, with further reductions anticipated [37] Q&A Session Summary Question: Impact of the NOPAIN Act on ZYNRELEF - The NOPAIN Act will provide reimbursement for ZYNRELEF in hospital outpatient departments and ASCs through 2027, with potential extension to 2030, ensuring broader adoption [74] Question: Cost Reduction Plans for 2024 - The company expects operating expenses to stabilize between 108 million to $160 million in 2024, with no significant further cost reductions anticipated [81] Question: Growth Expectations for ZYNRELEF in 2024 - Management remains comfortable with the 50% year-over-year growth projection for acute care products in 2024, driven by the CrossLink partnership and label expansion [76] Question: Opportunity in the ASC Segment - The ASC segment offers significant growth potential, particularly for ZYNRELEF and APONVIE, as the company focuses on the orthopedic space and aligns with ASC goals of rapid patient recovery [78]