Heron Therapeutics (NASDAQ:HRTX) reported second-quarter net revenue of $37.7 million, up from $34.7 million in the first quarter and $37.2 million in the comparable prior-year period, while management said sales of its key products came in below its internal expectations.
Chief Executive Officer Craig Collard said the company’s acute-care franchise grew 44% year over year, led by growth in postoperative pain treatment ZYNRELEF and anti-nausea product APONVIE. However, he said both products expanded more slowly than the company had anticipated. Oncology product CINVANTI posted sequential sales growth but remained down from a year earlier amid branded competition.
Product Sales and Commercial Trends
Chief Operating Officer Mark Hensley said total acute-care sales were $15.3 million in the second quarter. ZYNRELEF generated $11.1 million in net sales, up 9% sequentially from $10.2 million and 35% from the prior-year quarter. Average daily units increased 19% year over year.
Hensley said the company’s IGNITE 2.0 program was active across 3,150 accounts, compared with 2,260 accounts under IGNITE 1.0. He characterized ZYNRELEF adoption as a “site-by-site, case-by-case adoption curve,” saying the company’s focus is converting access into cases and protocols at accounts where the product is already available.
APONVIE recorded approximately $4.2 million in sales, rising 26% from the first quarter and 74% from a year earlier. The product reached a 23% share of the surgical NK1 segment, up two percentage points sequentially. Average daily units grew 59% year over year, while June ordering accounts rose 42% from the same month last year.
Hensley said pharmacy and therapeutics approvals for APONVIE reached 1,810 accounts, representing 6.7 million medium- to high-risk procedures annually.
In oncology, CINVANTI generated $21.8 million in sales, compared with $20.5 million in the first quarter and down about 10% from the prior-year period. Hensley said utilization has remained stable in recent months, with June market share of 25%, in line with the product’s 12-month average. The company had 1,241 CINVANTI ordering accounts in June, also near its 12-month average of approximately 1,200.
SUSTOL contributed $0.5 million in second-quarter sales as the company continued its previously announced planned wind-down of that product.
Patent Decision and CINVANTI Generic Risk
Collard said the June court decision changed Heron’s outlook and prompted discussions with lender Hercules. While a CINVANTI generic has not launched, Heron said it is preparing for potential competition through its clinical product profile, customer relationships, contracting position and formulary work.
During the question-and-answer session, Collard said the company used a conservative view of potential generic timing when discussing debt covenants with Hercules. He said uncertainties include when a generic could reach the market, manufacturing requirements for the sterile emulsion product and reimbursement considerations, including whether a generic would use Heron’s J-code or obtain a separate code.
He said a potential generic launch by Azurity would not affect Heron’s settlement agreements with other parties related to CINVANTI.
On ZYNRELEF, Hensley said a slower-than-expected recovery in the surgical market during the second quarter contributed to results falling short of the company’s expectations. He said management did not see a specific product-related issue and expects the market and ZYNRELEF to strengthen in the second half, while acknowledging that second-quarter execution was the company’s responsibility.
Financial Results and Debt Amendment
Heron reported a gross margin of 69.3% for the second quarter. Research and development expense was $2.7 million, while selling, general and administrative expense was $25.4 million. Total operating expenses were $28.1 million, including stock-based compensation and depreciation.
The company posted an operating loss of $2 million and a net loss of $5.5 million, compared with a net loss of $2.4 million in the prior-year quarter. Adjusted EBITDA was $3.2 million, up from $2.2 million a year earlier.
Chief Financial Officer Ira Duarte said Heron ended the quarter with $42.7 million in cash equivalents and short-term investments. Under the amended Hercules credit facility, the company paid a $13.5 million principal reduction at execution, plus associated fees, and may make an additional $4 million principal reduction on or before Sept. 15.
- Pro forma cash was approximately $28.5 million after the initial payment.
- Pro forma cash would be approximately $24.3 million after the potential September payment.
- The amendment establishes monthly minimum revenue, EBITDA and cash covenants through December 2027.
Duarte said the company withdrew its prior 2026 guidance for net product sales of $173 million to $183 million and adjusted EBITDA of $10 million to $20 million. He cited uncertainty around the timing and terms of potential CINVANTI generic competition, the pause in planned salesforce investment and the company’s review of strategic alternatives.
Heron said it will instead provide quarterly updates on its cash position, spending and compliance with its financial covenants. The company did not provide a timetable for its strategic-alternatives review and said there is no assurance the process will result in a transaction.
About Heron Therapeutics (NASDAQ:HRTX)
Heron Therapeutics, Inc is a commercial-stage biotechnology company focused on developing and commercializing therapies in pain management and supportive care for patients undergoing medical and surgical procedures. The company’s research is dedicated to addressing unmet needs in oncology supportive care and post-operative pain management through innovative drug formulations designed to improve patient outcomes and reduce reliance on opioids.
Heron’s first approved therapy, SUSTOL (granisetron) extended-release injection, received U.S.
